Santa Clara Unified CFO outlines second interim budget, warns of ongoing deficit spending and one-time expenditures
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Summary
District staff presented the 2024–25 second interim budget showing increased revenues and a large increase in projected expenses driven primarily by negotiated agreements and one-time expenditures; staff warned the district remains in deficit spending with plans to monitor property tax growth and statewide budget developments.
Mark Scheele, a district finance staff member, presented the Santa Clara Unified School District’s 2024–25 second interim budget to the board on March 12, 2025. The presentation compared the adopted budget, first interim and second interim and described a modest increase in property tax collections and larger increases in projected expenditures.
Key figures and drivers: Mr. Scheele said total general fund revenues increased by about $2.3 million from the first to second interim, with local revenues accounting for roughly $1.7 million of that increase driven by donations, increased facility-use fees, a legal settlement and an insurance refund. Projected expenses increased by approximately $12.6 million from first to second interim; the presentation attributed most of that increase to costs associated with negotiated agreements (including the UTSC settlement already ratified), higher utilities, transportation costs for special education placements, and increased nonpublic school placements.
Mr. Scheele told the board that the district is “deficit spending this year” and that about $22 million of the projected deficit represented one-time spending items or prior-year commitments carried into the current year. He noted salaries and benefits are roughly 84% of the general fund budget and represent about 95% of projected revenues for the current year. The district’s multi-year projections included a 5% annual property tax growth assumption; Mr. Scheele reported the county assessor’s current roll adjustments signaled 3.43% growth for 2025–26, below the district’s assumption and creating some fiscal uncertainty.
State and federal factors: The presentation reviewed potential state actions in the governor’s proposed budget, including full funding of the Proposition 98 COLA (projected at 2.43%), one-time discretionary block grants, and partial repayment of prior learning-recovery block grants. Mr. Scheele cautioned the board that the governor’s May revision and external events (for example, natural disasters that affect state tax filing) could alter the state’s final proposal. At the federal level, the district is watching possible changes to Title I and IDEA funding levels and proposed changes to E-rate and nutrition program funding.
Board discussion: Trustees questioned details about the same-day materials and asked staff to continue monitoring property tax projections and state and federal developments. Trustees emphasized the need to plan for future capital needs (textbook adoption, bus and technology replacement) and discussed whether to begin budgeting for those needs now rather than waiting until reserves decline further.
Next steps: Staff will present a public hearing and final proposed 2025–26 budget at the May board meeting and return in June for budget adoption. The unaudited actuals will be presented in September.
