Monday, Feb. 9, 2009 | Once upon a time San Diego Unified calculated what every school needed. It created formulas that figured out how many teachers, vice principals and librarians the schools should get based on how many students strolled through its doors. It devised rules for school secretaries, attendance keepers, and even what it needed for office supplies.

Schools were told how many employees they could hire and their salaries were paid out of the central office. Principals never looked at dollars when planning their hiring.

But five years ago budgets were slashed by the state. The school district couldn’t afford to provide all the employees required by its own formulas.

So San Diego Unified decided to let principals choose for themselves where to pinch pennies. Instead of telling principals how many teachers, counselors and clerks to hire, it figured out how much money each school would need, based on the formula, to pay their salaries out of its own budget. It gave principals that money to spend as they wished — but it slashed a small fraction of the funds to balance the books.

Middle and high schools now get roughly nine out of every 10 dollars they once would have gotten under the old formula. But they still have to hire just as many teachers to keep classes small. That means that schools are perpetually pinched to fund all of their teachers, due to a bizarre budgeting process that gives schools too little money to actually pay all the employees they are supposed to have under the formula that decides how much money they get.

“I don’t know of any other school district anywhere in the country that is doing it this way,” said Superintendent Terry Grier.

The system has pressured principals to clean out budgets for supplies and trim hours for counselors and clerical workers so that schools have enough teachers to keep class sizes in line with union contracts and state laws. And it leaves school budgets on such shaky ground that staffing can change dramatically from year to year, bumping employees from one school to the next to the next.

“It makes it really hard for us principals to figure out, ‘How much money do I really have?’” said Julie Martel, principal of Pacific Beach Middle School. “How many teachers can I really hire?”

Now San Diego Unified wants to change that system so that the formulas used to calculate school budgets actually match the budgets. It is unlikely to actually give schools more resources and will likely eliminate some of the power that San Diego Unified principals have enjoyed to decide which services they need, a power that has left them with increasingly painful choices as budgets plummet.

But the hope is that budgets will finally make sense and reflect a new reality — that funding has dropped below the point where the old formulas can be relied upon.

Budget Tradeoffs Cause Turnover, Turbulence

Round after round of budget cuts have whittled away at the money sent to San Diego Unified schools. Middle and high schools now get roughly 90 percent of the money they were originally intended to and elementary schools get about 95 percent of that sum, said Gamy Rayburn, budget operations director.

That means that a middle school that is supposed to have 30 teachers, a vice principal and a counselor is only given enough money for 27 teachers and too little to pay the full salaries of the vice principal and the counselor. But that school still has to hire enough teachers to keep classes to a reasonable size, Rayburn said. So principals have often cut the money from elsewhere, such as the budgets for school supplies, counselors and other employees, to cover the teacher expenses that San Diego Unified fails to cover.

They ask parents or teachers to pay for copying paper and use the money they got for school supplies to cover the rest of the French teacher’s salary. They cut hours or do without an attendance clerk or a secretary and juggle the tasks themselves. Or they pull money that is earmarked by the government for extras — such as added services for English learners or economically disadvantaged students — and figure out how to spend it on services the school needs without violating the law.

The advantage of such a system is that a principal who feels confident running a school without a financial clerk, for example, can cut the clerk and spare other services such as the school nurse, Martel said. The disadvantage is that a principal may be forced to trade away employees who Grier believes are crucial, such as an attendance keeper, in order to simply stay afloat. And when the school gets a new principal they may have a different definition of what is necessary.

Those choices, made yearly as budgets rise and fall, mean that staffing can be extremely unstable at schools. When a principal cuts back the hours of a secretary, labor contracts say that secretary has a right to another job and can bump another, less senior secretary from their spot, triggering a domino effect that pushes employees from school to school, frustrating both employees and principals.

“Someone can bump into a job for which they have absolutely no skills or training,” said Dana Shelburne, principal of La Jolla High School. “You replace a registrar who has been at your school for 15 years with someone who doesn’t know squat, and suddenly kids need college applications and transcripts and this person doesn’t know timelines, doesn’t know requirements, doesn’t know anything.”

Finding $25M in a Budget Crisis

The idea of changing the funding formula appeals to principals such as Shelburne who want to spend less time balancing the books. School board member Richard Barrera said the existing system is “craziness” that is only now being conquered because of budget woes.

“I would guess that every large bureaucracy has this kind of bizarre stuff that goes on,” Barrera said. “If there is anything positive about this financial crisis I think it is really forcing the district to get its house in order.”

The problem is that fully funding the old formula is costly. Budget staffers originally estimated that it would cost $32 million to pay for all the employees and supplies that were originally intended under that formula. A previous committee gave advice on how to fix the problem but was derailed because the solution was believed to be too expensive. Yet staffers believe the money is out there. Though San Diego Unified has provided less and less to schools under its own formula, many employees and services are still being provided by other funds, some of which are intended to pay for extras.

School districts are supposed to cover the basic costs of running schools out of their general fund. Other government funds are meant to cover extra services, such as additional programs for economically disadvantaged students or English learners, and some schools get money from parent foundations as well. But schools have resorted to using those funds to cover basic costs as their ordinary funding has drained away.

“These jobs are already being funded from somewhere,” said Deputy Superintendent Chuck Morris. “And to be frank, there is probably some question about whether we have been using those moneys the way we are supposed to be using them.”

So San Diego Unified is creating a newer, leaner formula for basic staffing that it can actually pay for. It will likely be less generous than the old formula, but it will actually reflect the funding that schools get and set a bottom line for the basics services that any school should have, preventing principals from cutting crucial employees. The goal is to free principals from worrying about the bare essentials — such as the minimum number of teachers each school needs — and ensure that extra money is actually spent on extras.

“We’re trying to alleviate the burden on principals to be an expert on finance,” said Chief Finance Officer James Masias. “We’ll let them be an expert in working with students.”

The new system, still in the works for rollout this fall, will give principals fewer choices about which staffers to keep and which to chop, Masias said. It will likely bar schools from trading in or cutting down certain positions — such as attendance clerks — to cover other costs. The intent is to make budgeting understandable and more consistent, to lessen bumping to stabilize staff, and to make the system transparent to the public.

“We need to say, ‘This is what it costs to fund education in San Diego Unified,’” Grier said. “Right now we can’t say that. We need to be transparent.”

Now the challenge before Masias and his staff is to find an estimated $25 million in school funding to pour into the formula without spending an extra dime. They hope that by redirecting the extra money that principals have chosen how to spend to specific parts of the formula such as nurses or counselors, they can tighten the rules without thinning their wallets. San Diego Unified now faces an estimated shortfall of more than $33 million due to the California budget crisis, with deficits projected for years to come.

“It’s not like we’ve got new money,” Masias said.

Shelburne said making sense of how schools are funded is long overdue, even if it means taking away some of the choices now left to principals.

“They are not going to play any more of these financial games and that is a good thing,” he said. “What you see is what you get and there won’t be any smoke and mirrors.”

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