Despite pandemic, LBUSD budget is looking brighter after state and federal aid

The Great Recession of 2008 left lasting scars on the Long Beach Unified School District. After teacher layoffs, school closures, and other cuts, then-Superintendent Chris Steinhauser vowed to do whatever was necessary to avoid ever taking those steps again.

But in recent months, the threat of a pandemic-caused recession brought back fears that such drastic cuts would once again be needed. Now, however, the once-bleak LBUSD budget outlook has gotten much brighter because of new aid from the state and federal government, as well as the district’s strong financial reserves.

During the summer, the LBUSD Board of Education approved a $71 million cut for the 2020-21 school year, a 10% reduction that was largely offset by drawing from the more than $200 million the district had in reserves. Still, there was significant concern about the district’s financial prospects going forward and the district has closed a small high school and trimmed back grade offerings at two other schools, in part due to budget concerns.

But other more drastic steps, like layoffs, appear to be off the table for now.

According to a presentation by LBUSD Chief Business and Financial Officer Yumi Takahashi at last week’s Board of Education meeting, the district’s financial picture is brightening.

“Our revenue, projected, is better than in our first presentation,” she said.

Two rounds of federal aid as part of COVID-19 relief have helped, as has the ever-shifting state budget, which is revised multiple times throughout the year. In the most recent revision, more money was allocated for public education. The state budget will be revised one more time, in May, before it’s finalized in June.

Gov. Gavin Newsom’s recent announcement of financial incentives for districts returning to in-person learning also lined up nicely with the district’s existing plan, and the LBUSD will apply for a $23.5 million grant from the state to support in-person instruction and up to $55 million for extended learning and funding to address social-emotional needs of students.

The district’s budget projections show next year’s budget growing to $761.4 million, an increase of $47.4 million from this year. The district is still projecting deficit spending once the aid money is used, and the projection shows them using $40.1 million of their reserves in 2022-23, and $55.9 million in 2023-24. Even so, that would leave the district with $215.6 million in reserves at the end of the 2023-24 school year, a projection that certainly shows the district weathering the storm of COVID-19’s financial effects.

There is further uncertainty, however, aside from waiting for the May revision to the state budget: The district and its labor unions will also await enrollment data in the fall. Enrollment has been on a slow but steady decline for the last several years, which results in less funding from the state. The COVID-19 pandemic could end up accelerating that enrollment decline—or mitigating it.

“It’s important to note that we don’t really know where we’re going to end up next year in terms of enrollment,” said LBUSD board member Juan Benitez before the board voted unanimously to accept the financial report.

Teachers Association of Long Beach Executive Director Chris Callopy said in an interview earlier this year that he was glad to see that layoffs weren’t going to be on the table the way many had feared over the summer, but that he wasn’t ready to relax yet.

“The (state) revenue piece isn’t as bad as we feared, but there’s still a real concern about declining enrollment or families relocating,” he said. “We could still have a drop in enrollment. It’s a super mixed bag.”

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