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Desert Sands Unified projects narrowing revenue despite healthy reserves; board hears second interim budget
Summary
At a March 4 board meeting, staff presented the district—s second interim budget showing continued enrollment decline, expiring one-time COVID funds, a projected 2025—6 deficit if current trends continue, and a reaffirmed AA2 Moody's rating with a positive outlook.
At its March 4 meeting, the Desert Sands Unified School District received a detailed second interim budget presentation outlining a sustained enrollment decline and the budgetary consequences of expiring one-time dollars.
The district—s business services presenter said LCFF (Local Control Funding Formula) and attendance patterns drive most revenue and that the district has seen a multi-year drop in students that has depressed total funding even as per-student rates rose. The presentation showed a forecasted 2025—6 operating deficit under current assumptions if no further revenue or structural changes occur.
Jordan Aquino, who led the budget briefing, told the board the district—s revenues are dominated by LCFF and that a proposed 2.43% statewide cost-of-living adjustment (COLA) would increase per-student revenue but not fully offset declines tied to lower enrollment. Aquino said the district—s enrollment trend is equivalent, over successive two-year spans, to losing roughly an elementary school—s worth of students and that the district—s next-year projection assumes a 1.1% drop in pupil counts. He also noted the district expects to receive about $339 million in LCFF revenue this year, down from $348.7 million last year.
Why it matters: Desert Sands enters the 2025 budget cycle with substantial one-time funds still available from federal COVID relief and state block grants but with those sources slated to expire in coming years. District staff stressed that continuing programs funded by one-time dollars will require new, ongoing revenue sources or program reductions once grants end.
Key figures and near-term risks described at the meeting: - The district—s ending unrestricted general fund balance for 2023—4 was reported at 43.6% of general fund expenditures; the budget projection shown at the meeting anticipates a 36.7% unrestricted ending balance under the current plan. - Staff identified roughly $144 million in COVID-relief funds received since 2020 that supported many programs and positions. - Several large one-time grants and programs were singled out as expiring, among them universal pre-K planning/implementation, learning recovery monies, educator effectiveness funds, Golden State pathway grants, literacy coaches/reading specialists, and an art and music block grant (the presentation cited an art and music block grant amount of $14.5 million). - A multi-year projection displayed a potential $19 million gap in 2025—6 if revenues and expenditures follow current projections.
Board members pressed staff on details and next steps. Trustees asked for a written list of expiring one-time programs and the dates those funds end; staff said it would include that information in a Friday packet or letter. Multiple trustees commended staff for conservative stewardship and for planning options that prioritize preserving positions despite one-time funding sunsets.
Staff also reviewed the mechanics of LCFF, noting the per-ADA (average daily attendance) rates vary by grade span and by unduplicated pupil counts (English learners, foster youth, free/reduced-price meal students). Aquino pointed to state data used for comparisons and said the district—s revenue rate per ADA differs from neighboring districts, citing the California Department of Education P1 apportionment as the source for those comparisons.
The board heard that some expenditure pressures extend beyond personnel: projected pension cost increases tied to CalPERS, rising utility costs in the district—s Imperial Irrigation District service area, and typical step/column salary schedule growth all reduce the net budgetary benefit of the COLA. Staff illustrated that payroll-related rate increases (for retirement and taxes) and utility increases combine to reduce available discretionary funds.
In a separate financial note, staff announced that Moody—s had reaffirmed the district—s AA2 credit-equivalent rating and upgraded the outlook from stable to positive. Staff said that rating and outlook reflect the district—s fiscal management and would help in future bond-market pricing.
What—s next: Staff will provide the board with the list of expiring one-time programs and their deadlines and will continue to model multi-year budget scenarios. Trustees emphasized a preference for solutions that address structural deficits rather than relying solely on reserves.
