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Saturday, February 14, 2009

This is the Worst Possible Budget Deal But It Needs to Pass

Given the fact that this is the bicycle capital of the world, I risk a lot by saying this, but the priorities of people are a bit off in this country. Originally the state legislature was going to meet at 9 am this morning to vote on the budget agreement.

However there is one problem. Tomorrow in Davis there will be the Amgen Bike Tour. In Sacramento that will be today from 1 pm to 4 pm. There will be 100,000 people in downtown Sacramento today. Not of course to watch the budget vote, but to watch Lance Armstrong.

As a result, the State Legislature will be pushing off their vote on the budget to 5 pm on Valentine's Day Evening. If you're keeping score at home bike racing > Budget > Love and Marriage.

Now that we're clear on our priorities, let us lay out the stakes as if you do not know it. The most immediate stake is that there will be 20,000 state workers laid off their jobs if the budget does not pass. I am certain that some people reading this thinks this is a good thing, I would strongly suggest they put themselves in the shoes of those who make a modest income to begin with and will suddenly not know where their next paycheck is coming from.

That is just the immediate impact. The state is literally out of money. So right now, as we learned from Yolo County's Assistant Administrator Pat Leary on Wednesday, the County is not receiving its normally $5 million in monthly payments from the state in order to carry out its state mandated functions. Those are all of the social service functions the county provides. The county is still performing them, but they are taking the money from an emergency joint fund that is shared money from the cities and other jurisdictions in this county. They have to pay the money back with interest. They will get the money back probably but again, they will lose the interest. This is on top of the $22.5 million deficit the county is facing next fiscal year.

At some point, the state will not only be issuing IOUs to state employees, but to jurisdictions themselves. That means that at some point schools, counties, and municipal governments will have to operate without any state money. That will be an interesting challenge.

The bottom line, and I have spoken to a lot of people about this. There will come a point when the state starts defaulting on its obligations and those entities will basically have to shut down. If that happens, the entire state could come crashing down and then the state's economy will go from on the brink of disaster as it stands now to over the cliff. This is not an exaggeration.

Let's be honest up front--nobody is going to like this deal. No one. It's a bad deal. It's a horrible deal. And it is one that we have to sign because if we do not, things get so much worse. I cannot tell you how many different people have said this same thing in their own words.

On Wednesday, Senate Republican Leader Dave Cogdill called this deal the best they were going to get.
"My deal, one more time, has always been that I would try my best to get it to a position where I felt it was as good as I could get and I was willing to release my members. That's where I am. So I'm not guaranteeing any votes; it's up to them (his members) to make that decision… But I've negotiated it to the point where I think it doesn't get any better…"
He did say he was turning them loose to allow them to vote if that’s their decision.

In fact, the Senate leader himself would not commit to supporting the package saying:
"We're waiting to see all the language and all of that so I'm not ready to commit who the votes will be at this point."
The question is whether or not they have the votes and one-by-one Republicans announced that they were not voting for it. Until there were just three Republicans who had not announced that they were not voting for it, but they also hadn't announced that they were not voting for it.

This is what Shane Goldmacher from the Sacramento Bee said:
"The field of potential Republican votes for the budget compromise in the Senate -- widely viewed as the most challenging caucus to corral support -- has narrowed so significantly that only three members have yet to throw cold water on the tentative deal.

That happens to be the bare minimum of Republican votes needed to pass the $40 billion-plus budget plan.

Those three are Senate Republican leader Dave Cogdill, Sen. Dave Cox of Fair Oaks and Sen. Roy Ashburn of Bakersfield."
Here's the Senate Republican Caucus' Morning release:

"What They Are Saying About the Bipartisan Budget Solution...

"...what lawmakers and voters must understand is that the choice is not between this budget and some theoretical better deal; it is between this budget and fiscal meltdown."

-- Los Angeles Times editorial, February 13, 2009

"... there is one overpowering, compelling reason that legislators should approve it: It is the best possible deal that we can imagine out of a dismal reality - economic and political - that has left California government at the brink of insolvency."

-- San Francisco Chronicle editorial, February 13, 2009

"...the tentative budget deal being worked out by the governor and legislative leaders is probably the best we can get. Perhaps the only positive thing about the proposed deal is that its spreads the pain fairly evenly."

-- Fresno Bee editorial, February, 13, 2009

"Given the scope of the state deficit, any budget compromise will contain ugly and unpopular components. But further delays are an even worse option."

-- Modesto Bee editorial, February 13, 2009)

"When Republicans unveiled their budget draft back in December, they put forward their wish list of government changes they wanted as part of any budget agreement. And though details are still coming into focus on the tentative budget deal, it looks as if Republicans made progress in nearly all of the areas they wanted changed."

-- Capitol Weekly article, "Republicans win concessions in budget plan," February 12, 2009)

"While this budget contains a painful mix of cuts and tax increases that nobody loves, the cost of inaction is much, much greater. Every day we wait to pass a budget means further economic devastation, the loss of thousands more jobs, and the shuttering of small businesses up and down the state."

-- Jim Earp, Executive Director of the California Alliance for Jobs, press release, February 12, 2009

"If we don't pass this budget now the pain will only get worse and the budget hole will only get deeper. It took courage for the Governor and our legislative leaders to make these hard decisions but they stepped up to the plate and addressed their responsibilities."

-- Danny Curtin, Director of the California Conference of Carpenters, press release, February 12, 2009"
So do we have the votes? Find out tonight.

What's in the bill?

A mix of spending cuts, tax increases, and borrowing. $15.8 billion in spending cuts, $14.3 billion in tax increases, and borrowing of $10.9 billion some of which will require voter approval.

How bad are the cuts? $5.646 billion from education this year. Another $2.955 billion next year. Higher education will get a 10% cut across the board. In other words, it's really bad. We do not know to what extent this includes budget flexibility. It looks like Class Size Reduction remains however.

The Los Angeles Times declared business the big winner in the budget plan. While we are having to pay more taxes, there is $1 billion in corporate tax breaks.
"About $1 billion in corporate tax breaks -- directed mostly at multi-state and multinational companies -- is tucked into the proposal. Opponents say the breaks will do nothing to create jobs, and the Legislature has rejected such moves repeatedly in the past. But now, to secure enough Republican votes to pass a budget that would raise taxes on everyone else, the Legislature is poised to write them into law with no public hearings at a time when the state treasury is almost out of cash."
Some of this was contingent upon the federal stimulus giving at least some money to California. Some of that borrowing is coming from stimulus money. We will have to see how that plays out.

The bottom line, this is again an awful budget. Horrible things will happen as the result of it. But if it does not pass, it is going to affect everyone's life in profound ways that you cannot imagine.

---David M. Greenwald reporting

Friday, February 13, 2009

Family of Woodland Taser Victim Files Suit Against Woodland, Police, and Taser International

The family of Ricardo Abrahams has filed suit against the City of Woodland, the Police Officers involved in the incident, and Taser International. Mr. Abrahams died in May of 2008 following an incident where he was shot multiple times with "Taser" electrical guns, hit with metal batons, and the police eventually tackled him to the ground.

