Why can’t school districts like WCCUSD increase revenue to avoid budget cuts?

WCCUSD has made budget cuts year after year, and the financial outlook suggests this will continue. So it’s not surprising that our readers often ask: Is there anything the district can do about this problem?

The short answer: School districts don’t have as much control over their revenue or spending as people might think. Most funding comes from the state (plus a small amount from the federal government) and a fair portion of it is earmarked for specific programs, such as special education. And the tools districts do have to raise money are limited.

WCCUSD uses the same funding system as virtually all public school districts in California: The Local Control Funding Formula, which determines how much money it gets based primarily on attendance and enrollment. 

The state provides a base amount per student per grade level plus supplemental funding for ‘high-need’ students, such as foster youths, low-income students and English language learners. When a district has a high number of those student populations (more than 55%), as is the case at WCCUSD, the district also receives additional money.

All of that adds up to roughly $100 to $140 per student per day for a district like WCCUSD, depending on the grade level and needs of the student. But that funding is tied to attendance, so if a student doesn’t show up, the district doesn’t receive those dollars. 

Those dollars make up the bulk of the district’s budget. About 66% of WCCUSD’s funding comes through the state formula, and nearly 90% comes from the state overall, according to district documents. Federal funding accounts for about 5%, leaving only a small share generated locally — primarily through a parcel tax and facility rentals.

That doesn’t mean districts are completely stuck, but it indicates that WCCUSD’s funding problems are likely more structural than related to how the district’s funds are being managed locally.

“It is a structural problem. Full stop,” said Travis Bristol, associate professor of teacher education and education policy at UC Berkeley. “But one can’t just throw up their hands.” 

The reality is the state and federal funding isn’t enough, he said, and California school districts have only a handful of ways to increase revenue: Increase attendance, stabilize enrollment, ask voters to pass local parcel taxes or bonds or pursue grants. 

But those options have strings attached: Parcel taxes depend on voter approval; bonds can only pay for buildings and repairs (not salaries); and grants are usually short-term and tied to specific programs. 

School districts can also fundraise for specific programs, create partnerships with other agencies or rent out facilities like fields or multi-purpose rooms for profit. 

Enrollment and attendance are the most promising revenue sources

“It starts with enrollment,” said Mike Fine, chief executive officer of California’s Fiscal Crisis and Management Assistance Team (FCMAT). 

FCMAT is a state agency that helps districts in financial distress. The agency was created in 1991 after WCCUSD, formerly known as Richmond Unified, declared bankruptcy — the first school district in the state to do so. 

The last time WCCUSD needed FCMAT to step in was 2024. Since then, it has managed to balance its budget, but not without making deep cuts. And, WCCUSD still has a “qualified certification” for its budget plan, meaning it concedes that it may not meet financial obligations in the subsequent two years.

The district’s latest fiscal solvency plan shows a $127 million deficit over the next three years. To balance the budget, the district is combining two middle schools, phasing out its K-eight school program, defunding some programs like elementary band and cutting more than 300 positions. 

“If you’re a declining enrollment district, you have to understand why you’re declining. If you’re declining purely because of birth rates. Well, there’s so much you can do about that, right?,” Fine told Richmondside, noting that is the No. 1 reason for declines. “But in some districts, they’re also declining due to losing kids to neighboring districts, to charter schools, to other schools.” 

In WCCUSD, it’s a mixture of both. Births have declined every year since 2015, with an accelerated decline of 6% between 2019 and 2020 statewide. The district’s enrollment has also seen a steady decline. Since 2019, WCCUSD has lost about 10% of its students, nearly 3,000 pupils, according to state data. 

But WCCUSD enrollment data also shows that students are leaving at seventh grade, indicating they are likely going elsewhere for middle and high school. 

“There could be some room for growth (in enrollment), especially when we see those drops between sixth and seventh grade, so that there’s some opportunity there,” said SchoolWorks Inc. President Ken Reynolds, who presented the report at the April 15 school board meeting. 

Fine said in cases like that, districts could do more to attract students and understand why students may be leaving. 

“If you’ve got kids leaving School A and going to School B, then there’s a clue there that there’s something people aren’t satisfied with at School A,” Fine said. “And the district can take that on by identifying those issues and potentially changing them and making school more attractive to enrollment.”

WCCUSD officials have maintained that attracting students has been a top priority and have flouted ideas on how to highlight its unique offerings at nearly every board meeting. 

But increasing enrollment may seem like a pipe dream for many school districts, especially as birth rates decline. 

