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Board certifies second interim as Positive; CFO warns of multi-year gap driven by salary increases and special-education costs
Summary
Moreno Valley Unified certified a Positive second interim report while staff warned the board that recent salary settlements, step-and-column costs and rising special-education contributions will push projected deficit spending higher over the next two years unless district-level adjustments and right-sizing occur.
The Moreno Valley Unified Board voted unanimously to certify the districtsecond interim financial report as "Positive" after Chief Business Official Susanna Lopez presented updated multi-year projections and assumptions.
The board approved the certification after finance staff outlined the dominant drivers behind a projected current-year deficit: the January salary settlement (including a one-time component), step-and-column movement for employees, and increasing employer retirement and insurance costs. Ms. Lopez told trustees the district projects $14 million of deficit spending in 2025-26 and, under the current assumptions, a projected cumulative deficit that could reach roughly $40 million by 2027-28 unless revenue or expenditure changes are implemented.
Special education is a major driver of additional cost: restricted funding and federal reimbursements do not cover the full cost of services, requiring the general fund to contribute an estimated $74.5 million toward special-education expenditures in the current year. Ms. Lopez said state and federal funding patterns have not caught up to local service needs and that the district has seen multi-year growth in special-education obligations.
Board members pressed staff on school-by-school enrollment and attendance assumptions; Ms. Lopez said the district is projecting a net enrollment decline of roughly 475 students for the current year and is building conservative attendance and unduplicated-pupil (LCFF) assumptions into the projections. She said the district would continue internal efforts to reduce costs, including right-sizing and strategic review of positions and contracts, before formalizing a long-term fiscal stabilization plan. Trustees asked that the district provide the 2024 stabilization plan and identify any new steps being taken, and staff agreed to add the plan to the Friday memo and return with an update.
What the vote means: A "Positive" certification indicates the district believes it can meet its financial obligations for the current and two subsequent fiscal years under the assumptions presented. That certification does not prevent the district from taking additional corrective actions; staff emphasized they are already reviewing staffing, master schedules, and contracts to limit future deficits.
Next steps: staff will incorporate May revised state budget assumptions and finalize the 2026-27 budget in June. The board and cabinet will continue monitoring special-education contributions, routine restricted maintenance set-asides, and the projected use of one-time reserves.
