San Marcos Unified adopts second interim budget as staff warns of a roughly $9.5 million unrestricted deficit
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Summary
The San Marcos Unified School District board on March 12 adopted the 2025–26 second interim report and a positive budget certification after presentations showing projected general‑fund revenues of $311.7 million, expenditures of $335.4 million and an estimated unrestricted deficit of about $9.5 million; staff outlined a strategic alignment plan and a stakeholder budget advisory committee to close the gap.
SAN MARCOS, Calif. — The San Marcos Unified School District Board of Education on March 12 voted to adopt the district’s 2025–26 second interim financial report and issued a positive budget certification, while staff warned the district is on track for an estimated $9.5 million unrestricted deficit for the current year.
Superintendent Dr. Johnson framed the problem in plain terms: “Those COVID funds have sunset, and we are in declining enrollment,” he said, describing how one‑time pandemic aid and falling student counts left a structural fiscal gap the district must address.
Erin, presenting the second interim report, told the board the district projects general‑fund revenues of about $311,700,000 this year and projected expenditures of approximately $335,400,000, leaving the district on pace for deficit spending in the unrestricted general fund. Erin recommended adoption of the report and a positive budget certification.
Why it matters: San Marcos Unified’s finances are driven by the Local Control Funding Formula (LCFF), which ties core state funding to attendance and certain pupil categories. Dr. Johnson reminded the board that San Marcos Unified receives the LCFF base and the supplemental allocation for high‑need students but falls short of the concentration threshold that would trigger additional funding. The district’s projections show enrollment continuing to decline over the next several years, and staff cautioned that modest state cost‑of‑living adjustments (COLA) do not keep pace with typical fixed‑cost increases like salaries, pensions and utilities.
What the board approved: The motion to adopt the second interim report and positive budget certification passed by voice vote after staff said they had already trimmed the prior $11 million projection down to roughly $9.5 million by identifying savings and reclassifying some restricted program spending.
Next steps and staff plan: Dr. Johnson described a proposed strategic alignment and sustainability plan to align priorities with available resources. The plan centers on five objectives: an instructional focus on programs with measurable impact; continued rightsizing of staffing to enrollment; risk mitigation to preserve essential services; robust stakeholder input; and transparency of the data and decisions. Staff also will convene a budget advisory committee to review assumptions and solicit community, employee and student input as the district finalizes recommendations for the board.
Numbers and clarifications: Erin reported $311.7 million in general‑fund revenue projections and $335.4 million in projected expenditures for 2025–26; the district’s unrestricted reserve balance was reported at $71.4 million (about a 10% reserve that includes $4.6 million in commitments). Staff characterized the approximately $9.5 million unrestricted deficit as an interim projection that they expect to reduce further as the year closes.
Board response and timing: Board members asked detailed questions about assumptions (enrollment declines, COLA, benefit cost increases) and about runways for further community engagement. Dr. Johnson said the staff‑driven budget advisory committee, coupled with LCAP and strategic‑plan refresh work, is intended to produce recommendations for the board to consider in the coming months. The next regular board meeting is April 10, 2026.
Votes at a glance: the board adopted the 2025–26 second interim report and issued a positive certification (voice vote).
