Monday Morning Thoughts: School District About to Head Back into the Red

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By David M. Greenwald

Davis, CA – It should be good news, despite fears of the need for massive cuts for the school district and state government in the wake of the pandemic and economic shutdown last spring, that this has not materialized.

But as we have seen locally, the budget picture is still not good.  The school district last week reported that they will operate with a small surplus this year, but the district is facing cuts of around $1.58 million in the 2022-23 budget and $1.04 million in the 2023-24 budget.

As we noted back in March, the district, like much of the state, is facing continued declining enrollment—over the past 15 years the district has lost an average of 76 students but gained 56 non-resident students each year.  That is slowly bleeding the budget, but not nearly as bad as it would be without the out-of-district transfers.

The district said they still do not know what will happen with the pandemic drop in enrollment of 300 students from 2019 to now—which could add up to a loss of $3 million in state funding.

Tom Adams called the situation “short term rich and long term poor.”

Meanwhile, Board President Joe DiNunzio noted that a huge problem has been the cost of pensions.  He said that “we are going to need to make $2.6 million in reductions between 22-23 and 23-24.”

Let us return to the theme that I have been pressing on since at least 2018.  The school district has a problem, but so too does the whole community.  The district has continued to plug that problem with short-term fixes.

In 2016, the district renewed their parcel tax.  Rather than attempting to solve long-term funding, the district simply attempted to renew the parcel tax with an inflator.

As I pointed out at the time, we asked for too little and were simply punting the problem down the road.

In 2020, the district avoided another problem by getting voters to support a new parcel tax, with 68 percent of the vote, to fund increased teacher compensation.

Now in fairness to the district, immediately after that parcel tax passed, the district and indeed the world was hit with the pandemic, which scrambled everything including district priorities.

I have continued to support parcel taxes in part because the district is disadvantaged by the statewide funding system.  Moreover, as discussed at length in subcommittee meetings by Alan Fernandes and Joe DiNunzio, the alternatives—programmatic cuts and school closures—were shown to be unappetizing.

Unfortunately none of what we are seeing is surprising.  DJUSD has managed to survive almost crisis by crisis over the last 13 years.  Sometimes we have had to take a hit—lay some teachers off.  But, for the most part, the district has survived by escalating its parcel tax.

We can point to several factors—the state funding system which gives Davis about 85 percent of a dollar for its classroom funding, rising pension costs, and of course declining enrollment.

Davis has managed to survive these largely through increasingly escalating parcel taxes, which started out at $100 in 2007 to the point where we added another $198 to the existing $680, and of course through out-of-district student transfers to blunt the impact of declining enrollment.

But how long can those patches continue to hold the DJUSD boat afloat?  What is the long term plan?  How do we plan to adjust?

It’s of course not just DJUSD that is facing a long term decline in sustainable funding—it is the community as a whole.

The city of Davis, as we have pointed out over the past five years, faces similar problems—a lack of a sustainable revenue source, increasing costs of house, inability to provide new housing for families, and eventually a declining infrastructure and other problems associated with that.

We tend to treat city and school issues in a silo, but they are actually related.

For example, while one problem has been the decline of births in the area to the lowest level in 20 years, a lot of this is about demographics as much as the overall decline of birth rate in the state and the nation.

But the second problem cited by Davis demographics last spring is the lack of new housing—especially for families.

While there are over 800 city-approved residential units planned within the next five years, “75% are apartments that typically do not house school age children.”  Most are designated as student housing.  While the report perhaps discounts the potential for the apartments to free up single family homes, the lack of housing currently planned beyond the currently approved units weighs heavily on this.

“Total enrollment has been fairly level over the last 10 years,” they found, but “resident student population (is) declining)” with “increased IDT’s (helping) mask decline.”

In short, the housing crisis impacting the city—that we are debating right now with the housing element—has implications for the school district.

And while there are certainly those who will not be concerned about issues of quality of schools or declining enrollment, the problem is larger than just the schools.  The overall quality of life in our community is threatened by things like declining quality of schools, lack of money to invest in infrastructure like roads and parks and other amenities—and that is the real threat that our city faces.

