Wednesday, February 8, 2012

From The Superintendent: Budget Realities Update

Supt. Kowba
I am writing to all of you in a continuing effort to keep our team fully informed and current about the budget development process. February is a critical month for the preparation of the 2012/13 budget because of two state deadlines imposed on school districts (both on March 15): the requirements to issue certificated staff layoff notices and to submit the Second Interim Financial Report to the County Office of Education.

Some Budget Facts

We are all struggling with the realities of the national economic downturn and the state’s budget morass that are decimating school district funding. San Diego Unified faces a 2012/13 budget shortfall of $122 million. This includes a structural deficit of $72 million, transportation funding cuts of $9 million, and potential midyear reductions of $41 million. The shortfall is unchanged from the analysis provided to the Board of Education in January. We continue to monitor the legislative budget process in Sacramento.

The Road Forward

Given this context, our district is at a crossroads. We can proceed down the path of reducing our school and support staffing by more than 1,000 FTE or we can pursue employee concessions that will significantly mitigate layoffs.

At the direction of the Board, I have reached out to all of our collective bargaining unit leadership to address possible concessions. As a first step, we have proposed that employees forgo the raises negotiated in existing contracts, accept an extension of the five-day furlough currently in place, and consider options for health benefit changes. We also need to develop a contingency plan if the November ballot measures fails and midyear cuts are triggered.

These shared sacrifices are difficult for all of us. It is truly unfair that the burden of the state’s failure to adequately fund public education is being placed on students, academic programs, and district employees. The deep and ongoing reductions raise fundamental questions about how much society values public schools. Unfortunately, we must deal with the circumstances at hand and move forward. By working together, we can get through these difficult times, reduce the number of layoffs, and most importantly, limit the detrimental impacts on our students.

In the chart below, I provide information on a number of topics in response to incomplete and inaccurate opinions and conclusions that are circulating. It is critical that all of us have a full understanding of the convoluted and evolving state budget. You are entitled to straightforward and transparent explanations.
Thank you for being open minded about the facts associated with the district’s budget dilemma and for your ongoing dedication to our students.


Bill Kowba

 If you hear this…  The reality is...
1. The District “lacks comprehensive and reliable budget information” …  There is NO reason to assume any significant improvement in education funding. Next year the state is facing a $9 billion budget deficit. The Governor’s January proposal provides the framework for the preparation of the 2012/13 budget. The Legislature can and will make budget adjustments, however, changes will likely be minor and not offset the need for layoffs and/or concessions. San Diego Unified must resolve a budget shortfall that is far above $100 million including midyear cuts. Should there be any questions about the accuracy of budget projections, our employee unions have been invited to meet with our finance staff with their external audit experts to review all budget information in detail.
 2. The district will “receive additional monies based on the elimination of redevelopment agencies.”

 There are no additional funds provided to school districts as a result of the elimination of redevelopment agencies. The Governor’s proposed budget uses redevelopment funds to balance the state budget rather than increase funding to schools. The Governor intends to maintain K-12 education funding at the current, flat, level with the threat of a significant midyear reduction if the tax ballot measure fails in November.
 3. Governor Brown’s budget “replaces the current categorical funding model with a weighted formula wherein districts with high proportions of low income students and English learners may receive even more funding.” No additional funding is expected from the consolidation of categorical funds into a weighted student formula. The State Finance Department has indicated that the transition to this new formula distribution will be designed to redistribute funds with more flexibility but not to increase or decrease current K-12 education funding levels. The transition to the new model will be phased in over a five-year period resulting in very limited impacts, if any, in 2012/13.
 4. “Legislation has been passed that will restore more than $4 million in transportation cuts “ This legislation does not help the district’s budget because the restoration of transportation formula funding is paid for with an across-the-board cut of $42 per student. In fact, this legislation may cost San Diego Unified an additional $100,000 in funding this year because we receive slightly less than the average district in transportation funds. Furthermore, this legislation only deals with 2011/12 funding, and has no effect on 2012/13 funding. The Governor’s proposed budget will eliminate 100% of transportation funding, a cut of $9.2 million to our district.
 5. The November ballot measures will increase education funding. Layoffs should be delayed until after the election.  The Governor’s proposed budget already assumes revenue from a November ballot measure. Even with the passage of the measure, San Diego Unified will still face a deficit of $81 million. Unfortunately, school districts cannot assume the passage of a ballot measure and must balance their budget based on the assumption the measure will fail. We must plan for a budget shortfall of $122 million and the necessary staff reductions to meet the March 15 layoff notice deadline.