Wednesday, March 4, 2009 | Led by a new school board, San Diego Unified is trying to do what was once called impossible: balancing its thinning budget without laying off a single employee.

It has already found more than $45 million in other savings that were never discussed last year when the school district dismissed hundreds of workers to save money. Staffers credit the change to a new school board that insisted on avoiding layoffs — including new members elected with union backing on the pledge to keep cuts far from classrooms — and to a tighter way of scrubbing its budgets. Unions and outsiders have praised it for finding less painful cuts.

“I’ve never seen a school district do this, with this degree of depth,” said Phil Stover, a consultant analyzing district spending. He added, “They had a much sharper focus on examining materials, supplies, travel, printing — you add them all together and it’s a lot of money.”

But the budget is far from finalized and time is running out to decide whether teacher layoffs are in the cards for next year. March 15 is the deadline for school districts to submit a financial report to the county superintendent that explains how they will balance their budgets for the next two years. It is also the legal deadline for school districts to warn teachers if they might be laid off in the coming year.

Cutting the budget without layoffs would spare the schools the anxiety and turmoil caused by sending layoff warnings to teachers. It would also be a political victory for school board members who protested the layoffs and vowed to find another way. But avoiding layoffs will still mean thinning the ranks of San Diego Unified workers through less explosive methods that are not as savage as layoffs — but not as surefire either.

Its current plan to avoid layoffs depends on a careful balancing act between two tactics: Eliminate programs or push class sizes larger so that fewer workers are needed. The next step is to prod employees to leave with a golden handshake buyout offered to create vacancies and replace veterans with less expensive workers. It can also fall back on cutting loose the temporary teachers whose jobs are not guaranteed at the end of the year.

The problem is matching the jobs that are eliminated to the vacancies created when workers leave. There is no guarantee that those stars will align or that enough workers will leave to fill the gaps caused by cutting programs.

San Diego Unified could decide to make classes slightly larger in high schools, for instance, eliminating the need for dozens of high school teachers. But if fewer high school teachers take the buyout — and more elementary teachers take it instead — the school district could be stuck finding jobs for the displaced high school teachers and scrambling to fill the vacancies left by the elementary teachers.

“You could end up cutting a program that your teachers are credentialed to teach and you don’t have a place for them to go,” said Rick Knott, a former finance director for San Diego Unified.

There is no sure way to anticipate those problems because the school district will not know which employees are taking the buyout until May, months after the school board has to decide whether or not to issue layoff warnings to educators. And many of the ideas on the table, such as making classes larger, must be bargained with the teachers union before the school district can unroll them at all.

School board member John de Beck worries that there is no guarantee that the union will agree to boost class sizes to balance the budget, or that teachers will take the golden handshake. He believes that issuing layoff notices are a good backup plan.

“We are risking our fiscal stability on whether teachers choose to resign or not,” he said.

Those are two questions in a minefield of unknowns as San Diego Unified tries to balance its books. It originally budgeted for a $33 million shortfall in this school year only to find itself scrambling for another $13 million when cuts were finalized in Sacramento. It is juggling that crisis with an estimated $71 million shortfall for next school year and has found roughly $45 million to plug it so far. And while there is hope that the federal stimulus package will deliver money to schools, it remains unclear exactly how much San Diego Unified will get or which programs it will benefit.

Many school districts across California have responded to that uncertainty by issuing layoff warnings. Getting one does not guarantee that a teacher will be terminated, but a school district cannot dismiss an employee if it does not send the notice by March 15, long before the state finalizes school budgets. School districts tend to err on the side of sending too many warnings to give themselves the option of dismissing teachers if they need to.

That was the route that San Diego Unified took last year, when it originally expected to lose $80 million to budget cuts. It braced for the shortfall by warning more than 900 teachers in March that their jobs were at risk, spurring angry protests from teachers and parents. School board members repeatedly said they had little choice and would be risking the financial solvency of the district if they did not issue the layoff warnings.

But as the state changed its plans, the school district lowered its estimated cuts and canceled most of the planned layoffs, even rehiring teachers who had been terminated after the school year began. The teachers union argued that the episode proved that the layoffs were never needed and furor over layoffs helped unseat an incumbent school board member last November. Mitz Lee was replaced by John Lee Evans, a child psychologist who was backed by the teachers union and who decried the layoffs as irresponsible.

Lee still believes the layoff warnings were the prudent choice. And she is anxious that the board seems disinclined to send any warnings this year.

“My question is, what is their fallback?” Lee said.

Evans said layoffs have been avoided this year because the board pushed San Diego Unified staff to find other savings that were neglected last year, such as shifting $6.3 million in custodial costs to redevelopment funds or postponing the replacement of aging school buses to save $1 million. Other funds were not available until this year because the state only recently granted school districts some flexibility to use earmarked funds such as textbook replacement money for other purposes.

And while it is still possible that the board may opt to issue layoff warnings, Evans said their goal is still to avoid them if possible.

“The simplest way, mathematically, to make substantial cuts is to lay people off. You just chop off a big piece of your budget. That is very easy and tempting from a quick solution point of view. But I think the costs and consequences are just way too high,” Evans said.

“It was just a matter of going to the administration over and over saying, ‘Where else can we find cuts? How can we do this at a lower cost?’ We just kept asking the questions,” he said.

Every manager in the district was asked to rewrite his or her budget from scratch, instead of tweaking their existing budget, and to reconsider each expense. Budget staffers spent more than an hour with each manager reviewing their budgets, line by line, to find savings, including an estimated $4.6 million in savings in purchased services and spending in the central office, according to Chief Financial Officer James Masias.

“I kept hearing (last year), ‘We’ve done everything we can possibly do and we have no other options than layoffs,’” said new school board member Richard Barrera. “And from our experience this year, that wasn’t true. We found more savings.”

Stover, the consultant who had long been analyzing spending in the school district, was asked specifically to come up with ideas to cut money without cutting employees, such as expanding the high school lunch period so that more students would eat government-reimbursable meals, and streamlining bus routes by changing bell times at schools. Ideas like that have already added up to more than $30 million in savings for the current school year and $45 million for next school year, all without layoffs or furloughs.

“They took a completely different way of looking at the budget,” said Camille Zombro, president of the teachers union.

The school board will meet again Saturday to discuss its options for cutting the budget. It has less than two weeks left to decide if teacher layoffs will be part of the plan.

“If they pull this one off it’s a miracle,” de Beck said of cutting the budget without layoffs or layoff warnings. “I don’t think they can.”

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