The Yolo County Coroner's office ruled Abrahams did not die from the Tasers, but but rather from positional asphyxiation, which happened when police held him down on the ground. The Attorney General's Office cleared the officers of criminal wrongdoing.

Lawyers representing Rosemary and Cecil Abrahams of Davis allege:
"On the morning of May 28, 2008, police officers from the Woodland Police Department killed Ricardo during an altercation in which the officers beat him with metal batons, shot him multiple times with "Taser" electrical guns, and tackled him to the ground. The brutalization by the officers, combined with a dangerous defect in the Taser guns used, caused Ricardo's death."
According to their account, on May 18, 2008, Ricardo Abrahams left the Safe Harbor facility. Staff had become concerned about his condition and called the police to ask them to check on Ricardo.
"One or more officers at the scene decided to take Ricardo into custody, even though he had done nothing illegal and was not a danger to himself or others. Ricardo was not intoxicated and was not under the influence of any illegal substances. Police officers simply did not have reasonable suspicion or probable cause to seize Ricardo.

Police officers began to beat Ricardo's arms and legs with their batons. Police officers also fired at Ricardo using Taser electrical guns that were manufactured, distributed, marketed, and/or sold by TASER INTERNATIONAL, INC. Ricardo ran away from the officers to avoid their unlawful use of force against him. The officers chased Ricardo and shot him again with Taser guns. Ricardo fell to the ground and police officers swarmed on top of him. The weight of all the officers on Ricardo made it difficult for him to breathe. Shortly thereafter, the officers realized that Ricardo was not breathing. One or more officers called for an ambulance to transport Ricardo to the hospital. Ricardo was taken to Woodland Memorial Hospital where he was pronounced dead at approximately 10: 15 a.m. Ricardo's death occurred after unlawful, illegal, and unconstitutional force was used against him by the officers."
The lawyers allege that the police officers "needlessly escalated their encounter with decedent into a confrontation, and intentionally and recklessly commenced the use of force and violence without justification."

The plaintiffs also criticize policies, customs, and practices of the Woodland Police Department.
(a) directing or encouraging police officers to inflict unreasonable and excessive force on persons and to seize persons without reasonable suspicion or probable cause,

(b) hiring, retaining, and assigning officers with a known propensity for using unreasonable and excessive force and for seizing persons without reasonable suspicion or probable cause,

(c) failing to adequately train, supervise, warn, and discipline officers against the use of unreasonable and excessive force and against the seizure of persons without reasonable suspicion or probable cause, particularly with respect to persons who have committed no crime, but suffer from a health/medical condition, mental stress, mental deficiency, or mental illness,

(d) failing to investigate and impose discipline upon officers who use unreasonable and excessive force, or seize persons without reasonable suspicion or probable cause, or for other misconduct, thereby condoning and encouraging officers to believe that they can violate the constitutional and statutory rights of persons with impunity and that such misconduct will not affect their eligibility for continued employment, compensation, promotion, and other employment benefits,

(e) failing to adequately train, supervise, warn, and discipline officers regarding the dangers of Taser guns, particularly the risks to the respiratory and cardiovascular systems of persons who may have pre-existing health and/or medical and/or mental conditions, and who are shocked repeatedly, within a short period of time, and are then subjected to impaired breathing by the weight of an officer or officers.
The complaint alleges eleven causes of action.

The first is wrongful death in that the "decedent's death was directly and proximately caused by the illegal, wrongful, and neglectful conduct of the Defendants."

The second is violation of substantive due process.
"Defendants' misconduct and policies, customs, and practices alleged herein amounted to deliberate indifference to, and/or reckless disregard for, Plaintiffs' fundamental liberty interest in, and substantive due process right to, the companionship and society of their child, under the First and Fourteenth Amendments of the United States Constitution."
The third is excessive force.
"Defendants' misconduct alleged herein violated decedent' right to be free from the unreasonable and excessive use of force as guaranteed by the Fourth and Fourteenth Amendments of the United States Constitution."
The fourth is false arrest.
"Defendants' misconduct alleged herein violated Plaintiffs' right to be free from unreasonable seizure as guaranteed by the Fourth and Fourteenth Amendments of the United States Constitution."
The fifth is municipal liability that hits on the city of Woodland's polices, customs and practices. Recall one of the defenses is that they were following procedure as laid forth by the Woodland Police Department. This cause of action would get at that defense claim.

The sixth cause of action is battery stemming from the physical confrontation that the plaintiffs allege was improper.
"The police officers beat, shot, and tackled decedent, without his consent, with the intent to cause harmful and offensive contact. Decedent was harmed and/or was offended by such contact. This conduct occurred prior to decedent's death."
The seventh cause of action is interference with civil rights, this is related to the second cause of action.
"Defendants, by intimidation, violence, threat of violence, and/or coercion, intentionally interfered with or attempted to interfere with the right of decedent to be secure against unreasonable seizures, pursuant to the Fourth Amendment of the United States Constitution, Article I, Section 13 of the California Constitution, and the right to due process, pursuant to Article I, Section 7 of the California Constitution. This conduct occurred prior to decedent's death."
The eight cause of action is negligent hiring and supervision. The ninth cause of action is negligence.

Only the tenth and eleventh causes of action is directed against Taser International--strict products liability and products liability--negligence.

According to the allegations:
"TASER INTERNATIONAL, INC. knew that its Taser guns had manufacturing and/or design defects that presented the risk of causing personal injury and death, particularly against persons experiencing mental stress, mental illness, health issues, and/or medical conditions.

Furthermore, TASER INTERNATIONAL, INC. knew that its Taser guns were defective in that they were not accompanied by adequate instructions and/or warnings regarding the correct use of the guns, and/or the known and/or scientifically knowable potential risks or side-effects involved in using the guns in a foreseeable manner, including, but not limited to, the risks to the respiratory and cardiovascular systems of persons who may have pre-existing health and/or medical and/or mental conditions, and who are shocked repeatedly, within a short period of time, and are then subjected to impaired breathing by the weight of an officer or officers."
There have been no official responses to this point from the defendants.

One point that needs clarification because it arose in the Woodland Daily Democrat's initial story and also was mentioned on Matt Rexroad's blog.

The Daily Democrat wrote:
"The officers -- John Perez, Omar Flores, Anthony Cucchi and Amanda Waldeck -- were cleared of any wrongdoing by the state Attorney General's Office."
Mr. Rexroad who argued that the family should not receive one cent of taxpayer money said:

"The Woodland Police officers were cleared."

The more accurate statement is that the officers were cleared by the Attorney General's Office of CRIMINAL CONDUCT.

Deputy Attorney General Davis Lowe wrote:

"We find no criminal conduct on the part of any of the involved officers..."

The Vanguard reported on this back in October:
"This is not a surprising finding and based on what little we know of the case, an accurate finding. The fact of the matter is, a criminal finding would have had to have shown that the police officers intended to do harm to this individual. That is a very high standard to meet and one that is not in agreement with the known facts of the incident.

