Patch Blog: Arcadia Unified School District's Budget Crisis Hits Close to Home

As parents of teenage triplets, my wife and I have a potential financial crisis brewing.  Two years from now, our three children will be graduating from and moving on to college.  And based on how well they’ve done so far, all three will likely gain admission to a top UC school and possibly some prestigious private universities. 

Now, the daunting prospect of suddenly paying three college tuition bills brings home the fact that our family’s future expenses will far exceed our future income.  We’re looking at least four years of tuition and housing, plus possibly graduate school, so this financial situation is a long term issue.  Our family’s crisis hasn’t hit yet, but is coming and we are planning for it.

Unfortunately, for the Arcadia Unified School District (AUSD), the time of its budget crisis is now.  Like many other school districts in California, AUSD has seen its funding from the state slashed as a result of the weak economy and the state’s own ongoing budget issues. 

Unfortunately, for Arcadia, much of the local tax revenue raised within Arcadia’s borders doesn’t stay within Arcadia, but goes to the state and is redistributed across the state to meet the state’s increasing financial needs in many areas.  As a result, AUSD is not adequately funded as it should, especially given the high performance of AUSD students, most of whom will eventually attend four year universities and become very successful in life. 

Currently, AUSD is being funded by the state at around $5200 per student.  By comparison, in 2007, AUSD was funded at around $5700 per student.  Had the state continued to fund AUSD at 2007 levels and adjusted for normal increases in expenses (as the state has for most other state funded programs), AUSD would be funded at around $6400 per student.  So depending on how one looks at it, that’s a funding gap of $500 to $1200 per student. 

That’s not the end of it.  Because the state’s current budget deficit is still unresolved, there may be an additional decrease of over $300 per student in order to balance the state budget.  The recent windfall in revenues the state has received reduces the possibility of such a large cut in student funding, but does nothing to restoring the funding cuts from previous years, nor does it alleviate financial pressure in future years.

So AUSD has a major imbalance between revenues and expenses, a structural budget deficit.  There really is no economic or political scenario where the state magically restores all past spending cuts, so AUSD has both a short-term and long-term financial problem. 

So what can AUSD do? 

AUSD can draw upon its financial reserves and has done so the last few years.  But just as my family cannot draw on savings indefinitely, AUSD cannot draw on its reserves indefinitely.  Unlike many large companies and the state government, AUSD does not have physical assets it can sell to raise cash.  What about Measure I money?  That voter approved bond measure was specifically designated for AUSD construction and facility costs, not ongoing AUSD operations and personnel expenses.

So AUSD has little choice but to look at reducing its operational expenses.  Over 80% of AUSD operational expenses are personnel costs, mostly teachers.  The result—.

Fortunately, the Arcadia community has stepped up and .  This alone has saved several positions.  AUSD has been in negotiations with the teachers union for additional financial concessions that would result in saving even more positions.  State legislators are coming under increasing pressure to at least hold the line on further education funding cuts, as every school district in California, not just AUSD, is affected. 

Frankly, more needs to be done.  All the money recently raised for AEF only partially addresses the upcoming school year.  Less than a year from now, AUSD will be facing the same difficult financial choices.  Long term answers have to found on both the revenue and expense side.  Just as my family will have to find a way in two years to pay three college tuition bills, AUSD has to find a way to resolve its financial crisis.  I’m hoping my three children will earn scholarships to help pay for college.  But who will provide a scholarship to AUSD?