Los Angeles County Office of Education officials on Thursday, Oct. 9, painted a grim picture for the Pasadena Unified School District Board of Education, warning that years of inaction by the district amid fiscal warning signs had left it at a crossroads that requires immediate and swift action to avoid county intervention and possibly receivership.
Director of Business Advisory Services Octavio Castelo led a presentation during a special meeting of the Board of Education. Castelo was part of a panel of four LACOE representatives, including Chief Financial Officer David Hart.
“I would not be here if we weren’t trying to convey that the clock is ticking,” Hart said. “We appreciate the very unique challenges that Pasadena is facing, but it is going to be tough for you, if not impossible, to revenue your way out of the problem.”
Castelo provided a recap of how PUSD arrived at its dire financial straits — a $30 to $35 million budget shortfall in 2026-27, driven by a structural deficit, rising costs, declining enrollment, and uncertainty in federal funding — and laid out what would happen if the district did not take the necessary steps.
Officials described the district as being at a crossroads and likened the message from LACOE as being a yellow light warning with county intervention and possible receivership of the district as being the red light.
This week, PUSD announced the roadmap for how it plans to implement $30 million to $35 million of reductions in the 2026-2027 school year. The hefty cuts are part of a multi-year fiscal stabilization plan aimed at cutting around $83 million over three fiscal years to address a troubling financial situation.
In its presentation, LACOE called the stabilization plan a proactive response from PUSD.
Complicating matters, however, is that since mid-September, according to PUSD spokesperson Hilda Ramirez Horvath, the district has been without a chief business officer after Saman Bravo-Karimi took a job at the Los Angeles Unified School District.
Superintendent Elizabeth Blanco said that herself, Chief Human Resources Officer Sergio Canal and Chief Academic Officer Helen Chan Hill will be covering the duties of the chief business officer while a search is ongoing.
“That to us is a concern,” Castelo said. “However, we have been talking with Dr. Canal, with Dr. Blanco on the recruitment but yeah to us when anytime a vacancy is in your chief financial officer or even the director of budgets or fiscal services it’s a concern to us.”
That dire financial situation is why LACOE has its eyes on PUSD. According to state education law, LACOE is the oversight body for local districts like PUSD. At the behest of LACOE, the PUSD Board of Education passed the stabilization plan in concert with its fiscal year budget over the summer.
Castelo said the stages of county intervention begin with a fiscal expert being placed in a district, escalating to a fiscal advisor and the final step being a county administrator who would essentially run the district. He cited Inglewood Unified School District as one that has been under receivership for more than a decade.
“That board is elected by their constituents but they have no authority,” Castello said of Inglewood. “The authority lies with the county administrator.”
The Superintendent’s Budget Advisory Committee will identify where reductions can be made and in November the Board of Education is scheduled to review the recommendations and take final action. Per the roadmap, implementation begins in December, reduction notices will be sent in March and the next fiscal year budget will be approved in July with the $30 million to $35 million of cuts in effect.
Castelo said Dec. 15, when the district submits to LACOE its first interim report capturing the district’s financial position up to Oct. 31, will be a crucial date. LACOE will review PUSD’s report and self-assessment of its financial position to determine what comes next.
“That’s going to drive a lot of your decisions come March,” Castelo said. “It’s imperative for us to see that report, timely and we do an objective assessment of your first interim.”
Last school year, while the district reeled in the aftermath of the Eaton fire, the Board of Education approved cuts to about 150 full-time positions, a move that had been expected for months but that still resulted in community uproar and protests. The final number of reductions ended up being much lower after a process guided by state law and the collective bargaining process.
Trustee Scott Harden said it’s up to the Board of Education and district leadership to think long term about redesigning the district’s structure for sustainability in light of its financial reality.
“We can do this and we can have what we want, and I actually believe we can thrive,” Harden said. “But we know there are systemic challenges, and we also know that the environment that we’re in, both at the local level and at the broader state and national level, is going to require that we rethink how we serve our students.”