LAUSD takes notice of declining enrollment

The red line indicates LAUSD's declining enrollment.

The Los Alamitos Unified School District is beginning to take notice of a steady loss in students that transcends the pandemic, which now threatens deep cuts in state funding.
“We are experiencing declining enrollment,” said Dr. Nancy Nien, Assistant Superintendent for Business Services, during the board ‘s first interim budget review last week.

“Every single public school district around us is having the same problem,” said Nien. “My colleagues tell me, ‘we don’t know where these kids are going?’”

“They are going somewhere,” she said, noting that every public school district is experiencing the same problem.

While decreases might be understandable during a pandemic, Nien said the trend goes back several years. For instance, while the district’s enrollment was nearly 10,000 in 2015, this year’s enrollment was 9305 (see illustration).

The state’s education formula funds public school districts on a per student basis, so every lost student means an incremental decrease in overall funding.

Of course, LAUSD is a complex organization with multiple budgets, so the discussion centered around the boards unrestricted general fund budget.

Overall, for the current year, the adjusted budget for the year is approximately $112 million in revenue, with expenses over $116 million, said Elvia Galicia, Director of Fiscal Services. Adding in other factors, she said the budget deficit is projected to be slightly over $8 million.

Based on the state’s student funding formula, the projected drop in enrollment could lead to a $4.2 million budget impact in the 22-23 budget year, she said.

As a result, the LAUSD financial team is projecting significant deficits in the 22-23 budget year in which the district’s budget and fund balance could dip further into the red.

While the district’s current operating fund balance is over $8 million, she suggested the declining revenues could absorb not only the fund balance, but also the district’s $7.2 million “Reserve fund for economic uncertainties.”

According to the information presented, if the projected drop occurs, the fund would still be short nearly $150,000 (see illustration).

New board member Scott Fayette asked about the board’s Fund 17, listed on the list of funds, which Galicia termed as “an unrestricted special reserve.”

“Like a super rainy-day fund,” said Fayette?

She said the more than $5 million in that fund could be used for any related purpose.

“Unfortunately, if the enrollment does decline the way we anticipate and revenue continues to be at zero percent, we will have to dip into Fund 17, said Galicia.

District Supt. Andrew Pulver stepped in to explain the history of Fund 17, which he said began many boards ago “as a secondary reserve” to cover situations like a sudden drop in students.

The superintendent acknowledged that if the projected fund loss (because of the declining enrollment) is realized, it would amount to “a big hit to a budget at one time.”

Pulver, nonetheless, said school officials were expecting student enrollment to flatten, but even if the projected decline materializes, he suggested Fund 17 will enable the board to “respond thoughtfully,”

Pulver also warned that coming changes to certain pension systems would put additional pressure on the district budget in the years ahead. He noted, however, that the state funding formula has a two-year lag and suggested student enrollment could recover by then.

Moreover, he said staff was already beginning to put together alternative scenarios to deal with the changing economics.

“We are talking about some of the things we think we may need to do should we think that that will be a reality in three years out,” the superintendent said.

However, he added, “we often see too that the projections two years old are never really come to full fruition, but we also can’t bury our head in the sand.”
Galicia clarified that the only deficit fund was the board’s unrestricted general fund.