PD Editorial: A brewing fiscal crisis for Santa Rosa schools

Santa Rosa City Schools, the largest school district in Sonoma County, is marching toward insolvency.

Structural budget deficits are growing by about $1 million a year and, barring big changes, reserve funds will be exhausted within three years.

It is, in short, a budget crisis.

And district officials, beginning with the Board of Education, deserve an F on their report cards for failing in their obligation to share this information with the public in a clear and timely fashion.

Not a word was mentioned during the recently concluded school board election.

Nor is there a member of the school board, a parent or any other representative of the public on a committee of principals, administrators and union representatives that was quietly appointed last summer to study the district’s options.

The most thorough update came at the end of a four-hour board meeting in mid-December - the first for three new members elected in November.

It’s unlikely, at best, that anyone perusing the meeting agenda would have identified “First Interim Report for Fiscal Year 2016-17” as the late-night blockbuster that it proved to be.

Here’s a brief summary:

The deficit for 2016-17 is?$10.7 million in a budget of?$180 million, followed by projected deficits of $7.9 million in 2017-2018 and $11 million in 2018-19.

District enrollment is basically flat, but a decline in elementary school enrollment is masked by increased enrollment in charter schools, which are funded separately.

Santa Rosa City Schools will experience “staggering” increases in retirement costs for teaching and non-teaching employees over the next several years, according to a financial consultant hired by the district. By 2020-21, payments to the California Public Employees Retirement System and the California State Teachers Retirement System will eat up 20 percent of payroll dollars - about double the level in 2014-15.

To remain solvent, and to comply with a state law requiring school districts to maintain a reserve equal to 3 percent of general fund spending, Santa Rosa schools must make budget adjustments - that’s a euphemism for spending cuts and/or tax increases - totaling $4 million for 2017-18 and $2 million more for 2018-19.

At that point, consultant Terry Ryland told the school board, “we’re still deficit spending, but it gets us down to where we meet our 3 percent reserve.”

The district’s financial situation was exacerbated by million-dollar accounting mistakes that apparently resulted in the departure of two top administrators in recent weeks.

It appears that the bookkeeping mistakes have been rectified, but the district hasn’t credibly addressed its systemic problems.

After listening to Ryland’s Dec. 14 report, without comment on questions, and receiving a vague report from the special budget committee, which made suggestions including attracting more students and seeking a parcel tax, the board unanimously declared that it had met its legal obligation to adopt a sustainable spending plan.

Sonoma County school Superintendent Steve Herrington, whose responsibilities include oversight of school district budgets, grudgingly accepted that conclusion but warned Santa Rosa school officials that they need to be much more specific about their plans for erasing the deficit.

In 2014, Santa Rosa voters taxed themselves to pay for $229 million in capital improvements to local schools - money that cannot be used for day-to-day operations. At least one school board member is on record advocating a parcel tax to help balance the books. But the district’s elected and appointed leaders will need to be far more forthcoming, and establish a more transparent process, if they expect voters to bail them out.