The Morning Report
Get the news and information you need to take on the day.
Our reporting relies on your support. Contribute today!
Help us reach our goal of $250,000. The countdown is on!
Good news for number nerds: I just got copies of the analyses of how much San Diego Unified expects it could save — or lose — under different “golden handshake” scenarios. I’ve also got some basic numbers on how much the last such buyout was expected to save — and where it proved costly.
Let me walk you through this: The school district is weighing whether to give employees an exit bonus as an incentive to leave the district so they can be replaced with less senior, less expensive employees or not replaced at all.
It is considered a kinder, gentler way to thin the workforce than the layoffs that the new school board majority has pledged to avoid. Such a buyout was last offered to employees six years ago during a budget crisis and is estimated to have saved the school district an $12 million in its first year and $21 million over five years.
According to the analysis, the biggest savings came from offering the bonus to educators, dozens of whom were not replaced, to the tune of nearly $20 million. But offering the golden handshake to principals and vice principals actually cost the district $2.6 million last time — and that isn’t including what San Diego Unified paid to bring some of them back to work.
San Diego Unified is now considering including teachers, principals and vice principals in a new golden handshake. It is using the analysis to judge the potential benefits of the plan. It breaks down the potential savings based on which group of employees get the bonus, what percentage of them are replaced with new employees, and how large of a bonus is involved.
Replacing fewer employees means bigger savings, and the savings can actually grow or decrease over time depending on how many spots are left vacant. Some scenarios could actually end up costing San Diego Unified money as the new employees gain more experience and bigger paychecks over time.
General Counsel Mark Bresee cautioned that the numbers are very tentative and that actual savings depends on who actually retires, how much they earn, whether they are replaced, and how much their replacements earn. The total bonuses imagined in the four different scenarios range between 70 percent and 100 percent of the employee’s final salary, paid out over five years, a decade or a lifetime. If an employee opts for lifetime payments and lives longer than expected, she can actually end up getting more than 100 percent of her last salary in bonuses.
The teachers union is pushing for a golden handshake that mirrors the last plan, which typically furnished employees with 7 percent of their last salary annually for a lifetime, as closely as possible. That exact plan is no longer available but accounting director Ken Leighton said the 100 percent plan is very similar to the last golden handshake.
Here are some quick points I gleaned from the analysis of the new plan:
- San Diego Unified could actually lose money over time if it replaces all of its departed employees — with the exception of teachers who save money in almost all scenarios — and for some groups of employees must cut as much as 20 percent of the vacated jobs to save any money. Replacing all teachers and giving them the highest bonus would cost the school district more than $500,000 over five years. Doing the same for paraeducators — classroom aides and special education assistants — would cost $2.3 million.
- The savings are significantly higher for educators than for any other employee group. Giving exiting teachers and counselors a bonus that most closely matches the last golden handshake — the 100 percent scenario — is projected to save $12 million initially and $43 million over a five year period if only 70 percent of the educators are replaced. That would mean cutting nearly 200 teaching jobs from the payroll.
There is a lot to chew on here. If you want to see the charts on the new golden handshake for yourself, click here, here, here and here. I’ll be sending out more updates as I pore through the data. Send me any observations or questions of your own at firstname.lastname@example.org.