GUEST OPINION
Pasadena Unified District (Photo – Colorado Boulevard)
More layoffs in Pasadena Unified have sparked criticism of “the district” by employee groups, despite the fact that employees constitute the large majority of the district and its expenditures. Additionally, many employees received 28% raises over the past three years, contributing to a fiscal crisis and the resulting layoffs.
By Walt Beckett
Employee groups have suggested that the district reduce contracted services rather than employees. In response, the district’s superintendent issued a letter explaining that these contracted services are state and federal legal mandates, which the district is required to pay and that are not funded sufficiently by the state or federal government.
Special Education Costs
Special education is a well-known example of one of these unfunded mandates, and it represents the largest of these costs for the district. The federal government has long been aware that the cost of this mandate is more than twice the funding provided for it.
This remains true today, with the district’s recently adopted second interim budget showing the unrestricted general fund having to provide $52.8 million to fund special education in PUSD. This is a huge increase since 2022-23 when that amount was only $35.8 million.
As employee salaries and benefits have gone up, overall revenue for special education has gone down. Additionally, contracted services for special education have increased by 28% (or $8.8 million) over the last two years, now totaling $40.8 million. The district has not questioned such a large increase, as it typically pays whatever is necessary to provide the mandated services.
The district is at the mercy of its contractors, who appear to have raised their prices significantly. While contractors could reduce their prices, this would require them to view themselves as part of the district and invest in addressing the fiscal crisis. According to the recent budget, the total expenditures for special education are $87.9 million, meaning that the general fund now covers 60% of the special education budget.
One Idea for More Revenue: Asset Management
Asset management has long been discussed as an area for revenue generation, and the district now has a dedicated manager for this task. The recently adopted budget shows that the revenue the district receives from leases and rentals of its property has remained the same for many years, about $5 million, so the district has not been doing whatever is necessary to increase that amount.
– Leasing the site of the district’s administrative offices
Several years ago, the board explored a strategy used by several districts, including Glendale USD, known as a property exchange. This proposal involved swapping the highly valuable district property at 351 S. Hudson Avenue for a similar-value income-generating property, such as an apartment building. The district would then benefit from the revenue stream of the new property, which could be used for general fund costs. However, this idea was not pursued. If instead of a property exchange, the district leased the site to a developer, that revenue could also be used for general fund costs. The district does have many former school sites that it could use for the relocation of the administrative offices, but in order to have enough space at one former school site for all of the offices to be together, the district may have to displace current tenants. This would be difficult and take leadership, but it seems like a reasonable thing to do in light of the fiscal crisis the district is in.
– Increasing Payments from Current Renters and Lessees
The district rents space to various entities, with the largest users being charter schools, community-based nonprofits, churches, private schools and the City of Pasadena. As noted by the superintendent, some charter schools have not been paying even the minimal amounts legally permitted. Some well-known community nonprofits with long-term leases pay nothing, and some who have permits for regular use pay only small amounts.
Some churches pay very little. Private schools pay larger, more market-based amounts. The City of Pasadena also pays below-market rates for the properties it uses, but offers some services to the district, such as hosting the annual Turkey Tussle game in the Rose Bowl, providing library-based services, public health services, and police services at schools. The district could enforce current agreements where user payments are in arrears, which seems like a reasonable thing to do considering the current fiscal crisis. The district could increase the amounts it charges to these various entities. For most entities, the latter would be politically difficult and take firm resolve, as many of these entities got these deals through arrangements that are subject to political pressure and in exchange for providing services to service students and families. Increasing the charges for private schools, however, would seem more politically feasible and reasonable, given the fiscal crisis.
The Power of Us
In keeping with the district’s current motto, “The Power of Us,” the following actions could be considered:
- Employee wage concessions.
During previous fiscal crises, such as the Great Recession, district employees agreed to pay reductions to help reduce costs. This would require real leadership from both employee group leaders and senior executive staff, but it would demonstrate employees taking ownership of the district rather than simply blaming “the district.” - Employee health benefit cost concessions.
The district currently absorbs more than 90%—in some cases, 100%—of healthcare premiums for its employees. Employees could agree to shoulder a larger cost of their healthcare costs. Again, this would require real leadership and a willingness to take ownership from both employee group leaders and senior executive staff. - Reducing expenditures for consultants and contractors.
At each regular board meeting, the board approves a detailed list of consultant and contractor expenditures, which add up to millions of dollars annually. Some of these expenditures are required to fulfill legal mandates, such as special education services, but many are not. These contracts often involve community-based providers offering services to students and families. The district could discontinue these services or ask the entities to reduce their prices, freeing up some restricted funding that could be used for unrestricted costs. The long practice of cost-shifting unrestricted expenditures to restricted expenditures occurs every summer during the close-out of the annual budget. Reduction of these contracts would increase the amount of restricted funding available for such cost-shifting, which in turn would help the unrestricted fund deficit.
Leadership and firm resolve would be necessary to meet the blowback of criticism from these often politically-powerful entities. There are over 1000 nonprofit organizations in Pasadena, and many of them exert a large influence on the City Council and the district because the City and the district are often significant sources of money for some of these entities’ operations. Again, given the fiscal crisis facing the district, this seems like a reasonable approach, and given that these entities are often referred to as the district’s partners, this would be an example of them pitching in and taking ownership as part of the district.
Walt Beckett is a resident of the San Gabriel Valley.
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