Santa Ana Unified plans to submit second interim as staff warn of multi‑year budget pressures

Santa Ana Unified School District staff told parents and community members at a March virtual budget town hall that they will submit a second interim report to the Orange County Department of Education with a positive certification, even as the district projects multi‑year budget pressures.

"We will be submitting to OCDE a second interim report with a positive certification," said Jennifer Cernos, the staff presenter, summarizing the district's current projection and certification plan. The presentation showed a projected drop in the district's ending general‑fund balance from roughly $216.6 million (FY 2024‑25) to about $157.7 million in 2025‑26 and estimated deficit spending of about $59 million for 2025‑26.

Why it matters: The district relies primarily on the Local Control Funding Formula (LCFF) — roughly 72% of revenue in the district's slide presentation — and those funds are sensitive to attendance and enrollment. Staff warned that enrollment and average daily attendance (ADA) declines are the largest structural risk to revenue in coming years.

Presenters highlighted several drivers behind the gap. Staff described a sharper enrollment decline than in prior years, projecting headcount near 33,000 in 2025‑26 and dipping below 30,000 by 2027‑28, which would lower LCFF revenue. The district also cited volatile timing for other local revenue such as medical reimbursements (recognized only when received) and the expiration of several state block grants that had temporarily boosted recent years' revenue.

Special education costs were a second major pressure. "The federal and state government simply do not fund special education adequately," said Ron Hacker, who described how the district must transfer unrestricted general‑fund dollars to cover specialized services. Staff said Santa Ana's student‑with‑disability share is higher than county and state averages and that state and federal funding covered only a minority of special‑education expenditures in the most recent year; the district used unrestricted funds to cover the remainder.

On expenditures, staff reported a modest increase in certificated salaries from first to second interim (about $6 million, attributed to extra duty and Title I carryover), higher classified salaries (additional paraeducators and a board‑approved pay schedule adjustment), and an approximately $15 million increase in services driven by temporary staffing contracts and higher utilities. Capital needs included vehicle purchases and emergency repairs — staff cited two plumbing failures that together cost about $500,000.

Staff emphasized reserves and policy triggers: the district must keep a minimum unrestricted reserve of 2% while ADA is above 30,000, and that requirement would rise to 3% if ADA falls below 30,000 (staff projected a roughly $7 million increase in the reserve requirement in that case).

Next steps and process: presenters said the governor's May revision could change state revenue assumptions, and the district will present estimated actuals in June while developing the 2026‑27 budget. Staff also said they will continue to share updates with labor partners and the community as new information becomes available.

The town hall included Q&A and breakout groups; no formal board votes or policy actions were taken during the remote session. The district plans to incorporate this community feedback into future budget discussions and to present updated budget documents to the board later this spring.