The problem is that this is a long-term, slow decline, and so many people will simply not notice the problem until it’s too late.  We are in a pot of water and we are not yet noticing that we are slowly cooking to death.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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41 thoughts on “Monday Morning Thoughts: School District About to Head Back into the Red”

        1. David Greenwald Post author

          There is a reason why that’s not the case. Right now they are using out of district transfers to change the attrition from 77 to about 20 per year. If you “downsize” which I assume means stop taking intradistrict transfers, it doesn’t say you money in either the short-term or the long-term. In the long-term- as long as the the district continues to shed students, it looks money faster than it saves it. 300 students was about $3 million. So 77 is about $750,000 a year. Downsizing doesn’t change that equation. We’re not talking about short-term here. That trend has been over the last 15 years. You could be talking decades where they have to cut each year. That’s not a good way to maintain quality education.

        2. Ron Oertel

          There is a reason why that’s not the case.

          I’ll say.  The reason being that you’re referring to analyses performed by an organization that is completely opposed to that solution.

          Another word for that is “conflict of interest”.

        3. Ron Oertel

          Obviously you have no idea what conflict of interest means.

          It means that an organization which has a direct stake in the outcome of a proposal (such as one to “downsize”) should not be the same organization which is analyzing that option. Or perhaps even directly hiring an organization to analyze that option, without some kind of oversight.

          And it probably won’t be the same organization which claims that the total cost of educating one child is the same as the cost of educating thousands, as an example taken to the extreme.

          Something about digging a hole, when one finds it getting deeper $ as it gets larger.

          Perhaps the question is, would the same amount of facility, administration and size be planned for today? Knowing what the situation and trend is.

          1. David Greenwald Post author

            What you are describing is not a conflict of interest. In fact, all organizations do their own fiscal analysis.

        4. Ron Oertel

          It crosses a line into conflict of interest, when it is used in the political manner repeatedly presented by the district, as assisted by the Vanguard.  That is, when they are attempting to appeal for more money, whether it’s via development (for its own purposes), or more taxes.

          It would not be a conflict of interest, if they were honestly interested in analyzing that inevitability.  (Or, when it’s ultimately forced upon them, when their political campaign runs out of gas.)

          It is exactly the same as those in Susanville who are protesting the closure of the prison there.

          https://www.lassennews.com/residents-local-officials-wont-give-up-the-fight-against-ccc-closure/

          It is also the same reason that the “military base closure” committee was designed in a manner that would (hopefully) ensure that individual representatives in Congress would not be able to override the recommendations of that commission.

          https://en.wikipedia.org/wiki/Base_Realignment_and_Closure

          Turns out that no one wants to lose their job. Nor do a handful of parents want to be impacted.

  1. Ron Glick

    The city has a much worse unfunded liability financial situation.

    I don’t see why you are complaining you supported Measure D the chokehold on Davis’ housing crunch. You are yet to repudiate your position so cry me a river.

    1. Bill Marshall

      The existence/absence of the JeRkeD measure is only one aspect of the problems the district faces…

      They have structural problems with Administrative size and particularly senior Administrative salaries… even if attendance returned to previous levels…

  2. Rick Entrikin

    Surprisingly, I didn’t see any of the following information in today’s Vanguard article about the financial challenges facing the Davis Joint Unified Unified School District.

    Last month, DJUSD began consideration of a plan to award stipends of about $2,500 per employee, “for extra work they’ve done during the pandemic.”   For 1,000 employees, I figured that to be ~ $2,5 million, but the May 19, 2021 Davis Enterprise report stated the total as “nearly $4 million.”

    “The payments result from agreements the district made with the two employee unions late last month” (assuming April, 2021).

    In addition, “Davis teachers will also be receiving 37 hours of compensation at $41 an hour for self-directed professional learning and preparation times.”  Since no total was provided for these additional payments, I estimated that at about $814,000 (37 hours x $41/hour = $1,628 x 500, the number of teachers shown on the DJUSD website).

    I realize that DJUSD has labeled these “one-time” payments, but they still total about $4.8 million, not mentioned amidst the woeful projections above.

