Pacific Grove Unified reports positive second interim but notes reserve decline, property-tax uncertainty

The Pacific Grove Unified School District Board of Education received the district’s second interim financial report on March 20 and certified a positive fiscal outlook for the current and the next two fiscal years.

Assistant Superintendent Jorn presented the numbers to trustees. Key points: Pacific Grove Unified is a basic‑aid (community‑funded) district whose primary revenue source is local property tax receipts; the district reported a projected combined ending fund balance of roughly $5.3 million and a general‑fund reserve of about 8.8 percent. Staff noted a modest downward revision in property‑tax receipts through January and said the district will monitor April receipts (the larger annual property tax installment) before finalizing longer‑term assumptions.

Nut graf: The certification gives the board a required statutory finding that the district currently can meet its obligations, but the presentation warned trustees the reserve level has declined from prior years and that PERS rate increases and property‑tax timing are key risks.

Major details provided to the board: - Revenue and reserves: The district’s LCFF entitlement was shown for context, but Pacific Grove remains primarily supported by local assessed property valuation; staff reported a small revenue increase of roughly $100,000 tied to categorical funding but pointed to a modest drop in secured tax‑roll receipts in the current snapshot. The adopted budget had projected ~5.25% property‑tax growth; current interim snapshots show nearer 4.75% until April receipts are final. - Expenditures and trends: The presentation showed a net operating deficit for the year that staff explained is largely driven by aligning restricted carryover funds with planned expenditures (for example, music/Prop 28, EOP kitchen infrastructure, and site donations). Benefits rose (an increase of roughly $461,000 reported from first to second interim), driven by staffing fills and updated payroll encumbrances. - Reserves and comparisons: The district’s reserve is projected at about 8.8 percent; staff reminded the board that statutorily a 3 percent reserve is required, but many basic‑aid districts maintain higher board‑policy minimums. A neighboring basic‑aid district was cited with a much larger reserve for comparison (over 20 percent). - Cash flow: Because property taxes are received unevenly, the district continues to use a tax revenue anticipation note to bridge cash‑flow timing between major receipts; staff reported that the district has the cash‑flow resources needed for the year as currently projected.

Board questions and follow up: Trustees asked for clarification on books and materials trends, digital versus hard‑copy curricula costs and whether the district had tightened encumbrance practices; staff said the district has worked to reduce year‑to‑year carryforward encumbrances and aims to keep actuals within about one percentage point of projections where possible. Trustees requested a follow-up update after the April property‑tax receipts and asked staff to consider codifying a board policy on reserve targets.

What the board decided: After discussion and public comment (none on the item), the board voted to approve the second interim report with a positive certification. Staff will return with updates after April tax receipts and continue monitoring pension (STRS/PERS) rate changes and restricted‑fund carryovers.