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District projects ongoing deficit, proposes advisory committee to address reserves
Summary
Assistant Superintendent Josephine Peterson told the board the FY25–26 proposed budget aligns with the LCAP but the district faces a multi‑year structural deficit driven by declining enrollment, pension and operating cost increases, and the sunset of COVID‑era funding; trustees urged strategies to reduce deficit spending.
Assistant Superintendent of Business Services Josephine Peterson presented the Jefferson Elementary School District’s FY25–26 proposed budget and a multi‑year financial projection, saying the budget was based on the governor’s May revision and current enrollment estimates.
Peterson told the board the district remains heavily dependent on state Local Control Funding Formula (LCFF) dollars and is projecting a structural deficit in the multi‑year projection. "With those transfers, the deficit is about $7 million ongoing every year," she said, noting that roughly $4 million of that is on the unrestricted side of the budget. She added that declining enrollment, rising pension and insurance costs, the loss of one‑time COVID relief funds and higher transportation and special education costs are primary drivers.
Peterson outlined assumptions behind the proposed budget — cost‑of‑living adjustments as proposed in the governor's May revision, conservative enrollment projections, pension cost increases and potential one‑time state discretionary funds that were not yet included because the legislature was still negotiating the May revision. She also noted a possible deferral of a portion of the district’s June apportionment to July that could affect cash flow.
Trustees raised concerns about recurring use of reserves; one trustee described three years of strategic reserve use in the projection and urged the superintendent’s advisory committee to identify ways to increase revenue and control expenditures. Peterson said the district is forming a superintendent's budget and facilities advisory committee to explore long‑term strategies and that the budget and LCAP would be presented for adoption on June 25, with the state’s final budget due June 30.
Peterson also explained the local funding context: Jefferson is a local control‑funded district and receives LCFF plus parcel tax and other local revenues; neighboring basic‑aid (community‑funded) districts can receive substantially more per pupil from property tax revenues, creating local inequities.
The board did not take a final vote on adoption at this meeting; next steps include incorporating the final state budget if materially different and reporting un‑audited actuals in September and a first interim in December when staffing and enrollment are finalized.
