Live Oak School District, facing ‘budget crisis’ amid declining enrollment, plans layoffs

Even as it’s asking voters to approve a $44 million bond measure next month, Live Oak School District’s governing board is preparing layoffs and other cost-cutting measures.

The move comes after the Santa Cruz County Office of Education informed the district it is at risk of not meeting its financial obligations in the upcoming 2024-25 fiscal year.

In a Jan. 10 letter to the district, County Office of Education Deputy Superintendent Liann Reyes wrote that “the district has significant decisions to make in order to remain fiscally solvent.” 

“As such, in fiscal year 2024-25 the district is projecting an unrestricted ending fund balance in the general fund of $109,545, which does not cover the state required reserve for economic uncertainty of $854,105,” she wrote. 

If the district’s Measure H is passed, the funds will only go to infrastructure and won’t have a significant impact on the district’s financial situation.

Several teachers are planning to speak up during public comment at Wednesday evening’s meeting of the district’s governing board. Shoreline Middle School eighth grade teacher Jeremy Powell told Lookout that educators are nervous, and that they will advocate for saving administrators and teachers they’re concerned are on “the chopping block.”

“If you’re a new teacher, it’s a nightmare. If you’re not tenured, it’s a nightmare,” said Powell, who previously served as the teachers union co-president for eight years and now acts as a union negotiator for the Live Oak Elementary Teachers Association. “And if you are tenured you’re worried about class size – you don’t want to teach a combo class. It’s very difficult to teach fourth and fifth grade.” 

County and district officials say the crisis was likely caused by a variety of factors. Those include turnover in the district’s chief business officer position, decreasing funds as a result of declining enrollment and chronic absenteeism, and the end of COVID-era funds, according to the district’s governing board president, Kristin Pfotenhauer. She said the district has been aware for some time that it was “pushing it.” 

“We were aware when we made our last decisions about teacher negotiations that we were cutting it close,” she said.

County Superintendent of Schools Faris Sabbah said it’s been at least more than 10 years since a district’s budget reached the “negative” classification. He added, however, that many other school districts are also having to look at reductions for next year due to the loss of pandemic-era funds and declining enrollment and attendance. 

“I think that it’s a combination of factors. I don’t think that there’s a single reason for it. I do think that having a change in those key positions has had an effect,” he said. “We are also seeing that several school districts are being impacted at this point, as a result of declining enrollment, as well as the expiration of many of the additional funds that were provided to the school districts during the pandemic and after the pandemic.”  

Live Oak School District serves about 1,512 students in three elementary schools, one middle school, one K-8 independent charter school and one alternative school. The district employs about 280 certificated teachers, classified staff and administrative employees.

Pfotenhauer said the district’s board has submitted its preliminary stabilization plan to the County Office of Education and is in the midst of finalizing it. The district board has to approve it, and make layoff announcements, before March 15, so that plan will be on a meeting agenda before then. 

Pfotenhauer said while she’s not concerned about the district solving the issues, it will have to make difficult decisions. 

“It will be hard on morale,” she said. 

Pfotenhauer said the district hasn’t yet finalized which positions will see layoffs and how many there will be. 

“We are trying to spread them from district office cuts to classified [and certificated] staff, but those decisions are still in the process,” she said. 

Former union leader Powell added that he doesn’t feel that negotiations for higher salaries are the cause of the financial challenges. 

“We were one of the lower-paid bargaining groups in the area and after the last few rounds of negotiations, we’re probably in the top tier, top quadrant of compensated educators,” he said. “But that’s not why we’re in a budget crisis. The No. 1 reason why we’re in a budget crisis is because of declining enrollment.” 

The budget challenges come as the district is in the midst of a bond measure campaign and as it has been pushing ahead on a workforce housing project.

Pfotenhauer said the district’s $44 million bond Measure H, on the March ballot, if approved, will potentially go toward projects such as a $10 million gymnasium and multipurpose building for Green Acres Elementary and replacing Live Oak Elementary’s roof for about $470,000. 

As for the workforce housing project, Pfotenhauer said the district is looking into potentially selling the property it has been leasing to Community Bridges and Senior Network Services to the tenants and using those funds to purchase another site to build workforce housing there instead. In that way, the senior services can stay at the location where they’ve been serving older residents for decades. 

“If we aren’t able to secure a new site, we’ll have to go back to the drawing board of what ways we can support the senior services and trying to figure that out,” she said. “But we are hopeful.” 

Pfotenhauer said if the property were secured soon, the district could potentially go for another bond measure to support the workforce housing project as early as the fall. 

“Our community survey did indicate that people were willing to pay for both [bonds],” she said. 

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FOR THE RECORD: The story has been updated to reflect current data from the district’s website.

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