  3. Matt Williams

    One other factor that David did not include in his article is that the School District receives over $6 million dollars per year of revenue from DJUSD CFD#1, and at the end of Fiscal Year 2020-2021 the account balance of the CFD#1 funds was $5,924,713 and the amount owed on the CFD#1 borrowings was $9,673,587.  That leaves a net balance owed of $3,748,874, which is more than covered by the current year’s $6,000,000 plus of CFD#1 revenues.

    What does that mean?  It means DJUSD has an additional $6 million of unspoken-for revenues to cover its costs.

    If you are wondering how it is that the annual tax levy of CFD#1 continues to be levied after the debt is fully paid off, that is the way the language of the original measure passed by the voters in November 1979 was written … as a perpetual tax, with a 4.5% annual CPI escalator.

  4. Bill Marshall

    It means that an organization which has a direct stake in the outcome of a proposal (such as one to “downsize”) should not be the same organization which is analyzing that option. Or perhaps even directly hiring an organization to analyze that option, without some kind of oversight.

    That may be a ‘definition’ according to the “Book of Ron”, but is far from a legal definition by law.

    At most, what Ron describes shows a potential of bias towards ‘inertia’ or the status quo, or political bias to not stir the waters related to teachers, administrators, or other staff… they’d probably feel a need for ‘golden parachutes’ for early retirements, and don’t even want to talk about straight lay-offs, except as a “last resort… but ‘conflict of interest’ (by any commonly accepted definition, particularly legally), it IS NOT!

    Conflict of interest (in the legal sense), almost always involves ‘individuals’, not groups, nor  organizations… but I guess anyone can call anything, anything, accurate or not.

     

    1. Bill Marshall

      Ron… the CA Legislature just passed a ‘budget’, that has zero chance of being signed by the Guv.

      They did that to make sure they didn’t get their compensation “docked” by not ‘adopting’ a budget by June 15…

      Was that a “conflict of interest”, Ron?  By your ‘Wikipedia standard’?  State law?  A government agency, acting in a way to protect ‘their interests’?

      1. Bill Marshall

        BTW, the Republicans had a “freebie”… they could vote against the sham budget, and still benefit from their continued compensation, and 4.2% raises… an inconvenient fact for conservatives…

        No ‘conflict of interest’ there, but might well be hypocrisy… otherwise, they’d forgo the compensation and increases… donate them back to the State, or at least to charities…

    2. Ron Oertel

      Here’s a definition for you.

      A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interestsfinancial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations in which the personal interest of an individual or organization might adversely affect a duty owed to make decisions for the benefit of a third party.

      A widely used definition is: “A conflict of interest is a set of circumstances that creates a risk that professional judgement or actions regarding a primary interest will be unduly influenced by a secondary interest.”

      https://en.wikipedia.org/wiki/Conflict_of_interest

      B.M. ” . . .but is far from a legal definition by law”.

      I did not put forth anything regarding legal concerns.

  5. Don Shor

    The district should definitely extend, expand, and formalize the online/independent study option now that teachers have training in it and know how to make it work. A significant percentage of students thrived on this approach. I think it has great potential for gifted students and those who aspire to advanced placement in particular. A large percentage of high school students indicated they would not be returning to campus when it reopened, intending instead to finish out the year by learning at home.

    If they adapt to this approach, either as independent study or expansion of hybrid learning, it may be possible to consolidate some operations on campuses. Extra space could be used to expand or start up new magnet programs, which would very likely draw students from nearby districts in increasing numbers.

    I really think the district needs a long-term planning committee that draws from across the community to help them transition to new forms of learning, now that it’s been demonstrated that different learning modalities can be implemented and have proven efficacy. I suggest they focus less on the dollars and more on the outcomes. As to the teachers, they could benefit from increased pay for specialized training. I’d guess there is a wide range of aptitudes (and probably a wide range of preferences) for the online learning option. As with gifted and special ed programs, training in that format should be compensated.

