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IUSD CBO warns COLA changes and declining enrollment could mean multi-year shortfall; audit returns clean opinion with findings
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Summary
Assistant Superintendent Rafael Guzman told the board the governor's 2026-27 budget reduces the projected COLA, producing an estimated $3 million net effect for the district over three years; auditors issued an unmodified opinion on financial statements but noted state-side qualifications and some compliance findings.
The district's chief business official gave the board a comprehensive briefing on cash flow, the governor's proposed 2026-27 budget and the district's 2024-25 audit during the Feb. 18 meeting.
Rafael Guzman told members the governor's proposed 2026-27 COLA was adjusted down in the January-to-May budget sequence, and that over the next three years the reduced COLA assumptions create a roughly $3 million reduction in the district's projected revenue if all other assumptions hold. "When you look at the COLA adjustments, it actually nets to about $3,000,000 over the next three years," Guzman said, urging continued monitoring and fiscal adjustments.
Guzman also reviewed declining enrollment trends statewide and explained the LCFF funding factors that determine per-student funding, noting the district qualifies for supplemental and concentration grants tied to unduplicated pupils. To counter revenue pressure, staff are piloting an attendance recovery program to restore ADA, tracking daily attendance more closely, and scrutinizing vendor contracts for "not-to-exceed" language and receipts.
On the 2024-25 financial audit, Guzman presented the auditor's report: an unmodified (clean) opinion on the financial statements and on federal compliance, a qualified opinion on the state side tied to classroom teacher salaries and an ELOP (Expanded Learning Opportunities Program) finding, and a set of remaining findings largely reduced from prior years. Guzman said management will submit corrective-action plans to the County Office and continue collaboration with auditors.
Board members pressed staff for immediate strategies to reduce expenses and for clarity on monthly cash-flow volatility (February was flagged as a month of projected higher expenses than revenues). Guzman answered that the district is implementing multiple cost-control measures and will present updated projections after the May revise.
Next steps: staff will return with May-revise implications, updated estimated actuals and proposed adjustments necessary for second interim budget planning.
