The San Diego Unified School District is in big trouble financially, and the district now faces the prospect of a state takeover amid a deteriorating financial situation for one of the largest school districts in the state.
While recent changes in state education funding are being blamed for the districts poor financial condition, reports have emerged that there have been discussions within the district for at least two years concerning the potential for insolvency.
The time frame for these discussions is noteworthy because it turns out that at roughly the same time there were internal warnings about the possibility of the district becoming insolvent, the union-backed board majority voted to impose a Project Labor Agreement on $2.1 billion in new construction approved under Proposition S, passed in 2008.
As a former school board trustee, I’ve seen first-hand how powerful interests line up to pass school bonds. Unfortunately, many districts rack up big maintenance backlogs as a result of political pressure to dump all available resources into compensation (school district employees have politically connected labor unions influencing elections, while deteriorating buildings do not). Bonds are in turn used to borrow money to not only pay for new construction, but also for repairs which should have been paid for year to year.
To use a family analogy, a leaky roof or a backed up pipe should be repaired on the spot. Instead, districts often let the work pile up and then take out a second mortgage to pay for it all, and put an extension on the house to boot.
Back to the Project Labor Agreement.
It’s well known that PLA’s raise the cost of school construction because it in effect limits bidding for the work to companies with unionized workforces. It doesn’t say this explicitly, but that’s the net effect. And we all know what happens when competition is restricted – options go down, and prices go up.
Yet despite this proven reality, the union-backed board at San Diego Unified voted to impose a Project Labor Agreement on all Proposition S work, driving construction costs up at precisely the time district officials were growing concerned about insolvency.
How much will a PLA cost San Diego Unified? A study by the National University System Institute for Policy Research found that PLA’s drive up construction costs by 13% to 15% in California. Taking the later number, it means that San Diego Unified will only get $1.78 billion in construction and repairs at a cost of $2.1 billion.
Such decision-making is irrational even if the district was in good financial shape, but to do so while insolvency is a possibility should constitute serious mismanagement of taxpayer resources.