It’s amazing what can happen in five years, especially when Gov. Gavin Newsom unilaterally imposed an overbearing pandemic lockdown on California’s school districts during this time period. And for an age group least likely to become ill with COVID-19.
The coronavirus had a significant impact on local school district finances and they seemed to survive with a major assist from the federal government. How did your district fare?
Most of the 79 school districts in Los Angeles County saw dramatic fiscal movement during the period of July 1, 2019, to June 30, 2024. A review of their annual audited financial statements provides their unrestricted net position (UNP), also known as retained earnings in the private sector, for comparison purposes. When dividing the population the district serves, generating a per capita, it reveals that 34 (43%) moved up or down by double digits within the generated rankings.
A review of each district’s per capita finds that the perennial fiscally best school district is Gorman Joint. However, It serves a very small population, has a solid UNP and consistently places first. Its fiscal status is very unique, as most of LA’s school districts have negative UNPs. This is due to unfunded actuarial accrued liabilities for employee defined benefit pension plans and retiree medical (also known as “other post-employment benefits,” or OPEB) plans.
Wording this accounting lingo in a generic manner, school districts usually have more debts than assets and try to pay them down methodically on an annual basis. Like paying down a mortgage, someday they will have a zero or positive UNP.
The detailed graph below lists the 79 districts in alphabetical order. If you are looking for Lowell Joint, it moved into the Orange County sphere of influence, as it also served the city of La Habra.
The goal of the Chief Business Officer and administrative staff of a school district is to be like Gorman Joint, having a positive UNP. Over this five-year time period, 33 school districts moved up, 4 stayed in place, and more than half, 42, actually lost ground. Here’s a look at the seven that moved up or down the most:
- 49 Azusa Unified
- 44 Hacienda La Puente Unified
- 38 Compton Unified
- 37 Temple City Unified
- 32 Las Virgenes Unified
- 31 San Marino Unified
- 24 Inglewood Unified
- (23) Manhattan Beach Unified
- (23) Paramount Unified
- (24) Glendale Unified
- (28) Santa Monica-Malibu Unified
- (30) Centinela Valley Union High
- (31) San Gabriel Unified
- (32) Alhambra Unified
For the year-by-year analysis of what occurred during each fiscal year, please go to the California Policy Center website at https://californiapolicycenter.org/ for the graphs and details.
The explanations are referred to in the last column of the graph.
- 2020 1 in 5 Los Angeles County School Districts Had Major Accounting Moves in 2020
- 2021 Los Angeles County School Districts See Unique Fiscal Changes in 2021
- 2022 A Review of Budget and Financial Results for Los Angeles County’s School Districts
- 2023 Post COVID Lockdowns, Los Angeles County School Districts Improved Financially in 2023
- 2024 10 Los Angeles County School Districts Make Big Changes in Fiscal Rankings in 2024
The material provided will give you the ability to dig into your district’s finances and provide the basis for inquiries of the Chief Business Officer or the elected members of the school district’s board. For another excellent tool for monitoring your school district(s), go to the California Policy Center’s Dashboard at https://californiapolicycenter.org/fiscal-health-dashboard/.
There are several factors that impact the UNP. The big one is the bottom line on the statement of activities (known as the income statement in the private sector). Were revenues in excess of expenditures? Or vice versa? What were the reasons for staying within the projected revenues or exceeding the budgeted expenditures. For example, San Marino Unified has been increasing revenues through voter-approved parcel taxes. Is this something in your district’s future?
The next major factor is usually transfers into or out of restricted assets. These are funds set aside for a specifically designated purpose.
The third is the acquisition or disposal of land or capital improvements and assets, less the related debt (school bonds), for the net investment in capital assets. This is an area that has been misunderstood by the management of many municipalities but has an impact on the UNP when the amount is not calculated properly.
Now that you have hung in there for this surface introduction of public-school finance, use this information as a tool to determine how your school district is managing its finances. If it is in the upper half, then encourage your elected officials to continue moving up the rankings. If it is in the bottom half, then ask them what their multi-year plan of action is to dig out of this precarious status. Their solution may impact your personal finances, as San Marino Unified and many others in the Golden State have successfully passed real estate tax increases.
There are many forces buffeting the ship of state. Declining enrollment, economic cycles, lockdowns, ever increasing salary and benefit demands from each district’s teachers’ union, and legal settlements related to former Assemblywoman Lorena Gonzalez-Fletcher’s Assembly Bill 218, which will require Los Angeles Unified to borrow $500 million for new sexual abuse cases, and changes at the federal level with the Department of Education, all making for rough seas ahead.
The 2025 audited financial statements will be arriving very soon. Will your district hold its own? Have a steady climb up the rankings? Or languish by dropping more than a few places? Will the ever increasing spending by school districts significantly improve the educational outcomes?
Pasadena Unified is facing major budget cuts. And it ranked in 17th place, so more than sixty of LA’s school districts may be facing the same. As a stakeholder, this information should assist you in monitoring a municipality that consumes your tax dollars and may directly impact your children and grandchildren.
John Moorlach is a senior fellow at California Policy Center. He previously served in the California Senate and on the Orange County Board of Supervisors.