School districts across the state are taking financial hits from all directions these days. But there are ways to find success (even positivity) at the bargaining table, experts say. The trick is to identify the economic and funding obstacles and then leverage eight key strategies to address bargaining table tensions.

Roy Combs, partner at Fagen, Friedman & Fulfrost, has represented school leaders at the bargaining table for many years. He points to one district that has had exceptionally strong financials for the last 12 years but is looking ahead to a rough five years to come. Recently, the city called the superintendent to say it was suspending the new housing it had been planning to build. The district had been planning on young families moving into that housing and registering children for kindergarten – helping the district’s Average Daily Attendance (ADA) numbers stay strong into the future.

This was a sobering reality for a district that had been in growth mode. The district has been financially prudent, planned very well and had been practical with agreed upon salary increases during bargaining.

The financial outlook for schools across the state is worrisome, even when districts have been well-managed. Enrollment is declining across the state, making it hard to justify the current number of employees. Elementary schools that previously had 700 students now have 450 to 500 students.

California districts are faced with a stark funding picture after COVID years provided increased funding from federal and state governments. Despite the extra funding, many schools are still trying to recover learning loss. In many districts, enrollment and ADA are down, while costs are increasing.

That leaves school leaders in a tight spot as they enter into collective bargaining with labor partners. Teachers often want higher wages and improved benefits, and some are seeking lower class sizes. However, school funding is complex, and when resources are tight, often none of the options seem good.

“We’ve had some pretty good budget years under the Local Control Funding Formula (LCFF), but now that’s trending down,” says Combs. “We are in a low Cost of Living Adjustment (COLA) environment. That always makes the economic side of bargaining more difficult. We believe that teachers are underpaid. Yet we only have so much flexibility to bargain with in school budgets. Naturally, there are more tensions at the bargaining table in times like these. That doesn’t mean the relationships are bad, but there is more tension when we know resources are strained.”

The Funding Picture

Nationwide, the economy has been slowing, and prices are increasing. Funding for public schools has slowed down significantly compared to the above-normal funding and extra one-time money districts received related to the pandemic. As a result of that additional funding, most districts made it through the pandemic while maintaining employment for their employees. Now that money has dried up and districts must adjust.

In addition, enrollment has been declining almost everywhere. As a result, many districts find themselves with more employees than they would otherwise have. Through COVID, districts hired several support employees, social workers, school psychologists, security and school resource officers. All those components have led to higher operating costs and commitments the public expects districts to provide.

“Between a lower COLA and ongoing declining enrollment, schools are seeing a lot of fiscal challenges districts haven’t seen in 10 years,” says John Gray, president and CEO of School Services of California (SSC), a nonprofit that provides financial and management services to California school districts. “That’s the reckoning. We want our employees to maintain their standard of living, but with the economic conditions, it’s a challenge for districts to find the money. If they decide at the bargaining table to do something for the employees, they will have to stop doing something else.”

The cost of health care for employees, energy and food costs are all rising. While districts do receive a COLA at 2% or 2.5%, that translates to only about 95 cents on the dollar in a district with declining enrollment. Employees are also experiencing a higher cost of living, but districts can’t increase wages to meet that level of increase.

“The biggest challenge we’re facing is that funding growth is not equivalent to economic growth,” says Michael Fine, CEO at FCMAT. “There is just a mismatch between school funding and what most of us would consider to be a fair wage increase.”

How can school leaders set the table for successful bargaining with labor partners in this challenging environment? Here are eight pro tips.

8 Tips for Successful Bargaining

1. Operate with transparency to build trust with partners.

District leaders should not hesitate to share any data that labor partners request. They’re generally just as informed as anyone else, so there is no reason to hold back information. Lay all the information on the table, then have a transparent debate about funding priorities.

Roman Munoz, a partner at Lozano Smith, says trust is imperative for a good start. “I want to emphasize this doesn’t always mean bargaining won’t be adversarial, but trust is the foundation to start having those discussions. One of the greatest hurdles to overcome is the esoteric nature of school finance. It’s really difficult to grasp on a day-to-day basis because there are a lot of moving parts.”

