San Diego Unified officials said Monday they have identified about $100 million in budget solutions to address the district’s looming $176 million deficit — but they have yet to release details on what exactly will be reduced.

District leaders plan to adopt similar budget reduction methods as last year, according to their first board budget workshop of the year, held Monday afternoon. They will focus their cuts on central services to minimize impacts on classrooms, but it is recognized that schools will still feel the impacts, as some central services directly benefit schools.

Like last year, they will also make attritional reductions, eliminating positions as they become vacant and moving staff to those that need to be filled, and they plan to offer early retirement incentives to encourage staff to leave. The district prefers to reduce its workforce through attrition but has not ruled out layoffs.

San Diego Unified faces an unrestricted budget deficit of $176 million for the upcoming school year and a deficit of $230 million for the following year. The district used $114 million of its reserves to make ends meet for the current school year, reducing its ending balance to about $44 million.

District leaders attributed the deficit to several factors, including declining enrollment, rising operating costs and this year’s expiration of pandemic funding. They have always maintained that state and federal funding is insufficient.

Some community members also pointed to a sharp increase in costs that they say is fueling the deficit: In 2023, the district gave employees 15% raises, which at the time was estimated at $208 million. additional dollars per year.

“There is a significant contributor to the budget deficit that has not been listed,” Tamara Hurley, a parent of district graduates, said during a public comment Monday. “These wage increases ultimately led to deficit spending. »

District leaders say the raises were necessary to retain and hire staff as the cost of living rises. “We had to take steps to ensure that we compensate our staff fairly and competitively,” Interim Superintendent Fabiola Bagula said Monday.

Even as the district plans to downsize to make ends meet, Bagula stressed that it has difficulty filling vacancies in needed positions, such as bus drivers and food service workers, because it cannot does not pay as much as outside companies.

Board member Cody Petterson also said the district’s salary increases have not kept pace with inflation, which rose more than 20% in San Diego from 2019 to 2023.

Personnel has long been by far the district’s largest expense category.

San Diego Unified spent more than 85% of its total spending on personnel two years ago, California School Services Associate Vice President Matt Phillips said during Monday’s meeting.

It is nearly 8 percentage points higher than the average for California unified school districts, and significantly higher than the state’s other largest unified school districts. Los Angeles Unified spent less than 79% on personnel.

Although Phillips acknowledges that San Diego is an expensive place to live, “the rate at which the district is spending on people, in my opinion, is not sustainable,” he said. The district leaves just 15 percent for everything else, from utilities to insurance, and “all those costs are going up, too,” he said.

San Diego also has significantly smaller reserves than other large unified districts. As a percentage of total spending, its reserves were less than 9 percent two years ago, compared with an average of nearly 24 percent for all California unified districts and nearly 42 percent for Los Angeles Unified.

Part of what’s likely fueling these disparities, officials say, is the fact that other large unified districts, including Los Angeles, receive more per-pupil funding for public schools. That’s because they have higher percentages than San Diego of low-income students, English learners, and foster youth, and the state funding formula grants more money to districts with higher concentrations of these student groups.

The San Diego Unified School Board will discuss the budget again at a meeting in December. The district is seeking feedback on the budget on its website.

Originally published: October 21, 2024 at 6:30 p.m.