School District Reserves At Historic High of $68 Million

The Pasadena Unified School District’s Reserve level is currently at a historic high of $68 million, school officials said Monday during a joint meeting of the School Board and the Pasadena City Council.

Leslie Barnes, PUSD’s Chief Business Officer, said most of the reserve funds are based on one-time savings from closure of schools during pandemic, one-time COVID funds from State and Federal Governments and the average daily attendance (ADA) Adjustment and Hold Harmless provision of the state. 

In  fiscal year 2017-2018, prior to pandemic, the district filed a negative interim report. However, it ended the year being able to meet the reserve requirement and a $19 million fund balance. 

Despite having a high reserve to date, PUSD believes this will soon shrink due to several factors. 

The district receives about 90 percent of its revenue from the state, as per Barnes. The funding is typically allocated through a formula which considers, among other factors, the average daily attendance numbers of students enrolled in the district.

Over 14,000 students are currently enrolled in 23 PUSD K-12 school sites. 

Previously, if the district was in declining enrollment they could use the prior year’s ADA but a new law has required districts to use the ADA over the past three years. 

“Going forward we will just have the average of three years,” Barnes said. “Within a couple of years, we will be back to recognizing a pretty substantial decline.” 

The decreasing enrollment in the district, which could result in a significant decline in funding districts receive from the state would force PUSD to think about whether or not they will need to downsize operations. 

“We are overcounted on students right now but that count is going to start normalizing closer to what our actual enrollment is,” said PUSD Boardmember Patrick Cahalan. “So we are either going to spend down some of the reserves or we are going to make cuts. Will probably do something in the middle.” 

“We have a fairly large reserve right now but one of the reasons we built it up so big is we knew we needed a cushion,” he added. 

According to Barnes, Pasadena has experienced declining enrollment for approximately two decades. 

“In the past four years, we’ve lost about 1,600 students and we’ve closed five schools since 2019.” 

Barnes said the state is also experiencing declining enrollment in the K-12 population and this is expected to continue through 2027-2028. 

Los Angeles County is one of the highest declining counties in all of the state. 

According to Barnes, there are other constraints on PUSD’s reserve levels. 

“We have increased salaries quite substantially over the last two years based on having large cost of living adjustments,” Barnes said. “Other districts have done the same.” 

Aside from increasing workers’ salaries, Barnes said PUSD is also facing rising costs related to utilities, property and liability insurance and other cost increases.