Within three years, the Glendale Unified School District may find itself in a serious financial situation.
District staff filed a first interim budget this school year and certified it as “qualified.” According to its own projections, that means the district “may not be able to meet its financial obligations for the current and subsequent two fiscal years.”
The Glendale Unified school board approved the budget on Dec. 11 and a solvency plan, which calls for $5 million in cuts for the 2019-20 school year.
Those reductions are expected to be $1 million in services and supplies and $4 million in salaries and benefits. Layoffs are not expected, school officials said.
“Every major budget period has a multiyear projection, so you’re doing it for the current year and the future two years,” said Stephen Dickinson, the district’s chief business and financial officer.
“So, the furthest year out, call it the third year, [we] may not be able to meet the [state-required] reserve of 3% if our enrollment were to continue to decline, and if we are not able to meet our solvency targets,” he added.
The 2018-19 budget shows the district is deficit spending for a second straight year as total revenues are projected at roughly $293.5 million and total expenditures are listed at about $299.6 million.
While the district received an increase of nearly $16 million in Local Control Funding Formula revenue this year for a total of approximately $235.3 million, employee costs were higher at roughly $252 million, or 84.1% of total expenditures.
That means the district’s undesignated reserve will continue to shrink until it’s projected to be depleted in four years.
The reserve is estimated to be $18.79 million for the 2018-19 school year and will decline to about $14.9 million in 2019-20, and that’s after approximately $5 million in cuts. By the 2020-21 school year, that figure is expected to be about $5.90 million before turning into a roughly $7 million deficit for 2021-22.
State one-time funds are missing from the budget.
“Historically, we do get a wide variety of one-time funds from year to year,” Dickinson said. “Sometimes it’s been as high as $10 million or so and sometimes it’s been as low as $4.3 million.”
Also, incoming Gov. Gavin Newsom may allocate more money in his upcoming budget expected by mid-January, school officials said.
Perhaps equally alarming is a General Fund balance also heading south. For 2018-19, the balance is estimated at $39.42 million and will dip to $35.25 million in 2019-20 and $30.52 million the following year.
“Looking back over 10 years, 2019-20 will be the lowest [Glendale Unified’s] reserves have been in 10 years,” said Supt. Winfred B. Roberson Jr.
While school budgeting is a continuous process, there are deadlines throughout the year, and budgets are required to be filed with the Los Angeles County Office of Education.
The first deadline this school year took place Dec. 15, with budgets being classified as “positive,” “qualified” or “negative.” The next interim budget is due March 15.
A positive budget states a district can “definitely meet” financial obligations, while a negative rating means it cannot meet that responsibility. Glendale’s “qualified” status means meeting those obligations is questionable.
The position has happened so rarely it’s unknown the last time the district turned in a qualified budget.
School Service of California Inc., a business, financial and management advocacy educational resource group, submitted a budget review Dec. 14, which the board examined Tuesday evening.
The group pointed out that one issue hampering the district has been a steady student enrollment decline.
Glendale Unified hit its zenith in 2000-01 as the district’s total was 30,374 students.
Since then, School Service of California noted, “the district’s enrollment has declined by almost 15% by 2017-18, to 26,071.”
This year, the district projected its enrollment dropped by 281 students.
Each student loss has cost the district $9,224.80 annually, according to figures from School Service of California.