2. Make sure all partners know some key things about the district.

As Munoz said, school finance is complex and hard to understand. Slow down and take the time to make sure everyone at the table understands and agrees about the numbers, starting with these:

• The basic demographics of the district, including enrollment numbers, ADA numbers and the delta between the two. Those little percentages can make a lot of difference.
• Unduplicated student count. This number includes students who fall into any or all of the categories: students eligible for Free or Reduced Price Meals (FRPM), English Learners (EL), or foster youth. These students are only counted once even though they may fall into multiple categories.
• Multi-year financial projections (MYFP) and the overall trendline over time. Look at three to five years of expenditure data from budget adoption through the first and second interim, year-end and unaudited actuals. Make a graph for each year and see the highs and lows of each point. Know the unaudited actuals, the ending restricted funding and the undesignated ending fund balance.
• Real rate on statutory COLA. Know the change in ongoing unrestricted dollars from one year to the next. If you’re in a growing district, you’re getting more year to year than just that COLA. If you’re in declining enrollment, that’s eating into the COLA. What is the true unrestricted dollar amount?
• Employee data. This includes the Full-Time Equivalents (FTEs) and the step and column for certificated employees. A scattergram can be an important tool because it visually lays out the labor force, including teachers, counselors and secretaries, helping everyone see the true compensation costs.
• The turnover or attrition rate, and any gaps in the salary structure

3. Appoint a superintendent’s cabinet that’s knowledgeable about budget trends and can advise school board members.

Boards will sometimes see an adopted budget with a huge deficit, but by the end of the year that deficit has turned into a budget surplus. That’s naturally very confusing. Schools start conservatively and overstate expenditures to stay within a variance. Typically, the outlook improves as the school year goes on. If you can look at trends together, that will build trust, Fine says.

“None of the data should surprise someone who understands the trends,” he says. “It becomes about priorities. We want to give raises but have to prioritize what we can afford. Do we cut discre-tionary items?”

4. Keep negotiations local.

School leaders and their labor partners know the community and the individual circumstances of the district better than anyone. If the parties cannot agree, the state has a process for coming in with representatives on both sides of the table.

“When locals continue talking over a long period of time, they usually find a way to figure it out,” explains Gray.

5. Agree on the numbers you’re negotiating.

Understanding the numbers below upfront ensures both parties are on the same page:

• The cost of a 1% increase. This is the most important number to agree on. “If you are not in agreement with the association, you need to go back and get in agreement,” says Fine.
• The built-in ongoing costs. Agree on each column on the salary schedule and the health plan’s costs. This can be tricky because next year’s health insurance premiums may not be known at the time of bargaining. Use the best numbers available.
• Staffing ratios, the number of kids at each grade span, the number of classrooms available and the potential for combination classes.

6. Be clear about reserves.

Sometimes unions see that a district has reserves and think that means the district has money to offer. If the financial picture improves, districts can spend down some reserves. However, there are many external factors that the reserves may have to cover.

“Maintaining a reserve is very important. The increase in operational costs is going to continue to go up,” says Munoz. “Be very cautious if you use reserves for salary expenses – that will put a district in dire straits right away. Plus, most district reserves aren’t that high. They can spend those down in just a month of payroll.”

7. Identify non-economic components to work with – for example, teacher prep time.

Many districts are considering whether teacher prep time is cutting into consistent blocks of instructional time. In addition, there’s an associated cost to prep time. In elementary schools, that time is often provided by art or music classes, which require the employment of other certificated employees.

Another example is the language is contracts. Talk to site-level leaders to understand where cumbersome language makes teacher jobs harder. Looking at average class sizes or maximum class sizes is a good tool. Beware of bargaining with ratios because that can limit employer flexibility on staffing individual
schools.

“The district should know where contract language is impacting operation. That information is not from the central office,” says Combs. “We only know this by talking to our site leaders. They are the boots on the ground, doing the work, experiencing any contract impediment.”

8. Trust partners to act in good faith.

Once there is a tentative agreement, each side must go to their respective sides and advocate for approval of the terms Before the board accepts the proposal, the costs will be disclosed to both the board and the public. Be as accurate and transparent as possible in the disclosure. If you agree to a compensation increase based on monies that are spoken for somewhere else, you’ll get into trouble.

“I’m all for paying employees as much as we can pay them,” says FCMAT’s Fine. “But we have to know we can afford that, or how to make it affordable. It’s a balancing act, no question about it.”

Julie Phillips Randles is a freelance writer and editor with 35 years of experience writing about education policy, leadership, curriculum and edtech.