There was a surreal feeling sitting in the partially filled auditorium on the Davis High School Campus. The all-employee meeting was perhaps closer to half employees, but still a robust showing. Superintendent James Hammond, about to lay it on the line for the teachers and other employees, did not recognize the uniqueness of the moment. This wouldn't have happened under his predecessor.
Perhaps it sunk home at the end, after the bad news had been laid forth, all reasonable options had been exhausted, he thanked those in attendance for coming, and they responded by clapping. It is not often news of this sort is delivered and you hear clapping, but that is what happened on this day.
There will be many tough days ahead for the Davis School District. They and the DTA still do not see eye-to-eye on specifics, though they all agree on the basics.
The purpose of this meetings, as Superintendent Hammond put it at the start was to lay out the budget status and assumptions for all to see. Discuss the possibility of salary reductions. And reiterate again that unlike the state, this school district is not going to go outside of the negotiation process.
The meeting was preceded by emailed FAQs to all employees and it will be proceeded by yet another round.
At the end of the day, the district has just one month from this coming Sunday, four weeks really, to come up with their second interim budget.
The struggle as the district has made cleared each time they have gone through this, is that we only have the governor's plan to work off of. Yesterday morning it was announced that there was a budget agreement, and the budget will go forward for a vote. One of the key questions that Superintendent Hammond laid forth was to what degree the district will be afforded flexibility in the area of categorical funds and fund balance reserves. For now they have anticipated the worst-case scenario with no flexibility.
And yet do not hold your breath on the budget agreement. As much as an agreement was announced, there is still a strong possibility that the votes are not there to pass it. Even the Republican's negotiator was noncommittal on the prospect of voting for the bill, even as he said this was the best possible deal.
After a long and apologetic speech about the difficulty of the process and a number of other comments that conveyed his general discomfort with having to deliver such bad news--sincerely delivered, Superintendent Hammond turned the discussion over to Associate Superintendent and CBO Bruce Colby.
They spent the balance of the meeting briefly walking through the budget assumptions and challenges and then addressing questions submitted by card from the employees.
As Bruce Colby explained, the district closed the fiscal year 2008 with a fund balance of around 10 million. Due to ongoing structural deficits, the fact that expenditures exceed revenues, the current fund balance is now down to $8.8 million. This year we have a $2.5 million deficit due to midyear adjustments in the budget by the state. That $2.5 million will come from the fund balance.
The goal of the district remains not to notice any employees.
Right now, our budget challenge is such that we have a $2.5 million deficit for 08-09 (that will be paid for with the fund balance). That grows to $3.3 million for 09-10 and $4.9 million for 10-11.
With the budget flexibility carryover we can we reduce our deficits. The carryover brings up to $0.1 million in surplus for this year, but $2.1 million in deficit for 09-10 and increases the deficit to $4.1 million for 10-11 since we've spent our carryover in the first two years.
If we spend down our reserves as well, we reduce 09-10 to a $1.2 million deficit but increase 10-11 to a $4.5 million deficit.
Staff layoffs or a 2.5% salary rollback will take care of the deficit for 09-10 but we will still have a $3.3 million deficit for 2010-11.
They then threw out these two numbers. A one-day reduction in the work calendar for all employees is $250,000. A one percent rollback in salary for all employees is $500,000.
If all employees take a four percent paycut, the district does not need to lay off one single employee.
Bruce Colby, Superintendent Hammond, and Kevin French then answered a series of written questions.
The first question was why DTA and the Administration were so far apart on how to balance the budget. From the district's perspective part of the governor's plan says that you can go below fund balance. However, his plan does not change ed code and the district believes you have to operate according to ed code. That means you must operate using ongoing revenue or make ongoing cuts. Fund balance reduction is one-time money, not ongoing.
The next question is why aren't all administrators offering to take a five percent pay cut like the "big four." They did not address this directly but suggested that this was a choice. It had to be a mutually agreed upon decision and all have to buy into it or it is not going to make a difference. If only a small number of employees buy into it is, it is just a symbolic offer.
Temporary teachers are hired for a single year. Late in the spring they are notified and let go. Then depending on the fiscal situation, budget, and retirements they could be rehired. Because of how late this process is being pushed this might not occur until very late in the spring if it happens at all.
A question was asked whether the pay cut comes from this year's salary level or next year if one is getting a step and column increase. It was explained that there is a matrix to determine the steps and columns and each cell in that matrix would have a 2.5% decrease. So it would be based on next year's rate.
Next question was whether the salary reductions would be one-time or ongoing. Answer is that they will be ongoing until the district has the ability to restore them.
Next question asked about the impact of salary decreases on retirement. The answer is that while it would be different based on which retirement system the employee is on, they are trying hard to not let it impact retirement.
