Budget Challenges Facing School Districts

1. Declining Enrollment: The district has lost 1,650 students (11%) since 2018, which equals a loss of nearly $20 million in funding.

2. Loss of COVID Funds: The district lost $41 million in one-time COVID relief funding over the past four years, yet many valuable positions funded by these dollars remain.

3. Low Funding from State: PUSD is among the lowest-funded districts under California’s Local Control Funding Formula (LCFF), receiving $31 million less than the average California district.

4. Low Cost of Living Increases & Inflation: In 2024, PUSD received only a 1% COLA despite facing an 8.1% inflation rate in the Bay Area and rising utility and insurance costs.

5. Staff Retention: The district's ability to attract and retain quality staff was bolstered by a 2023/24 raise and enhanced health benefits — which is important but difficult with a strained budget.

In our scores of presentations, we have stated that the amount of reductions PUSD will need to make changes. In fact, it did--from $8.66M (Sept. 26, 2024 Board Meeting) to $5.56M (Jan. 16, 2025 Board Meeting).

California state funding for public schools fluctuates due to its reliance on the General Fund, which depends heavily on volatile income tax revenues from high earners. During economic booms, tax revenues rise, increasing education funding, while recessions cause revenues to drop, leading to cuts. Proposition 98 ties school funding to the state’s revenue, further amplifying these fluctuations.

Funding also varies due to declining enrollment and shifting priorities. The Local Control Funding Formula (LCFF) bases allocations on attendance and demographics, meaning fewer students result in less funding. Legislative changes and voter measures can also redirect funds, making school funding unpredictable and challenging for long-term planning.

Dear Pleasanton Community,

Your board of Trustees is committed to informing you with transparency on upcoming financial challenges ahead. I value our partnership and collaboration and look forward to working together with you to address these challenges.

I moved to Pleasanton thirty years ago for a teaching position and because I wanted to have my own children go to our excellent schools.  My family has greatly benefited from the schools and I want to have our schools continue to be the best.  There are some pressing issues that you need to be aware of.

First, all schools were given covid funding; Pleasanton received $41,000,000 over the last four years.  That money paid for additional counselors, wellness centers, additional sections and support at our schools.  The federal government is no longer supplying that money even though the need remains the same.

Second, we need to attract and retain talent.  Our teachers and staff make the difference in providing an outstanding education.  Providing our students with effective teachers and staff is a priority so we need to have funds to compensate them.

Third, all across the state and country schools have declining enrollment.  The state pays us by the number of students we have.  For every loss of 100 students we lose 1.2 million dollars.  Currently, we have a loss of 1650 students.

Fourth, we are all feeling the effects of high inflation and low Cost of Living adjustments (COLA) from the State, where we receive the majority of our funding.  For our area, inflation over the last two years is 8.1% yet the COLA provided by the State this year is only 1%.

Fifth, we are a low funded district. California uses an equity-based formula to allocate funding to school districts across the state. For Pleasanton this means that as a fairly affluent community, our funding remains stagnant regardless of how much property taxes or home prices go up. As a result, nine out of ten districts in the state receive more money than Pleasanton. 

This is not only a Pleasanton problem, districts everywhere are experiencing this loss of revenue.  However, we have a community that I know will work together to address this challenge.  Currently, we have a budget advisory committee and they are helping us examine our budget and generating ideas for reductions and looking for creative ways to generate income.

How can you help?  The main way is for you to just understand our financial situation and know that we have tough times ahead and difficult decisions we have to make.  Also, I have learned over the years that our community wants to be part of the solution so if you have ideas, suggestions or questions please email us.  The bigger issue is how schools are funded so any lobbying of our elected officials would be helpful as well.

If you would like more detailed information about our budget you can go to this link.  Thank you for your time and support.  As always we remain committed to providing the best education for our students.

Mary Jo Carreon

PUSD Board President

The District formed a Budget Advisory Committee in 2023-24 to begin discussing the state of our budget and to generate ideas to address challenges ahead. Learn about their important work

The Pleasanton Unified School District (PUSD) held a budget workshop on Sept. 24, 2024, to address the district's fiscal challenges. PUSD’s Budget Advisory Committee, formed in May 2024, led a majority of the discussion on budget realignment to inform the Board’s discussion and action on an estimated $8 - 10 million in reductions to balance our budget. Please read below for a summary of information shared or watch the full meeting recording. 

