A Year After County Said It Was Prepared to Take Over Pasadena Unified, It Approves District's New Budget and Steps Back

The Los Angeles County Office of Education gave its stamp of approval Wednesday to the Pasadena Unified School District’s plan to cut its budget by millions of dollars in order to comply with a state mandate governing budget reserves.
In a letter to the Pasadena Unified Board of Education, LACOE Chief Financial Officer Candi Clark commended district officials for meeting the goal for the 2018-2019 school year, but also pointed out several lingering concerns.
County officials had directed the District to submit a “Fiscal Stabilization Plan” last November outlining how the District plans to cut more than $10 million from its budget over the next three years.
The County had threatened the possibility of a County fiscal takeover of the school district in January of 2018, when it found the district was not on track to meet a state-required minimum “reserve for economic uncertainty” of 3 percent of its total operating budget each year.
But with the Wednesday letter, Pasadena Unified’s months of cost-cutting have paid off with County approval.
“Our analysis of the data provided indicates that the District should be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years,” Clark wrote. “We therefore concur with the District’s positive certification and offer our comments and concerns.”
Much progress has been made since the County Office of Education first put Pasadena Unified on notice a year ago, according to this week’s letter.
“The District submitted an updated FSP [Fiscal Stabilization Plan] that identified cumulative reductions totaling $10.1 million over three years, and restored reserves accordingly,” it stated .”The County Office acknowledges the tough decisions the Board and District staff have made to ensure the long-term stability of the District, and we commend the District for their hard work and diligence in developing a plan to achieve fiscal stability.”
Pasadena School Board members have spent the past year combing over the budget looking for ways to meet the requirements. They have frozen positions, eliminated others, discontinued general education bus service, made cuts to programs and taken other measures in order to cut the budget.
The District will also close one campus, Cleveland Elementary School.
But the County’s assessment on Wednesday wasn’t all good news.
It found the district still has an issue when it comes to deficit spending, though the Office of Education acknowledged significant improvement.
“The District is still projecting an operating deficit of $2.9 million, representing 2.13 percent of the District’s unrestricted General Fund projected expenditures and other outgo for fiscal year 2018-19,” Clark wrote. “The District is also projecting operating deficits of $5.0 million and $3.6 million for 2019-20 and 2020-21, respectively.
The shortfalls primarily blamed on declining enrollment, Clark added.
“We recommend the District analyze the causes for deficit spending in order to keep it manageable and to prevent erosion of the fund balance and impact on REUs [Reserves for Economic Uncertainty].” The County also suggested re-evaluating staffing needs in the coming years.
Unsettled labor negotiations also have a potential to alter the PUSD’s budgetary situation, as labor costs are a major portion of the operating budget, county officials said.
The County said it plans to keep a fiscal effort in place, at County expense, to help the district stay on track, financially.
Wednesday’s letter was not the final word on the matter.
“The information provided reflects the District’s financial position and assumptions as of October 31, 2018, and further adjustments will be made during the year as additional data becomes available,” Clark wrote.