Tustin Unified certifies second interim budget as "positive" while projecting multi-year deficits

The Tustin Unified School District Board of Education on Wednesday certified its 2025–26 second interim financial report as "positive," even as staff warned of projected deficits over the next two fiscal years and outlined steps to manage costs.

Finance presenter David Yang told the board the district’s unrestricted general fund showed a net increase in fund balance of about $2.4 million compared with the first interim, driven largely by an anticipated $4 million increase in interest revenue offset in part by roughly $2 million in increased budgeted expenditures tied to proposed salary settlements. Yang also said the district projects deficit spending that would rise from about $11.1 million in the current fiscal year to roughly $19.1 million in fiscal year 2026–27 and about $20.5 million in 2027–28 under current assumptions.

"Projection changes over time as conditions change," Yang said, emphasizing the figures are point-in-time estimates. Mr. Sullins, who led the board’s financial briefing, said the trend reflects declining enrollment combined with rising operating costs and that the district is using reserves and seeking opportunities to right-size the budget.

To capture interest savings for taxpayers, the board adopted Resolution 030426 authorizing up to $17.5 million in 2026 general obligation refunding bonds and approved related transaction documents. "Conceptually it’s no different than refinancing your mortgage when interest rates go down," Sullins said, describing the refunding as a modest cost-saving move given the limited remaining term of the outstanding bonds.

The board also adopted Resolution O30526 formalizing committed fund balances that total $138,460,759, a measure board members said helps maintain reserves to buffer future revenue variability.

The motion to certify the second interim report passed on a voice vote after no extended discussion.

What’s next: district staff said they will continue to update multi-year projections as state budget information changes and will identify budget options and adjustments to maintain long-term fiscal solvency. The board’s action means the district remains officially "positive" for the purposes of state reporting while continuing to plan for potential reductions or revenue changes.

Speakers quoted in this article are drawn from the meeting transcript and identified as follows: David Yang (district finance presenter) and Mr. Sullins (district staff leading the financial briefing).