Guest Opinion | Scott Phelps | PUSD’s Latest Budget: An Updated Reality Check

Published : Tuesday, April 24, 2018 | 2:15 PM

[Editor's Note: This piece was submitted prior to the issuance of a letter by the Los Angeles County Board of Education requiring $8 million in additional reductions be included in the upcoming June budget, not the December first interim budget.]

phelpsThe Board of Education approved PUSD’s second interim budget for 17-18 on March 15.  (Please click here  for the overview slides and all the detailed sheets. This budget reflected the over 100 layoffs for the 18-19 school year that the board issued as part of the county-required Fiscal Stabilization Plan approved by the board in February that decreased 17-18 expenditures by about $4 million and 18-19 expenditures by over $12 million.

Expenditure Increases
Unrestricted certificated and classified salaries added together have increased from $77,635,065 in 15-16 to $82,535,803 for 17-18 as of our March 15 2nd interim budget. That’s a $4.9 million increase, roughly $3.1 million of which is due to the 6% raise in 2016 (equivalent to 3% higher salaries from 15-16 to 16-17 since it was effective mid-year in 15-16) and step and column increases of about 0.5% each of the two years since then, and roughly $1.8 million of which was more staffing.

Benefits have increased from $30,020,078 to $36,473,520. That’s a $6.45 million increase. Roughly $1.2 million (again 4% of the 15-16 amount) can be attributed to the 2016 raise. ”Under state law, PUSD’s contributions to the teachers’ retirement system (STRS) have been increased from 10.73% of employee salary in 15-16 to 14.43% of employee salary in 17-18, and its contributions to the public employees retirement system (PERS) have increased from 11.9% of employee salary in 15-16 to 15.8% of employee salary in 17-18. So PUSD’s pension contributions in terms of percentage of employee salary have increased by 3.7% and 3.9%.  These percentage increases when compared with the levels they were at in 15-16 are increases of 34.5% and 32.8%, very substantial increases in pension costs.” Add in annual substantial increases in the market cost of PUSD’s employee health care plans, also mandated under collective bargaining agreements, increases in workman’s compensation costs, etc. These are mostly invisible increases in the cost of public employees. Invisible because the employee doesn’t notice most of them.

The third fundamental of our challenges is flat revenue and increasing expenditures for special education. Special education revenues in 15-16 were $27,489,260. As of March 15 they are $27,658,277 for 17-18. You may wonder why special education revenues are so flat. It’s because they are allocated based on the district’s total enrollment, not the number of special education students, and as is well-known, our total enrollment has been decreasing. This is longstanding state practice to avoid over-identification by districts to get more revenue. Meanwhile expenditures have gone from $50,957,333 to $57,684,215 as our costs and the number of students identified for services has increased. An increase of $6.7 million. Near the bottom of the page, one can see that the General Fund Contribution has gone from $23,813,871 to $30,465,494, an increase of $6.65 million, to cover this increase in costs.

So for the three major drivers of costs, expenditures increased by $18 million from 15-16 to 17-18.

Changes in Revenue
The unrestricted revenue plus the special education revenue have gone from $192,201,544 in 15-16 to $197,892,394 for 17-18, which is an increase of $5.69 million. Almost all ($5.57 million) of this revenue increase was one-time or not projected to occur in 18-19 and beyond, including $3.6 million of one-time E-rate federal revenue (for technological improvements) and $1.0 million of one-time revenue from the city of Pasadena as part of the joint use agreement of the Washington complex gymnasium. Without this one-time revenue our unrestricted revenue plus special education revenue would have been essentially flat as shown in the first interim budget in December 2017 and reported previously.

The near future: far from out of the woods
The second interim budget shows that over $8 million in reductions will be needed for the 19-20 school year in order to maintain the state-required 3% reserve. That means that during the next, 18-19, school year, for which over $12 million in reductions has already been made and which is not very far away, we will be trying to find $8 million in further reductions or more revenue so that we don’t have to layoff more staff. We will have to submit a new Fiscal Stabilization Plan with the first interim budget in December 2018. In the near future, the board will also be exploring ways to generate more revenue using the district’s properties.


Scott Phelps is a Pasadena School Board Member


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