By Robert W. Graeff, Ed.D.
Ramona Unified School District
As superintendent of our local school district, I have been asked daily for the past several weeks about the status of our district budget — especially when other districts in the San Diego area have been making headlines on a regular basis related to mid-year cuts, school closures, bargaining, and potential insolvency. In spite of our very unpleasant circumstances in the midst of our most challenging era since the Great Depression, it is important for parents and community members to know exactly where our local schools stand.
As approved in June, our district’s current $50 million budget once again calls for expenditures which are $3.7 million more than our anticipated revenue. Since the beginning of the state’s budget woes several years ago and the ensuing massive cuts to public education, the district has consistently been experiencing annual budget shortfalls — in spite of employee layoffs, elimination of key programs, and reduced supplies and materials for our classrooms.
With nearly 90% of our expenses tied up in people (salary and health insurance), we have been buoyed by a large reserve fund (now depleted), the American Recovery and Reinvestment Act (now depleted), and the Federal Jobs Bill (now depleted). In the current year, we entered July with $980,000 above our legally required minimum reserve fund of 3.0%. That small reserve excess will be exhausted before year’s end. Assuming there are no mid-year budget cuts provided by Sacramento (a big gamble), we will end the current year with an ending balance of $2.1 million.
Assuming the state maintains our current revenue stream for next year, issues no mid-year cuts this year, and provides a cost-of-living increase to public schools (all highly optimistic assumptions), the district is still pointed toward a budget shortfall of $4.9 million. The increasing deficit is due to three annual factors: declining student enrollment, rising health insurance costs for employees, and step-and-column salary increases for employees.
Comparing increasing costs to our projected revenue, we are projecting an end-of-year deficit of $2.8 million — an anticipated situation which cannot be approved by our Board or the County Office of Education. In 2013-14, we are projecting an even larger deficit of $8.3 million. If the state imposes mid-year budget cuts due to the much publicized threat of potential “triggers” in mid-December, our challenge will grow that much worse. Clearly, the governing board has no option this year but to take steps to bring the district’s expenses in line with its revenue.
The district has faced budget shortfalls several times since 2003, but has always managed to pay its bills. Now that our local reserve funds are finally depleted and with no “silver bullets” on the horizon from either the state or federal governments, the district finally has no other recourse but to look from within for budget resolution. Certainly, community members have read multiple stories of surrounding school districts and public agencies which have already faced this same budget dilemma and made some very hard choices to bring their expenses in line with declining state support. Now it is our turn.
In order to address our increasingly crippling budget deficit, I will be recommending to the governing board that the district cut the General Fund’s expenses for the coming school year by $4.6 million in ongoing expenses. If accomplished, the district will reduce its ongoing deficit spending to a much more manageable figure and can show a small ending year balance for each of the next two fiscal years.
Some of the reductions which I will be asking the board to consider in the coming months will include $2.1 million in the following areas:
•Significant reduction of site and department carryover funds (an action implemented this fall)
•Reduction of textbook funding
•Reduction of district expenses supporting student transportation
•Avoid replacing most retiring employees
•Layoff of limited number of certificated, classified, and administrative employees
Because these solutions alone cannot provide the total solution necessary to achieve a satisfactory reduction in deficit spending, the board has opened negotiations with the Ramona Teachers Association in an effort to begin reducing employee costs by $2.5 million. Last week, the board delivered a proposal to RTA leadership providing a wide variety of options calling for employee concessions. In the board’s proposal, teachers are being asked to consider paying partially for health benefits in 2012-13 via monthly payroll deductions for the first time in memory. Current estimates (assuming a 10% increase in next year’s health care costs) would place contributions for most benefitted employees in 2012-13 for Employee-only at $922 to $1,011, Employee with one dependent at $3,689 to $4,047, and Employees with two or more dependents at $5,234 to $5,869.
As an alternative, teachers are being asked to consider a 7% reduction to salaries for 2012-13 with additional reductions to come in successive years. The district proposal includes additional ideas for consideration in an effort to reach the desired reduction in employee costs.
Community members may recall that the district offered both employee unions two years ago a proposal to reduce salaries by 2.75%. During the same time period, the district offered a benefit-contribution strategy to reduce health care costs by 15%. Had either of these proposals been accepted, the General Fund would have been improved by $1.0 million last year, this year, and again next year -— resulting in $3.0 million in savings for 2012-13 and pushing this unpleasant conversation off into the future. Sadly, both unions declined to accept the District’s offer.
Last summer, the district offered to both unions a proposal to provide Kaiser health care to employees for free, but to begin a “buy-up plan” for HealthNet. Although this relatively simple concept could have saved the General Fund $800,000 through next year, the concept was again rejected by both unions, and was accepted only by our school administrators.
Since mid-October, the district’s chief negotiator has repeatedly requested to meet with the RTA Negotiating Team. To date, the RTA’s team has not yet agreed to meet to review the district’s budget situation or the board’s proposal for negotiations. Obviously, the district has no choice but to continue to make a strong plea for RTA negotiators to meet with district negotiators in a transparent, collaborative, well-intentioned setting to begin the hard work at hand. In light of the pressing financial concerns of the District, the time to commence good faith negotiations has arrived.