Pacific Grove USD first interim report shows $2.0M projected deficit, reserves at 8%
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Summary
Assistant Superintendent for Business reported revenue of $48.6M against projected expenditures of $50.4M for 2025‑26, generating an estimated combined general‑fund and transfers deficit near $2.0M and a projected ending reserve of about 8%. Trustees directed the budget subcommittee to develop long‑term strategies.
The district’s 2025‑26 first interim financial report, presented Dec. 11, shows the district operating under multi‑year pressures that require proactive planning.
Assistant Superintendent for Business (presentation) said the district projects total revenues of $48,600,000 and projected expenditures (including interfund transfers) of roughly $50,400,000, leaving a combined operating deficit of about $2,000,034.70 for 2025‑26. The projected ending reserve was shown at about 8% — above the state‑required 3% minimum for economic uncertainty but below the 17–21% reserves recommended for basic‑aid districts by some fiscal advisors.
The presentation broke the deficit into unrestricted ($690,001.85) and restricted (approximately $1,300,000) components and attributed the larger restricted portion to carryover program expenditures and grant‑funded initiatives that must be budgeted this fiscal year. Several special funds were reviewed: adult education (Fund 11) showing a programmatic deficit; child development (Fund 12) projecting tighter balances; and building/ed‑tech (Fund 21) tied to bond spending and series releases.
The assistant superintendent emphasized that one‑time carryovers and postponed expenditures currently mask underlying structural pressure and noted the need for an ongoing solution rather than short‑term stopgaps. The budget subcommittee will develop recommendations for the board’s budget study session in spring 2026, including strategies to address declining reserves.
Trustees asked about the drivers (enrollment, personnel costs, retirement contributions, and one‑time carryovers) and discussed options including careful use of bond and developer fee funds for capital priorities. After discussion, the board approved the first interim report by roll call; staff recorded a positive certification and will move the report to the county by the statutory deadline.
Next steps: budget subcommittee will return recommendations for long‑term deficit mitigation at the January budget meetings and at the spring budget study session.