A Review of Budget and Financial Results for Los Angeles County’s School Districts

Preparing school budgets is a monumental task.

Julie Hamill, former trustee on the Palos Verdes Peninsula Unified School District Board, recently recommended a great book on the subject. I’m sure most school trustees in California have heard of it. “Smarter Budgets, Smarter Schools” (2022) is by Nathan Levenson, and it was a great read. Levenson is very candid about the realities that school districts face and is loaded with suggestions on how to not only squeeze more out of the budget, but to improve educational scores as well.

Budgets reflect priorities. And audited financial statements reflect results. As we continue the journey over the past few years of the school districts in Los Angeles County, let’s review their financial activities.

For the fiscal year that ended June 30, 2022, which covered the tail end of coronavirus lockdowns, Los Angeles County’s school districts calmed down a bit.

School districts are ranked by dividing the audited unrestricted net position by the population the district serves, providing a per capita. This allows for comparing on a fairly equitable basis and serves as a temperature gauge. The higher your district is in the rankings, the better.

Almost every district should have moved up one position, thanks to the transfer of Lowell Joint to Orange County’s sphere of influence. As can be seen from the graph below, 86 percent of the districts moved less than seven places. Let’s check out the 10 that had significant movement and why.

Azusa Unified had revenues in excess of expenditures of $25.2 million. It also saw its net investment in capital assets, already a negative $28.7 million, move further in the wrong direction by $65.7 million. This explains why the district’s unrestricted net position improved by $91.8 million. The annual audited financial statements and the related notes are silent on the reduction, and the only reasonable explanation is that the significant amount of debt in excess of the adjusted cost basis of the district’s capital assets was not reflected properly in the prior year. This unique and rare situation explains its move up the rankings by 43 places.

Temple City Unified had revenues in excess of expenditures of $13 million. It also transferred $24.3 million from restricted assets. Combined, it explains the $37.5 million improvement in its unrestricted net position and its move up 31 positions.

San Marino Unified reduced its unrestricted net deficit by one-fourth, $10.4 million. Having revenues in excess of expenditures of $14.6 million did the trick, with a transfer of $4.3 million into restricted assets. This moved it up 11 places.

Compton Unified had revenues in excess of expenditures of $98.7 million, transferred $7.7 million into restricted assets, and increased its net investment in capital assets by $10.3 million. Combined, it reduced its unrestricted net deficit by $80.6 million and moved up 10 places.

Redondo Beach Unified had revenues in excess of expenditures of $21.6 million, saw its net investment in capital assets decline by $4.6 million, due to depreciation, and transferred $3.4 million into restricted assets. Combined, the unrestricted net deficit was reduced by $22.7 million, moving the district up nine places, thus recouping half of its 18 place drop in the previous year.

San Gabriel Unified saw its unrestricted net deficit reduced by $4.4 million, but dropped seven places as other districts had lower per capitas in the bottom half of the rankings and did a little better. The same was true for Saugus Unified and Lancaster Elementary, both dropping eight places.

South Pasadena Unified had revenues in excess of expenditures of $4.8 million, transferred $11.3 million from restricted assets, and increased its net investment in capital assets by $22.6 million. Combined, the unrestricted net deficit increased by $6.5 million and the district dropped 10 positions. This seems to balance out its jump up of 13 places in the prior year.

Glendale Unified had expenditures in excess of revenues of $4.5 million and transferred $7.5 into restricted assets, explaining the bulk of the $14.8 million increase in its unrestricted net deficit and dropping it 11 positions.

Overall, it was a quiet year, with the 79 districts reducing their cumulative unrestricted net position by 8.2 percent. The goal is to reduce these deficits on a consistent basis with every succeeding year. Now you have a clearer perspective of where your district is and where it is heading. Please encourage your elected school board trustees to focus on the results.

John Moorlach is the director of the CPC’s Center for Public Accountability. He has served as a California State Senator and Orange County Supervisor and Treasurer-Tax Collector.

This article originally appeared in The Epoch Times.