Beverly Hills Unified projects healthy reserves while board presses for clearer CTE grant accounting

Beverly Hills Unified School District reported projected revenues of about $100 million and a multiyear projection that keeps the district in "basic aid," while board members pressed staff for a clearer, itemized accounting of career‑technical education grant funds during a Feb. 24 budget study session.

The district’s director of fiscal operations, Marilou De Arcos, told the board the district came to the board in March with the second interim report and that "you will be seeing that budget in June, wherein we will adopt the budget for fiscal year 25 26." She summarized the district’s funding picture as largely property‑tax driven, noting the district’s basic‑aid position and projected property‑tax revenue growth over recent years.

De Arcos said the district’s combined unrestricted and restricted revenue at second interim was about $100 million and that the general fund’s unrestricted reserve percentage — the measure the board focuses on for fiscal health — is projected to be in the high‑20s (percent) across the multiyear projection. She warned the board that restricted program shortfalls must be covered from unrestricted dollars: "Unrestricted dollars cannot go negative," she said.

Why it matters: Being a community‑funded (basic‑aid) district means Beverly Hills Unified receives more revenue from local property taxes than it would under the state’s Local Control Funding Formula (LCFF) allocation tied to attendance (ADA). That produces higher revenue but also changes how state cost‑of‑living adjustments and enrollment shifts affect the district compared with state‑aid districts.

Key budget details presented

- Property taxes and basic‑aid: De Arcos displayed a four‑year property‑tax history and projected 24‑25 property taxes around $72 million, noting the district’s basic‑aid position rose from about 73% in 21‑22 to a projected 88% in 24‑25.

- Total revenues and expenditures: Staff presented combined projected revenues of roughly $100 million and total expenditures near $108 million at second interim; the general fund ending balance and projected reserves were shown in a multiyear projection (MYP) indicating reserves in the high‑20s to low‑30s percent range across the projection period. (All figures presented as second‑interim projections and subject to year‑end adjustments.)

- Fund structure: Staff reviewed multiple funds outside the general fund (Fund 13 nutrition, Fund 14 deferred maintenance, Fund 17 special reserves, Fund 21 bond/construction, Fund 35 state reimbursements, and Fund 71 OPEB). Examples given included: - Fund 13 (child nutrition): projected revenues ~ $2.5 million, expenditures ~ $2.6 million, ending balance about $1.3 million; those funds are restricted to food‑service purposes. - Fund 14 (deferred maintenance): a beginning balance shown near $264,000, projected spending and a planned contribution from the general fund (board discussion cited a planned annual contribution figure that was used in budgeting). Staff said the district budgets conservatively for deferred maintenance projects. - Fund 17 (special reserves): the district maintains subfunds, including a tech‑refresh subfund (17.1) with an annual transfer of $500,000 and a liability/contingency subfund (17.2); the combined special reserve was shown in the mid‑teens of millions. - Fund 21 (bond/construction): staff said the beginning balance was roughly $156 million, anticipated spending about $61 million this year for major projects (including Conheim B3/B4 and the upper athletic field), and a projected ending balance near $97 million. - Fund 35 (state reimbursement): staff said the district qualifies for about $4.5 million in future State School Facility Program reimbursements, but timing is uncertain (applications and state processing can take multiple years; staff cautioned not to treat those sums as immediately available). Fund 35 receipts reimburse bond‑eligible projects the district already completed. - Fund 71 (OPEB): the district continues annual OPEB contributions to an irrevocable trust; staff reported a beginning balance and a projected increase across the year, and noted long‑term funding work to reach a fully funded position.

Board questions and requests

Board members asked detailed questions about where one‑time and restricted revenues can be used, how site budgets and principal allocations connect to district priorities, and how the district matches spending to intended outcomes. Several board members urged more granular tracking and reporting so the board and public can see precisely what grant funds have been received, how much has been spent and where general‑fund subsidies were applied.

CTE grants and transparency concerns

A large portion of the public and board discussion focused on career‑technical education grants (CTE). Board members asked for a full, line‑by‑line breakdown of CTE grants — what the district has received, what has been spent, what remains unspent, and where district matching funds were applied.

De Arcos and other staff summarized grant activity for recent years: the district received an estimated $300,000 in CTE incentive grants (CTEIG) in 23‑24 and was required to match that allocation (a 2:1 match was cited); the match and additional district contributions resulted in total CTE‑related spending that exceeded the grant amount. For the current year, staff said the CTEIG allocation is smaller (about $150,000) and staff projected a district general‑fund contribution in the range of several hundred thousand dollars to continue programming.

Staff described separate multi‑year Golden State Pathways awards (hospitality, healthcare, robotics and other program grants) that total larger amounts spread over multiple years; those awards were presented as multi‑year allocations that the district has received and intends to program across the grant period. Staff said some grants are paid after expenditures (reimbursement grants) while others remit funds up front; staff said receipts for several Golden State Pathways awards are already recorded in the district’s ending fund balance.

Board members said the available slide decks and aggregate lines in interim reports make it difficult for trustees and the public to verify program spending. The board requested: a) a single, consolidated schedule showing each CTE grant by name, award amount, years of availability, actual receipts to date, expenditures to date (by object and by site), and the district’s match/contribution; and b) a study session or follow‑up packet if needed to answer remaining questions.

Staff response and next steps

Finance staff agreed to provide the requested breakdown and suggested the board could request a dedicated CTE study session if trustees prefer a deeper walk‑through. Staff reiterated that funds designated as restricted (for example, some CTE awards, Title I, Title II, Title III, lottery and other categorial dollars) cannot be moved to general‑fund purposes unless the grant rules allow it; conversely, when the district wants to sustain restricted programs beyond grant awards, it sometimes contributes general‑fund dollars to maintain programming.

Other items discussed

- Developer fees: staff said developer fee revenue is projected and that the district recently updated its developer‑fee study to increase rates; board members discussed using developer fees for construction and safety projects where legally permissible and staff said transfers would be carefully allocated to bond‑eligible projects when appropriate.

- District office move and deferred maintenance: staff said a district office move and related one‑time costs were budgeted and that actual move costs were lower than some prior estimates after most work was done in‑house.

- Benefits and OPEB: staff reviewed the district’s OPEB contributions and benefit cap ($13,250 cited as the current district cap the board will cover) and noted the district works with its broker annually on plan design and cost analysis. Staff said the cost impact of changes (for example raising caps or wage‑scale increases) is modeled when bargaining and budgeting decisions take place; staff provided an example that a $1,000 increase to the benefit cap was estimated in the presentation to cost roughly $439,000 based on current take‑up.

What the board asked for next

Trustees asked for supplementary materials to accompany the June budget adoption packet, specifically: - A detailed, line‑by‑line schedule of CTE grants (awards, receipts, spending by site and object, district match). - A clearer presentation of which funds are restricted and which are unrestricted and the year‑to‑year movement between funds. - Additional detail on deferred maintenance and the district‑funded portions of major one‑time projects.

The board ended the study session with staff agreeing to supply the requested breakdowns and to place additional details in upcoming budget presentations and, if needed, a follow‑up study session focused on CTE funding.

Ending

After the requests and clarifications, Board President Marcus closed the session and reminded trustees of the regular board meeting scheduled a week later.