  6. Matt Williams

    David Greenwald said … “There is a reason why that’s not the case. Right now they are using out of district transfers to change the attrition from 77 to about 20 per year. If you “downsize” which I assume means stop taking intradistrict transfers, it doesn’t say you money in either the short-term or the long-term. In the long-term- as long as the the district continues to shed students, it looks money faster than it saves it. 300 students was about $3 million. So 77 is about $750,000 a year. Downsizing doesn’t change that equation. We’re not talking about short-term here. That trend has been over the last 15 years. You could be talking decades where they have to cut each year. That’s not a good way to maintain quality education.”

    .
    David, your assumption on “downsizing” is strange.  Downsizing wouldn’t involve any change in interdistrict transfers (I think interdistrict is the correct term).  It would mean closing one, or more then one, Elementary School and redistributing the students across the remaining Elementary Schools.  It might also include closing one of the three Middle Schools.  Class sizes would get slightly larger.  The head count of administrators and teachers would get smaller.  Revenues would stay the same, but costs would go down.  Costs would go down substantially if the closed school was demolished and housing was developed (ala Grande) on the site.

    1. David Greenwald Post author

      No it’s just a continuation of a conversation over the past several years. That said, downsizing doesn’t solve the problem either, it’s just a temporary stem. If you are losing students over time, you are losing money over time and the closure of school can offset some of that – with some heavy costs (non-financial).

      1. Ron Oertel

        If you are losing students over time, you are losing money over time and the closure of school can offset some of that – with some heavy costs (non-financial).

        As it is, the district is “losing money” allocated across each student.  In other words, it’s already a money-losing operation, even when considering the money that the district receives from the state for each student.  (For the moment, we will ignore that money from the state is not “free” in the first place, and comes from taxpayers.)

        It seems that you are relying upon an analysis put forth by the district itself (which is opposed to downsizing – and has every reason to put forth an analysis which claims that reducing its size will not save more money than it “costs”).  This is called a “conflict of interest”, in regard to putting forth an unbiased analysis.

        Such analysis should be looked at with the same amount of skepticism as this:

        CDCR states that closing CCC will save the state $122 million per year, but CCC is 1 of 3 prison facilities that operates in the black every year. CCC is already saving CDCR millions just by being open.

        https://www.change.org/p/california-department-of-corrections-and-rehabilitation-cdcr-cancel-the-closure-of-california-correctional-center-ccc?redirect=false

      2. Ron Oertel

        Matt:  “Revenues would stay the same, but costs would go down.  Costs would go down substantially if the closed school was demolished and housing was developed (ala Grande) on the site.”

        This is a key point.  The number of students is declining on its own, and has nothing to do with the savings that would result from reorganizing or reducing the size of the school system (e.g., number or size of facilities, employees, etc.) in response.

        And failure to do so results in a higher “per student” cost, as that cost is allocated across fewer students.

        Taken to an extreme, it would cost tens of millions of dollars to educate “one” (or “no”) students, if no response was made. A system which exists for its own purpose.

        1. Keith Olsen

          Taken to an extreme, it would cost tens of millions of dollars to educate “one” (or “no”) students, if no response was made. A system which exists for its own purpose.

          Good point Ron.  Every year that there are less and less students the cost per student keeps going up.  Can you imagine a business operating in the red that has continued sagging sales every year justifying keeping all of their warehouses and store fronts open and keeping all of their employees?

      3. Keith Y Echols

        There seems to be some missing analysis.  On the surface it seems that as far as net revenue goes, students are a loss?  Or is there some break even point with the amount of infrastructure/fixed costs in place that requires X number of students for the district to not operate at a loss?  It sounds like your assumption is that there is some threshold number for student enrollment revenue that can balance out the districts’ expenses.

