April 20, 2020

Dear South Pasadena Unified Community,

Last week, SPUSD School Board President Dr. Michele Kipke sent a letter sharing the School Board’s concern about the anticipated economic impact due to COVID-19. You may read the letter here. As we continue to manage the crisis and how it influences our day-to-day school environment, the effects are quickly becoming a reality. I encourage you to take the time to read the detailed budget information below and the accompanying summary document linked here.

 

Introduction
The local, state, national, and global economy is facing a considerable downturn due to COVID-19. The extent of the downturn is uncertain. Regardless, state leaders have informed schools to prepare for a significant and prolonged recession. This situation puts our schools at great risk. Our funding is determined by the Governor and the state legislature based on tax collections. The SPUSD School Board and I have been informed by state and county officials to anticipate and prepare for substantial reductions to school funding. Some leaders have shared that the budget deficits will far exceed those in the last Great Recession.

SPUSD Funding
SPUSD is funded in the lowest 10% of unified districts within California based on the state’s Local Control Funding Formula for public education. This year’s per student funding level finally reached a funding level similar to what it was in 2008, just prior to the Great Recession. As a result, the state revenue we receive has not been adequate to cover regular increases over the years. Additionally, in January 2020 the Governor reduced projected funding for public education which resulted in an annual loss of approximately $500,000 in revenue for SPUSD.

 

SPUSD has been operating in a silent recession since 2013 and has been reducing expenses that have had minimal effects on employees and programs while adding revenue sources along the way to help meet the budget challenges. For example, significant reductions in utility costs have been achieved, program grants awarded, local Measure S Parcel Tax & Measure SP Bond passed, and district property assets have been maximized. Much of this work has been accomplished behind-the-scenes to keep our district solvent while offering expanded and new academic, social-emotional, and extracurricular programs.

 

Since the state and county mandated school closures in March, SPUSD has been spending District reserve funds to prevent lay-offs this school year. However, expending reserves is not a sustainable option in future years.

 

Ten percent of our total operating budget comes from local funding sources and our volunteer organizations – SPEF, PTAs, and booster clubs. These organizations are concerned about missed fundraising opportunities due to the COVID-19 crisis.

 

For more in depth information, please refer to the following budget presentation (item 8.03 Second Interim) provided to the Board of Education prior to COVID-19 -- March 10, 2020 School Board Budget Presentation.

Changes to the State’s Budget Adoption Process
As a result of the economic downturn, the State budget development process will be very different this year. Lawmakers have shared that they will make funding reductions to school districts in May and June 2020 for this current fiscal year (2019-2020) and also for the next fiscal year. State leaders are also planning to make additional funding reductions to the education budget in August 2020. The timeline for this process has never been used before, and it puts school districts in a precarious position for making the necessary and required spending reductions with little to no time to process. The legislature must also make changes to the statutory requirements and regulations for districts to respond appropriately and responsibly. The State is providing no advance guidance. Therefore, school districts will need to act immediately and decisively in order to remain financially solvent.

 

SPUSD Actions
SPUSD Board of Education members and I are engaged in discussions and correspondence with Senator Portantino and his staff, public education advocacy organizations and the Governor’s office. We are also in daily communication with superintendents and school board members throughout Los Angeles County for advocacy purposes. This week, I am meeting with the Senate Budget Committee consultant from the State to discuss our challenges related to COVID-19 and to implore more autonomy and flexibility in how school districts make budgetary decisions. In spite of our unending commitment to our students and fiscal responsibility, SPUSD will be challenged to weather this crisis without courageous and immediate action by our State elected officials.

 

Looking Ahead
As this situation unfolds we must be mindful that, from a metaphorical standpoint, a multi-year budget problem might be thought of as a large hole in the ground that we have to fill. Surrounding the large hole with caution tape will not suffice. We can fill the hole with boulders, rocks, pebbles, and sand. The challenge we face involves multi-millions of dollars. In terms of dollar amounts, it will be important that we not confuse what are boulders (large budget impact) versus what is sand (small budget impact).

Our school community will continue to do all they can to provide the needed support to bridge the funding gap in the coming months and years. The SPUSD Board of Education will continue to be responsible financial stewards for our outstanding school district.

We believe that together, with our collective resolve and immediate action by our State’s elected officials to do what is right for our students, we will get through these difficult times.

 

Regards,

 

Geoff Yantz, Ed.D.
Superintendent