La Canada Unified board approves first interim budget, accepts audits; auditors note recurring ELOP finding

La Canada Unified School District trustees voted Thursday to approve the district—s first interim financial report for 2025-26 and to accept two audit reports, including a bond audit with no findings and a districtwide financial audit that included one recurring state compliance finding.

The board—s motion to approve the first interim report followed a presentation by district finance staff explaining that, compared with the budget adopted in June, the district—s general-fund position improved by about $551,000. Presenter Melissa said that change reduced projected deficit spending for 2025-26 from roughly $2.0 million to about $1.1 million and attributed the improvement to stronger attendance (which increases LCFF funding), a one-time state professional block grant of about $1.19 million, and additional endowment and donation funds from the La Canada Foundation for Education (LCFEF).

"Overall, our general fund balance did change from the approved budget to first interim. We saw an increase," Melissa said during the presentation, adding that the LCFF (local control funding formula) makes up roughly 68% of district funding and is driven by average daily attendance. She warned that the block grant was one-time funding and that the district must manage reserves and cash flow accordingly.

Trustees asked for clarifications about the block grant—s spend-down window, COLA assumptions and lease income stability. Melissa said the state—s one-time professional block grant is discretionary and typically can be spent down over roughly three to four years; she also noted the district had built conservative multi-year assumptions (including a 3.02% COLA for next year) and that a 0.5 percentage-point COLA change would equate to about $200,000 for the district.

The board then voted to accept the first interim report by voice vote.

On audits, the board accepted the 2024-25 bond financial audit for Measure LCF; the external auditors reported no findings. The district—s comprehensive financial audit for 2024-25 received a clean opinion on internal controls, but staff noted one recurring state compliance finding related to the ELOP program that mirrored last year—s finding. Melissa said the overpayment had already been accounted for in the district—s financials and that the California Department of Education (CDE) allows an opt-out beginning in 2025-26, which should address the compliance concern going forward.

"We have been issued a clean opinion and so, we have a clean opinion on our internal controls and, there's one audit finding related to state compliance," Melissa said.

The board accepted both audit reports by voice vote.

What happens next: district staff will include the interim report in required filings and continue monitoring revenue assumptions ahead of the governor—s January budget update and the second interim review in March.