Planning for Reducing Personnel Costs

There are many options and strategies available to districts seeking to reduce personnel costs.

With approximately 80 percent of a school district’s budget connected to personnel, effective management of personnel costs is necessary to maintain a balanced budget. During difficult financial times, the district may have no choice but to reduce personnel costs to operate within budgetary constraints.

First Steps

It is important for the district to consider the legal ramifications, practical implications, and timing of each option. Districts should consider the following strategies as part of the initial discussion to reduce personnel costs:

• Evaluate current staffing allocations and practices in each department and campus.
• Research options for reducing staffing needs (e.g., combine job duties, increase class sizes, evaluate workload, modify instructional arrangements).
• Analyze current budget and projected financial outlook.
• Review board policy addressing termination of staff.
• Discuss methods for reducing staff:
  • Implement a hiring freeze and absorb positions through attrition.
  • Reduce at-will positions.
  • Reduce probationary contract and non-chapter 21 contract positions at the end of the school year.
  • Offer exit incentives.

Additional guidance for reducing personnel costs is available in the TASB School Law eSource document Reducing Personnel Costs.

Reduction in Force

A Reduction in Force (RIF) is a last resort measure that school districts should consider when all other options have been exhausted. When the strategies listed above prove to be inadequate and immediate financial cutbacks are required, a district may be forced to consider a RIF.

The primary benefit of a RIF is it allows a district to eliminate positions over a relatively short time-period. Because it is a drastic measure, a RIF requires the board and superintendent to declare a financial exigency or program change, identify the affected employment areas, and systematically apply preset criteria to identify the individual employees to be discharged.

When a RIF is needed, consider the following preliminary steps to help prepare the staff and community prior to implementation:

• Communicate with staff and the community about reasons for needing to reduce personnel costs and steps taken to avoid a RIF.
• Review Policy CEA (LEGAL), DFF (LEGAL), DFFA (LOCAL), and DFFB (LOCAL).
• Identify impacted employment areas.
• Analyze methods and criteria for reducing staff.
• Determine a timeline. A RIF may occur either at the end or in the middle of a school year.
• Consult local counsel to ensure compliant practices are used.

Financial Exigency

The commissioner’s rules define financial exigency as meaning the financial position of a school district as a whole is such that the financial resources are insufficient to support the school district’s instructional programs or the school district is unable to finance the full compensation of staff for the current or next fiscal year. A district’s board may declare a financial exigency under one or more of the conditions listed in 19 TAC §109.2001(a).

A determination of financial exigency constitutes sufficient reason for nonrenewal or termination of a contract during the contract period. Districts should consult Policy CEA (Legal), DFFA (Local), and the Texas Education Agency website for a summary of requirements to declare financial exigency, deadlines, and required forms.

Program Change

TASB model Policy DFFB (LOCAL) defines a program change as the elimination, curtailment, or reorganization of a program, department, school operation, or curriculum offering such as:

• A change in curriculum objectives
• A modification of the master schedule
• The restructuring of an instructional delivery method
• A modification or reorganization of staffing patterns in a department, on a particular campus, or district-wide

A determination of a program change constitutes sufficient reason for nonrenewal of an educator contract. Be sure to check your district policy for any local changes to the TASB model Policy.

Additional Resources

Additional information on RIFs is available in the HR Library (member login required) and in the TASB School Law eSource document Reductions in Force.