The Petaluma City Schools Board of Trustees unanimously approved the district's first interim financial report for fiscal year 202526 after a detailed presentation by business‑services staff on revenue, spending and multiyear projections.

"The district certification is positive based on current information," the business‑services presenter said, summarizing financial activity through Oct. 31 and the assumptions behind the report. Staff told trustees the district's overall revenues are approximately $2.9 million higher than at budget adoption, driven by an estimated $455,000 increase in LCFF sources and roughly $2.5 million in other state revenues tied to student‑support and learning‑loss grants. At the same time, total expenditures rose from $137.3 million to $138.9 million.

The presentation highlighted salary and staffing changes: certificated salaries were reported down about $800,000 after position‑control cleanups, while classified salaries increased partly because of added floating TK aides and increases to instructional assistants. Staff said about $80,000 in additional salaries will be added at second interim and that bringing back frozen positions would raise expenditures further.

Trustees and staff discussed federal grant timing, the potential impact of a federal government shutdown and how carryover and encumbrances affect restricted funds. Staff described district reserves as approximately $5.0 million in unrestricted funds and said reserves equate to roughly 3.7 percent of expenditures at first interim, up from the prior reporting point but below commonly cited targets. "If we did not receive federal or state funds," staff said, "we would not be able to make payroll based off of the reserves that we have," emphasizing the district's exposure to revenue uncertainty.

Board members pressed for clarity about how mid‑year staffing decisions, encumbrances and grant timing would affect second interim and asked staff to return with follow‑up analysis. The presenter said the multi‑year projections in the packet assume the district implements a $5 million reduction in next year's budget; without those reductions, the district would show larger deficits in subsequent years.

The board approved the first interim report by motion and vote, with trustees saying they expected continued updates at the January and March meetings and a deeper discussion of reserve targets and multi‑year planning to follow.

Next steps: staff will return with updated second interim projections in March, present governor's budget impacts when available in January, and continue the reserve‑target conversation at future board meetings.