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SFUSD holds first reading of 2008-09 budget citing one-time reserves and structural risks
Summary
At first reading the superintendents recommended 2008-09 budget projects the district will rely on one-time rainy-day reserves and local measures to avoid layoffs next year but warns of long-term structural shortfalls driven by declining enrollment, retiree health costs, and uncertain state COLA funding.
San Francisco Unified School District staff presented the first reading of the recommended fiscal year 2008-09 budget and accompanying three-year projections, saying the district can avoid immediate layoffs by using a combination of one-time rainy-day reserve funds and local parcel tax revenues but that longer-term structural challenges remain.
Budget staff highlighted two near-term sources of local support: an estimated rainy-day reserve (city-managed funds) that would provide approximately $18.1 million in 2008-09 and local parcel tax revenue from voter-approved measures. Mr. Grazioli, presenting the slides, said the recommended budget projects revenues of roughly $368.8 million and expenditures of roughly $360.7 million for 2008-09 with positive operating results next year but growing deficits in years two and three under current assumptions.
Presenters warned that state-level uncertainty remains a significant risk. The governors May revise at the time included no COLA for K—, and staff explained that much of the three-year projection assumes statutory COLAs in later years but not repayment of the "deficit factor" created by the zero-COLA year. Declining enrollment (the district has lost roughly 700 students per year on average over recent years) and rising retiree health-care costs are listed as continuing pressure points that will require planning.
Board members and the public asked about the assumptions, triggers and one-time funding sources. Commissioners asked staff to make explicit how earlier projected shortfalls (discussed earlier in the spring) have been closed in this recommendation. Staff acknowledged that the plan leans heavily on one-time resources for 2008-09 and reiterated the need to treat those funds as non-recurring in long-range planning. Next steps include an augmented budget committee meeting on June 17 and a second reading and board adoption planned for June 24; staff will analyze the final state budget over the summer and recommend adjustments if necessary.
"Past 08-09 we are going into deficit spending," a budget presenter told the board, urging careful planning for the following years and stressing the importance of the rainy-day fund and local measures in avoiding immediate personnel reductions.
