VTA Bargaining Update
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VTA Bargaining Update

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Update as of 7-17-2012.

Update as of 7-17-2012.

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VTA Bargaining Update Document Transcript

  • 1. Bargaining Update: Vista Teacher’s Association July 17, 2012Collective bargaining is an important process in any school district. In the current context, relationships betweenmanagement and labor groups have become strained over time as a result of diminishing financial resources. In VistaUnified, we have yet to reach an agreement with the Vista Teacher’s Association (VTA) on contract languageadjustments for the 2012-13 year. The intent of this communication is to provide some background and information onthe current context with VTA.The screenshot below from the VUSD website indicates the dates of previous negotiations (including those with theclassified group CSEA):Given that fact that an agreement was not reached, Vista Unified School District (VUSD) filed for impasse with the PublicEmployment Relations Board (PERB) on May 14, 2012. The first step in the impasse process is for PERB to assign amediator that will come and work with the parties with the intent to establish an agreement. Unfortunately themediator was unable to schedule dates for the negotiations and VUSD requested that the process be advanced to thenext stage which is called Factfinding. In Factfinding each party identifies a panelist and those two panelists mutuallyagree on a third person that is called the “neutral.” At this point the Factfinding panel has been established and themembers are: Page 1
  • 2.  VUSD: Ron Bennett, School Services of California  VTA: Alva Rivera, California Teacher’s Association  Neutral: Bonnie Castrey, Panel ChairpersonRight now the Factfinding panel is attempting to establish a date for the hearing. The Factfinding hearing would consistof brief presentations from VUSD and VTA to the panel and then the panel makes a non-binding recommendation forresolution. As we have been working to schedule the Fact Finding hearing, both VUSD and VTA agreed to meet andnegotiate on Friday, July 13th. No agreement was reached on that date.Financial Context: Declining RevenuesAs mentioned in the introductory paragraph, reaching an agreement in the current context is complicated by statewidefinancial difficulties and uncertainty about the impact of the Governor’s November Tax Initiative as it relates toeducational funding. The primary drivers of revenue for a typical school district in California are the number of studentsthat attend school (Average Daily Attendance or ADA) and the Base Revenue Limit (BRL) amount that establishes howmuch funding is provided for each of those students. Other funding sources, such as federal and state categorical funds,are typically intended for specific uses and, in many cases, are also restricted to programs and services for particularstudents.In VUSD, the enrollment numbers has dropped by more than 3,100 students over the past ten years. 25,338 25,500 24,864 25,000 24,307 24,500 23,919 24,000 23,458 23,440 23,500 23,148 23,000 22,622 22,467 22,440 22,238 22,500 22,000 21,500 21,000 20,500 Source: CBEDS Enrollment (2012-13 figure is projected)The picture for the funded BRL also indicates that we have fewer dollars per student now than we did in 2007-08. If theGovernor’s Tax Initiative fails the amount is projected to decline to $4765, a number that is roughly the same as whatwas funded back in 2004-05. Page 2
  • 3. The Financial Crisis- Funding Per ADA Actual Funding Provided to VUSD vs. Statutory Level $7,000.00 $6,697.61 } $6,500.00 $6,368.00 $6,486.00 Loss of COLA $6,343.00 $6,106.00 Dollars Per ADA $6,000.00 $5,777.00 $5,500.00 $5,627.00 $5,203.00 $5,149.00 $5,205.92 } Loss of Baseline Dollars } $5,000.00 $4,500.00 $4,946.00 $4,764.92 } Loss due to mid year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 (or funding per ADA) The continued failure of the state to fund education has cause the District to make difficult decisions since the 2007-08 school year. The loss of COLA and the loss of baseline dollars equates to a $30 million dollar loss to VUSD. If the mid- year cuts are enacted in November 2012, VUSD will lose an additional $8 million dollars. In the 2012- 2013 school year alone this will result in a loss of up to $38 million dollars to our District. Base Revenue Limit Funded Base Revenue Limit Mid Year Cut Source: School Services of California and VUSD Budget Book-AssumptionsAs a result of the combined impact of the decline in ADA and the drop in the funded BRL, VUSD revenues have droppedprecipitously over the past few years. It should be noted that this is not a unique situation—districts across the state arenow in financial distress as a result of the decline in revenues. In May of 2012 State Superintendent of Public InstructionTom Torlakson announced a “Record Number of School Districts in Financial Jeopardy.” Revenue Limit Funding $140,000,000.00 $120,000,000.00 $100,000,000.00 $80,000,000.00 $60,000,000.00 If the Tax Initiative fails the BRL decline from 07-08 to 12-13 would be 19.7%. If it passes $40,000,000.00 the decline would be 12.6% $20,000,000.00 $0.00 12-13 07-08 08-09 09-10 10-11 11-12 12-13 Inititative Fails Revenue Limit Funding $132,719,739 $128,885,221 $112,429,958 $115,710,930 $115,650,249 $115,958,554 $106,494,972 Page 3
