Despite plummeting state revenue and increased costs related to COVID-19, the Orange County Department of Education is projecting an actual deficit of less than $1 million against a budget of about $250 million, Associate Superintendent Renee Hendrick said Wednesday.
OCDE provides direct educational services and support for some of the county’s most vulnerable populations. It also supports local districts with services necessary for their operations, including professional development, high-speed internet access and security, legal and fiscal guidance, payroll services and student enrichment.
Addressing the Orange County Board of Education at its regular meeting, Hendrick outlined the department’s proposed spending plan for the fiscal year that starts July 1. Its development comes as California works to close a $54 billion shortfall caused by a collapsed tax base and a surge in costs associated with the coronavirus pandemic.
“Former Governor Jerry Brown warned us that a recession was coming, but no one could have seen this,” Hendrick said.
The decline in state revenue effectively drops the guaranteed funding level for schools under Proposition 98. Governor Gavin Newsom has proposed offsetting the losses with a combination of cuts, deferrals, federal dollars, flexibilities and the reallocation of funds that were previously earmarked for paying down unfunded pension liabilities.
Based on the governor’s latest figures, Hendrick said OCDE is projecting a $27 million surplus in the current year because of a temporary change in student funding formulas and the influx of about $8.5 million that was received this year but will be spent in 2020-21.
By contrast, the department’s spending plan indicates a deficit of about $21.8 million in 2020-21. But that includes the expenditures tied to the $8.5 million above, and it factors in about $10.2 million for one-time projects and expenses related to COVID-19.
After accounting for these variables, and adding in federal dollars that have already been confirmed, the structural deficit amounts to less than $1 million. If OCDE receives more federal funds or realizes additional savings, that shortfall could be eliminated entirely, Hendrick said.
“The Orange County Department of Education’s budget philosophy is conservative, and we strive for a budget that is structurally balanced,” she said. “We believe that with continual monitoring and with adequate reserves, we have the ability to continue balancing the budget without impacting services to the students and districts we serve.”
Hendrick cautioned that the governor’s most recent spending plan, often referred to as the May Revise, was still being debated and may change before a budget is adopted.
In an effort to keep OCDE’s costs in check and maintain healthy reserves, she said, all new and vacant positions will be reviewed by the superintendent and his leadership team for possible reductions, and travel will be limited.
The board is expected to vote on OCDE’s proposed budget at its next meeting.