The Sacramento City Unified City Unified School District is poised to run out of cash in May of 2021, according to a recent report by the state Fiscal Crisis Management Team.
There’s a lot going on. Here are some facts about SCUSD to illuminate the crisis the district is facing.
The SCUSD operating budget is:
- Unrestricted: $348,640,116
- Restricted: $292,235,621
- Total: $640,875,737
Of the unrestricted budget, which mostly comes from school revenues and are spent at the discretion of the school board and superintendent, about 90% goes to salary and benefits for employees. (Restricted funds come from the state, federal government and other sources and are used to pay for specific programs and purposes.)
So 90 cents of every dollar the district is free to spend goes to adults. The last 10 cents go to the kids and everything else.
SCUSD is an outlier: SCUSD teachers and their families pay nothing out of their monthly pay for health care. Most Californians contribute between about $80 to $400 a month. SCUSD is the only district in the region to pay 100% of health care costs.
SCUSD health care plan is one of the most expensive in California: In 2019, state auditor Elaine Howle found that only three Bay Area/Silicon Valley school districts paid more in health care costs than SCUSD.
Wrote Howle: “(SCUSD’s) total cost for health and welfare benefits to its teachers in fiscal year 2017–18 exceeded Elk Grove Unified’s costs that year by about $13 million, even though Elk Grove Unified employed 950 more teachers.”
And this problem is longstanding: “Since 2003 Sacramento Unified has received repeated warnings about the affordability of paying the full cost for all health plans it offers to its teachers. Nonetheless, it did not include a limit on its contributions to health benefits for employees and their families in any of the six contracts it negotiated with its teachers union during these years,” Howle wrote.
A labor agreement between SCUSD and SCTA expired on Dec. 31, 2016: In March 2017 SCTA requested an impasse. According to a fact-finding report by the California Public Employees Relations Board, SCTA and SCUSD met with an arbitrator on April 19, 2017. The two sides met six more times but were unable to reach an agreement. On May 18, 2017, two the sides began a fact-mediation with PERB.
Jorge Aguilar became SCUSD Superintendent on July 1, 2017.
PERB released its fact-finding report on Nov. 1, 2017: PERB recommended teachers get no raise in 2016-17, a 3.5 raise in 2017-18, and salary adjustments totaling half percent increases in 2018-19. That’s a total of 9%. The arbitrator recommended the parties “endeavor to make a...2% salary schedule adjustment for 2019-20. But also said: “While the district’s total compensation is competitive with other districts in the geographic region, a substantial part of the difference is attributable to generous health beneifts...Teachers whose salaries lag...may consider the higher salary to be more attractive than the health benefits available, and efforts should be made to control health care benefits while improving teacher salaries.”
SCTA disregarded PERB report,scheduled the first teachers strike within SCUSD since 1989: The PERB report was meant to be the basis for compromise between the two parties but SCTA dismissed it the day after it was released. ““The report is badly written and filled with errors and contradictions that make it virtually useless,” said SCTA President David Fisher.
On Nov. 2, 2017 SCTA scheduled a strike for the following week. According to a Nov. 2 Bee story, roughly 1,000 teachers and community members massed at SCUSD headquarters in support of teachers.
Sacramento Mayor Darrell Steinberg brokered a deal: On Nov. 6, 2017, Steinberg hosted a news conference at City Hall to announce an agreement between the parties after negotiations at his home the previous weekend. The raise for teachers was reported as 11% over three years.
After the 2017 deal
Trouble with the raises: The two sides couldn’t agree how to implement the raises and ended up in arbitration again. Though he moderated the dispute, Steinberg declined to offer testimony in the arbitration case.
SCUSD thought they had agreed to 11 percent in raises. In May 2019, PERB ruled in favor of SCTA’s interpretation of the salary agreement..
Howle’s audit described what happened next: “The 2017 contract terms included general salary increases and a change to the salary schedule, which Sacramento Unified projects will together result in a 15 percent increase in its salary costs...We estimate that when fully implemented in fiscal year 2019–20, the 2017 contract’s salary increases and adjustment to the salary schedule will add about $31 million per year in ongoing spending. This amount represents 5 percent of Sacramento Unified’s total spending.”