In other words, there is no reason to have suspected that the officers acted in a malicious fashion. That would be the difference between an incident like Rodney King where the police officers were clearly using excessive force in an intentional and malicious matter. However, even in the King case there was no criminal conviction--rightly or wrongly. The King case in that regard represents the norm.

But that is not the end of the story. Criminal conduct is only a small amount of this case. The next question will be whether the police are civilly liable for Mr. Abraham's death. That is a much lower standard and one that it does not appear from media accounts that the AG's office looked into."
At that time, Attorney Johnny L. Griffin from Sacramento claimed that the state's ruling was based on inaccurate information submitted by the Woodland Police Department to the Attorney General's office.
"If the material submitted by the Police Department is incomplete and/or inaccurate, the attorney general's findings will likewise be flawed... Bottom line, the attorney general's finding can only be as trustworthy as the information provided by the Police Department."
Bottom line here is that no judgment should be passed yet either way. The AG's office found no criminal conduct but that is not the end of the story. This civil trial will determine civil liability. The officers have not been cleared in this venue yet. We shall let the process play out and see what comes out in the trial.

---David M. Greenwald reporting

Frequently Asked Questions (FAQ) About the DJUSD Budget Situation

The school district in order to answer questions from district personnel about the budget and budget process has put together a Frequency Asked Question (FAQ) sheet. They put one together prior to Wednesday's meeting and now will put one together based on the questions received at Wednesday's meeting.

Here's the original FAQ that was emailed to all district personnel.

1. What is required of the district in terms of a budget process?

The district is required to submit a multi-year budget that shows fiscal projections over a three year period. The Second Interim Budget due by March 15th must include projections in the current 2008-09 year and the next two years 2009-10 and 2010-11. By June 30th the district must submit an “Adopted Budget” for 2009-10 that includes a multi-year projection for 2009-10, 2010-11 and 2011-12. These budgets must show fiscal solvency over these time periods.

2. What does a "qualified" budget mean?

A “qualified” budget means that the district cannot provide a fiscally solvent budget plan in the second or third year of the budget. The district is required to develop a fiscal plan of action to address the budget shortfalls. Depending upon the size of the shortfall and the district’s ability to address the issue, the County Office of Education can require outside interventions to move the district toward fiscal solvency. This means persons outside the district can become involved or even direct budget decisions and timelines.

3. What would a "negative qualification" mean to the district?

A “negative” budget means that the district cannot show a fiscally solvent budget plan in the current year of the budget or is at risk of running out of cash due to the budget shortfalls. This “negative” status occurs at any time including the current year if/when reserves no longer meet contractual commitments. The district is required to develop a fiscal plan of action to address the budget shortfalls. The County Office of Education would require outside interventions immediately to move the district toward fiscal solvency.

4. Why are cuts to school districts budgets so difficult compared to private sector?
1. Districts’ have little or no control over funding levels. For example, right now we are being required to meet statutory deadlines even thought the legislature has not me theirs.

2. A portion of the district’s dollars (15%) are “categorically” attached to specific programs and services. Right now, it is unclear what state categorical dollars are “flexible” and can be used to address the budget deficit.

3. Employee compensation accounts for over 85% of the operating budget and the majority of the employees work under employee collective bargaining associations. Compensation accounts for 90% of the unrestricted budget.

4. Over 10% of our funds are programs protected by parcel tax measures. This means these programs or services will not be eliminated.
5. Approximately how many jobs would be saved with a rollback?

A 2.5% rollback would save approximately 20 jobs. A 4% rollback (i.e. back 18 months) would prevent layoff notices from being administered this year.

6. How does our situation compare with the state and the nation?

Our situation is in line with a deep economic downturn affecting the country. The California unemployment rate is at an all time high and could climb above 10% in the coming months. There have been thousands of corporate layoffs over the last few weeks. Some major corporations are trimming up to 10% of their employees. The State of California is currently putting workers on furlough with potential layoff for state employees that could reach 10,000 workers.

7. How would a more favorable than expected state budget affect our decisions?

If the approved State budget gives the district flexibility, fewer reductions would be needed and any layoff notices administered could begin to be rescinded.

8. How would a rollback affect retirement?

This question would have to answered on a case by case basis. A STRS employee with fewer than 25 years of service, absent any negotiated agreement to mitigate the reduction, would be adversely affected.

9. What impact would categorical "flexibility" have on the budget shortfall?

A large portion of State education funding is allocated to districts for specific programs (Categoricals). DJUSD receives state funding of $7m for these programs. Categorical flexibility means that instead of using the money in specific categories (e.g. CSR, textbooks) we would be able to use the money as part of the general fund. This would allow our district to make local decisions how to use these funds to cover our state revenue reductions. Even if we were allowed the most flexibility that anyone has suggested it would only cover $2 million of the total $5 million deficit over the next three years.

11. Are we using the reserve?

At this point we are using all the reserves we are allowed to use.

12. What relationship does the stadium have to the general fund or the budget shortfall?

It has no relationship. This is an example of how complex school funding came be. In the middle of devastating general fund losses, we have redevelopment funds that cannot be used to help us with our educational funding. There are monetary advantages and safety consideration that make moving forward with a project at this time a reasonable thing to do. Even so, the direction of the Board was simply to move forward with planning. No money has been expended, borrowed, or promised beyond the redevelopment funds that could only have been used on such a project. In the event a facility load is used to finance the project, the funding stream to pay the debt would come from secured property taxes earmarked for facilities only.

Thursday, February 12, 2009

District Lays It All Out for the Teachers and All District Employees

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

Wednesday, February 11, 2009

Vanguard Radio Tonight

Guest will be Pat Leary, Assistant County Administrator for Yolo County. We have not talked as much about the county's budget crunch. But it's worse than the city and school district combined.

Catch the show tonight at 6 pm on KDRT 95.7 FM. Or log onto: for live streaming. Show will be taped, so no calls.

Why Do We Need a New General Plan?

The Davis City Council last night began to embark upon their discussion of how the General Plan update process should proceed. There was considerable discussion as to whether it should even go forward at this point given the current economic situation, given the costs of proceeding, and given the uncertainty of our times.

The consistent question that arises and is never really answered by those councilmembers who support going forward with an update is why we need to do so now, rather than take the Housing Element that has already been adopted and perhaps modifying the plan with more modern and general principles of sustainability.

There is considerable difference as to how the council should proceed. Some such as Councilmembers Sue Greenwald and Lamar Heystek want to hold off on any major changes right now. Others such as Mayor Pro Tem Don Saylor believe that this current General Plan no longer can guide us and we now need a new one. Others such Mayor Ruth Asmundson and Councilmember Stephen Souza seem to want some sort of middle ground where there is some update, but on the cheap and perhaps not full blown.

