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Newport-Mesa board certifies 2025–26 first interim budget as "positive," staff flags reserve pressure
Summary
The Newport-Mesa Unified School District board voted to certify the district's 2025–26 first interim budget as "positive," citing a $3.2 million revenue upward revision and $15 million of higher expenditure assumptions that reduce projected reserves to about 13.65%.
The Newport-Mesa Unified School District Board of Education on Tuesday approved a staff recommendation to certify the district's 2025–26 first interim budget as "positive," indicating the district can meet its current and next two years' financial obligations.
Chief Fiscal Officer John Dixon told trustees the first interim reflects a modest revenue uptick and higher near-term costs. "We received our first property tax revised estimate from the county, which was slightly higher than we had assumed at adopted budget," Dixon said, noting a roughly $5 million increase in LCFF/property-tax revenue and a net $3.2 million upward revision to revenue at first interim. He added that salary-and-benefit adjustments increased expenditures by about $10 million, with approximately $7.5 million of that in benefits, and that overall expenditure assumptions rose by a little over $15 million.
Why it matters: Dixon said the review still produces a positive certification but reduces cushion in the district's reserves. "When we look at our components of the ending fund balance," he said, "based on the first interim adjustment, it would drop down to 13.65%." He told the board that level was within acceptable range but that staff will monitor trends and bring options to the February budget study session.
Board members pressed staff on the drivers of the changes. Trustee Anderson asked whether the increase in services and operating was a forecasting artifact or a likely near-term cost; Dixon said some increases reflect immediate trends (transportation, utility usage and encumbrances) and would be updated at second interim. Trustee Crane asked whether ESSER funds remained available; Dixon said those federal COVID-era funds are fully spent and only a few discretionary grants remain.
What happened next: After trustee questions and brief discussion, Trustee Pearson moved to approve the first interim certification and Trustee Anderson seconded. The board approved the staff recommendation in a roll-call vote.
The next steps: Staff will provide a more detailed menu of options and a breakdown of service/operating categories at the February budget study session to inform second interim assumptions and the 2026–27 proposed budget.
