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Priority 2: Expenditures = Revenue

"…MPUSD’s chief business officer, delivered a shocking secret to a stunned constituency: The once-rich district, a model of enlightened education, was hemorrhaging money. Early estimates of a $6 million deficit eventually crept to $9 million, necessitating a series of painful budget cuts..."

"The district knew the closure was coming as early as 1990. The news should have been a call to action for the seven-member, elected Board of Trustees and the administration. But very little changed on MPUSD campuses following that revelation and the ensuing closure."

Claims in “Poor Little Rich District” – Monterey County Weekly – May 11, 2000

Twenty years later, Monterey Peninsula Unified School District finances are stable – for now. But enrollment decline is accelerating, which will result in a lower Average Daily Attendance (ADA) and reduced funding from the state. It’s unclear when or to what extent tax revenues will recover from coronavirus public health orders that hindered – and still hinder – commercial activity.

As reported to the school board at its September 22, 2020 meeting, 2019-2020 was an atypical fiscal year for the district. The unrestricted General Fund balance ended the fiscal year $10.287 million higher than estimated in June 2020. This happened because the district sold property in the City of Seaside for $5.7 million and had a net gain of $4.58 million because of lower expenditures resulting from coronavirus-related school closures and higher revenue from coronavirus-related federal and state emergency grants.

But just four months earlier, on May 12, 2020, the school board held a Fiscal Stabilization Board Study Session and discussed the likelihood of structural budget deficits resulting from declining enrollment, increased costs of employee retirement benefit programs, higher utility costs, special education expenses, and other new expenses. And the 2020-21 budget incorporated expenditure reductions and anticipated reductions in the number of teachers in coming fiscal years to account for enrollment declines.

Budgets are boring. No one likes spending cuts or tax increases. It’s easier for a governing board to ignore potential budget deficits in the future and hope they can somehow avoid making unpopular decisions now.