Education: County tells MHUSD to fix budget woes

School district gets six-month extension to provide plan to balance budget

By Marty Cheek

The Santa Clara County Office of Education has granted the Morgan Hill Unified School District a six-month extension to submit a comprehensive plan addressing the district’s projected $28.1 million budget deficit over the next three years.

The extension comes amid growing concerns by the county as well as parents, teachers and others about the district’s long-term financial sustainability. As outlined in two letters dated Jan. 12 and April 12  from County Superintendent of Schools Dr. Mary Ann Dewan to Board of Trustees President Adam Escoto, the county expressed worry MHUSD is projecting a significant budget deficit and requested by the end of June a plan on how to fix the problem.

In the April 12 letter, Dewan wrote: “Even with the planned reductions, the District is projecting to deficit spend such that over the three years included in the Multiyear Projection Report, the unrestricted beginning balance decreases from $40.1M in  fiscal year 2023-24 to a projected ending balance of $12.0M in 2025-26, representing a projected decrease of $28.1M.

“I would like to remind the District that continued deficit spending is not sustainable and will lead to fiscal insolvency if ongoing expenditures are not brought into alignment with projected revenues. Therefore, I am requesting that along with the Adopted Budget due no later than July 1, 2024, the District submit a board approved detailed plan to show how the District plans to bring ongoing expenditures into alignment with ongoing revenues.”

The district administration declined to be interviewed for this story but asked to be sent email questions. After being sent a series of questions, Penny Timboe, Assistant Superintendent of Business Services, emailed this response.

“Our focus continues to remain on providing a quality education that ensures all students are college and career ready. The District’s reserves remain strong — the $5.5 million in cuts we’re implementing for the 2024-2025 school year are addressing the structural deficit. We continue to bring in additional money through grants and plan to increase our Average Daily Attendance (how we’re funded), among other revenue increases. We will continue to work in partnership with our district community to ensure our focus remains on the success of our students. We will work with our district educational partners like we did to identify the initial round of cuts. For the 25-26 school year, we plan to hold community forums, and invite members of our community to apply to be part of the Budget Advisory Committee. The district has been in communication with the County Office of Education. As we engage in a collaborative process to identify additional cuts for the 2025-2026 school year, the county and the district have agreed that the plan will be shared during the first interim certification in December.”

In an email, Escoto affirmed the county’s extension. “The district has been in communication with the County Office of Education. As we engage in a collaborative process to identify additional cuts for the 2025-2026 school year, the county and the district have agreed that the plan will be shared during the first interim certification in December.”

Jim Levis, president of the Morgan Hill Federation of Teachers, said the union declined to comment.

Paradise Valley Engineering Academy parent Anahita Yazdi has monitored the district’s budgeting actions. She set up a change.org petition against proposed budget cuts. It now has 540 signatures. Yazdi said she is “incredibly concerned” the county superintendent wrote two letters to the MHUSD board asking for a plan to align revenue with spending.

Click HERE to read Morgan Hill Life’s editorial on the district budget and transparency

“The deficit is so staggering . . . that even the county is concerned (the district’s) suggested cuts are not making the cut,” she said. “If we have to do even greater, deeper cuts in the next three years, the impacts on the students are just horrific.”

One important step the district can take is to improve its communication with parents, teachers and other concerned citizens in the community, she said.

“I think it’s worth constantly talking about it, especially where the Budget Advisory Committee is not open to the community at this time,” she said. “We have a huge issue in front of us in terms of our financial stability, and yet this is not the forefront of our conversations . . . The county got really worried, and the board and the district are not acting as if this is a major concern.”