After closing a budget gap that placed the Pasadena Unified School District in danger of takeover by the county Office of Education, local school officials were left with little time to celebrate.

In the next two years, the district faces deficits that will again leave it perilously close to financial insolvency, and could force another round of school closures and layoffs.

The district faces a $3 million budget deficit for the 2019-2020 school year, and a $12 million shortfall for 2020-2021.

Earlier this year, the board of education voted to eliminate 139 full-time employees — 87 of those positions held by teachers — to close a $6.9 million gap via current year reductions and revenue increases. The board cut another $14.2 million in reductions for the 2018-19 school year beginning in September.

“Everything will be on the table,” said Board Member Michelle Richardson Bailey. “But school closures are the very last option.”

Earlier this year a committee recommended district officials close Wilson Middle School, Blair High School and Cleveland, Jefferson and Franklin elementary schools.

The board opted to table the discussion of school closures indefinitely and did not vote on the committee’s recommendation.

District spokesman Hilda Ramirez said those recommendations may not even be used in future discussions.

“There are a lot of factors involved that could change the picture entirely,” Ramirez said.  “No schools will be closed when school opens next year. Any decisions on school closures will be for the 2019-2020 school year. I know people have started to worry, but nothing is set.”

According to a column by Board of Education member Scott Phelps that appeared in the Pasadena Weekly on July 5, Superintendent Brian McDonald is considering a districtwide magnet school approach to help increase enrollment and bring new funds into the district.

“The superintendent has expressed the desire to pause and explore ways to increase revenue and also to attract students to increase the socioeconomic integration of our schools, which the Board of Education has made a focus area of the district,” Phelps wrote. “Students in socioeconomically diverse schools — regardless of a student’s own economic status — have stronger academic outcomes, score higher on standardized tests, and are more likely to enroll in college.”

Several charter schools already share campuses with public schools, including Cleveland Elementary School, which shares space with Odyssey Charter School.

In his annual State of the City Speech on Jan. 16, Mayor Terry Tornek called for a three-quarter cent sales tax increase to generate more than $21 million annually. One third of that money would go toward funding the school district.

“If they are to continue their efforts to improve educational outcomes for our children, they need our support,” said Tornek. “We cannot have a great city without a great public school system.”

Earlier this year, officials with the Los Angeles County Officer of Education (LACOE) informed the board that the district was in danger of becoming insolvent and could be taken over by the county.

According to LACOE Chief Financial Officer Candi Clark, the district not only failed to implement expenditure reductions for three years, but also committed to ongoing expenditures, “placing the district in immediate risk of becoming insolvent.”

LACOE is calling for cuts to special education, an increase in the district’s insurance fund workers’ compensation program, and close monitoring of enrollment trends. School funding by the state is predicated on student daily average attendance, with funding cuts corresponding to steep and ongoing reductions in the district’s student population.

The district is currently plagued by several issues that have impacted its finances. Declining enrollment is one, and unless officials can find a constant revenue stream, the district could end up in this situation again even if it closes schools and balances the budget for 2020-2021 school year.

District officials have blamed the decreasing numbers on “white flight,” a phenomenon caused by upper middle-class white families pulling their children out of the struggling PUSD schools and placing them in area private schools or charter schools.

To make matters worse, as housing prices and apartment rents  increase in Pasadena, many young families and lower income families have moved east towards the Inland Empire where they can afford homes. Older residents whose children are out of the house are staying in their homes, making home inventory low and contributing to the rising costs.

Finally, the state has mandated increases to retirement contributions. Health benefits are likely to increase over the next three years beyond the district’s projections due to the dismantling of the Affordable Care Act.

The contribution taken from PUSD’s general unrestricted budget for needed special education services over the last five years was $147 million. The district’s contribution is likely to go up without an increase in funding from the federal government.

Earlier this year, the board supported a rent control initiative that would have capped rent hikes, but organizers failed to gather the necessary signatures to get the initiative on the November ballot.

The district’s financial woes led Moody’s to downgrade the district’s bond rating and list its outlook as negative.

“The rating reflects the district’s diminished fiscal position that remains under stress though the district has enacted plans to provide some budgetary relief in fiscal 2018 and 2019.” States Moody’s report, which can be accessed online. “The rating also recognizes the size and wealth of the district’s exceptionally large assessed value and above average resident income levels.”

If LACOE takes over the district, they would have the power to rescind board decisions if they deem them detrimental to the district’s financial status.

All told, PUSD has 27 schools, a number some administrators feel may be too high for the district.

But a LACOE takeover may not right the ship in Pasadena. In 2011, LACOE took over the struggling Inglewood Unified School District. Six years later, that district’s enrollment was still declining, according to an LA Times article earlier this year which also noted that several school buildings needed upgrades and repairs, and test scores and graduation rates were still below state average.

“I know people have started to worry,” Ramirez said. “Everything is still in the discussion stages. We need a thoughtful long-term plan that takes into account the district’s academic program.”