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Moreland staff warn governor's budget cuts to COLA could reduce district's ongoing revenue
Summary
District finance staff told trustees the governor's January proposal includes significant one'time funds but reduces the ongoing cost-of-living adjustment (COLA) from roughly 3% to 2.41%, a change the presenters said could cost Moreland about $400,000'$500,000 in ongoing revenue and complicate multi'year budgeting.
Moreland School District finance staff on Thursday told the board that the governor's January budget proposal offers one'time K'12 funding but reduces the ongoing cost'of'living adjustment (COLA), a combination that could strain the district's multi'year budget. "He is providing some one'time additional resources to schools, but at the same time he is reducing the COLA," a presenter said, adding the COLA was lowered to 2.41% from about 3.0.
The reduction in COLA, officials said, has the practical effect of lowering the district's ongoing revenue. "That reduction from the 3% to the 2.4 is about 400 to 500,000 of ongoing fund that we're losing," the presenter said. Finance staff framed the proposal as a mix of discretionary one'time funds and changes to how Proposition 98 settle'ups would be handled; they warned the district is watching assumptions underpinning the proposal, including personal income tax and stock market performance, which state analysts treat as uncertain.
Why it matters: One'time allocations can help cover near'term needs but do not restore permanent revenue lost when COLA is reduced. Board members asked how one'time funds are typically distributed and whether the district can smooth those dollars across multiple years; presenters said districts often spread one'time allocations across several years but cautioned there is no guarantee beyond the year the funds are awarded.
Officials also explained the governor's approach to Prop 98 "settle'up," which the presenter described as a plan that would pay some prior-year obligations without the usual inflation adjustment, delaying and potentially shrinking future repayments to schools. "With the settle up... it doesn't get adjusted for inflation," the presenter said, which could reduce the eventual value of funds when they are repaid to districts.
What's next: Staff said they will monitor the Legislative Analyst's Office reviews, the February trailer bill language, and the May Revise before making final projections for Moreland's 2026'27 budget. The board received the presentation as an informational report; no action was required at the meeting.
