EDUCATION: Manhattan Beach Unified School District adopts budget, cuts 31 employee positions 

by Mark McDermott 

The Manhattan Beach Unified School District Board of Education last week adopted a balanced budget for the next fiscal year. But that balance was scarcely achieved —  with a mere $54,000 projected left over in the General Fund’s remaining balance, in the context of a $100 million budget —  and came at the expense of 31 employee positions and a perilously depleting dip into district emergency reserves. 

The budget was adopted without comment at a short special meeting on June 20, after a longer discussion on June 18. On that night, school board president Wysh Weinstein did not mince words about the situation the district finds itself in. 

“We’ve been talking about this for a while,” she said.  “And it’s been bleak, and getting bleaker.” 

For the last half decade the story of the Manhattan Beach Unified School District’s unusually fraught financial situation has been told many times — during the multiple campaigns for the Measure MB parcel tax, during the Manhattan Beach Education Foundation’s ongoing fundraising drives, and every year, during the budget adoption process. MBUSD is chronically underfunded, primarily due to the state education funding mechanism, the Local Control Funding Formula. 

The LCFF was adopted in 2014 with the intention of helping economically disadvantaged students, but its unintended consequence was to make MBUSD one of the lowest funded districts in the state of California.  As 

Dawnalyn Murakowa Leopard, MBUSD’s assistant superintendent overseeing its finances, gave a detailed presentation to the board that, in part, explained how the district finds itself in dire financial straits. 

The LCFF, she said, prioritizes a large chunk of its allocation to each district based on its “unduplicated” counts —  that is, the number of students who are English learners or are eligible for free or reduced lunch programs. Only 6.31 percent of MBUSD students are unduplicated, compared to the state average of 61 percent. In the South Bay, El Segundo is the second lowest, at 12 percent, while Inglewood is at 92 percent (and thus receives $27 million more in state funds than MBUSD). MBUSD has the second lowest unduplicated count among unified school districts in the state and the lowest in LA County. The average district in California receives $10.5 million more in state funds than MBUSD, based on LCFF, and the average LA County district $11.8 million. 

“I do want to add that the LCFF is structured this way intentionally, because the idea is that the structure provides equity,” she said. “The students who are falling into the unduplicated pupil count come to school with greater needs, and those school districts have to put programs in place to support those students and their needs. So this is not to criticize the structure. It is simply to point out that it creates vast funding disparities between a district like ours and a district like Inglewood.” 

“So that is an ongoing challenge that I will warn you…creates a structural issue for us that is coming home to roost for us,” she said. 

Meanwhile, the cost of providing education, like everything else, continues to go up, at a pace that does not match the revenues MBUSD receives. 

The MBUSD community, and specifically the Manhattan Beach Education Foundation and local taxpayers, have stepped up to help bridge this gap. 

Last year, MBEF contributed $7.5 million to the MBUSD budget. In June, MBEF gave MBUSD another $7 million, a significant chunk of the district’s $100 million budget, while voters last year agreed to continue to a parcel tax that provides another $2.5 million annually (although voters the previous year rejected a more expensive parcel tax that would have provided four times that amount). All totalled, 16 percent of MBUSD’s budget was provided locally, even as local property tax dollars are largely lost through the state-controlled allocation of educational funding. 

But Murakowa Leopard has long warned that the district was approaching “a fiscal cliff,” a point at which the local help is not enough to overcome the increasing gap between revenues and expenses. The district officially arrived at that cliff last year, when it had a $7.5 million shortfall, which resulted in ten teacher layoffs and a deep dip into its economic reserves. 

This year, the cliff grew steeper, and the soft landing area smaller. The shortfall was $2.7 million but MBUSD’s ability to forestall deeper cuts was gone. 

“I’ve been here for six plus years, and we’ve heard this ‘financial cliff’ is coming,” said trustee Jen Fenton, who has served on the board since 2019. “It was coming. And now the numbers don’t lie. We are seeing how expenses increase, just by doing nothing —  literally opening the door to school has an increase in costs, and we are not bridging that amount for whatever reason. So this is now the crossroads we are at.” 

Murakawa Leopard, who earlier this year was named LA County Cabinet Member of the year for her fiscal management, told the board that this day of reckoning would have come much sooner if the pandemic had not also arrived, and with it emergency funding for every district in the state. 

“If you recall, pre-pandemic we were in a place where our reserves had been depleted and we were making really difficult reductions in our expenses,” she said. “At that time, I was saying, this is where we are headed —  this is not going to change and we are going to continue to make ongoing reductions. Then the pandemic happened, and a lot of resources came into the district. There were, at the height of it, 24 new sources of one-time funding that the district received, and those really buoyed us over the past several years, from 2020 through now. The reason we haven’t continually had to have really difficult budget situations is because of that one-time revenue.” 

