Sacramento City Unified school board grapples with massive budget shortfall
Sacramento City Unified School District says it has found a way to cut its massive budget deficit enough to temporarily stave off a government takeover – but it remains unclear whether the plan will fly with county education officials.
The district has been racing to fill a budget hole estimated as high as $35 million and avoid insolvency, which would trigger state receivership.
At its meeting Thursday night, the school board will decide whether to approve a 2019-20 budget plan that reduces the deficit to about $20 million, without cutting student programs. The district would use reserve funds to cover the remaining gap.
Using reserves in that manner is not “fiscally prudent,” Sacramento City Unified spokesman Alex Barrios acknowledged. But he said it would buy the district time to achieve permanent savings by negotiating a less expensive health care plan with its teachers union.
The district says it spends more on benefits and salaries than any other in the state. Barrios said that if Sacramento City Unified brought its health care spending in line with the state average, it would achieve an estimated $20 million in savings.
“The sooner we reach an agreement, one that will help achieve some cost savings, the sooner we will save money and get to a balanced budget,” Barrios said. “Starting these negotiations is critical because they require a lot of time and calculations.”
The teachers union noted that while the new spending plan has “questionable assumptions ... the District’s bottom line has improved significantly.”
“These improvements, we believe, now make it clear that the District can both honor our contract and avoid insolvency,” the Sacramento City Teachers Association officials said in a statement Wednesday to The Sacramento Bee.
The union and district have been at odds, with teachers alleging the district is not honoring its 2017 agreement. The union is planning a second one-day strike on May 22.
But union officials also recently said they would be open to renegotiating terms of their contract if necessary to balance the budget and prevent state intervention.
Sacramento City Unified says it spends more than any other district in the state per pupil for employee salaries and benefits – 91 percent of its budget. The state average is 85 percent, according to district reports.
The district says much of the savings it will present to the board come from adjusting expenses, while avoiding cuts to student programs.
“We don’t want to balance the budget on the backs of students,” Barrios said. “We are doing everything we can to achieve on going savings with our labor partners. In order to solve this problem, we have to reduce the 91 cents of every dollar that’s spent on benefits and salaries. That’s the only way out.“
Among its moves to achieve the new cuts, the district said it:
- Identified $5 million in unneeded general fund spending
- Redirected funds for facilities out of the general fund
- Reduced its contribution to retiree health care funds by $3 million.
However, “We are still in deficit spending,” Barrios said. “Next year’s budget will once again rely on spending reserves to pay the bills and that’s not sustainable. If that continues, we will be taken over by the state.”
The budget the board will consider Thursday is a third “interim” update. The district’s initial budget was disapproved by the Sacramento County Office of Education in August and subsequent attempts were similarly rejected because of high projected deficits.
The county Office of Education will respond to the third interim report with suggestions in about a month. The district will have until the end of June to make more reductions.
A final adopted budget must be submitted by June 30, said spokesman Tim Herrera. The county will then decide whether to approve it.