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Declining enrollment = declining revenue

Tri-Valley school districts could lose millions of dollars, forcing budget cuts
Pandemic-induced enrollment decreases could lead to a loss of revenue for school districts beginning next year, forcing budget cuts that will affect students and staff.

Editor's note: This is the second in a two-part series about how the pandemic has affected Tri-Valley public school districts.

Following a two-year stretch of leniency, Pleasanton Unified School District and other Tri-Valley districts face a potentially significant drop in revenue next year if the funding formula doesn't change to take into consideration a decrease in enrollment and effects of the pandemic on attendance.

The state uses average daily attendance (ADA) to calculate how much money each district receives. ADA takes into account not only enrollment but also how many students are in class every day.

Districts were also allowed to use their 2019-20 pre-pandemic attendance and enrollment to calculate their funding for the last two years. But starting in the fall of 2022, funding is set to return to the enrollment and attendance formula. Because enrollment has declined, and attendance is complicated by pandemic-related quarantine and independent study, this could mean a significant drop in revenue.

"The pandemic has affected enrollment and attendance in school districts across the state, introducing complexities into the process," PUSD Superintendent David Haglund said.

PUSD spokesman Patrick Gannon told the Weekly, "The district has experienced an approximately 800-student drop from pre-pandemic times and are still funded and staffed based on 2019 numbers."

As of Jan. 12, enrollment at PUSD is 14,023 students, which Gannon called "a significant drop from pre-pandemic when we were (approximately) 14,500 to 14,800."

In his recently presented budget, Gov. Gavin Newsom proposes an amendment to how the funding mechanism, Local Control Funding Formula (LCFF), apportionment is calculated to consider the greater of a school district's current year, prior year, or the average of three prior years' average daily attendance.

PUSD's absence rate pre-pandemic was approximately 3%. With the recent surge of COVID cases with the omicron variant, absences the first week back from the winter break in January average about 14% of the student population.

LCFF/property tax make up more than 74% of the district's revenue, with property taxes making up about 57% of the total LCFF apportionment.
"Currently we are being funded and, therefore, staffed under pre-pandemic enrollment, which means we're staff based on our enrollment in 2019, and we know that we have a significant drop in enrollment," Gannon said.

According to a Dec. 9 2021-22 budget update to the PUSD board of trustees, if funding is based on current enrollment, PUSD could lose about $7 million in revenue beginning in 2022-23 due to the enrollment decline, a good portion of its budget. To put this in perspective, the 2021-22 budget is $190.3 million, which includes roughly $16.5 million in one-time pandemic-related funding.

However, Gannon said, "It's difficult to put a precise number on the impact to the budget just because there's so much that can change from now to May. All we can do is operate under what we know, which is the guidance that the (Alameda County Office of Education) is giving us, and that we need to operate under the way we've been funded."

While the district does not know exactly how much money they will lose, Gannon said, "the one thing we do know for certain is that every school district in California and probably the country are going to have to make some staffing adjustments, which is incredibly difficult."

But some changes have already been made according to the Dec. 9 report, which stated, "While the district has made some adjustments to staffing in 2021-22 further right-sizing of staffing will be needed in the coming years."

To mitigate concerns about COVID and help maintain enrollment and attendance numbers, PUSD created Pleasanton Virtual Academy, a supported Independent Study Program that allows students to learn from home while providing the prescribed amount of live instruction required for each grade level.

"PVA provides a robust and flexible learning environment for students that is developed and implemented by our world-class PUSD educators," Haglund said.

A parent volunteer at Bollinger Canyon teaches second-graders how to animate Google slides in December 2021. Photo courtesy of SRVUSD

Enrollment was already declining at San Ramon Valley Unified School District prior to the pandemic, according to officials.

"We are not looking at things right now through the lens of pre-pandemic versus during, and then post-pandemic," SRVUSD communications director Ilana Israel Samuels said. "As we have been watching this trend in enrollment patterns over the years, we have focused on budgeting effectively and maintaining our high standards for fiscal responsibility."

Public school enrollment in California dropped by more than 160,000 between the 2019-20 and 2020-21 school years. Migration patterns and low birth rates contributed to the annual decline before COVID, but enrollment for kindergarten -- which is not mandatory in California -- shrank by approximately 61,000 students during the pandemic. Most of the overall enrollment decline is attributed to the kindergarten enrollment decline.

Districts can be affected by budget cuts many ways including layoffs and the elimination of programs and services. The state has assisted districts through recovery this past year, including significant investments in K-12 education, though more ongoing funding has been allocated to districts with more at-risk students.

"For finances during the pandemic, it has of course been very helpful that the legislature has shielded us from revenue losses," Samuels said. "We are still evaluating the full data on enrollment, but we are hopeful that the disruptions to attendance caused by COVID will begin to lessen soon."

While ADA is used by the state to calculate the amount of funds paid to school districts each year, State Sen. Anthony Portantino (D-La Caada Flintridge) recently introduced Senate Bill 830, which would issue funding based on annual enrollment and bring in $3 billion for California schools.

SRVUSD has been examining the bill, and "upon our initial evaluation, it is promising that it would provide us with supplemental funding to make up the difference in what we receive currently under LCFF due to lower enrollment," Samuels said.

The current version of SB 830 includes what SRVUSD calls "a caveat" that districts would be required "... to use at least 50% of (this) supplemental education funding to supplement existing (local education agencies) expenditures to address chronic absenteeism and habitual truancy."

"In a district like ours, where we already do an outstanding job preventing truancy and chronic absenteeism, 50% of the funding earmarked for this purpose would actually not be helpful for us as a solution to funding issues due to declining enrollment," Samuels said.

Photo by Getty Images. Graphic design by Doug Young

After students returned to classrooms in the fall of 2021, attendance was also affected by strict protocols for remote learning and isolation. Districts without an independent study option for students in quarantine were required to count them as absent, thereby losing attendance-based funding.

Newsom has proposed adding three options to the state budget to calculate funding -- current year enrollment, last year's enrollment, or a rolling three-year average. Based on a preliminary evaluation of Newsom's proposal, Samuels said, "The rolling three-year average would probably be the best option for SRVUSD."

SRVUSD is still evaluating their current enrollment numbers, including processing independent study contracts for students.

"We have already taken the necessary budget actions to account for less revenue coming in, if it ends up that the state takes no action," Samuels said. Those actions were shared with the Board of Trustees in the first interim financial report and approved last month.

"We will talk more as time goes on whether further budget adjustments are necessary," Samuels said. "Overall, it's really too soon to tell how the future will play out, but we are prepared for multiple scenarios."

Now it's a waiting game to see what happens with SB 830 and Newsom's budget.

"The way California's budget works, our budget planning is backwards because by law we have to provide employees notice if we're going to have to make reductions in March, and we don't know what the budget is actually going to be until May," Gannon said.

The situation is "nothing new," Gannon added, "but it puts school districts in a very difficult and uncomfortable spot. We're going to do the best we can and we'll try to think outside the box and be innovative."

Editor's note: Publisher Gina Channell Wilcox contributed to this story.

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