SFUSD Budget

We took 8 of your parent questions about SFUSD’s budget to the California Department of Education. And they responded!

Here’s what CDE Fiscal Agent Elliot Duchon had to say:

Question 1: How bad is SFUSD’s budget deficit? How does it compare with other CA school districts?

CA DEPT OF EDUCATION REP DUCHON: “All districts are required to certify that they are able to meet their fiscal obligations for the current year and two subsequent years. The 23-24 budget that the Board of Education adopted in June included a certification that the district would be able to meet its obligations for the current 23-24 fiscal year and the two following years, 24-25 and 25-26. That is the good news. What this basically means is that if the district adheres to its spending plan and does not incur any new expenditures it will continue to meet its obligations. The budget also included a set aside for employee raises. SFUSD’s budget also relies on the spending down of one-time monies to meet its ongoing obligations. In simple terms what this means is if the district were a family with an income of $100,000 for the next three years, but it was spending $110,000 each year and using its savings account of $30,000 to pay its bills, it would deplete its savings and have to cut its budget in the fourth year. That is very similar to the budget condition of SFUSD. This is what is called a “Structural Deficit”, ongoing expenditures exceed ongoing revenues. The budget goes from balanced or positive to deficit as soon as the district commits to expenditures that cannot be met within the current budget parameters. In comparison, most CA districts are able to maintain positive certifications.”

Question 2: How do other school districts with healthy budgets and good student outcomes account for the need and desire to grow the compensation for teachers over time.

CA DEPT OF EDUCATION REP DUCHON: “CA Department of Ed Rep Elliot Duchon: “There are a number of factors that help districts maintain competitive pay and good student outcomes:

• They do not spend money they do not have and work to reduce the number of priorities so they can focus on quality not quantity.
• They maintain staffing levels aligned with student enrollment. If there is declining enrollment they reduce staffing over time, often by attrition.
• They focus their expenditures and efforts on quality programs and staffing aligned with enrollment and reduce the number of programs offered keeping those with the greatest benefit. That means that good programs that benefit only a small number of students must be analyzed and sometimes cut.
• They maintain lean staffing.
• They may not be able to meet salary demands and so not spend before they cut but determine what they can afford before they negotiate and only offer what the budget can handle.
• They start with funding what is essential and required by state law and local bargaining contracts. If there is not enough money to go around they fund the most beneficial and highest priority programs.”

Question 3: I hear lots of talk about a “bloated central office.” If SFUSD got rid of their entire central office staff, would our budget be balanced? What functions in our central office are required and how much does that cost?

CA DEPARTMENT OF EDUCATION REP DUCHON: “There are many functions in the district office: Human Resources, payroll, curriculum development, contracts, budgeting, operations, and many positions that directly support the classrooms. The central office is actually understaffed in several departments, particularly business, human resources and technology. The people working on the budget are looking at budget cuts in all areas including the central office. There may be some significant cuts that can be made in the central office staff. That will help resolve part of the budget deficit but not the major part of it.”

Question 4: How can families be involved, and in what ways can SFUSD do a better job of engaging families, in fixing our budget?

CA DEPT OF EDUCATION REP DUCHON: “The first thing families can do is to be active at their own school. Look at the programs and quality of education and be involved in site-based parent groups and the School Site Council. At the district level, there are a number of actions families can take:

• The district web site contains valuable information about the budget, district programs, the LCAP and many other informative resources.
• Speak up, remember that having a voice doesn’t mean having a say. Understand the big picture. SFUSD is a big district with many competing interests. The district Board is committed to improving student outcomes and at the same time must live within its means. It is important to look at programs from a cost benefit analysis perspective. How student outcomes are improved should outweigh programs that are popular.
• Read board agendas. There are descriptions and reports attached to major budget items
• Watch board meetings, online or in person
• Look at the district’s LCAP-Local Control Accountability Plan.
• Parents can go to board meetings, speak at public verbal comments, write to the board, and speak to individual board members as well as the district.
• Remember that parents do not always agree. Your voice is important, but the Board and Administration must look at the big picture, including community voice, parent voice, laws and requirements, what the district can afford and what is best for students.”

Question 5: What are the three biggest unsustainable elements built into the current budget? How did these come about?

CA Department of Ed Rep Duchon: “For most districts at least 80% of their budgets are spent on staffing. That is true with SFUSD. So, the answer is staffing and staffing and staffing. Contracts in the district could be cut to help, but the majority of reductions will have to come from staffing reductions. Like many districts in California and across the country, SFUSD has had trouble filling positions at all levels so there are a number of vacancies that can be left unfilled and that will help.

This came about over time with an influx and one-time state and federal funding that ended up being used for ongoing expenditures. One of the key elements is that the district has experienced declining enrollment and maintained staffing levels that it had when there were more students. The district also has a large number of schools and programs that add to operating costs. We do not believe the district has sufficiently realized staff to decline enrollment. There are a large number of very small classes, specialized programs, and schools.”

Question 6: Assuming there is no influx of new funding, would SFUSD go bankrupt at the current rate of deficit spending? And how do SFUSD’s new contracts affect this runway?

CA DEPT OF EDUCATION REP DUCHON: “The answer depends on if the district increases its spending this year and how much that increase is. The 23-24 budget includes a set aside for employee raises. It is our understanding that the offers on the being discussed exceed the amount set aside, and depending on how much they are would deplete all of the district’s reserves in excess of the 2% reserve it is required to keep in the budget. This could mean that as soon as next year, 24-25 or the year after 25-26, the district would not be able to meet its fiscal obligations and would have to certify that to the California Department of Education. In that case the CDE could continue to require Fiscal Experts to advise the district. At its discretion, the CDE could elevate Fiscal Experts to become Fiscal Advisors who would have the authority to stop or rescind actions the district takes in relation to fiscal decisions.

The bottom line is that the district will have to make budget cuts to offset the cost of employee raises. Generally the district will have to use the reserves it set aside for employee raises this year and will need to make major expenditure cuts next year. So the answer very much depends on how much the district can cut from its ongoing expenses.”

Question 7: Will SFUSD need to close schools? If we don’t do this, what are other main options for getting the budget back on track?

CA DEPT OF EDUCATION REP DUCHON: “The district has over 130 schools and a large number of programs. Staff are currently analyzing to determine the cost benefit and program impact of closing schools and cutting programs. This is a process that will take awhile and is not likely to bring about any changes or results until at the 25-26 school year. It is difficult to say how much money would be saved until that analysis is completed. That being said, it is not the solution to the entire budget problem, but will help. The main thing the district must do is to spend within its means and align staffing to enrollment. The size and number of schools should be viewed in the same light as any other expenditure: what benefit does it bring to student outcomes compared to other budget items and how does the cost compare.”

Question 8: What is the timeline for when decisions will be made on the budget and potential cuts to SFUSD schools and programs?

CA DEPT OF EDUCATION REP DUCHON: “Once the district enters a collective bargaining agreement it is required to send a disclosure to CDE. That disclosure must explain the fiscal impact of the agreement and how the district will pay for it. The district would have to commit to the cuts it would make to keep the budget balanced. No layoffs could happen this school year but could take place for the next school year starting July 1.”