Los Angeles County Tells Pasadena Unified to Cut Millions Deeper

County notifies Pasadena School Board it is concerned about District’s history of not implementing financial plans; Board Member calls letter “unusual”

Published : Wednesday, April 25, 2018 | 5:27 AM

[Editor's Note: The original version of this story said that the Los Angeles County Office of Education "oversees" Pasadena Unified. In fact, LACOE’s role, as required by law, is to review the budget and two interim financial reports prepared by the county’s 80 school districts each year. LACOE examines the budgets and reports to determine whether districts can meet their financial obligations in the current and two subsequent fiscal years.]

 

In a sternly worded letter, the Los Angeles County Office of Education, which determines if County school districts are financially sound, has told Pasadena School Board President Roy Boulghourjian that District “may not meet its financial obligations of 2019-20″ unless it cuts an additional $8.15 million in expenses.

In the letter dated April 17 obtained Tuesday by Pasadena Now, LA County Office of Education Chief Financial Officer Dr. Candi Clark said her office is “concerned” because the Pasadena Unified “District has a history of not fully implementing its FSPs (Financial Stabilization Plans) in prior years.”

Therefore, Clark continued, the “County Superintendent is prepared to elevate the Fiscal Expert to a Fiscal Advisor with and stay and rescind authority over the Board should the FSP (Fiscal Stabilization Plan) not be implemented in its entirety, or should the Board take any action determined to be contrary to improving the District’s fiscal solvency…”


Read the full letter here


Last week’s letter follows an intensifying series of far-reaching Board discussions and actions over the past four months to address the District’s financial problems.

On February 8, responding to an earlier letter from Dr. Clark setting a deadline to create a Fiscal Stabilization Plan, the School Board quickly passed a plan which included $6.9 million in current year reductions and revenue increases, and $14.2 million in reductions in 2018-19.

The motion to approve the Fiscal Stabilization Plan was passed 5-1 at a February 9 PUSD Special Meeting, with Board Member Kimberly Kenne voting “no” after voicing a number of concerns.

However, Clark said in last week’s letter, the Board’s Fiscal Stabilization Plan “does not address the District’s ongoing structural deficit.”

According to Clark’s letter, “The District is projecting an operating deficit of $2.0 million, representing 1.46 percent of the District’s unrestricted General Fund projected expenditures and other outgo for fiscal year 2017-18. The District also projects operating deficits of $1.6 million and. $10.5 million for 2018-19 and 2019-20, respectively.”

Clark pointed up the long term deficits of the PUSD, which may have a more damaging effect on the District.

As Clark stressed in her letter, “We are concerned that the District has a significant underlying structural deficit that will severely impact the District’s solvency in 2019-20 if not fully addressed now by the FSP.”

The letter also pointedly informed the Board that, “Pursuant to EC Section 42 13 1 (e), any school district that files a qualified Second Interim Report, must provide the County Superintendent, the State Controller’s Office, and the Superintendent of Public Instruction with a financial statement projecting the district’s fund and cash balances through June 30, for the period ending April 30, 2018. This financial statement and supporting assumptions should be submitted to the County Office no later than June 1, 2018.

Reached for comment Tuesday, Pasadena Unified Board Member Scott Phelps seemed somewhat nonplussed, saying that this is the first time that the County has ever asked for reductions in the third year of a Financial Stabilization Plan.

“I think this is their way of holding the Board’s feet to the fire, and making sure that we keep doing the reductions,” Phelps said. “It means we need the reductions earlier than we thought, but we will get them. There are more vacancies being closed, and more things that our Chief Business Officer is finding.”

Phelps also said that Superintendent McDonald is meeting with County officials Wednesday to “find out more about this unusual request.”

Meanwhile, Clark’s letter concluded, “While the District has made some progress developing its FSP, implementing the identified reductions is critical to the District ‘s continued solvency. The County Superintendent is committed to working with the District in addressing the concerns identified in this letter, and staff will continue to work with the fiscal expert and assist the District as needed.”

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