PUSD Certifies Positive Financial Status, But Acknowledges Fire Insurance Revenues Mask Shortfalls

The Pasadena Unified School District Board of Education certified a positive financial condition for the current and next two fiscal years on Thursday, though officials emphasized this status largely stems from temporary fire-related insurance revenues that are currently exceeding expenditures.

The certification, approved during a special meeting, confirms the District is projected to meet its financial obligations through the 2026-2027 fiscal year. However, District officials warned that significant budget challenges remain unresolved.

“The proposed reductions approved on February 27th were not sufficient to close the shortfall,” said Chief Business Officer Saman Bravo-Karimi during his presentation to the Board. “Additional reductions will be necessary in the future.”

The District is currently projecting operating deficits of nearly $40 million for the current year (2024-2025) and $29.5 million for 2025-2026, with a small surplus in 2026-2027 that depends on fire-related insurance funds, according to Bravo-Karimi.

Several factors are driving the District’s financial difficulties, including continued declining enrollment, the expiration of one-time COVID relief funds, and a significant impact from a four percentage point lower unduplicated pupil percentage. This change has reduced Local Control Funding Formula revenue, particularly supplemental and concentration grant funds.

“That’s a loss of $1.5 million this year that if it’s compounded over three years will be $9 million,” said Superintendent Dr. Elizabeth Blanco, referring to the impact of the lower unduplicated pupil percentage.

While the District has been granted a state Average Daily Attendance hold harmless provision due to the Eaton fire, officials noted it’s limited to the 2025-2026 fiscal year and insufficient to offset the negative impact of the lower unduplicated pupil percentage.

The certification came amid emotional public comments from teachers who recently received layoff notices. Jonathan Gardner, president of United Teachers of Pasadena, told the Board that 125 teachers have been told they won’t have jobs next year.

“The vast majority of the cuts you have enacted to balance your budget have been in our schools,” Gardner said. “The wildfire you are unleashing on our schools is unconscionable.”

Sergio Lopez, a math teacher at John Muir High School, gave emotional testimony about losing his home in the Eaton Fire and then receiving a layoff notice.

“I am a victim of the Eaton Fire and I got laid off this year,” Lopez said. “All that I had left that I owned was in my classroom. And now that’s getting taken away from me.”

According to public comments, approximately 90 PUSD teachers lost their homes in the Eaton Fire.

At the beginning of the meeting, the Board announced it had voted 7-0 in closed session to initiate litigation against Southern California Edison to recover damages resulting from the fire.

Several Board Members expressed concern that the use of fire insurance revenues was masking the District’s true financial position.

Board Member Kim Kenny proposed amending the certification to “qualified” status, arguing it would better reflect the District’s financial challenges.

“We have to make cuts whether we file positive or qualified,” Kenny said during a lengthy discussion. “I think it’s a more honest appraisal of where we are.”

The amendment was voted down, with some Board Members expressing concern about overriding staff recommendations. Board Members noted that according to current projections, the District will need to cut approximately $12 million in each of the next two years.

Questions were also raised about transparency in tracking fire insurance funds since they’re in the general fund rather than a separate account, though officials assured the Board that all expenditures are being coded to allow for proper tracking.

Superintendent Blanco noted that additional revenues from a parcel tax will kick in next year, which could help offset some budget pressures. She added that the District will reconvene the Superintendent’s Budget Advisory Committee in August to address future budget challenges.

“We will have to have a process again that involves multiple voices from our educational partners to continue to reduce the budget,” Dr. Blanco said.