WCCUSD has been able to offset the decline by opening a transitional kindergarten program that has brought in hundreds of students, keeping enrollment numbers above 25,000 over the past three years. But with that program now fully developed, there won’t be an influx of new students, and the district expects enrollment to decline even faster with a drop of 2,000 students over the next six years. 

“It starts with enrollment, but in my opinion, you can do a lot more things to improve (average daily attendance), and there’s a lot of room to improve it, especially in larger urban districts.” Fine said. “And I would put west Contra Costa in that category.” 

WCCUSD used to average around 96% to 97% average daily attendance (ADA) before the pandemic, but that number has since dropped to 91% ADA. Because most students honored the picket line and stayed home during the recent teachers strike, it could fall closer to 89%, further reducing revenue, according to WCCUSD’s interim budget Director Jeff Carter. 

The district has floated a number of ideas to increase attendance. It plans to offer summer courses so students can make up those missed strike days, which can boost ADA. At several schools, there are also school community outreach coordinators who work with families to bring students to school. 

Future WCCUSD cuts tied to average daily enrollment

Attendance is by far the most impactful lever a district has to increase attendance. Just a 1% increase in ADA can generate $2.75 million in additional state funding at WCCUSD. 

Before the teachers strike, former budget director Kim Moses said if WCCUSD was able to increase ADA by 3%, the district could avoid budget cuts. 

But that is not the case for WCCUSD anymore. The district was already in a tight fiscal situation, but its deficit was exacerbated by the four-day teachers strike that resulted in an 8% raise for the next two years. 

Over the next three years, the district is making $60 million in cuts and borrowing from its reserves. But even after all that, in year four, the district is likely to continue making cuts, according to WCCUSD’s interim budget director Jeff Carter. 

How deep those cuts will be is determined by the ADA. 

“If those go up, potentially, we could balance that (deficit) out,” Carter said at the March 11 school board meeting. “With declining enrollment, you’re just going to constantly be fighting, balancing that budget of growing expenditures while losing revenue.”

At that meeting, Carter discussed the district’s mid-year budget update. There he pointed to the employee raises as one of the main reasons the deficit grew. Throughout the negotiations, several district officials maintained that WCCUSD could not afford to pay the teachers what they were asking for. Usually districts use 85% of their general fund dollars for salaries and benefits. With this new contract, that number is closer to 90% at WCCUSD. 

However, teachers argued that they were making less than what their counterparts would make at nearby districts, impacting retention and recruitment rates, and leaving many classrooms vacant with a revolving door of substitute teachers. They believe the raises will help solve those problems and improve educational outcomes for students. 

It’s a song and dance that many districts are seeing across the state, Carter said. And while enrollment decreases and salaries increase to match cost of living increases, ADA is what districts will focus on most. 

“This is a statewide issue that the state is looking deeply at on how to maintain school districts funding in a declining enrollment state,” Carter said. “We’ve been declining enrollment for over 10 years now. So it’s just a constant of balancing the budget, decreasing expenditures to match the decreasing revenue that we’re projecting.”

Leveraging grants and offering students more support

Bristol agreed that increasing attendance is a major lever for school districts, but doing so is not simple. In large urban school districts, there are a myriad of reasons outside of school that impact attendance. 

Students who lack access to basic needs, such as food, stable housing or even hygiene products, are less likely to attend and engage in school on a regular basis. Another formidable barrier is reliable transportation, and California ranks last in the nation for school bus accessibility for students. WCCUSD only offers buses for special education students. 

Solving those major barriers, in part, also means major investment from the state or federal government, he said. 

There are, however, easier lifts for school districts to leverage state dollars to offset district costs, but it also won’t generate as much revenue as an ADA increase .

One major example Bristol pointed to was the state’s national board incentive program where the state pays a teacher an additional $5,000 per year if they receive a national board certification at the state and teach at a high priority school. 

“Teachers can make $25,000 (more) over five years which increases a teacher’s capacity to teach all students and increases their pay,” Bristol told Richmondside. 

Of WCCUSD’s 56 schools, 48 qualify as ‘high priority schools, meaning 55% or more of the student population is either low-income, an English language learner or in foster care.

“It’s not a silver bullet, but it costs a district almost nothing,” Bristol told Richmondside. “It’s really an important lever that many districts who are under-resourced across the state are not taking advantage of.” 

In fact, as of the 2022-23 school year, there were only 1,764 teachers taking advantage of the program statewide. It’s unclear if any were from WCCUSD. 

Another state program is the Literacy Coaches and Reading Specialists (LCRS) Grant Program, where a school district can get up to $450,000 to employ, train, and support literacy coaches and reading specialists at eligible elementary school sites. 

