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OCDE holds budget study session; staff outline multi‑year projection, Prop 98 and pension pressures
Summary
Department finance staff presented OCDE’s second interim financial report, described a projected operating deficit for 2024–25, and highlighted statewide risks including Prop 98 maneuvers, CalSTRS/CalPERS contribution increases and the winding down of COVID relief funds.
Orange County Department of Education staff presented the board with its budget study session on April 2, detailing the second interim financial report, multiyear projections and state level risks that could affect the county office and local districts.
David (OCDE finance director) walked trustees through the budget book and second interim report. The presentation summarized fund structure, SACS coding fields used in state reporting, and the department’s multi‑year projection. Staff reported an operating deficit forecast for the combined general fund (including restricted categorical programs) of $18.6 million for 2024–25; the unrestricted operating accounts were shown as projecting a $13.1 million deficit before taking out planned one‑time capital projects and other one‑time spending. When one‑time capital expenditures (for example Rancho Sonata project, conference center upgrades and elevator installation) are excluded, staff said the county office’s current‑year structural position was closer to a small surplus.
State and economic context OCDE staff reviewed the governor’s January proposal and UCLA economic assumptions referenced in the presentation. Highlights included: the Department of Finance’s recently revised revenue estimates that raise the Prop 98 K–12 guarantee, differences with the Legislative Analyst’s Office estimates, and the governor’s proposed partial appropriation of the Prop 98 guarantee for 2024–25 with “settle‑up” language if revenues materialize. Staff noted that the governor’s January proposal estimated roughly $17 billion more in state general fund revenues over a three‑year window relative to the enacted 2024–25 budget act, while the LAO’s estimates were lower by about $10 billion over the same window.
Pension and long‑term pressures Staff highlighted long‑term employer contribution rates for CalSTRS (projected to remain at 19.1%) and CalPERS (rising further in out years), noting the substantial increase since LCFF implementation in 2013–14. The presentation also summarized district revenue drivers (LCFF funding based on ADA) and the effect of ADA declines on LCFF revenue despite a modest statutory COLA. The presentation flagged several state fiscal risks the LAO has identified, including capital‑gains volatility and elevated unemployment in California compared with the nation.
OCDE projects and capital plans The department’s multiyear projection included a small projected deficit (about $155,000) for 2025–26 that incorporates planned capital spending for Rancho Sonata and other projects. Staff described procurement steps underway (prequalification of contractors for Rancho Sonata, pre‑bid conferences and a pre‑construction schedule) and other planned capital work including portable replacements and an elevator installation at the Esplanade building.
Next steps Staff said a May‑Revise‑based preliminary budget will be brought to the board in June with public hearings on the LCAP and the preliminary budget before final adoption in late June. Trustees and staff discussed the sensitivity of projections to state revenues, CalSTRS/CalPERS contributions and lingering one‑time federal COVID funding that must be obligated or liquidated per federal rules.
