Hope, responsibility and tough choices
November report from WCCUSD

By Bruce Harter

With the passage of Measure D, voters have renewed the parcel tax that costs so little and provides so much. Now we can plan to maintain our small class sizes in kindergarten through grade three, keep our libraries staffed, retain our middle and high school counselors and keep our high school athletic program. Even in challenging economic times our voters have affirmed their priority of funding essential elements in our local schools. On behalf of all our 30,000 students, I’m deeply grateful for the generosity of our voters.
   Yet, despite our joy at the renewal, the district is still facing huge financial problems for 2009-2010 and our board will be faced with incredibly difficult decisions over the next few months in order to maintain the financial solvency of the district. Worldwide economic conditions and the enormous California state budget deficit will only make matters worse. According to the governor’s latest report, the state is now more than $11 billion short of the revenue that is necessary to fund the budget that was adopted in September. This could mean substantial mid-year cuts for school districts, including WCCUSD, for the current year, and even larger reductions for next year.
    For the first time since the district went into state receivership in 1991, we will spend more this year than we receive in revenue. We’re able to do this because over many years, we’ve been able to build up a substantial fund balance that will allow us to maintain our programs while making cuts as far from the classroom as possible. But just like a family that has to dip into its saving account, we can only spend our fund balance once.
    In 2007, MGT America conducted a performance audit of our district and made 80 recommendations for improving operations and generating savings for student programs and services. As we plan for 2009-2010, we know that we will have to reduce costs in areas not covered by the parcel tax. The MGT report tells us where we should look to make these reductions.
    Since the MGT report was published in April 2007, we’ve been able to implement more than 60 percent of the recommendations and cut our expenses by $3.9 million for 2008-2009. But that report, like others before it, found that there are two areas where 85 percent of the total savings should come from — health benefits and school closures. The cost of health benefits for both active and retired employees has increased from $21 million in 2002 to more than $48 million this year.
    While our health care expenditures have increased by more than 125 percent over the past seven years, our general fund revenues have gone up only 19 percent. Over that time, health care costs have gone up much more steeply than even gasoline. As a result, we’ve had proportionately less to spend each year to support our schools and teachers. The financial burden of providing health care is why teacher salaries are low in WCCUSD, which makes recruiting new teachers more difficult.
    The district’s retirees account for about one-third of the cost of employee health benefits. WCCUSD is one of a handful of districts throughout the state that continues to provide lifetime health benefits, which include paying the Medicare supplement for retirees who are age 65 and older. By making this commitment, the district has incurred a huge unfunded liability of approximately $727 million.
    In approving the 2008-2009 budget, the board capped the health benefits for non-represented managers. We’re now engaged in negotiations with the other four groups of employees and must look for ways to reduce current and future health insurance related costs.
    Complicating our financial picture is the continued decline in our student enrollment, which peaked in 2001-2002 and has since declined by more than 4,800 students. When housing prices spiked, some families moved to find less costly housing. The birth rate has also declined in WCCUSD — we have 2,000 fewer children in the 0-to-5 age bracket than we did five years ago. The trends of high cost of housing and lower birth rates also hold true for much of California: more than half the districts in the state are struggling with lower student enrollments.
    The problem for WCCUSD is that we already had small schools even when we had nearly 5,000 more students. Now we have 24 elementary schools that have fewer than 450 students; eight of those have fewer than 350. When we compare our average school size to other districts, WCCUSD schools are smaller.
    Since California funds education based on the number of students, operating small schools is costly. Overhead expenses — such as utilities, cleaning costs and maintenance — are all proportionately greater in smaller schools. Because we have so many small schools, we have higher management costs and more combination classes than schools with greater populations.
    In order to remain financially viable, we’re faced with closing some schools for 2009-2010 and additional schools for 2010- 2011. In approving the 2008- 2009 budget, the county and our state trustee required us to cut $1.5 million from the budget in each of the next two years by closing schools. Public hearings that will help the board decide which schools to close will begin in January 2009.
    Closing schools and limiting benefits are divisive issues that are emotionally charged for all who are impacted or even potentially affected by the changes. Figuring out a way to make these changes in order to remain financially viable will be painful. But the alternative to accepting our responsibility is a return to state receivership, a path much worse for our students, staff and community.

Bruce Harter is the superintendent of the West Contra Costa Unified School District.