Palmdale district reports positive second-interim; flags $14 million textbook commitment and a $7.2 million reclassification

The Palmdale School District's fiscal administrator told trustees on March 12 that the district is issuing a "positive" second interim certification for fiscal year 2025—26 while identifying near-term financial commitments and funding shifts that trustees should watch.

Lisa Jellicker said the report covers transactions from July 1 through Jan. 31 and projects the remainder of the 2025—26 fiscal year. Key assumptions include a cost-of-living adjustment (COLA) near 2.3 percent and the deferral of a principal apportionment from June to July 2026.

Jellicker said the district plans a $14,000,000 commitment for a textbook adoption in 2026—27 and is reclassifying $7,200,000 in benefits expenditures into a one-time instructional materials/discretionary block grant for 2025—26. "So the expenditures don't disappear," she said. "They're just going from unrestricted to restricted." The reclassification increases restricted spending this year and reduces the unrestricted balance.

The report shows modest increases in total revenues (driven partly by COLA and local interest) and projections that benefits will rise to about $36 million this year and return to higher unrestricted levels in later years. Jellicker also highlighted state-proposed changes that could help special education funding: the governor's budget proposal includes equalizing per-ADA special education funding to about $999 per ADA.

Jellicker told the board the district's ending fund balance now includes a reserve for the planned textbook purchase and a reserve for economic uncertainties that the district is working to increase from roughly 11 days of operating expenses toward a target of three weeks. The second-interim multiyear projection shows the district planning to raise reserves over two out-years to reduce volatility caused by state funding changes.

Board members asked whether projected unrestricted ending balances could be used for one-time student programs; Jellicker said some planned uses include classroom renovations and resurfacing projects but cautioned that bond covenants and required reserve levels limit options. She said staff is evaluating how to spend one-time funds while remaining covenant-compliant.

The report also calls out increased contributions to restricted programs driven by growing expenditures, and a finalized regionalized special education billing process that changed revenue and contribution projections. Jellicker closed by answering trustees' questions and noting the district will continue monitoring ADA and revenue assumptions tied to state proposals and local enrollment trends.

The board accepted the second interim report and recorded the presentation for follow-up and monitoring as the district finalizes budgets for 2026—27.