The San Diego Unified school board Tuesday night approved more early retirement deals based on numbers that don’t exist yet.
The second largest K-12 public school district in California has been slashing its employee ranks to try to close a $124.4 million projected deficit next school year.
Last week, the board approved a payout for 528 retiring teachers worth 100 percent of their final salary, even though district documents showed the deal would not achieve the savings it was supposed to. District staff recommended the same payout for 600 of the district’s administrators, police and other non-teaching staff in both white-collar and blue-collar jobs Tuesday, and they were approved 5-0 Tuesday.
When approving the incentives earlier this year, the school board agenda said the deals would need to “generate net savings, or no net cost” to the district’s unrestricted general fund for a period of five years, and most required savings next school year.
But district charts posted online for Tuesday’s school board meeting show the deals for 600 non-teaching employees would cost more than $24.4 million. Throw in the $635,600 the teacher deal was shown to cost, and the total reaches $25 million by 2022.
District documents show no savings in any year for any of the non-teaching employee groups. The catch: Those numbers include the costs to replace every retiree – something a district spokeswoman and the superintendent said publicly the district does not plan to do.
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I watched the meeting in disbelief. The Superintendent, who with the Board has led the district into the fiscal crisis it's currently facing, said, essentially, that we shouldn't worry, trust her, it won't cost anything--but offered no proof. Sorry, but her track record for budgeting does not inspire confidence, so why would the Board believe her? Did they not hear the CFO just minutes earlier during the budget presentation say. "The costs of SERP won't be known until sometime in 2017-18"? Then again, their track record for budgeting isn't any better.
The district can say anything, but there is no disputing that a SERP costs money: annuity premiums and PARS fees are paid out for folks who are no longer working. This amounts to more than one year's salary for each retiree (paid out at 20% per year for 5 years). The question is only whether there are net savings over those 5 years by reducing costs through leaving their positions vacant or replacing the retirees with lower-cost folks. That takes a very complex analysis of which positions would be left open, which would be occupied, whether there is a direct correlation between those whose pink slips would be rescinded and the vacated positions, and what the cost of each employee would be over the next five years compared to the person who would be vacating the position--for every one of the hundreds of employees taking SERP and the hundreds of pink-slipped personnel who whose pink slips are rescinded.
Then there is the "long view" in that the district has already identified another $52.5 million shortfall in 2018-19. How many of those whose pink slips are rescinded now will survive into 2018-19 or the three years after that? So when the lowest person on the district's seniority totem pole (also generally the least expensive) is let go again in a year, you might have someone more expensive taking the place of the person who vacated the position to SERP, and your savings decrease. Or if you actually hire back someone for a position you were going to leave vacant but changed your mind anytime in the next 5 years, then your savings decrease.
Once all the folks settle into their positions and the district hires back for all the vacancies it has to fill, that's when we'll learn whether the collective SERPs are revenue neutral, as claimed.
Meanwhile, did Winet really say that the district is considering "pay hikes to hire and retain the best workers"?! They just spent $28 million annually on across-the-board pay raises--and then cut $28 million from the 2017-18 budget to pay for it. At 93+% of the district's costs linked to employee compensation, can they not see that any pay hike will only result in cuts to other employees? Unbelievable...