Your donation will help us produce journalism like this. Please give today.

LA Unified expects this to be its best budget year in a decade, school officials said Tuesday, but board members urged immediate action to address a deficit in three years that could reach half a billion dollars.

“This is the healthiest year in the past decade,” Chief Financial Officer Megan Reilly said in a report to the school board. “For the first time since 2008, this is the first budget without a need for a fiscal plan.”

Reilly also reported that the district had reduced by more than $200 million a projected budget deficit in two years.

Last June, the district was projecting a $340 million deficit by the 2017-2018 school year, and in December that prediction was changed to $225 million. Now that deficit is expected to be less than $100 million. It’s possible it may be as low as a $72.2 million deficit, Reilly reported.

While Reilly reported that the district will have an unassigned ending balance surplus of $129 million this year, she warned that the budget benefited from one-time payments from the state totaling about $170 million, which was owed to the district, and that those funds cannot be depended on for long-term fiscal stability. “On a cautionary note, waiting for one-time funds to plug up that hole is not good for the ongoing deficit,” Reilly said.

The general fund’s balance is projected to be $1.2 billion as of June.

But after congratulatory statements from other board members, Monica Ratliff asked about a slide that had not been presented that addresses a potential $450 million deficit in three years due to declining enrollment and increasing fixed costs, including pension costs, legal liability and other post-employment benefits.

Student enrollment is expected to decline in 2018-2019 by three percent.

Ratliff, who chairs the Budget, Facilities and Audit Committee, urged the board to address the deficit and wanted more transparency.

Board member Richard Vladovic also called for immediate attention to the projected deficit.

“That is a half a billion dollars,” Vladovic said. “I recommend that the superintendent deal with that now. I’m very concerned. We have to note that 86 cents of every dollar goes to people, that’s for salary, health benefits and more.”

“I don’t want to do anything now that will be hurting people years from now,” Ratliff added.

Addressing that deficit in three years, Reilly said, “We have two years to get there. We have to address it, but there is a rosier outlook now with campaigns and programs.”

In presenting the Second Interim Report plan, Reilly said the district will be able to meet financial commitments for the next two fiscal years, through 2017.

“The second interim suggests an overall improvement of the multi-year outlook,” Reilly said.

“This year’s second interim has a stable outlook,” said Superintendent Michelle King. She credited an increase in revenues from the More-than-a-Meal free meal campaign and improved student attendance, which alone increased revenues by $60 million.

King said that perfect attendance in the district could bring in an additional $250 million annually. King warned that there are 80,000 students who are chronically absent. But she said she is encouraged by the report and added, “Together, anything is possible.”

Board member Monica Garcia was happy to hear the district won’t have to send teachers pink slips, which has been standard practice over the past few years. “It is nice that California has increased support for our kids, and we need more and we could do better,” Garcia said.

King agreed. “We don’t want to get into the position of doing Draconian cuts.”