Continue to look for updates and opportunities to engage on our PUSD website. 

Why This Matters to You

Maintain local control: In California, school districts are required to show balanced multi(3)-year budgets approved by their County Offices of Education. The need for the $8-10 million in reductions is dictated by this requirement (as shown in the graphic below). Currently, PUSD has received conditional approval pending a commitment and plan to realign our budget with the funding we receive.

If reductions and realignment does not happen, we run the risk of losing control of how this realignment occurs and where reductions come from — where the County and then State steps in to make reductions to balance our budget. While this may sound dramatic, it is a reality taking place across the State and in districts locally in the Bay Area.

We want to take a proactive approach to our budget so that our community has control of how its school funding is allocated. We are committed to leading this work in a way that is open and involves our community.

To this point, we will be hosting a series of opportunities to learn, ask questions and provide input at school sites and virtually for the community to be part of. We urge you to be part of this conversation, so we can reach a solution that meets our shared goals and above all keeps students at the forefront.

Overview and Objectives

The workshop aimed to inform the Board of Education and the community about the state's conditional approval of PUSD's 2024/25 budget and to discuss plans for addressing the district’s budgetary shortfalls. The objectives were to clarify the realignment timeline, promote community engagement, and generate feedback on the district’s revenue generation and rightsizing strategies.

Fiscal Challenges

The Budget Advisory Committee (BAC) presented key financial challenges facing PUSD, including:

1. Loss of COVID Funds: The district lost $41 million in one-time COVID relief funding over the past four years, yet many valuable positions funded by these dollars remain.

2. Low Funding from State: PUSD is among the lowest-funded districts under California’s Local Control Funding Formula (LCFF), receiving $31 million less than the average California district.

3. Low Cost of Living Adjustments (COLA) vs. High Inflation: In 2024, PUSD received only a 1% COLA despite facing an 8.1% inflation rate in the Bay Area and rising utility and insurance costs.

4. Declining Enrollment: The district has lost 1,650 students (11%) since 2018, with each 100-student loss translating to a $1.2 million revenue reduction.

5. Staff Retention: The district's ability to attract and retain quality staff was bolstered by a 2023/24 raise and enhanced health benefits — which is important but difficult with a strained budget.

Budget Realignment and Revenue Generation

Given these challenges, the BAC outlined various cost-saving and revenue-generating measures. Aligning staffing and programs with the lower enrollment is crucial for the fiscal solvency of our District and to maintain local control.

Revenue-Generating Options

PUSD explored several revenue-generating strategies, including:

• Facility Rentals: Increasing revenues through facility rentals, which brought in $475,000 in 2023/24.

• Summer Programs: Expanding summer educational programs, which generated $850,000 in gross revenue.

• Enrollment Boosting: Marketing efforts to increase student enrollment.

• Water and Energy Conservation Projects: Exploring cost savings in utility usage.

• Full-Day Transitional Kindergarten (TK) and Kindergarten: Offering full-day programs to attract more students.

• Parcel Tax: The district has also floated the idea of a parcel tax, which could generate $4-5 million annually.

Process Timelines and Next Steps

The district has laid out a timeline for decision-making, including Board discussions on budget realignment and revenue generation. On Sept. 26, the Board of Trustees took its first steps toward this goal by passing a resolution confirming the District's commitment to fiscal solvency — a requirement by the Alameda County Office of Education.

By early 2025, the district will present final recommendations for reductions, based on BAC input and community engagement. These recommendations will include staffing adjustments, program cuts, and further analysis of the district’s financial landscape.

PUSD will be hosting a series of opportunities to learn, ask questions and provide input at school sites and virtually for the community to be part of. We urge you to be part of this conversation, so we can reach a solution that meets our shared goals and above all keeps students at the forefront. Please stay tuned and check our website for updates.

