City Council, Pasadena Unified Face Budget and Election Issues as Summer Wanes

City deficit expected to grow to $10 million by 2021; School district could see deficit of $5.7 million in 2018

Published : Tuesday, September 5, 2017 | 5:46 AM

Both the Pasadena City Council and the Pasadena Board of Education close summer staring straight into the face of budget deficits, with the City’s projected budget deficits for the next five years estimated to be as much as $10 million by 2021.

The Pasadena Unified School District (PUSD) is projecting a $5.7 million deficit for fiscal year 2017-2018, which could grow to about $10 million to $12 million in future years.

For both the City and PUSD, the increasing deficits are the result of rising pension costs that will soon rocket past the City’s projected revenues.

Last week, the City Council, in an effort to steady the rising costs, voted to establish a Public Agency Retirement Services (PARS) Section 115 Trust Pension Rate Stabilization Program, in order to pre-fund the City’s pension and other post employment benefits.

According to a Finance Department staff report, a pension rate stabilization program under such a trust could address the City’s net pension liability, because of its investment flexibility, compared to restrictions on general fund investments.

The City currently has two retirement plans for current employees through CalPERS: one to fund pensions for miscellaneous (non-safety employees) and one to fund pensions for public safety employees (fire and police personnel).

As of the June 30, 2016 CalPERS valuation, the funding ratio of the City’s miscellaneous plan dropped from 74.8 percent to 70.1 percent rate, and the funding ratio of the City’s safety plan declined from 75.6 percent to 70.9 percent, said the report.

Even with these drops in the funding ratio, the retirement plans are still an additional expense, and the City has to take drastic measures to cut down on expenses in order to reduce the deficit.

The combined unfunded liability for these two plans was reported at $470 million, an increase of $93 million from the prior year, while the City’s total assets stood at over $1.1 billion, same as the prior year.

For PUSD, the situation is far more serious.

Superintendent Brian MacDonald said in June that the approved budget was a “dire situation,” and that the District was in danger of “going insolvent in the next few years.”
The 2017 PUSD budget shows projected revenues of $206, 205, 630, against projected expenditures of $211, 975, 672, for a projected deficit of just over $5.7 million. Of those expenditures, $79.7 million is earmarked for certificated salaries, $37.4 million for classified employee salaries, $52.8 million for employee benefits, $7 million for books and supplies, and an additional $35.1 million for other operating expenditures.

Vacant positions continue to be funded, the PUSD budget report noted, and projected expenditures do not include increases for any collective bargaining unit for 2017-18 and beyond.

The budget presentation noted that “major decisions (have) to be made regarding 2018-19 and 2019-20 budget reductions to identify what adjustments must be made to implement the budget reduction proposed in those fiscal years.”

Among the budget considerations were possible school consolidations and cost-sharing increases in Health and Welfare.

For PUSD Superintendent Brian McDonald, the difficult fiscal situation is both a challenge and an opportunity.

“While we have weathered budget difficulties in the past, the reality of our current financial situation, coupled with declining enrollment, means that we must fundamentally change the way in which we operate,” McDonald said in an email to the PUSD community last month.

McDonald said the District was also working with legislators to find solutions to the deficit problem and to increase funding for PUSD.

As both boards grapple with deficits, another equally important issue will need to be officially addressed before the end of this year.

The state’s new election law, mandates that local jurisdictions—even charter cities like Pasadena— must reschedule their elections to align with state and national schedules if their latest turnouts averaged less than 25 percent lower than during previous state elections.

Pasadena’s turnout for the March 2017 City Council election was 21 percent, and the Pasadena Unified turnout was 20.47 percent, according to City Clerk Mark Jomsky, who would help to implement any election changes. Any changes to the City and PUSD election timing would require a Charter Amendment, voted on by the voters of Pasadena and PUSD.

Last month, Mayor Terry Tornek said the City would “probably move to concurrent elections by the next elections,” adding that even if the City wanted to hold its own elections, “the elements are not there.”

The City must have a plan in place by January 1, 2018, or risk legal action, Jomsky said recently.

“A plan, such a charter study committee, has to be adopted by resolution and agreed upon to submit to the state,” said City Clerk Mark Jomsky. “It does not need to be submitted to any agency, just adopted, or the City can be penalized with a lawsuit if it ran elections after the January 2018 date without an adopted plan.”

A few City Council members have already indicated a preference for Pasadena keeping its current local election dates, saying that a move to state and national election dates might not only increase the cost of participating in state-mandated election dates, but could also affect the City’s political diversity.

“This is a city where everyone from a billionaire to Joe Average has the ability to run for office and be on City Council and even be mayor,” said Councilmember Tyron Hampton recently.

Councilmember Victor Gordo also noted the issue’s complexity.

“This is a complicated issue, which involves legal and practical matters. It affects the right of this city to determine when to hold its own elections. Charter cities like Pasadena should have the right to choose, but the State is imposing on that right. The Council needs to grapple with that, and then deal with the practical aspects, if we can even coordinate an election, because of the lack of (election) vendors.”

Councilmember Andy Wilson says a better option to clear up the discussion would be to draw up several election scenarios and look at the pros and cons of each one.

“You actually have something specific to react to, to come up with kind of the best suggestion,” Wilson said last month. “Look at the pros and cons, and then maybe you have someone argue more philosophically why one approach is better than the other.”

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