Sue Greenwald cited the strength of the current General Plan and the budget situation as reasons not to go forward with a full-scale General Plan update process at this time.
“Personally I think there’s no reason to spent 1-2 million dollars that we don’t have to reinvent the wheel when the wheel that we already have is a Michelin. Yes it would cost 1-3 million dollars to do a comprehensive General Plan. Sometimes discretion is the better form of valor.”
Councilmember Greenwald expressed concern about the livability of this region in the future. She also demonstrated support for the work that has already been done and the fact that this General Plan is a model for other communities.
“We have an extremely high quality advance General Plan, we don’t need a new General Plan right now. Our General Plan is what other cities are trying to do. When you hear other cities are doing a General Plan, they are trying to do one similar to the one that we have now.”
The bottom line is costs:
“We can save 1 to 3 million dollars by re-adopting our current plan in essentially similar form. The Housing Element Update which is our legal requirement is good until 2013.”
As a result, she is looking at a more basic General Plan process—one that keeps what we have and is good, and updates where it is needed.
“We might want to add some sustainability items, but we might want to wait on that because the state is talking about how they want to incorporate sustainability into our General Plan.

We can amend our General Plan, four times a year with as many amendments as we want. We can work on a sustainability section now. We already have a housing element which is good through 2013.”
The uncertainty is also part of what drives the more cautious approach:
“It’s very important for us to scale this back. I was always against doing a full scale General Plan, but when the council majority decided to go forward with it, it was before the economic collapse. Many economists are debating whether we are going to have a recession that takes three or four years to really work our way out of or whether it’s going to be a Japan style twenty year recession where housing prices fell fifty percent and never got back to where they had been before…”
Given the current fiscal situation, we need to save whatever money we can.
“We’ve already set aside $257,000 just this year for this type of visioning process. We don’t have this type of money. Look at the budget deficits you’re going to see next week. I implore you, do not go forward with a comprehensive General Plan that we cannot afford to do and we do not need.”
Councilmember Stephen Souza spoke of several of the past General Plans and the process involved in developing them. He said that for him he didn’t want the extremely short, ten month process, but he also didn’t want the 215-member, 14 committee, six year process.
“As for the question raised by several in the community and the one councilmember that has spoken so far, why should we do this? Is there something broke that we need to fix here? I would say I have seen planning over the term that I have been on the council in a haphazard fashion. It’s not coordinate, there’s no vision of where it’s coming from, it’s project-by-project. I think that cuts into a vision I want to see in my community, inevitably.”
Councilmember Souza is looking for a vision that would describe what and where we will be within the parameters of the city of Davis. Is our “urban form” what we see now and will we simply redevelop it or is it something different?
“To should we. I concur, I really don’t want to spend any money right now. I want to save that money because I don’t know what’s going to hit us in the next two years. But I don’t want to stop what we’ve begun. If there’s some way we can move forward without moving forward as fast, on a plan. If there’s something we can do in the interim that gives us some guidance as to where we may eventually go.

Maybe it’s just describing that vision of what we will become in 2035 and 2050. Maybe we go that step, we don’t do a full-blown analysis, revision, and update. And I do agree that I don’t think… I think after looking at all these plans, I like this one [current General Plan].

I like it, but it’s confusing and there’s areas that need better understanding for not the folks who read this all the time who can go through it all the time… but for the basic citizen of the community to be able to understand this document a little more.”
Mayor Pro Tem Don Saylor began by describing his involvement in the previous process. He suggested that contrary to popular belief, most of the people involvement played a small role. His own was played on committee that completed its work seven years prior to the final adoptions of the General Plan in 2001. From that standpoint our General Plan is not merely eight years old, but entire sections are actually closer to 15-years-old and thus badly in need of update.

He continued arguing that the current plan is in effect, obsolete:
“I submit in many respects our current General Plan is not guiding our actions. Any action that we need decision that we take, does in fact require a General Plan amendment. In fact, we do bundle them up and package them in one of these four General Plan amendments that happen each year. Virtually any project that comes forward, we’re looking at changing the General Plan.”
He then disparages the current General Plan:
“I think the General Plan is as our staff has said, long and unfocused. It is not clear in its guidance. It does not provide for reliable projects for financial and infrastructure planning. It requires us to have constitutional crisis over any project that comes before us. It has a lack of coordination with UC Davis plans and is not in sync with the state requirements, some of them are still shaping on climate change, water supply, environmental justice and other issues.”
From this perspective, he suggests we have a need to take a look at it.
“My interest in terms of what should it contain and achieve, I would dearly love for us to have a process… that allows our community members to be able to coalesce around some sort of shared vision on what we want our community to be on about 2035. The reason to take a date like that is that it’s far enough out that we are not necessarily talking about what we do with some intersection or some empty lot, we’re talking about a vision. That vision should guide what actions follow and flow from it.

I would like for the plan that we have to constitute a framework for us so that when we have decisions on individual projects or proposals that we can compare them against something rather than the individual opinions of the people who happen to be in the room at the time.”
He went on to point out the current General Plan does not address issues like climate change, sustainability, economic development, infrastructure needs, and other issues of finance. He spoke of the need to update our transportation circulation system.
“Our street system is sort of designed for something that doesn’t exist anymore. In a lot of ways our streets are designed for a town that existed in 1965 and we’ve already outgrown it and we should take a look. ”
Later the Mayor Pro Tem would take issue with the suggestion that this comment refers to the need for widening the roadways in Davis.
“In terms of the financing, nobody can argue that we’re in a good time to do this. But we’re not planning for this year or the year after, we really are thinking about visioning for a longer term.”
He wants the city to look for sources of funding and is willing to consider some sort of phased approach.

Councilmember Lamar Heystek was very cautious about the need to do this and urge us to be careful in proceeding.
“I think we need to be careful about our process that leads us to throw the baby out with the bath water. We’ve heard a number of comments made about our General Plan—some good and some not entirely positive. But, if this current General Plan is the road map of our community I ask anyone to tell us how this roadmap for our community, how has this road map let us astray. What is it about Davis now that we think this General Plan has led us to that we need to change?”
He agrees that there needs to be actualization of this plan. However, he challenged people to find what they disagreed with with regards to the current General Plan.
“If you find something objectionable please tell us and tell us how we should change it.”
For him therefore, it is unclear why we need to spend money for something that does not appear to be broken.
“It is unclear to me why we should be spending millions of dollar on a[n updated] document or taking this document and possibly creating an entirely different one if we can’t make the case that this document has led us astray.”
Councilmember Heystek argued that if there are weaknesses and omissions within the current General Plan, perhaps we needed staff to find ways to address those needs for less than one million dollars.
“Unless someone points out to me what’s wrong with this plan, I’m not inclined to start a new process… If it ain’t broke, don’t fix it.”
He also wants to look at other aspects of our General Plan aside from land use. He wants to think about where this falls within our priorities. His major concern is with the price tag and the need to change this project.

Mayor Ruth Asmundson did not want the finances of this plan to prevent the process from going forward.
“We talk about maybe this is not the right time to start this process because it’s expensive. But I think what we need to recognize is that we’re not planning for the today, but we’re planning for the future. We should be responding for future plans for what we have right now. It has to be a process that spans so many years.

