El Rancho Unified School
District
In May 2012, the California State Superintendent of
Public Instruction added El Rancho Unified School
District (ERUSD) to the list of state school districts
in “financial jeopardy.” ERUSD has plenty of company. That year a record number of school districts
in California made the list: 188. ERUSD received a
qualified certification signaling that it may not be
able to meet its financial obligations in 2012 or in
the next two years. Most of the 188 listed school districts received a qualified certification; however, 12
received negative certifications (1 in Los Angeles—
Inglewood Unified), meaning they were deemed unable to meet financial obligations this year or in
the next two years. ERUSD became one of 26 Los
Angeles County school districts with the qualified
designation. Whittier Union High School District,
profiled as part of this research project in 2011, was
not on the financial jeopardy list.
ERUSD ($89.9 million budget for fiscal year 2011–
2012) is one of two school districts serving the city
of Pico Rivera in Los Angeles County. The other is
Montebello Unified School District ($267.2 million
budget for FY2011–2012), which also received a
qualified certification in 2012.
Community Demographics
ERUSD serves a suburban population. The district
has fifteen schools, including an early learning education center and an alternative education center. Its student population is 98.4 percent minority (FY2011) and 97.3 percent Latino (FY2011).
The number of students in ERUSD has declined
from 2007 to 2011 (11,495 in FY2007 to 10,377
in FY2011, according to the New America Foundation Federal Education Budget Project). The ERUSD
student census shows an increase in poverty (17.3
percent in 2007 to 20.1 percent in 2010). In one
year, FY2009 to FY2010, there was more than a
10-percentage-point increase in English Language
Learners in ERUSD (29.3 percent to 41 percent). In
FY2010, the percentage of English Language Learners in ERUSD was 10 percentage points higher than
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National Civic Review • DOI: 10.1002/ncr.21111 • Spring 2013
B Y G L O R I A R U B I O - C O R T É S
the state average (41 percent ERUSD compared to
28.7 percent state average).
Pico Rivera is a short eleven miles from downtown
Los Angeles with easy access to several Los Angeles freeways. This close-knit Latino community is
called by some residents the Latino Mayberry because of its middle-class values and aspirations. In
2009, CNN’s Latino in America series featured Pico
Rivera’s picturesque homes flying America flags and
Latino boys playing Little League baseball. The television program also recounted Pico Rivera’s recent
transformation from a community with significant
gang-related violence to one that is addressing these
issues after the 2007 killing of a mother of two
sparked community-wide action to curb gang violence.
The housing bubble and bust changed the city’s demographics, according to a longtime resident. In the
past, the school district has had generation after generation of families growing up and staying put. The
housing bubble significantly inflated home prices,
which made this city and school district less accessible to young families. The housing bust resulted
in additional residential departures when residents
could no longer pay their mortgages and moved in
with relatives or out of the city to other states.
Financial Challenges
ERUSD has faced many challenges that moved it into
financial jeopardy. A couple of challenges appear to
be quite common for many districts today: declining
student enrollment coupled with fewer state dollars
per pupil. ERUSD, however, also has the misfortune of a senior leadership gap. Interim appointments hold the top three administrative positions—
superintendent, assistant superintendent for educational services, and budget director—and there is a
history of financial stress over the past decade, as
noted in reports by bond rating companies.
For many years, ERUSD’s finances were precarious. A 2003 Fitch Ratings report for a
A Publication of the National Civic League
$30 million general obligation bond sale rated the
ERUSD bonds at A− according to the Business
Wire. “Despite the stable and growing tax base, the
district’s financial operations have been under pressure, including operating deficits, slim cash balances,
and state compliance issues. The district has maintained unrestricted reserve levels below the 3.0%
of spending legal requirements since fiscal 2000,
dropping to an unrestricted reserve deficit in 2001.
Management has recently taken prudent measures
to address negative operating margins and unsatisfactory reserve levels. . . Nevertheless, the district’s
historical inability to achieve the state-required fund
balance coupled with ongoing operating pressures
damages credit quality.” By June 2010, Moody’s
assigned ERUSD bonds an “A1” rating. In 2012,
the school district’s bond ratings remained in positive territory. Fitch and Standard & Poor’s Insured
cited stable outlooks and gave ERUSD bonds A+ or
AA− ratings.
