PHOENIX – A one-day strike by the faculty of the San Francisco Community College District is a bad sign because it shows a strong resistance to the district's efforts to balance its books, Moody's Investors Service said Thursday.
The April 27 strike, the first in SFCCD's history, was in protest of district management's proposal to reduce expenditures by 26% over the next six years. Currently rated Aa3 with a stable outlook by Moody's, the district has seen enrollment fall 37% since 2011. Moody's attributed that to an improved economy luring students back into the workforce, as well as some concerns about SFCCD's accreditation.
California community colleges typically reduce their expenditure base when enrollment declines to maintain structural balance, Moody's said. "However, SFCCD has reduced operating expenditures by only 15.2% since 2011."
The district receives state "enrollment stability funding" which has helped it stave off the need for deeper cuts. The district has proposed reducing costs by cutting staff and class offerings, and adopting a salary structure about $10 million below what the faculty is seeking. Moody's said that because the strike occurred relatively early in the negotiation process, it points to a deep level of mistrust between faculty and management that could be a credit problem.
"Employee efforts to impair the district's flexibility to make expenditure reductions or otherwise maintain structural balance is a credit weakness relative to other districts that do not face such challenges," the rating agency said.
The district had about $278.4 million of general obligation bonds outstanding as of the June 30 last year, according to its most recent disclosure filings on EMMA. Besides Moody's, the GOs are also rated by Standard & Poor's and currently have an A rating.
