Question: Taking total salaries and benefits as a percent of total expense, is there a certain percentage which can be used as an indicator that a district could be in financial trouble?

If so, what is the percentage? It would help if your answer could be limited to elementary districts, and if the denominator could include transfers and other uses as well as "total expenses." If not, please state your parameters.

Response: Ed. Code Section 41372 requires that an elementary district expend at least 60% of their cost of education for the payment of salaries and benefits for classroom teachers. There is no requirement for a percentage for classified and certificated support salaries.

Many districts are in the mid 80% range. However, it is not as simple as to just compare the percentage that is paid for salaries and benefits. Is the district able to provide all services and materials with the remaining 15 to 20%? Are the facilities in need of repair, do textbooks all need to be updated or replaced, is equipment in need of replacement? Does the district have a comfortable reserve to deal with emergency needs? In addition, the expenditure of one-time money can artificially decrease the percentage for salary and benefits by increasing the denominator for a one or two year period.