  • 4. It should also be noted that, unlike other industries, local public educational agencies do not have the ability to “raiseprices” unilaterally. The mechanisms for increasing revenue require voter approval and the threshold for passage oflocal tax increases is a two-thirds majority for relatively unrestricted funds. No district in San Diego County has everpassed one of these “parcel taxes.” Proposition 39 requires a 55% majority for facility-related projects but most of thefinancial pressure in schools today is in the general fund which typically devotes the majority of its expenses toemployee salaries and benefits.Governor’s Tax InitiativeTypically the funded Base Revenue Limit is provided to school districts when the state budget is approved. Ideally thisoccurs in June and our fiscal year runs July 1-June 30. This year, however, the Governor has a Tax Initiative on theNovember ballot and, if that initiative fails we have been told that we can expect to lose an additional $458 per ADA inthe 2012-13 year. The impact to VUSD would be the loss of an additional $9.5 million in revenue each year. Given theenormity of this potential adjustment, the state would provide districts with the flexibility to reduce the instructionalyear by up to 15 additional days in 2012-13 and 2013-14.Financial Context: ExpendituresVista Unified provides important services to students, families and to the community. The primary method for providingthese services is to hire people that provide direct instruction to students or support the instructional process byproviding educationally-related services. We serve over 22,000 students and to do so we employ about 1100 teachers,800 classified staff members, and almost 100 administrators and management employees. Based on most recentUnaudited Actuals report from 2010-11, 85% of our expenditures were for salaries and benefits to employ these valuedindividuals and to compensate them for the work that they do. Of our total expenditures, 56% are devoted to teachercompensation in the form of salaries or benefits. General Fund Expenditures, 2012-13 Operating 10% Capital/Other Books and Supplies 1% 4% Certificated Non- Management Salaries Employee Benefits 43% 23% Management and Supervisor Salaries 4% Classified Non- Management Salaries 15% Source: VUSD 2012-13 Budget BookThe trend for employee expenses since 2007-08 does show that the projected costs for salaries and benefits in the 2012-13 year will be less than they were in the past. It should be noted that, in spite of the decline in employee expenses, thereduction is not proportional to the revenue declines during that same time period. Page 4
  • 5. Employee Salary and Benefit Costs $180,000,000.00 $160,000,000.00 $140,000,000.00 $120,000,000.00 $100,000,000.00 $80,000,000.00 The projected change in employee expenses $60,000,000.00 from 07-08 to 12-13 is a decline of 3.9% $40,000,000.00 $20,000,000.00 $0.00 11-12 12-13 07-08 08-09 09-10 10-11 Projecte Budget d Series1 $168,219, $167,554, $164,479, $150,595, $162,502, $161,638, Source: VUSD Unaudited Actuals from 2007-2010, 2011-12 and 2012-13 are projectionsReservesThe unfortunate reality is that an organization cannot sustain rising expenditures and declining revenues in perpetuity.Fortunately, VUSD has funds unspent from previous years—this amount is sometimes called the reserve and other timesreferred to as the “Ending Fund Balance”—that helps to minimize the amount of expenditure reductions at the moment.VUSD is projecting beginning the 2012-13 year with approximately $37.5 million in reserves. Our finance departmenthas prepared four scenarios to help us plan: 1. No agreement with VTA, Tax Initiative Passes 2. No agreement with VTA, Tax Initiative Fails 3. Agreement with VTA, Tax Initiative Passes 4. Agreement with VTA, Tax Initiative FailsFor these assumptions, we are projecting the financial impact of an agreement based on the proposals that have beenpresented by VUSD. The following tables indicate the projected Ending Fund Balance for each of these four scenarios inthe current (12/13) next fiscal year (13/14), and the following (14/15). 2012-13 2013-14 2014-15No Agreement Tax Initiative Passes $27,031,867 $11,890,056 ($3,498,214) Tax Initiative Fails $17,568,285 ($6,952,463) ($31,635,015)Agreement (as Tax Initiative Passes $29,431,867 $20,490,056 $9,201,786proposed by VUSD) Tax Initiative Fails $26,968,285 $15,647,537 $2,064,985 Source: 2012/13 VUSD Adopted Budget and Proposal from May 10, 2012Clearly the concern from the VUSD perspective is the potential for rapid depletion of the Ending Fund Balance that couldoccur based on the combined impact of a potential failure of the Tax Initiative and implementation of the existing VTAcontract. Page 5
  • 6. The graph below indicates the projected deficit spending if we are unable to reach an agreement with VTA. Theprojected deficit spending (even if the Tax Initiative passes) is not sustainable based on current assumptions. Eitherexpenses will need to be reduced, revenues will need to increase, or some combination of those two will be necessaryto maintain financial balance. Projected Revenues and Expenditures - No Agreement 200,000,000 195,000,000 190,000,000 185,000,000 180,000,000 175,000,000 170,000,000 165,000,000 12/13 13/14 14/15 Rev Pass 178,513,569 178,626,645 180,665,350 Rev Fail 169,049,987 169,247,708 171,371,068 Expenditure 189,025,292 193,768,455 196,053,620 Source: VUSD Fiscal Services DepartmentEven under what may be considered the “best case” scenario—which would be agreement on the VUSD proposals andsuccessful passage of the Tax Initiative—we still project deficit spending in the each of the next three years. This is whythe projected Ending Fund Balance under this “best case” scenario drops from the current $37.5 million to about $20.5million by the end of 2013-14 and under $10 million in 2014-15. Absent revenue increases, additional expenditurereductions would be required to sustain long-term financial balance. Projected Revenues and Expenditures - With Agreement and Initiative Pass 200,000,000 195,000,000 190,000,000 185,000,000 180,000,000 175,000,000 170,000,000 165,000,000 12/13 13/14 14/15 Revenue 177,013,569 177,126,645 179,165,350 Expenditure 185,125,292 186,068,455 190,453,620 Source: VUSD Fiscal Services Department Page 6
  • 7. VUSD ProposalA copy of our most recent proposal to VTA is inserted below as a reference.It should be clarified that the VUSD proposal on class size would maintain a districtwide average of 29.5 students perclassroom and a schoowide average of 31 students per teacher. Both of these averages are currently in the VTAcontract (Article 20.1). In addition, the California Education Code places limits on the number of students in a class andfiscal penalties occur if those limits are exceeded. The VUSD proposal would align the VTA contract language with manyother districts in San Diego County.Next StepsThe Factfinding panel hearing is in the process of being scheduled now. We will continue to provide updates until wehave reached an agreement. Page 7