Nevada Union school district discusses, tries to get ahead of ‘silent recession’ in state schools | TheUnion.com
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Nevada Union school district discusses, tries to get ahead of ‘silent recession’ in state schools

Sam Corey
Staff Writer

In April 2018, the nonprofit research group WestEd came out with a report titled the ‘Silent Recession,’ analyzing the ways in which costs for California schools across the state are rising faster than revenues.

The report is bleak. Schools, even those with balanced budgets, will likely be running deficits soon because of factors like the rising rate of pensions, special education costs, and rising staff costs, along with the price of health care.

The rising expenditures have been significantly aggrandized since the Great Recession, leading to statewide district costs rising to a total “$1 billion increase” in the 2017-18 school year alone, the report states.

On Tuesday, the Nevada Joint Union High School District held a special meeting to discuss the report and its implications in an attempt to get ahead of the possible problems.

“There are storm clouds on the horizon,” said Brett McFadden, school district superintendent, adding that when fixed costs are outpacing revenue by about two-to-one, it’s important to try to circumvent the issue: “You want to protect the classroom,” he said.

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The projections are particularly worrisome as some, like Nevada County Superintendent Scott Lay, believe another recession is looming, according to the economists he reads.

HEALTH CARE, PENSIONS, SPECIAL EDUCATION COSTS

Financial shortfalls began eating into school budgets across the state in 2008, states the WestEd report. Between 2012 and 2017 expenditures “increased by 21% for teachers’ salaries, 49% for employee benefits and 75% for books and supplies. In many districts, costs have also been rising for maintenance or replacement of aging school buildings.”

With regards to infrastructure, Nevada County has experienced a spike in bond measures with the Nevada Union, Penn Valley and Grass Valley school districts all using bonds — or trying to use them — to pay for renovation dilemmas.

Special education costs, the report reads, have increased dramatically in part due to the rising number of special education students filling classrooms in recent years even as “overall K-12 enrollment in the state has decreased.”

While enrollment projections in the Nevada Union district are anticipated to rise slightly from 2,570 to 2,626 from this school year to the 2022-23 year, the student population has dropped from 4,500 in the late 1990s, according to Laura Flores, chief business official with the district.

Statewide health costs for school districts have risen by about $800,000 between the 2016-17 and 2017-18 school years, “representing a 4% increase in a just a single year,” reads the report.

All of this doesn’t include spending on employee pensions, which is anticipated to “nearly double” between 2015 and 2021, per the report, and have increased from 8.3% in 2013-14 to a rate of 19.1% by the 2020-21 school year.

BOARD, COUNTY RESPONSE

Many of the report’s solutions are things the district is already doing, like using data to track investments, make services more efficient and strengthen relationships between business leaders and the education community.

At Tuesday’s meeting, McFadden suggested the board review things like tightening staffing; changes to programming; operational savings and increasing efficiency; how much money is put into reserves; and seeking internal and external input from the community about how to move forward.

“This job is often like chipping through an iceberg,” said McFadden. “You just have to keep chipping.”

While solar panels added to district infrastructure, and eight staff members retiring at the end of the school year could help bring down costs, McFadden said that unfortunately significant savings must come from the “people side.”

At Tuesday’s meeting, district board member Pat Seeley said residents need to be informed of the issue.

“Everyone needs to be aware that this is a real issue that is coming towards them” so they are not “blind-sided,” she said. “They need to know what we’ve talked about.”

PUSHING THE STATE, VOTERS

Although the “education and health” sectors provide the most jobs in Nevada County behind “government,” according to state reports, Scott Lay said 80% of Nevada County residents have no direct connection to schools.

There are many retirees who are either not interested in raising taxes for schools or can’t do it, Lay said, and thus: “You have to be wary” about asking them for more funding for schools.

Prior to the passage of Proposition 13, the majority of school funding came from a school district’s local tax base, according to a University of California, Davis, report.

During that time, “local property taxes provided, on average, 60% of K-12 funding while the state provided 34%,” per the report. Prop 13 altered that, imposing a 1% property tax rate. Today, total local taxes amount to 32% of school funding in California, according to research from the Public Policy Institute of California.

“The state is woefully under-funding education,” McFadden said, adding that state officials are leaving the issue to local school districts to balance rising deficits.

Per pupil spending in California is at $10,786, which lags behind the national average of $12,346, according to the Public Policy Institute of California.

In concert with the California School Boards Association, the Association of California School Administrators has been pushing representatives in Sacramento to increase funding for schools. McFadden said the two organizations may propose a ballot measure in 2022 to help resolve the issue.

Until then, McFadden said the district will have to be “very strategic” about balancing its budget, and doing right by its students, administrators and staff members.

“You can be sitting pretty and make one, two, three really bad decisions and two years later, you’re in deep you-know-what,” he said.

To contact Staff Writer Sam Corey email scorey@theunion.com or call 530-477-4219.


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