College District Deficit Worse Than Anticipated

Sinking deeper into red ink, the Los Angeles Community College District now projects its deficit at more than $13 million--a tenfold increase over the figure that initially alarmed state oversight officials.

The district’s Board of Trustees meets tonight to review the nagging financial troubles and begin considering ways to solve the nine-campus district’s fiscal crisis.

A team of state officials plans to fly in next week to scrutinize the district’s recent round of raises and other financial policies that may have led to the rapidly expanding deficit.

“We have to come up with something in the next four to six months to turn this around,” said Patrick Lenz, vice chancellor for fiscal policy for California’s 106 community colleges.

“We don’t find anything that shows the decisions made at the local level are not [contributing to] a continuing decline.”

In a strongly worded letter last month, the state chancellor’s office warned the district--run by an independently elected seven-member board--that it must learn to live within its means.

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The district’s history of financial troubles, and its suddenly surging deficit, are likely to place it at the top of the chancellor’s “watch list” of fiscally troubled institutions, Lenz said.

“It’s not just the dollar figure, it’s the pattern. I can’t say the deficit is the highest ever; it’s high enough to be very alarming.”

But Beth Garfield, a Los Angeles district trustee, criticized the state chancellor’s office of worsening its plight by imposing a $3.3 million fine.

The chancellor’s office has fined the district for slipping below the state goal of maintaining 75% of its instructors as full-time faculty, Garfield said.

As of this fall, she said, 71% of the district’s instructors were full time, with part-timers picking up the rest of the teaching load.

“It’s very ironic,” she said. “The chancellor’s office is not supposed to be exacerbating the problem.”

Still, she said she is troubled that the deficit continues to climb.

“I was told it was a $1.3-million deficit,” she said. “Clearly, if it has risen to $13 million, our problems are magnified.”

James Heinselman, the Los Angeles district’s interim chancellor, said he and his staff are now scrambling to staunch the hemorrhage. His cabinet will meet next week with the college presidents, faculty leaders and the heads of the employee unions to come up with a list of options.

All of them are likely to be painful, he said.

“Everyone will suffer from this,” said Heinselman, who took over as top administrator after the abrupt departure of Chancellor Bill Segura last month.

Salaries and benefits for the 6,000 employees make up 85% of the district’s $306-million operating budget--and thus make them likely targets for cutbacks.

The state chancellor’s office has been particularly critical of the multiyear pay raises awarded last year--21.5% for faculty and 12% for administrators clerical and other support staff over three years.

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If the 100,000-student district, the nation’s largest, fails to come up with a workable plan, the state chancellor’s office can take the rare step of appointing a state monitor to audit its books and recommend a path to solvency.

So far, eight of the nine campuses were forced to make deep cuts in classes in response to the district’s deficit.

Lenz, the state vice chancellor for fiscal policy, said his office also can provide bailout funds in an emergency.

“I almost certainly wouldn’t recommend any kind of bailout, if two or three years from now they are back in the same situation,” he said. State officials, he said, want to see the Los Angeles district exercise financial discipline.

In addition to the heat from state overseers, the district accreditation is being reviewed by the Western Assn. of Schools and Colleges.

David B. Wolf, executive director of the association’s Accrediting Commission for Community and Junior Colleges, said the agency might be forced to place one of more of the district’s colleges on warning or probationary status if a solution is not forthcoming.

Loss of accreditation could jeopardize students’ ability to transfer to four-year colleges as well as disqualify the district for federal funding.