The board kicked off its meeting Wednesday night in the realm of the warm and fuzzy, to students who have made a difference in the community and honoring standout teachers who have propelled their students to great heights.
There was loads of well-deserved applause and hugs all around.
But less than an hour later, a pall fell over the room at and the mood morphed from grateful to gloomy. District officials dug into the details of an ever-worsening budget outlook that has an inherent problem – declining revenues and rising costs – that is exacerbated by imminent cuts in state funding.
“We’ve known about this structural problem,” board member Steve Sell said. “But the big change is the state cuts. They’re into perpetuity and they come right now.”
Enrollment has risen by an average of 100 students for each of the past six years and will continue to rise by at least that rate each year, according to district projections. Enrollment for the current school year is approximately 2,815 students.
The enrollment boom isn’t just coming kindergarten. For instance, a large incoming fifth grade class and a small outgoing eighth grade class will lead to a jump of approximately 100 students at the middle school in 2011-2012.
“It is an anomaly that we have experienced growth in grades other than kindergarten,” said Michele Rollins, the district's assistant superintendent for business services.
The enrollment boom comes at a time when property tax revenues, which account for 55 percent of the district's annual funding, declined 1.56 percent from last year and are projected to stagnate for the next three years, according to the Marin County Assessor’s Office. While those revenues are not projected to decrease further, they aren't likely to go up either, Rollins said.
“Our economic future is closely tied to the growth of our schools,” said Mike Fuchs, a member of the district’s financial advisory committee. “We really have an underlying economic issue in addition to the state budget – the lack of revenue growth combined with our enrollment growth.”
That boom drives up costs – the middle school will add two full-time teachers to accommodate its growth, for instance.
With enrollment-driven costs and tax-driven expenses heading in opposite directions, the uncertainty in Sacramento is set to get worse, Rollins said.
Mill Valley is a “basic aid” (“community-funded") school district, which means that its per-pupil property tax revenue exceeds its per pupil revenue limit. The state doesn't provide any general purpose funding to community-funded districts, only funding for specific purposes, such as maintaining a 24-to-1 student-teacher ratio for kindergarten through third grade.
Districts that aren't basic aid are dubbed "revenue limit" districts, where the local property tax isn't enough to meet the per-student amount, so the state makes up the difference. Those districts have felt the brunt of the budget cuts in recent years, so the state has taken "fair share" reductions from basic aid districts to spread the pain, so to speak.
The Mill Valley School District receives $1.3 million from the state to maintain a 24-to-1 student-to-teacher ration from kindergarten through third grade. In 2009-2010, the state took $610,000 of those categorical funds back, and another $934,000 in the current 2010-2011 school year.
The reduction is based on the district’s average daily attendance numbers, so the higher enrollment goes, the more the reductions will increase.
For 2011-2012, the reduction is set to be $1.524 million since the governor signed a proposal that reduces "basic aid" districts' categorical funding. That reduction of $1.52 million is considered ongoing, meaning that district will have to do without that money for next year and beyond.
If Gov. Jerry Brown’s proposed tax extensions are not approved, the district faces an additional reduction of $935,000, or $2.4 million total.
“We have become a textbook case of what can happen to a basic aid school district,” said Benny. “The storm has become more perfect in terms of the growing enrollment.”
The only shred of good news, Rollins said, is that the state can only take back as much state funding as it provides the district, so it can’t rise higher than the $2 million, or $330 per student, that the state provides the district in categorical funds.
The state cuts will have the district looking in every corner for its own cuts and possible additional revenue sources, district officials said.
“If you look at the size of these numbers, no one lever is going to fix it,” Fuchs said. “You’re going to have to hit every lever as hard as you can hit it.”
That could include the possibility of going back to voters for a hike in the current parcel tax, which was passed in 2004 and raised and extended via Measure A in November 2008. The district expects to receive $6.9 million from its parcel tax in 2010-2011.
Measure A extended the district’s parcel tax to 2018 and raised it by $193. The revised tax started at $663 in 2009-2010 and is set to grow by 5 percent each year until 2017-2018. Property owners age 65 or over are eligible for an exemption.
Measure A passed with more than 74 percent support, but Sell said it was important to consider timing so as not to overwhelm voters with tax increase requests. The Tamalpais Union High School District board agreed this week to in November.
It could also include looking to , the nonprofit foundation that has been a much-needed safety net for the district’s schools, raising approximately $2 million a year to pay for the district’s arts curriculum and a host of other programs.
And it will likely include cuts. In fact, it already has. The district is trimming the number of kindergarten classes from 16 to 15 in the 2011-2012 school year, based on a decrease in registrations to 353 students, and eliminated a 17.5-hour a week instructional aide to account for it.
The board authorized its first layoff of the year Wednesday night, eliminating a full-time custodian. The move will reduce “the number of times things are vacuumed and serviced,” according to Tim Ryan, the district’s director of maintenance and operations.
“This is a very difficult decision to make,” Benny told the board. “It’s important to understand that we’re starting to dismantle the kinds of progress we’ve made in a number of areas in recent years. And there will be further cuts that will be coming to you.”
At Wednesday’s meeting, Rollins unveiled a document called “What Matters Most,” which outlined different tiers of positions, services and costs that could be considered for cuts. The board took no action as it was an informational document, not a proposal.
“These difficult decisions are going to be laid before us meeting after meeting,” board member Judy Sherman added. “It’s heartbreaking and there is no getting around it.”
The situation remains fluid, Benny cautioned. On Monday, Brown is set to issue his “May revise” on the 2011-2012 state budget, a move that may further impact the district’s budget plans.
“I don’t think there is any great news coming out of that,” Benny said. “It will likely further validate what we have already talked about here.”
Mari Allen, co-president of the Mill Valley PTA Council, said the district needed to do more to communicate the dire situation to parents and the broader public.
“The average parent in any our schools has no idea that you are making these very difficult and very serious decisions right now,” she said. “Now is the time that parents and community members who don’t have children in our schools need to stand up.”It’s not just going to be OK. We can see that from these numbers.”
Kiddo Director Trisha Garlock agreed. The organization kicked off its annual fundraising drive last week and said the community lacks a sense of urgency when it comes to the financial health of its schools.
“People don’t understand how desperate we really are in this district,” she said. “In the 30 years that I have been doing this, it’s never been this bad.”
The 411: The board has scheduled a study session on the budget for May 24 at 6 p.m. at , and Rollins is expected to bring a preliminary budget to the board on June 15. The board is set to adopt a budget on June 22.