Sac City Unified OKs budget it says will avert takeover – but it’s not out of the woods yet

In a down-to-the-wire decision, the Sacramento City Unified School District board on Thursday night approved a spending plan officials say could temporarily spare the district from state takeover.

After slicing $28 million through cuts and layoffs in its third and final effort to correct its budget deficit and avoid insolvency, the district is still spending more than it has in revenue. But officials say they can cover the gap with reserves and avoid seeking an emergency state loan until fall 2020 – buying them time to achieve permanent savings through negotiations with the district’s teachers union.

The district’s initial budget was rejected by the Sacramento County Office of Education in August, and subsequent attempts were similarly disapproved because of high projected deficits.

In the report approved Thursday, the district assumed higher revenues and lower expenditures than its two previous midyear budget revisions, called interim reports.

The district also said it fixed a human error in the second interim report’s enrollment numbers, which left out five schools – more than 700 students. Because funding is tied to the number of students attending a district, the previous budget underestimated revenue by $9 million.

School board President Jessie Ryan said the person who made the oversight no longer works for the district.

While the deficit will increase, the district says it will not grow as much as projected in previous interim reports

The district will use $20 million in reserve funds to cover the budget deficit in 2019-20 – though the gap is expected to widen again to $34 million by 2022.

The meeting was marked by tearful and frustrated pleas from teachers, parents and students who at times criticized the district’s spending and possible future cuts.

“Right now, I’m not celebrating because urgent work needs to be done,” said Tara Thronson, co-founder of the group Parents United to Restore our Schools.

A school district pays for most of its operating expenses out of its general fund. The district made cuts by identifying unneeded general fund spending, redirecting funds for facilities out of the general fund, and reducing its contribution to retiree health care funds by $3 million.

Sacramento County Superintendent of Schools David Gordon, whose office will decide whether to approve the budget, said at the meeting Thursday he is confident the district will continue to scour the budget for additional savings.

“I can’t tell you what to spend your money on, but show me what you are willing to cut,” he said.

Gordon said the priorities must be to end deficit spending and stabilize the budget.

“Unfortunately, this is not a cause for celebration, but it is an opportunity for a fresh start in how you treat one another in this district,” he said.

The “vastly improved” financial picture was a primary reason the teachers union on Thursday postponed a second strike it had planned for May 22.

But confusion set in among parents and community members at the board meeting as many asked how Sacramento City Unified would end up with nearly exactly the same deficit, which officials for months had been projecting at $35 million.

Parent Eric Schranz asked the district to fix its budget so “we don’t have to play this silly game next year,” and to improve communication with parents.

“We are millions of dollars in the hole, and the union wants the district to spend millions more. Now is not the time to be squabbling over the contract,” said Jeanine Rupert, a teacher and parent of four children in district schools. “That idealistic ship has sailed.”

Continuing a practice of deficit spending, Sacramento City will dip into its reserves to cover expenses in 2019-20. State law requires school districts to maintain at least 2 percent of their budget in reserves, but the district would fall short of that provision unless it further reduces its spending.

Spokesman Alex Barrios said district leaders hope to find the money through union contract negotiations.

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.

Gordon said he is optimistic that the board can identify more savings, and added that all parties must come to the negotiation table to find long-term solutions.

The teachers union and district have been at war over their labor contract, an eleventh-hour bargain struck in November 2017 under threat of a strike. Teachers staged a one-day walkout April 11 and had planned another May 22. But the union delayed that strike indefinitely on Thursday citing the district’s new budget projections as a major reason.

Sacramento City Teachers Association president David Fisher said state Superintendent of Public Instruction Tony Thurmond sent a letter this week in response to an SCTA request, saying he would bring the district, union and other leaders to the table to try to avert both a strike and receivership.

Teachers union Vice President Nikki Milevsky said the district should have made more cuts at the administrative level and should not consider eliminating student programs.

“You need to look at cuts that are not directed at kids,” Milevsky said.

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Sawsan Morrar covers school accountability and culture for The Sacramento Bee. She grew up in Sacramento and is an alumna of UC Berkeley Graduate School of Journalism. She previously freelanced for various publications including The Washington Post, Vice, KQED and Capital Public Radio.