Being both a trustee and volunteering on the Measure B campaign gives me an interesting perspective on questions that, from time to time, swirl around the community. One of those involves the answer to the question “So, just how big is the financial problem the District is facing?”
You’d think there should be just a single answer to this question. And there is. But because staff is evaluating lots of potential fixes for the problem the portion of the deficit that will have to be addressed through program cuts varies. It’s like talking about the shortfall in your household budget before and after you start making adjustments to your spending decisions: the starting point is the same, but the left over portion of the problem fluctuates.
In this posting I’ll try to show how all the District’s numbers are related to each other.
But let’s keep one thing perfectly clear: we have a big problem. If Measure B doesn’t pass we’ll lose the kind of San Carlos education we’ve come to know and expect.
The following table shows, in separate columns, all of the various numbers I’ve heard offered by people when they’re asked “how big is the deficit?” As you can see, each number is based on combining different items of information to come to a particular total (commentary on each item follows the table):
| Magnitude | It’s $2,500,000 | It’s $2,000,000 | It’s $1,700,000 | It’s $1,200,000 | It’s $2,130,000 | |
| #1: The District is spending more than it takes in, courtesy of the State budget cuts. | $(2,500,000) | $(2,500,000) | $(2,500,000) | $(2,500,000) | $(2,500,000) | $(2,500,000) |
| #2: The District has some financial reserves it can use to cover part of the deficit | $500,000 | $500,000 | $500,000 | |||
| #3: There will be more money coming to the District next year because kindergarten enrollment is up. | $370,000 | $370,000 | ||||
| #4: Staff believes they can improve special ed instruction and reduce costs next year. | $600,000 | $600,000 | $600,000 | |||
| #5: Suspending paying off post-retiree medical benefit liabilities can temporarily save cash. | $200,000 | $200,000 | $200,000 | |||
| #6: Passage of Measure B will inject about $730,000 per year into the District’s finances. | $730,000 | |||||
| Total | $(100,000) | $(2,500,000) | $(2,000,000) | $(1,700,000) | $(1,200,000) | $(2,130,000) |
- #1: This is the starting point for the analysis. If the District, through a combination of revenue increases and cost cutting, doesn’t reduce its deficit by $2.5 million per year it will eventually run out of money. At which point it will be taken over by the State, with consequences we don’t want to experience.
By the way, since the new, improved California budget is already broken, the State’s support of education could drop further, which would lead to a bigger deficit than $2,500,000.
- #2: The District does have some financial reserves it can use up. But all that does is postpone the day of reckoning. We can’t exist as an independent school district, long-term, if we spend more than we take in, although we can dodge the bullet for a while.
- #3: There was a large, and unexpected, increase in kindergarten enrollment for next year. Because the State “guarantees” the District a certain amount of money per enrolled student, that means there will be more money than expected coming in to the District…provided all the children actually show up (e.g., don’t move away or enroll in private school).
- #4: Improving service while reducing costs is a wonderful opportunity. However, remember the saying about the best laid plans of mice and men… Or about not counting your chickens until they hatch.
- #5: The District offers teachers and staff the opportunity to take early retirement prior to age 65. As part of that program, the District pays up to seven years of the former employee’s health benefit premiums. This represents a current financial liability of about $2,500,000.
If we don’t set aside money every year to fund that liability there will come a time when we will have to spend significant dollars out of each year’s budget to pay those benefit premiums. Which would effectively mean reducing the amount of money spent on those future students in order to pay for the education received by today’s students.
- #6: I know what you’re thinking: “Wait, Mark, it’s $800,000, not $730,000!” And you’re right, Measure B will raise about $800,000 per year. But that money is shared between the District and the CLC on a per-student basis. That’s what accounts for the difference.
So which is the real deficit? There’s really only one: $2,500,000. That’s how much we need to improve the finances by in order to have a viable school district over the long term. All the other factors are either choices we would make in response to the deficit (#s 2, 4 & 5), or are things that haven’t happened yet (#s 3 & 6). But remember that if the State budget unravels again (it has before, you know) then the deficit will likely exceed even $2,500,000.
You could argue that increased kindergarten enrollment has already happened. That’s true, and it’s why I included the last column in the table. But it’s a long time between kindergarten registration day and the start of school. Even then, though, the deficit is still over $2,000,000.
As to why the confusion arose, that’s an unintended consequence of transparency. District staff is working very hard to find ways to reduce costs and/or increase revenues while minimally impacting the education delivered to kids. That naturally leads to a wide-ranging discussion of alternatives and scenarios, which tends to obscure the underlying simple message of how big the problem really is.
That’s not anyone’s fault, and, in fact, we wouldn’t want a District staff that sits around twiddling its thumbs until we find out, say, whether Measure B passes or not. We need alternatives and scenarios, because we must make the best decision we can for kids, regardless of the shape of the playing field on which we end up standing.