Rui Bao, Chief Business Official

Action Item

It is recommended that the Board of Trustees approves the Second Interim Fiscal Solvency Report for 2020-21 and certifies that the Belmont-Redwood Shores School District will be able to meet its financial obligations through June 30, 2023.
 

Public school districts are required by the State to certify, twice each year, the ability to meet their financial obligations for the remainder of the fiscal year and two subsequent years.  This report shows actual activity for the period of July 1, 2020 to January 31, 2021.  Financial projections are made to June 30, 2021, and for fiscal years 2021-22 and 2022-23.

The purpose of the report is to identify if deficit spending is occurring so that corrective action can be taken in time to avoid financial insolvency at year end.  The report highlights the General Fund, although all funds are included.  Projections show adequate year-end fund balances in all funds.

The projected unrestricted June 30, 2021 Ending Fund Balance for the District’s General Fund is $7,752,702.24.  Of this amount, $15,000 is set aside for revolving cash.  The Board identified 6% reserve for economic uncertainties is $3,101,793, and the unassigned and unappropriated amount is $4,635,909.

The projected restricted June 30, 2020 Ending Fund Balance for the District’s General Fund is $2,510,242.71.

Management is pleased to present a Positive Certification of Financial Condition, meaning that the District will be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years and meet the 3% minimum State Reserve for economic uncertainty.  The District does not currently project to be able to meet the Board identified 6% minimum reserve for fiscal year 2021-22.

The primary factors impacting the annual budget is increased one-time funding for the COVID pandemic.  Compared to our adopted budget, we have received $3,994,480 more than anticipated (mostly one-time funding) and our expenses have exceeded adopted budget by $3,202,444.

The District projects overall deficit spending over the next two years of $1,515,198 in 21-22 and $3,545,477 in 22-23. The projected deficit spending does not include any raises for staff, only step and column increases. The June Budget for 2022-23 will need to incorporate ongoing reductions in order to ensure fiscal solvency. 

The District’s solvency depends significantly on its parcel taxes, which are currently generating approximately $3.4 million in annual revenue for the District. The District is grateful to the community for supporting Measure R, which will continue through 2024-25, and Measure K, which will continue through 2022-23.  In addition, the District continues to be grateful for the SchoolForce Foundation, which donates approximately $2M each year to the District.  Without these two funding sources, our students would not receive the quality education they deserve and receive in the Belmont-Redwood Shores School District.

In summary, the budget is solvent for the current and subsequent two fiscal years.  Due to the limited life of the parcel taxes, if new consistent sources of additional revenue are not identified in the next few years, the District will not be able to maintain the current level of core programs.  The District will continue to focus on operational efficiency and being proactive to ensure fiscal sustainability. Management will also continue to monitor funding updates at the state and federal level.