LETTER TO THE EDITOR: Preventing Bankruptcy at Capo Unified

EDITOR'S NOTE: Patch welcomes letters to the editor from all perspectives on all issues. To submit your own letter regarding Capistrano Unified, email Penny.Arevalo@patch.com.

There are currently 143 school districts in the state of California that are facing insolvency this year. Orange County has nine out of their 28 districts on that list. (The complete list can be viewed at: Second Interim Status Report, FY 2010-11)

• Anaheim City
• Capistrano Unified
• Centralia
• Fullerton Elementary
• Fullerton Joint Union High
• Garden Grove Unified
• La Habra City
• Santa Ana Unified
• Westminster

(Saddleback Valley Unified has recently been removed from this list). 

With 50 percent of California's State budget going to fund education, why are so many Orange County Schools facing bankruptcy?

Part of the reason is the unfair distribution of property tax dollars. Of the 58 counties in California, Orange County is the state's most generous "donor" county. That means that Orange County public school children receive a much smaller percentage of our tax dollars than children in all the other counties in the state. (See http://octax.org/cat3sub3.php - Highlights below):

Orange County taxpayers spend about 70 percent of their property taxes on schools and only 30 percent on county and city governments and special districts. Those percentages are roughly reversed in San Francisco, which is a “recipient” county. Does this mean our schools are better-funded than those in San Francisco and other recipient counties? Unfortunately, no.

Orange County taxpayers spend only 6 percent of our property taxes on county government. The statewide average for all 58 counties is 18 percent. In other words, general governmental services in the average county in California are three times better-funded than in Orange County.

This “tax inequity” costs Orange County taxpayers dearly. Since 1992, the ERAF shift has taken probably $5 billion dollars from the county’s general fund, libraries, flood control, harbors beaches and parks and other community service agencies. 

Orange County’s annual “donation” to recipient counties is about $200,000,000 (money our schools could greatly use).
Definition: ERAF - (Educational Revenue Augmentation Fund: Property Tax Shifts) 

What that means is that our budget problems cannot be solved by voting to increase taxes. For every dollar of tax - only 6 cents of that dollar comes back to Orange County schools. Facing $50 million in budget cuts this year alone, and union contracts that contain yearly automatic increases to compensation means that all Orange County schools will eventually go bankrupt unless the state of California changes the formulas used to calculate ERAF percentages or schools are able to negotiate large and permanent cuts to employee compensation.

What this means for Capo Unified

When my child started in CUSD five years ago, CUSD had an annual budget of $473 million dollars. The current year budget is about $381 million dollars. Despite $100 million dollars in cuts over the past five years, CUSD has been able to balance its budget and meet expanding contractual obligations through class-size increases and temporary work-year reductions (furlough days). 

While some cuts have been made to employee compensation* almost all of the $100 million in cuts made to date have been from that portion of the budget (normally 15-20 percent) that does not go to employee compensation. 

* The 2010 teachers union strike did result in an agreement to cut teachers’ salaries by 10.1 percent through June 2012, but the Board of Trustees voted to reinstate a portion of the teachers wages last year, reducing those cuts to 6.49 percent. 

Today, 92 percent of the CUSD budget goes to employee compensation leaving only 8 percent of CUSD's budget for EVERYTHING ELSE! So where will CUSD find $50 million in cuts this year?   

CUSD Employee Cuts

With 92 percent of the budget going to employee compensation, CUSD will most likely be facing a battle over reductions in salaries, pensions or benefits. The same battle that lead to a teachers strike in 2010. At Monday night's Board of Trustee meeting, trustees voted to reopen negotiations with the district's three employee unions because staff could only identify $11 million in cuts that could be made without reopening union contracts.

What has been put on the table for discussion is class-size increases, furlough days, wage and benefit adjustments. District staff even went so far as to suggest that student government bodies and booster clubs be set up to accept donations. Are we really going to start funding public schools core programs with donations?

According to California State law, a "public" school must provide the same opportunities to each student despite their parent's income or ability to pay. If we start funding public education with donations, it will create greater educational opportunities in richer communities with less opportunities in poor areas, which is against state law.