        But what I do know is that it would make sense for the district to have more revenue coming in from other sources that don’t add costs too (like students).  More housing for more students doesn’t make sense to me.  However, more housing for more taxable parcels does.  But now we get into the kind of housing that makes the most sense for the school district.  It seems like new single family housing (which is what is in demand in the Sac region) wouldn’t be optimal because while you’re getting new parcel tax revenue; you’re likely also getting new students.  Again, we don’t know if that is financially a good idea (yes taking on more revenue but also more cost).  High density housing, I’m not sure makes sense either; apartments, dorms and condos.  Why? Because you have lots of units built on a single or a few parcels….so less parcel tax.  So small lot high/medium density units to me make sense.  The problem is, that I do not know to what degree the Davis market will support a significant number additional of small lot medium density residential units.  Usually young urban professionals are the target for those kind of units.  But maybe there’s a a market for these kinds of units for UCD temporary employees (professors/researchers…specialists here on projects for a couple years)?  I don’t know…I’m spit balling thoughts here.

        Schools sit on lots of under utilized resources.  A huge number of families in Davis are always wondering: “what am I going to do for after (and sometimes before) school childcare?”  CDC/Catalyst Kids is set up next to many of the elementary schools as a solution (though at least one or two of them is questionable to return next school year).  Davis Kids Club uses schools space.  But wouldn’t it make much more sense for the school district to provide after school care at their schools?  Maybe there are teachers that want to make some extra money on the side.  Maybe some newer teachers or teachers in training would like to get their foot in the door with after school care.  Parents pay a lot of money for after school care, I’m sure they’d pay the school district if they provided a decent after school child care option….plus they already have much of the infrastructure in place to do it.  I’m surprised that school property isn’t rented out for other gatherings and events.  Again, I’m just spit balling ideas.

        Then there’s the school district land and teacher housing.  It occur to me that schools all over east coast, the north, midwest and other countries tend to be multi-story buildings.  We talk about sprawl on this blog in regards to housing but look at how these schools are built.  They’re mostly one story buildings all spread out.  I get why they built the schools the way they did, CA has nice weather, no need to keep the kids inside.  But wouldn’t a better use of a district resource be to make the schools denser and use the extra space on the periphery to create affordable housing for teachers?  The district could create 2 and 4 plexes, condos and apartments on the edge or near school grounds.  They could rent the homes out at a below market price to some of their teachers and get a revenue stream.  Plus you get affordable housing in residential areas that likely won’t be protested….because I’m guessing most neighborhoods won’t oppose having school teachers living near them.   Obviously, I’m spit balling again….but the idea is to come up with more revenue ideas for the school district (since I don’t know much about the costs and how to control them).

        1. Ron Oertel

          Parents pay a lot of money for after school care, I’m sure they’d pay the school district if they provided a decent after school child care option….plus they already have much of the infrastructure in place to do it.

          Interesting idea.  Plus, the kids are “already there”.

          I’ll refrain from suggesting that parents ought to be paying more of the cost to educate their children in the first place.  Perhaps in conjunction with eliminating some of the significant tax breaks they get at the state and federal level.

          I predict more of a “revolt” – as folks have fewer children (which is already occurring – not just in Davis).

          Democrats are on the wrong side of this issue. (However, I found Newsom’s elimination of the “diaper tax” amusing, more than anything else.)

        2. Ron Oertel

          It occur to me that schools all over east coast, the north, midwest and other countries tend to be multi-story buildings.  We talk about sprawl on this blog in regards to housing but look at how these schools are built.  They’re mostly one story buildings all spread out.

          That’s another interesting idea.  For that matter, they’ve been building multi-story schoolhouses (even in the West) when land was dirt-cheap (and the government was giving it away).

          Including this relatively attractive one:

          https://en.wikipedia.org/wiki/Fourth_Ward_School_(Virginia_City,_Nevada)

      4. Matt Williams

        What are the heavy non-financial costs associated with closing one or more Elementary Schools and distributing their students to the remaining Elementary Schools?

        1. Don Shor

          What are the heavy non-financial costs associated with closing one or more Elementary Schools and distributing their students to the remaining Elementary Schools?

          Do you remember the last time they did that?

        2. Ron Oertel

          Do you remember the last time they did that?

          I don’t.  But, I wouldn’t have been paying attention to it anyway.

          Regardless, it looks like the entire state may have to deal with it:

          The most important take from PPIC’s reports is that the factors in the zero population growth Johnson and others advocated decades ago appear to be permanent. It’s entirely possible that California will never quite reach the 40 million population that once seemed inevitable, much less the 50-plus million that had been predicted.

