Sacramento Unified School District on Verge of Insolvency While Super Takes $35K Junket to Harvard

Sacramento City Unified School District is teetering on insolvency. And now the Sacramento City Teachers Association has voted to authorize a strike, demanding salary increases to deal with the surging cost of living in California’s urban centers, the Bond Buyer reported. But it appears that this strike is more of an attention-getting move with a tone-deaf district.

The district is under the threat of state takeover as it wrestles with a $35 million budget gap.

Assemblyman Kevin McCarty (D-Sacramento) requested an audit of the district citing a “leadership issue” as the cause of the crisis, which ballooned after a 2017 deal with the teachers union for salary increases “that the district acknowledged were not affordable without significant budget reductions.” The Joint Legislative Audit Committee approved the audit performed by California’s State Auditor Elaine Howle.

“McCarty said that in addition to a financial analysis by the state auditor, he wanted to know: ‘What were the district’s key actions that caused the crisis? Who made these decisions? Why were these decisions made?’” the Sacramento Bee reported.

California Globe contacted McCarty’s office to discuss the audit request with him, but did not receive a call back by publication.

Notably, McCarty is married to Sacramento City Unified Board member Leticia Garcia, “a longtime ally of teachers unions,” the Bee reported.

As all of California’s public school districts face large mandatory teacher pension contribution increases, and volatile and low revenue reserves, threats of recession will spell disaster. Additionally, throughout California, enrollment continues to significantly decline at the state’s 1,200 school districts.

Expensive Junket to Harvard

Even with these financial warning signs, after the Sacramento City School District ended the 2017-18 fiscal year with an $11 million deficit and just days after Superintendent Jorge Aguilar submitted the 2018-19 budget projecting another $22 million deficit (which was rejected by the county), Aguilar and seven other administrators spent more than $35,000 to attend a six-day conference at the Harvard Business School, the SCTA reported.

The other attendees were:

• Vincent Harris, Chief Improvement Officer
• Iris Taylor, Chief Academic Officer
• Mary Hardin Young, Area Instructional Superintendent
• Olga Simms, Area Instructional Superintendent
• Cancy McArn, Chief Human Resource Officer
• Tuan Duong, Principal, Will C. Wood
• Garrett Kirkland, Principal, Hiram Johnson

SCTA reports that the District is now scrutinizing all expenditure requests, including student field trips. Out-of-state field trips for students usually require the approval of the full school board, the SCTA says. However, “only Board President Jessie Ryan appears to have approved the trip (click here)–not the full school board of the junket Superintendent Aguilar and the top administrators” made to Harvard.

The Sacramento teachers union has been demanding audits of the budget, and transparency, to no avail. “We expect that when the District finally provides the requested information that the Harvard Business School won’t be the only ‘Administrative Field Trip’ taken in the last few months.”

What’s going on in the administration of the Sacramento City Unified School District?

SCTA provided some “Cliff Notes” of the budget:

1. From 2014 to 2018, District revenues increased by $123 million.
2. Prior to the hiring of Mr. Aguilar in 2014 the District operated at a surplus as the reserves soared to nearly $100 million.
3. In November 2017, to avoid a strike and to improve services to students, Mr. Aguilar personally agreed to a contract with SCTA that made it easier to recruit and retain teachers by restructuring the salary schedule and by using any savings from health plan savings to reduce class sizes and add professional support staff like school nurses and psychologists. Mr. Aguilar’s agreement required a shifting in spending priorities at the District away from the Serna Center (administration) and back to the classrooms.
4. Based on concerns raised by Sacramento County Office of Education, Mr. Aguilar also committed to SCOE to shift the spending priorities consistent with the SCTA contract.
5. Based on Mr. Aguilar’s commitments, SCOE approved Sac City’s budget in January 2018, and again in March 2018.
6. But rather than honoring his commitments, Mr. Aguilar went on a spending spree–adding administrators and paying out millions to administrators to cash out their vacations and other questionable expenditures
7. In June 2018, Mr. Aguilar submitted a new 2018-19 budget with several gimmicks designed to hide his rampant spending and failure to make promised cuts.
8. In August 2018, SCOE saw through Mr. Aguilar’s stunt and rejected the budget.
9. At the same time, Mr. Aguilar then tried to back out of his contract with SCTA on the restructured salary schedule and the later on using the health plan savings to lower class sizes.
10. Even after SCOE rejected the budget in August 2018, Mr. Aguilar has refused to follow through on making the administrative cuts he committed to make over one year ago. A independent report by the State’s Fiscal Crisis Management Assistance Team (FCMAT) confirmed in a scathing review that the District’s management team lacks “experience and expertise” and that “leadership issues” make state takeover a strong possibility without significant changes.

The Bond Buyer Warnings

The Sacramento City Unified School District is projected to run out of cash by November 2019 unless steep cuts are made, the Bond Buyer reported. The state’s 10^th largest school district has 43,000 students on 76 campuses. “Its enrollment has remained steady, but it shares LAUSD’s issue of having steep other post-employment benefit liabilities through a generous retiree healthcare program.”

Sacramento City “entered into a collective bargaining agreement in December 2017 that they could not afford,” Bond Buyer said. The Fiscal Crisis & Management Assistance Team report released in December concluded that SCUSD needed to make $35 million in cuts by the time it adopted its 2019-20 budget or it would only have three to four months of cash remaining for day-to-day operations.

“Keep More Administrators”

The SCTA reported that the Sacramento school board also unanimously passed a resolution “that is little more than a justification for its reluctance to cut administrators, and the outrageous vacation buyout for administrators.”

“The resolution preserves the current elevated pay of Superintendent Aguilar, who agrees he won’t accept an additional pay INCREASE until the District budget improves. There is no mention of a pay reduction for Superintendent Aguilar.”

“Perhaps most importantly, Superintendent Aguilar and Board President Ryan are breaking their promises to students and parents, by promoting this resolution that makes cuts ‘based on parity relative to each bargaining unit’s size and cost to the District,’ NOT to keep cuts away from the classroom.”

The fight between the bloated school administrators and classroom teachers is escalating: “Not only did Aguilar and the board not announce plans for administrative cuts, but they once again defended the hiring of administrators, and board member Darrel Woo even defended the outrageous vacation buyout,” SCTA said.