A Message From Superintendent Gundry Regarding the District's Financial Condition
Dear PUSD Community,
As the Pasadena Unified School District (PUSD) faces another year of budget uncertainty, I'd like to brief the community about the district's financial situation.
As you may know, the State of California requires school districts to submit their budgets for the coming school year before anyone knows how much revenue each district will receive from the state. School districts are also required by law to submit a balanced budget for the current school year as well as for the next two years out. In addition to showing a balanced budget, districts are also required to have a 3 percent reserve, which is about $5.4 million for PUSD.
In order to ensure that the district remains solvent, it is necessary for us to be conservative when estimating our revenues and to be realistic when estimating our expenditures for the coming school year. In other words, we have to plan for the worst case scenario in order to ensure that we are not at risk of financial insolvency.
Some significant considerations when determining the budget for the coming school year include:The state has reduced the amount of money it sends to public schools over the last several years. California is almost dead last among the 50 states in its per-pupil spending on education.
- Although the passage of Proposition 30 prevented further cuts to education funding, it did not add any new revenue for schools. It did, however, help the Governor balance the state budget, which may allow the state to send more money to schools in the future. That may mean increased funding for the 2013-14 school year, but we will not know until after we have submitted our budget to the state, so we have to plan for no additional money coming from Sacramento.
- The federal sequestration has resulted in automatic cuts to federal funding for education programs. For PUSD, this translates into an estimated $1 million reduction in federal Title funds for 2013-14. Since there is no indication that the sequestration is going to end, we have to assume that the reduced rate of federal funding is permanent.
- Since our federal and state funding are tied to our average daily attendance (ADA), declining enrollment means declining revenue. When we build the budget, we have to estimate our enrollment and ADA for 2013-14 in order to estimate our revenue. Next year's budget is built in part on the assumption that enrollment will continue to decline. If enrollment does not decline, we will receive additional revenue that will allow us to reinstate programs and positions.
The cost of employee salary and benefits continues to rise in a time of declining revenue.
- In 2011-12, the maximum annual cost of health and welfare benefits for a PUSD teacher approached $19,000. This was the highest of any school district in LA County and was among the highest when figured as a percentage of a teacher's salary. We spend $19.6 million annually on health and welfare benefits, which is about 11 percent of the total budget. With no cap on benefits, this cost will continue to rise as the cost of health insurance rises.
- There have been emotional statements made at recent board meetings about raises for administrators, but this is a mischaracterization of what occurred. The only additional compensation received by any administrator occurred as a result of standardizing the rate of compensation for an earned doctorate. PUSD pays an additional five percent for an earned doctorate. The five employees who were receiving three percent for an earned doctorate were given an additional two percent. This was done simply to give them the same benefit enjoyed by all others in the district with an earned doctorate.
- A fact that has not been mentioned is that the Teamsters Local 911 and the Association of Pasadena School Administrators (APSA) have agreed to furlough days for 2013-14 which will result in a reduction in compensation for all Teamsters and administrators. United Teachers of Pasadena (UTP) and CSEA Local 434 have not agreed to furlough days.
- The only raises in salary in 2013-14 will be a result of step and column increases. The step increases are automatic increases in salary based on years of experience. The column increases are available to UTP members only and are granted for continuing education. The added cost of step and column increases for 2013-14 is estimated at $1 million.
When you put all of this together, it means that we need to reduce our budget by at least $8.5 million in 2013-14 in order to balance the budget.
This is a very difficult number to reach after the cuts that have been made over the last several years. There is a possibility that revenues could exceed our expectations, but we cannot count on that in the budget planning process. The best case scenario for PUSD would be passage of the Governor's Local Control Funding Formula (LCFF). This budget proposal would designate more funding for districts that serve high numbers of low income students and English learners and would bring PUSD about $4 million in additional funding in 2013-14. Whether the Governor's budget proposal passes or not will not be known until after our budget has been submitted; therefore, we have to assume that there will be no additional funding as a result of the passage of LCFF.
In its most recent bulletin, UTP has proposed that we balance the budget through cuts to administration and district office staff and by freezing all hiring and all spending. They propose that these measures will balance the budget and at the same time:
- Preserve class size reduction;
- Leave counselor ratios at 400:1;
- Avoid all layoffs of teachers, nurses, counselors, and librarians;
- Require no furlough days;
- Require no increase in the employee contribution for health insurance; and
- Preserve elementary music and arts programs.
In response, I'd like to say that there is very little hiring and discretionary spending going on right now, so there is not a lot of savings to be had there. A complete hiring and spending freeze would be impractical since we are still running a school district that has expenses and some turnover in staff. By the same token, it is not possible to cut administration enough to balance the budget. If fully implemented, for example, the administrative cuts proposed by UTP total to about $500,000, which is only about 5 percent of what we need to find in reductions. A few points I'd like to be sure you are aware of are:
- Many of the positions we are eliminating are a result of the expiration of grants and our projected decline in enrollment. This includes almost all of the reduced teacher, counselor, and nurse positions.
- There is no proposal to eliminate elementary music and arts programs.
- Some significant administrative reductions have been made for 2013-14, including the elimination of two of the five Chief positions.
- In the midst of budget reductions, we believe it is essential that we preserve our signature programs which include College & Career Pathways/Linked Learning; Dual Language Immersion; and International Baccalaureate. We are also committed to opening the Washington Middle School STEAM magnet. These signature programs draw students into our district. These programs not only increase revenue, but they help us to continue to move forward in our implementation of 21st Century learning, even during a difficult financial time.
I know that there still are some unanswered questions, but I hope this gives you a somewhat better understanding of the challenges we all face in making it over the hump in 2013-14. The good news is that the budget outlook at the state level is improving, so we expect to see an increase in revenue coming to schools very soon. Barring a large decline in enrollment or some new, unforeseen budget crisis, we should see a steadily improving financial situation over the next several years. This will allow us, at the very least, to restore programs, improve professional development opportunities, provide technology for classrooms, and reduce class size across the district.
The worst of the financial crisis is nearly over, so in the meantime I ask you to please join me in lobbying your legislators to support the Governor's Local Control Funding Formula and in doing all we can to increase enrollment and student attendance. These are revenue generating measures that will help us preserve jobs and offer the best education possible for the students of PUSD.