Board reviews $1.9 million shortfall, approves investment policy and audit contract

The Birmingham Community Charter High District board reviewed a second-interim budget showing an estimated $1.9 million operating shortfall for the current year and approved an investment policy statement and the district's annual audit contract during its meeting.

At a meeting presentation, finance staff said, “As you're gonna see with our second interim, we're looking at about a $1,900,000 deficit this year,” framing why the board is pursuing a mix of cost reductions and revenue strategies. The board voted to adopt an investment policy statement and to renew the external audit contract with Christian Larson and Allen.

Why it matters: the shortfall is part of a multiyear projection showing continued pressure on reserves if no revenue increases or expense reductions are implemented. District staff told the board that attendance and enrollment directly affect state funding; they estimated the district's revenue changes at roughly $530,000 for each 1 percentage-point swing in average daily attendance.

Details from the budget update: the district reported enrollment of about 3,100 students and an attendance target of about 94 percent. Finance staff said the district expects to use roughly $5.3 million in one-time funds this year and that general operating costs run about $5.7 million per month, including roughly $4 million in monthly payroll. Staff also outlined revenue strategies under consideration, including boosting BBA (Birmingham Virtual/BBA) enrollment and restarting an international-student program to generate tuition revenue.

Finance staff gave an example for the international program: “We would charge about $30,000 per student for international. And so 30 students would be $900,000 as an example,” illustrating one of several revenue scenarios the district is studying.

Investment policy and audit contract: the board approved an investment policy statement that staff said is the first step toward establishing an investment fund for a portion of the district's cash holdings. Staff described the next step as issuing a request for proposals for an investment consultant and manager if the district proceeds. The board also approved a one-year contract for audit services; staff reported the audit fee at $45,500 plus an additional $45,000 for related tax services.

Budget hearings and deadlines: district staff said the second-interim report will be submitted to the county and to LAUSD per statutory timelines and that the state budget process and expected COLA (cost-of-living adjustment) will affect final figures. Staff warned board members there remains uncertainty in state funding assumptions and noted the district will continue looking for operational savings while pursuing revenue options.

Votes at a glance: the board approved the investment policy statement and the audit contract by voice/roll-call; both items passed. (The meeting record shows motions were moved and seconded and that the board carried each item.)

The board directed staff to continue refining assumptions, return with more detailed revenue and staffing scenarios, and to proceed with an RFP for investment advisory services if recommended.