Take note of the comments by various people:
- Bill Kowba (Superintendent)
- Ron Little (SDUSD CFO)
- Lora Duzyk (County Board of Education - responsible for approving SDUSD budget)
- Bill Freeman (President of the teacher's union - SDEA).
Brian
SD school employees warned of cuts, layoffs
San Diego city schools chief Bill Kowba issued a sobering letter to some 14,000 employees Friday, warning about grim finances and layoff notices set to land in mailboxes before the holidays under the threat of midyear cuts.
Teachers are safe from midyear job cuts under state law that requires any potential layoffs to be signaled with March pink slips. Cafeteria workers, clerks, janitors and other workers may be terminated after a 45-day warning.
Superintendent Bill Kowba
The San Diego Unified School District’s budget woes have been well-publicized for months and are unlikely to come as a surprise to employees. Even so, Kowba sought to provide all personnel with a “heads up” on the situation in Friday’s memo.
The district is bracing for midyear cuts of $26 million to $30 million to it’s $1.057 billion operating budget, based on disappointing financial projections from the state, setting the stage for a potentially devastating budget scenario for the 2012-13 school year. In October, Kowba made the alarming announcement that midyear cuts could push the district into insolvency and potentially force a state takeover of local campuses.
Making it through this school year would require the district to drain $22 million from a reserve account, spend $4.5 million in real estate proceeds, and impose a hiring freeze to save $1.5 million, Kowba said. Another $1.7 million to plug the shortfall would come from eliminating about 55 nonteaching jobs.
Kowba acknowledges the poor timing in his memo: “Unfortunately, the timing of the midyear cuts requires that the Human Resources Department begin the notice preparation process before the winter break.”
Next year, many more employees could lose jobs, Kowba said in the memo. The superintendent will release preliminary cost-cutting measures on Tuesday as the school board lays the ground work for another grim budget.
“... it is extremely difficult to achieve budget adjustments of this magnitude without drastic staffing reductions,” Kowba said in the letter. “Consequently, this list of budget solutions will include recommendations for significant layoffs touching all stakeholder groups, programs, and organizations in the district.”
Like other districts up and down the state, San Diego Unified has been bracing for midyear budget cuts ever since California’s independent legislative analyst issued dire revenue projections in November. A second and pivotal fiscal forecast is set to be released on Dec. 15 by the state Department of Finance.
The state balanced its current budget under the assumption that revenues would grow by $4 billion. Automatic cuts to state programs will start if revenues fall more than $1 billon short of that mark.
The report released last month from the state’s legislative analyst predicted revenues would come in $3.7 billion short, enough to trigger $1.35 billion in cuts to schools.
Gov. Jerry Brown must rely on the most favorable of the two state fiscal reports to authorize the triggers. But districts must begin balancing next year’s budget under the assumption that midyear are a given.
San Diego Unified Chief Financial Office Ron Little said the worst-case scenario would drive up the budget shortfall next year to $97 million. Even without midyear cuts, he said the deficit could reach $72 million.
“The economy is recovering, but more slowly than anticipated,” Little told the board Tuesday. “The state budget presents longtime and ongoing challenges.”
San Diego Unified has cut millions from its budget in recent years to cope with the state’s fiscal crisis. However, many have criticized the board for a series of decisions that have complicated the situation.
For example, the board spent about $30 million to hire back hundreds of laid off teachers this summer — rather than sock the money away — based on optimistic state revenue projections. The board also negotiated a contract with teachers that calls for raises to kick in next year at a cost of $21 million, a decision it now wants to revisit with labor representatives.
“The (San Diego) board wanted to give people back their jobs and give students the best education programs. In this kind of environment, that is very risky,” said Lora Duzyk, assistant superintendent at the San Diego County Office of Education. “They took a gamble. We don’t know yet if it was the right decision, or if — and how — they may have to pay for it.”
Bill Freeman, who represents the district’s some 7,000 teachers as president of the San Diego Education Association, said the union will not apologize for the raises that teachers were promised or the jobs he said they deserve. He called Kowba’s letter overly alarming, but he said he understands the district must meet a series of state budget deadlines.
Freeman would not discuss whether the union would agree to concessions. But he hinted that a compromise could be considered — if it is deemed necessary.
“Once we get real information from the state about real numbers — not projections — we will do what we have to do,” said Freeman, “We are optimistic. We do not believe the state will let this district go under.”
