Santa Clara Unified reports $31.1 million unaudited deficit; county warns of watch status
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Summary
District fiscal staff presented unaudited actuals showing a $31.1 million decrease in fund balance for 2024–25, explained revenue and expense drivers and warned of a sizable cut to Expanded Learning Opportunities Program (ELOP) state funding.
Santa Clara Unified officials told the Board of Trustees on Sept. 11 that the district’s unaudited actuals for the fiscal year ending June 30, 2025, show a $31.1 million reduction in fund balance, and county fiscal reviewers warned the district that it may be placed on a watch list unless the board takes steps to stabilize ongoing finances.
Fiscal presentation: Mr. Scheel, who presented the unaudited actuals, said total revenues for 2024–25 were about $419 million, with the largest portion — more than $340 million — from local property taxes. Combined general fund expenses were about $439 million, mainly salaries and benefits. That produced the net decrease of about $31.1 million in fund balance.
Drivers and reserves: Scheel said property tax growth fell short of earlier assumptions and that state and regional market factors have slowed assessed-value increases. He also cited rising employer pension contributions (STRS and PERS) and declining enrollment as contributors to the deficit. The district maintained required reserves — a statutory 3% general fund reserve and a board-maintained 7% basic-aid reserve — and has site and grant carryovers included in assigned fund balance.
County review and consequences: The Santa Clara County Office of Education reviewed the district’s submissions and noted that short-term transfers are spending one-time reserves for ongoing expenditures. The county said if it does not see significant improvement the district may be required to develop a formal fiscal solvency or fiscal stabilization plan as a condition of future budget approvals.
ELOP/Expanded learning funding cut: Scheel told trustees the district expects a significant reduction in the state’s Expanded Learning Opportunities Program funding. "Last year we received about $2,000 per student," he said, and the current estimate for state funding to the district is about $12.40 per student; he added there is a possibility the figure could be revised upward to about $1,500 per student but said any amount was a substantial reduction from prior-year funding. Scheel said the district will use carryover funds from prior years to help sustain programs in 2025–26 while it analyzes options.
Board questions and follow-up: Trustees asked for clearer scenario planning and for the district to return with recommendations at a special meeting and at the December interim budget presentation. Trustee Canova asked how the district would explain the deficit to constituents; Scheel attributed the shortfall to a combination of sluggish property-tax growth, higher pension costs and enrollment declines. Trustees signaled appetite to explore rightsizing operations where necessary to restore ongoing sustainability.
Ending: The board approved the unaudited actuals report as required and heard that staff will bring more detailed fiscal stabilization options and interim reports in coming months.