Why additional taxes won't work

It's time for everyone (parents and the educational work force) living in Orange County to realize that the ability to continually raise class size, or cut the number of days in the school year to meet growing contractual compensation obligations is unsustainable.

While a November tax increase may help recipient counties in the state of California, the proposed tax increases, even if they are passed will not be enough to save Orange County schools. At a return of 6 cents out of every dollar in tax, tax increases will not keep pace with current step and column salary increases nor ballooning pension and benefit costs. The possibility of balancing the budget through fundraising is ludicrous. 

So it is time that CUSD employees align themselves politically with Orange County parents to change educational funding at the state level rather then align themselves with "state" union positions that simply seek to raise additional revenues through greater taxation which benefit only "recipient" counties, not "donor" counties.

Why a teachers' strike won't work

When the state teachers' union starts beating the "increase tax revenue drum" and asks Orange County teachers go on strike to support revenue increases rather than accept cuts to compensation, there are some facts that Orange County parents and teachers should know before supporting another teachers' strike over compensation.

A recent report from the Legislative Analysts Office titled, "2011 Cal Facts: Program Trends K- 12: California School Rankings Are A Mixed Bag."

Nationwide  California State-Ranking CUSD as of 2012  Average teacher salary  $53,168  $66.064  First  $77,508 Spending per student  $9,509  $9,015  31st  $7,228 Student-teacher ratio  15.3  20.8  49th  33

• California has the highest average teacher salary of any state in the country but also has among the highest numbers of students per teacher.
• California ranks 31st in per pupil spending.
• California ranks almost last in student achievement. 

* CUSD numbers from: 2010–11 Current Cost of Education link: http://www.cde.ca.gov/fg/fi/ir/first1112.asp

CUSD class size

In CUSD Average class size is 33. State law requires class sizes in those grades to average no more than 29.9 students per teacher. If a district’s average exceeds that number, it faces stiff financial penalties. The only way to get around the law is to ask the State Board of Education for a waiver. 

CUSD requested a waiver in April 2011 to increase class size in grades 4 - 8. See Agenda Item No. 6 April 27, 2011 Regular Board Meeting Agenda  

CUSD requested a waiver in February 2012 to increase class size in grades K- 3. See Agenda Item Nos. 5 and 6  February 29, 2012 Regular Board Meeting

It is important to note that this is an "average" class size. That means CUSD has many classes with much higher student-teacher ratios than 33 to 1.

It is also important to note that class-size increases must be negotiated. If you read Section 8.5 on page 19 of the CUEA contract, it requires that teachers receive "release days" if their classes have more students than the negotiated number. Release days provide teachers with a paid day at school, outside of their classroom to do paperwork, etc.

That means a sub has to be hired for each "release day." Release days are bad for our children. Not only do our kids have larger class sizes, they get less days with their actual teacher and more days with a substitute teacher.

In addition to being bad for our children, release days cost the district a lot of money. To find a sub for each release day, the contract requires the district to hire teachers who have been laid off. The district has to pay these laid-off teachers at the rate they were making when they were let go (not at the rate for a typical sub), meaning that the district is paying for "two" teachers at full-time rates (not sub rates) for each release day.

Spending per student

National average: $9,509. California: $9,015. Capistrano Unified: $7,228. Per-student spending will not improve without making structural changes to the way California funds education.

CUSD teachers' salaries

Salaries, pensions and benefits are currently 92 percent of the district's total budget. Total compensation (salary + benefits) bring the average teacher compensation in CUSD to well over $100,000 per year.

Despite continued cuts to CUSD's budget, automatic step-and-column salary increases mean that so called "cuts" are actually "reductions to automatic contractual increases" and not "real cuts."

In checking the database for my child's school, I found that of 33 employees, 21 received salary increases this year (an actual pay raise); six received pay cuts; one remained unchanged; and, five had no data to compare.