Superintendent of Public Instruction. ERUSD’s annual revenue is made up of 75 percent of state
funds, with the balance from federal, local, and
other sources. ERUSD’s budget projections are approved by the five-member elected school board and
prepared by the school district staff. Twice a year,
school districts must file their budget projections as
an interim status report with the state. The California State Superintendent of Public Instruction reviews the projections and, based on the information
provided, makes a determination of positive, qualified, or negative. As noted earlier, ERUSD received
a qualified determination in May 2012, which suggested that it may not be able to meet its financial
obligations in 2012 or in the next two years. In 2012,
ERUSD took action to reduce its projected expenses
for FY2013 through 2015 to reflect the anticipated
smaller state fund allocation.
Employee Negotiations
An elected official recalled that residents blamed the
school district leadership for poor financial management during the recession. Only when residents
experienced the effects themselves did they gain a
better understanding of the breadth of the financial crisis. By 2010, the mood had changed. In the
midst of the recession, residents taxed themselves
to support critical educational upgrades. By a significant majority (74 percent), a general obligation
bond of $52 million passed. Called Measure EE,
the bond is intended for capital improvements including increased “student access to computers and
classroom technology, building vocational technical classrooms . . . and providing renewal energy improvement to reduce operating cost,” as reported in
Ballotpedia. Measure EE promised annual reports
to the community and the establishment of a Citizen’s Oversight Committee. In 2012, ERUSD extended by twenty years the Measure EE bond to
take advantage of the low interest rates available,
saving $1.7 million, according to a press release issued by the previous ERUSD superintendent, Dr.
Myrna Rivera Coté, who retired in 2012 after serving for two years.
State Relations
California school districts are required to submit
three-year budget projections to the California State
National Civic Review
In addition to facing declining student enrollments
and therefore less revenue, employee health benefits
plan increases have added more expense and stress.
Both full-time staff and part-time instructional aides
receive health benefits. There have been yearly health
benefits cost increases of between 8.5 percent and 14
percent in the past few years, a district official said.
ERUSD reduced its FY2013 budget by $8.8 million
through negotiations with its three unions and has
moved to a position of being fiscally solvent, said
one manager. The budget was reduced to $75 million in revenue and $76.5 million in expenses. (The
difference is expected to be covered by anticipated
FY2012 savings.) The school district administration
negotiated separately with each of the three unions,
one of which represents the classified administrative
staff (office staff, janitors and others), one of which
represents teachers, and one of which represents senior managers (not common in school districts). A
district manager familiar with the budget process
said each union was given a targeted amount for expense reductions (calculated as a percentage of the
total reduction and based on the ratio of salaries
of its members to the salaries of the entire school
district). Each union was given the flexibility to determine on its own how the cuts would be achieved.
The options included furloughs, employee contributions toward benefits, layoffs, a combination, or
DOI: 10.1002/ncr
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13
others. In the end, the budget was reduced through
“the elimination of adult education programs, increase in class size from 24–1 to 30–1, laying off of
57 teachers and requiring employees to help pay for
health insurance,” according to the Whittier Daily
News in July 2012. The 2012 budget reductions
add to those made in 2008: four elementary schools
were closed and eighty teachers were laid off. An
elected official said the action had to be taken because these schools were half empty. In a city in
which the school district is the largest employer, according to the City’s website, reductions in staff are
particularly difficult to make.
Suggestions were solicited from teachers, parents,
and administrators in a recent stakeholder process
designed to develop ideas to increase services and
reduce expenses.
ERUSD’s union negotiations were different from the
approach taken by Whittier Union High School District in 2011. WUHSD brought all of the unions
to the table at the same time to make expenditure
reductions. This was possible after many years of
building trust with the unions by ensuring they understood current and future financial projections. An
ERUSD manager said each of the unions has its own
priorities and point of view, adding that holding the
negotiations with all of the unions at the table at
the same time would not have worked out well because of the perceived hierarchies. The union agreements ERUSD reached in 2012 are for two years,
giving the district more certainty than if they were
only for a single year. A district manager believed
the ERUSD agreements were reached in no small
part because of the many years of trust developed
between the school board and administration staff
and the unions. Also in 2012, expenses were cut by
instituting smarter delivery of services across the district in the special needs program. Suggestions were
solicited from teachers, parents, and administrators
in a recent stakeholder process designed to develop
ideas to increase services and reduce expenses. An
additional revenue generation plan is to offer fulltime preschool to increase enrollment. It is an idea
that is under consideration by the state.
