SCUSD Budget Crisis Worsens: District On Track To Go Broke In 2019

For the first time, the Sacramento City Unified School District (SCUSD) adopted budget for the 2018-2019 fiscal year has been disapproved by the county Office of Education, and the district is expected to go broke by November of 2019.

SCUSD’s deteriorating financial condition met its final decline in August when the district’s budget proposal was rejected by the county Office of Education. This development in the state of the district’s budget was announced by Superintendent Jorge Aguilar and School Board President Jessie Ryan on September 6, through a video posted on the district’s YouTube account.

County Superintendent David W. Gordon disapproved the $555 million budget on grounds that while the district would make its minimum reserve requirement for the 2018-2019 fiscal year, it would reach a “negative fund balance” by the 2019-2020 school year, falling $21 million short, and subsequently another $40 million for the following 2020-2021 school year.

Gordon’s letter of disapproval designated “unrestricted expenditures” as the main cause of the worsening financial situation, “even though the district has been asked to solve its structural deficit problem.”

Following the letter’s conclusion that “the district begin making cuts immediately,” the district was assigned until October 8 to file a revised budget that would serve as a sufficient replacement to the budget that was previously submitted.

On December 5, the SCUSD announced in their video statement their final preparations to address their financial crisis, which would majorly involve cuts to employee healthcare.

In the video, Aguilar addressed his current position in the financial crisis, stating, “I’ve done everything in my power to keep cuts away from the classroom, and while I’ve made millions of ongoing cuts in expenditures, primarily in central office administration that is already one of the leanest in the region, unfortunately these cuts are not enough to eliminate our structural budget deficit.”

School Board President Jessie Ryan reiterated his point in her statement, “While the Superintendent has gone as far as he can in reducing costs we are now forced to look to identifying other areas to save money.” Both Ryan and Aguilar tirelessly restated throughout the video that “[their] continued goal was to ensure that students and their families aren’t impacted.”

Superintendent Jorge Aguilar and Board President Jessie Ryan suggested this was the only suitable path towards a solution, considering that SCUSD “pays far more for employee health insurance than any other school district in the region for similar benefits.” The statement mentioned that the proposed healthcare cuts would save the district between 11 and 16 million dollars a year.

As was formally announced at the Board of Education meeting on December 6, the district has received approval from four of five of its labor unions to begin healthcare cuts.

To do so, however, would require adequate cooperation from the Sacramento City Teachers Association (SCTA). On December 7, the SCTA released an article addressing the district’s announcement to hold a press conference that would discuss the budget and healthcare management. The SCTA has since withheld their decision to participate in the conference.

In 2017, the SCTA agreed to partner with the California Education Coalition for Health Care Reform (CECHR) to work towards reducing health care costs without significantly reducing benefits or increasing employee costs. This partnership was most important to the SCTA because it promised that no changes would be made to employee healthcare plans without written, explicit agreement from the SCTA. The potential savings from working with CECHR could be up to $16 million.

According to the members of the SCTA, instead of picking itself up and starting the work with the CECHR in January 2018 as was agreed upon, the district “dragged its feet, to the point that in August and September it refused to pay CECHR for its work, despite the signed agreement.” In the same report, the SCTA stated that “despite the district’s delays, [their] work with the CECHR has already resulted in $5 million in health plan savings to the district.”

The district’s refusal to abide by the agreement has diminished the SCTA’s support, and their failure to follow through with the CECHR agreement has only emphasized the district’s inadequacies, even more than the seemingly unending financial crisis has done so far.