Thursday, March 12, 2026

PUSD Board to Consider Second ‘Positive’ Budget Certification

The Pasadena Unified School District Board of Education will consider certifying the district’s financial condition as “Positive” Thursday evening, a required state designation that says PUSD can meet its obligations for the current and two subsequent fiscal years, through 2027-28.

The certification, contained in the district’s Second Interim Budget Report, must be filed with the Los Angeles County Office of Education by March 16.

The district’s own financial data, presented in Board Report No. 120-B, reveals that without one-time insurance revenue, the district is running a deficit. Insurance revenue of $164.65 million from PRISM, the district’s insurer, following the January Eaton Fire flows through the unrestricted General Fund, producing a one-time $66.6 million surplus for 2025-26. Strip out fire-related revenue and expenditures, and the district is running a $16.9 million deficit in the current year, according to the report.

The gap between the two pictures is stark. With fire insurance revenue included, the unrestricted General Fund’s ending balance stands at $173.3 million. Without it, that figure drops to $24.3 million—with an unassigned balance of $13.7 million against a $12.6 million required reserve, according to Board Report No. 120-B.

No additional insurance payments have been received since the First Interim report filed in December.

The Second Interim carries essentially the same insurance figure—$164,650,690 compared with $164,650,000 at First Interim, a difference of $690. All received insurance funds are assumed to be fully expended by the end of fiscal year 2027-28, the report states. Fire-related contracted services account for the bulk of the $98.9 million in unrestricted contracted services expenditures—an extraordinary figure compared with $21.7 million in 2023-24, before the fire, according to the report. Potential fire expenses not covered by insurance or grants remain an unquantified risk.

The multi-year projection shows further pressure. Net decreases of $77.9 million are projected for 2026-27 and $77.3 million for 2027-28, according to the report.

Enrollment continues to decline. The district reports 13,228 students in 2025-26, down from approximately 17,000 in 2014-15—a loss of roughly 3,800 students, or 22%, since 2014-15, according to the report. PUSD projects further annual declines of 2.3%, with enrollment falling to 12,925 in 2026-27 and 12,628 in 2027-28. Because state funding under the Local Control Funding Formula is driven by average daily attendance, every student lost directly reduces revenue.

The unduplicated pupil count—which determines supplemental and concentration grant funding for low-income students, English learners, and foster youth—is projected to decline even more steeply, at roughly 3% annually, falling from 9,175 in 2025-26 to 8,633 in 2027-28, according to the report.

Special education remains the district’s single largest structural cost pressure. The unrestricted General Fund’s contribution to special education under AB 602 stands at $53.9 million for 2025-26—down from $57.9 million at the Adopted Budget, reflecting SBAC workstream adjustments—but still consuming 28% of unrestricted LCFF revenue, according to the report. Total unrestricted contributions to restricted programs, including routine maintenance and transportation, amount to $69.8 million.

The board has taken significant action to address the deficit. In November, trustees approved approximately $24.5 million in budget reductions developed through the SBAC process, according to the district. On Feb. 26, the board unanimously approved layoff resolutions eliminating 161.35 full-time equivalent certificated positions and scores of classified positions—a vote that drew emotional opposition from teachers, parents, and students.

But the savings from those Feb. 26 layoff resolutions are intentionally excluded from the Second Interim Report. They will be reflected in the 2026-27 Adopted Budget, expected in June. Because the board approved the layoff resolutions, LACOE is not requiring a Fiscal Stabilization Plan at Second Interim—one had been required at First Interim, according to the report.

“While the advancement of insurance funds has helped the District maintain a ‘positive certification’ in its Second Interim Financial Report, these monies are in fact already designated for school restoration and cleaning,” Superintendent Elizabeth Blanco, Ed.D., wrote in a recent community letter.

The Governor’s proposed 2026-27 state budget carries a modest $2.9 billion shortfall, according to the report. Several significant items tied to the state budget are not reflected in the Second Interim projections: the proposed one-time $2.8 billion statewide Student Support and Professional Development discretionary block grant; the restoration of $757.3 million statewide for the Learning Recovery Emergency Block Grant for FY 2026-27, deferred from the 2023 Budget Act; and the J13A ADA credit for the Eaton Fire, which has been approved by the California Department of Education but is not yet reflected in the LCFF calculator, according to the report. Future compensation changes, unknown liabilities, and potential reductions in state or federal funding are also listed as unquantified risks. The Fund 17 (Special Reserve) balance of $11.5 million is not projected to transfer in 2025-26 or the two out-years—a change from the Adopted Budget, which had included it for 2026-27, according to the report.

Across all funds, the district reports total revenues of $346.1 million, total expenditures of $603.1 million, and a total ending fund balance of $467.8 million for 2025-26. The combined General Fund ending balance is $201.8 million, and the County Building Fund (Fund 21) holds an ending balance of $201.0 million.

The Board of Education meets at the PUSD Education Center, 351 South Hudson Ave., Pasadena. Meetings are broadcast on KLRN-TV (Charter Cable Channel 95, AT&T U-Verse Channel 99) and streamed live on the district’s website. Written public comments may be emailed to publiccomment@pusd.us.

The report was submitted by Sergio Canal, Ed.D., Chief Human Resources Officer, and approved by Superintendent Blanco. The next regular board meeting is scheduled for June 11.