Dear Colleagues,
The District is required by the state to have a 5 year forecast showing major areas where money is spent and where income received. Our Board has asked for this forecast to be updated monthly as a discussion point at Board meetings.
The 5 year forecast has been a staple of speculation for years. For instance, we have seen the salary line fluctuate wildly as guesswork. As an example, when salaries for Fiscal Year 2016 were first forecast back in October 2011 the forecast showed that salaries for all employees would cost $67.8 million. By February 2013 it was down to $64 million. In November 2015 it was expected to be $59.3 million, but when the actual numbers were calculated it ended up being $58.9 million. All areas on the 5 year forecast read just like this. At first there is an explosively high number given, but the closer it comes to being fulfilled, the lower the number becomes.
The 5 year forecast is meant to be ultra conservative. The District needs to be able to try to figure out the worst case scenarios and plan accordingly. That makes sense. It is much better when things work out to their benefit. The problem is that it should be a guideline, not a rule book. The problem is that the District should be planning for decent wage increases instead of expecting that employees will take no raise, thereby subsidizing the District.
Board of Education members relied on the 5 year forecast to determine how much money would be required for the November levy. They planned for it to be the lowest levy for a long time so it would have a better chance of passing. By using the 5 year forecast numbers they effectively planned back then, in May, that we would be taking a 0%,1%,1% contract. This seems presumptuous since we had not yet started to negotiate.
For the most conservative estimate of school finances it also seems odd that potential losses from a lawsuit brought against the District by Kaiser Permanente in 2012 did not cause any changes in the forecast until October 2016 – 3 months after the ruling for Kaiser. The District lost $3 million from this lawsuit which basically states that Kaiser is a non-profit and should not have had to pay property taxes. Kaiser is appealing the ruling because they only got back taxes rewarded for 3 years and had asked for 6. The forecast, starting in October also shows a potential loss of $3.7 million in case the District loses the appeal. It seems like this potential disruption to District finances could have been conservatively planned for in determining how much money to ask for in May when the levy was first introduced for the fall election. This is another example of poor planning.
We have been told that a 1% raise across the district costs $770,000. For Local 795 alone that would be $400,000. The budget for this school year is close to the $110 million figure. At the end of fiscal year 2017 in June there is a prediction for a $13 million carryover for the next year. With the District’s extremely fine toothed calculations there will be $6.8 million left over after Fiscal Year 2018. At the end of FY19 the forecast shows only $466,000 in the bank. The lay finance committee said it would be a three year levy and they made sure that the money will run out in three years. By the way, hidden in the comments section of the 5 year forecast is the fact that the District expects to save $1 million when the middle schools are at Wiley next year. When I asked how this would occur, they had no specifics. Treasurer Gainer was told there would be savings, so he put it in the forecast.
You might draw your own conclusion, but I say “Feh!” Their planning for the last 20 years of which I have been keeping track has been nothing less than remarkably inaccurate. I believe they find money to pay for things they want to pay for. We have taken incredibly low raises for too long – 3.5% over the last 5 years. They want us to take 5.5% over 8 years. This is not acceptable. They need to go back to their calculators and figure out how to pay adequately. We work too hard to be let down again.
In Solidarity,
Ari Klein
CHTU President