As La Cañada Unified enters a new fiscal year, officials find themselves caught between conflicting state legislation that mandates districts to pay more into the teacher retirement system but limits the amount of money they are able to save from year to year.

News of the requirements came in the wake of Gov. Jerry Brown's May revision of the state budget, not too long before LCUSD reviewed its own $39-million budget in advance of a July 1 deadline. The Governing Board approved that spending plan in a June 24 meeting.

Last fiscal year, the district paid 8.25% of the $18.45 million spent on certificated staff — or about $1.52 million — into the State Teachers Retirement System (STRS), matching educators' own contributions, according to the Business Services department.

In an attempt to save state dollars, Brown has announced school districts' payment obligations to STRS will increase incrementally, from 8.88% this fiscal year to 19.1% by 2020. Assuming the same expenditures, LCUSD would end up paying about $3.52 million the final year of the rollout.

"That's one of the elephants in the room," said Stephen Hodgson, a business consultant for the district. "Everybody agrees we need to adequately fund the teacher retirement plan. The problem is, when you get this information in May, it's really difficult to plan the budget."

La Cañada's new budget includes nearly $26.5 million provided through the state's Local Control Funding Formula, which aims to give local entities more of a say in how dollars are spent. An overall deficit of $541,126 was closed using money in the district's reserve fund, Hodgson said.

But another bill passed by Brown in the 11th hour of budget talks limits the amount districts may keep in their reserves to 6% of their total budget, just twice the state-mandated minimum of 3%. Anything beyond the new threshold will have to be defended by districts through the County Office of Education.

The reasoning behind that decision, roundly supported by the California Teachers Assn., is that a new statewide rainy day fund being planned would preclude the need for similar local withholdings.

This is problematic for LCUSD, which operates under a self-imposed 3.5% reserve minimum but currently keeps much more — about 19% of its budget — in some kind of reserve status, according to Board Vice President Andrew Blumenfeld.

Blumenfeld said reserve money was critical for helping LCUSD through recent lean years and would likely play a role in helping the district pay its increasing share of employee retirement.

"[The state has] given us the planning time but taken away our planning tools by not allowing us to keep a reserve," he said. "It really flies in the face of local control. It's just a show to say there's this Local Control Funding Formula, there's just no local control there at all."

Board President Ellen Multari said the parcel tax created breathing room in this year's budget, bringing in an annual estimated $2.6 million and allowing LCUSD to keep class sizes down while refilling support staff positions cut in recent years. Still, she called Brown's recent decisions "a game changer" in local education funding.

"There really isn't a strategy the state has provided for how we're going to provide all these services and meet the STRS funding requirement," she said.

Despite the instability coming out of Sacramento, Multari said officials aren't in a state of panic yet and will wait to see how today's decisions shake out in the near future. In the meantime, she added, the district is grateful for the continued community support.

"We're very fortunate to have the strength of community support," Multari said. "You show your values system by where you put your money and your time, and we're a community that values education."

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Follow Sara Cardine on Twitter: @SaraCardine.

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