King City Joint Union High School District is broke, and trying to put education on layaway. The district is set to run out of cash in July, and is counting on a $13 million state loan to get it through multi-million dollar deficits for years to come. And according to the district and King City High School Teachers’ Association – uncommon allies – Monterey County Superintendent of Schools Nancy Kotowski has dug the district into a deeper hole.

Kotowski recently vetoed an agreement between the teachers’ union and the district which would have saved an estimated $2 million next fiscal year. A key piece of the contract would have increased maximum class size to 35 students, requiring fewer teachers and allowing several high-paid instructors to retire, says John Radcliff, teachers’ association president. Kotowski rescinded the agreement, so class sizes will remain 28 students, and the district will likely hire 10 more teachers, says Rory Livingston, assistant superintendent of business: “Her action is going to require us to spend a million dollars more this year.”

Under the two-year agreement, the district would still have had a more than $7.6 million deficit next fiscal year, according to a Monterey County Office of Education analysis. “The bottom line is, if the tentative agreement were implemented it still leaves the district with a negative fund balance for the year and each subsequent year through 2011,” Kotowski says.

Kotowski says the agreement wouldn’t have allowed the forthcoming state administrator to negotiate deeper concessions with the union. Under the terms of the state loan, the district board will surrender fiscal authority to the administrator to work out a recovery plan.

The district, which includes King City and Greenfield high schools, is already under scrutiny by MCOE, which loaned the district $1.2 million in 2006. The district has a $3.6 million deficit this fiscal year and is borrowing money from a facilities fund to pay its bills.

District and county officials have linked the budget mess to high teacher salaries and benefits, in addition to a 2006 Public Employees Relations Board decision that included back pay for teachers. Kotowski says the district has a structural deficit that can’t be fixed under the current salary formula. “That negotiating agreement is unaffordable,” she says. “It is not possible for the district to operate at that level of compensation for the teachers.”

But Radcliff says teachers are getting a bad rap: “We are getting blamed for the current situation where we’ve done nothing but give and give.”

PERB found that the district improperly calculated the negotiated salary formula dating back to 2000, and awarded teachers $5.2 million. The district and teachers’ union agreed to reduce the amount, and the district ended up shelling out $2.1 million.

Still, King City teachers have some of the highest salary schedules in the state – and large benefit packages.

King City High School District teacher salaries averaged $81,391 last fiscal year, the fifth highest in the state. (The state average was $65,808.) In terms of dollars per student, teacher wages were 105 percent of the average for high schools, while employee benefits were 128 percent. Radcliff says the moot agreement would have brought teachers’ pay and benefits close to and below state averages, respectively.

The district’s fate is now in the state’s hands. The California Senate Judiciary Committee is expected to vote on SB 130 on May 28. The bill would authorize an initial $5 million emergency loan. Though school districts in the past have turned to the state for bailouts, King City High School District is the first one this year, says Jann Taber, spokeswoman for Sen. Jeff Denham, the bill’s sponsor.

Things aren’t looking up. State budget cuts will likely intensify for all school districts with the failure of Tuesday’s ballot measures.

On May 13, the school board voted to issue layoff notices to two counselors and 13 teachers, but Livingston says the pink slips will likely be rescinded since Kotowski rejected the agreement.