Declining Enrollment and the Impact on Mt. Diablo’s Bottom Line 

Anyone who has had a conversation about Mt. Diablo and Mt. Diablo’s revenue compared to other districts has probably heard that other surrounding districts (notably San Ramon) are increasing in enrollment, while Mt. Diablo is decreasing in enrollment.  Setting aside the absolute revenue differences between the two districts, it would seem that the increase or decrease in enrollment would not impact the district’s ability to manage the district because less students equals less cost, so the lower enrollment and lower revenue would balance out.  Although this sounds like the right answer, the facts are very different.  In fact, declining enrollment has a huge impact on the district’s ability to compensate employees, fund programs and manage the district.

Let's say the District lost 25 students all in the same grade and in the same school. The District would lose about $140,000 in revenue that accompanies those children. The district could then cut that class' teacher. But since no teacher makes $140,000, the District would have to cut about another $80,000 because of the lost revenue.

Imagine the opposite effect this funding formula has on districts whose enrollments are growing. Using the same example, a district gaining 25 students receives $140,000 but only requires a third of that revenue to hire a teacher for those students. 

To further complicate this issue, imagine that the District loses 180 elementary school students in one year.  If these students are equally distributed across grades, then the District would lose 30 students per grade.  If they are equally distributed across the District’s 30 elementary schools, then there would be a loss of 1 student per grade, per school.  There would be absolutely no reduction in costs (teachers, administrators, energy, transportation, food, etc. costs would be exactly the same), but the District would lose almost $1 million in revenue.   

The 2007-08 Adopted Budget projects a loss of 627 students, for a total revenue reduction of $3,466,512.  This would reflect a loss of approximately 170 elementary students, 225 middle school students, and 232 high school students.  These losses will, generally speaking, be spread out across the district.  This would mean that that the District is losing about 1 student per grade, per school in elementary school, about 7.5 students per grade, per school in middle school, and about 10 students per grade, per school in high school.  None of these losses are significant enough to reduce the number of teachers, staff or other costs in any given school.  Although over time there may be some reduction in costs, this will not occur until more revenue is lost. 

Obviously, declining enrollment impacts the bottom line in a major way.  As a result of declining enrollment and the overall lower levels of revenue that Mt. Diablo faces, Mt. Diablo must pursue alterative revenue sources such as a parcel tax. 

© 2007 The Strange Law Firm, PC