Key Points: 

• The land that the old District Office (4665 Bernal Avenue) occupied was underutilized and extremely valuable (assessed at $40 - $50 million)
• The impact of the pandemic on office space availability and low commercial real estate prices provided a strategic opportunity to better leverage PUSD resources
• The District office buildings on West Las Positas were purchased for $23.5 million with non-general funds (these funds cannot be used for employee salaries) 
• The additional office space at West Las Positas and the vacant space at the Bernal Avenue property can provide new revenue streams to support our students on an ongoing basis 

In 2022, Pleasanton Unified School District (PUSD) invested in two office buildings on W. Las Positas Blvd with the goal of generating substantial revenue while addressing facility and accessibility issues. This investment brings immediate financial benefits and will provide ongoing support for students.

The financial benefits include approximately $1 million in annual revenue from an existing tenant, Gatan, which will directly support PUSD's general fund. Additionally, PUSD is currently in escrow to sell the vacant Vineyard property for $34.695 million to pay off the $30 million loan taken for the W. Las Positas purchase and improvements, ensuring no general funds are diverted for this purpose. If leased or sold, the old Bernal property, valued at $40-50 million, also holds potential for an ongoing income stream to further support PUSD educational programs.

Beyond revenue, the move to the W. Las Positas property consolidates district functions and provides current ADA compliant facilities, which will particularly benefit programs like Village High School, the adult transition program, and Pleasanton Virtual Academy. These efforts enhance both the learning environment and administrative efficiency, creating a supportive, accessible space for students and staff alike.

Below is a summary of answers to questions we've heard during meetings and from our budget reduction question form. 

What is the dollar amount PUSD needs to reduce/realign its budget by? 
Currently, PUSD is looking at ~$8.7 million in budget reductions to align with funding we receive from the State. . 

When do these reductions/realignments need to be made? 
The ~$8.7 million in reductions must be made for the 2025-26 school year. PUSD and our Board of Trustees will begin discussing how these reductions can be made beginning at their January 16, 2025, regular meeting (agenda will be posted here on January 10, 2025). 

Why do these reductions need to be made? 

• Declining enrollment (loss of 1,650 students = decrease of $20 million in funding) 
• Low funding from the State is not adequate and has not kept up with rising inflation  
• PUSD must remain competitive with salaries and benefits to recruit and retain educators 

Learn more by watching this short video. 

Why did PUSD purchase office buildings on West Las Positas Boulevard if we knew about these reductions? 

Funds used for facilities and construction cannot be used for employee salaries and benefits (over 80% of our budget). The District’s old offices on Bernal Avenue are extremely valuable real estate ( ~$40 - 50 million). PUSD took advantage of low commercial real estate costs during the pandemic to purchase the West Las Positas offices for $23.5 million. The existing West Las Positas property and vacant Bernal offices are being strategically leveraged to generate additional revenue to benefit PUSD students.  

Can the District offer an early retirement incentive to reduce the need for budget reductions? 

The District offered an Early Retirement Incentive through PARS in the Spring of 2022.  It takes five years for the District to pay the cost of the PARS incentive.  The idea of a retirement incentive is to encourage those more senior employees to retire earlier and then hire teachers earlier in their careers to save money.  The savings have to cover the cost of the incentive at a minimum.  Currently, the district offers up to 15 years of service for new teacher to PUSD, which has increased the average costs of teachers and reduced the savings.  During these 5 years, we are paying the cost of PARS. We needed to suspend the "Golden handshake" to break even.  At this time, there would be no savings for the district to offer an early retirement incentive.

Is PUSD the only District facing these challenges? 
No, unfortunately declining enrollment and budget shortfalls are facing neighboring Districts as well as those across the State.

This section will be updated over the next several weeks with additional questions we receive. 

• At least 4 Bay Area school districts meeting over massive shortfalls 
• San Ramon Valley Unified facing challenges with new district chief at helm
• Budget cuts proposed to address Fremont Unified schools $35.1M deficit
• 10 San Jose schools may close or consolidate due to $20M budget deficit

The following Thursdays are upcoming opportunities to learn and engage in board budget discussions: 

• January 16, 6:00 p.m.: Initial review of budget realignment options (agenda)
• January 23, 5:00 p.m.: Board workshop for in depth discussion of realignment options  
• January 30, 6:00 p.m.: Refining and narrowing of budget reduction options  
• February 13: 6:00 p.m.: Board action on budget reduction decision   

All families and community members are encouraged to engage in these meetings by watching on tv30live.org, Comcast TV30/AT&T U-Verse Channel 99, or in person at 5758 West Las Positas Boulevard in Pleasanton.