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SDUSD Budget Analysis:Fact and Fiction

Shane ParmelySDEA Member

CTA State Council Delegate

The Breakfast Club, an SDEA Union Reform Caucus

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Great news!SDUSD has more than enough money to

restore our salaries and cancel furlough days!

And not just for this year… they had enough money last year to avoid both layoffs AND concessions.

Turns out it was right there in the budget the whole time, just like we thought. And just like it always is year after year after year after year…

And now that SDUSD has to report its Estimated Actuals for 2012-2013 in the new budget, we can ALL see that the money was there to honor our contract last year without layoffs. And it still is.

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This is the budget presented during the June 25, 2013 SDUSD Board Meeting.

It shows how much money was left over in reserve after the end of 2012-2013.

This document (and all others!) can be found in the Board Docs section of Sandi.net

Let’s look at Page 21

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The only reserve required is 2% of our total budget.

SDUSD started 2012-2013 with almost $69M in surplus of Unrestricted Funds.

We ended with $46M. More than enough to honor our contract last year.

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We also have enough money this 2013-2014 school year for pay restorations and a full school year.

The only reserve required is 2% of our total budget.

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Remember how the District pled poverty in spring of 2012?

Let’s check their math.

$46M (2012-2013 Unrestricted Fund Ending Surplus) - $25M (2012-2013 TA Concessions) $21M …which more or less meets the $22M required 2% reserve. And remember, over the past year the District has given raises to the CFO, HR staff, the legal department, and the Superintendent, AND has created about $1M in new administrative positions.

This means SDUSD had the money to cover all pay restorations and cancel all furlough days during 2012- 2013 without a single layoff!

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And we know our concessions only saved $25M because SDUSD said so this past June.

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And what about this year?

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SDUSD definitely has the money to cover all pay restorations and cancel

all furlough days during 2013- 2014. $69M (2013-2014 Projected Unrestricted Ending Surplus) - $37M (2013-2014 Concessions Full Restoration**) $32M -This far exceeds the required 2% reserve of $22M.

And historically, the District ends up with more in reserves than it projects. Let’s take a look at SDUSD’s history…

** If: 5 furlough days (2.7%) + first two 2% raises = $25.7M Then: Each percentage point increase equals about $3.84M So: Last 3% raise = +/- $11.52M, round up to $12M for step/column increases Finally: 2013-2014 concessions full restoration = $25M + $12M = $37 million.

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SDUSD’s History of Crying Wolf

• Back when SDEA was still doing this work, The Advocate ran a story (Feb 2012) analyzing the District’s history of crying wolf.

• The accompanying chart detailed how the District grossly skews its budget every year.

• And every year, SDUSD starts the new year with a surplus that far exceeds the previous year’s projections.

• And every year, SDUSD claims that it is barely staying afloat the current year, but will surely drown the next.

Take a look…

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I compared the SDUSD’s Unrestricted Fund Ending Balances over the last 5 years and it tells the same story… Projected vs Estimated Actual “Ending Balance”

Year

ProjectedUnrestricted Funds“Ending Balance”

as Reported to SDCOE in the July 1 Budget

Estimated ActualUnrestricted Funds“Ending Balance”

as Reported to SDCOE the Following Year

Difference Between Projected and Actual

“Ending Balance”

09-10 $60,719,685

10-11 $25,508,035 $96,664,385 $71,156,350

11-12 $36,406,758 $60,273,162 $23,866,404

12-13 $32,979,701 $46,004,731 $13,025,030

13-14 $69,608,325 More than enough to justify restoring salaries and canceling furlough days.

In June of each year, the SDUSD Board must approve a budget for the following school year and turn it into the SDCOE by July 1st. Each year, they grossly underestimate how much money we will have in reserve by the end of the next few years (usually by creating a Fake Future Financial 911). They use this low-ball number to justify layoffs and low salaries. And there is even more surplus money in the Restricted Funds!

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Required Reserve vs Actual Reserve

YearUnrestricted Fund

Required Reserve as Reported to SDCOE in

the July 1 Budget

Unrestricted FundEstimated Actual

“Ending Balance” Reserve as Reported to SDCOE

Extra MoneyHeld in Reserve

09-10 $22,690,000 $60,719,685 $38,029,685

10-11 $22,476,000 $96,664,385 $74,188,380

11-12 $21,741,000 $60,273,162 $38,554,162

12-13 $21,719,000 $46,004,731 $24,285,731

AND THERE ARE MILLIONS MORE IN THE RESTRICTED FUND!!!

