Last week, top officials said the San Diego Unified School District is on the brink of financial collapse and may require a state takeover to remain afloat.

So what does that mean?

A takeover would push the state to loan the district millions of dollars to pay for its bills. Declaring insolvency would spur radical changes in the district’s operations.


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In exchange for the loan, the law requires local officials to hand over control of the district to the state. Ironically, it would either fire or relegate the top two officials that are sounding the district alarm, Superintendent Bill Kowba and board President Richard Barrera.

Here’s how the beginning steps would unfold:

• The superintendent would be immediately fired and replaced by a state appointed administrator.

• The school board would lose all powers and become an advisory panel.

• The state administrator would essentially become the district’s new leader and have the power to unilaterally make decisions, such as which property to sell, what academic programs to cut, which schools to shutter and who to lay off. After labor contracts expire, the administrator could impose district-wide cuts to pay and benefits.

No longer beholden to an electorate, the administrator could make politically unpopular decisions in the community that can be difficult for a board to make under pressure from parents and teachers. The school board, employees and residents could still offer their input on major decisions, but the administrator could ignore them.

After a few years, if the district appears to be on the right track, the state could return some control of the district to local officials. The district could hire a superintendent and the school board could get some its old powers back.

But until the loan is repaid with interest, the state would remain a fixture in the district’s affairs. Though the superintendent and school board could make financial decisions, a state administrator or trustee could veto them.

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The length of a state takeover depends on the size of the loan and the district’s repayment schedule. The state issued a $100 million loan to the Oakland Unified School District in 2003, for example, and it’s expected to be repaid in 15 years from now. (Randy Ward, the San Diego County Office of Education’s superintendent, previously served as the state-appointed overseer for Oakland.)

The road to insolvency also isn’t a quick one. If San Diego Unified or County Office of Education officials deem the district insolvent, its financial books would likely undergo months of review before the state writes a check. A state legislator would have to propose a loan and have it be signed off by the Legislature and the governor.

So what’s next?

The dire warnings issued last week by district leaders marked a significant escalation in its battle with the state.

District officials are closely watching the state to figure out whether it will cut an estimated $30 million from the district’s budget this year. The cuts are tied to economic indicators. If the economy improves and the state collects more taxes, it won’t make the cuts. If the indicators fall below state goals, as they have been recently, the cuts will happen.

The district finds itself in this situation as a result of the state’s financial condition and a series of self-inflicted wounds that compounded the state’s woes, our investigation last month found.

Check out our reader’s guide for a quick three-step wrap up of the district’s money mess.

Keegan Kyle is a news reporter for voiceofsandiego.org. He writes about public safety and handles the Fact Check Blog. What should he write about next?

Please contact him directly at keegan.kyle@voiceofsandiego.org or 619.550.5668. You can also find him on Twitter (@keegankyle) and Facebook.

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    This article relates to: Education, Investigations, News

    Written by Keegan Kyle

    24 comments
    Don Wood
    Don Wood

    What is most likely to happen is the school board and its executives closing a lot of schools and selling off the sites to local developer buddies in a big fire sale. The local developers will make a killing and in return fund the campaigns of current school board members when they run for higher office. Follow the money.

    Don Wood
    Don Wood subscriber

    What is most likely to happen is the school board and its executives closing a lot of schools and selling off the sites to local developer buddies in a big fire sale. The local developers will make a killing and in return fund the campaigns of current school board members when they run for higher office. Follow the money.

    Donald Gillies
    Donald Gillies subscribermember

    The 10-10 solution would probably be a good start. 10% layoffs and 10% paycut, then close 10% of the schools at the end of the year.

    systemBuilder
    systemBuilder

    The 10-10 solution would probably be a good start. 10% layoffs and 10% paycut, then close 10% of the schools at the end of the year.

    mlaiuppa
    mlaiuppa subscriber

    The basic problem is funding. The voters have tried but failed to provide stable funding. They've made their wishes known. But legislators have always found a way to shortchange schools. What we need is a different way to fund education, one that is not a mystery until the last minute, does not fluctuate wildly and one that pays up front, not with IOUs that may never materialize. The current system may have worked for those 19th century one roomed school houses but we need something a little more 21st century. You get what you pay for and the State isn't paying.

    mlaiuppa
    mlaiuppa

    The basic problem is funding. The voters have tried but failed to provide stable funding. They've made their wishes known. But legislators have always found a way to shortchange schools. What we need is a different way to fund education, one that is not a mystery until the last minute, does not fluctuate wildly and one that pays up front, not with IOUs that may never materialize. The current system may have worked for those 19th century one roomed school houses but we need something a little more 21st century. You get what you pay for and the State isn't paying.

