Preliminary 2025–26 budget: district projects multi‑million dollar shortfalls amid enrollment decline and rising benefits costs

The East Side Union High School District on June 5 reviewed a preliminary budget for 2025–26 that projects continued fiscal pressure over a multi‑year horizon due to enrollment declines, rising health‑benefit costs and uncertainty in state one‑time funding.

Chief Business Officer Tom Huynh told trustees the budget presented is preliminary and will be adopted at the June 17 meeting. He said the California budget process remains fluid and that a number of state proposals were unresolved, including the final treatment of one‑time block grants. “Before you, is our preliminary budget, that we will take this action on, June 17 to adopt,” Huynh said.

Key points from the presentation: - COLA and LCFF: The state’s May revise reduced some earlier projections; a 2.3 percent COLA for K–12 was included but declining local ADA means district LCFF revenue projections do not grow dollar‑for‑dollar with COLA. - Enrollment and ADA: Projected decline in average daily attendance and enrollment reduces base LCFF revenue despite COLA; district staff modeled a modest increase in daily attendance toward 93% but noted declining enrollment trends. - One‑time funding uncertainty: Huynh identified up to several million dollars in potential one‑time funding (parcel tax and state block‑grant restorations) but stressed the amounts are not final and depend on June state actions. He cited a potential $7.3 million of one‑time funds under optimistic scenarios but noted the state negotiation window was near its end. - Benefits and costs: The district faces notably higher benefit costs (health‑insurance increases). Staff modeled a historic 6 percent benefits assumption but said recent experience has exceeded that in some years; next year’s benefits line is one of the largest expenditure pressures. - Multi‑year projection: The district’s multi‑year projection shows deficit spending in the near term, with staff citing deficits in the tens of millions of dollars across the current and next fiscal years (presentation figures included estimates of roughly $38.7 million to $43.1 million in projected deficit spending across different lines of the presentation). Huynh warned that without revenue increases or expense reductions, reserves would decline over the projection period.

Trustees asked about federal funding exposure, class‑and‑collective bargaining impacts and strategies to improve attendance and enrollment. Huynh said federal Title I funding was included in the budget and was not expected to change materially in the immediate term, and he described the district’s ongoing attendance‑recovery outreach as a component of the revenue plan.

The board will consider final budget adoption and a required budget stabilization plan to be filed with the county office of education at its June 17 meeting.