This is the money in our Unrestricted Fund’s reserves. By law, SDUSD is required to maintain 2% of its budget in reserve at all times for “Economic Uncertainties”. (That’s about $22M these days.) SDUSD has ALWAYS maintained tens of millions of extra dollars in reserve for “emergencies”. And while SDUSD ALWAYS gives a doom and gloom budget presentation saying that we will have a deficit “not this year but next,” they ALWAYS prove themselves wrong in the following year’s July 1 Budget.

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Fake Future Financial 911Every year, SDUSD grossly underestimates how much money we will end with in reserve. And then they continue to underestimate for the following years as well by creating a Fake Future Financial emergency (FFF-911). They share this information every year during the Board meetings leading up to the adoption of the next year’s budget. Here are some of the scary looking graphics from previous years.

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Let’s revisit the SDUSD 2012Fake Future Financial 911

During this May 2012 presentation, the Interim CFO shows that SDUSD will have an $80M reserve if Prop 30 passed. (Actually was $83M.)

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• We are only required to have 2% in reserve.• 2% in reserve equals about $20M.• With the passage of Prop 30, SDUSD would have $80M in reserve

The Interim CFO explained:

Awesome!That meant they would totally have enough money to honor our contract, right?

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Wrong! Because here comes the District’s Yearly Fake Future Financial 911…

• A month later, SDUSD’s real budget numbers look about the same, but their presentations include the 2012 FFF-911.

• They say that even IF we agree to pay cuts and IF Prop 30 passes, then we will only have an Unrestricted Fund Reserve Surplus of $9.9M for 2012-2013. (The ACTUAL Ending Balance, which is a real number, turned out to be $46M.)

• They invent an $80M deficit for 2013-2014 and slap it onto the page in a scary, red, pointy text box.

• They say we need to make concessions or they’ll have to lay off 1,300 educators because it will bankrupt our District… Not in the current year, but NEXT year which is classic FFF-911.

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This is FFF-911 garbage and can’t be located in the current MYP

These are pretty accurate which is why they attempt to erase these surpluses with FFF-911 garbage.

Lies they wanted us to believe

2% required reserve

Budget Projections for 2012-2013

Unrestricted Fund

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The District is already trying to use the same scare tactics as last year.

Look at the next slide from the 2013-2014 Budget Adoption Presentation.

Can you find:1) Beginning Balance2) Ending Balance3) Required 2% Reserve4) The FFF-911s?

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Lies they want us to believe

Required 2% reserve

FFF-911 garbage

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But wait, doesn’t some of that surplus money comes from one-time land sales?

Yes. And?The money goes straight into the Unrestricted Fund which means SDUSD can decide to spend the money however they want. There are no strings attached to the proceeds of land sales other than those being self-imposed. Unrestricted funds are unrestricted funds.

When the District sold that property, it was for the purpose of surviving fiscally tough times — and they have. The tough times are behind us, and school funding is projected to soar over the next five years.

The District can absolutely use that money to provide a full school year for our students and to pay our employees the wages the SDUSD Board keeps saying they wish they could pay us.

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Doesn’t the June Agreement (TA) say we only get 57% of additional ADA

to go toward pay and furlough days?

Yes. But this is just the bare minimum that the District is required to honor.

There is nothing stopping them from canceling all furlough days and restoring pay except for their lack of desire to do so.

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Inoculate Yourself Now!• Every year, some money person will make very authoritative

presentations to the Board.• Every year, this person will earnestly warn about a financial monster

hiding under next year’s bed.• Every year, whatever

garbled mess that person has presented is later proven wrong.

• Every year, these authoritative and earnest money people seem to change. (Peace out, “Data” Dobbs!)

Here is what they are coming at us with right now…

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NOT TRUE!

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SDUSD will finish 2013-2014 with a $69M surplus in Unrestricted Funds.

But considering SDUSD always ends up with a bigger reserve than projected, it will likely be higher.

SDUSD absolutely has the money to restore all pay and cancel all furlough days now.

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The only money actually required in reserve

Other stuff they made up.

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Oh! And I forgot to mention…The July 1 Budget is using last year’s ADA of $6,796 per student even though the State of California Department of Finance has published its projection that SDUSD will get $7,107 ADA in 13-14, and $7,583 ADA in 14-15.

Which means there’s even more money coming to SDUSD than is currently called out in the July 1 Budget.

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SDUSD can afford to honor pay restorations and cancel all furlough days THIS school year.

Will they?

Only if we make them!

For more information or to get involved, please visit The Breakfast Club website at http://thebreakfastclubsandiego.wordpress.com/ .