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Board certifies positive second interim; staff outline $6M in adjustments and 1.5 FTE reduction
Summary
Trustees approved the district's second interim financial report showing about $2.37 million in revenue increases since first interim, projected unrestricted reserves around 3.73%, and staff presented planned adjustments including approximately $6 million in reductions and 1.5 certificated FTE reductions beginning 2026-27.
Petaluma City Schools on March 10 certified a positive second interim financial report and discussed staffing and program adjustments intended to preserve the district's multi-year budget.
Presenter Melissa McGarry (speaker 27) told trustees overall revenues had increased by about $2,370,000 since the first interim, driven largely by updated state and federal grant allocations and parcel tax and interest adjustments. She said overall expenditures increased about $1,130,000 since the first interim and that restricted expenditures rose by just over $4,000,000 due to finalized program budgets tied to grant funding.
McGarry said the district must still eliminate roughly $6,000,000 from its operating budget over the next three years to maintain a continuing positive certification. As part of those adjustments, cabinet recommended reductions in certificated and classified staffing, including about 1.5 certificated FTE for 2026-27, operational reductions and a roughly $500,000 reduction to site discretionary budgets. She said the district's multi-year projection shows a projected change in fund balance of about $11,200,000 for 2025-26 and an ending fund balance of approximately $13,600,000, while unrestricted reserves were projected at roughly 3.73% in the current year.
Trustees asked clarifying questions about restricted vs. unrestricted funds and how the district would implement program and staffing adjustments. McGarry emphasized that many increases were tied to restricted grants that cannot be used to support the general fund, and that staffing adjustments would be part of a broader plan to align ongoing expenditures with projected revenues.
The board moved and seconded approval of the district's second interim report; the motion passed by voice vote and the board certified the report as positive. Trustees noted the county office of education must also concur with the district certification as part of the normal process.
Next steps include incorporating the staffing and operational adjustments into the 2026-27 budget process and returning to the board with follow-up details as reductions and program-right-sizing are refined.
