Sacramento City School District Gave Teachers Raises It Couldn’t Afford, State Auditor Finds

The California State Auditor says the Sacramento City Unified School District has done such a poor job with its finances and labor negotiations that the state Legislature should pass a law to keep the same thing from happening at other school districts. 

A report released by the California State Auditor’s office on Tuesday also says if the school district and the Sacramento City Teachers' Association can't work together to address a $31 million shortfall during a new bargaining session, the district will run out of money in two years.

The report lays much of the blame at the feet of the district and school board, which approved a labor deal that allowed the average annual Sacramento city teacher's salary and benefits to increase by $24,000 to $119,000 since 2016. 

The district gave the teachers raises it couldn’t afford, according to Margarita Fernandez, chief of public affairs with the state auditor's office.

"They believed that the salaries for their teachers were lower than other school districts nearby and what we found was that that wasn't necessarily true," she said.

SCUSD teachers’ salaries ranked fourth among five area districts in every year except one from 2013 to 2018. In 2017, their average salary was last. 

But their salaries and benefits ranked first every year, because of SCUSD benefits packages that include 100 percent payment of health care costs.

Superintendent Jorge Aguilar says he “accepts responsibility” for the labor deal, but hedges that he was new on the job at the time.

"We agreed to a contract at that time three months into my tenure to avoid a teacher's strike, because I knew the harmful effects that would have on our students," Aguilar said. He urged the union to come to the table as soon as possible to begin work on a new agreement.

David Fisher, president of the STA, disputes the deficit and claims the district "broke even" last year. His position is that, if the district changes health care providers, it would save between $11 million and $16 million. 

"They just haven't been able — and willing, I should say — to implement that portion of it,” he said.

Aguilar says the outcome of a lawsuit filed by the union in 2014 prohibits the district from making that switch. He also added that changing health care providers wasn't part of the terms of the labor deal agreed to two years ago.

"It was not negotiated and it hasn't resulted in actual switches," he said. 

Sacramento County Superintendent of Schools Dave Gordon warned Aguilar, the union and the SCUSD board before it signed off on the deal, which he said would leave the district unable to pay its bills. 

“They can’t keep doing the deficit-spending, coming to a cliff and say, ‘Oh boy, we better avoid going over this cliff.’ It doesn’t work,” Gordon said. “The ones who are getting short-changed are the students, particularly the most needy students in the district.”

The state auditor report says the two sides can make up most of the deficit if employees put 3 percent of their salaries toward their own retirement health care costs and take a 2 percent pay cut. That would total $14 million. Cutting the district's cost for health care by 10 percent would add another $14 million. 

The teachers union says it hopes to work with the district to figure out a way to increase enrollment in city schools. The audit says that is declining by an average of 163 students each year, which means less money for the district. 

The auditor's office recommended the Legislature pass a state law that would require a school board to get approval from the county superintendent before approving any significant spending.