We don’t really know what that future will bring, but what we need to look at is what do we want to see Davis in 2035.”
The Mayor wants to have a vision, we all have different ideas of what is best for Davis, and wants to start with a positive process where we look at what we want rather than what we don’t want. We need to have strong public engagement.

She is concerned a bit with the three million dollar cost and questioned how much input we need and how long a process this should.
“I think most of the three million (dollar) cost is because of the long process, long public engagement that is going to happen. I think we need to find a hybrid—I don’t want it too short that we are shortchanging our process, I don’t want to have that. If we’re going to have a new General Plan or an updated General Plan it has to be realistic and pragmatic that we can really use rather than just having a nice product that will go on the shelf.”
She thinks that two years is too short. She’s looking at two to five years with five years being too long. In terms of the cost, she wants to do it for less than a million but recognizes the costs of the EIR. She wants to possibly have a “cheaper” environmental impact report. She also wants to explore alternative funding options like SACOG.
“If the cost is what’s prohibiting us, then I know that we can get the funding grant from somewhere else. But that shouldn’t be the limiting factor for us in this study. I think we need to look at what we want and then look at the cost. My personal preference is I don’t want to start with the cost. ”
Finally, she feels that since the issue of growth is a divisive issue, we should not look at growth but rather what we want in Davis. According to the Mayor, growth has to happen, but how do we get to that.
“It shouldn’t be the growth that leads us to where we want to go. So I want growth to be used secondarily not what’s leading us.”

The question I came in with is why we need to do this now. What I heard at the meeting, even from those who argued that we did need this now, was really no rationale for urgent and immediate action. I heard reasoning of why things need to be updated on a variety of fronts. I heard reasoning of why we need at some point to come up with a shared vision for the future of Davis. What I did not hear is a reason why this needs to begin today or next year, rather than in 2013 when the Housing Element expires. What I did not hear is a reason we cannot revise the current General Plan to include elements of sustainability and climate change that we seem concerned about to go along with the Housing Element Process.

The bottom line is I simply do not see the need to go forward with this today when we are facing down a budget deficit that will run in the millions, when we have adequate housing to fill our needs frankly for the next ten years let alone five, when the market is crunched, the state and country is in crisis, and we have no idea what tomorrow let alone next year will look like. There was nothing said last night that changes that viewpoint.

As Councilmember Sue Greenwald wrote on the Vanguard last week:
"This is a total waste of money, which I have been opposing from the start. Our current general plan is very good, and way ahead of its times. The housing element update can be done independently. The plan can be amended quarterly.

There is no way we have the money for this exercise. I can only imagine that growth agendas are driving it."
Councilmember Greenwald is exactly right. The city's current budget appears to have a deficit of upwards of $5 million for the fiscal year 2010-11. And yet the re-drafting of the general plan will cost into the millions.

According to the city staff report:
"Total costs for updating the City's General Plan could range from approximately $1 million to $3 million over two to four years, depending on the work program selected."
We might be able to justify the cost if there was a pressing need to update the general plan. During the course of the meeting, again, I saw rationale for us to update portions of the General Plan. What I did not see was either rationale for the scope that Mayor Pro Tem Don Saylor suggested or to do it today.

As Councilmember Greenwald has put it, the current General Plan is a sound plan which was way ahead of its time. There is no need for wholesale changes.
"We can just take the existing plan with the new housing element, make a couple of changes (we do that regularly anyway), and adopt it as our new plan."
Councilmember Lamar Heystek concured. He told the Vanguard prior to the meeting:
"It is not clear to me, especially in light of the millions of dollars in budget cuts we'll have to make over the next few years, why we should be spending millions in taxpayer dollars redoing what the taxpayers themselves spent years doing just a short time ago. My priority is to implement what we have, not reinvent the wheel."
What is clear is that our citizen-based General Plan is now under attack by the forces that are demanding more growth. Our current citizen-based 2001 General Plan is a core document which speaks to a long term vision of the future of Davis. Many spent years working on this document, why throw it out now?

Moreover, they are pressing for a twenty-five year general plan that looks out to 2035 or even 2050. 2050? That is forty years. But by developing a plan that far out, what will happen is that sites that would never be considered in the next ten years, will be given life and consideration when we look forty years out. Such a document is growth inducing.

This is not the time to spend money on this sort of project. We do not need to do it right now. We have serious problems facing us including a budget deficit, a structural deficit, and a pension and compensation system that is out of whack and in need of restructuring.

There are serious questions about our water supply and even more questions about the cost of developing alternative sources for water which will threaten to drive the average person for their homes.

It is ironic that so many talk about Davis' lack of growth policies as leading to the increase of cost of housing, the pricing out of the middle class, and yet if we continue to grow as we have, we will be forced to develop a water project that will do exactly that--force out existing residents who cannot afford the $200 per month additional cost for water.

In short, there is no justification for updating the General Plan right now. The housing market has sapped the demand for new housing. The council has already approved enough housing over the next five years to meet our RHNA requirements. And most of all, there is no fiscal justification for a project that runs in the millions and gives us so little in return.

And yet as we stand here today, that is exactly what this council is poised to do. There appears to be a majority in favor of some sort of process. They may not necessarily agree on what that process should be, with Councilmember Souza seeming to want a much more modest process than the seeming complete revision that Mayor Pro Tem Saylor wants.

The question I think is what do the citizens of Davis want. It is your city. What do you want to see?

---David M. Greenwald reporting

Tuesday, February 10, 2009

District Administration Opposes Self-Qualifying Option for Budget

Yesterday, the Vanguard published excerpts from the Vanguard Radio interview with DTA President Cathy Haskell and incoming President Ingrid Salim. One of the recommendations the teachers made during this interview, was support for self-qualifying.

Ingrid Salim:
"one of the ways that we would advocate that we would make the budget balanced now is what is called a self-qualification. On paper we acknowledge that that third year out we don’t make ends meet. We will deal with that over time. If we self-qualify that way and make a couple of other cuts, there are no cuts necessary right now in order to balance the budget right now. We say that we haven’t balanced it, we acknowledge that…"
"We’re looking at something like 70 percent of districts in the state of California who might be doing that. That’s just a reflection of not having a budget now, not having assumptions, and seeing that there’s no way to make it balance in three years unless you cut your staff."
As Cathy Haskell put it, the problem this year is the state's revenue stream to local districts, not our fiscal management.
"Last year we chose to show that we had a positive certification. And to be positive it means you have to show that all three years you will be in a positive cash flow.

This year the trouble isn’t how we’re organized as a school district, it’s the funding from the state. With the Governor’s projection of what the budget for the state will be, I don’t know a district in the state that won’t be in trouble the second year out. Most of them will be trouble next year. We now have some of that cushion of Q and W, but nobody has a cushion for a 16% cut."
Today in the second part of our series, we have the response from the district Chief Budget Officer, Associate Superintendent Bruce Colby, who opposes self-qualification.

