Superintendent’s Blue Ribbon Committee Report Addressing the Economic Shock of Diablo Canyon Power Plant Closure December 2017
Blue Ribbon Committee Members James J. Brescia, Ed.D. Jane Maxwell, Ed.D. Kevin Bumen Nelda Olvera Monica Grant Refujio Rodriguez Melissa James Gilbert H. Stork, Ed.D. Christine Johnson Bob Wacker Facilit itated d by: y: Ron Bennett
Committee Purpose • Conduct independent assessment of Diablo Canyon impacts • Recommend possible remedies for $8M annual loss • Focus on most important goal: Present and future success of students
Committee Process • 10 meetings, 3 hours each • Full access to any and all data requested • Interviews conducted with District’s stakeholders including administrators, school principals, teachers, staff, union representatives
Scope of Challenge Diablo Closure = Budget Driver $8M M Annual Loss is Peo eopl ple • 10% of the District’s annual • Wages & Benefits 85% * operating budget • Services & Operations 10% • Equivalent of 100 teaching positions • Materials & Supplies 5% • Represents $1,700 in per-pupil funding *Virtually all stipulated via collective bargaining
Scope of Challenge $8M M annual loss = 100 teaching positions Impact of Diablo: 10% * Virtually all stipulated via collective bargaining
Scope of Challenge • $36M M in negotiated mitigation money rejected by the CPUC Administrative Law Judge o Bridge funding is threatened = Impacts will be felt sooner o Plant could close sooner = Impacts would be greater • Health Care costs projected to increase from $7.1M 1M to $10.5M 10.5M by 2025. o These increased costs are in addi dditi tion on to o $8M $8M in property tax losses
Factors to Consider Must acknowledge these hard truths: • Budget gap is significant • No easy solution • Can’t avoid cuts • Urgency crucial — Diablo could close prematurely
Advice to District • Act swiftly • Communicate clearly and frequently with stakeholders • Avoid unilateral decision making • Strive for consensus and shared responsibility among all stakeholder groups • Respond to emerging opportunities • Be entrepreneurial • Continue to pursue any and all mitigation money but plan for future without
Revenue Enhancements 1. Parcel Tax ($3M M – $6M $6M) • 2/3rds vote required • $80 to $160 annual tax • Conduct feasibility study
Revenue Enhancements 2. Surplus Property: Rent, Sell or Develop ($200K K – $5M) M) • Recurring rental money for operating budget • Sale of property for endowment • Explore Public/Private partnership for development of properties
Revenue Enhancements 3. Negotiate for Fairer Inter-district Fees ($400K) K) • Curren rrently ly no reimbu imbursem semen ent t for r 160 transf ansfer er stude udents nts
Revenue Enhancements 4. Create Permanent Endowment ( $10M M endowment generates $400K) K) • Generate ongoing returns to enhance opportunities for learning, to support student achievement, and help fund educational programs
Cost Containment Measures 1. Attrition Potential Savings: TBD • Avoid layoffs 2. Monitor Early Retirement Program Annually Potential Savings: TBD • No short-term savings, but continue to evaluate
Cost Containment Measures 3 . Modest Increase in Class Size Potential Maximum Savings: $2.5 .5M • Implement via attrition, not layoffs • Increases not to exceed terms of current negotiated contracts Current approximate Current negotiated averages: contractual average maximum: K – 3: 23 students/per teacher K – 3: 28 students/teacher 4 – 12: 26 students/per teacher 4 – 12: 32 students/teacher *Note: Numbers are based on average class size; individual class maximums can exceed class average per contract
Cost Containment Measures 4. School Closures Potential Savings: $500K 0K 5. Health Care Cap Potential Savings: $2M M – $3M $3M • Annual spending projected to increase from $7.1M 1M currently to $10 10.5M .5M in 2025, compounding the budget problem 6. Evaluate Salary Scale Potential Savings: TBD
Scenario 1: All Cuts + + Increased Class Sizes Health Care Cap School Closure $2.5M 5M $2M M – 3M 3M $500 00K $6 $6M M Savings
Scenario 2: All Revenue Enhancements + + + Surplus Property Inter-district Fees Endowment Parcel Tax $400 00K $400 00K $1M $1M $6M $6M $7 $7.8M 8M + Savings
Scenario 3: Combined Actions + + + Increased Class Sizes Health Care Cap Efficiencies Parcel Tax $1M $1M $1M $1M $1M $1M $3M $3M $6 $6M M Savings
Final Thoughts: A Shared Responsibility • Budget gap is not anyone’s fault, but is everyone’s burden • Proposed remedies will have a dramatic impact on people • Important that this be a community-wide discussion
Superintendent’s Blue Ribbon Committee Report Addressing the Economic Shock of Diablo Canyon Power Plant Closure December 2017
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