The Pasadena Unified School District Board of Education will review a fiscal stabilization plan Thursday that identifies $30.5 million in budget reductions and new revenue, meeting the Los Angeles County Office of Education’s financial requirement to cut $30 million to $35 million to avoid state intervention.
The proposed plan combines $25 million in spending cuts with approximately $5.6 million in new revenue and grant funding, according to a 105-page presentation released Monday afternoon. The board will discuss the proposals at a study session Thursday and is scheduled to vote Nov. 20 on which measures to implement.
The county office conditionally approved PUSD’s 2024-25 budget and has set a Dec. 15 deadline for the district to submit a first interim financial report demonstrating progress toward fiscal solvency. County officials have authority to assign a fiscal expert to work with the district if they determine insufficient progress has been made.
Eight-Part Plan
The district’s proposed Fiscal Stabilization Plan plan draws from eight workstreams developed over the past three months, with the largest savings coming from school-based service reductions recommended by a community advisory committee.
School-based service reductions identified by the Superintendent’s Budget Advisory Committee (SBAC) would generate $18.5 million, or 61% of the total savings. The committee, composed of parents, students, educators, employees, labor partners and community members, reviewed 38 packages of potential cuts totaling $51.6 million and ranked them from most to least acceptable.
To reach $18.5 million in school-based savings, the board would need to approve cuts extending to approximately the 24th-ranked package on the committee’s list, which is beyond the 15 packages the committee rated as most acceptable. The top 15 packages would generate only approximately $12.1 million.
Central office reductions would cut $3.6 million and eliminate 28.25 full-time equivalent positions across operations and academic departments.
Operations cuts totaling $1.4 million would eliminate 9.5 positions including accounting, human resources, communications and facilities staff. Academic cuts totaling $2.2 million would eliminate 18.75 positions including one elementary principal, special education coordinators and support staff, and student wellness positions.
Contract reductions would save $2.8 million, though the presentation itself does not appear to specify which contracts would be eliminated or reduced.
Grant maximization efforts would generate $4.3 million in new revenue by pursuing additional grant funding opportunities.
Staffing and vacancy management would save $3 million by leaving open positions unfilled and managing attrition without layoffs.
Asset management initiatives would generate $500,000 in new revenue through a projected 5% increase in facility rentals and civic center fees, according to the proposal.
A new state block grant for student support and professional development would provide $1.3 million in additional revenue.
The plan also accounts for $3.5 million in economic uncertainties, including estimated losses from declining unduplicated pupil counts and grant expirations, reducing the gross savings to the net $30.5 million total.
Special Education and Transportation
The plan on Thursday’s agenda does not propose reductions to special education or transportation spending. Instead, the district aims to maintain current contribution levels to offset typical annual cost increases of approximately $5 million for special education and $3 million for transportation.
Special education services cost the district more than $50 million annually, with state and federal funding covering approximately $40 million and requiring a general fund subsidy of more than $10 million, according to the presentation.
Financial Projections
The district’s financial outlook shows projected deficits over the next three fiscal years, according to the presentation.
For 2024-25, the current fiscal year, the district projects total revenue of $353.4 million and expenditures of $315 million, showing a surplus of $38.4 million. However, the revenue figure includes approximately $135 million in one-time Eaton Fire disaster recovery funds.
Excluding those fire-related funds, the district’s operating revenue is $218.4 million against operating expenditures of $247.7 million, resulting in an operating deficit of $29.3 million for the current year.
The district projects a deficit of $7.8 million in 2025-26 and $37 million in 2026-27, for a three-year cumulative deficit of $74.1 million. The $30.5 million in reductions targets the 2026-27 budget.
Enrollment and Revenue Decline
The district’s unduplicated pupil percentage, which determines supplemental state funding for low-income students, English learners and foster youth, dropped from 74.7% in 2023-24 to 70.7% in 2024-25, a 4 percentage point decrease. The presentation does not explain the cause of the decline.
District officials have attributed the financial challenges to multiple factors: declining enrollment that reduces state funding, the expiration of one-time federal COVID relief funds, rising costs in special education and transportation, and the drop in unduplicated pupil percentage.
School-Based Cuts
The Superintendent’s Budget Advisory Committee’s most acceptable recommendations included eliminating career technical education positions, significantly reducing athletics budgets, cutting community assistant positions at schools with lower percentages of low-income students, and lengthening grounds maintenance cycles.
The committee unanimously rejected three packages as least acceptable: a 75% reduction in custodial services, elimination of all custodial services, and major cuts to safety and supervision positions.
The committee released its final rankings Oct. 30 after working since September to evaluate potential reductions. The presentation released Sunday does not specify which of the 38 packages the board will be asked to approve, but the $18.5 million target indicates cuts extending beyond the most acceptable packages.
County Oversight
The Los Angeles County Office of Education placed PUSD’s 2024-25 budget under conditional approval, requiring the district to demonstrate progress toward fiscal stability.
County officials told the PUSD board at an Oct. 9 meeting that the Dec. 15 first interim financial report would be “critical” to determining the district’s path forward.
Octavio Castelo, director of business advisory services at the county office, told the board in October that county officials want to see evidence the district is “doing business differently” and implementing structural changes, not just incremental cuts.
If the county office determines insufficient progress has been made, officials have authority to assign a fiscal expert to work with the district. Further intervention could include a fiscal advisor with authority to override board decisions, or in severe cases, a state-appointed trustee who would replace the superintendent and assume all board powers.
Community Input
The district held a virtual town hall Nov. 6 and an in-person town hall Nov. 10 at Pasadena High School to present the fiscal situation to the community and answer questions.
Superintendent Dr. Elizabeth Blanco told community members at the virtual town hall that the district has been working to “shield students in classrooms for as long as possible” by first reducing central office costs, but that school-based reductions are now necessary due to the scale of the financial challenge.
Board President Jennifer Hall-Lee said at the virtual town hall that the $30 million to $35 million target represents “real and urgent” reductions that must be made to maintain local control.
Timeline and Implementation
The board will review the fiscal stabilization plan at a study session Thursday at 5 p.m. at district headquarters, 351 S. Hudson Ave. Board members will discuss the proposals and provide direction to staff but will not vote.
The board is scheduled to vote Nov. 20 at 6 p.m. on which reductions to implement. Any approved layoffs or position eliminations would take effect in the 2026-27 fiscal year, with reduction in force notices required to be issued by March 15, 2026, under state law.
The district must submit its first interim financial report to the county office by Dec. 15. That report will include updated revenue and expenditure projections, evidence of reductions implemented or approved, and the board’s certification of the district’s financial condition.
The board must certify the district’s financial status as positive, qualified or negative. A positive certification means the district can meet its financial obligations for the current and two subsequent fiscal years. A qualified certification means the district may not be able to meet its obligations. A negative certification means the district cannot meet its obligations.
What’s Next
Thursday’s study session and the Nov. 20 board meeting are open to the public and will be livestreamed on the district’s website at pusd.us. Community members can submit questions and comments through the district’s website.
The Dec. 15 first interim report will be the county office’s primary basis for determining whether the district has made sufficient progress toward fiscal solvency and whether state intervention is necessary.
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