Report on Reserves Spurs Review of Community College District

The Los Angeles Community College District has severely depleted its financial reserves after a five-year budget slide, triggering a state review to assess what can be done to strengthen the district’s coffers.

A budget report released to the district’s Board of Trustees estimates that the Los Angeles district, the nation’s largest, will end the year with $5.6 million, less than 2% of its $282 million budget. Only two other college districts in California--Compton and Victor Valley in San Bernardino County--have such low balances.

“Definitely anything of this nature is an alarm indicator that something needs to be done,” said Vishwas More, president of the California Community College system’s Board of Governors.

Officials also predicted that the district may, for the first time, violate a state law that requires at least half of all expenditures for classroom instruction. If this projection holds true, Los Angeles officials will either have to seek a state waiver to the rule or make up the monetary difference in the future.

The report blamed the poor financial picture on plummeting enrollments that have reduced state funding, an unexpected drop in tuition collected from foreign students, a costly faculty early retirement plan and a $1-million payment on the district’s new downtown headquarters.