Some unpleasant news, that at least some members of the public knew was coming, emerged with the City of San Luis Obispo’s 2016-17 Mid-Year Budget Review and their General Fund Five Year Forecast on Feb. 21.
The forecast projects a structural budget shortfall of over $5 million by 2021-22, in part, City staff reports, due to lower than projected tax revenues, but largely as a result of the City pension costs scheduled to increase from $10.7 million in the current fiscal year to $19.1 million over the next five years.
Dr. Prater’s report said that Diablo’s closing, “creates a new paradigm in San Luis Coastal. The certain loss of $8 million in ongoing unitary tax revenue represents a significant transition challenge because 85%-90% of our budget is personnel dependent.”
Though they have until 2025 before Diablo is completely shuttered by Pacific Gas & Electric, the sense of urgency struck the district immediately last summer when PG&E made the closure announcement. The loss of significant property taxes will be felt by a wide array of agencies — from Cities like Morro Bay to special districts, who get a share of those property taxes.
The District — who with SLO County stands to lose the most tax dollars when the plant is closed — have hit the ground running in attempts to lessen the impact.
“Through intensive negotiations with PG&E [assuming successful approval by the Public Utilities Commission this spring],” Dr. Prater said, “we secured funding in two forms: 1) mitigation funds and 2) education foundation funds.
“Although we will continue to receive unitary tax revenue through 2024-2025, it will diminish significantly during that timeframe as PG&E depreciates the plant as an asset. We expect to maintain our basic aid status during this time; however, that is never a certainty.”
The District, which covers SLO, Los Osos, Morro Bay, Avila Beach, and areas in between, is a so-called “basic aid” district, meaning that it derives the majority of its revenues from local property taxes instead of relying on the State for funding.
With Diablo Canyon thrown into the mix, the District has avoided the ups and downs of other school districts that depend entirely on State funding. On the other hand, Diablo’s closure will have a disproportional effect on the District’s finances. Time is apparently of the essence for the District.
“We have nine years to align our anticipated reduced revenues with expenditures,” reads Dr. Prater’s report. “Dramatic increases in employee retirement plan contributions [STRS and PERS] and health care costs, along with automatic step and column salary increases, make this task even more challenging.”
The administration was given six principles from the Board to guide how and what would be cut. They are: “focus on reducing personnel costs; start the reductions furthest away from the classrooms beginning with the district office and district-subsidized programs; model cost consciousness and frugality wherever possible; make decisive reductions at the earliest possible opportunity to make future reductions less severe; utilize attrition (retirements and resignations) to avoid hurtful layoffs and maximize savings; and, monitor and plan for STRS, PERS, and rising health care cost increases.”
The District held three public forums last fall to garner “interests, ideas, and feedback” and then formed a “Local Leaders Group” of residents, and a group of District employees, for more feedback.
They’ve narrowed the issue down to a half dozen areas of concern. They are: Communication; Budget/Financials; Educational Programs; Foundation/Partnerships; Enhanced Revenues; and Reduction Strategies. The District condensed all the feedback into “Core Themes,” further narrowing down the suggestions.
Under “Communication” they list frequent messaging; delivering the right message and by the right messengers; involving students in decisions; and putting out information in both Spanish and English.
Under Budget/Financing was placed conducting a new, 7-year budget analysis; developing a tiered system analysis; analyzing expenses at schools and at the District; and capping health care costs; among others.
Under “Educational Programs” they asked for a definition of “mission-critical” programs; called for prioritizing support services; conduct a class size study; reimagine professional development; and a call for “a new vision in SLCUSD.”
The District was also urged to form a charitable education foundation; to partner with Cuesta College and Call Poly for certain programs; as well as partnering with local Chambers of Commerce and collaborating with the cities and the County.
As for increasing revenues, the suggestions are to use existing district properties to generate income; study a possible parcel tax initiative; and selling the naming rights to some school properties; among others.
And as for reduction strategies, the district was advised to fine-tune its “attrition strategy” (not filling vacancies); offer early retirements; and to offset the cuts with revenues from the educational foundation; among others.
The Diablo Canyon ball will now pass to a Blue Ribbon Committee being formed by Dr. Prater to “undertake the task of using this information to form suggested recommendations to successfully transition the school district through this challenging period.
“The superintendent will weigh these recommendations and share them next fall with the administration team, staff, and public. Forums will be held to gather additional feedback before a final multi-year recommendation is made to the Board in January 2018.”
Based on all this, “the Superintendent is recommending proactive and immediate budget reductions for the 2017-18 school year.”
Some cuts were made at the District level for this current budget including eliminating one “assessment teacher on special assignment” (saving $95,800); combining two part time administrative assistants in personnel and fiscal into one full time person ($86,400); cutting one copy center technician ($77,200); and cutting a senior clerk in instructional services/student services ($70,400); for a total savings of $330,000 for fiscal year (2016-17).
For the next budget, the District is proposing consolidating two jobs in the ISLA office ($81,000); consolidate the deputy director of student services with the Principal’s job at Pacific Beach HS ($165,000); eliminating the District’s share of the costs for police officers assigned to Morro Bay and SLO High schools ($160,000); and eliminating an instructional aid at MBHS ($51,200).
They also propose cutting general fund support for the Adult School to save $150,000; to eliminate the District family services coordinator’s job ($91,400); losing a clerk in instructional services ($66,400); and cutting library media assistants ($49,800). Other cuts include reductions to District teachers on special assignments ($87,263), and reductions to District Instructional Coaching Program ($275,300).
The single largest cut would be to “District Professional Development — Consultants, Substitutes, Teacher Hourly,” at a whopping $350,000, for a grand total of $1.69 million in proposed cuts.
To keep up with the dynamics of Diablo Canyon’s demise and its effects on local schools, see: www.slcusd.org.