06-10-25 Update on PUSD’s Budget

June 10, 2025

Dear Pasadena Unified Community,

As we continue our work to ensure a strong and sustainable future for the Pasadena Unified School District (PUSD), I want to share important information about the District’s financial outlook.

At the upcoming Board of Education meeting on June 12, the District will present its first overview of the 2025-26 budget for adoption. PUSD’s final budget will be formally adopted at the June 26 board meeting. This budget reflects the seriousness of the challenges ahead and begins a critical phase of work that will require transparency, shared responsibility, and community-wide engagement.

There are many factors contributing to the district’s fiscal outlook, including:

Ongoing decline in enrollment
Expiration of one-time COVID relief funds
Lower state funding levels
Higher cost of employee health benefits
Rising cost of unfunded government mandates

At the Second Interim budget report earlier this spring, our projections showed that — without accounting for fire-related revenues or expenditures — PUSD would end the 2026-27 fiscal year with a negative ending balance of $28 million.

This Second Interim forecast already reflected the impact of difficult budget reductions made for the upcoming 2025-26 school year. These reductions were not sufficient to close the shortfall, but they were what the school system could prudently implement after the fire. Additional reductions are still necessary in the future to address the projected District’s shortfall.

Now, as we prepare for final budget adoption in June, we are required to project three years out. This Multi-Year Projection (MYP) now includes school years 2027-28, and the financial picture becomes even more sobering:

2025-26: Projected operating deficit of $37.9 million
2026-27: Projected operating deficit of $36.7 million
2027-28: Projected operating deficit of $36.1 million

These operating deficits represent the amount by which we are expected to spend more than we bring in each of the next three years. These operating deficits are what lead to the District’s projected negative ending balances. The updated MYP, which now includes the 2027-28 fiscal year with a projected negative ending balance of $78 million, confirms the extent of this work.

We have received almost $100 million in fire-related revenue this year, with nearly that full amount expected to be spent over the next two years. While this funding is essential for rebuilding and recovery, it will not offset our general fund operating deficits.

This is a very serious fiscal situation. We want to be clear: without significant changes, without additional reductions even larger than those recently implemented, our financial trajectory is unsustainable.

The Los Angeles County Office of Education is expected to issue a letter of concern, and while we may not be officially assigned a certification at budget adoption, our fiscal status will likely shift from Positive to Qualified by the First Interim in the fall 2025.

While this is difficult news, it is not unexpected. Throughout the spring, we have said that there would be more work to do to address the operating deficit in the 2026-27 school year and beyond. We are committed to a transparent, inclusive process as we address these challenges. We will present at the June 12 board meeting to help explain the budget in clear terms.

We also recognize that the solutions will require tough decisions. We will need to come together as a community to weigh all options and determine how best to preserve our students’ educational experiences while restoring fiscal balance.

More information will be shared following the June 12 meeting, and we will continue to engage employees, families, and community partners in the process ahead.

Thank you for your continued dedication to our students and school communities.

Sincerely,

Elizabeth Blanco, Ed.D.
Superintendent

For more information, visit pusd.us/budget.