Proposed Sac City 2019-20 Budget Further Demonstrates State Takeover Is Not a Threat
We wanted to share with you more good news about the budget at Sac City. While we have concerns that rather than share the good news the District will continue to paint a gloom and doom picture, the details of the budget tell a different story. Here is our initial analysis.
SCTA Initial Analysis
2019-20 SCUSD Budget
June 3, 2019
- Lack of Transparency: From the outset, it must be said we are concerned about the continued lack of transparency from the District. With growing concerns about the fiscal mismanagement of the District–particularly in light of its admitted $16 million mistake in undercounting 700 students in its Second Interim Budget—that the District would decide to make budget information harder to obtain rather than more readily available is especially concerning. So far, the District is only making the proposed 2019-20 budget available only at the Serna Center during business hours, and behind locked doors. This is even more is troubling after the Chairperson of the school board’s budget committee promised that the document would be available on-line. This lack of transparency leads many to question what the District is trying to hide.
- The Budget Draft is Incomplete: In addition, the budget draft is not complete. Major sections of the budget are still not available. Missing are sections that detail the enrollment/ADA projections, the number of administrators, and other key pieces of information.
- The District is Not on the Brink of Insolvency: That the District is not on the brink of insolvency was established when the Third Interim Budget was released on May 16, 2019. The proposed 2019-20 budget makes that even more clear.
- The District’s LCFF Revenue Will Increase by $30 million over the next three years: The District’s LCFF revenues continue to increase. This year (2018-19), the revenue from LCFF is $398.5 million. In 2019-20 that will increase to $411.8 million; in 2020-21 it will increase again to $420.2 million; in 2021-22 it will increase again to $428.8 million.
- The District’s Proposed Budget Meets Its Minimum Reserve for 2019-20 and 2020-21: The District now is projecting an ending reserve fund balance of $41.8 million in 2019-20 and $14.7 million for 2020-21. That means its projections about running out of cash if no other changes are made is well into the 2021-22 school year.
- The District Can Easily Submit a Budget with a Positive Certification. Here’s How: For 2021-22, the District is projecting it will have a negative cash reserve of $14.9 million, and it needs to have a minimum 2% reserve of $11.7 million. The difference is $27.1 million. At least $7 million of that $27.1 million difference includes reinstituting the highly flawed extended summer school program in 2020. The balance can be further addressed by reallocating the $8.5 million per year the District currently uses to overfund retiree health benefits. The District could use that $8.5 million in 2018-19, 2019-20, 2020-21, and 2021-22, which would total $34 million through 2021-22, allowing the District to have a reserve balance that comfortably exceeds the minimum 2% requirement. In addition, reducing the pay of the 50 top administrators at the Serna Center by 25% would yield an additional $2.1 million per year, or $6.3 million in this three-year budget. Additional savings could be achieved by chopping from the top, including cutting more administrators, and reducing the more than $75 million the District spends on outside contracts and consultants.
- The District Can Solve its Budget Problem and Honor the Contract: Remember when how until fewer than two weeks ago, the District was telling the public that implementing our agreed-upon salary schedule would result in an imminent state takeover? The new budget fully implements the agreed-upon salary schedule. It also continues to send millions of dollars to HealthNet instead of using those dollars to lower class sizes and improve services to students. The new budget could allow the District to honor the contract in a budget neutral way, if the Superintendent and school board chose to do so.
We will share more as we learn more.
David & Nikki