Wednesday, January 14, 2026

Pasadena Unified Avoids State Intervention, But County Requires Proof Fiscal Plan Is Working by March

Los Angeles County Office of Education accepts PUSD’s current budget, but cautions current plan may be insufficient

The Pasadena Unified School District has avoided immediate state intervention for now. In a Jan. 7 letter, Los Angeles County Office of Education officials accepted the district’s self-certification as fiscally sound, but the ruling came with a stark warning: prove by mid-March that promised budget cuts are actually being implemented, and prepare to submit an updated recovery plan to address continuing deficit spending.

The county’s acceptance of PUSD’s “positive” certification represents a conditional reprieve for the embattled district, which has been under county scrutiny for months due to declining enrollment and structural deficits.

The Jan. 7 letter from county officials reveals that the district’s November budget cuts may not be enough to prevent reserves from shrinking to barely above minimum levels by 2027-28, and explicitly demands an “updated Board-approved Fiscal Stabilization Plan” by March 16.

The ruling validates the strategy employed by the Board of Education on Dec. 11, when members voted late at night to certify their own finances as sound while simultaneously launching a long-term study process for school closures.

That dual strategy—projecting fiscal confidence while acknowledging need for painful structural change—succeeded in buying the district time to maintain local control. But the county’s letter makes clear that time could be running out.

At stake is the independence of the locally elected school board. If the district fails to demonstrate sufficient progress by March, county officials could override the “positive” certification and assign a fiscal expert to take control of the district’s finances, stripping the board of much of its authority.

Such state takeovers are rare but not unprecedented in California, and county officials have been warning since October that PUSD was approaching that threshold.

The county’s letter, signed by Financial Advisory Services Officer Steven Choi, acknowledges the district’s efforts to develop a recovery plan but expresses concern about “the projected trend of deficit spending and its impact on the District’s ability to maintain minimum required” reserves in future years. County projections show PUSD’s unrestricted reserves plummeting from 40.68 percent this year to just 3.80 percent by 2027-28—barely above the three percent minimum required by state law.

That trajectory represents an 86 percent decline in reserves over three years, driven by projected deficit spending of $77.62 million in 2026-27 and $78.19 million in 2027-28. The county’s letter notes that the district’s November budget cuts are projected to generate cumulative savings of $24.52 million, but the request for an updated fiscal plan suggests those savings may not be sufficient to prevent reserves from approaching minimum levels by 2027-28.

“Therefore, we request the District to address the deficit spending through submission of a updated Board approved Fiscal Stabilization Plan as stated above,” the letter states, referring to the March 16 deadline for the district’s Second Interim Report.

The county’s ask for an updated plan signals that PUSD could face another round of budget cuts this spring, on top of the reductions already approved on Nov. 20. Those cuts, which the county letter says are projected to generate $24.52 million in cumulative savings for fiscal year 2026-27, included staff layoffs, program eliminations and administrative reductions that are still being implemented across the district.

The March 16 deadline represents the first real test of whether those cuts are actually happening. The district’s December report to the county contained no evidence of implementation because it only captured financial data through Oct. 31—before the November cuts were approved. The Second Interim Report will capture data through Jan. 31, giving county officials their first look at whether the district is following through on its promises.

The district’s financial leadership has been in flux during this critical period. The county’s Jan. 7 letter is copied to Sergio Canal, identified as interim chief business officer, though Chief Business Officer Saman Bravo-Karimi had acknowledged the implementation challenge at the Dec. 11 board meeting, telling members that “this really is just the beginning in terms of an implementation of what’s to happen” and that “there’s a lot of work that is still taking place.”

The county’s letter also highlights another pressure point: declining enrollment. County projections show PUSD losing 794 students over two years, a 5.99 percent decline that will result in significant revenue losses. The county explicitly recommends that “staffing needs and facilities planning should also be assessed and adjusted based on the projected rate of decline in enrollment”—language that points toward the need for school closures and further staff reductions.

That recommendation validates the board’s Dec. 11 decision to pass Resolution 2852, which establishes minimum enrollment thresholds for schools and directs the superintendent to begin studying consolidation. But the resolution, which was significantly weakened through amendments during a contentious late-night debate, does not require consolidation recommendations until October—a timeline that may not satisfy county officials’ sense of urgency.

In an October meeting, county representatives used stark language to convey their impatience with the district’s pace of action, “imploring” the board to act and warning that “the clock is ticking.” They repeatedly stressed the need for PUSD to begin “doing business differently.”

The county’s acceptance of the district’s positive certification suggests officials believe the recovery plan could work if implemented aggressively. But the letter’s multiple warnings and explicit demand for an updated fiscal plan indicate that county patience is not unlimited.

Another complicating factor looms on the horizon: unsettled labor contract negotiations. The county’s letter notes that “certificated and classified labor contract negotiations for 2025-26 fiscal years remain unsettled and potential changes have not been calculated and incorporated into projected salary and benefit expenditures.” Any salary increases resulting from those negotiations could worsen the deficit projections and undermine the recovery plan.

The district’s current financial picture is complicated by a one-time infusion of tens of millions of dollars in state and federal funds to recover from the devastating January 2025 Eaton Fire, which destroyed or damaged multiple school properties. Those fire-recovery funds have temporarily inflated the district’s reserves, masking an underlying operating deficit that the district reported in October as $21.4 million for the current year alone. As those one-time funds are spent over the next two years, the structural deficit becomes more apparent—a reality reflected in the county’s projections of sharply declining reserves.

For the seven members of the Board of Education, the county’s Jan. 7 ruling represents both vindication and warning. Their December gamble succeeded in maintaining local control through the critical year-end deadline. But the county has simply moved the target, setting a new deadline just 68 days away and requesting an updated recovery plan to address deficit spending that threatens to push reserves to minimum levels.

If the March 16 report fails to demonstrate adequate progress, or if the board fails to approve an updated plan as the county requests, the locally elected board could find itself stripped of authority and answering to a state-appointed fiscal expert. For a district that has resisted making hard choices about school closures and structural changes for years, the margin for delay has all but disappeared.

The county will render its verdict on the Second Interim Report by late March. Until then, PUSD operates under what county officials described in October as a “yellow light”—one step away from a red light that would trigger state intervention.