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IUSD finance chief warns one-time funds limit program runway as state revenue outlook weakens
Summary
Chief Business Official John Fogarty told the board the district's 2025—26 budget outlook is stable but sketched state-level revenue risks in the May Revision, possible reductions to discretionary block grants and reliance on one-time funds that can sustain current programs for roughly two years.
The Irvine Unified School District's chief business official presented the district's proposed 2025—26 budget at the June 10 board meeting, warning that uncertainty in the state's May Revision could reduce available discretionary funds and that the district is depending on one-time money to sustain several programs.
John Fogarty said the district is projecting a relatively stable local outlook but faces statewide revenue volatility that the governor flagged in the May Revision. "I'm encouraged to report that the district's financial outlook for the budget year and the two subsequent years is very stable," Fogarty said, while also noting risks from lower revenue projections and potential pressure on Proposition 98 funding.
Fogarty outlined a scenario in which the state's May Revision lowers revenue projections by about $10 billion and that the governor's calculation of Proposition 98 in the revision is roughly $1.3 billion lower than earlier estimates. He described options the legislature was considering, including a smaller discretionary block grant and reduced deferrals, and said the district's share of a discretionary block grant would be roughly $11.4 million under the governor's proposal.
The district estimates it will generate about $18 million year-over-year from the LCFF COLA but must cover step-and-column and special education growth, leaving about $7 million in ongoing unallocated funds. Fogarty said one-time funds currently support mental-health staff, extra counselors and nurses, extended summer programs and intervention services and that existing one-time reserves and discretionary block grant receipts could sustain those programs for two years; he warned of structural shortfalls thereafter without additional ongoing revenue.
Board members asked detailed questions about the governor's assumptions, capital-gains sensitivity and the proposed discretionary block-grant reductions proposed by the legislature. Fogarty said the district would monitor state actions and incorporate any changes in the final budget and that a budget revision would be considered if the final state budget materially differs.
The board opened the required public hearing on the budget; no members of the public spoke. The district staff said the proposed budget will be placed on the June 24 agenda for adoption, after the state budget is finalized.
