District responds to State Auditor’s report of SCUSD
State Audit Report confirms reducing healthcare costs is critical to solving Sac City Unified fiscal challenges
SACRAMENTO, CA – Today, the California State Auditor released a financial audit of the Sacramento City Unified School District. The audit report considered the District’s short-term and long-term financial challenges and made recommendations to address the District’s $27 million structural budget deficit.
“We agree with many of the Auditor’s findings and recommendations including that the real solution to our budget challenges lies in reducing our healthcare costs – which are among the highest of all school districts in the state,” said Jessie Ryan, President of the Sacramento City Unified Board of Education. ”We remain committed to establishing the types of budget practices that will support student learning and ensure our long-term fiscal stability– new leadership has already taken important steps to this end.”
The audit recognizes that the District’s largest on-going expense is employee salary and benefits and concludes that the District must address employee costs, including healthcare to achieve the significant cost savings that are required to bring financial health to the District.
“This situation demands bold and long-term solutions that will require us all to act in good faith and make shared sacrifices for the benefit of students,” said Superintendent Jorge Aguilar. “We call on our labor partners to join us to work toward long-term solutions to our $27 million budget deficit.”
In addition to the state audit report, the Sacramento County Office of Education (SCOE), the Fiscal Crisis Management and Assistance Team (FCMAT), and a group of researchers from Stanford University and the Bay Area have all identified that: the vast majority of District funds are spent on employee salaries and benefits resulting in a situation where the District’s “options for reducing ongoing expenses that do not involve labor negotiations are limited and unlikely to prove successful in addressing its precarious financial situation.”
For more than 550 certificated employees, the District has paid nearly $35,000 per employee annually for full family health insurance coverage with no premium contribution required from employees. This far exceeds healthcare costs by other school districts up and down the state. In fact, the state audit found that Sac City Unified pays the fourth highest cost toward an employee health plan offered by a school district in the State of California.
The audit report confirms that the solution is for leaders of the District and its labor partners to work together to reduce healthcare and other labor costs to solve the District’s structural budget deficit.
The District is addressing many of the recommendations by the state audit report. It has already put into place improvements to budget practices that will contribute to the long-term financial health of the district. In addition, the District accepts the findings that the 2017 agreement with the Sacramento City Teachers Association resulted in $31 million in additional expenditures for the District, but still believes it was necessary to avoid a teacher’s strike that would have had a significant impact on student learning.
“It is important to understand that our Board made difficult financial decisions in 2017 to avoid a teacher’s strike that would have had a devastating impact on our students.” Ryan said. “We decided to not make additional cuts because they were a one-time fix with serious, long-term impacts to student learning.”
The District is now required to present to the State Auditor and SCOE a budget recovery plan to address the $27 million budget deficit and change the budget structure. The District has begun negotiations with several labor partners and has sent several proposals to SCTA leaders and continues to ask them to join the District to find a solution to the long-term budget challenge.
“We can no longer kick the can down the road – the time is now for us to make shared sacrifices for the financial stability of our District, so that we can invest in student learning. Our community expects and deserves nothing less,” Aguilar said.
To view the State Audit Report, click here.
To view the District’s response to the State Audit Report, click here.