School district financial risk analysis

Santa Cruz Elementary School District—Among the highest-risk districts

General information
County Santa Cruz County
Operational peer group (FY 2023) 12
Legislative district(s) 21
School information FY 2022 FY 2023
Students attending 174 175
Number of schools 1 1

Summary of risks identified

Santa Cruz Elementary School District is among the highest-risk districts due to its change in weighted student count (WSC), operating and capital budget limit reserves, General Fund operating margin ratio, General Fund change in fund balance, and frozen tax rate, as shown on the measure cards below.

The District's WSC has declined 11.2 percent since fiscal year (FY) 2020, with a 3.8 percent decline in FY 2024, to date, impacting its student-count-generated revenues and budget limits. As the District did not reduce spending, General Fund expenditures exceeded available revenues (i.e., negative operating margin) in FY 2023, reducing the District’s General Fund balance 56.9 percent during FY 2023. The District spent 70 percent of both its operating and capital budget limit reserves in FY 2023 and has decreased its capital budget limit reserve 81.6 percent in total since FY 2019, reducing its ability to react to mid-year revenue decreases from WSC decreases. The District’s primary property tax rate has been frozen since FY 2018, limiting the District’s ability to increase its property tax revenue. The District reported spending $1.2 million from COVID-19 federal relief monies in FYs 2020 through 2023 with approximately $84,000 remaining to spend as of June 30, 2023. As these are one-time monies, to avoid future financial risk and to ensure it will be able to spend within its available cash resources and budget capacity when these relief monies run out or are no longer available to spend after September 30, 2024, the District should plan how it will adjust spending in areas where it used relief monies.

District response

Our District has had 100% teacher retention during the past three years and we believe taking care of the employees and their families financially is one of the factors to teacher retention. We have continued year after year even during and post COVID and during inflation of product costs to give a step and/or a yearly increase for high-cost of living raise. Medical premiums continue to go up every year, an additional cost for the district. However, student count has decreased, and the district has sustained the increases of living cost for the employees as we consider the value of each employee an asset to our district. We have advertised/recruited for new students at the preschools, sending out mail postcards, radio advertisement, put up bulletin boards, used our social media, and used word of mouth with no positive results. The trends of student enrollment have sustained the same within the past few years and even decreased some.

ESSER funds we used to help purchase COVID supplies to keep the district in compliance with safety and health guidelines in order to operate the school and make staff and students feel safe and to help offset expenses. We used ESSER funds for additional salaries for maintenance and after school programs to help close achievement gaps. We also used the ESSER funds to purchase a much-needed Locker room that needed to be replaced for our middle school students.

The district will continue to maintain a close watch on unnecessary spending and do what is necessary to keep the district in line with its budget. The district is working diligently to identify expenditures to reduce and ensure budget limits are not overspent for FY 23-24 and moving forward. District has taken steps as far as reduction in force and reduced hours.

Analysis and data

Additional information about each measure, including how each measure was calculated and how districts were identified as high risk for each measure, is available on the Measures page.

High risk
Change in weighted
student count

-3.8% -11.2%
(1-year change) (4-year change)

Fiscal year Group A WSC
2024 231
2023 240
2022 239
2021 243
2020 260

This measure shows a district's change in group A weighted student count (WSC) over a 1- and 4-year period. A single-year substantial decrease in WSC, or smaller but repeated decreases over more years, may expose a district to higher financial risk due to the loss of student-count-generated revenue.
High risk
Budget limit reserve—
Operating budget

-70.0% 100.0%
(1-year change) (4-year change)

Fiscal year Balance
2023 $23,414
2022 $78,160
2021 $83,722
2020 $80,417
2019 $11,529

This measure shows how a district's Maintenance and Operation (M&O) Fund budget limit reserve has changed over a 1- and 4-year period. Declining, negative, or unfunded M&O Fund budget limit reserves indicate higher financial risk.
High risk
Budget limit reserve—
Capital budget

-69.7% -81.6%
(1-year change) (4-year change)

Fiscal year Balance
2023 $12,954
2022 $42,801
2021 $59,450
2020 $40,850
2019 $70,435

This measure shows how a district's Unrestricted Capital Outlay (UCO) Fund budget limit reserve has changed over a 1- and 4-year period. Declining, negative, or unfunded UCO Fund budget limit reserves indicate higher financial risk.
Financial position—
General Fund operating reserve ratio

4.1% 11.1%
FY 2023 unaudited FY 2022 audited

Fiscal year Balance Expenditures
2023 unaudited $100,935 $2,488,850
2022 audited $285,109 $2,558,408

This measure shows the percent of General Fund monies held in reserve for future spending (i.e., fund balance), compared to total spending from the prior year. A negative operating reserve ratio indicates a negative fund balance, which means the district must use monies received in the following year to cover prior-year spending.
High risk
Financial position—
General Fund operating margin ratio

-4.1% 0.1%
FY 2023 unaudited FY 2022 audited

Fiscal year Revenue Expenditures
2023 unaudited $2,389,964 $2,488,850
2022 audited $2,561,642 $2,558,408

This measure shows the percent of district General Fund revenues not spent in the year received for each of the most recent 2 years. A district with below-average operating reserves exposes itself to higher financial risk each time its spending exceeds its revenues (i.e., negative operating margin).
High risk
Financial position—
General Fund change in fund balance

-56.9% 3.9%
FY 2022 to 2023 unaudited FY 2021 to 2022 audited

Fiscal year Change amount
2022 to 2023 unaudited ($133,145)
2021 to 2022 audited $10,804

This measure shows the 1-year percentage change in a district's General Fund balance for each of the most recent 2 years. Declining fund balances or a negative fund balance in the most recent year indicate higher financial risk as less resources remain available for current and future needs.
Capital monies
redirected to operations

0.0% 0.0%
(FY 2024) (5-year average)

Fiscal year Capital monies Amount redirected
2024 $114,119 $0
2023 $103,837 $0
2022 $94,600 $0
2021 $101,020 $0
2020 $100,247 $0

This measure shows the percentage of intended capital funding the district has redirected to operational spending rather than capital spending in the current year and on average over the last 5 years. Districts that direct a substantial portion of their intended capital funding to operational spending may be at higher financial risk.
Small school budget
limit adjustment

N/A - District is too large to be eligible for adjustment.

Fiscal year Adjustment
2024 $0
2023 $0
2022 $0
2021 $0
2020 $0

This measure shows a district's additional budget capacity from a small school adjustment in the current year and each of the prior 4 years. The loss of the ability to include a small school budget limit adjustment or an unfunded small school budget limit adjustment due to a frozen tax rate may indicate higher financial risk.
High risk
Frozen
tax rate

District's primary property tax rate has been frozen since FY 2018.

This measure shows whether a district has a frozen primary property tax rate, limiting the District's ability to increase its property tax revenue to fund its allowable budget limits.
Receivership

District is not in receivership.

This measure identifies whether a district is operating under a State Board of Education-appointed receiver due to gross mismanagement or insolvency.