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    LBUSD Had Policy Of Spending Down Its Formerly Large Surplus, Now Blames Sac'to For District's Serious Financial Situation

    (Dec. 18, 2003) -- In the wake of revelations by the Long Beach Unified School District -- first reported by -- that the district cannot currently meet its minimum state financial reserve requirements, has learned that several years ago, the district adopted a policy of spending down its once large surplus by knowingly spending more than it was taking in.

    LBUSD now blames Sacramento's budget problems for its financial woes.

    In response to a Dec. 17 telephone inquiry by, LBUSD Financial Services Officer Lawrence Bozanich said that LBUSD used to have a $72 million reserve...but the district made a "conscious decision" a few years ago "to begin reducing that to more reasonable levels."

    He noted that LBUSD receives 90% of its funding from Sacramento. Asked why LBUSD didn't reduce its spending as Sacramento's fiscal problems mounted, Mr. Bozanich said that had it been known Sacramento would implement its midyear budget cuts, the district might have made reductions...but after a March 15 deadline had passed, it became effectively impossible for the district to reduce certificated teacher commitments, a major district cost item. He noted that the district was free to let other classified employees go on 30 days notice.

    Mr. Bozanich said during his Dec. 16 School Board presentation:

    "We've looked at our estimated revenues and expense, and we have some serious financial problems," he said, adding that "based on our current projections, may not be able to meet all of its financial obligations for the year" and "we do not have the required one percent reserve in unrestricted funds that are in current state law."

    In his Board presentation, Mr. Bozanich attributed much of LBUSD's problem to increasing workers compensation costs and employee benefits. He also noted that the district has "had six years of spending more than we've brought in."

    Developing. Further to follow.

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