MEMORANDUM FROM: Brian Catanzaro, Scott Chipman SUBJECT: Meeting with R.

Barrera RE: Real Estate, June 6, 2012 DATE: June 7, 2012 CC: MB Cluster

Purpose
Scott Chipman and Brian Catanzaro met with Richard Barrera. The meeting was inspired by comments made recently by Scott Barnett regarding the solvency of SDUSD and his objection to the sale of real estate to temporarily increase revenue.

SDUSD Budget Summary for 2012-13

Using revenue projections based upon ADA from the State of California and costs based upon staffing and increases in payroll from 2011-12, the projection was a deficit of $125M for 2012-13. 85% of district funding comes through the state based on 130,000 students, ADA Funding from the Federal government (Special Education, Title 1) adds to this revenue but does not cover program costs. Deficit exists because: o Per pupil funding remaining flat o Approximate $20M increase in general costs each year. o 2011-12 revenue included one-time $20M from federal stimulus o Contract employees (inc. teachers) are scheduled to return from 175 day/yr to the full 180 day/year (2.5% increase) plus preset contract raises (Step and Column) total of $40M in increased payroll. o Assuming the November ballot measure fails: $45M mid-year cuts in per pupil reduction. o $20M + $20M + $40M + $45M = $125M shortfall Situation will improve by $45M if Brown initiative passes (extending existing taxes). If it passes, it will affect 2012-13 fiscal year

SDUSD is not Insolvent

Insolvent = cannot meet legal obligations with revenue. Teacher:student ratio set by union contract will be met. Teacher salaries will be met. Staff cuts = $95M $5M in revenue sharing with a downtown redevelopment agency. Not clear what the dissolution of redevelopment agencies means for this $5M. $20M in revenue from sales of excess properties

MB Cluster

Sales/Disposition of SDUSD Properties

These sales would need to be in escrow by about June 2013 Mission Beach Elementary is one property being considered for sale. Scott indicated that he had heard no objections to selling the mission beach property however, all agreed that selling property was not a viable solution to a structural deficit. Barrera indicated that there was a specific timeline and protocol for sale that would involve qualifying different bidders at different times. He offered to assist us in understanding that timeline.

SDUSD is required to project budget planning for 2 years

2013-2014 revenues are not likely to be flat but the state is possibly going to reduce funding by another $40ml That would mean a need for an additional budget cuts for that year of another $60M? o Additional state cuts: $40M reduced revenue o One time real estate sale cannot be applied in 2012-13: $20M in reduced revenue The fiscal year for 2013-14 will be subject to a new contract with the SDEA. Negotiations have begun and the outcome is unclear

Breaking up the district or charter school funding savings

Richard indicated that charter school performance is mixed SDUSD schools collectively are performing generally better than any other large district with similar socio-economic strata in the nation. Break-up of the district requires mirroring the demographics of the district. This may not be difficult for MB, but is difficult for LJ. A Charter District was not regarded as a solution, but the rationale was not clear. There seem to be many constraints (e.g. collective bargaining, seniority, days in the school year) that could be relieved that force SDUSD into the present situation. Barreras understanding is that 50% of all California public school students are in districts that are providing qualified budgets, that is budgets that are not confirmed to work. o This indicates a big problem for the State of California, but no solution has been proposed. o All legislatures promise to sustain education, but neither party really follows through.

Receivership
Does not provide any flexibility in the solutions and would likely end up with long term debt, school closings, and selling of properties with little or no input from the community members. Public education would not be the hands of the public.

State revenues are increasing year over year but school funding is decreasing?
Public school funding is decreasing faster than most other budget categories despite promises to protect education spending.

MB Cluster

What is the mechanism to advocate for eliminating reductions in education at the state level? o The district has a state lobbyist who works with the lobbyist from LA and organizing some others representing education in the state to fight cuts.

