Sacramento is a city on the rise, California is flush with cash and yet the city’s public school district – the district serving more than 40,000 kids in the state capital – is on the verge of insolvency.
Unless something momentous happens in the next few months, the Sacramento City Unified School District will run out of money in November of 2019.
If that happens, the school district will be essentially taken over by people from the outside. The seven-member school board elected by city voters will be effectively shoved aside. In years past, the state schools superintendent would take over an insolvent district and deputize a local point person to run it.
But now, based on legislation that only education wonks would know, the county superintendent of schools – former Superintendent of Elk Grove Unified, Dave Gordon – would take over Sac City Unified in the case of insolvency.
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I talked to Gordon by phone on Friday and told him that some people in town seem to want this to happen. These folks are so exorcised after years of labor strife between the district and its teachers union that they hope the district leadership framework implodes entirely. They want to see still-new Superintendent Jorge Aguilar stripped of his authority and they want school board members who support Aguilar to become mere spectators to whatever happens afterward.
Some folks have endorsed a takeover of Sac City Unified at recent school district board meetings but I’m not going to quote them here because of what Gordon said to me on Friday.
“Insolvency is the last thing you want,” Gordon said. “Because if that happens, state relief will come in the form of a big loan. Not a grant, but a loan. If the state gets you a loan, it will be at market rate, not a low-interest rate. You’re going to assume 6 or 7 percent interest. And the person who I appoint as administrator...the top priority of that person will be the district finances. The top priority will be to pay back the loan.”
What would that look like?
“If I were explaining this to a group, I would say it would be like going into bankruptcy. Now, on top of your mortgage, you have this (huge debt payment) in perpetuity.”
Labor contracts with the Sacramento City Teachers Association and other labor groups would be honored in the case of insolvency so that would surely mean that kids would suffer the loss of programs to pay the district’s debts. And the next time labor contracts are negotiated, the pot of money available will surely be smaller and the labor partners of the district would be negotiating against an administrator who is not beholden to city voters or parents.
That administrator will be beholden to a bank.
Let that sink in while considering some stark numbers: “The district’s total deficit...is projected to be $52,563,654 in 2019-2020,” wrote state auditors in a dire report made public last week.
Why is this happening? Because for more than a decade, this district has put off hard decisions to spend money it didn’t have, said auditors from the state Financial Crisis Management Assistance Team – an independent state agency established in 1992 to help public school districts in financial trouble.
Just a year ago, people celebrated when a teachers strike was averted by a deal reached between the district and the union that was brokered by Sacramento Mayor Darrell Steinberg.
But the truth is, the district couldn’t afford the deal it cut. Teachers were given up to an 11 percent raise over three years in an agreement reached in November of 2017.
Aguilar had just moved to town from Fresno, where he was hailed for helping significantly raise the high school graduation rate of Fresno schools, when he faced a strike vote in Sacramento. Instead of a Bundt cake as a house-warming gift, Aguilar had a figurative gun pointed at his head. Welcome to Sacramento!
Aguilar made the deal with Steinberg mediating, but its cost figured prominently in the report complied by FCMAT: “The district is using $13.2 million of one-time funds to meet the increase of labor contract negotiations.”
In layman’s terms, using one-time funds to pay for continuing labor costs is robbing Peter to pay Paul. The celebrated labor deal meant the district went into deficit spending.
The significance of the FCMAT report is this: It’s an independent third party analyzing the district without taking sides between the district and the teachers union. Sac City is always framed by labor strife, and people in Sacramento choose sides. And while people have been choosing sides for the last decade or more, the real truth about district finances have been buried until the bill has come due.
So here is where I repent for my side of this mess. In years past, I wrote many columns about the district and almost always framed them as pitched battles between combatants. Well, that didn’t really help. And I want to help. This is not just because I’m a district parent now, but because of something Gordon said.
“We need the young people in this district to run this town and this country one day,” he said. “We can’t afford for them to to miss out a good education.”
I spoke with David Fisher, a union leader, on Friday, and he came across as a committed and caring educator who wants what is best for district kids. I asked him if the SCTA wants the district to go into insolvency and be taken over. He said, no. I asked him what he thinks of Aguilar. He said: “We have very high expectations of (Aguilar) and we completely agree with his philosophy of equity for students.”
The SCTA and the district will meet on Jan. 9. They must negotiate how they will right the financial ship of a sinking district. District officials are finding savings by having employees switching to a less expensive health carrier. Fisher said teachers are looking at bureaucratic bloat within the district. He also said if employees agree to less expensive health plans, they want the savings to go toward hiring many more teachers. They say the agreement they cut with Steinberg calls for this. District officials say that part of the agreement is non-binding.
This is not going to be easy. These disagreements run deep and have been waged for more than a decade.
But you know what? The parties must get over that.
Gordon said 91 percent of district costs are tied up in compensation and benefits for employees. He said that makes Sac City an outlier within the county. Without taking sides, that means they have very few avenues to find savings that don’t involve employee benefits. Gordon is not taking sides. He has to keep his powder dry because he might have to take over this district.
It’s a job he doesn’t want.
“This district is way out of whack with what other districts are spending,” he said. “What this district needs is stability and continuity of leadership...In Jorge Aguilar you have person focused on the needs of young people. He needs to be given a chance. Someone needs to stay there for five to 10 years and create a different culture.”
Sacramento needs to rally behind a stable school district. That’s the only side to choose.