Pali High Board of Trustees Budgets for Upcoming Year

Members Discuss With Assumption That PPP Loan Will Not be Forgiven

By JENNIKA INGRAM | Reporter 

During the Palisades Charter High School Board of Trustees meeting on June 9, Sara Margiotta, a parent board member on the Budget and Finance committee, reported that the school is budgeting with the assumption that the $4.6 million Paycheck Protection Program loan the school accepted will not be forgiven.

“The Budget and Finance Committee, after much discussion, decided that it’s fiscally irresponsible to assume any of that money will be forgivable,” Margiotta said. “We need to be fiscally responsible, and in doing so, we budgeted for the 2020-21 school year under the assumption that none of that loan is going to be forgivable.”

Pali High applied and accepted the $4.6 million loan based on information provided by Governor Gavin Newsom that it was likely the State of California would defer funding at certain times during the 2020-21 school year so the state (which operates on a cash budget) would have a more balanced budget.

“It was a bridge loan,” Margiotta explained at the board meeting.

Chief Business Officer Greg Wood and Margiotta explained how there will be at least three and a half months over the next two years where Pali High will be obligated to pay its payroll when the school will not have received the money in time from the state.

Margiotta and Wood shared that for the month of June, while the school won’t be getting its monthly money from the state until July, it is still obligated to pay its $1.5 million payroll sooner. This is why, board members reported, the school applied for the loan, since they knew these cash deferrals were coming and Pali High wanted to ensure it was able to make its payroll.

“What they are doing is deferring our funding in June until July,” Margiotta said. “And they are doing the same thing again in April, May and June of 2021.”

Wood explained that although the school district would show up on the California State Budget as a receivable, the school will not actually have received the money yet.

“It’s their way of conserving cash basically,” Margiotta explained.

“Because this is a deferral of income versus income that was not received,” Margiotta explained, the Budget and Finance Committee is acting on the assumption the PPP loan will not be forgivable, keeping in mind the parameters for forgiveness are not finalized.

The PPP loan money has been put into a short-term treasury rather than sitting in a checking account, so it’s earning a little bit of interest, Wood shared in a previous board meeting.

Private schools that charge tuition are not likely to have the income deferrals Pali High is expecting, regardless of what the budget looks like in the State of California.

Other charter schools in the Palisades are “affiliated charters,” which means they have an affiliation to Los Angeles Unified School District: They have more autonomy with the charter status to do their own programming, but they are not independent from LAUSD—they are still part of the district.

Pali High is not affiliated with LAUSD and does not receive its funding from the district—its funding comes from State and Federal.

The Budget and Finance Committee spent more than a dozen hours in recent weeks putting together the budget for the 2020-21 school year, knowing it will likely be revised as new information comes in. Members explained they will continue to review it as new regulations regarding the Paycheck Protection Program evolve.

Because this is an ever-changing environment, Pali High does not know if the school is going to be in an e-Learning, hybrid or on-campus situation next semester, Margiotta shared.

“We do know in the past few months the school has been shut down that it’s financially more expensive to operate with students in seats on campus than in an e-Learning environment,” Margiotta said, “so we created a budget as if the students are in-seat because we know that’s the more financially responsible position to be in.”