So while district children have seen class sizes increase every year, have lost instructional minutes because of furlough days and seen core programs cut, most teachers received actual pay increases. The bulk of the $100 million dollars in cuts that CUSD has made to date have not come from employee compensation, which has continued to increase every year for a majority of the district's 4,000 employees. 

A quick check of the databases at the OC Register show that district administrators also received raises this year. Superintendent Joseph Farley received a $7,000 raise, bringing his salary (excluding benefits) to $282,200.04. Quite astonishing when the district is facing $50 million in cuts and is asking parents to raise revenues through tax increases or donations. We already give the state of California $50 Billion dollars per year in tax money that pays for education (half of California's total budget).

I encourage every parent to check the databases below to see how many of their teachers and administrators received actual pay increases this year. Does the district really expect students and parents – many who have lost jobs, suffered substantial pay decreases and/or lost a huge amount of their own retirement savings – to "fundraise" to pay for employee compensation increases while the district is on the verge of bankruptcy?

Salaries database: Click here to review salaries of 2010-11 employees earning $25,000 and more.

Benefits database: See a comprehensive review of O.C. teacher benefits.

Benefits

The average teacher salary in Capistrano Unified is $77,508.00 (see j90summary1011, page 18) with 95 percent of a teacher's benefits being paid by the district (see Database: Review 2009-10 benefits costs for Orange County school districts and benefit plan details for all California districts.) Total compensation (salary + benefits) bring the average teacher compensation in CUSD to well over $100,000 per year.

A look at CUSD health benefits shows that Capistrano Unified teachers receive Kaiser Permanente health insurance coverage completely free and only pay 5 percent for Cadillac health plans with the district picking up 95 percent of those costs.

I would like to put that into perspective: I have Kaiser for my health insurance. The cost to cover my family of four is $1,364.00 per month ($16,368 per year) for the same plan that district employees get for free. Kaiser increases the cost of its insurance about 10 percent per year. In the last four years, my costs have gone from $881 in 2008 to $1,364 in 2012.

How is the district going to cover these increases going forward? Perhaps it is time to look at requiring CUSD employees to contribute more to their health coverage as one way to balance the budget rather than increasing class size or cutting the number of school days per year. 

The district currently has a $51.5 million dollar unfunded liability for benefits. 

Furlough days

Furlough days may not be as attractive to unions this year because we have reached the minimum number of days of instruction (168) in order for pensions to vest. 

The teachers' union has been very concerned about being able to use furlough days as a means to balance this year's budget. State law requires teachers to work a minimum number of days in order for their pensions and benefits to vest.  

The teachers just got the approval to negotiate an additional 15 furlough days without affecting benefits. SO parents brace yourself: The bad news is that the school year may be shortened by 15 additional days. The good news is that teachers' pensions and benefits will vest even with the shorter school year. 

According to Fiscal Report, a publication of School Services of California, a consultant to CUSD and many other school districts:

STRS Service Credit Not a Problem After All

It was previously reported in the Fiscal Report (see "More on the Trigger, the Seven Days, and the STRS Credit Problem" in the October 8, 2011, Fiscal Report) and widely publicized by news media and education organizations statewide, that a reduction in the school year below 175 days would cause an active member of the California State Teachers' Retirement System (STRS) to lose service credit. STRS is now reporting that base days may fall below 175 without a loss of service credit according to Education Code Section (E.C.) 22138.5.E.C. 22138.5 includes these statements:

For the purpose of crediting service under this part, "full time" may not be less than the minimum standard specified in this section... The minimum standard for full time in prekindergarten through grade 12 is as follows:(1) One hundred seventy-five days per year or 1,050 hours per year, except as provided [for administrators].

