Budgeting for uncertainty

In today’s fiscal environment, California’s education leaders are navigating one of the most unpredictable budgetary climates in recent history. Declining enrollment, coupled with a funding model driven by Average Daily Attendance (ADA), has placed districts, particularly small and rural ones, under growing financial pressure. Rising costs, inflation, and state budget volatility add further complexity. The challenge is clear: How do we sustain the programs our students depend on while making responsible financial decisions that protect the future of our schools?

This is not a theoretical dilemma. Across the state, superintendents, chief business officials, and school boards are being forced to grapple with uncertainty, sharpen their fiscal skills, and embrace new approaches to leadership. In my 27 years as a small school district superintendent, I have seen firsthand that fiscal management is not just about numbers; it is about values, priorities, and the promise we make to every student who walks through our doors.

The challenge of ADA and volatility California’s public school funding system ties resources directly to student attendance. On paper, the formula seems fair: Funding follows the student. In reality, this approach leaves districts vulnerable to demographic shifts and attendance trends far outside their control.

This volatility is compounded by chronic absenteeism. Even when students remain enrolled, absences reduce ADA and, consequently, district revenue. Post-pandemic attendance patterns remain stubbornly inconsistent in many communities. The California Department of Education reported chronic absenteeism rates above 25 percent statewide in 2022–23, nearly double pre-pandemic levels (CDE, 2024).

The fiscal message is clear: Budgeting in California is no longer about steady-state projections but about anticipating volatility.

Strategic budgeting: Planning for what we cannot predict The instinctive response to fiscal uncertainty is often across-the-board cuts. While this approach may temporarily balance the books, it rarely aligns with educational goals and often undermines long-term sustainability. Strategic budgeting provides a more effective path forward.

1. Multi-year projections — Districts must build budgets that extend beyond a single year, using conservative assumptions about revenue and enrollment. A three- to five-year projection allows leaders to identify structural deficits early and adjust proactively rather than reactively.

2. Priority-based decision making — Rather than treating all programs equally, leaders should identify “non-negotiables,” the initiatives and services that are core to student success. For example, preserving literacy intervention in early grades may take precedence over less essential enrichment programs.

3. Reserves and stabilization — Maintaining healthy reserves is no longer optional. The Government Finance Officers Association recommends a minimum of two months of operating expenditures in reserve (GFOA, 2021). While this is challenging for small districts, building even modest reserves provides a cushion during economic downturns or state revenue shortfalls.

4. Transparent engagement — Fiscal decisions are more sustainable when staff, parents, and community members are included in the process. Budget advisory committees, town halls, and clear communication build trust and reduce conflict when difficult choices must be made.

In my own district, engaging stakeholders has shifted the conversation from “what is being cut” to “what we must protect.” This distinction changes not only the fiscal plan but also the culture of the district.

Fiscal sustainability cannot rely on ADA alone. Leaders must actively pursue and manage alternative funding streams.

1. State and federal grants Competitive grants can bring millions of dollars into districts, but they require dedicated staff capacity for application and compliance. Districts must weigh the benefits against administrative burden and ensure grant-funded programs are designed with sustainability in mind.

Example: Federal ESSER (Elementary and Secondary School Emergency Relief) funds allowed districts to expand tutoring, mental health services, and technology infrastructure. However, with ESSER sunset in September 2024, districts that used these dollars for ongoing positions now face “fiscal cliffs.” The lesson: align one-time dollars with one-time expenditures whenever possible.

2. Bonds and local measures General obligation bonds remain one of the most effective tools for addressing facility needs. Bond proceeds cannot fund salaries but can modernize classrooms, expand capacity, and improve safety. For districts facing enrollment decline, a bond may also provide the opportunity to right-size facilities, reducing long-term operational costs.

Parcel taxes, though politically challenging, provide ongoing revenue for specific priorities such as arts programs or class size reduction. The key is building broad community support through transparent messaging and visible impact.

3. Partnerships Schools do not have to go it alone. Partnerships with local government, businesses, and nonprofits can bring in resources and expertise. For example:

4. Foundation and philanthropic support District foundations, when nurtured, can grow into powerful funding mechanisms. A strong foundation board with diverse representation can raise funds for scholarships, technology, or innovative programming that may otherwise fall victim to budget cuts.

Responsible reductions: Managing the human side of budget cuts Even with strategic planning, reductions are sometimes unavoidable. The way leaders approach these reductions matters deeply.

Transparency: Staff deserve to know the “why” behind decisions. Sharing enrollment data, budget assumptions, and financial projections demystifies the process.

Negotiated agreements: Respecting collective bargaining agreements and working collaboratively with unions ensures fairness and reduces legal challenges.

Redeployment: Whenever possible, reassign staff to areas of need rather than issuing layoff notices. For example, shifting a classroom teacher to an interventionist role preserves employment while addressing student needs.

Compassion: Behind every budget reduction is a person. Recognizing the human impact, offering support, and communicating with dignity reinforces organizational values even in difficult times.

Districts that manage reductions with care not only preserve morale but also maintain credibility with their community.

Advocacy as a leadership responsibility Fiscal leadership extends beyond district boundaries. Superintendents and administrators must be vocal advocates for funding reforms and resource protections.

1. Reforming ADA funding: Many education leaders argue that California’s ADA model should be replaced with enrollment-based funding. Enrollment, unlike attendance, provides a more stable revenue stream and acknowledges that schools serve all students, even when they are absent.

2. Weighted student formulas: Expanding the Local Control Funding Formula weights for small and rural districts, or for districts with high concentrations of poverty, would better align funding with needs.

3. Cost-of-living adjustments (COLAs): Advocating for full and fair COLAs is essential. Too often, COLAs are applied unevenly, or fail to keep pace with actual cost increases in health care, utilities, and special education.

4. Collective voice: Organizations like ACSA, California School Boards Association, and Small School Districts Association amplify the voice of education leaders. When superintendents testify at legislative hearings, write op-eds, or meet directly with lawmakers, they transform fiscal challenges from district-level struggles into statewide policy conversations.

A call for adaptive leadership The days of predictable revenue and steady enrollment are behind us. What today’s fiscal landscape demands is adaptive leadership — a willingness to innovate, communicate transparently, and make difficult choices with courage and compassion.

Navigating fiscal challenges is not just about balancing budgets. It is about sustaining the programs that ignite curiosity, support mental health, and prepare students for the future. It is about advocating for fair and equitable funding. And it is about leading with integrity during uncertain times.

As superintendents and education leaders, we are stewards not only of finances but of trust. By budgeting with foresight, exploring creative funding, managing reductions responsibly, and raising our voices in advocacy, we can fulfill the promise of public education — even in an era of fiscal uncertainty.

Helio Brasil, Ed.D., is superintendent of Keyes Union School District.