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District closes 2024‑25 with $2.2 million operating deficit; cafeteria fund requires major transfer
Summary
The district’s unaudited 2024‑25 financials show an operating deficit of about $2.2 million, a $826,000 transfer largely to cover an unexpected cafeteria fund shortfall, and staff cited a combination of long‑standing bad debt, an unanticipated vendor commission clause and overestimated cafeteria revenue.
The Los Gatos‑Saratoga Union High School District board on Sept. 18 received and approved the district’s unaudited actuals for the 2024‑25 fiscal year, which show the district closed the year with an operating deficit of about $2.2 million.
Patrick (district finance presenter) told trustees the district largely ended the year as projected on revenues and expenditures, but transfers to other funds rose 26%, an increase of about $826,000, driven principally by an unanticipated need to cover a large operating deficit in the cafeteria fund (Fund 13). “We ended the year with an operating deficit of about $2,200,000,” Patrick said.
Staff detailed three main causes for the cafeteria shortfall: a long‑accumulated pool of cafeteria bad debt (written off during close) that staff estimated at roughly a quarter‑million dollars; an unexpected invoice stemming from an existing contract clause with vendor Country House Kitchen that requires the district to pay 5% of gross sales on days the vendor is not on site; and substantial overestimation of cafeteria revenue in the estimated actuals (staff estimated an overstatement of about $500,000). Patrick said the district will shift to zero‑based budgeting for the cafeteria program and return with a revised Fund 13 budget in December along with the first interim report.
Patrick also flagged that most of the district’s revenue (about 85%) comes from property taxes and that parcel tax renewal in May 2024 explains recent parcel‑tax revenue growth. He said the district’s reserve at fiscal year end was 11.74%, slightly below the 12.07% projected in June.
On the vendor issue, Patrick said staff reviewed the Country House Kitchen contract and verified the invoice was legitimate under an existing clause; the board did not vote to reopen the contract at the meeting but asked staff to return with further budget and policy recommendations in December. The unaudited actuals were approved by motion and will be submitted to the district’s external auditors for formal audit and an auditor’s report expected to return to the board at the Dec. 11 meeting.
Key figures cited by staff:
• Operating deficit (2024‑25): about $2,200,000.
• Increase in transfers to other funds: $826,000 (26% increase).
• AP Physics textbooks purchased to remedy a Williams Act insufficiency: 150 copies, about $9,000 (separate agenda item).
• Cafeteria bad debt identified for write‑off: about $250,000.
• Over‑estimated cafeteria revenue in estimated actuals: roughly $500,000.
Patrick said the district would present a budget revision and first interim reporting in December, and the board will discuss whether and to what extent the district will continue subsidizing cafeteria operations.