Despite the statewide attention given to this issue by policymakers, a plain reading of the code above, and an effort on the part of STRS in an omnibus cleanup bill last spring to "fix" the reported service credit problem, it now appears that the school year could be reduced significantly with no loss of service credit to STRS members working full time.STRS has clarified that E.C. 22138.5 provides local educational agencies the responsibility for establishing the standard for full-time service. Full-time service cannot fall below the minimums described in E.C. 22138.5. For teachers, full time means no fewer than 175 days or 1,050 hours. What this effectively means is that a reduction in work year could be negotiated that falls well below 175 days without impacting service credit so long as the following are true:

• The standard for full time is applicable to the entire class of employees
• The standard for full time does not fall below 1,050 hours
• The compensation earnable for an employee working full time is equal to their earnings

For example, assuming a 7.5-hour duty day and a work year of 160 days, the standard for full time would be 1,200 hours, well above the statutory minimum. Under this scenario, and assuming a 1.0 full-time equivalent employee at no time during the year falls into unpaid leave status, the employee would receive a full year of service credit.

What Does This Mean for School Districts and County Offices of Education? Should we find ourselves in a situation similar to the one caused by Assembly Bill 114—whereby the proposed contingency plan for anticipated revenues falling short of projections (or in the case of next year, the tax measure failing) was to further reduce the school year—negotiating a reduction in the work year of certificated employees below 175 days would not have a long-term negative impact on their service credit so long as the standard for full-time did not fall below 1,050 hours.To be clear, we believe that further reducing the school year would be poor public policy. We need a longer school year—not a shorter one; we need lower class sizes—not higher; we need more options for students—not fewer; and we need stability for our professional teachers, administrators, and classified staff—not more layoff notices. Unfortunately, the economics have led us down the path of short-sighted policy decisions, which will regrettably have profound impacts on education, our economy, and California's workforce for years to come.—Suzanne Speck

Fundraising

Fundraising has allowed a greater and greater percentage of CUSD's budget to be spent on salaries, pensions and benefits with greater and greater reliance on fundraising to pay for core educational programs.

For example, to continue block music and Meet the Masters (art program), my school's PTA was told to raise funds to pay for these programs or they would be eliminated. As more and more programs are cut, parents are being asked to donate more and more to schools for things that should be covered by the $50 billion that taxpayers already give to the state of California for education.

The PTA, which is chartered as an "advocacy organization," has been turned into a "fundraising organization" with more and more time spent raising money and less time advocating on behalf of children.

Separate from the PTA as a fundraiser, parents have been asked to pay fees to participate is sports and other activities. Last year, the ACLU sued the state of California so that parents can no longer be forced to pay for books, supplies and participation in school activities, such as sports and other extracurricular activities. These "fees" were found to be illegal. A "public" school must provide the same opportunities to each student despite his parent's income or ability to pay. 

Not only is the district facing $50 million in cuts, revenues from fees and fundraising will be less as a result of the ACLU lawsuit (DOE Vs California). Download: Settlement agreement between state and ACLU over school fees

Conclusion

In reality, it's time to re-think education funding in the state of California. Orange County cannot continue to let the quality of our students' education suffer as a result of unfair funding formulas and ridiculous union contracts. See LAO Report Restructuring the K-12 Funding System - California Legislative

Orange County parents and Orange County educators need to join forces and change the way education is funded in California. There are not enough revenue sources available to fix our bankrupt school districts.

Parents need to separate the "teacher" from the "union." The union has been really good at getting parents to support state political positions by using a parent's love and respect for the individual teacher to translate into support for union positions; even if that position actually hurts the quality of education that the child will receive.

Parents need to understand that that it is the job of the union to advocate on behalf of its members by fighting for increased salaries, pensions and benefits. The union does do not have any responsibility for the children in our district.

In reality, there is no one sitting down at the bargaining table who represents the interest of the children, which is why employee compensation continues to eat up a larger and larger percentage of the CUSD budget. In reality, the California education system has been transformed into an adult jobs programand is no longer about the education of our children.

The Real Cost of Public Education?

What is the real cost of educating a public school student? The Cato Institute did a study, They Spend WHAT? The Real Cost of Public Schools, and found that Los Angeles Unified spends $30,000 per student in "real costs" and has a 40 percent drop-out rate. LAUSD spends $30K per student.

The following is a summary of compensation increases for my child's school this year. I personally will not be doing any "fundraising" so long as a bulk of my school teachers and administrators are still receiving pay increases. The salary increase that my principal alone received this year would have been enough to pay for the cost of block music and Meet the Masters.