LANCASTER — Gov. Gavin Newsom’s proposed May 2020-21 state budget revision on presented a worst-case scenario with a 22.3% decline in revenue since January because of the COVID-19 pandemic.
The estimated $54.3 billion budget deficit would mean an estimated $6.5 billion in cuts to the Local Control Funding Formula, the main source of funding for K-12 school districts.
Under Newsom’s proposal districts would see cash deferrals, meaning money they expected to get this summer would not come until next year.
The state Senate, however, said not so fast. The Senate’s Education and Appropriations Committee on Thursday rejected Newsom’s cuts to education and actually provides a slight increase to school funding.
“They threw out almost all of the cuts that Newsom had in his budget for education, and said, We’re going to make it up with cash deferrals and we’re going to plan on the feds giving us this money,” Antelope Valley Union High School District Assistant Superintendent of Business Services Brian Hawkins said Friday.
The deadline for the state Legislature to pass the 2020-21 budget is June 15. Newsom has until the end of June to sign it.
Hawkins, in the meantime, will present a proposed 2020-21 budget for adoption to the AV Union High School District Board of Education on June 11.
“If we took every cut that Newsom said we’re going to get, and we got no additional money, we can make it next fiscal year,” Hawkins said, adding the district has enough one-time money with its reserves and CARES Act funding to cover it.
Hawkins will craft a budget to address the ongoing COVID-19 pandemic, educational learning issues, and maintaining fiscal solvency.
Hawkins expects to see deferrals. Newsom’s May revision proposed one deferral this year, and three months of deferrals next year fiscal year.
If there is no federal money and the state implements deferrals, the district will need a Tax & Revenue Anticipation Note, also called a TRANS, to meet its operating costs, including payroll.
The Los Angeles County Office of Education typically pools TRANS together from districts throughout the county to get a better interest rate, typically about 1% to 1.5%.
“I’m budgeting for the worst-case scenario and hoping for the best, but hope isn’t a plan, so I have to budget for the worst case,” Hawkins said.