Associate Superintendent Bruce Colby's response

It is the responsibility of the DJUSD Board and district administration to ensure a healthy district protecting kids, programs, and teaching. Maintaining fiscal solvency is part of maintaining a healthy district. It is the statutory responsibility of the Board to submit a multi-year projection to the County Office of Education at interim reporting periods. This report is used to assess the fiscal health of the district. If the district is unable to show fiscal solvency over the three year reporting period, the County Office of Education is required by law to put together a fiscal intervention plan to get the district back on a healthy fiscal track. A district can voluntarily go into this intervention status or it can be assessed by the County Office of Education.

This obviously becomes a challenge during tough economic times when the State funding levels are being reduced. In order to maintain our fiscal solvency, the district must develop and approve actions to reduce expenditures if needed to close our budget gap created by the State budget. Our district is responding to this challenge and our Board and Administration are developing plans to maintain a "positive" status, thus showing ability to maintain fiscal solvency without outside intervention. This is being fiscally responsible.

Unfortunately, the budget assumptions by the State are not clear and the district must review and discuss multiple scenarios based upon different levels of assumptions. The impacts of these scenarios have been discussed including the use of operating savings, "categorical flexibility", staff reductions and employee salary reductions. In the end, balancing the budget will most likely require the use of all these options.

The DTA leadership has opined on their preference, which is to maintain current staffing levels, spend down cash reserves and "self-qualify". The Board and the Administration does not believe this is in the best interest to the long term health of the district. It does nothing to solve our fiscal challenges and puts the district at greater risk in the future. DTA leadership is only looking at the problem from a high level. Fiscal solvency means adequate cash to pay the bills. Due to the drop in State funding, use of district reserves, and slowdown of State apportionments, cash levels for the district will be much lower than in the past, requiring higher levels of short term borrowing (TRANS). This borrowing will be a at risk if the district does not respond with a realistic reduction plan. The financial markets are very much aware of the State budget and the impact on school districts. The debt rating agencies will be asking very detailed questions regarding our financials. If we have no answers, we risk getting a loan. Without a loan, we are out of cash. The district can not take this risk.

The Board and Administration are in agreement with DTA in developing solutions to maintain staff in these challenging times. The district is trying to use staff attrition when possible to develop savings, reduce operating expenses and use "categorical flexibility". This however is not enough to close the gap, and the Board is asking all employees to agree to a possible 2.5% salary reduction to save staff cuts. In order to save staff cuts prior to the March 15th notice period, employee associations must agree to a salary reduction by the end of this month.

These options will be discussed an all employee meeting schedule for this week. I have attached a report from School Services of California that describes the process for fiscal status and interventions.

{Click on the top right to enlarge and read the full document}

SSC Fiscal Report Budget Reports

---David M. Greenwald reporting

Monday, February 09, 2009

Davis Teachers Respond To DJUSD Budget Crisis

The Davis School District is facing a multiyear, multimillion dollar shortfall due to the state's economic and budget crisis. Complicating the already problematic nature of the state's economy is the political impasse that has gripped the state's budget process. That has meant not only are local districts facing budget cuts, they are dealing with large unknowns. The word leaking out of Sacramento is that the big five have reached a tentative agreement that could be announced today. Many are expected the results of that to be devastating to local governments and schools.

As a result of the uncertainty, the district is planning for the worst--budget cuts with zero flexibility. That means pink slips and pay cuts are on the table. Right now the proposal is for a 2.5% cut for teacher salaries.

On Wednesday of last week, the Vanguard interviewed DTA President Cathy Haskell and incoming DTA President Ingrid Salim. You can catch the entire interview here.

This is the first of a two part series. Tomorrow, we will have the district's response from Associate Superintendent Bruce Colby.

From the teacher's perspective one of the biggest concerns is to avoid a repeat of last year when there were 114 pink slip notices sent out to teachers.

Ingrid Salim:
"You may recall that despite all of the pink slips that did go out, those are the RIF notices or reduction in work force, that say that teachers might get laid off. They sent out 114 of them. They rescinded I think all of them. They ended up hiring teachers this year because some of them had already found other jobs. So we knew that they were taking a very conservative path last year."
The teachers hope that we learned something from last year however.
"We think they had learned something about the impact that had had on morale in this district this year, and at least these expectations now, even in the worst case scenario... the expectations are that RIF notices will be much much smaller. Superintendent Hammond was mentioning [Wednesday] twenty-something perhaps and that's anticipated to even go down or be rescinded after the March 15 date when they have to get out."
One of the questions that arises is if the district has and is using carryover or reserve money this year to plug some of the gaps, why didn't they use that money last year.

Igrid Salim likened it to a leaky roof situation and whether you use your savings account to fix the leaky roof or you hold onto in case there is a worse problem down the line.
"You have a savings account, do you fix the leaky roof now or do you keep the savings account because something worse might happen later and just live with the leaky roof? That's not a fair analogy here, but in the end it is the board who makes the decisions about how to use the money."
In the end she said, the board felt more comfortable in terms of the overall status of the budget, by sending out pink slip notices to quite a lot of teachers rather than eat into the reserves.

However both teachers felt that this had a hugely detrimental effect on the morale of teachers, the students, the parents, the community and even the board and administration.
"We did learn last year that if you lay people off, even if they’re rehired that it has an enormous price on morale, which in the end has a consequence in the classroom and for education overall. I certainly know that our chief financial officer Bruce Colby and our Superintendent Dr. James Hammond have been incredibly earnest about wanting to not lay off people. They have certainly learned that that was a horrible process to go through."
One of the key questions facing the district is how much flexibility the district will in dealing with the decreased amount of money.

Ingrid Salim:
"Things are going to be dire in terms the budget coming from the state which we don't have yet. We have a couple of proposals, the Democrats have one proposal, the Governor has a different one slightly. Each of them have a lot of different factors which will impact how much money we are not getting from the state, not how much we get, but how much they will take back."
However, regardless of the proposal, we could get something in the way of flexibility.

Cathy Haskell:
"We have looked at flexibility offered in the Governor's proposal and there's some in the Democrats' proposal, but where pretty sure we're going to get some flexibility."
The two biggest areas would be an ability to use more of the carryovers from the previous year than we normally would. That would be a chunk of money according to Ms. Haskell. The other chunk would come from class size reduction money, something that the teacher's would like to avoid even in Davis where that would simply mean going from 20 to 22 students per classroom.

Ingrid Salim explained how the categorical process works.
"Unlike our paycheck that we get every month that we can use however we want, budgets for school districts have little categories that you can only use for specific things, for example, buildings are called facilities money. You can't use those monies to pay teachers."
One item that might be cut would be money for new textbooks.

Ms. Salim explained that while the could use new Math and English textbooks, teachers are a much higher priority:
"We do have books, we could use new ones but we don't *need* them, we need teachers."
One of the big questions, and one of the things that the board and administration are asking teachers to do is to give up salary and possibly instructional days in order to balance the budget.

