The millions of dollars in revenue the San Luis Coastal Unified School District has received for three decades thanks to Diablo Canyon nuclear power plant has allowed it to keep small schools and class sizes, provide an array of programs for students and extensive professional development for teachers, and offer higher salaries to employees.
Now, facing the plant’s proposed closure in 2025, district officials will look to make cuts from those same areas to make up for the loss of about $8 million a year in property tax revenue.
A tentative agreement announced Monday between the school district and PG&E has increased the amount the utility will pay — $36.8 million over nine years, instead of $24.3 million — to ease the economic impact of shuttering California’s only remaining nuclear power plant.
A loss of $8 million — the amount of annual property taxes the San Luis Coastal Unified School District receives from Diablo Canyon — is the equivalent of 106 employee salaries from a workforce of just over 800.
The tentative agreement is part of an overall settlement package between PG&E, San Luis Obispo County, six of the county’s seven cities and the school district. PG&E has agreed to pay a total of $85 million, up from $49.5 million that it originally proposed.
“The PG&E mitigation dollars will help us make a softer landing, but we still have to reduce $8 million in our ongoing revenues by the plant closure,” said Ryan Pinkerton, the district’s assistant superintendent of business and support services.
The $8 million loss represents about 10 percent of the district’s annual budget — the equivalent of 106 employee salaries from a workforce of just more than 800, according to an impact report on the district’s website.
“When you cut 10 percent of your budget, it will affect school sites,” Pinkerton said. “We’re trying to keep it away from the classroom as much as possible.”
In a meeting with The Tribune on Monday, Superintendent Eric Prater said he’s no longer convinced the district would need to close any schools.
“Those are the two things that we heard throughout our public meetings: Keep class sizes down and don’t close schools,” Pinkerton said Tuesday.
Still, the district is embarking on an in-depth demographic study and enrollment projection throughout the district, which includes schools in Los Osos, Morro Bay and San Luis Obispo. Such a study would be used in any future discussions about school closures.
“We can look at it over the next couple of years and not jump to any conclusions,” Pinkerton said.
A projection completed for the district in 2014 estimated that enrollment would increase steadily over the next five to 20 years because of increased birth rates and homes added in San Luis Obispo. But while enrollment has increased in the district, it has not done so at the rate projected by the report.
Pinkerton said to avoid layoffs, the district would try to make cuts through attrition as much as possible.
“Anytime any position opens now in the district, we’re looking at whether there’s a way to consolidate and not fill those positions,” he said.
Craig Stewart, president of the San Luis Coastal Teachers Association, said consolidating through attrition would be a way to retain the teachers the district has now.
“Teachers certainly don’t want to see the quality of their instruction be compromised by a loss of resources or higher class sizes,” Stewart said. “All of the things on the chopping block are valuable things in one way or another and they’ll be missed. But as things change, we just have to learn how to change with them and provide the best teaching and services and leadership.”
Ultimately, it will be up to the district’s Board of Trustees to make the final call on cuts. Prater plans in January and February to present to the board a plan for reductions at the district office, followed by a four- or five-year reduction plan to be presented the following year, Pinkerton said.
The district also plans to put half of the money it will get from PG&E — $2 million a year — for the first five years into an endowment fund to help offset revenue losses after the plant closes.
The goal would be to create an ongoing revenue source to help the district retain some programs or keep class sizes smaller, for example.
Pinkerton said it’s too soon to know if the loss of the Diablo Canyon revenue would push the district out of its “basic aid” status. The district is different than most others in the county because it derives most of its income from local property taxes rather than relying on the state for revenue.
Being basic aid means the district has been able to spend $9,500 annually per student, versus $7,800 for state-funded districts.
“A lot of that will be determined on what happens with property tax revenues locally — if they continue to rise, then that’s our source of income,” Pinkerton said. “If that were to happen — and that’s a big if — and we were to become a state-funded district, it would be in our best interest to look at ways of attracting kids to our district.”
Enrollment data for San Luis Coastal Unified School District
Number of students
Source: San Luis Coastal Unified School District