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El Segundo Unified reports healthy reserves but continued deficit spending in first interim
Summary
Chief business official presented the first interim budget for fiscal year 2025–26, reporting roughly $1 million in additional restricted revenue from a block grant, reserves above the 3% minimum, ongoing one-time deficit spending, and smaller projected out-year deficits than at adopted budget due to lower inflation and energy projections.
Dr. Linz presented the district's first interim budget report for fiscal year 2025–26 on Dec. 9, reporting the district is maintaining reserves above the 3% minimum while continuing to deficit-spend one-time funds.
"You'll notice on the highlighted bottom row, we are maintaining healthy reserves," Dr. Linz told the board, adding that the district's revenue increased by about $1,000,000 because of the student support and professional development discretionary block grant. He noted that while the district is deficit spending in the current and out years as it spends one-time funds, projected deficits for 2026–27 and later are smaller than originally forecast at the adopted budget because national inflation projections have moderated, particularly in energy and some supply categories.
The report covered restricted and unrestricted funds: restricted funds showed deficit spending as one-time grants are spent down, while the general fund showed healthy reserves and staffing-related expenses comprising the bulk of expenditures. Dr. Linz said 72% of district funding still comes through the Local Control Funding Formula (LCFF) and emphasized the contribution of local sources, including the El Segundo Education Foundation, to program support.
What the board decided: The board accepted the first interim report by a voice vote during the action portion of the agenda (recorded as carried 4–0). The CBO noted the next interim report will be in March and will include actuals through Jan. 31.
Why it matters: The first interim is a formal fiscal checkpoint required by the county and state; it informs budget planning and demonstrates whether the district is on track to meet fiscal obligations. The combination of maintained reserves and planned deficit spending of one-time funds is consistent with many districts managing post-pandemic program restorations and one-time capital or safety investments.
Ending: Staff recommended continued monitoring and presentation of a second interim in March with updated actuals.
