Budget Information and Staff/Community Input

Budget Update – 01.31.2019

  • This Board and district leadership has deliberately worked for the past 3 ½ years to be transparent and inclusive. We, the Sweetwater Collective (that includes our Board of Trustees, Cabinet, management, labor partners, students, families, and community) have accomplished many positive outcomes for the district and we are proud of that.
  • Ever since Sweetwater reported problems with our 2017-18 Unaudited Actuals to the San Diego County Office of Education (SDCOE) in September, we have been in the public’s eye regarding our fiscal health/solvency.  From the onset we have taken our responsibility very seriously and we acknowledge our accountability for past, current, and future actions. In order to share what we are doing to ensure a balanced budget going forward with true and accurate numbers, here is a timeline to show a visual of our journey since September.

Discussions with SDCOE Sept 4-19,  Unaudited Actuals Sept 24,  Budget Revision Oct 8,  External Audit Oct 8-12,  FCMAT Report Oct 17-19,  Stakeholder Discussions / Negotiations Oct-Nov,  First Interim Report Dec 10

    • Our Unaudited Actuals (closing the books) for the 2017-18 school year was accepted by the Board on September 24th. When SDCOE disapproved our 2018-19 budget, that action triggered a new timeline for Sweetwater where we were required to balance our 2018-19 budget by Oct. 8, 2018.
    • With a very short timeline and in collaboration with all labor partners, we did submit a balanced operating budget at our Oct. 8, 2018 Board Meeting. That, in and of itself, was an incredible accomplishment with the size of our district and budget. Staff came in during the Fall break to meet and submit budget solutions; we asked for input from staff and community in a google form on our district website; Sweetwater pulled together to address this challenge.
    • During October and November, in preparation for the 1st Interim Budget Report in December, we continued to confer with stakeholder groups, negotiating agreements with our labor partners, and getting approval to move forward with an early retirement incentive as part of our budget solutions. Our belief is that we would rather reduce staffing through incentives versus layoffs.
    • Dec. 10, 2018, the Annual Audit and the 1st Interim Budget reports were presented to the Board of Trustees and the public. The Audit findings included negative adjustments to the 2017-18 budget due to declining enrollment, lowered average daily attendance, and lower unduplicated student percentage revenue. Therefore, the 1st Interim Report stated a shortfall of approximately $10M to the current 2018-19 budget. Although this year’s operating budget was balanced as of the Oct. 8, 2018 Board Meeting, and based upon the information presented on Dec. 10th, the new finding put us into a negative status. Note: this $10M shortfall is an actual number and not a projection.
      • The 1st Interim Budget Report also projects our budget in future years based upon the best information we had at December meeting. The projection for the 2019-20 Budget is negative $42.4M. You will hear Dr. Salkeld make a presentation tonight on the Governor’s Budget Proposal for 2019-20. In his proposal he raises the Cost of Living Adjustment and recommends a state contribution to the State Teachers Retirement System. For Sweetwater, his proposal increases revenues by $5.1M which decreases next year’s deficit to now $37.3M. To keep this in perspective, the $37.3M projection for 2019-20, is 7.7% of our total budget; and, it includes the $10M shortfall for this current year, $9M to restore the 2% Economic Uncertainty Reserves requirement and a remaining $18M deficit. Remember, those are projections based upon what was known on Dec. 10, 2018 and, now includes the Governor’s Proposal. We know we have work to do and decisions to make as we move forward to balance the 2019-20 Budget.
    • Every day since we reported the problems with our 2017-18 budget to SDCOE, the Sweetwater staff has been making daily progress. The main reason we have been making progress is that we believe we generate better solutions when we include all stakeholders. What makes Sweetwater different in the state of California for organizations who are experiencing similar fiscal distress, is that we place a high value on input, collaboration and honest, transparent information sharing with our labor partners and all Sweetwater stakeholders, including students and community. We know we are unique in that respect and we attribute all progress to that partnership.
      • We are committed to making progress and we continue to make adjustments and corrections in our practices and structures based upon the recommendations from the external Annual Audit, FCMAT, and School Services reports. Here is what we have done:
        • The Board approved the Supplemental Early Retirement Incentive on Dec. 17th. The cost savings projected for December retirees exceeded our expectations. According to the PARS presentation in December, the original expected savings was a cumulative $1.4M; the revised expected savings is $3.3M. Any additional savings or the difference between the original and revised savings contributes positively to the current 2018-19 $10M shortfall. Any reductions to our current shortfall, also reduces next year’s deficit. SDCOE and our Fiscal Advisor recommended we extend the SERP; we agree. So, eligible employees have been notified the SERP is open until Feb. 28, 2019 – this will result in potential additional savings.
