Money woes plague state schools again
Skyrocketing costs forcing districts to cut workforces, increase class sizes
The recession is long over and California continues to boost spending on schools, but education officials are scrambling to deal with skyrocketing costs that are forcing program cuts and staff reductions as well as increases to class sizes and other austerity measures.
School leaders in the Bay Area and across the state are once again fretting over finances after a run of good years under a healthy state budget. Over the next few years, they must absorb much higher pension payments and likely cuts in the federal budget, while relying on state funding that, though still rising, isn’t keeping pace with increasing costs.
In few places is the economic shift more striking than Oakland, where the school district is pressed to come up with $10 million by the end of June to cover this year’s bills.
While most districts are focused on what they will do to save money next year and the year after, Oakland is implementing broad cost-cutting strategies and considering severe options such as requiring unpaid furlough days for central office staffers within the next three months.
The district announced a hiring and spending freeze in January, but acknowledges that it imple-
mented the move poorly — allowing individual schools, for example, to encumber funds, setting them aside to pay incoming bills.
“We haven’t saved any. Not a dollar,” said interim Superintendent Devin Dillon, who took over in February after former Superintendent Antwan Wilson left to oversee schools in Washington, D.C. “It’s still a lot of money with only a few months left.”
For many districts, cutting costs this year and next will be difficult, state and local education officials said, given that the school system hasn’t fully recovered from the recession.
“The reason people are so afraid and people are jumping at their shadows is because it’s like we’re heading into this perfect storm,” said Susan Henry, president of the California School Boards Association. “We’ve already made the cuts we could cut.”
Critically, some expenditures can’t be trimmed. Districts must pay statemandated pension costs, which are expected to double over the next several years, diverting billions of dollars from classrooms into teacher and other staff retirement accounts.
That means that even though the governor’s proposed education budget of $73.5 billion for the 2017-18 school year includes $2 billion more for schools, more than half of that will be needed for increases in what is owed to teacher and staff pension funds, according the state Legislative Analyst’s Office.
In addition, President Trump has proposed a 13 percent cut to the federal education budget, including the elimination of funding for after-school programs, which covers about 20 percent of costs in many districts.
Few Bay Area schools issued teachers pink slips in anticipation of layoffs to cover budget shortfalls. But several Southern California districts — including San Diego, where officials are projecting a nearly 10 percent deficit in the district’s $1.3 billion budget — did send notices, despite an ongoing teacher shortage.
San Rafael parent Georgie Craig, who said she’s heard rumors about cuts in Marin County and possible increases in class sizes, was shocked that financial problems were again looming over schools.
“There’s a level of frustration and just a little bit of burnout,” said Craig, whose child attends Terra Linda High School. “We volunteer and raise money and give money to the school and try to be extremely supportive in all things, and you hear, ‘Oh, it’s not working.’ ”
In San Francisco, district officials said they are anticipating a shortfall next year and are making cuts to cover costs, trimming the number of assistant principals and other school support staffers funded by the central office budget, which includes some social workers and literacy coaches.
Even with those measures, officials expect to overspend revenues by $6.1 million next year. While they can use cash left over from this year to cover the shortfall, this budget scenario doesn’t include anticipated raises for teachers and other staff members. To pay for the salary increases, the district will have to make additional cuts, said spokeswoman Gentle Blythe.
“The revenues are slowing, and mandatory expenditures are growing,” she said. “We do see in the next few years that our revenues will not be growing anymore, and if we continue to spend at the projected rate based on compensation increases, it’s not sustainable.”
In West Contra Costa Unified, which serves Richmond, El Cerrito, San Pablo and other communities, officials also expect to spend more than they’ll take in during each of the next two years, and plan to use leftover funds from this year to balance their budgets.
“Barring any economic turmoil over the next year or two, we’re OK, but there’s not much room for error,” said Marcus Walton, the district’s communications director. “We’re not alone, and we’re dealing with it the best way we can.”
Oakland is facing a more serious and immediate situation as school leaders try to figure out how to pay the bills this year, a circumstance created by both unforeseen challenges and a series of missteps.
The $10 million hole traces, in part, to the district underestimating its enrollment, resulting in less money from the state.
But Wilson, the former superintendent, didn’t adjust teacher staffing levels accordingly. Instead of transferring about 50 extra teachers to schools where there were openings, he left them at under-enrolled schools to minimize disruption to students. That cost an estimated $3 million, based on average teacher compensation.
There were also unexpected increases in special-education and early-education costs. And district officials neglected to account for the city’s mandatory increases in the minimum wage, which pushed up payroll for cafeteria and other workers by about $1 million, Dillon said.
Hoping to improve the situation, officials put the spending and hiring freeze in place in January, but didn’t enforce it immediately, giving schools the chance to essentially place cash in reserve so the district couldn’t freeze it, district officials said.
“The execution (of the freeze) was poor, and it caused people to scramble and try to secure what they felt they needed to close out the year,” said school board President James Harris. “It caused a bit of a panic, and people responded accordingly.”
Last week, Dillon, who is applying for the permanent superintendent job, issued a new mandate expanding the freeze to all accounts, including school funds set aside to pay for incoming invoices. Now district and school staff must make a special appeal to spend any money.
In addition, Dillon has limited spending on travel and food and is even keeping tabs on copies made at the district office printer. She’s not filling certain open positions, including a chief of staff, chief financial officer, controller and fiscal analyst. She’s sharing an administrative assistant after the previous one went with Wilson to Washington, D.C.
“As a district, it is our responsibility to do a much better job of managing our finances,” she said. “We’re losing focus on what matters most.”
“The reason people are so afraid and people are jumping at their shadows is because it’s like we’re heading into this perfect storm. We’ve already made the cuts we could cut.” Susan Henry, California School Boards Association president