Millbrae trustees certify first interim with $2.5 million projected deficit and tentatively approved 6% raise for staff

Mary Pollard, the district’s chief business officer, presented the Millbrae Elementary School District’s 2025‑26 first interim report and told the board the documents cover data through Oct. 31, 2025. She said the district projects total general‑fund revenue of slightly over $36 million and expenditures of about $38.5 million, producing roughly $2.5 million in deficit spending for the year.

The projection includes a tentative, board‑reviewed 6% compensation increase for bargaining units. “These expenditures account for the 6% raise that we will later ask for your approval,” Pollard said. She noted the superintendent and the CBO are excluded from that increase as presented.

Pollard walked trustees through the revenue mix underpinning the forecast: locally generated LCFF/tax revenue makes up roughly 77% of the general fund, federal revenue about 2% and state revenue about 9%. She told the board the district expects to transfer money from restricted funds into the general fund — roughly $275,000 from fund 20 and just over $1 million from fund 17 to cover textbook adoption — but emphasized transfers are not new revenue.

Trustees pressed Pollard and Superintendent Lisa Hickey on assumptions behind the multiyear outlook, including whether the district will remain a ‘‘basic aid’’ district, how negotiated salary increases and vacancy timing affect projections, and the district’s mandated reserves. Pollard said the board’s policy requires a 17% reserve (about two months of payroll) in addition to the state‑mandated 3% economic uncertainty reserve. As a result, she said, the projected reserves decline to about 17.2% by 2027‑28 under current assumptions.

Pollard also flagged growing special‑education contractor costs: contracted paraeducator and related specialized services have increased from just under $900,000 in prior unaudited actuals to about $1.48 million in the interim projection. That rise, she said, reflects increased student need and difficulty in directly hiring specialized paraeducators.

After discussion, the board approved the first interim report and directed staff to return with a second interim in March incorporating updated data and the county auditor’s draft report. The board also approved publicly filing collective bargaining disclosure under AB 1200, which the CBO said includes the tentative compensation terms incorporated in the first interim.