District finance chief warns of volatility in state, federal funding as school year begins

The Los Altos School District received an update from district finance staff on state and federal funding as it prepares to open schools, and officials urged caution about relying on one-time revenues. The presentation, given by Mr. Wallace, outlined the district’s $87,000,000 general fund portfolio and noted that property tax is the district’s largest source of revenue while federal funding represents about 1 percent of the total but still amounts to more than $1 million. Mr. Wallace said a discretionary state block grant will deliver “about $315 per ADA. It’s right around a million dollars,” and that the district expects a modest COLA for some restricted programs including special education, the mandated block grant and child nutrition. He described the discretionary money as onetime and said the district should avoid using it to fund ongoing staff costs: “I always have to emphasize it's onetime. So we want you to put onetime expenses, not for staff.” The presentation gave several cautions. Mr. Wallace said a prior learning recovery block grant that had been clawed back was restored and that timing of the funds remains uncertain. He also warned that some federal title programs — including Title I, Title II and Title III for English learners and immigrant students — and other federal reimbursements could be at risk pending decisions in Washington. “There has been talk in Washington about potentially eliminating some of these, and it would have an impact on our budget for sure,” he said. Board members pushed for contingency planning. One trustee said the district should increase reserves to protect against a sudden federal cut; Mr. Wallace said the district is monitoring cash flow and would reflect any changes in the multi‑year projections once state and federal assumptions become clearer. On targeted programs, Mr. Wallace told the board there is no new funding for transitional kindergarten (TK) for basic aid districts and that a claim seeking reimbursement for a 10:1 adult‑to‑student TK requirement had been denied for basic aid districts. He also explained that the federal and state meal reimbursements do not cover full program costs and that the district continues to subsidize food services from the general fund. Board members asked for follow‑up and updates. Mr. Wallace said the district will report unaudited actuals and a first interim update in September and will return to the board with multiyear projection changes if revenue assumptions shift. What happens next: staff said they will incorporate final allocations into the September unaudited actuals and update the board’s multiyear projections if federal or state assumptions change.