Financial information

The fall of SF schools prompts the state to intervene in the face of a massive deficit

With a $ 116 million shortfall increasing the likelihood that the San Francisco school district will not be able to pay its bills, the California superintendent of education is stepping in to remedy its financial slump in a bid to avoid a complete takeover by the state.

The intervention, revealed in district meeting documents this week, means the state will hire a tax consultant to help the school board determine how to cut the equivalent of 13% of its annual $ 1 billion budget. . It will also require the district to submit any collective agreements to the state’s superintendent of public education, Tony Thurmond, for review.

The state stressed that it had the power to withhold the salaries of school board members and the director general for “failure to provide requested financial information.” State officials said they are not currently taking this step, but may do so in the future.

“We recognize that the district is working to identify strategic solutions to address projected budget deficits,” according to a September 15 letter to District Superintendent Vince Matthews that was included on the public meeting agenda. Tuesday board special on future budgeting. “However, the cuts have yet to be identified after a year of discussion.”

The district was due to submit a fiscal stimulus plan with two separate budget reports this fiscal year, but failed to do so, state officials said. District leaders, however, said there was no deadline for submitting these plans.

The school board now has until December 15 to approve a “fiscal stabilization plan” that will allow it to pay its bills with an adequate reserve for the 2022-2023 and 2023-24 fiscal years.

The state intervention is the latest blow to a district in crisis for 18 months, with controversies within the school board, a recall effort, costly lawsuits and tensions between the teachers’ union and parents over return to teaching in person. At the same time, registrations are dropping.

At the start of 2020, the district was spending $ 60 million a year in excess of its income. Adding to the crisis, personnel costs were increasing at four times the rate of increase in state funding, and special education and other costs were increasing.

The situation has only worsened since then.

“In SFUSD, we are seeing a decline in registrations, resulting in a decrease in revenue,” Matthews wrote to staff this month. “Our costs continue to increase dramatically – the current benefits, salaries and programs of the employees and retirees who serve our most needy students are just a few of the areas where costs have increased by tens of millions. during the last years.”

While the city’s schools have received $ 60 million for pandemic recovery from state and federal sources, and $ 15 million from city coffers, the district has largely used that money to make up for a shortfall. this year, preventing staff and program cuts, and expanding online and post-curricular learning, Matthews said.

The school board increased its financial burden by creating new programs for racial subgroups and incurred staff costs and legal fees with its decision and reversal to rename some schools and the approval of a close plan. million dollars to cover a school mural.

The expense to support struggling students is understandable, said former school board member Rachel Norton, “but your responsibility as a board member is first and foremost the financial condition of the district. It’s your job. She’s got it. added, “It doesn’t look like this board has made the tough decisions.”

More recently, the board opposed a staff-recommended $ 5 million savings measure to relocate teachers to more evenly distribute the student load and cut budgets at some schools where enrollment is low. falling.

Board member Kevine Boggess, at a board meeting on September 21, said the idea of ​​cutting campus funding was “the wrong direction.”

“Because we are in a pandemic, we need to find a way to do more for our school sites,” he added.

The district teachers’ union said on Tuesday that educators will do all they can to protect classrooms and essential services for students.

“SFUSD should be focused like a laser on keeping cuts as far away from classrooms and school sites as possible,” a statement from United Educators of San Francisco said. “We find it disturbing that in one of the richest cities in the world, for decades management has suggested deficits and cuts that take away precious resources from our students, our classrooms and our schools. We call on the city and the state to work with us to ensure our students receive more, not less. “

So far, the council has refused to make cuts to school sites despite declining enrollment. Last year that meant the superintendent was forced to balance the budget by withdrawing $ 25 million from central office. Yet teacher union officials and others have recently complained about the lack of response from human resources and other administrative departments, Matthews said at the Sept. 21 meeting.

District staffing ratios are well below state averages, with 1 teacher per 16 students, compared to 1 per 21 children statewide.

Board member Alison Collins asked staff why they weren’t applying for grants. Such funding is usually intended for specific programs and would not make up for the deficit, said district officials, who for more than a year have sounded the budget deficit alarm and urged the board to act. .

If the district goes bankrupt and needs a loan to pay the bills, the state would step in and take over, with the school board losing control.

State actions are legally required given the projected deficit over the next two years and the lack of a plan to address it.

The intervention “allows central office staff to receive technical advice regarding our budgets for the coming years,” school board vice president Faauuga Moliga said ahead of Tuesday’s board meeting. “I believe this will prove useful for everyone.”

Typically, the county office of education would provide tax oversight, but in San Francisco, the district office and the county office of education are combined.

With state action, San Francisco joins 13 districts – out of the state’s 1,000 school districts – in financial straits severe enough to spur county intervention, including Oakland, where the office of the Alameda County Education is monitoring.

Oakland’s financial woes continued despite a $ 100 million state bailout and takeover in 2003. Matthews, several years before becoming Superintendent of San Francisco, led the Oakland District as served as a state administrator until the state restored power to Oakland Council in 2009. The state continues to have some tax audits on Oakland schools because the district is still repaying the loan .

San Francisco will have to make tough decisions to avoid the same fate, officials said.

School board member Jenny Lam, who chairs the SF District Budget Committee, warned colleagues last month that the district was facing “historic budget deficits” and there was no money. The pain of cutting some school budgets and transferring teachers to save $ 5 million will be magnified by 20 in the coming months, she said.

“Solving SFUSD’s historic budget deficits remains the top priority, and securing the highest level of learning outcomes despite our fiscal circumstances is our challenge,” Lam said Tuesday. She added that the district is on track to have a budget plan in place by December 15. “Our objective must remain on the fiscal solvency of SFUSD; this is the only way forward for the future of our students.

Jill Tucker is a writer for the San Francisco Chronicle. Email: [email protected] Twitter: @jilltucker

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