L.A. Community Colleges Face Dire Budget Crunch

The Los Angeles Community College District’s precarious financial condition has prompted the state chancellor’s office to downgrade the district’s fiscal status and question its ability to function on its own.

In a strongly worded letter, the state office cited recent across-the-board pay raises, chronic management turnover and “overly optimistic” growth projections as causes for concern about the nine-campus district.

“Taken all together,” the letter stated, “these factors are leading us toward an increasing sense of urgency about the district facing the management problem of living within the funds available to it.”

The state’s letter and a similarly strong warning from the private group that accredits community colleges, both obtained by The Times this week, were written even before district officials disclosed that a projected $1.3-million budget shortfall could skyrocket to as much as $10 million.

No immediate course cutbacks or other effects on students are expected, as district administrators and the Board of Trustees have yet to decide on a plan of action.

But the impact may be keenly felt by June in the form of decreased summer school offerings, officials said. Already this academic year, eight of the district’s schools, including Pierce College in Woodland Hills, Mission College in Sylmar and Los Angeles City College, were forced to make deep class cuts in response to campus deficits.

Ultimately, financial mismanagement could cause accreditation problems for the 100,000-student Community College District, the nation’s largest. That, in turn, could jeopardize students’ abilities to transfer to four-year colleges--or even lead to a state takeover of the district.

Failure to improve “could lead to a probationary or more serious status for one or more of the district’s colleges,” the Western Assn. of Schools and Colleges wrote Jan. 13.

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But the Los Angeles district can avoid such accreditation sanctions by providing both groups with an approved plan for improvement. Such a course of action will be discussed at the Feb. 11 meeting of the district’s Board of Trustees, when the latest quarterly financial report will reveal the extent of the shortfall in the $306-million operating budget.

The district’s latest fiscal problems underscored its long-standing inability to manage its finances.

“This is inexorable,” said David B. Wolf, executive director of the Western Assn. of Schools and Colleges.

“There’s no way out” for the district, he said, other than confronting its fiscal problems.

Only if district officials do not devise and implement a plan would the state chancellor’s office send in a monitor to do it for them. If that failed, a complete state takeover would be possible--but only if approved by the state Legislature.

The Los Angeles district’s financial woes are so persistent that it has been on the state chancellor’s “watch list” since 1987. The current crisis was considered grave enough, however, to downgrade the district this month from the least serious category of red-flagged institutions, a ranking of 3, to a ranking of 2. The lowest ranking, indicating the most serious financial status, is 1.

District officials are aware of the financial instability. The chief financial officer, Bonnie James, said he privately gave a grim prognosis to the trustees this week, a warning reflected in the dour faces and agitated talk about money at Wednesday’s board meeting.

“We will have to hunker down like we’ve never done,” said interim Chancellor James Heinselman, in his first words to the board after being named to succeed Bill Segura. Segura left the district leaderless last month when he resigned to take a job in Texas after serving just 16 months of a four-year contact.

His departure followed months of contentious contract negotiations that left the district with significant multiyear pay raises for its nearly 6,000 employees--22.5% for faculty and 12.% for administrators and support staff. The raises were singled out for criticism in the state chancellor’s letter to the district, dated Jan. 16., informing it of its downgraded status.

The raises, the letter noted, exceeded the statewide cost-of-living adjustment.

Wolf, of the accreditation association, also cited the raises as a key component of the district’s financial problems. He predicted that the district will be hard-pressed to avoid a budget shortfall without seeking union concessions.

Because salaries and benefits account for about 85% of the district’s budget, “it’s hard to understand how they can address matters without going into serious discussions with their bargaining agents,” Wolf said.

Board members defended the raises, however, saying they were needed to stay competitive with neighboring districts that, even after the increases, offer higher salaries. “I don’t think it’s because of the raises,” said trustee Beth Garfield. “We have so many more full-time faculty than other districts. That’s why it costs more to run our district.”

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Another problem contributing to the projected shortfall, said district spokesman Blair Sillers, is the $6 million to $8 million in additional funding given this year to the district’s campuses in hopes of increasing enrollment--which in turn would generate more revenue.

That growth has not yet materialized, and the district cannot expect to get its money back by the end of the fiscal year, Sillers said.

Possible remedies could range from hiring and purchasing freezes to seeking some kind of temporary relief from the unions.

“We may not be able to offer much of a summer program,” Sillers said.

Trustee Garfield said she takes the deficit seriously, but is not worried that the district will be forced into receivership.

The problem, she said, is that the district has for years operated on an expensive crisis-to-crisis basis. It needs to step back and formulate a long-range plan, including reorganization, she said, to bring financial stability.

With the appointment of Heinselman as interim chancellor, she noted, just such an effort was launched by the board last week.