2013/14 Budget Solutions Summary
- New Prop. 30 funds help but are not be enough to balance the 2013/14 budget
- Staff reductions must be a part of the budget balancing package
- Two alternative solutions
- Massive layoffs, or
- Attrition staff reductions plus real estate sales
- Attrition staff reductions will be difficult but will not destabilize schools
- Successful implementation will require sacrifice and support from across the district
On Tuesday, Jan 22, the Board of Education held a budget workshop where I presented the reality of the district’s projected $84 million deficit for 2013/14. We outlined two alternative scenarios for balancing next year’s budget. One alternative is to initiate a large layoff process similar to the one we followed last year. The second alternative is to reduce staffing levels through attrition combined with a significant increase in property sales to generate one-time revenue.
Both alternatives are difficult. The massive layoff strategy creates great turmoil, destabilizes staffing and increases class sizes. The attrition approach will result in an uneven and challenging staffing pattern. But it is the best approach to safeguard stability and student supports. Consequently, the Board directed staff to prepare a balanced 2013/14 budget using a combination of attrition savings and property sales.
Outlook for 2013/14 - The Path to a Balanced BudgetOver time, the recently approved Proposition 30 taxes will generate more revenue for the state for education funding. This new revenue does not immediately return the district to the funding levels of 2008, but it is a first step toward that goal. We are in a transition period to a better funding environment but our current budget shortfall must be addressed now.
Over the past several years, the district has spent down reserves, made permanent operational cuts, and used one-time funding solutions to balance budgets during the state’s financial crisis. These budget balancing strategies of previous years still leave a 2013/14 budget deficit of $84 million.
Since last week’s board direction, I have initiated a two-pronged budget strategy of personnel reductions through attrition and planning for additional real estate sales. The following is a summary of these two key deficit reduction strategies.
Attrition-Based Staff ReductionsEach year, 500-600 staff members leave the district stemming from retirements, leaves or separations. Typically, these are budgeted positions that are refilled with temporary contracts for approved leaves, probationary contracts or new hires for separations. Teaching positions that become vacant during the year are filled in the same manner. Certificated management at school sites are also replaced with interim appointments until permanent appointments are made. Classified positions are similarly filled based on function and situational need.
The attrition-based deficit reduction program will require a significant change to this standard operational approach. Beginning immediately and throughout the 2013/14 school year, every vacancy created in any manner at all school sites and support departments will be reviewed by a position review committee and the appropriate senior management leader.
More detailed procedures for implementation will be developed to support the following general guidelines:
- A reduction of a minimum of 300 staff positions not replaced from attrition is targeted for a savings of approximately $30 million. This target will be adjusted in response to the evolving state budget development.
- All teaching and other certificated positions and classified positions WILL NOT be automatically filled to replace leaves, retirements and separations.
- All hires will require senior management approval. Positions will not be automatically filled unless absolutely needed.
- Schools may be required to adjust class sizes upward and add combo grade classes to accommodate for staff reductions from anticipated attrition.
- Unassigned qualified teaching staff at other locations may be moved to fill positions.
- Temporary contracts and subs will only be used if absolutely needed for critical positions.
- School sites and departments will have to support flexible staffing and staffing variations.
- Business operations will be asked to adjust by not filling positions vacated through attritions unless the position is deemed critical.
- Principals will communicate to school site staff and their parent community that as an alternative to destabilizing layoffs that there will be a potential for mid-year class size and configuration adjustments as a result of attrition at any point.
Real Estate Sales
The second critical element of our 2013/14 deficit reduction strategy is to increase the revenue from real estate sales. The Board of Education has committed to proceeding with real estate sales as an alternative to a massive layoff. To accomplish that goal, the district will need to sell $50 million of surplus property in 2013/14. In addition to these sales, I will also pursue the implementation of a program to optimize short and long-term lease revenues from district real estate assets.
SummaryI believe that 2013/14 is a critical bridging year for San Diego Unified. We will need to solve our budget deficit as we await the fufillment of significant new revenues from Prop. 30 in subsequent years. This challenge will require more collaboration and support than ever. We face a stark choice for a balanced budget, massive layoffs or the path selected by the board, attrition reductions and real estate sales. Staff reductions from attrition will not be easy but it will give us more stability. In the weeks ahead, we will develop more details to guide this strategy and will consult with employee groups to ensure implmentation of this approach in the best way possible. As we move forward, I value and appreciate the understanding and cooperation from all employees.