The board will meet at 2 p.m. on Tuesday at district headquarters, 4100 Normal Street, to consider layoff notices and other initiatives to get through midyear cuts. Trustees will also review cost-cutting measures to balance next year’s budget. The board is set to vote to adopt a first interim budget on Dec. 13 in time to get the document to the San Diego County Office of Education by the Dec. 15 deadline.
Letter to Employees
From: Smolens, Michael Sent: Friday, December 02, 2011 5:01 PM To: Smolens, Michael Subject: FW: First Interim Report and Mid-Year Budget Cuts Attachments: image001.jpg; image002.jpg Dear District Employee: The purpose of this email is to provide you with a “heads up” about a public discussion that will take place over the next few weeks about the district’s first interim financial report and mid-year cuts. At the Board meeting on Dec. 6, 2011, I will present budget reduction recommendations to accommodate an estimated mid-year cut of approximately $26-30 million. At the same time, there will be an initial reading of draft first interim report budget solutions to balance a $91-97 million budget shortfall in 2012/13. On Dec. 13, 2011, there will be a second reading of the first interim report budget solutions. First Interim Financial Report As background, every year the district is required to submit a first interim financial report to the San Diego County Office of Education (SDCOE) by Dec. 15. This report highlights information on our financial condition for the first four months of the current fiscal year and a projection of our financial position for the next two years. With the submission of the report, the Board certifies the district’s ability to meet all financial commitments. Per SDCOE guidance, in this year’s first interim, we are required to assume that the State will impose a mid-year cut to K-12 funding and that we will not receive a Cost of Living Funding Adjustment (COLA) in 2012/13. As a result of these two assumptions and other fiscal planning factors, we have calculated a budget shortfall in 2012/13 of $91-97 million. To address the mid-year cut and next year’s shortfall, the first interim report will require the submission of a preliminary list of budget reductions for both scenarios. At this point, the list of reductions cannot include any assumption of negotiated budget savings from collective bargaining that may or may not materialize in the coming months. Mid-year Cut Reductions and Timing Issues The State budget approved in June included a legal provision that automatically imposes funding cuts on K-12 education should state revenues fall below targeted projections by more than $2 billion. Under this provision, the Governor must consider the more positive of two revenue assessments, one from the Legislative Analyst Office (LAO) and the other from the Department of Finance, in making a trigger decision. The LAO projection, released before Thanksgiving, estimated a state revenue shortfall of $3.7 billion, which, if confirmed by the Finance Department projections, would result in a mid-year General Fund reduction for San Diego Unified of approximately $26-30 million. The projection from the Finance Department will not be released until Dec. 15, after the district’s deadline to submit the first interim report to the County. Simply stated, we must act on a mid-year budget cut strategy before the Governor has the required financial reports that will determine if the mid-year cut trigger must be implemented. At the Dec. 6 Board meeting, I will present recommendations to the Board to mitigate the mid-year cut by obtaining monies in the following areas: * $22M – Projected year-end fund balances, * $4.5M – Real estate sale proceeds, * $1.7M – Mid-year classified staffing reduction savings, and * $1.5M – Hiring freeze savings. I will be initiating a strategic hiring freeze on all non-essential positions for the remainder of this fiscal year to help replenish our year-end balance and mitigate the scope of the 2012/13 deficit. In order to achieve the needed budget reductions in this fiscal year, the classified staffing reduction must be initiated this month to provide impacted employees with the required 45-day notice. Unfortunately, the timing of the mid-year cuts requires that the Human Resources Department begin the notice preparation process before the winter break. 2012/13 Budget Development Like the mid-year cut scenario, the 2012/13 $91-97 million reduction situation must be addressed before the Governor has acted. In this case, the Governor will not release his draft 2012/13 budget until early January 2012. The first interim report must also include a list of solutions to address the projected deficit without negotiated employee concessions. After five years of significant budget reductions totaling more than $450 million, it is extremely difficult to achieve budget adjustments of this magnitude without drastic staffing reductions. Consequently, this list of budget solutions will include recommendations for significant layoffs touching all stakeholder groups, programs, and organizations in the district. As the new year opens, we will be increasing our advocacy efforts in Sacramento and consulting with our employee groups about concessions that can mitigate the drastic staffing reductions that must be included in the first interim report submission to the County Office. I believe that we can weather this storm if we continue to work together collaboratively and creatively on a range of solutions. Advocacy with our elected representatives must be ongoing to urge them to find revenue solutions for the California budget crisis that can stave the tide of devastation hitting public education in California. Thank you for your continued dedication and commitment to our students as we continue to face this unprecedented economic crisis. [Kowba Signature] Bill Kowba Superintendent
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