Financial mismanagement of San Diego school hurts students the most

Guest commentary by Todd Maddison

It seems as if the financial mismanagement at Sweetwater Union High has reached a tipping point, now that officials with the San Diego County Office of Education have formally requested an audit “to find out whether the district committed financial fraud or misappropriation of funds,” according to a recent report in the San Diego Union-Tribune.

Michael Fine, the head of the independent state agency that studied the district’s finances, made clear the systemic errors uncovered were not accidental. Those kinds of errors “don’t show up by accident,” Fine reportedly said. “Those are very intentional entries. Three hundred and two of them is what we discovered. That, my friends and colleagues, is a cover up.”

Launching a formal audit run by outside investigators is a good and necessary first step. But it is also critical that we understand why the district felt the need to “cook the books” to begin with.

Given labor makes up approximately 90 percent of all school district’s expenses, the answer to any question regarding financial health will always be found there.

And when we look at labor costs over the past several years, we find massive increases in both pay and benefits for district employees.

In 2012, we voted to raise taxes on ourselves in order “to improve education” via Prop 30. That tax has generated billions of dollars in additional revenue for schools, typically tens of millions for each district. This money is called – in bureaucratese – “Education Protection Account” (EPA) funds.

In Sweetwater’s case, their “Estimated EPA Entitlement” for the current school year is $64 million. That’s $64M extra we’re giving them, “for our kids”, right?

Not quite.

If we look at Sweetwater’s actual pay records — according to public data posted on Transparent California — and examine data relating to employees who have been with the district since 2012, we see an average pay rate increase (CAGR) of 6.64%.

During this same time, pay for everyone else in San Diego County increased by an average annual rate of only 2.09%, according to data from the Bureau of Labor Statistics. In other words, Sweetwater has been giving itself raises at rates over three times the rate that you and I are getting.

And it shows. The average teacher who has been with the district since at least 2012 earned $100,983 in total pay last year, not including benefits.

If we assume that growth rate applies to the entire staff – not just those with the district since 2012 – then simply keeping their wage growth rate to market levels would have left the school with a $48 million surplus — that could have been spent on improving student learning. In other words, 75% of the additional Prop 30 funds were spent on raises at a rate nearly that was over triple what the average San Diegan received.

And given pension contributions by the district are based on a percentage of pay, higher pay means even higher pension contributions, further compounding the cost of such excess.

Michael Fine has also been quoted by the San Diego Union-Tribune as saying “We have not run across any evidence that suggests anyone personally benefited from wrongdoing.”

If giving themselves raises at a cost of tens of millions of dollars is not a “personal benefit”, we wonder what is?

And, to add to the personal benefit, during the June 12th, 2017 Board Meeting a 3.75% increase for management personnel was approved, on the same agenda as approval of their new contract with the Sweetwater Education Association, which also contained a 3.75% raise. Remarkably coincidental.

While Sweetwater is a somewhat extreme example of fiscal mismanagement, an examination of other districts usually reveals similar patterns, with many districts giving their employees raises at rates that often double or triple the rate received by the taxpayers funding those raises.

This is not what voters signed up for when they agreed to raise taxes in order “to improve education.” Indeed, Sweetwater’s profligacy and refusal to tackle these costs means the school is almost certainly going to cut education programs, rather than improve on them as promised.

Compounding the years of waste and financial malfeasance, the school, just approved a plan to pay $18 million to about 300 employees to retire early. That’s $60,000 apiece – approved despite warnings from county auditors that the plan was “fiscally irresponsible” and unjustified, as most employees were planning on retiring anyway!

Sweetwater Superintendent Karen Janney said this one final slap in the face of taxpayers and parents was necessary in order “to keep a positive relationship with unions.”

But what about the school’s responsibility to taxpayers and the children in their care? When will California school leadership finally put their needs first?

Todd Maddison is a former leader of his school district’s Parent Advisory Committee, past member of the LCAP Committee, and parent of three children who resides in Oceanside, CA.

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