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District finance staff warn of structural general-fund deficits despite bond proceeds
Summary
The district projected ongoing general-fund deficits, noting a superficially balanced 2025'26 budget that relies on a planned $35 million bond issuance for capital projects while operating deficits persist; staff proposed staffing reductions and warned of state funding risks.
District fiscal staff told the El Monte City School District board on June 16 that the district faces a structural operating deficit even after adopting the 2025'26 budget.
"While the overall budget looks balanced due to the one-time bond proceeds, the structural deficit in our operating budget remains a concern," the district's director of fiscal services, Ms. Piautos, told the board. She said the adopted budget shows a projected surplus driven primarily by a planned $35 million bond issuance designated for capital—not for day'to'day operations.
Staff presented estimated actuals for 2024'25 showing a decline from last year's one-time surplus (driven by COVID-relief funds) to a projected general-fund deficit. Ms. Piautos said the district is projecting a significant ongoing deficit for 2025'26 and warned that continued deficit spending is not sustainable; she recommended monitoring ongoing expenditures, staffing and long-term commitments.
Mr. Herrera earlier summarized potential state-level funding reductions tied to a legislative deal and May revisions, telling the board that the district's expected discretionary block grant support could be substantially reduced under the current proposal. "Overall there's less funding coming to El Monte City School District if that gets enacted," he said, urging that staff monitor the governor's final budget action.
The budget presentation included multi-year projections through 2027'28 that kept reserves above the state's 3% minimum but still showed repeated annual operating shortfalls. As one planning response, the district intends to reduce certificated staffing by 19 FTEs for 2025'26, with additional reductions estimated in subsequent years to align staffing with declining enrollment and revenue.
Staff also reviewed revenue assumptions, including LCFF, federal programs, state grants and local revenues. The presentation noted local revenue projections include bond proceeds and interest income; the latter improved actuals for 2024'25. Costs such as salaries and benefits remain the largest share of expenditures.
Next steps outlined to the board included adoption of the LCAP and budget, governor's signature on the state budget (expected by June 30), a 45'day budget revision in August if material changes occur, and continued monitoring through interim reports.
