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PUSD Budget Projects Multi-Million-Dollar Deficit
Education Jun 28, 2017
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“If we don’t make significant cuts going forward, we could end up being insolvent and we certainly don’t want that,” said Superintendent Dr. Brian McDonald. – Photo by Terry Miller / Beacon Media News
Superintendent McDonald Warns Against Potential Insolvency
By Gus Herrera
The Pasadena Unified School District (PUSD) Board of Education recently approved a budget that is expected to leave the district in a multi-million-dollar deficit by the end of the year.
The FY2017-18 budget, which was approved unanimously (6-0), projects $206.205 million in revenue and $211.975 million in expenditures – digging the PUSD into a deficit of $5.77 million.
A little over 80 percent of total expenditures are expected to go towards employee salaries and benefits, while only 3.32 percent will fund the students’ books and supplies.
It is important to note that the budget approved is still somewhat fluid, as modifications (approved by the board) can be made throughout the year to compensate for any changes in revenue and/or expenses.
Aside from the narrowly-attained three percent worth of reserves, which is required, the budget has no additional contingency funds built in to rely on in case of emergency. Furthermore, if the state decides to apply any reductions in the coming year, then the budget will require further expenditure cuts in order to meet the reserve quota.
“The budget is not able to support any contingencies … this is a very, very tight budget and whatever we have budgeted so far is all the monies that we have to survive on for the fiscal years moving forward,” revealed Bernadette Griggs, chief business officer.
Minimal revenue growth and increased commitments towards employee retirement/benefits systems are expected to leave the PUSD in a $5.7 million deficit by the end of next year.
– Photo by Terry Miller / Beacon Media News
The district’s precarious situation is fueled by the combination of minimal revenue growth and the inevitable increase of expenditures.
PUSD’s revenue will grow by less than two percent this year, something that Griggs partly attributes to a continuing decline in overall enrollment throughout the district.
Similar to the City of Pasadena’s budgetary challenges, significant hikes in expenditures are attributed to increased commitments towards the public employees’ retirement system (CALPERS) and the state teachers’ retirement system (CALSTRS).
“I don’t think the general public actually realizes how massive of an impact the increase in retirement contributions is making on our budget,” said Board Member Patrick Cahalan.
Griggs also stated that the cost of special education must be reduced, as current funding levels are “weighing heavily” on the district’s budget.
To quell the deficit, Griggs recommended that $10 to $12 million worth of reductions need to be made by FY2019.
In order to achieve this mark, the PUSD must make “major decisions” regarding the sustainability of its programs and determine a more streamlined district-wide focus that can be fully supported. Griggs also recommended that the district look into forms of school consolidation as a way to cut costs.
Several board members voiced their concerns regarding the process that the district will take in carrying out the significant number of cuts that need to be made.
“My biggest concern is whether we have system/process to do it and do it well,” said Board Member Kimberly Kenne.
Board Member Scott Phelps echoed the lone public speaker’s request for a transparent process that describes all the cuts in laymen’s terms, “I would certainly like to see … those [cuts] listed out and presented to the board.”
Cahalan agreed that it would benefit all to know the specifics of impending cuts, “when you’re talking about making millions of dollars in cuts, people are going to yell at us. I’d prefer to know ahead of time what they’re going to be yelling at us for … because I want to have solid, cogent answers for them.”
PUSD Superintendent Dr. Brian McDonald was quick to respond towards the demand for transparency, revealing that planning will begin in August to put a “process in place that will allow people to participate.”
Although confident in the district’s ability to conquer its fiscal challenges, McDonald made it clear that the process is “going to be painful” and that some decisions “will not be popular.”
