This bar chart shows the levels of tax payments made by PG&E since 2018 (2024 figures were not available yet). DCPP means Diablo Canyon Power Plant; Non-DCPP is all of PG&E’s property outside Diablo Canyon; and CIMP stands for ‘Community Impact Mitigation Program’ the $85 million the State required the company pay to make up for lost taxes upon closure of Diablo Canyon.
The San Luis Unified School District is navigating a challenging budget deficit, as property tax revenues from local power plants have dropped off dramatically.
At the District’s Feb. 4 board meeting, administrators outlined the budget cuts they are proposing to close a projected $6.3 million deficit. And as one might expect, the news of the cuts is not playing well with the public.
Speaker after speaker pleaded with the Board not to cut programs, jobs and staff.
At this point, the administration is proposing several cuts to programs, mostly in the elementary schools, including cutting the District’s “transitional kindergarten” program.
According to the website, teachingstrategies.com, transitional kindergarten or TK “first emerged in 2010, when California passed the ‘Kindergarten Readiness Act.’ This act was created for 4-year-old children who turn 5 between September 2 and December 2, although California recently expanded the range to February 2 of the following year.
“Since these children have late birthdays, they traditionally missed the cutoff for kindergarten in California, which requires kindergarten students to be 5 years old by September 1.”
In the beginning the State funded the TK programs at all schools but recently cut out so-called “basic aid” districts, of which San Luis Coastal is one, and after 2025 they will no longer give money for TK.
Parents of these children protested that cut and the District changed its tune and reinstated the program for at least one more year. But that didn’t fix any of its budget woes.
Basic aid districts garner nearly all of their annual revenues from property taxes. Most other schools are funded entirely by the State.
San Luis Coastal ‘s basic aid status has been greatly supported by taxes paid by Pacific Gas & Electric on its Diablo Canyon Power Plant. But those monies have been steadily declining after the company and environmental groups reached a settlement in 2016 that would close the plant for good by 2025 when the second of its operating licenses expires.
Part of that deal and subsequent legislation called for the plant to be devalued over time, eventually having it be worth zero. Instead, PG&E agreed to pay over $80 million to the County and School District to make up for future lost taxes, along with millions more for emergency systems and other needs.
Those payments end in 2025, too. Now the District is blaming its current deficit on this loss of tax monies.
Estero Bay News asked PG&E why they haven’t paid taxes? Spokeswoman Suzanne Hosn, replied, “PG&E is fully compliant with tax laws and continues to pay unitary taxes to San Luis Obispo County. State legislation that directed the closure of Diablo Canyon by 2025 called for the depreciation of the power plant assets to $0 by closure.”
PG&E pays its taxes to SLO County, which pays the school district’s share out of the total. When the closure deal was struck the County and school district both cried foul and pushed to backfill the lost revenues.
“Senate Bill 1090,” Hosn continued, “required a Community Impact Mitigation Program [CMIP] of $85 million, to be paid in advance by PG&E by 2025 to offset reduced tax revenues to San Luis Obispo County.”
She added that the company has paid all of these bills and is following its obligations under the law. But the game has changed.
In 2022, the State decided Diablo Canyon shouldn’t close because the power grid didn’t have enough reliable generation capacity to cover the loss with renewable energy sources, namely solar and wind energy plants. The State just wasn’t ready to lose Diablo Canyon’s 2,200 megawatts of reliable energy production.
“When the Legislature extended the operations of Diablo Canyon in 2022,” Hosn said, “the Legislature did not change the tax policy.”
According to a chart Hosn provided showing the company’s tax payments form 2018-2025, the Diablo Canyon property taxes were nearly $25 million a year. Taxes on PG&E property outside Diablo Canyon were at about $5 million.
Starting in 2019, the CMIP payments flew past the depreciating property taxes. The CMIP payment in 2019 was about $28 million and property taxes dropped to about $17 million.
Since then both tax types have dropped dramatically to where in 2025, the property taxes are at $5 million and the CMIP taxes are just under $10 million. But those CMIP payments will end in 2025, leaving the School District in quite a financial pickle and anticipating having to make some tough decisions for next year.
Superintendent Dr. Eric Prater told the Board “There’s’ nothing about this that I like. Nothing is good.”
Ryan Pinkerton, assistant superintendent/Business Services, in explaining the proposed cuts, said, “Most of our budget is spent on people.” And, “Most of our reductions have to be people.”
Pinkertoin explained that the District received some $13 million of “COVID” money during the recent pandemic that closed schools for a year, and spent that money in numerous ways. Now, with COVID money long gone, the cuts being proposed in large part were some of that extra stuff added during COVID.
He said their deficit last year was $7 million and it’s another $5 million this year. “There’s your $13 million from COVID.”
He said they are projecting a $6-plus million deficit for the next year (2025-26 school year) and they’ve proposed about $5 million in cuts. “We’ll see what happens,” he said.
Among the cuts being proposed:
• Cutting some 22 classroom teachers that will mean slightly larger class sizes. “As part of the reductions,” reads the District’s slide show on the cuts, “we will increase average class sizes to 26 students per teacher in grades TK-3, 29 students per teacher in grades 4-6 and 29 students per teacher in grades 6 to 12.These numbers do not include our special education classes that maintain a class size much lower than the averages stated.” Those break down to losing 14 elementary school teachers and seven secondary teachers (high school). This would save $1.87 million.
• Reduction of Site Title 1 positions. “Reduction of two Intervention Teachers and one Academic Intervention Teacher. Reductions of 2.2 Instructional Assistants, .125 After School Aides, 1.4 Counseling Aides.” All told this cut would eliminate 6.725 full time equivalent jobs and save some $462,000.
• Cut school counselor positions, 5.5 FTE (full-time equivalent). “Counseling support at the elementary level will be reduced by 4.5 counselors. The remaining five elementary counselors will be distributed to schools based on need and size of school. School psychologists will continue to work with our students who have mental health support in their IEPs. At the secondary level we will reduce .5 counselors at both middle schools to equal 1.0reduction. This will still leave all of our middle schools with more counseling than they had prior to the pandemic. We will retain the virtual counseling platforms for students and families in need.” Cutting counselors will save $486,000.
• Cut 9 FTE “student support specialists.” “Reduce the Student Success Specialist teachers assigned to nine school sites.” And, “We will need to restructure this support to help with the structural deficit and look for another way to lead our support systems.”
• Reduce District Department staff. “We are reducing the following positions at the district level: Executive Assistant Superintendent’s Office, Payroll Technician, and Human Resources Technician. With current retirements, we are able to make these reductions through attrition.” They can save over $462,000 here.
• Reduce 14 FTE instructional aides. “We added several instructional aides to school sites over the past five years. We are going to reduce our aide support by 11 FTE. This will leave us with approximately 26 FTE to support our schools. With the reduction of a PE position, the aide will also be reduced.” They will save 652,000 with this cut.
• Cutting TK (which has already been ruled out for next year), represented the second largest of the proposed cuts. “The start of the 2025-26 school year will open up the window for all four-year-olds to attend transitional kindergarten.” But through collaboration with the TK teachers and the union, we have found a way to contain program costs while maintaining the core elements of our current program. We will continue to utilize our ELOP funding along with our innovative TK plan to preserve core elements of the program.” Simply doing away with TK would have saved the District $1.5 million, according the District.
All told, these and other smaller cuts total $5.866 million. That still doesn’t cover a projected $6.327 million deficit.
The school board will digest these figures and is slated to vote on the budget cuts at their Feb. 18 meeting.