While such revenue sources dry up and ongoing state revenue —  which accounts for 69 percent of the district’s budget —  is both mired in uncertainty and even in a best-case scenario not enough to cover costs. Basic Cost of Living Adjustments (COLA) generally attached to such funds are projected at 2.30 percent, while MBUSD’s fixed costs are growing 4.5 to 5 percent annually.

“It feels like a cut, because our costs have gone up by 4.5 to 5 percent and our revenue has not gone up by the same amount,” Mirakawa Leopard told the board in her budget presentation. 

Mirakawa Leopard noted that some utility costs have increased by close to 200 percent, while some forms of liability insurance have increased by 700 percent. Meanwhile, like nearly every district in the state, MBUSD’s enrollment has never come close to reaching pre-pandemic levels, and state funding is based on Average Daily Attendance (ADA) at district schools. Overlaying the entire budgetary picture is a federal government at loggerheads with the state of California and threatening punitive action and what most economists believe is a looming recession that will affect all revenue sources. 

The MBUSD budget document begins with two quotes, one by UCLA economist Clement Bohr in which he said, “We should all be on Recession Watch,” and another by Moody’s chief economist Mark Zandi: “In 35 years as an economist, I’ve only seen uncertainty like this twice before: during the global financial crisis and in the middle of the pandemic. . . . These are highly uncertain times.”

The upshot, as Fenton remarked, is that MBUSD isn’t going to receive help from state or federal governments. Things are likely about to get considerably more bleak. 

“Where we are going with the economy…I don’t see that knight in shining armor coming in with a big check and saying, ‘Here’s money to spend,” Fenton said. 

Mirakawa Leopard repeatedly emphasized how crucial local funding sources have become to MBUSD, especially MBEF and Measure MB. 

“This is the destiny that we control,” she said. “The community has invested. In many ways, it is difficult to continue to go to this community and say, ‘Give more,’ but the reality is that our revenue doesn’t keep up with our needs, and we have had a pattern of deficit spending, a pattern of cost increases that happen to us, not because of us. So we are at a place now where our revenues are going to outpace our expenses in a way that we are not going to be able to sustain.” 

Trustee Cathey Graves also emphasized the importance of ongoing local revenue. 

“That’s the only thing that we can control, and we are so thankful for the generosity of our community that has given to MBEF and through the PTAs,” she said.  “Because without those funds, we would be a very, very different school district …I hope people understand the important impact that those monies have and continue to be as generous, because we just couldn’t do it without it.”

Trustee Tina Shivpuri expressed some hope that the state “budget revise” that occurs between the state’s own budget adoption on June 30 and August 15 could contain some small bit of relief. But she said that the community may need to revisit the possibility of a larger parcel tax. 

I am just hopeful for what might happen in the 45-day revise as it relates to the 31 [employee reductions],” she said. “But we just can’t hope. We always need to be thinking two, three, however many years ahead. Like, when is the next time we want to potentially ask the community for a little bit more in a parcel tax? There are other things we need to consider, not now, not this year, but in the future.  So I know that’s a possibility, that we would want to go back to our community and ask for a little bit more.” 

“I hate to even start talking about that again,” Graves said. “You know, we’ve asked our community for so much.  But….I just don’t know where else we look. It’s really a dire situation right now.” 

Nobody attended or spoke at the budget hearing on June 18 and the budget was unanimously adopted without comment in a short meeting two days later. Another key feature to the adopted budget was that it required a dip into emergency reserves, from 5.8 percent to just over 4 percent of the total budget. Board policy requires a 5 percent reserve but also enables the district to go below that level if accompanied by a plan to restore reserves. The state requirement is 3 percent. 

“Board policy allows this, but states that if we have to go below 5 percent, we must have a plan to replenish it to be up back up to 5 percent,” Murakawa Leopard said. “So we’re doing that for one year, and then planning reductions to bring us back to a 5 percent number in [fiscal year] 26-27.” 

Hence the employee cuts.  In an interview, Manhattan Beach Teachers Association president Shawn Chen said that teachers are leaving the district in larger numbers than the reductions, both to retire or move to other districts. Whatever pink slips were issued, Chen said, have already been rescinded. She noted that the district is advertising for 31 vacancies on its online employment site. 

“More people are quitting than are getting laid off,” she said. “Everyone has already been recalled. Since so many people resigned, took leaves and reduced their hours, none of the pink slips matter.” 

She said the year-after-year threat of pink slips has taken its toll, to the point where such instability is expected. 

“It’s the same old boring story,” she said. ER