Initial Report Warns of More Budget Cuts

The Long Beach Unified School District is reporting that it will meet its financial obligations this year but must make $40 million in cuts over the next two fiscal years. The first interim financial report, presented at a recent Board of Education meeting, is required each December by the County of Los Angeles. A second report is due in March. Figures in the latest report may change in January when Gov. Arnold Schwarzenegger proposes his next state budget. "These are difficult times for school districts," said Kim Stallings, chief business and financial officer for LBUSD. "The first interim report reflects the fact that cost increases have outpaced revenue increases for the past few years necessitating budget reductions." Further cuts during the current fiscal year’s budget also are possible but have not yet been determined. Over the next two fiscal years, cuts will be required primarily because of escalating health care costs that have surpassed growth in state revenues. Schools and other employers throughout the state and nation have experienced skyrocketing health care costs in recent years. The school district also must reduce costs to comply with a mandate to set aside 2 percent of its unrestricted funds. The state two years ago lowered its 2 percent reserve requirement to 1 percent in recognition of the statewide budget crisis facing California and its public schools. School districts must return to the 2 percent reserve level starting next fiscal year. Since 2001, LBUSD has cut $45.4 million, including $14.8 million this year. The district also is receiving less revenue because enrollment is leveling off after years of significant enrollment growth. The state allocates funding to schools based on average daily attendance. Several school districts throughout California face serious budget problems. The Fresno school board declared last week that its school district would not meet its financial obligations for at least the next two years. Other California school districts have recently proposed job cuts, school closures, increased class sizes and other cost-cutting measures.