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National Civic Review
Leadership and Educational Quality
Four objectives emphasizing quality education drove
the district restructuring begun under the previous
superintendent, Dr. Rivera Coté. She outlined them
in her 2012 Superintendent’s Message posted on the
Web site at that time: “Create a sustainable school
district that produces results for all children; increase student achievement through evidence-based
instructional practices; deploy resources efficiently
and targeted to support all students; and encourage
more families to attend our quality schools.” The
message also said that over the past two years, the
district “spent a significant amount of time working to involve our parents in the educational process
and giving them a voice in school decisions . . . a
more focused strategy of reaching out to parents and
to the community as a whole with open and honest
communication between parents, teachers, students,
and community members. I believe that this is the
best way to exchange ideas, overcome challenges,
and foster a learning environment.” Dr. Rivera Coté
spent much of her professional life in Southern California school districts outside of ERUSD, among
them Long Beach. Her message pointed to the idea
that to be successful in a tight-knit community, and
probably in any community, it is important to conduct regular outreach to, education of, and engagement of parents and the community on financial
matters, particularly during a recession. It is a sentiment held by leaders in the WUHSD as well. Upon
her departure from ERUSD, Dr. Rivera Coté was
quoted by Inland Valley Daily Bulletin reporter Sandra Molina (2012) as saying that the only thing she
would not miss upon her retirement is cutting budgets. This comment raises the question of whether
financial management difficulties may drive good superintendents out of school districts.
ERUSD’s leadership vacuum in 2012 will continue
to be a long-term challenge. However, experienced
interim managers, one of whom knows the district
well, have stabilized the district. When Dr. Rivera
Coté retired in 2012, the school board brought back
the previous superintendent, Norbert Genis, to be
the interim superintendent “creating instant stability,” an elected official said. Mr. Genis had retired
after working for ERUSD for thirty-one years. His
retirement was prompted by anticipated changes in
superintendents’ pension benefits, the official added.
DOI: 10.1002/ncr
Spring 2013
It is important to put ERUSD’s financial struggles
into perspective by considering state and national
school district funding statistics and their consequences. In a 2012 Center on Budget and Policy Priorities analysis of school spending in the fifty states
from FY2008 to FY2013, Phil Oliff, Chris Mai, and
Michal Leachman found that “[s]tates have made
steep cuts to education funding since the start of the
recession, and, in many states, those cuts deepened
over the last year.” The report says that the cuts
came “after the deepest recession in 70 years hit beginning in late 2007, precipitating a historic collapse
in state revenues.” It continued: “Because states relied heavily on spending reduction in response to
the recession, rather than on a more balanced mix
of spending cuts and revenue increases, funding for
schools and other public services fell sharply. While
emergency aid followed the onset of the recession,
Congress allowed that aid largely to expire at the
end of 2011 fiscal year, before state revenues had
recovered from the recession” (p. 1). In California,
the report noted, per student spending had been reduced by 17.3 percent over the past five years, the
sixth greatest reduction among all the states. (Only
Arizona, Alabama, Oklahoma, Idaho, and South
Carolina had greater reductions.) When adjusted
for inflation, California’s per student spending reduction was $1,105. The state’s average per pupil
expenditure in FY2009 was $9,503. ERUSD’s per
student expenditure for FY2009 was $8,702. With
the passage of California’s November 2012 Proposition 30 tax increase initative, education will not
experience planned cuts and the state will begin to
increase the per student funding by $308, the report
concluded.
When we look at a snapshot of ERUSD’s student competencies, we see that competencies at the
high school level are above the state average but
that fourth-grade competencies are below the state
level. In FY2010, ERUSD’s fourth-grade reading
and math scores were 53 percent and 58 percent respectively compared to the state averages of 60 percent and 65 percent. At the same time, ERUSD’s high
school student competencies were above the state
average for FY2010. ERUSD’s high school reading
competency scores were 79 percent and math scores
were 81 percent, well above the state average of 52
percent for reading and 54 percent for math.
