Chico Unified School District

Q:

Why is CUSD spending millions on facilities when it is supposed to be in a fiscal crisis?

A:

The money that is available for facilities projects can only be used for that, and cannot be used to help relieve CUSD of its fiscal crisis. Furthermore, now is a very good time to go forward with facilities projects because costs of materials and labor are relatively low in the current economy. It is prudent for CUSD to move forward as quickly as possible with its facilities projects so that they are done at a lower cost than if they were delayed. Funds saved on current projects means that there can be more funds available for future projects.

Q:

Why can't CUSD use its reserves to cover the shortfall?

A:

Reserves are one-time money -- think of them as a savings account. You can only use the money once to pay your bills, and then you need to replenish it. CUSD is required to maintain reserves of at least 3% of total General Fund expenditures, which experts -- including FCMAT -- agree is the bare minimum. In fact, 3% is woefully inadequate when considering that it will only pay about a week's worth of CUSD's payroll.

Q.

What is a retirement incentive and how does it work?

A.

A retirement incentive is a benefit offered to try to encourage employees who are eligible to retire to do so earlier than they normally would. When an employee at the high end of the salary schedule retires and is replaced by an employee who is at the lower end of the pay scale, there are salary savings generated.

There are costs that come with providing an incentive including: 1) the cost of the incentive; 2) the cost of setting up the incentive; and 3) the interest, if the incentive is financed over time. Generally incentives try to achieve a two-year-earlier-than-normal retirement. Keep in mind that incentives have to be attractive enough to make up for the amount of lost service credit and age factor that is built into PERS or STRS retirement tables and everyone who retires will get the incentive, even the people who were planning to retire anyway, so that needs to be figured in as well.

Finally, employers who provide post-retirement health benefits are at a disadvantage to be able to fund incentive plans because they have to find enough savings to pay for not only the incentive but also the extra years of retiree health benefits that the retiring employee will utilize by leaving the work force earlier than normal. Essentially the district is paying double benefits for the first two years of the incentive.

There are some characteristics that make retirement incentives difficult to provide in CUSD:

1) The average pay of our teachers over age 60 is $73,152, which is a relatively low number considering that the top pay of a teacher in CUSD is $84,597.

2) The average pay of our replacement teachers is $45,718, a relatively high number considering that the incoming Step 1, Column 1 is $38,541.

3) In addition, employees in CUSD who have worked five years are eligible for retirement benefits for themselves and their family up to the age of 65. The cost of the Red Plan for retirees is expected to be $1,240 a month in 2010-11, a 15.5% increase over the current rate of $1,027.

To summarize, our oldest teachers are not necessarily our most expensive, our replacement teachers are relatively costly because we have been laying off staff and many "wait in the wings" serving in temporary assignments in hopes of being returned to permanent jobs eventually, and we have a very generous and costly retirement benefit plan. All of these factors contribute to making any kind of incentive for teachers difficult to provide for CUSD.

Q.

I have followed the financial problems of the CUSD for several years and have some suggestions and insights I would like to share. (NOTE: We have listed and commented under this forum as this individual did not share their name or contact information, the suggestions are summarized.)

A.

1. Terminate employees who are not absolutely essential to the operation

The district aligns staffing to the student count on a regular basis or both regular education and special education classroom settings. The number of teachers needed is driven by Education Code as well as the employee bargaining agreement with the Chico Unified Teachers Association (CUTA). The number of classified support hours hired for each school site is reviewed annually and reductions and eliminations are routinely made when workloads change. Administrative support is also reviewed and CUSD must certify, annually, that it does not exceed a defined Administrator Ratio -- we are, in fact, far below the norm for a district of our size.

Some sites have additional personnel that are funded from state, federal or even local grant funds. For example, our Title I schools have additional resource teachers because of their percentage of eligible students. Schools with a higher population of English Language Learners receive additional resources that can only be spent on that population to serve the needs of those students.

2. Replace counselors at secondary level with hourly guidance technicians

This would need to be negotiated with CUTA insofar as it would be replacing bargaining unit work.

3. Contract out for custodial services

This would need to be negotiated with CSEA (our classified support union) insofar as it would be replacing bargaining unit work.

4. Evaluate and eliminate programs which are not productive (English language learners, special education students, pregnant minors, other high intensive programs).

We are required by both federal and state regulations to provide services to English Language Learners and to students identified as special needs through an Individual Education Plan (IEP). Regarding our pregnant minors program, we can abandon the program but the options for these students to earn their high school diploma become more limited and the district loses the funding generated by their continued attendance.

5. Close the continuation high school, requiring students to earn their credits in regular setting rather than providing them extra opportunities to graduate

The Board has made a commitment to provide opportunities for all students. Fair View, our Continuation High School, serves as an alternative to the traditional comprehensive high school. Many students simply cannot be and are not successful in a traditional high school setting. Fair View provides not only an opportunity for high school students to earn credits, but also an opportunity for many to stay in school and graduate. Flexibility in the schedule also allows many students to work while completing high school in this manner.

6. Limit in-service/training to only those legally mandated requirements

Release time for in-service training is limited to federally funded grant dollars provided exclusively for the purpose of staff development. Travel and conference expenses are limited to "have to know" activities. Many staff who are required to travel for their jobs donate both their time as well as travel expenses.

Recently an on-line training program has been developed by our insurance provider. This program provides on-line "workshops" particularly in areas of safety related topics. The on-line program was a free service developed by Keenan and Associates for all schools, and was implemented beginning in 2009-10. It has been successful and reduced cost for the district for annual mandated training requirements and those trainings provided to new hires.

7. Reduce or eliminate the school day for 12th grade students

To eliminate the school day reduces income from ADA for these students. A reduced school day is a topic that is being discussed by the Board.

8. Sell any property the district is holding and apply that money to the general fund, including the property purchased for the Canyon View High School

Sales of surplus property cannot be used to fund "on-going expenses" in the general fund. Recent changes in law allow the district to sell surplus property and use a percentage of any "profit" towards operating expenses but only if those expenses are one-time in nature. Our largest budget expense is payroll and would not qualify for these funds. In addition, the Canyon View property was purchased for more than it would currently appraise, so there would be no gain to the General Fund. It is also a very short-sighted approach to the problem insofar as demographic projections indicate that all district owned school sites, with the exception of Cohasset, are expected to be needed for growth and expansion in the next 10-15 years.

9. Evaluate all sports programs for the cost versus the rewards/benefits they provide

A discussion about athletic funding for 2010-11 is scheduled for a Board Workshop being held on May 12, 2010. Watch the website for time and location. Currently the district provides about $225,000 in funding for athletic programs. This amount is far less than what is needed to actually run the program. Most of the sports programs are funded through a combination of fund raising which is accomplished through the hard work of students, coaches, booster clubs and the generosity of our parents and community. In evaluating program options issues such as compliance with Title IX (equal opportunities for boys and girls) and making sure that our sports programs serve a variety of students are considered.