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District certifies second interim report; Fund 40 one-time transfers and Genentech tax settlement noted
Summary
The board reviewed and certified the 2025-26 second interim report showing projected reserves of 12.54% after one-time Fund 40 transfers; staff warned of ongoing multi-year deficits partly due to potential Genentech tax refunds.
The Cabrillo Unified School District board certified the 2025-26 second interim financial report on March 12, a required update that projects the district will meet its financial obligations for the current and two subsequent fiscal years while noting continuing budget pressures.
CEO Jennifer Marsh presented the report, which covers actual expenditures through Jan. 31, 2026, and updated projections. The report projects a combined reserve of 12.54% against a board policy target of 16%. Staff included two one-time transfers from Fund 40 (created after a $12 million settlement): a $3,388,000 transfer to the General Fund for strategic financial sustainability and a $500,000 transfer to Fund 17 to increase the special reserves for economic uncertainties. After those transfers, Fund 40 is expected to be fully spent and reconciled to a zero balance by June 30.
Marsh also flagged reduced revenue projections tied to a property-tax settlement involving Genentech; earlier refunds for tax years 2000—62005 have reduced upcoming apportionments, and other related litigation covering 2006—2024 remains unsettled and could affect revenue. The district's multi-year projections use a conservative 3% annual assessed-value growth assumption and factor in negotiated salary increases and step/column progression; staffing remains the largest expenditure category (roughly 75% of expenditures).
Board members asked for additional detail on worst-case scenarios and longer-term actions to address deficit spending, including possible contract/service reductions and revenue opportunities. Marsh said staff is actively pursuing coding and reimbursement corrections (for example, an approximately $149,000 increase in home-to-school transportation reimbursement identified by staff) and is reviewing contracts, special-education service delivery, and possible in-house hires to reduce contracted costs.
On a motion and roll-call vote, the board approved the second interim report with a positive certification. Members also approved related AB 1200 disclosures and the staffing and compensation agreements reflected in the multi-year projections.
