Budget Solutions 2024-25

HUSD's state funding is based on reported average daily attendance—the average number students who attend school. An ongoing decline in enrollment is putting downward pressure on daily attendance and funding. 

This a California problem. Statewide enrollment trends show continued decreases due to declining birthrates and families moving out of the state. Since 2012-13, the state has experienced a loss of nearly 400,000 (roughly 6.3 percent) students. If current trends hold over the next ten years, a further decline of almost 620,000, or 10.7 percent, in total enrollment is projected. These declines are hitting coastal communities especially hard.

According to School Services of California, many school districts are exploring how to "rightsize" their operations to keep pace with the declines in students. 

Pandemic relief funds that the federal government provided to school districts starting in 2020 expired on September 30, 2024. HUSD was allocated and has spent $87 million of those funds. Additional one-time grants were allocated by the state in 2021-22 and 2022-23 to support post-pandemic relief efforts. HUSD was allocated $38 million, and has spent $20 million. All grants are expected to be fully spent by the end of this school year. That surplus funding, which is going away, has supported staffing, professional development and other supplies and services and allowed us to delay "right-sizing" the district's budget.

California, which supplies the vast majority of education funding, experienced a decline in tax revenue last year. As tax revenues fluctuate, so does the amount of funding the state allocates to education spending, per the requirements of Proposition 98.

For HUSD, the downturn resulted in an average of $10 million per year less for 2024-2026. 

Each year, the state applies a cost-of-living-adjustment (COLA) to our Local Control Funding Formula (LCFF) grant, which accounts for the majority of HUSD state funding. The COLA can vary year-to-year. You can view a record of previous COLAs here.

The state budgeting process for next year begins in January when the governor submits his budget. That is when school districts will begin to get an idea of funding for 2025-26.

The shortfall now stands at $55 million.

A Negative certification is assigned when the district will not be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year. The circumstances that lead to Negative certification can be outside of the control of district leadership, like the loss of one-time funds and/or a decline in student enrollment.

Ultimately, a Negative Certification means there are significant risks of the district not meeting its monthly payroll obligations in the foreseeable future. Therefore, it indicates a need for significant budget adjustments to balance the budget and immediate actions are needed to meet its financial obligations and maintain local control.

Read more here.

The First Interim Financial Report released in December 2024 includes $405.7 million in total expenditures.

See the budget fact sheet here.

There are several drivers of the current deficit. Two of them are COVID funding expiring and enrollment declines. 

The state economy is another. As the state faces financial challenges, it affects how much it allocates for education. As an example, cost-of-living increases to the base funding vary year-to-year.

As the state revises its projections for school funding, this changes our projections for our own revenues and our reserve balance. Currently, the state has a multibillion dollar deficit. For HUSD, the state’s recent economic downturn has resulted in an average of $10 million per year less for 2024-2026.

The state budgeting process for next year begins in January when the governor submits his budget. That is when school districts will begin to get an idea of funding for 2025-26.

Additionally, the state continues to underfund legally mandated special education services. The district is required to make up this shortfall, costing the general fund budget several millions of dollars.

Each year, the state adjusts the Local Control Funding Formula (LCFF) base grants with a cost-of-living-adjustment (COLA) as part of its budget-adoption process. Because these base grants make up such a large portion of annual funding, and costs go up every year, school districts watch the annual COLAs closely. These adjustments have varied widely from year-to-year, from as low as 0 percent to more than 6 percent. The California Department of Education (CDE) maintains a list of historical COLAs for LCFF. Sometimes, school district real-world costs increase more than state COLAs.

The state allocates funding based on “average daily attendance,” or ADA. This is calculated by dividing the number of days of student attendance by the number of calendar days that school was taught. Each daily student absence costs HUSD approximately $83 in potential funds. 

However, enrollment is important because fewer enrolled students means fewer students who can attend school.

Statewide enrollment trends show continued decreases due to declining birthrates and families moving out of the state. Since 2012-13, the state has experienced a loss of nearly 400,000 (roughly 6.3 percent) students. If current trends hold over the next 10 years, a further decline of almost 620,000, or 10.7 percent, in total enrollment is projected. These declines are hitting coastal communities especially hard.

As far as attendance, rates hit historically low levels during the pandemic nationwide. The rates are recovering at HUSD and elsewhere, but there is still room for improvement.

Common reasons for missing school include:

• Barriers that impede a student from getting to school.
• Negative school experiences such as bullying.
• Lack of engagement due to students feeling little or no connection to school.
• Misconceptions by families about the importance of attendance, particularly at lower grades.

A one percent increase in attendance would result in approximately $2 million more in the budget.  The current adopted budget assumes an attendance rate of 93.78 percent, so perfect attendance could add more than $12 million.

At this point, school closures are not being considered. With continued declining enrollment, that may change in the future.

Adult School funding structures are independent of district general funds. Budget solutions should not have an impact on Adult School programming.

The state is providing free lunch and breakfast for all students as a part of regular school funding. This began shortly after the pandemic. At this time, we expect this to continue.

Generally speaking, voter-supported bond monies are used to fund capital projects. Those are not impacted by potential budget cuts.

Bond monies can only be used on facilities projects, such as school construction or improvements. Those one-time funds cannot legally be used to support the day-to-day operations of the district. Since 2006, HUSD has been working through a comprehensive plan to upgrade aging classrooms and school facilities, many of which are over 60 years old. Examples of those projects are here. That work will continue.

Funds raised from selling properties can only be used for other types of capital projects. These funds can't be used to pay for general operating salaries. Moreover, the sale of properties only generates one-time revenue, which does not help cover ongoing costs.

The current budget shortfall is serious and will require reductions in some as-yet undetermined areas. Approximately 90% percent of the HUSD budget goes toward employee salaries and benefits. It is likely that staff will be impacted. However, the scale and nature of the reductions is unknown.

The community survey and town halls have offered valuable information on how families and staff engage with the district and schools, the student experience, and the community's funding priorities. That feedback is being considered along with the financial analysis work that HUSD staff are conducting internally and in conjunction with the Alameda County Office of Education. Ultimately, HUSD needs to develop a budget that is financially responsible and sustainable, even if that includes decisions that are uncomfortable.

A parcel tax is a form of real estate tax. Unlike most real estate taxes, it is not directly based on property value. It can either be a flat rate or based on a property’s size. These often include senior exemptions.