School District Anticipates ‘Painful’ Budget Revise

As school district officials prepared this week to dive into the May budget revise from the state that was unveiled Thursday, they steeled themselves for the difficult decisions that might be necessary to retain solvency.
Without significant federal and state aid, Michele Kipke, president of the South Pasadena Unified School District Board of Education, said the path forward will be “extremely painful.”
“We will have no choice but to make significant staff reductions,” she wrote in a statement following Tuesday’s board meeting. “We recognize that COVID-19 has plunged California into the worst budget deficit in the state’s history, but a 25% loss of revenue to public education is simply not sustainable. It is our sincere hope that the governor’s May budget revision and subsequent budget revisions offer creative solutions for how the state will respond to ease the expected, extreme loss of funding.”
Though the Los Angeles County Office of Education, or LACOE, weeks ago advised area school districts to plan for a zero-percent cost-of-living adjustment, or COLA, from the state, the state Department of Finance recently warned districts that the funding deficit could be three times greater than it was during the Great Recession. Under LACOE’s assumption, SPUSD would have to cut $3.5 million for the next three years to maintain a minimum reserve while making payroll obligations.
By contrast, should the state’s warning become reality, SPUSD will have to find a way to shave $10 million — a full quarter of the district’s state revenue — throughout the next two years. This all comes after the district has for years adjusted to a “silent recession,” as Superintendent Geoff Yantz described, and dealt with pension obligation increases, unfunded special education mandates and receiving minimal state funding.
“The greatest stressor of all has been that we are in the bottom 10% of all school districts in California on a per pupil funding basis,” Yantz said at Tuesday’s meeting. “The state has not given us or provided necessary resources to keep up with these types of costs.”
The school board signaled agreement with Yantz’ plan to make budget adjustments in a methodical step-by-step basis after the May revise was released on Thursday. The idea is that existing familiarity with the finer line items will make it easier to make further adjustments in August after the state receives income tax returns in July. (The tax return due date was extended to July 15 on account of the pandemic.)
“I think taking a measured approach that’s laid out sequentially — versus overreacting — but at the same time be cognizant that we need to prepare for cuts and potentially deep cuts is the only way we can approach it, because we are facing a difficult future,” board member Zahir Robb said Tuesday. “While no one likes the idea of putting these things in motion or looking at the impacts that it will have on personnel or students or the community at large, we have to look out for the fiscal solvency for the district.”
Added board member Jon Primuth: “Every time these things [updates] happen, we have to redo our budgets and we’re constantly making these slight adjustments, but that’s actually helpful, because what it’s really showed me is how on top of things our management team is. We actually have really good controls on our numbers.”
The vast majority of the district’s expenses comprise personnel salaries and benefits, which makes them likely to be where the most effective budget cuts are.
“We’re going to have feelings of sadness, frustration, anger,” Yantz said. “We’ll be anxious. We’ll even have moments of hope and pride. At the end of all of this, it’s imperative that we do look back and reflect back on ourselves and our governance team, with the understanding that we did our absolute best. We must remain resolute in the decisions that we make. Everyone must understand that we are confronted by the greatest challenge public education has experienced.”
Yantz dove into his somber message with a bit of wind in his sail Tuesday. In board member comments, Kipke touched on the board’s recent performance evaluation of the superintendent, which resulted in a unanimous vote of confidence for the district’s CEO.
“We all, collectively, couldn’t have been any more positive or enthusiastic about Dr. Yantz’s leadership throughout the year, but especially since March when this whole COVID madness crashed upon us,” Kipke said. “There’s just no question that the next year or the next few years are going to be the most difficult for this district that we’ve ever seen and I just can’t tell you how reassuring it is that we have Dr. Yantz and his cabinet at the helm, leading us through this difficult time.”
Yantz, humbled, tipped his cap to his cabinet members and the “absolute focus and engagement” he has from the school board.
“It’s certainly not possible without a fantastic team around you,” he said. “It’s that kind of teamwork and camaraderie and care that gives me hope and the energy to move forward for the community and our students.”