After the 2017 raise issue was settled, according to Howle’s calculations, a teacher with a BA and 60 semester units of teaching went from a salary of $57,337 to $65,039.
After the 2017 raises, SCUSD teachers became the highest paid in the region: Howle’s audit showed that between fiscal year 2017-18 and 2019-20, SCUSD teachers went from having the lowest average salary in the region at $73,236 to the highest at $91,250.
The audit also found that they have the highest overall combined salary and benefits with an average of $119,036.
County superintendent of schools warned the district it couldn’t afford the 2017 raises: Dave Gordon told SCUSD board members in December 2017, two and a half hours into a marathon board meeting, that the district would face a structural deficit by 2020 because of the raises approved by Aguilar and the board. (For a variety of reasons, including budgetary belt tightening and savings incurred because schools are empty due to COVID-19, a state auditor now projects the district will run out of cash in May of 2021.)
“What is going on is you are spending down your reserves along with your annual allocations from the state to be able to afford the increases you have provided,” Gordon said Dec. 7, 2017.
Health plan liability
Gordon also warned the district about another ticking time bomb: At the same Dec. 7, 2017 meeting where he warned the district it couldn’t afford its teacher raises, Gordon said the district also had to confront a $621 million unfunded liability in its employee health care plan for retirees. Many teachers along with other employees may qualify for lifetime health care depending on their age, longevity and hire date.
“I’ve sent 22 letters to five different superintendents, urging that you take care of the unfunded liability,” Gordon said.
“But for more than a decade, it has not been taken seriously.” Gordon said the unfunded liability was bigger than the SCUSD overall budget.
In its communications to its members, SCTA dismissed the severity of the unfunded liability “myth”: “The sky is not falling,” SCTA wrote in an Oct. 21, 2016 communication to its members. “(Former) Superintendent Jose Banda and (former) Chief Business Office Gerardo Castillo have been crying wolf: the District will go under if it doesn’t address the ‘unfunded liability’ related to the health insurance benefits for retirees....”
State auditor recommended district make a plan to deal with its unfunded liability: “To prevent a similar fiscal crisis in the future, Sacramento Unified should do the following by July 2020: Develop a long-term funding plan to address its retiree health benefits liability. The plan should include appropriate action necessary to ensure the district will be able to meet its obligations to its employees and retirees,” Howle wrote in December 2019. She recommended a six-month agency response.
California state auditor’s assessment
Howle’s six-month review: “As we note in our report, Sacramento Unified has not developed a plan to address its large retiree health benefit liability, which impacts the minimum amount the district has to contribute each year to pay for current and future retiree health benefits. Therefore, any plan developed by the OPEB commission must be integrated into the district’s fiscal recovery plan.”
State auditor recommended cuts: She reporting possible savings of $30 million. Howle recommended that all district salaries be cut by 2%. That would bring an expected savings of $7 million. She reported that nearly $10 million could be saved if all employees pay 3.5% toward retiree health benefits and nearly $16 million could be saved if caps were placed on employee-only health care plans and family plans.
SCUSD and SCTA have made no progress in adopting these recommendations.
What’s next, etc.
Five of the seven SCUSD board members have served less than five years: Only trustees Darrel Woo and Christina Pritchett have served longer than five years. Board chair Jessie Ryan began in December 2015. Outgoing members Mai Vang and Michael Minnick came a year later. And members Lisa Murawski and Leticia Garcia started in December 2018.
The district has reported some educational gains for students: There is a direct correlation between college enrollment and the completion of Free Application for Federal Student Aid forms. The district reports that in 2015-16, less than half of SCUSD students completed their FAFSA forms but that number rose to 76.4 in 2019-20.
The district graduation rate rose from 81.9% in 2017 to 84.82% in 2019. District officials believe the number will be higher in 2019-20 when numbers become available later this year.
Where do things stand now? CTA and the political action committee for SCTA have spent more than $500,000 to run four candidates for the SCUSD board. They have spent the most in the race to unseat Ryan, the board chair. “If elected, the CTA-backed candidates would control both sides of the bargaining table,” said Bruce Scheidt, chair of the Sacramento Metropolitan Chamber Political Action Committee Board.
““That would not be a healthy situation for our schools, and the thousands of students and families it serves.”