Parcels and bonds can add millions in revenue, but not enough

School districts can also ask constituents to help increase revenue through parcel taxes and bonds. Parcel taxes can be used for programming, salaries or any other day-to-day school needs. Bonds are only used for facility upgrades and projects. 

The district has one parcel tax, Measure T, which is set to expire the summer of 2027, so the district is likely going to ask voters to renew it again in November.

It has generated $10 million annually, since 2004, to fund student programs including athletics, libraries and guidance counseling. Property owners currently pay 7.2 cents per square foot of total building area — about $72 per year for an average homeowner (senior citizens and disabled property owners are exempt).  

The district also has three bond programs that have funded school reconstruction projects, including the total rebuild of Stege Elementary and the modernization of Kennedy and Richmond high schools. However there are more than a dozen schools that need to be upgraded, and doing so would likely require the district to ask voters for another bond. 

While those dollars offset costs, it’s not enough to make a big dent with such large budget deficits. 

Former Chief Economist at the U.S. Department of Labor Jesse Rothstein also said it’s not a particularly equitable way to fund schools because the revenue generated or number of parcel taxes approved is often dependent on the socioeconomic status of the constituents. 

“That tends to be something that you can get voters to support in wealthy areas. (WCCUSD) is not so wealthy,” Rothstein told Richmondside, noting a super-majority vote (2/3rds) is a high bar to clear. 

Rothstein, who is now a public policy and economics professor at UC Berkeley, squarely attributes the state’s public school budget problems to the passing of Proposition 13 because it restricted districts’ ability to meaningfully increase revenue. 

Before it passed in 1978, local officials, like a school board, could adjust property tax rates to meet budget needs, and that money flowed directly into local school funding. 

“Effectively, it took California from being one of the highest spending states in the country to one of the lowest spending states in the country in education,” Rothstein said. “There’s very little (school districts) can do now.”

That also means that the responsibility to fix those problems falls squarely on the state. He said aside from school districts jointly advocating at the state level for additional funding, “I don’t think they have many other options,” to avoid impending cuts. 

Is it on the state, federal government or the district?

WCCUSD has been largely criticized by the teachers union, United Teachers of Richmond, and some community members of mismanaging district dollars. They have pointed to the district’s over-realiance on contractors, particularly in special education, as an example of such mismanagement.

District leadership, in response, created a contract review committee to see if there are contractors the district can cut to reallocate dollars to programs or positions like elementary school band teachers.

There are also more creative solutions for the district to generate revenue streams such as converting any of its five now-vacant school sites into teacher housing — similar to what is happening in Oakland or San Francisco.

Nevertheless, levers that exist now can make some impact, but not enough.

“You can always point to some decisions or there’s always going to be some ways more could be squeezed out of the rock,” Rothstein said. “No district is perfectly managed, but I also think that most districts are not terribly managed.”

El Cerrito teacher Sky Nelson, who started the WCC Community Building Group and has studied the district’s budget documents and data, said he “quickly realized local advocacy was not going to be effective,” in solving the budget crisis. His group is now working with state leaders to help draft policies to increase state funding.

“WCCUSD hasn’t been able to catch up with the rising costs and when we looked at Oakland, Sacramento, Santa Rosa, Los Angeles, we saw the same thing,” Nelson told Richmondside. “There are things that the management can do better, but this shows that (the budget cuts are not because of) local mismanagement.”

Closing schools could be part of the solution

Rothstein said WCCUSD is probably going to have to find other ways to stretch their dollars. Like many other districts with declining enrollment, that may mean closing more schools.

He said the issue goes beyond local control. His research shows that better-funded schools lead to better outcomes and that even higher taxes can increase property values when they result in stronger schools.

“Ultimately … if we choose not to spend money on schools, we’re not going to get schools that have the resources they need,” he said.

Bristol echoed that sentiment, saying the real solution lies beyond individual districts.

“Maybe at some point, the teachers and the parents in Oakland and west Contra Costa and San Francisco and in (Los Angeles) may come together and realize that their fight is not one against the (school districts),” Bristol said. “Until then, we are really tinkering at the edges here.”  

He added that the limited role of federal funding is a policy choice, not a constraint, and pressure should be added there.

For example, the Individuals with Disabilities Education Act is chronically underfunded, with the federal government only providing 13% to 15% of the promised 40% per-student cost — a roughly $38.6 billion shortfall that states and districts are then forced to cover, diverting resources locally.

“Look at the war in Iran — we can quickly spend billions of dollars, so it’s not a question about (federal) resources,” Bristol said. “The way that we fund schools in the United States keeps students who are at the margins at the margins, and rarely brings them to the center.”