How Does a School District Go Broke With $1.1B in Revenues?
When It Spends $1.3B
This macabre joke is all-too real for San Francisco Unified, where this spring a state oversight panel took control of all budget decisions until the district balances its spending. After reviewing the district’s budget, the oversight panel decreed that the locally elected school board no longer has full authority over, “any action that is determined to be inconsistent with the ability of [the district] to meet its obligations for the current or subsequent fiscal year.”
According to an independent fiscal analysis, the district has a number of budgetary problems:
- It paid for employee positions using one-time federal relief funds and will need to lay them off or find other revenues or savings;
- It has not adjusted student enrollment projections to account for continued declines;
- It does not track monthly attendance data and, as a result, overstates average daily attendance in projecting future revenues; and
- Its budget office is understaffed, leading to inadequate control over its payroll system and problems tracking employee overtime costs.
Some parts of this story make San Francisco unique. For example, it spent $40 million in a failed effort to fix its payroll processing system. And, to avert a strike last fall, the district agreed to large salary increases — 19% over two years for teachers and 16% for service workers.
California is also unusual in that it has a powerful oversight agency. The Department of Education’s Fiscal Crisis Team reviews district budgets to ensure they are financially solvent, and it can take over budgeting decisions if the need arises.
