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San Diego Unified School District trustees last week adopted a largely balanced $1.33 billion operating budget for the 2018-19 school year, but they expect to grapple with nearly $41 million in budget cuts next year, plus at least $35 million more the year after.
Last month, chief business officer Greg Ottinger told trustees the goal is to identify $41 million in ongoing cuts next year. If they don’t, trustees will face a $76 million problem for the 2020-21 school year.
Where the money will come from is still unclear.
“The work is ongoing. The district has nothing to share at this point,” school district spokeswoman Maureen Magee said in response to questions about the anticipated cuts, and whether teachers or other employee jobs could be on the chopping block.
“The district will bring forward any potential solutions in December this year.”
San Diego Unified has seen large revenue increases in recent years, but district spending has outpaced revenue gains, district records show.
District officials initially planned to cut $34 million in spending for fiscal year 2019, which began July 1, but leaned on one-time money to trim only $8.5 million.
More than 150 layoff notices went out this spring, but in the end, fewer than 40 employees lost their jobs July 1, including 16 teachers, the district’s director of human resources told the school board last month.
San Diego Unified officials have touted the positive budget outlook received recently from the San Diego County Office of Education, a fiscal oversight agency that certifies to the state the district can pay its bills. But in an April letter, the same agency urged San Diego Unified officials to identify ongoing cuts next year to avoid running out of cash in 2020, and warned them about doling out raises.
“We caution that any increase in on-going expenditures will need to be met with reductions in other areas,” Brent Watson, SDCOE’s executive director of district financial services, wrote San Diego Unified Superintendent Cindy Marten.
The district forged ahead anyway. The school board recently approved 3 percent raises for all employees, to be paid out incrementally this fiscal year.
The raises will cost San Diego Unified nearly $23.5 million in 2019 (with about $16 million for 6,000 teachers), and $19 million to $20 million annually in subsequent years, according to district budget documents.
Ottinger, the district’s business chief, said the raises are among several items increasing district costs year to year.
Ottinger told the school board last month that costs to operate San Diego Unified are growing an average of $41 million a year thanks to additional employee raises, automatic step and column raises that are guaranteed by contracts for longevity and education, as well as growing costs for health and welfare benefits, utilities, special education and pensions. He didn’t provide specific amounts for each. A June 28 request by Voice of San Diego for the numbers has not yet been answered.
Previously, district officials said they anticipated spending almost $120 million on pension payments in 2018, $136.5 million in 2019 and $153.6 million in 2020. That’s an increase of roughly $17 million each year, before the latest employee raises are factored in – which will increase pension costs, since pensions are paid as a percentage of an employee’s salary.
Next year’s anticipated budget crunch won’t be the first to follow raises.
Board members gave employees raises totaling 4 percent shortly before last year’s $124 million budget crisis. San Diego Unified initially issued more than 1,500 layoff notices last spring to deal with that shortfall, but canceled hundreds of layoffs after offering an early retirement incentive.
District officials had pledged the retirement deal – which paid more than 1,100 eligible employees a year’s salary to retire early – would be cost-neutral after factoring in the costs for employees spared from layoffs to fill retiree vacancies.
The district has not produced documents that would shed light on whether the retirement incentives delivered on that promise, and now San Diego Unified officials say those figures will never be known.
“We continue to believe those costs will be more than offset by leaving positions vacant and the fact that senior employees have been replaced by lower-paid staff members,” Magee, the district spokeswoman, wrote in a June email to VOSD. “Last month, the district was notified by PARS (Public Agency Retirement Services) that the size and complexity of the SERP program make it impossible for them to conduct a reliable post analysis without a substantial investment of additional time and labor. Therefore, the district will not be providing a separate analysis of our retirement costs as part of this year’s final budget reading.”
Though the district can’t show whether the numbers penciled out, Magee said the district remains confident it was a good deal.
“The purpose of the program was to mitigate the impact of potential layoffs on staff. In that, the program was successful and met all expectations,” she wrote.