PUSD Audit Reveals $33.3 Million in Fire Losses as District Faces Layoff Vote

The Eaton Fire destroyed $33.3 million worth of buildings and equipment at five Pasadena Unified School District campuses, but $133 million in insurance recoveries preserved the district’s finances during the 2024-25 fiscal year, according to an annual audit report set to be presented to the Board of Education Thursday night.

The audit, conducted by CliftonLarsonAllen and covering the fiscal year ended June 30, 2025, also flagged five findings — two of them repeat problems CLA said the district has failed to fix — and revealed that the share of spending devoted to classroom teacher salaries dropped to 41.97 percent, well below the 55 percent required by state law. 

The board will consider accepting the report at its regular meeting at 4:30 p.m. in the Elbie J. Hickambottom Board Room at 351 S. Hudson Ave., Pasadena.

The presentation comes on the same night the board is expected to formalize more than 160 employee layoffs as part of a plan to address a $30 million structural deficit.

Auditors issued an unmodified — or “clean” — opinion on the district’s financial statements, meaning the books present fairly in all material respects. No material weaknesses in internal controls were found. But the report identified significant deficiencies in four areas of state compliance.

The fire’s financial footprint dominates the audit. In January 2025, the Eaton Fire extensively damaged or completely destroyed five school sites, according to the report. The district recognized the $33.3 million impairment as an extraordinary item. The $133.05 million in insurance recoveries received by June 30, 2025, is recorded separately and is not related to the restoration costs of those impaired assets, the auditors noted.

Without the insurance money, the General Fund would have posted a $100.9 million operating deficit. With it, the fund recorded a $32.4 million net gain. The General Fund ended the year with $159.2 million in total fund balance, including $95.2 million in unassigned reserves — a 24 percent reserve ratio.

That cushion is projected to shrink dramatically. The district’s adopted 2025-26 budget projects the General Fund balance falling to $73.4 million, with available reserves dropping to 3 percent of expenditures — the minimum the state recommends for a district of this size, according to the audit’s financial trends schedule.

Among the audit findings, two are repeat problems from the prior year.

The year-end closing finding, designated 2025-001, flagged $813,985 in construction-related Building Fund expenditures that were not properly accrued at fiscal year’s end. The auditors attributed the problem to communication delays between the fiscal and facilities departments. The same finding appeared in the prior year at $1.4 million. The district’s corrective action plan from last year was listed as “not implemented,” according to the report.

The classroom teacher salary finding, designated 2025-004, showed the district spent 41.97 percent of its current expense of education on classroom teacher compensation — 13.03 percentage points below the 55 percent threshold required under Education Code Section 41372. The calculated deficiency was $41.4 million. The district attributed the shortfall to $67.5 million in fire-related costs that inflated total expenditures, reducing the percentage devoted to teacher pay. The prior year’s figure was 52.25 percent with a $7 million deficiency. The finding has appeared for three consecutive years. The district said it will apply for an exemption through the Los Angeles County Office of Education, according to the report.

A third repeat finding, 2025-002, cited noncompliance with state attendance requirements for the After/Before School Education and Safety Program at Norma Coombs Elementary and Madison Elementary schools. That same problem was flagged at San Rafael Elementary in the prior year, and the corrective action plan was listed as “not implemented.”

Two new findings were also identified. Finding 2025-003 noted the district failed to provide the legally required 10-day public notice for a hearing on the sufficiency of instructional materials. The notice was posted only four days before the hearing due to what the district described as “technical difficulties.” Finding 2025-005 cited missing gradebook records for eight of 25 Independent Study students tested.

None of the five findings carried a direct financial impact, according to the audit.

The audit also documented other key financial indicators. District-wide revenues totaled $485.6 million, up from $412.6 million the prior year, driven largely by the insurance recoveries. Total expenses were $477.6 million. The district’s net position increased by $8 million to $312.2 million.

The Local Control Funding Formula provided $191.2 million in revenue, a decrease of $8.5 million from the prior year. Enrollment stood at 13,757 students, with 67.4 percent qualifying as unduplicated pupils, according to the report. Average daily attendance was 12,705.

Long-term liabilities totaled $613 million, including $347 million in general obligation bonds, $212.1 million in net pension liability, and $39.8 million in retiree health benefit obligations. The district had $140 million in bonds issued under Measure O, out of $516.3 million authorized by voters in 2020. Building Fund expenditures totaled $41.2 million during the fiscal year.

The audit was prepared by CliftonLarsonAllen LLP of Ontario, California, and dated February 5, 2026. Board Report 115-B was originated by Dr. Sergio Canal, Chief Human Resources Officer.

The Board of Education meets Thursday, February 26, 2026, at 4:30 p.m. at 351 S. Hudson Ave., Pasadena. The meeting is open to the public. Agendas and meeting materials are available at pusd.us.