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Board hears second interim report showing $12.6 million gap; approves qualified certification
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Summary
Chief business official Melanie Nagy told the governing board the district projects a roughly $12.6 million general fund shortfall for 2025-26 and must rely on one-time restricted carryovers; the board approved the second interim report 4-1 after trustees pressed for vendor and consultant detail.
The governing board received the district's second interim financial report on March 12, which showed estimated general fund revenue of $87.9 million against projected expenditures of $100.5 million, producing a roughly $12.6 million shortfall for 2025-26.
Melanie Nagy, the district's chief business official, said the gap will be covered in the near term by one-time restricted carryovers from prior-year grants but warned that the district "must rebuild our reserves." She described multi-year assumptions that factor in LCFF COLA estimates and rising pension costs, and said the district expects a positive certification for 2026-27 after additional reductions and updated TK enrollment data.
Why it matters: the report signals a qualified (negative) budget certification for the current year and potential program impacts if ongoing revenue does not materialize. Nag y flagged several drivers: declining enrollment statewide, higher special-education costs, and the risk that changes to the Community Eligibility Provision could reduce child-nutrition revenue by about $360,000, potentially affecting meal eligibility and staffing.
Board members pressed for detail. One trustee criticized the district's professional-services spending, saying the board is seeing "more than $23,000,000 in outside services" under object code 5800 and asking for an itemized, vendor-by-vendor breakdown on the public record. The trustee said parents and taxpayers "deserve honesty about where the money is going" and asked whether expenditures on private investigators and legal fees were authorized by the board.
Nag y replied that much of the change in reported revenue is attributable to carryover budgets for grants (including state Expanded Learning Opportunity grants and two CalSHAPE grants introduced this year) and that some vendors are funded from restricted accounts such as the developer-fee fund rather than the general fund. She said the May Revise (expected in mid-May) will provide updated state funding details the district will fold into the proposed 2026-27 budget in June.
The board moved to approve the second interim financial report and, after additional discussion, voted 4-1 to approve the report and certify the budget as qualified for 2025-26. The dissenting vote objected to a lack of public, itemized detail about outside vendors and consultants.
Next steps: staff will present the May Revise impacts and the proposed 2026-27 budget in June; the district plans to implement the final round of budget reductions in May with the goal of restoring a positive certification by December 2026.
