ABC Unified warns of $8.3 million shortfall as AB 218 settlements and enrollment decline intensify pressure

Deputy Superintendent and Chief Financial Officer Twan Wen said the ABC Unified School District faces a roughly $8.3 million net change in fund balance for 2024–25, driven primarily by a funded average daily attendance (ADA) decline of about 840 students and a modest state cost‑of‑living adjustment.

"The net decrease in LCFF funding for this year is about $9 million," Twan said, summarizing the district's immediate revenue loss and the mechanics of P2 versus funded ADA. He told the board the district received an automatic 1.07% COLA for 2024–25 but lost more revenue from declining funded ADA than it gained from the COLA.

Twan said the district holds about $79 million in restricted reserves that cannot be spent for general operations and described how the district intentionally uses one‑time restricted block grants (for example, the learning recovery block grant and instructional materials funds) to sustain programs while those grants exist. "We have about $68.1 million in restricted revenues a year and spend about $115 million on restricted programs," he said, explaining that local contributions make up the shortfall in restricted program spending.

Beyond the $8.3 million net deficit, Twan told the board that several litigation settlements tied to Assembly Bill 218 — the state law that re‑opened an historical claims window for sexual‑misconduct cases — have increased fiscal pressure. He said the board previously approved settlements and that an additional settlement of about $2.5 million is not included in the $8.3 million figure presented to the board.

The county has formally required the district to prepare and submit a board‑approved fiscal stabilization plan. "The county sent a letter saying we need to put together a fiscal stabilization plan," Twan said, adding that the plan must show how the district will meet obligations through the three‑year projection window if current trends persist.

Board members pressed staff for clarifications. Dr. Rios asked about restricted fund balances and ending projections; Twan said the district started FY2024 with $79 million restricted, expects to spend about $14 million this year and end FY2025 with approximately $65 million, and plans to spend down further in subsequent years as certain one‑time funds expire.

The board also discussed longer‑term drivers. Twan reported current enrollment at roughly 17,510 students with multi‑year projections declining toward the mid‑15,000s if demographic trends continue. He said outside‑district student counts have fallen from a prior peak (about 3,300) to roughly 2,707, reducing a previous source of incremental revenue.

Board members and community commenters offered a range of responses: suggestions included seeking legislative relief or low‑interest bridge loans for AB 218 liabilities, maximizing revenue from facility rentals while accounting for insurance and overtime costs, consolidating very low‑enrollment schools to reduce overhead, pursuing programs to attract new students (including magnet and dual‑language offerings), and pursuing cost reductions away from classroom instruction where possible.

Public commenter Zeal Ahir urged the board to press legislators for flexibility and noted the human cost of the claims covered by AB 218: "AB 218 is about the reprehensible behavior of adults who were employed within this district," the speaker said, calling for systemic fixes and additional state support.

Twan and board members flagged potential offsets in the governor's budget proposals under consideration in Sacramento. The proposals include an expanded Extended Learning Opportunities Program (ELOP), universal school meals, and Universal Transitional Kindergarten (UTK). Twan said ELOP tier changes could increase district ELOP funding materially (staff estimated a possible ~$6 million increase under the governor's proposal if the district qualifies for the higher tier), but he emphasized these are restricted funds that carry program obligations and staffing or facility implications.

Next steps: staff will draft the county‑required fiscal stabilization plan and present options for budget alignment at the May board meeting. Board members requested broad stakeholder engagement, further analysis from hired consultants, and prioritized recommendations that preserve classroom services where feasible.

Outcome: The board closed the special session after comments and directed staff to develop a reduction plan and bring options back to the board in subsequent meetings.