Then next question asked about self-qualification. A qualified budget is when one does not have the ability to balance the budget over three years. You can qualify in two ways. First you can say it is balance and the County Office of Education can qualify it. Second, if the district know it cannot balance the budget for the third year, they still have to put a budget together, it would kick in another reporting period requirement, and the county could bring in a fiscal advisor. Regardless the district would still have to have a plan and make salary reductions.
There were concerns about cuts in positions to the classified employee bargaining unit. At this time there are no plans to fill positions at this time given the budget. That means that existing employees have multiple responsibilities and job titles.
There was a question about changes in class size reduction requirements. If the district were to change the K-3, and the 9th and 10th single subject class size reduction requirements from the current 20 to 1 and decrease it to 22 to 1, that would be the equivalent of 14 full time positions or FTE.
There was a question as to the salary reduction DTA would have to take in order for there to be no layoffs. As mentioned earlier, the number is 4 percent.
There was a question about the DHS Stadium. The funding for the stadium does not come from general fund money. So it has absolutely no impact on the status of the budget or employee salaries. The district cannot transfer that money to pay for employee salaries. The district considers this a very serious problem and believe that the liability from an injury is strong enough that it could have to pay a settlement from the general fund in the millions.
As such, the district is set to receive county redevelopment money as a starting lone and then looking into a debt instrument for the remaining money. That debt instrument cannot be used for general fund purposes. Just like Grande and the Nugget Fields, the money from these purposes can only be used for facilities not general fund.
Finally they clarified that the four percent reduction would mean no notices and also no class size reduction modifications.
At this time of course, DTA is arguing that the district does not need to make these kinds of cuts and is arguing for a self-qualification. However, at the end of the meeting, the response was appreciative.
The other thing I think that needs to be mentioned is the anguish that the administration and school board are going through with regards to these cuts. No one wants to make these cuts. But they believe that cutting salary will prevent layoffs and given the economic times, losing one's job could be disastrous.
Unfortunately DTA does not appear poised to agree to these cuts prior to March 15 when the second interim budget report is due and therefore, you will likely see a repeat of last year with a number of teachers notified with pink slips. It is unfortunate and it could be avoided.
The district has been clear that if flexibility enables it, the salary cuts would be the first thing off the table. Also I reiterate, do not count on the budget being passed tomorrow. Right now the votes aren't there for it, and even if it does pass, the numbers are bleak.
---David M. Greenwald reporting
Perhaps it sunk home at the end, after the bad news had been laid forth, all reasonable options had been exhausted, he thanked those in attendance for coming, and they responded by clapping. It is not often news of this sort is delivered and you hear clapping, but that is what happened on this day.
There will be many tough days ahead for the Davis School District. They and the DTA still do not see eye-to-eye on specifics, though they all agree on the basics.
The purpose of this meetings, as Superintendent Hammond put it at the start was to lay out the budget status and assumptions for all to see. Discuss the possibility of salary reductions. And reiterate again that unlike the state, this school district is not going to go outside of the negotiation process.
The meeting was preceded by emailed FAQs to all employees and it will be proceeded by yet another round.
At the end of the day, the district has just one month from this coming Sunday, four weeks really, to come up with their second interim budget.
The struggle as the district has made cleared each time they have gone through this, is that we only have the governor's plan to work off of. Yesterday morning it was announced that there was a budget agreement, and the budget will go forward for a vote. One of the key questions that Superintendent Hammond laid forth was to what degree the district will be afforded flexibility in the area of categorical funds and fund balance reserves. For now they have anticipated the worst-case scenario with no flexibility.
And yet do not hold your breath on the budget agreement. As much as an agreement was announced, there is still a strong possibility that the votes are not there to pass it. Even the Republican's negotiator was noncommittal on the prospect of voting for the bill, even as he said this was the best possible deal.
After a long and apologetic speech about the difficulty of the process and a number of other comments that conveyed his general discomfort with having to deliver such bad news--sincerely delivered, Superintendent Hammond turned the discussion over to Associate Superintendent and CBO Bruce Colby.
They spent the balance of the meeting briefly walking through the budget assumptions and challenges and then addressing questions submitted by card from the employees.
As Bruce Colby explained, the district closed the fiscal year 2008 with a fund balance of around 10 million. Due to ongoing structural deficits, the fact that expenditures exceed revenues, the current fund balance is now down to $8.8 million. This year we have a $2.5 million deficit due to midyear adjustments in the budget by the state. That $2.5 million will come from the fund balance.
The goal of the district remains not to notice any employees.
