Decline in ADA since pandemic hits district funding
Concerned parents share their thoughts about the impact of the budget deficit on the schools during the April 16 meeting’s public comments section. Photo taken as a still from the MHUSD Zoom video.
By Kaylee Arca and Marty Cheek
The Morgan Hill Unified School District is grappling with looming financial challenges as it faces more than $10 million in deficits during the next two years.
More than 30 speakers addressed the board of trustees during public comment at the April 16 meeting to share their concerns or express their praise on how the administration plans to manage the upcoming budgets. MHUSD must cut $5.5 million from the 2024-25 school year budget, and an additional $5 million for 2025-26.
The district must make tough decisions regarding staffing and resources in the next two years, but Superintendent Carmen Garcia insisted, “We have never intended to decimate.”
The district’s total budget stands at $152 million, with the majority of its funding coming from the state of California through the Local Control Funding Formula (LCFF). This formula allocates funds based on the number of students, the percentage of families qualifying for free and reduced meals, and the concentration of high-poverty districts (which MHUSD does not qualify for).
The reasons for the deficit is a “complicated matter” created by a number of variables, Garcia said. A major one is that during COVID-19, many students fell into a habit of not attending virtual classrooms. The state funds schools based on average daily attendance (ADA). This chronic absenteeism means the district receives three percent less ADA money, a significant drop.
“ADA is our bread and butter,” Garcia said. “We’ve got to increase our ADA. We’re at 92 percent, we’ve got to increase it so we can get additional dollars. I want to get to at least 95 percent.”
Compounding the district’s financial challenges are the rising costs of special education, pensions, and utilities. The federal government mandates the district support students with disabilities, but only provides $6 million in funding, leaving MHUSD to cover an additional $15 million from its general fund.
“If we were fully funded by the federal government, we would not have a deficit,” Garcia said.
The expiration of pandemic-related funding has also contributed to the district’s financial woes. During the COVID-19 crisis, the district hired additional staff, such as assistant principals, using temporary funds. Now that this money has expired, the district is faced with the difficult task of making cuts.
Garcia believes the number of families qualifying for the free meals programs is underreported, leading to a loss of potential funding from the state.
“We believe this is woefully incorrect because families have to complete on an annual basis a form that says, ‘Yes, we qualify.’ But a lot of our families do not fill that out for a number of reasons.”
Another impact on the budget was the significant salary increases staff members received since Garcia began leading the district. About 87 percent of the LCFF funds staffing.
“We live in a very competitive area and so we have these past three years given very handsome raises that our employees deserve, it’s 24 percent,” she said. “So if one percent equals $1 million, it’s a $24 million investment.”
To address the deficit, MHUSD has begun issuing layoff notices to staff. Four wellness technicians have received layoff notices, but due to three vacant positions, only one will ultimately be laid off. The district has also eliminated two assistant principal positions and reassigned those affected. Some teachers’ contracts will not be renewed for the upcoming school year.
MHUSD is actively working on various initiatives to increase its ADA and secure additional funding to mitigate the impact of its current budget deficit. One of the key strategies is the implementation of Saturday academies, where students attend four-hour sessions, allowing the district to receive full-day attendance funding. Additionally, a bill signed by Gov. Gavin Newsom enables school districts to recover absences that occur during the regular school week through before and after-school programs. By attending these programs for one hour a day, four days a week, students can effectively recover a full day of attendance.
The district is also focusing on more accurately identifying students with special needs to ensure that resources are allocated efficiently and to prevent unnecessary spending on students who do not require special education services, Garcia said.
In an effort to secure additional funding, MHUSD is aggressively pursuing grants. The district has already been successful in securing $1.2 million for site-based mental health clinicians and $747,000 for another initiative. The district hired a grant writer to identify grants for which they qualify.
“For any grant, it doesn’t matter if it’s $100,000, we’re applying for it,” Garcia said.
Another strategic partnership involves collaborating with Gavilan College to offer dual enrollment programs. Starting in the 2023-2024 school year, Gavilan College will pay for classes taken by MHUSD students, providing additional revenue for the district. The program has already attracted 150 students this year, with hopes of expanding to 1,000 students next year.
The district is also exploring the possibility of medical billing under AB 483, which allows districts to bill for certain services provided to students who qualify for Medi-Cal. This bill, signed by the governor, will enable the district to receive reimbursement for money spent on mental health clinicians and wellness technicians starting next year.
Superintendent Garcia emphasized that despite the challenges, the district’s reserves remain healthy, and they are working to minimize the impact on students. But she warned the district’s budget situation may change depending on the revised state budget, set to be released by Newsom in mid-May. MHUSD officials are closely monitoring the situation if the state reduces funding.
Despite their efforts in mitigating the deficit, Garcia and the trustees face scrutiny from parents, students, district staff, and community members regarding the upcoming school year budgets.
Jeanne Schow is a former MHUSD parent and part of the Concerned Parents of Morgan Hill group of parents, educators, and community members. Members are interested in academic performance, fiscal responsibility, and parental transparency and have a goal of restoring trust and excellence in the local public schools, she said.
“I took a look at the budget, I did a comparison back to the school years 2019-2020 and 2020-2021,” Schow said. “Those budgets were balanced with the revenue . . . Dr. Garcia joined the district in the spring of 2021. And from that point on, you see this lack of rigor around budgeting.”
The current board policy 3100 states the board intends to maintain a minimum assigned and unassigned fund balance in an amount equal to two months of operating expenses, about 17 percent of total general fund expenditures ($25 million). The reserve currently holds $31.8 million, about 24 percent. The state requires school districts to hold a minimum of 3 percent.
If the district keeps pulling money out of the reserves, Schow estimates that by 2027-2028 the district will deplete this fund.
“Our contention is Dr. Garcia’s contract is up in 2026,” she said. “If we run out of money, she can leave, but Morgan Hill is left with little to no reserves. We were completely financially healthy when she arrived. This is a self-inflicted problem.”
Anahita Yazdi has three young children, one now attending Paradise Valley Engineering Academy and one who will attend TK in August. She and her husband are active volunteers at the school. She and other concerned parents created an online petition urging the community and the MHUSD board to reject the staff cuts and raise awareness of Garcia’s vision for MHUSD. They have had one-on-one meetings with the superintendent and board members.
“Why are we considering budget cuts at the school level without truly understanding their impact on the students who are the stakeholders in any district, right?” Yazdi asked. “The students are the customers of this district as a business.”
Garcia’s approach is rooted in research that emphasizes a top-down approach while potentially overlooking some high-impact factors, such as classroom sizes, amount of homework, and other things, Yazdi said.
“As elected officials, it is the board’s responsibility to ask for due diligence, the best interest of your constituents,” Yazdi said. “And I feel like they haven’t done that. So that added factor has led to some wasteful spending. Areas in which we could have navigated much more efficiently.”
Board President Adam Escoto asks the Morgan Hill community to better understand education financing, and hopes residents would not focus on blaming the superintendent for what some “allege in terms of mismanagement.”
“I think people would be stunned if they knew that in terms of overall spending on education that California ranks 48,” he said. “We have been ranked in the 48th for years, and all because of Proposition 13.”
He suggested a parcel tax to increase salaries for teachers and staff.
“When people start to look at what they can do on their own, it’s a harsh reality of taxing ourselves,” he said.
Kaylee Arca is a Morgan Hill-based freelance reporter.
