Superintendent Deborah Bettencourt took the unusual step in April of sending an email to Folsom Cordova Unified families and staff warning that the school district faces two years of red ink.
Schools throughout California are entering an “uncertain economic period,” Bettencourt said in a rare budget email blast. She said her district foresees a $3.8 million deficit after July 1.
And she said the district can’t give raises to teachers unless Gov. Jerry Brown finds more money for schools in his May budget revision.
“I feel like we’re coming back into another mini-recession, at least for school districts,” Bettencourt said in an interview.
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For the past several years, teachers and staff across California saw pay increases, and schools began a flurry of hiring to reduce class sizes and restore programs they had slashed during the recession. But school districts say those heady years of budget growth are ending.
Besides Folsom Cordova, districts in Carmichael, Davis and Sacramento are projecting budget deficits.
They identify two chief reasons: Districts must increase contributions starting July 1 to the California State Teachers Retirement System and the California Public Employment Retirement System. Increases in CalSTRS payments are part of 2014 legislation that outlined a long-term funding plan. CalPERS recently took a more conservative view of future investment returns. And Gov. Jerry Brown is proposing a smaller increase than expected in a cautious January budget plan.
But some labor unions think administrators are crying wolf as a bargaining tactic.
“Sacramento City Unified is like the Chicken Little of school districts,” said Nikki Milevsky, president of the Sacramento City Teachers Association. “In the last three years the district has underestimated its budget by $71 million.”
She said the district predicted deficits in each year. None materialized.
In Bettencourt’s district, the Folsom Cordova Education Association, which represents about 1,000 employees, mainly teachers, initially asked for a 4.5 percent increase. It then sought a 3.5 percent increase.
“The district has come back zero every time,” said Angelica Miklos, the Folsom Cordova teachers union president.
Folsom Cordova district spokesman Daniel Thigpen said negotiators are willing to revisit teacher pay raises if the governor increases education funding in his May budget plan. Absent that, he said, “the district does not believe it has adequate funds to provide a permanent salary increase.”
Susan Henry, president of the California School Boards Association, said the situation is not far different in Southern California, where she serves as an elected trustee in Orange County. “What we’ve been talking about is a perfect storm” for districts as pension contributions ratchet higher through 2024, she said.
For Folsom Cordova, contributions to CalSTRS and CalPERS jumped $3.5 million this year. They will climb another $2.7 million after July 1.
In Sacramento City Unified, district contributions to the two pension systems this academic year rose by $6.6 million. They will rise $12 million more in the fiscal year that starts July 1. In another four years the increase in pension payments will reach $27 million.
“If you face deficit spending, the longer you don’t take care of it, the more painful the cost,” said Gerardo Castillo, chief business officer for the city district. “That happened to us in 2012-13 when we had to reduce custodian staff, close schools.
“We were able to manage. But they were painful cuts. They hurt the students. That’s the bottom line. That’s what we’re trying to avoid. This is the reality.”
But John Borsos, executive director of the Sacramento City Teachers Association, remains skeptical.
“They’ve been consistently wrong in projecting these structural deficits,” he said.
Castillo said the district did project deficits over three years, based on available data. The district, like others in California, relies on a summary of state data produced by a committee of the county superintendents association. The district also received $70 million in one-time funds during that three-year period. But such funds should not be counted on “until they materialize,” Castillo said.
Other local districts are feeling the pain: San Juan Unified is projecting its largest deficit, nearly $4 million, for 2018-19. Late last week, the Elk Grove Unified distributed a two-page letter in which Superintendent Christopher Hoffman emphasized that the district will see less money under the governor’s budget than it expected. He has recommended that the district not increase pay beyond what has already been approved until Brown issues his January 2018 budget.
“The next several months will be critical” to districts across the state, Hoffman wrote. Seventeen district officials and labor representatives signed the missive, indicating their support for Hoffman’s recommendation.