          “If fertility rates do not recover in California, it will have wide-ranging effects on society and the state,” its report concludes. “Most immediately, fewer children will lead to declining school enrollment and more schools will close.

          https://calmatters.org/commentary/2021/06/california-population-decline-zero-growth/

          Another phrase for this is “good news”.

        3. Ron Oertel

          Most immediately, fewer children will lead to declining school enrollment and more schools will close.

          (They apparently don’t yet realize that keeping unneeded schools open “saves money”, according to what we repeatedly hear on this blog.)

          I’d suggest sending over some analysts from DJUSD, to let them know. 🙂

          1. David Greenwald Post author

            Can you show me the analysis that we have “unneeded” schools open?

        4. Matt Williams

          Answering Don Shor’s question, when DJUSD closed Valley Oak, there was a lot of angst in the community … angst which died away over time.  Did any of that community angst turn into recurring annual non-financial costs?

          1. David Greenwald Post author

            On the other hand, it didn’t really solve the district’s fiscal problems either. It did however create different sets of problems that remain in place today.

          1. David Greenwald Post author

            All of the problems with Montogomery over the past ten years. Also the closure hardly has stemmed the district’s financial crisis.

        5. Matt Williams

          David, correct me if I am wrong, but weren’t all the Montgomery problems already in evidence before Valley Oak closed?  I believe the problems simply moved to a different location within the District.

          When you say that the closure hardly has stemmed the district’s financial crisis, you really don’t know if the financial crisis would have been worse had the closure not taken place.  Arguably, it was a half-way measure, and proactive right-sizing would have resulted in the closing of two Elementary Schools, not one.

          The district’s financial crisis is real. What would you do to bring the district back into the black?

  7. Ron Glick

    “The most important take from PPIC’s reports is that the factors in the zero population growth Johnson and others advocated decades ago appear to be permanent. It’s entirely possible that California will never quite reach the 40 million population that once seemed inevitable, much less the 50-plus million that had been predicted.”

    The problem is that most of California’s infrastructure was built for 20 million when Pat Brown was Governor not the 40 million here today. The water system, roads and schools were built under Pat Brown. Instead of planning for and building the needed future infrastructure both Reagan and Jerry Brown defunded major investments in infrastructure or were blocked by voters. Deukmejian and Wilson neglected infrastructure other than prisons. Since Wilson our infrastructure needs haven’t kept up with the growth in population. This is most obvious in the lack of housing construction, transportation congestion and the resultant homeless population along with the high rate of poverty due to the high cost of rent.

    Claiming that we don’t need infrastructure because California has stopped growing puts the cart before the horse. A better analysis is that California has stopped growing because of the lack of infrastructure spending. Dismissing the need for infrastructure while so many are homeless or living in rent poverty is sadly dismissive of the suffering of millions of Californians.

    1. Ron Oertel

      With California’s rapid population rise in the 1950s, the California coast seemed destined to follow the prevalent pattern of suburban development. But, these rebels changed the fate of the land. Their efforts set new precedents for protecting open space and shaped the environmental movement as we know it today.

      https://www.nps.gov/pore/learn/news/newsreleases_20140401_rebels_with_a_cause_national_broadcast.htm

      This includes abandonment of plans to build a freeway (infrastructure, as you would call it) out to Pt. Reyes.

      And another one through Golden Gate Park.

      Along with plans to fill-in much of the bay itself, for development.

      I am not surprised that push-back (from those who have their own self-interested reasons to support development) continues to this day.

    2. Ron Oertel

      This one, as well.

      https://en.wikipedia.org/wiki/Marincello

      And I thank those who saved it, even if I have to “save up” to move near it if I so choose.

      Same thing regarding Jackson Hole, Truckee, Tahoe, or a host of other places.

      Or, you can go the LA and San Jose route, which STILL doesn’t result in “low prices”. But, it does result in those places “sucking”, despite those prices. (Probably not such great school systems, either.)

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