        • Because we had a decline in enrollment between July 2018 and December 2018 of 273 students, we were required to make adjustments in staffing at school sites for second semester. To fully benefit from employees retiring/resigning in December, we asked school sites and district departments to analyze how we can right-size as a district. We want to thank SEA for agreeing to meet and sign a side letter that allowed some flexibility with 1/6 teaching assignments. Principals and faculty across the district collaborated on how to absorb some of the teaching sections from retirees with our current staff. We had approximately 78 (7-12) teachers who retired in December; through reassigning teacher resource periods and consolidating classes due to lower enrollment, we were able to absorb over 30 of those teachers’ assignments across our 26 school sites with current teachers. Our expectation of a worse-case scenario did not actualize. That success is a direct result of staff working together. Thank you to staff who picked up an extra teaching period or agreed to teach a different class to make this work. Without your support, this would not have been possible. We are still calculating the cost savings of this budget solution with the intent to include it in our 2ndInterim Budget Report in March.
        • FCMAT, School Services, Annual Audit, and current Audit reports cited weaknesses in position control and the lack of integration of our TrueCourse finance system with HR and Payroll.  TrueCourse is antiquated and has been in existence for about 20 years. That means there are practices, structures, and systems that need to be re-learned and developed. You’ll notice we have an agenda item tonight that asks the board to approve a new job description – Budget Position Control Analyst. We appreciate CSEA meeting with us to jointly discuss the new position. The intent here is to include this person as the hub for district-wide position control. In the meantime, Dr. Salkeld has established an internal Position Control Committee that includes CFO, Asst. Supt. of HR, Classified/Certificated HR Directors, Director of Finance, Director of Labor Relations, Director of Special Services. The objective of this committee is to create a comprehensive and strategic process to deliver an efficient alignment of financial resources and personnel that will also be shared with labor partners and stakeholders. As we move forward, Position Control will be a much needed process that monitors staffing by reviewing all proposals to temporarily or permanently fill a new position, refill an existing position, offer a stipend, or request hourly positions. Right now, because our HR, Payroll, and Finance systems are not integrated, this needs to be done in this manual process to ensure we have checks and balances in place.
        • Dr. Salkeld and the finance team have been meeting with each school site principal/school secretary to reconcile staffing and discretionary budgets. This same process is being used with district departments. I guarantee this has been an eye-opening experience for all staff involved. I’ll also tell you that staff are open to and appreciate this opportunity to learn and improve what and how we work with budgets. We are implementing this process to establish a common understanding and common uniform practices at each school site and district department going forward.
        • Our next goal is to bring a request forward to the Board to implement a new Finance System. Currently HR is using Infor Global HR. We have been listening and learning about Infor’s Finance Module for over a year. The current Finance team attended a final presentation by Infor in December and believe this is the best system for our needs and will accomplish the goal of integration, not only with HR, but also integration with PeopleSoft, the payroll system that SDCOE requires all districts in the county to use.
      • In order to reach the goal of a balanced budget for 2019-20, we will continue the collaboration with our labor partners (certificated, classified, and management) with updates to our employees, students, parents, and the communities we serve. Here is the process: The Board of Trustees held a Budget Workshop on January 14, 2019, to begin developing their priorities and guide us in determining budget solutions. Their next workshop is scheduled for Feb. 4th. To help us all prioritize services in the 2019-20 school year, district leadership, in collaboration with school sites, will host a community meeting in each of the five trustee areas in late February and early March to seek input on the LCAP Goals and its alignment with the budget process. These meetings are similar to the meetings we held three years ago when the new Board and district leadership began and where staff, students, administrators, and community members attended.
      • Since districts up and down the state spend the majority of their budgets on personnel, Sweetwater is no different. We will have conversations with our labor partners and seek input on their ideas before making recommendations to the Board. One area of cost savings we already know and an area that makes sense to review is looking first at district office management reductions and a reorganization that will produce a savings of approximately $2M for next year; that is around a 20-25% reduction in positions of district office management. Some of those savings come as a result of management employees taking the early retirement (these savings will reduce the current year shortfall), while other savings will be the result of a reorganization based upon retirements and the Board’s priorities that will contribute to reducing next year’s deficit.
      • We welcome input from outside expertise and continue to seek any positive assistance we can get while maintaining our focus on being collaborative. My highest priority today and every day is to advocate on what’s best for the Sweetwater Union High School District – our needs, whatever it takes! The needs of our students, our staff, and our families!
      • I am confident we, our Sweetwater collective, will bring equitable budget solutions to the Board for a balanced budget in 2019-20 and future years.