National Civic Review
Like many other school districts across the country,
ERUSD is governed by an elected school board that
meets monthly. School board members tend to serve
for many years. Meeting agendas are posted on the
district Web site in advance of meetings, as are minutes of previous meetings. A decade of agendas and
minutes is available on ERUSD’s Web site, but no
detailed financial information is posted there. The
budgets are available upon request at the school district offices, a school manager said. The district has
used a variety of means to communicate with parents and the community, including mailed newsletters (now a thing of the past because of cost), contributions to the city’s newsletters, and information
posted on its Web site. For example, past superintendent messages have discussed the scope and details
of the financial challenges facing the district.
Fortunately for the district, California voters in
November 2012 voted in favor of Proposition 30, to
tax themselves to restore much-needed revenue for
critical services, including schools. Before the election, there was much uncertainty about its passage,
so when preparing ERUSD’s budget for FY 2013,
district officials did not rely on the proposition. If it
had not passed, the district would have been pressured to increase the number of school district furlough days, in effect decreasing the number of days
of instruction.
There is a history of successful collaboration between the school district and the City of Pico Rivera.
They are working closely together to share facilities
(recreation areas) and to seek foundation and federal
grants to promote health and safe schools programs.
Conclusion
ERUSD has made good interim leadership choices
that have righted the ship temporarily. It has engaged the unions in a productive and flexible process
of budget cuts that can restore the district’s financial
credibility and take it off the state’s financial jeopardy list. The City of Pico Rivera and ERUSD have
a good collaborative relationship that works well,
as one person said, because they serve the same constituency. The passage of the State of California’s
Proposition 30 may restore sorely needed funds to
education, helping to reverse the dangerous trend of
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cutting education resources while needs grow. Luck
and hope may be on ERUSD’s side these days, although many challenges lie ahead. One of the most
important and difficult may be finding and retaining
the right superintendent and senior managers. To retain fiscal stability and community trust, the district
will likely need to continue and increase its communications about financial successes and challenges to
keep informed constituents inside and outside of the
school. It may be effective to employ a broad collaborative community budget team again. An elected
official recently reminisced about it. As affirmed by
a district insider, ERUSD is an example of the many
fiscally challenged school districts in the region. Yet
by sharing its story, its challenges, and the actions it
is taking, it can also be helpful to others.
References
Ballotopedia. 2010. “El Rancho Unified School District
Bond Proposition, Measure EE (November 2010).” http://
ballotpedia.org/wiki/index.php/El Rancho Unified School
District bond proposition, Measure EE (November 2010).
“Fitch Rates El Rancho USD, CA GO Bonds ‘A−’.”
2003. Business Wire, December 3. http://www.businesswire
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National Civic Review
.com/news/home/20031203005711/en/Fitch-Rts-30MM-El
-Rancho-USD-CA.
Molina, S. T. 2012. “El Rancho Unified School District Superintendent Says Goodbye After Brief Tenure.” Inland Valley Daily Bulletin, June 30. http://www.dailybulletin.com/
california/ci 20979736/el-rancho-unified-school-district-sup
erintendent-says-goodbye.
New America Foundation Federal Education Budget
Project. n.d. “El Rancho Unified.” http://febp.newamerica.net
/k12/CA/612180.
Oliff, P., C. Mai, and M. Leachman. 2012. “New School Year
Brings More Cuts in State Funding for Schools.” Washington,
DC: Center on Budget and Policy Priorities, September 4.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3825.
Rivera Coté, M. 2012. “Superintendent’s Message,
2012.” http://www.ERUSD.org/apps/pages/?uREC ID=153
730&type=d
Sprague, M. 2012. “Uncertain Times Face Whittier-Area
School Districts in Their Budgets.” Whittier Daily News,
July 4. http://www.whittierdailynews.com/ci 21005290
/uncertain-times-face-whittier-area-school-districts-their.
Gloria Rubio-Cortés is president of the National Civic
League.
DOI: 10.1002/ncr
Spring 2013