GUSD Maintains Strong Fiscal Position Despite Recent Volatility in Oil Revenues

The Goleta Union School District (GUSD) would like to assure members of our community that the fiscal health of the District is sound. Recent statements and letters in local media implying significant revenue losses and potential lay-offs due to the Plains All American Pipeline break may be based on misinterpretation of the complex reports documenting past changes and future projections related to oil, mineral, and gas revenues for the District.

Over the past twenty years, the annual portion of GUSD’s funding generated from oil, mineral and gas property tax revenue has been remarkably small and stable – averaging only 1.5% of total district property tax revenues over the past 20 years. But three years ago, oil, mineral, and gas tax revenues increased dramatically (nearly 400%) due in part to the short-term spike in crude oil prices. Since then, prices have declined just as dramatically and have now returned to more typical levels. The impact of declining prices for crude oil over the past two years is real, but it is also true that the District has enjoyed robust revenue growth based on inflated prices in the years preceding the recent declines.

As we plan for the next several years, we realize that the District has not yet experienced any direct impact from the ongoing closure of the Plains All American Pipeline. While we expect to see negative impact to revenue due to this closure, the overall percentage of revenue at risk remains a very small portion of our total funding. We fully expect that healthy growth in other property taxes, combined with our traditionally conservative budgeting practices and prudent reserve levels, will allow us to continue serving the children of our district in a manner that maintains our reputation for excellent schools, and as one of the county’s most desirable employers.

The accompanying graph shows a twenty-year history of oil, mineral, and gas revenue (shown in red) as a percentage of the total district revenue (shown in blue). Our fiscal health is strong, as is the quality of education, robust services, and small class sizes provided by the district to our students. The challenges of volatile revenues are real, but not a cause for alarm, and we have no expectation that budget planning for next year will include reduction to services or personnel.

William Banning, Superintendent and Susan Epstein, Board President