For both this seems to be the area of last resort, cutting salaries.

Ingrid Salim:
"We’ve talked long and hard about what we’d be willing to do. The short answer is this: there has been a suggestion that we give up a couple of days of salary, and the other union has been asked the same, and the administrators have been told that they will be expected to do that."
Cathy Haskell said that cutting two days from the instructional calendar would be approximately one percent pay cut. So a 2.5% pay cut would be the equivalent to five days of instructional time.

Ms. Haskell:
"There are some very interesting discussions about what does it mean to have one less day of school. Or does it mean that we still have that day of school, we just don’t get paid for it."
Ingrid Salim quickly followed up on that thought:
"So what she’s referring to is a voluntary cut in salary without a reduction in days. That’s another option on the table."
However, the teachers seem opposed to this option.
"We believe that there are measures that we can still take that on paper will of course balance the budget without us having to give up."
However, the district seems to feel otherwise and are now moving ahead with a plan to cut 2.5% from salaries. A plan that may not come to fruition depending on what the budget looks like as it announced today (if it announced today).
"Our reasoning is that it’s not just us giving up salaries, which absolutely we are affected by, but it certainly takes away from the educational process in this district. So if take away two days from instructional time, that’s two days students are not in class. If we take two work days from our time, that’s two days that we’re not preparing. We don’t feel that this serves education and we’re not willing to take the hit when there are other things that can be done."
She continued:
"Unfortunately it would impact real people who already make less than half of what our top administrators make. We don’t really want to point that out all the time, they do a tremendous job. But most of us are parents that have children that live and work in this city. We make the normal salary that teachers make, it’s not off the charts, it’s livable, but it would hurt us, we would feel that particular amount [of cuts]."
However, she said that as a last resort, and there is nothing else that can be done, they would be willing to enter into discussions on this. They simply believe that other options exist at this time.

Ms. Salim continued:
"If we felt we had to do that in order to put the district in a state where it had a balanced budget, I think we’d be willing to talk about that. We really do believe there are ways to begin addressing the budget deficit."
One of the biggest differences that is emerging between the board and the teachers is the issue of self-qualification. The district is required to show a balanced budget for a full three years. Under normal conditions that is a reasonable requirement. But when you do not actually have a budget, it gets tricky to try to budget for the third year.

As Ingrid Salim put it:
"It’s the absurdity of trying to balance the budget three years out without even a current to really work on. We’re talking about assumptions, putting numbers into a spreadsheet, plugging in equations, to figure out numbers for a budget that we don’t even have."
The district is moving toward more draconian cuts right now primarily because it is trying to have a positive assessment for 2010-11. The alternative is to balance the budget for this year and next year, and then address the problems with 2010-11 in the future when there is more certainty.

That is the approach the teachers favor.

Ingrid Salim:
"one of the ways that we would advocate that we would make the budget balanced now is what is called a self-qualification. On paper we acknowledge that that third year out we don’t make ends meet. We will deal with that over time. If we self-qualify that way and make a couple of other cuts, there are no cuts necessary right now in order to balance the budget right now. We say that we haven’t balanced it, we acknowledge that…"
She continued:
"We don’t want to cut salaries; we don’t to want to cut people. Let’s allow ourselves to be self-qualified. Let’s allow us to take our reserves down to the legal limit—it’s been hinted that we’d be allowed to drop them further than they are. That’s a little bit nerve wracking because it means you have less in your savings account. We advocate let’s do that first—yes, it’s less conservative, but we believe it’s a better policy to keep people and keep their salaries where they are and allow them to live, than it would be to do anything else."
The teachers feel respected in this process by administration.
"We’re feeling valued from them [the administrators]. We’re not completely sure that the board understands all of that. But then we acknowledge that none of them are fiscal experts. They are all people donating their time mostly to serve in this capacity. We really appreciate the amount of time and energy that they put in trying to wrap their minds around pretty big issues. It’s quite a lot for them to take in in small amounts."
Last year, the district tried like the plague to avoid self-qualifying. The fear was that the county would take over the school district and that would be a horrific outcome, we would lose out autonomy.
"Last year, don’t self-qualify… the county will come in… They heard this over and over. So they took action that was very conservative to prevent that. This year, they’re hearing the sky won’t fall in, it will be okay."
It is difficult to understand why that has changed now. However, according to the teachers, what has changed is the fiscal circumstance of the state.

Cathy Haskell was actually willing to take more of a chance last year rather than face the wrath of 114 layoff notices.
"I think it has to do with your level of risk that you have to take… 30% of the school districts last year ended up doing not a positive certifications. This year with the numbers the way they look it is for me not a surprise to hear that self-qualifying keeps you from doing some things that maybe you don’t want to do. I was actually ready last year to take more risk, but as a collection of people we couldn’t get there. I think we’re in a much different place this year, knowing that it’s not about this year, it’s not about next year, it’s about the second year out. Last year we were actually talking about the current year."
One of the things that has changed is that the process was horrible that no one wants a repeat of that scenario this year.

As Ingrid Salim explained, the entire point of self-qualifications is to prevent districts from mismanaging their money. During an economic crisis when the state is drastically cutting back its funding for local districts, counties are not going to immediately assume that districts are in the red in year three because of fiscal mismanagement. This is particularly true for districts that have a good track record.
"We’re looking at something like 70 percent of districts in the state of California who might be doing that. That’s just a reflection of not having a budget now, not having assumptions, and seeing that there’s no way to make it balance in three years unless you cut your staff."
As Cathy Haskell put it, the problem this year is the state's revenue stream to local districts, not our fiscal management.
"Last year we chose to show that we had a positive certification. And to be positive it means you have to show that all three years you will be in a positive cash flow.

This year the trouble isn’t how we’re organized as a school district, it’s the funding from the state. With the Governor’s projection of what the budget for the state will be, I don’t know a district in the state that won’t be in trouble the second year out. Most of them will be trouble next year. We now have some of that cushion of Q and W, but nobody has a cushion for a 16% cut."
Igrid Salim continued:
"Both from Bruce Colby’s understanding of what this means and the circumstances and the landscape changing, a self-qualification today isn’t going to mean the same thing that it meant a year ago."
Moreover, the hope is that seeing actual numbers will produce less drastic results.
"We want to wait and see how the budgets are going to really come in over the next year, and then we’ll accommodate that. We know that counties now are going to look at that and say okay, they’re thinking about that, they’re on top of it, they’re not losing it, they’re not going to be going bankrupt… So the reigns are a little bit more lax."
Ms. Salim also believes that because so many districts are facing these fiscal problems, that counties will be more reluctant to intervene, having not the resources to do so. In the worst case scenario, the county could hire an accountant to oversee the district's books. But she played down even this possibility.
“We don’t expect that to happen because there will be so many in this situation and because it’s a reasonable situation now. If we were flush with money, it wouldn’t be reasonable to be self-qualifying.”
One thing both agreed upon is that there is no way to cut our budget without deep cuts. The bad news is that we do not have a lot of pork and extra programs that can simply be cut. So any cut that the district makes will be painful.

