The Morning Report
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|Two Gambles, and a Gamble on a Gamble|
|The District’s Gamble|
|San Diego Unified’s 2010 labor deal was essentially a bet on the state’s finances turning around.
The district negotiated two years of unpaid furloughs for teachers to deal with an immediate budget crunch, followed by a series of raises in the final year. But the state’s finances haven’t turned around, and now the district is tied into paying the raises, regardless of whether it gets any extra money from Sacramento.
• To win the bet: The state’s finances have to turn around drastically, by more than $4 billion in tax revenue. Even then, state politicians would have to agree to carve out more money from that extra revenue for schools.
• If it loses the bet: Along with other increasing costs, the raises and the furlough days ending will mean the district starts next year $57 million in the hole and would again face the prospect of layoffs.
|The State’s Gamble|
|In the spring, Sacramento lawmakers passed a budget based on a bet that the state’s finances would improve. Legislators essentially assumed that California would bring in billions more in taxes the next year. That’s already looking like wishful thinking.
• To win the bet: The state has to bring in $4 billion more in taxes this year than it did last year, or it will have to make mandatory cuts to higher education, senior care and K-12 education.
• If it loses the bet: School districts lose out if the state doesn’t bring in enough extra revenue. San Diego Unified could get about $30 million less than it was expecting.
|The District’s Gamble on the State’s Gamble|
|Rather than playing it safe, San Diego Unified decided to rehire more than 300 teachers on the strength of the state’s financial promises. The district has already committed to spending that money this year, since it can’t lay off the teachers it rehired.
• To win the bet: The state has to bring in at least $2 billion in extra revenue for the district to get the extra money it is hoping for.
• If it loses the bet: Without the extra money, the district will have overspent this year by $30 million, which will be added to next year’s deficit, bringing the total projected deficit to $87 million.