Schools Facing New Shortfall, Possibility of More Layoffs : Budgets: The district is expected to go $308,696 into the red by June. It has been warned of a state takeover if it cannot turn things around.


The Montebello Unified School District is in danger of falling into the red once more, raising the specter of further layoffs and budget cuts in one of the state’s most financially troubled school systems.

Unexpected expenses, slower-than-expected enrollment growth and declining lottery revenue have created a projected budget deficit of $308,696 for the school year ending in June. And the deficit will likely worsen before the next budget cuts are made, school officials said.

The prospect of a state takeover looms if the state’s 12th-largest school district cannot right itself, but school board President Eleanor Chow insisted that the board will restore the district’s financial health.

“We’re not going under,” she vowed at a recent board meeting. “We’re going to start making cuts. I cannot see the state coming and taking over this district.”


Board members have been cutting programs, services and pay since May, when Montebello landed near the top of the state controller’s list of school systems most likely to become insolvent. Only the proceeds of a bond sale allowed the district to meet its June payroll.

Controller Gray Davis threatened to take control of district finances if the school system went into the red. So far, the board has cut about $26.7 million from this year’s $101.5-million budget.

The district laid off about 145 employees, most of them teachers, over the summer. The remaining teachers, once the highest paid in the county, agreed to a 2.3% pay cut and larger classes. Elementary-school librarians were reassigned to classroom teaching, and 20% of the district’s nurses were laid off. Earlier this month, the district put more than 20 non-teaching employees out of work and reduced the hours of dozens of others.

And still it has not been enough.


Acting Business Manager Glenn Sheppard and his staff are working over the holidays to prepare a list of more than $1 million of potential cuts for the board to consider in January. The board’s options are likely to include laying off more employees, using administrators rather than substitute teachers to fill in for absent teachers, and eliminating all or most spring shipments of supplies.

“There isn’t much left,” Sheppard said. “It’s a lot of revisiting of options we (previously) gave to the board and they did not accept. When you’ve already cut so drastically, the next dollar of cuts hurts as much as the last five because there isn’t much left.

“It’s the meat-and-bone routine,” he added. “You’ve cut to the bone and you’ve still got to cut more.”

The main problem is lower-than-expected revenue from the state lottery. Montebello officials anticipated getting $111 per student from state gambling proceeds when they planned their budget over the summer. Even the most optimistic forecasts currently peg lottery income at $101 per student.


And the lottery-revenue estimates are getting gloomier. School districts received as much as $176 per student four years ago. Some experts say the proceeds could dip as low as $79 per student for this school year.

Other districts are also affected, but most have sufficient reserves to cover lottery declines. The state typically asks districts to maintain a 3% reserve. Montebello board members approved a reserve this year of 0.5% of the total budget in hopes of limiting budget cuts and layoffs.

Montebello Unified has other difficulties too.

* The district did not save as much as expected with layoffs, pay cuts and benefit reductions, officials said.


* Total district enrollment, about 33,000 students, was below projections, which resulted in lower state aid than expected. State funding is tied directly to district enrollment. Ironically, an enrollment bulge in the early primary grades could force the district to hire a handful of elementary schoolteachers despite the layoffs in other areas.

* County funds for joint educational programs with the district decreased because of state budget cuts to these programs.

District officials acknowledge that bad planning in past years has much to do with district woes. But they add that the current problems are more the product of having to manage a budget with little room to maneuver.

“In the past the budget bounced around much more than this, but we had reserves and ways of controlling it,” Sheppard said. “Now we’re down to nickels and dimes.”


At a meeting earlier this month, board members debated for half an hour before rejecting $4,000 for traditional, districtwide vocal and music concerts. In times past, board members would have approved that type of expenditure almost routinely, Sheppard said.

Some have observed that the cuts have affected morale and other aspects of an educational program that has been a source of pride.

Parent Annette Sanchez noted that her fifth-grader is in a class of 39 pupils. Her sixth-grader has 41 in his class. The larger classes have created discipline problems and made it harder to teach, she added.

“My oldest boy got three Fs, and his teacher can’t help him because there are too many kids in the class,” she said. “Everything that has to do with reading, he is failing.”


Supplies are also a problem, She said that her son had to share a math book until just before the holidays. “I think the kids are sensing the problems,” Sanchez said. “They’re constantly told they can’t have this, they can’t have that. Emotionally, it’s not good for them.”

Despite the train of difficulties, the district’s Sheppard remains cautiously optimistic about the long run.

“The district is now in the neighborhood of being solvent. . . . We will make it through the end of the school year financially,” he predicted.

Community correspondent Marilyn Heck contributed to this story.