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To Prevent Layoffs, San Diego Unified Turns to Once-Verboten Budget Move

San Diego Unified has said it's improper to use one-time money to deal with ongoing expenses. But that's exactly what the district's doing, to close a budget gap without laying off additional staff.

San Diego Unified school board president Richard Barrera / Photo by Jamie Scott Lytle

San Diego Unified trustees approved just $8.5 million in cuts Tuesday night, far short of the $34 million budget shortfall identified in January.

To fill the gap, officials are turning to one-time funds. It’s a reversal for district officials who had pledged not to spend one-time money on ongoing expenses.

But the next school year won’t be the first time the district has turned to one-time resources for ongoing expenses. In 2012 and 2013, the district decided to sell off land to close a hole in its budget and avoid layoffs.

The district’s 2018-19 budget information webpage explains why using one-time money for ongoing expenses in its $1.4 billion budget wouldn’t be prudent and create more problems next year.

“The Governor has given that money ($29 million) for one time expenses. We cannot use that money for ongoing expenses. If we did we would … increase the shortfall for the following year and create an even bigger budget concern. We could use it to pay off debt (or other) one time expenses,” the district website says.

In January, the district’s chief business officer, Greg Ottinger, told the school board that staff were staying the course, identifying the $34 million in cuts needed, while “taking into consideration our draft guiding fiscal principles to ensure that one-time funds are used for one-time expenses.”

Ottinger didn’t explain the change in approach during his budget presentation Tuesday. Trustee Richard Barrera did question the use of one-time funds, though.

The $12.5 million in one-time funds would be used to close the shortfall, some of which came from the state after the close of last fiscal year, Ottinger explained. Plus, another $13 million would be transferred from a restricted funding account, though he didn’t specify which one.

He called the transfer “routine” and said it was done “to retain all staff possible.”

Barrera had no other questions about the issue.

A district spokeswoman has not yet responded to an inquiry Wednesday asking which restricted fund the money will come from, or if any money is coming from the special education account, where officials have discussed reducing general fund contributions.

Before voting to approve $8.5 million in cuts, board president Kevin Beiser highlighted the reduction in cuts. He asked Ottinger directly if the deficit had in fact dropped.

“I remember back in the beginning of the budget cycle we were looking at a $59 million deficit, and then that came down to $47 million or $43 million, and through a few maneuvers financially, that number is down to $8.5 million. Is that correct?” he asked.

Ottinger replied: “Yes sir. That is the remaining action this evening.”

“OK. Wow,” said Beiser. “That is considerably different than the $50 million or $40 million that I thought we were looking at this year, especially when you contrast that with last year’s budget challenge.”

This year’s actions may postpone the pain of more cuts to next year, something Trustee John Lee Evans noted had already occurred this year.

“If we really had completely solved the problem last year, we would have cut $150 million,” Evans said at Tuesday’s meeting. “And that was too difficult and too painful at that point, but people need to understand if we had done that last year, the additional $25 million, we would start off with enough money this year, so that’s kind of how we got to this place.”

Asked about the use of one-time funds to close the gap, district spokeswoman Maureen Magee said in an email, “Our budget presentation this year stressed the importance of not creating new ongoing district liabilities based on spending one-time monies. The one-time funds presented as part of the budget presentations were planned and purposeful.”

Magee said there is a difference between using one-time funds already received from the state, and one-time funds the district has not yet received.

State money received in the past is being used “to retire some existing liabilities. Doing so did not create any new ongoing obligations for the district. In contrast, allocating $29 million in one-time monies we are expecting to receive from the state to create new obligations would be irresponsible,” Magee wrote.

Further details were not immediately available.

The board voted 4-1 Tuesday, with trustee Mike McQuary opposed, to eliminate 271 jobs, or 203 full-time equivalent jobs next school year, according to a tally of district records.

Thanks to many existing vacancies and the addition of some new positions, though, officials expect to send out only 70 layoff notices, including 19 to teachers, district officials said.

As reported by KPBS, the district plans to close four child development centers next year and open more preschool spots.

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