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District projects multiyear deficit but retains positive certification in second interim report
Summary
The Lancaster School District’s second interim budget projects a first‑year deficit of about $38.9 million with multi‑year deficit spending but maintains a 3.78% reserve, meeting the state’s positive certification requirement.
The Lancaster School District presented its 2025–26 second interim budget to trustees, showing multi‑year projected deficits driven by one‑time spending and personnel costs but maintaining the state‑required minimum reserve.
The presenter summarized revenue and expenditure assumptions and figures. "The ongoing revenues ... is $239,550,000," the presenter said, and reported total state revenues of $255,700,000, federal revenues of $14,420,000 and local revenues of $27,440,000, for total projected revenues of $297,560,000 in 2025–26. Expenditures for the first year were listed at about $336,470,000, producing a projected first‑year deficit of $38,910,000 and an ending fund balance of $99,490,000.
The presenter noted one‑time grants included a $3,950,000 student support and professional development award (four‑year spending window) and $1,250,000 in redistributed learning‑recovery funds the district received because it had previously spent its ESSER allocations.
Despite the projections, the district reported a 3.78% available reserve — above the state minimum of 3% required for positive certification — driven in part by an existing beginning fund balance. The presenter said multi‑year assumptions include a COLA pattern based on the governor’s budget, STRS/PERS rate projections, step‑and‑column salary increases and inclusion of negotiated increases pending AB1200 approvals.
Why it matters: The report lays out the district’s fiscal posture — short‑term deficits driven by one‑time spending while meeting statutory reserve thresholds — and sets the baseline for any budget decisions or potential program reductions in subsequent budget cycles.
Trustees asked about ADA assumptions and confirmation that the district recovered $1.25 million in learning‑recovery funds; the presenter said attendance processes are being revisited and confirmed the recovery.