Right now, our budget challenge is such that we have a $2.5 million deficit for 08-09 (that will be paid for with the fund balance). That grows to $3.3 million for 09-10 and $4.9 million for 10-11.
With the budget flexibility carryover we can we reduce our deficits. The carryover brings up to $0.1 million in surplus for this year, but $2.1 million in deficit for 09-10 and increases the deficit to $4.1 million for 10-11 since we've spent our carryover in the first two years.
If we spend down our reserves as well, we reduce 09-10 to a $1.2 million deficit but increase 10-11 to a $4.5 million deficit.
Staff layoffs or a 2.5% salary rollback will take care of the deficit for 09-10 but we will still have a $3.3 million deficit for 2010-11.
They then threw out these two numbers. A one-day reduction in the work calendar for all employees is $250,000. A one percent rollback in salary for all employees is $500,000.
If all employees take a four percent paycut, the district does not need to lay off one single employee.
Bruce Colby, Superintendent Hammond, and Kevin French then answered a series of written questions.
The first question was why DTA and the Administration were so far apart on how to balance the budget. From the district's perspective part of the governor's plan says that you can go below fund balance. However, his plan does not change ed code and the district believes you have to operate according to ed code. That means you must operate using ongoing revenue or make ongoing cuts. Fund balance reduction is one-time money, not ongoing.
The next question is why aren't all administrators offering to take a five percent pay cut like the "big four." They did not address this directly but suggested that this was a choice. It had to be a mutually agreed upon decision and all have to buy into it or it is not going to make a difference. If only a small number of employees buy into it is, it is just a symbolic offer.
Temporary teachers are hired for a single year. Late in the spring they are notified and let go. Then depending on the fiscal situation, budget, and retirements they could be rehired. Because of how late this process is being pushed this might not occur until very late in the spring if it happens at all.
A question was asked whether the pay cut comes from this year's salary level or next year if one is getting a step and column increase. It was explained that there is a matrix to determine the steps and columns and each cell in that matrix would have a 2.5% decrease. So it would be based on next year's rate.
Next question was whether the salary reductions would be one-time or ongoing. Answer is that they will be ongoing until the district has the ability to restore them.
Next question asked about the impact of salary decreases on retirement. The answer is that while it would be different based on which retirement system the employee is on, they are trying hard to not let it impact retirement.
Then next question asked about self-qualification. A qualified budget is when one does not have the ability to balance the budget over three years. You can qualify in two ways. First you can say it is balance and the County Office of Education can qualify it. Second, if the district know it cannot balance the budget for the third year, they still have to put a budget together, it would kick in another reporting period requirement, and the county could bring in a fiscal advisor. Regardless the district would still have to have a plan and make salary reductions.
There were concerns about cuts in positions to the classified employee bargaining unit. At this time there are no plans to fill positions at this time given the budget. That means that existing employees have multiple responsibilities and job titles.
There was a question about changes in class size reduction requirements. If the district were to change the K-3, and the 9th and 10th single subject class size reduction requirements from the current 20 to 1 and decrease it to 22 to 1, that would be the equivalent of 14 full time positions or FTE.
There was a question as to the salary reduction DTA would have to take in order for there to be no layoffs. As mentioned earlier, the number is 4 percent.
There was a question about the DHS Stadium. The funding for the stadium does not come from general fund money. So it has absolutely no impact on the status of the budget or employee salaries. The district cannot transfer that money to pay for employee salaries. The district considers this a very serious problem and believe that the liability from an injury is strong enough that it could have to pay a settlement from the general fund in the millions.
As such, the district is set to receive county redevelopment money as a starting lone and then looking into a debt instrument for the remaining money. That debt instrument cannot be used for general fund purposes. Just like Grande and the Nugget Fields, the money from these purposes can only be used for facilities not general fund.
Finally they clarified that the four percent reduction would mean no notices and also no class size reduction modifications.
At this time of course, DTA is arguing that the district does not need to make these kinds of cuts and is arguing for a self-qualification. However, at the end of the meeting, the response was appreciative.
The other thing I think that needs to be mentioned is the anguish that the administration and school board are going through with regards to these cuts. No one wants to make these cuts. But they believe that cutting salary will prevent layoffs and given the economic times, losing one's job could be disastrous.
Unfortunately DTA does not appear poised to agree to these cuts prior to March 15 when the second interim budget report is due and therefore, you will likely see a repeat of last year with a number of teachers notified with pink slips. It is unfortunate and it could be avoided.
The district has been clear that if flexibility enables it, the salary cuts would be the first thing off the table. Also I reiterate, do not count on the budget being passed tomorrow. Right now the votes aren't there for it, and even if it does pass, the numbers are bleak.
---David M. Greenwald reporting
