Board adopts unaudited actuals, flags $2.2 million operating deficit and cafeteria shortfall

The Los Gatos‑Saratoga Union High School District Board of Trustees approved the district’s unaudited actuals for fiscal year 2024–25 after a presentation from district finance staff that showed a roughly $2.2 million operating deficit.

Patrick, the district finance presenter, told trustees the year closed slightly worse than June projections. Revenue in the general fund increased about 0.9% while expenditures increased roughly 0.3%, but transfers to other funds rose about 26% (an increase of $826,000), largely to cover an unexpectedly large operating deficit in the cafeteria program.

Patrick said the district had anticipated an operating deficit of about $1.9 million but closed the year at approximately $2.2 million, a shortfall he attributed primarily to transfers into Fund 13 (the cafeteria fund). He outlined three drivers of the cafeteria shortfall: (1) roughly $250,000 in long‑standing bad debt that had accumulated over many years and was written off, (2) an unexpected invoice tied to the district’s contract with Country House Kitchen that required a payment equal to 5% of gross sales on days that a Country House Kitchen employee was not on site, and (3) an overestimate of cafeteria revenue in the estimated actuals (about $500,000) due to timing of federal reimbursements.

On the revenue side, Patrick said about 85% of the district’s general fund revenue comes from property taxes and that year‑over‑year secured property tax revenues grew by approximately $3 million (about 5.25%). Local parcel tax revenue rose after voters approved a parcel tax increase in May 2024 that renewed authorization for nine years and added an inflation adjustment. Federal and state grant revenue declined compared with 2023–24 largely because one‑time COVID recovery tranches ended.

Patrick also described accounting and fund‑structure items trustees asked about: the RDA pass‑through revenue that must be used for facilities purposes, lease income from a tenant at 809 University (about $18,000 per month), and the decision to move employee benefits money into Fund 20 per GASB guidance. He told the board staff plans to present a revised cafeteria budget and a first‑interim multi‑year projection at the December meeting.

Board members thanked staff for the clear presentation and then approved the unaudited actuals by motion; students present gave their preferential vote first as part of the meeting routine. The board directed staff to return with a revised Fund 13 (cafeteria) budget in December and to analyze whether policy changes are needed to avoid a recurring structural deficit.

Next steps: staff will file the unaudited actuals with external auditors (Chavon and Associates) and present the audit findings and first interim multi‑year projection at the board’s December meeting.