Tomorrow we will see that the district does not agree with some of these assessments by the teachers, particularly with regards to self-qualification and also cuts to teacher salaries.

---David M. Greenwald reporting

Sunday, February 08, 2009

And Still We Have No Budget

I rarely comment in this space about comments to other posts, but given that I am trying to bring together multiple threads into a single article, it actually works quite well.

The anonymous commenter said:
"I agree the State Legislature is bad and has been that way for more than a few years. The self serving Nunez and Perata are gone and that helps. I think Arnold has been trying to get everyone to see the light for a couple of years now. But they all have their special agenda's to follow."
Having covered the state government for over two months now as my "day job," I have to strongly disagree with the Mr. Anonymous here. The Governor is the problem--he does not lead, he issues fiats and then goes on extravagant trips.

Let us for a few moments throw out politics altogether and forget about whose side we agree with and whose side we disagree with. Let us also throw out the fact that California's two-thirds requirements are unworkable. On a side note, the Public Policy Institute of California's poll shows for the first time ever a majority (bare as it is) support for reducing the two-thirds requirement to pass a budget to 55%.

But back to the problem. Everyone talks about how they do not like politicians. Let's face it, they are unsavory. They are often cold, calculating, and bent on scoring political points over sound public policy. But there comes a time when you just need to get things done. And let's face it, we are long past that in California.

When there is a budget deal, and there will be at some point, no one is going to like it. The Republicans are going to have to accept the fact that taxes have to go up because you simply cannot make enough cuts to balance the budget without causing more problems than you solve. Democrats are going to have to accept the fact that we are spending too much money and have to cut and that unfortunately they are not going to be able to just cut programs that they don't like, they are going to have to cut into programs that they do like and from their perspective, do work.

Everyone is going to hate something about this budget.

So back to the Governor. The Governor cannot do this by fiat. The Governor cannot try to do this from afar. If he wants to portray the severity of the problem, then he needs to be traveling around explaining the problem to constituents. He needs to park himself in Sacramento and he needs to roll up his sleeves and work. Until he is willing to do that, this budget problem is not going to be solved.

Moreover, the Governor has one primary responsibility in this process, he must get enough of his own party on board with him to strike a deal. This is a complete and total failure on his part. If Arnold were merely having to work with the Democrats, there would have been a deal a long time ago. The Democrats for the most part have been willing to compromise far more than the Legislative Republicans. I am sorry, but in my book that is Arnold's failure. All he needs is three votes from the Republican party. He should be able to offer enough inducements to get three members of his party to sign on, but he has not been able to do this so far.

There is a ripple down effect here that is going to be tremendously devastating. First, the governor is trying to balance the budget on the backs of state workers right now. Folks, most of these guys aren't like the Davis Firefighters making $150K per year in total compensation. These are people who make maybe $30 to $40K. A ten percent cut in their salary means somewhere between $300 to $400 per month in cuts for people who are largely living paycheck to paycheck.

Budget cuts are preferred by many over tax increases. Sales tax may be regressive, but think about it this way, a 1% sales tax increase means, one additional cent per dollar, it means one dollar additional tax per $100, it means ten dollars additional tax per $1000. You are telling me that people who make a $1000 purchase are going to notice $10 additional in sales tax?

On the other hand, budget cuts mean people will get laid off. One proposal for example had Republicans suggesting $10 billion in education cuts. Let us not forget what that would actually do to education, probably the most important thing we spend our money on, that's probably 20,000 teachers laid off. What would that do to the economy. We've had to suspend construction projects to the tune of $660 million per month. For crying out loud, the stimulus plan that Obama is looking at is trying to create construction projects to stimulate the economy. And we are cutting those jobs?

A lot has been made about furloughing state workers. People seem anti-state worker until of course they can't get their unemployment check or go to the DMV, because it's closed on a Friday when they should be open to collected revenue for the state. Then suddenly they realize that they need state employees to run our state. They provide a service. They are "public servants." We actually need them. Of course you say, private sector is laying off their workers, local government is also furloughing their workers. But wait, there is one big difference, let's start at Yolo County by way of example.

Remember as I said earlier, Arnold likes to govern by fiat. There is a process by which furloughs should be considered. It is the collective bargaining process. If the County cuts employee work days and salaries it occurs in negotiation. If the school district cuts employee work days and salaries it occurs in negotiation. If the city of Davis cuts employee work days and salaries it will occur by negotiation. That is how the rights of workers are protected. Almost every agency has been willing to sacrifice so that employees are not laid off. For all the perception out there, that is an amazing thing.

However, Arnold wouldn't and won't do that. This despite public employees groups publicly suggesting that they would be willing to work with the state to make things work to avoid layoffs. This despite what Speaker Bass said on New Year's Eve that the Democrats would be fine with holidays and furloughs as long as it was part of the collective bargaining process.

Yolo County is in many ways in deep trouble. They will be $18 million in deficit. That is one-third of their operating budget. There was a good story Friday in the Sacramento Bee on the relative success of Yolo County in instituting voluntary furloughs since May. That's right, voluntary furloughs. That is how job losses have been avoided. But this occurred with the help and consent of the bargaining units as opposed to forcing furloughs upon them.
That, at least, has been the experience of Yolo County government workers – for whom unpaid time off has become the norm over the last seven months.

Beginning last spring, when county officials realized they had to cut costs, Yolo County employees either volunteered to take time off or eventually faced mandatory furloughs.

Many say their experience has been surprisingly positive, despite the pay cut.
The Governor does not operate that way. He issues demands and fiats and expects people to comply. What he discovered is that that type of approach produces resistance rather than cooperation.

Let us not kid ourselves, the situation would be dire no matter what given the nature of the economic crisis before us, but had Arnold agreed to a budget in December, California would be in far better shape.

For one thing, we would be working with real budget numbers rather than assumptions. People's lives have been torn apart based on these assumptions.

Look no further than the school district. They are going to have to put people on pink slip notice once again because they cannot assume budget flexibility. If we had a budget, they might not have to do this. They are going to have to ask teachers to take a 2.5% pay cut. This will be negotiated. It is not preferred, but it will be done if need be in order to prevent job losses right now.

I actually think Sheila Allen summed it up the best:
"It's just so frustrating that we have deadlines that we have to meet and other elected officials are not. So we're working with 'fiction' and we're messing with real people's lives when it's based on fiction, it's very frustrating."
I agree. I'm sorry anonymous, but from my standpoint, Arnold doesn't know how to negotiate. He doesn't know how to lead. The departed President found himself in a similar situation. Oh he had conviction to the point of stubbornness, but like George Bush, Arnold never learned the most valuable lesson of all, you aren't a leader if no one is following you. Until Arnold learns that lesson, these budgets will only get more difficult and more and more people's lives will be torn apart.

Come on Mr. Governor, it's time to step up and solve the budget crisis not by will, not by fiat, but by cooperation and in true spirit of negotiation.

---David M. Greenwald reporting