PD Editorial: Schools must adapt to financial and enrollment changes

California school districts have received a barrage of bad news from state auditors and financial experts over the past two weeks. The worst may be yet to come. To prepare for the difficult days ahead, school officials statewide need to quickly shore up their record keeping and rethink their budgets to adjust to a new era of declining enrollment.

This week, the state auditor’s office issued a report criticizing the state Department of Education and school districts for failing to properly track expenditures of federal COVID-19 relief funds. In some cases, they might have to return millions to Washington.

To help schools cope with the pandemic, federal lawmakers set aside more than $23 billion in emergency education funding, with about $10 billion disbursed thus far. The money enabled school districts to provide mental health counseling to students, supply laptops to children who didn’t have them and generally strengthen remote learning programs.

But state Auditor Elaine Howle says her office found that the state monitored the spending of less than 1% of the 1,700 school districts receiving funds, an abysmally small sample. Some districts didn’t submit quarterly reports as required, and those that did nebulously categorized a lot of their spending as “other activities.”

In addition, auditors found that one-fifth of the school districts had spent 20% or less of the federal funds, and as much as $160 million might have to be returned if it is not used before the January deadline.

The auditor’s office called for better tracking of the spending, but some school officials contend additional monitoring would be a waste of resources. Transparency is never too late and never a waste of tax dollars. Government agencies don’t get to spend money with no accountability.

Even more worrisome was a report last week from Michael Fine, CEO of the Fiscal Crisis and Management Assistance Team, a school finance agency. School enrollment in the state plummeted by 160,000 students during the pandemic last year, and it wasn’t a blip. The state projects a decline of 703,000 in the next decade. That will translate to a drop in enrollment-dependent state funding for districts.

School districts are already feeling the pinch. San Francisco Unified is looking at a 13% cut in its budget, and West Contra Costa Unified is considering teacher layoffs to cover a $30 million deficit. Budget and enrollment issues were behind the West Sonoma County Union High School District’s decision to combine Analy and El Molino high schools.

Fine says the time to act is now. “Take decisive action, the earlier the better,” he said. “The depth of pain you will feel relates to how much time you wait to address changing circumstances.”

It would be a grave mistake to assume the Legislature, already funding schools at record levels, will bail out districts. Reassessing needs now, when the situation is less dire, could avoid even more painful, hurried and controversial cuts when a crisis hits.

No one envies the challenges that school officials face even under the best of circumstances. But public sympathy certainly won’t be there in a time of need if educators don’t heed the news of recent weeks and take appropriate steps now to track their spending and adapt to changing enrollment.

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