    ScrippsDad
    ScrippsDad subscriber

    Hopefully out of this insanity, eventually will come reason and kids in the future will win even though those in the present will undoubtedly lose.

    ScrippsDad
    ScrippsDad

    Hopefully out of this insanity, eventually will come reason and kids in the future will win even though those in the present will undoubtedly lose.

    Mark Giffin
    Mark Giffin subscribermember

    Looks like cannibalization of the district to satisfy labor agreements rather than Demolition of the existing structure

    mgland
    mgland

    Looks like cannibalization of the district to satisfy labor agreements rather than Demolition of the existing structure

    John de Beck
    John de Beck subscriber

    Long ago, now, I proposed a district split up, which I tentatively named "The San Diego Coastal District.' If some folks had listened, we would be near operational level by now. So; it can still be done, but in the meantime things have gotten as bad as I anticipated. Hopefully some of those "cluster and charter folks" who met and met ...with NO outcome will wake up and see that their delay is going to cost them CONTROL of their children's future. Those communities most severely affected by the current situation (PL, MB and LJ) thought I was nuts. Visionary...uh huh! We shall see.

    deBeck
    deBeck

    Long ago, now, I proposed a district split up, which I tentatively named "The San Diego Coastal District.' If some folks had listened, we would be near operational level by now. So; it can still be done, but in the meantime things have gotten as bad as I anticipated. Hopefully some of those "cluster and charter folks" who met and met ...with NO outcome will wake up and see that their delay is going to cost them CONTROL of their children's future. Those communities most severely affected by the current situation (PL, MB and LJ) thought I was nuts. Visionary...uh huh! We shall see.

    Mark Giffin
    Mark Giffin subscribermember

    But of course this whole kabuki dance "IS FOR THE CHILDREN"

    mgland
    mgland

    But of course this whole kabuki dance "IS FOR THE CHILDREN"

    David Hull
    David Hull subscriber

    I agree that the council seems unable to provide quality education in even the best schools. I hope the state administrator could do better, but I doubt we'd see significant change under state leadership. Sorry for the skepticism, but when school employees aren't held accountable for their performance, and parents fail to teach their children the importance of learning and education, the school system will turn out under-educated children. Only the very luckiest kids get parents who teach them discipline, and teachers who make them love to learn.

    davidhullster
    davidhullster

    I agree that the council seems unable to provide quality education in even the best schools. I hope the state administrator could do better, but I doubt we'd see significant change under state leadership. Sorry for the skepticism, but when school employees aren't held accountable for their performance, and parents fail to teach their children the importance of learning and education, the school system will turn out under-educated children. Only the very luckiest kids get parents who teach them discipline, and teachers who make them love to learn.

    Mike Hall
    Mike Hall subscriber

    Can we ask t he State to take over now or do we have to wait for the District to further ruin our schools? Clearly the District won't take the necessary measures (selling of property now leased to religious schools, ending extracurricular sports and marching band programs, ending total District funding for JROTC, total funding of before/after school daycare, etc.) to asave our schools and the local voters allow all the mismanagement to continue. Our child are entitled to educational management devoted to them and not special interests and "beloved" programs (not sure why the quotes around beloved but this site always uses them around this word). I hope the State takeover is sooner than later. The district is notserious about taking real action now.

    NoGods
    NoGods

    Can we ask t he State to take over now or do we have to wait for the District to further ruin our schools? Clearly the District won't take the necessary measures (selling of property now leased to religious schools, ending extracurricular sports and marching band programs, ending total District funding for JROTC, total funding of before/after school daycare, etc.) to asave our schools and the local voters allow all the mismanagement to continue. Our child are entitled to educational management devoted to them and not special interests and "beloved" programs (not sure why the quotes around beloved but this site always uses them around this word). I hope the State takeover is sooner than later. The district is notserious about taking real action now.

    Emilio
    Emilio

    You stay classy, Sacramento!