As enrollment declines, LBUSD resolves to set aside money to avoid layoffs
At its final meeting of the 2021-22 school year last week, the Long Beach Unified School District Board of Education passed its budget for the upcoming year and had an in-depth conversation about the ongoing financial challenges presented by steadily declining enrollment. The board unanimously passed a series of budget items and resolved to set aside $400 million of its “rainy day fund” to help prevent future layoffs.
The meeting included lengthy presentations on the district’s budget and Local Control and Accountability Plan LCAP), both of which passed 5-0. The district’s budget for 2022-23 lists expenditures of $1.17 billion; a seven-page summary of the presentation can be viewed here and the entire budget can be found here.
Yumi Takahashi, the district’s chief business and financial officer, presented a picture of the district’s finances that was not as bleak as many feared amid the pandemic, but she laid out serious challenges for the future. The district remains in steady declining enrollment, with a longtime drop of 2% annually reaching 3% each of the last two years. Each percentage represents a loss of $7-8 million in funding from the state, according to Takahashi. The district had an enrollment of 96,000 students in 2003-04 which has declined to 67,000 students this year.
The other ongoing challenge is attendance; the LBUSD for years had a strong attendance rate of 95% to 96%. That dropped to 90% when schools reopened after COVID-19 closures.
Still, Takahashi said those long-term challenges were mitigated by “higher-than-expected state revenue, with one-time revenues” for the upcoming school year.
While the long-term circumstances will be challenging for the city’s largest employer, the LBUSD does have a large weapon in its arsenal: the large “unrestricted ending balance” it has been building over the last decade. Essentially a rainy day fund, the district began aggressively saving money following the layoffs of the Great Recession, with then-superintendent Chris Steinhauser saying it was one of his top priorities to never again have to lay off teachers.
That rainy day fund is now sitting at $362 million, a jump of $43 million from the end of the 2020-21 school year. Takahashi’s presentation put that number at $476 million at the end of 22-23, and at $478.9 million at the end of 23-24, at which point the district expects to be withdrawing money from the fund going forward if enrollment numbers don’t reverse.
Takahashi asked the board to approve a resolution dedicating $400 million of that fund to “continuity of staffing,” in effect, pledging the bulk of the district’s savings to help keep the district from laying off employees as enrollment declines.
“On paper, it looks like we have more money, but enrollment is decreasing,” said Board President Juan Benitez. “What we’re being asked to do is commit a big percentage of what’s in the ending balance right now so that we don’t have to lay off staff.”
The Board passed the resolution unanimously.
“We know that there are some cliffs we could fall off, but it doesn’t look like we are because we’re being cautious,” said Board Member Doug Otto.
The district has been allowed to grow its rainy day fund to such a large number because of the passage in 2017 of State Senate Bill 751, a California School Board Association-sponsored bill that allowed districts to do exactly what the LBUSD has done, save a big chunk of its annual budget to prevent against future financial challenges.
Funding from the state is given to school districts annually for each year’s expenses and is typically intended to be spent on that school year. But during financial hardships for the state, such as the Great Recession, a reduction in state funding can lead to devastating consequences at the local level, as happened in Long Beach and many other cities that experienced widespread layoffs.
Rainy day funds are districts’ way of fending off future breaches of that covenant between the state and its schools. Labor unions and parent groups have frequently cited the amount of money the district has in its coffers as a resource they feel should be deployed more in the short-term to benefit students, teachers and other workers. It was a main point of contention as the Teachers Association of Long Beach and the California Schools Employees Association’s Long Beach chapter each pushed for higher pay during this school year.
The district’s LCAP also passed by unanimous vote, with board members praising the Long Beach community for record-setting turnout in providing input through online surveys and in-person forums as far as prioritizing how the district spent its money.
The district’s recent LCAP initiatives include wellness centers at all 11 high schools, additional counselors and social workers, and literacy coaches. The LCAP can be read in its entirety here.
In an expected move, the Board passed a universal pre-kindergarten plan unanimously, which is the next step in a major change for California public education, which will soon include universal, full-day pre-K and kindergarten plans.
The Board also unanimously passed the ELO-P, its Expanded Learning Opportunities Program, which will provide additional funding of $17 million for expanded school programs before school, after school, and in the summer. The ELO-P is part of how the district has spent its COVID-19 funding, expanding the scope of the school day at low or no cost for families who’ve needed additional flexibility.
“The ELO plan and the after-school programming is something we know parents have asked for and needed for probably decades in this district,” said Board Member Megan Kerr. “I’m grateful that the funding is there from the state and the allocation was made to expand really necessary programs.”
Although Graduation Week took place the week before the Board meeting, the Board made it official by accepting the recommendation of 5,623 students for graduation from its high schools (including the three largest, with 958 seniors graduating from Long Beach Poly/PAAL, 806 from Wilson and 804 from Millikan).
The Board approved the hiring of Wayne Strumpfer as its new general counsel, a position that’s been created to help oversee legal issues for the district. Strumpfer was previously general counsel for the Imperial Irrigation District.
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