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Modesto board reviews LCAP and 2025–26 budget projecting deficits and fiscal risks; staff cite uncertain state revenue
Summary
At a June 9 public hearing district financial officers and LCAP staff reviewed the draft 2025–26 budget and LCAP. Staff projected a $16.4 million unrestricted operational shortfall for 2025–26 and warned of uncertain state and federal revenues; trustees discussed reserves, routine maintenance set‑asides and next steps.
Modesto City Schools staff presented a review of the draft Local Control and Accountability Plan (LCAP) and the proposed 2025–26 budget at the June 9 board meeting, outlining revenue assumptions, key priorities and fiscal risks.
Steve Hurst reviewed the LCAP process and outreach (more than 30 meetings, surveys, and a 64‑member LCAP advisory committee) and described priority actions including full‑day kindergarten, professional development, reduced counselor ratios, English‑learner supports and targeted interventions at qualifying schools (LCFF equity multiplier). He outlined next steps: board consideration June 23 and county review following board approval.
Chief business officers then reviewed the proposed 2025–26 budget. Staff said the May state budget revision projects a 2.3% Local Control Funding Formula COLA; using district enrollment and ADA assumptions, staff estimated LCFF revenue increases but also forecast an estimated unrestricted operational deficit of about $16.4 million for 2025–26 and ongoing projected deficits in the multi‑year projection. Officials warned that one‑time federal/state funds are expiring and that pension, insurance and retroactive liability assessments (post‑AB 218 changes) increase operating pressure. Staff also noted the district must set aside routine restricted maintenance (3%) and maintain board reserves.
Board members asked about per‑student daily revenue impacts, routine maintenance rules, and options for mitigating the gap; staff said they will return a finalized budget for board adoption at the June 23 meeting and will submit required materials to the county by June 24. Officials urged the board to consider carryover priorities and to monitor state budget developments for possible mid‑year adjustments.
Quote: "Low COLA projections from the Department of Finance, combined with expiring one‑time funds, mean our unrestricted resources will be strained," a district finance director said.
Ending: The district will present a final proposed budget for board adoption on June 23 and submit required documents to the county office for state reporting. Staff recommended continued outreach and operational adjustments to address the projected multi‑year gap.
