California District May Have to File Bankruptcy

The Sacramento school district may have to file for bankruptcy, a report found.

A school district in California could have to file bankruptcy if its teachers union does not agree to concessions, according to a report from a state grand jury.

The Sacramento County Grand Jury noted that the Sacramento City Unified School District faces a $30.6 million budget deficit for the 2010-2011 school year. It also said the district could face mediation with the Sacramento City Teachers Association, where it will present the union with a plan for concessions.

The jury said that in the past the district and teacher representatives structured salaries and benefits in a way that did not show an understanding of their potential price. The recent recession has made the problem more pronounced.

Proposals from the SCTA were called "inadequate and unrealistic" by the grand jury, which said the union must do more to work with the SCUSD to mitigate deficit problems.

"A continued unwillingness to modify some contractual agreements will result in district bankruptcy," the report said.

While the school district may have to file bankruptcy if negotiations fail, consumers in the state are also facing problems, including increases in foreclosure rates. Dropping home values as a result can lead to districts having less money with which to work.