Santa Barbara Unified Unaudited Actuals Released; Planning for a Future without One-Time Funds
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Santa Barbara Unified reports a positive certification of its 2022-2023 school year budget as it considers the expiration of one-time funds this school year. A positive certification means that the District sees no risk of being able to pay its bills in the current year and the projected next two years based on revenue and expense assumptions. However, the District will not be able to maintain current levels of spending based on future revenue projections.
The District’s budget is representative of the values placed on student learning and support for staff and students. The budget includes investments in more teachers for lower than average class sizes, additional art, music, and physical ed teachers in elementary, additional staff for elective classes in secondary and core support classes, tutoring, mental health supports through counselors, school psychologists, licensed social workers, youth outreach workers, and family liaisons. It also includes funding time for teachers to collaborate and plan, known as early release or late start days.
The District’s total operating budget of $179,807,435, or 81.3% of the operating budget (Unrestricted and Restricted), goes to paying the salaries and benefits paid to our staff.
The rest of the fiscal obligations include utilities, maintenance and improvement of buildings, food services, transportation, instructional materials, supplies, and contract services.
The District finished with a total unrestricted and restricted operating budget surplus of $16,492,301 due mainly to the receipt of restricted one-time use federal funding known as Learning Recovery Emergency Block, Expanded Learning Opportunity, and the Arts, Music, Instruction grants. Additionally, the budget features one-time State and Federal COVID relief funds that will expire by September 2024. The funds are already flagged for use, mostly in employee salaries.
The Board requires the District to hold a 10% reserve. Because Community-Funded districts rely on local property tax, there is a need to have higher reserves to pay salaries and benefits in the months when the District does not receive property tax payments. This year, the State extended the deadline to file income tax to October 2023, so school funding will be unknown until those final results are announced.
Reserve monies historically are used towards covering payroll when tax revenue is not coming in and to pay for unforeseen emergencies. Reserves are one-time funds that are gone once used and therefore should not be used to pay for ongoing expenses.
With the increase in federal funding and a healthy real estate market, the District has been able to fund additional staff and services to support teaching and learning and provide social and emotional supports. As these one-time federal funds come to an end, our fiscal priorities will need to be realigned.
The District’s unrestricted ending fund balance for fiscal year 2022-23 is $24,859,091. This represents a total of 17% in reserves. The Board requires us to keep at least 10% in reserves. Looking ahead to the 2023-2024 school year and beyond, the District is monitoring the State’s projected revenue shortfall from the previous year and how that may impact funding. Additionally, rising interest rates and low real estate inventory are slowing the housing market as mortgage costs increase. This could affect local property taxes that fund the school district. By the end of the 2022-23 year, property tax revenue was $273,299 lower than the Tax Assessor had projected for the District. Since we do not know what the revenue will be until the end of the year, we maintain reserves in case projected revenues decline as they did in 2022-23.
“Maintaining a fiscally responsible budget is essential to meeting the needs of students, teachers, and staff at Santa Barbara Unified. The District is monitoring these changes in funding and has been planning for the end of one-time funds and will realign investments based on revenue projections as necessary,” said Dr. Hilda Maldonado, Superintendent.
The full report is available in the agenda packet posted online.