About 18 months ago, all hell was breaking loose at San Diego Unified.

Teachers were protesting outside the district headquarters. School board meetings were lessons in vitriol, as angry parents, jilted teachers and accusatory union leaders lined up to attack the five trustees tasked with running the state’s second-largest school district.

First, the superintendent warned that the district was starting down the road to insolvency. Then a school board member urged his colleagues to throw in the towel, saying the only thing to do was declare bankruptcy and let the state take over the city’s schools. Parents fretted as one in five teachers was given a pink slip.

As the troubles mounted, school and union officials launched a concerted effort to send a message to voters: Schools needed money, and they needed it now in the form of new taxes if the whole system was to be saved.

That message hit home. A year and a half later, San Diego Unified’s school board members and top officials are now talking about emerging from a dark era of financial gloom.

The passage of Proposition 30, a statewide tax increase that secures billions of dollars in additional funding for California schools, combined with a steadily strengthening economy and approval to spend almost $3 billion on new school facilities, have local school officials talking optimistically for the first time in years.

“My God! To go through a year’s budget with some stability, that would be extraordinary,” said trustee Richard Barrera, who joined the school board in 2008, just as the state began to cut education funding. “The best guess is that we should be planning for an era of investment.”

The district is by no means out of the weeds yet, however.

It still faces an estimated $80 million deficit for the 2013-14 school year, a problem the school board has only vague plans to deal with.

And while there is a general expectation that Gov. Jerry Brown will send more money to schools next year, the crucial figures won’t be known until January, when the state releases its initial budget.

Further, a temporary agreement inked with district teachers last year requires more than half of any new money to be spent back-filling raises that teachers put off to help the district limp through last summer’s budget season.

Talk of actual investment in classrooms or educational services then, is currently muted.

Officials hope that the district will continue to see successive funding increases for several years, and that despite constant expansions in labor costs, particularly health care costs, there should be some cash left over to actually increase student services.

“Prop. 30 was passed as an education measure, and the pressure is on the governor and the legislature to follow through and start restoring and providing stability,” said district Chief of Staff Bernie Rhinerson.

The district’s turnaround can be traced to three key events over the last 18 months.

Last winter, dreaded midyear “trigger” cuts to education funding essentially didn’t happen. Though there was a small budget cut, the impact was nowhere near as calamitous as district officials had predicted. The reprieve kept the district from basically reaching the point of insolvency.

Next, last summer, with the district facing a budget deficit estimated as high as $120 million, the school board laid off 20 percent of the teaching staff. The teachers union responded with concessions on a string of pay raises teachers had been promised, and by agreeing to continue five unpaid days off per school year. Combined, those concessions were enough to close the district’s deficit temporarily, and all district teachers kept their jobs.

Then came November’s election.

By far the biggest impact to local schools will come from the passage of Proposition 30, which introduces a quarter-cent sales tax increase and income tax hikes on the state’s highest earners. Though only about half of the new money raised by the taxes will end up at school districts, that extra cash, along with the overall easing of the state’s budget woes that should result from the new revenue, should mean districts see their first rise in funding in five years in 2013-14.

San Diego Unified voters also passed Proposition Z in November. This $2.8 billion bond measure, one of the largest school bonds ever passed in California, will provide a steady flow of new money to upgrade district facilities. The bond money will also insulate the district from hits to its day-to-day budget.

Next year, everything depends on the state’s budget.

In the run-up to November, Brown promised to right the state’s fiscal ship and return education funding to previous levels.

In January, Californians will find out if he can deliver on that promise.

“He’d better. He’ll be out on a limb, politically, if he doesn’t,” said Phil Stover, San Diego Unified’s deputy superintendent of business services.

Brown is expected to increase per-student funding by at least between $200 and $300 next school year, said Rhinerson. That translates to about $30 million for San Diego Unified’s budget.

More than half of that new revenue will go directly to teachers under the agreement the district signed with the teachers union last year. Fifty-seven percent of the new funding will go toward restoring the raises teachers agreed to forgo and canceling furlough days.

Under the agreement, the first priority for this portion of the money is to pay teachers a 2 percent raise they gave up last year. Any additional money within that 57 percent will go toward restoring furlough days until the school year is back to 180 days. Once the school year is restored, any remaining revenue will go to restoring another 5 percent in raises that teachers gave up.

The remaining 43 percent of any extra revenue from the state will go toward solving the district’s budget deficit.

It’s extremely unlikely that Brown will increase funding enough to wipe away San Diego Unified’s deficit next year, school officials said. Rather, the increased funding will be one of a patchwork of funding solutions to fill that budget gap.

The district should be able to avoid layoffs entirely next summer by selling and renting out property, with attrition from the teaching staff, and by carrying over some extra money from this year’s budget, Barrera said. Rhinerson wouldn’t commit to the same optimism.

“We have until March 15 to make that decision,” he said.

Looking further ahead, nobody’s certain what school funding will look like in 2014-2015.

But projections from the state Legislative Analyst’s Office and the state Treasurer’s Office Look healthy overall for schools, said Jim Groth, longtime Chula Vista teacher and a board member for the California Teachers Association, the biggest teachers union in the state.

Groth cautioned that any new funding will likely to be used to backfill cuts that have been made over the last few years.

“Really, what we’re doing is recovering,” Groth said. “Schools aren’t going to be fine. We have to decrease class sizes, restore furlough days and bring back counselors and classified employees.”

San Diego Unified School Board members are more optimistic.

Board President John Lee Evans acknowledged that cutbacks have impacted local classrooms, but said a good proportion of the cuts eliminated unnecessary waste and trimmed a bloated bureaucracy.

Evans said the district needs to be careful not to rebuild that bureaucracy as things get more financially stable. He said he’d like to see any extra funding channeled primarily toward improving student performance, starting with reinvesting in classrooms.

“As more money comes in, it’s not a case of restoring everything we had before, but is an opportunity to look at what is most effective and what really boosts student achievement,” Evans said.

The district and the newly minted school board are finally on the cusp of putting new money into classrooms after five years of fiscal drought. That means looking into using technology to improve performance and bringing back counselors, nurses and support teachers who help a school run more efficiently.

A period of financial stability would have another key impact on San Diego Unified.

For the last five years, the school board and labor unions have been at loggerheads over the district’s finances to such an extent that any other issues have been sidelined during labor negotiations.

The tense fiscal situation was one of several factors that fomented a fractious relationship between the district and unions and led the San Diego Education Association, the teachers union, to become increasingly hard-line and isolated.

The SDEA is now in the hands of new leaders who have shown an increased willingness to search for collaborative solutions. Moreover, last year’s tentative agreement mandates the creation of a joint budget committee made up of district and union representatives.

The way has been paved, then, for the union and the district to finally sit down and start talking about sticky issues like teacher evaluation and teacher tenure. As financial pressures on the district ease, Evans said he’d like to see those conversations start happening.

Such a joint effort is unlikely to start until at least the 2014 school year. If the next 18 months are as positive for school finances as the last 18 months, anything could happen.

Correction: An earlier version of this story misstated the size of San Diego Unified’s 2013-14 deficit. It is estimated at about $80 million. We regret the error.

Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at will.carless@voiceofsandiego.org or 619.550.5670.

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Will Carless

Will Carless was formerly the head of investigations at Voice of San Diego.

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