“Sequestration” Requires Consideration of Immediate Action

On March 1, 2013, deep cuts to the federal budget will take effect. These cuts, known as “Sequestration,” will result in $1.2 trillion in federal spending cuts over the next 10 years. Approximately half of the cuts will be made to the Department of Defense and half will be made through cuts in domestic discretionary spending programs. Although some commentators have noted that school districts have more time than other agencies to brace for the impact of Sequestration — because the impact would not occur until July 1, 2013 — we have all become familiar with the reality that potential cuts beginning July 1 require preliminary action in the spring.

According to the United States Department of Education, Sequestration will result in $725 million in cuts to Title I programs and $600 million in cuts to Special Education.  On February 25, 2013, the Obama Administration released state-specific impact reports detailing the consequences of Sequestration for the individual states. In California, Sequestration will result in a loss of $87.6 million for primary and secondary education programs. Another $62.9 million in funds for Special Education will be lost.

The Obama Administration estimates that the Sequestration cuts will jeopardize 1,210 teaching and instructional aide jobs in the primary and secondary program. At least 760 teaching and support jobs could be impacted as a result of the cuts to Special Education.  The recent decision in Stockton Teachers Association v. Stockton Unified School District (2012) 204 Cal.App.4th 446, complicates matters related to the Sequestration cuts since many districts use contracts for categorically funded positions to employ certificated employees in the Title I program. In years past, districts might have simply released categorically funded Title I teachers as temporary employees.

After the Stockton decision, districts must now ensure that their categorically funded contracts meet certain requirements and must demonstrate that the categorical funding has expired in order to release categorically funded certificated employees like any other temporary certificated employees. (See our Alert on the Stockton decision here) If districts cannot meet the Stockton factors, the categorically funded employees may be probationary and could only be released through the layoff process if the only reason for release is financial.

Unfortunately, the full impact of the Sequestration cuts to Title I and Special Education will not likely be known until after the deadline for issuing certificated layoff notices has passed. With March 15 rapidly approaching and funding for Title I and Special Education being uncertain it may be prudent for districts to plan for the worst and take precautionary measures to ensure district budgets can weather this storm. Accordingly, districts should evaluate their staffing in Title I and Special Education programs to determine whether staffing reductions might need to take place for the 2013-2014 school year. Ultimately, if there is a question about whether a district’s contracts for categorically funded employment meet the Stockton factors, the district should consider engaging in a certificated layoff of the categorically funded employees (in this case, Title I employees) and should contact legal counsel for assistance.

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