FUESD budget in good position despite pandemic

In spite of the havoc wrought by the coronavirus pandemic, the Fallbrook Union Elementary School District is in a decent financial position moving into the 2020-2021 school year, the district’s director of accounting said.

Cindi Martin, director of accounting for FUESD, presented the district’s financial reports from the 2019-2020 fiscal year to FUESD’s governing board at its Sept. 28 meeting. She said the district could increase its reserve funds in the last year while dealing with pandemic-related challenges.

Martin said the district used learning loss mitigation funds from the federal CARES Act that passed earlier in 2020 to pay for various costs dating back to March, which resulted in a one-time savings of more than $3 million.

“By charging things that occurred in March, April, May and June, we were able to free up general fund money that we had budgeted to pay for some of those items,” Martin said.

She said the $3 million savings was designated as “COVID-19 contingency” funds and was added to the district’s reserves.

Combining the money saved and existing reserve funds, the district now has the equivalent of about 11% of its $73 million budget in reserves, Martin said. School districts are only required to maintain a reserve fund of about 3% of their budget.

“We have 11% for reserves, which is a good place to be especially since we don’t know what’s going to happen with funding in the future,” Martin said.

Looking ahead to the rest of the 2020-2021 fiscal year, which ends June 30, Martin said the outlook for the district is better than what was assumed when the budget was first approved.

“For the 2021 budget, we adopted our budget on June 15, and the governor signed the state budget on June 29, so there were things that we knew were going to happen, but until he signed the budget we didn’t count on some of those things,” Martin said.

One of the biggest differences between the budget that was initially approved and how the year’s budget will actually unfold is that the state is not cutting Local Control Funding Formula money as was expected earlier in the budget drafting process.

“You can see that that LCFF cut that didn’t happen. That’s a little more than $4 million that we will be able to add back into this year’s budget,” Martin said. “The other is the additional (CARES Act) learning loss mitigation funds of over a million dollars that also will be added back into this year’s budget. And that is all great news. It really truly is.”

Gov. Gavin Newsom had originally proposed 10% cuts to funding for schools in his May budget revision, but when lawmakers balked at that, the governor agreed to get rid of the cuts and issue a record $12 billion in spending deferrals.

Deferrals were a tactic used during the Great Recession to keep state funding levels for districts stable while not actually giving them the money until the next fiscal year.

That tactic will create some new challenges for FUESD over the next year, Martin said.

“What we would typically receive in February through June is going to be not paid until the following fiscal year and as late as November (2021),” Martin said.

She said the amount of deferred funds for FUESD will total about $10 million, around a third of the district’s LCFF funding.

Martin said the district will look at “things like delaying large purchases if possible to really extend out when these large chunks of money come out.”

Still, FUESD is in a much better financial position than many other districts, Martin said.

“This district has always had a strong financial end, regardless of who the board was, who the superintendent was, who the CFO was – this was a financially healthy district,” Martin said. “Even in the bad years, years ago in the recession, at a time when districts were doing furloughs and layoffs and cutbacks, this district wasn’t, and that’s something that we’ve always been proud of. And it doesn’t happen by accident.”

Will Fritz can be reached by email at [email protected].