School Closings
Undermines the supported concept of neighborhood schools Some great performing (although under-utilized) schools could be closed Charter schools could take over the property and create competition to the remaining local schools. Some local students will likely move on to other alternative education options or choice out of the area. SDUSD is not designed to scale up (down). Therefore, when students leave the district, although it does not need the teachers / administrators / staff anymore, it does not know how to reduce its staff gracefully. o Example: 300 students leave = $5000/student = $1.5M less in revenue o With 30:1 ratio, 10 fewer teachers are needed = $90k/teacher = $0.9M less in expenses o Shut one school = $300k/site in overhead o Total reduction in revenue = $1.5M; Total reduction in expense = $1.2M. Who makes up the $0.3M? Overhead at the district office. SDUSD does not know how to reduce this expense easily.

Seniority Impacts Payroll Costs

Having an experienced workforce should help student learning. However, it impacts payroll costs and leaves a generation of teachers missing (e.g. no teachers under 30 yrs old). State supports layoffs based upon seniority. There is no apparent flexibility. Some people assert that more senior teachers can better education large classes. Barrera expressed that this is likely flawed and that it depends upon the teacher.

Why not get around all these rules by changing to a Charter School (District)?
Charters provide more flexibility and quicker decision processes. Charters performance is mixed. Richard thought the average performance would be lower than the current district performance Because Charters have a small decision making group there can be a wide disparity in performance. Charters face the same economic challenges.

What is the future direction of SDUSD?

The district is inclined support neighborhood schools. We are currently working under the integration strategies in the 70s and 80s o At that time the district was 75% white and 25% ethnic.

MB Cluster

Now the district is 75% ethnic and 25% white and we dont have the schools where we need them. BoE and SDUSD both support higher attendance at neighborhood schools o Impact to MBHS is likely a 50% - 75% drop in enrollment. o SDUSD will not necessarily help to prop-up enrollment at MBHS or any other site. o Skepticism regarding maintaining enrollment at PBMS and MBHS clear in P. Stover, R. Barrera, and the rest of the BoE. o Neighborhood schools can accommodate almost all of the students currently busing into MBHS/PBMS. o Reasons for not attending neighborhood schools is unclear to BoE / SDUSD. Suspicions arise around unfounded reputations and heritage. o

What about Mission Bay High and the Cluster?

We need to recruit. o It will be difficult to expect 100s of students to provide private transportation to MB Cluster. o SDUSD is happy to have Charter schools pay for SDUSD buses (e.g. High Tech High). Perhaps this is an option for students attending MB Cluster. o However, recruiting is still in opposition to the BoEs/SDUSDs goals. We need a critical mass of performing students to bring up the performance expectations of the majority. o Barrera said both studies and intuition have shown that the majority of academic performers affect the minority. o A culture of high achievement inspires a minority of lower achievers to do better. A culture of low achievement drags down the achievement of the minority. We need to have a conversation with those not sending their students to MBHS and discuss why and what they would want to happen to send their students here. Tracking o Concept put students of like performance together. Not fashionable in the public education community. However, generally supported by Barrera. o IS school at SDHS is all IB. This enables students of similar interest (and performance?) to gather with a singular focus. Suspected to improve performance in the same way that Magnet is supposed to improve performance. o MBHS / PBMS do not have this culture. No tight singular focus for school. No schoolwithin-a-school. General expectations for all students may not match their interest and may not focus students. #1 factor influencing student performance is the quality of the teaching. o Leadership of the teaching staff is critical and is the responsibility of the administrator o Teaching groups (staff with similar age of students) should be gathering to share practices or teach to their strengths and share the load. o Bad teachers should be encouraged to leave by the administrator. o Parent involvement is critical

MB Cluster

The #1 factor that influences the quality of the teaching is the site administrator (principal). o Area Superintendents were to assess all administrators in their clusters during 2011-12. o In the year 2012-13, administrators are expected to execute plans developed in collaboration with the Area Superintendent to improve academic performance. o If improvement is not seen by the end of 2013-14, changes in administration are expected. Barrera expressed the strength of our Area Superintendent is in the area of improving teacher quality o She has demonstrated that she can improve teacher quality in other schools o Her strength is in working with staff in small groups Other sites/clusters are improving faster than average. We need to be doing that in the MBHS cluster as well. o Mira Mesa has shown tremendous improvement despite economic disadvantages. o Kearny Mesa has shown tremendous improvement despite economic disadvantages. o SDHS has shown improvement through the school-within-a-school

MB Cluster