What California’s historic budget deficit could mean for Sacramento-area schools

California’s projected $54 billion budget deficit will likely have a profound effect on Sacramento-area school districts, some of which were already facing dire financial outlooks before the coronavirus pandemic struck. But with the shutdown still in place, it may be weeks before districts have a solid grasp on what cuts will be necessary.

When Gov. Gavin Newsom released his January budget proposal, California public schools and community colleges were on track to receive $84 billion in funding mandated by the voter-approved formula that sets minimum school spending. Newsom’s administration called the number an “all-time high.”

The new projections released this week show guaranteed school funding at $18.3 billion below the earlier estimate.

The Sacramento County Office of Education recently said that the COVID-19 pandemic may result in more revenue shortfalls that could require state budget reductions.

“Safely reopening schools and colleges requires resources and funding; not $18 billion in devastating cuts the $54 billion state budget deficit portend,” said California Teachers Association President E. Toby Boyd. “These cuts would cause real harm to student learning at a time when they need more support. This also has an all-too-familiar ring for educators and students who were still recovering from the draconian cuts of the last recession.”

Boyd said that schools cannot endure another blow following the coronavirus crisis. School districts had already asked Newsom to delay scheduled increases to their pension payments and divert money their way from relief funds.

The Sacramento City Unified School District currently has a $27 million budget gap. Sacramento City Unified Superintendent Jorge Aguilar called the state budget announcement “grim.”

“Our children need us now more than ever, but we anticipate some very difficult decisions over the next few months with effects that will expand beyond this crisis,” Aguilar said in a statement. “We can’t do this alone. We ask our community and our labor partners to stand with us to address these budget challenges.”

District Chief Business Officer Rose Ramos said the already financial strapped district could run out of money sooner than it anticipated — in May 2021. The district voted to lay off 12 teachers at a Thursday night board meeting.

At a school board meeting this week, Ramos said the budget cuts have put the district at its bare bones because the district has already made significant reductions. It’s unclear what the district will cut in the future in response to the state’s budget. During the 2008 recession, the district made mid-year classified employee reductions to remain solvent.

Repeat of Great Recession?

During the last recession, the number of school districts in the red was unprecedented. Many districts, including Sacramento City Unified, anticipate similar situations as a consequence of the state’s cuts and the pandemic.

If more school districts go from positive certification to negative certification, and start requesting loans from the state, the state will have to fund more districts than usual, but with less money at is disposal.

“I have to imagine that the state understands what the hazard is, and the decision they are making,” Ramos said. “I’m sure that falls into their calculation and that’s not lost on them.”

Several California school districts became insolvent after the 2008 economic recession, including South Monterey County Joint Union, Vallejo City Unified and Inglewood Unified. School districts were loaned anywhere between $13 million and $60 million during that time, and are still repaying those loans. The state will ultimately have to bear the financial burden if school districts become insolvent, school officials said.

Just before the recession, Oakland Unified School District was loaned a total of $100 million between 2003 and 2006. It still owes millions of dollars, an amount that nearly mirrors its deficit that caused its insolvency. Its final scheduled payoff date is set for June 2026.

Natomas Unified Superintendent Chris Evans said in an interview with The Sacramento Bee the state’s cuts were somewhat not a surprise. Evans said he worked with his board to preemptively manage the situation, and avoid cuts to the classrooms.

“I’m a former history teacher. It really isn’t rocket science,” Evans said. “When basically a significant part of the state has closed down, it will have a devastating effect on the state budget. It’s pretty easy math. A difficult state budget will cause cuts to education.”

School jobs, field trips could be cut

Last month, Evans told families that Natomas Unified will not be spared budget cuts. The district slashed six administrative positions including a deputy superintendent position, an assistant superintendent position and an associate superintendent position – all of which are currently vacant, but were occupied at one point during this school year.

Looking to the future, Evans anticipates some programs may need to be paused for a few years until the state can climb out of this.

Elementary and middle school field trips to local colleges may be paused for a few years, and Evans says he can’t promise furlough days won’t happen. The district has vacancies, and room for growth. Those plans are on hold for now.

“That time may come to scale back, but none of that has been discussed,” he said. “We are concerned about new expenses while meeting the safety of our students, but it is what we have to face. “

The CTA called for the federal government to authorize $1 trillion in the next CARES Act and provide $175 billion for the Education Stabilization Fund to provide states.

“The pandemic has shined a light on the vital role that public education plays in our society and that educators play in the lives of students and their families,” Boyd said. “We are painfully aware that the state and country are facing a recession, but for years California students, schools, and educators have had to do more with less and we can’t let our students fall further behind.

Like many school districts, Evans said Natomas Unified will begin knowing how to plan for the future in the next few months.

“Typically by now, we have a pretty good idea of what we have in terms of revenue for 2020-21,” Evans stated in a letter to families. “This pandemic has changed all of that. I cannot tell you how bad the budget will be, I can just tell you it will be bad.”

This story was originally published May 9, 2020 at 5:00 AM with the headline "What California’s historic budget deficit could mean for Sacramento-area schools."