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District certifies second interim budget as positive; staff warns of multiyear deficits after newly approved pay increases
Summary
San Marcos Unified certified a positive second interim budget March 13 while staff warned that incorporating the newly approved labor agreements will increase projected multiyear deficits and reduce reserves in later fiscal years.
San Marcos Unified staff presented the district's second interim budget and the board certified a positive budget on March 13, while staff warned of projected deficits in subsequent years once recently approved labor agreements are folded into the projections.
Erin, a district budget presenter, walked the board through the second interim report, which reflects actual revenues and expenditures through Jan. 31 and projections for the remainder of the fiscal year. The district projects general-fund revenues of about $311.5 million and expenditures of roughly $329.1 million; salaries and benefits account for more than 80% of expenditures.
Key items from the presentation: staff moved one-time transportation equipment grant dollars (roughly $9.6 million for electric buses) into a separate fund (Fund 15) to avoid skewing year-to-year comparisons in the general fund; local-control funding formula revenues and enrollment declines are driving revenue pressures; staff projected a 2024-25 unrestricted deficit of about $4.8 million under the assumptions presented at the meeting. Erin said adding the board-approved salary increases for 2024-25 and 2025-26 would increase the 2024-25 deficit to approximately $6.8 million and increase the 2025-26 projected deficit to about $11.4 million, with reserves falling toward the mid-single digits in later projection years.
Erin emphasized key assumptions used in projections: attendance/ADA assumptions (93.6% used as the attendance rate), enrollment declines (staff assumed a drop of about 200 students for 2025-26), and state COLA estimates (2.43% for 2025-26 and 3.52% for 2026-27 in the assumptions used). She told the board that the budget report as presented met the statutory requirements and that staff recommended approval of the second interim certification.
The board voted to approve the second interim budget and the positive certification. Erin said the district now has 45 days to add the approved salary increases into the budget and return updated fiscal projections to the board.
