School board approves proposed $43.6 million FY2026-27 budget with pay raises and staffing adjustments

The Santa Cruz Valley Unified School District No. 35 governing board approved the districts proposed FY2026-27 budget at a June 23 meeting, moving the draft forward for final adoption steps later this summer.

The board heard a presentation from Mrs. Brown, the districts chief financial officer, who described the document as a formalization of discussions held with principals and department heads over the past months. "This is our first draft of our proposed budget for fiscal year 27," Mrs. Brown said, noting that the state forms remain preliminary and some grant figures are still pending state and federal confirmation. Superintendent Mr. Verdugo and Mrs. Brown emphasized that final state forms and tax rates will be addressed in July and August.

Why it matters: the proposed operating fund totals about $43.6 million and includes recurring compensation commitments that account for more than 80% of typical district operating costs. The presentation highlighted a 4% increase for eligible employees, a 2% certified-place adjustment, and several position reclassifications and targeted hires intended to align staffing with projected enrollment. The draft also reflects the districts community-approved override (cited during the meeting in the draft as an add-on), and sets contingency reserves in both operating and capital funds to guard against revenue uncertainty.

Key details presented to the board included: - Enrollment projection: 3,289 students for 2026-27, a projected drop of 176 students; at the most recent weekly update the district reported being roughly 52 students below that projection. Board members and staff warned declining enrollment remains a statewide challenge that affects budget planning. - Compensation and staffing: a 4% pay increase for eligible employees, a 2% certified placement adjustment, insurance-rate changes, reclassification of select positions (for example, student activities technician to specialist and accounting specialist to coordinator), and both reductions and additions of teacher and support positions tied to right-sizing at specific schools. The presentation also included a plan to add stipends aimed at recruiting speech-language pathologists directly to the district. - Capital and one-time allocations: technology upgrades (phased interactive boards), curricular and instructional materials (a curricular rotation line item), athletics maintenance (a one-time $25,000 allocation to maintain the track), and a capital contingency the presentation described as about $1.7 million. - Reserve posture: the operating fund summary included a contingency of roughly $4 million.

Several board members praised the districts stewardship and noted long-term planning choices. Mr. Brad Beach said retaining staff and investing in instructional materials were priorities the community expected the district to protect. Mrs. Brown described the draft as a product of months of work across departments and stressed the need to "rightsize" staffing to match enrollment trends.

Vote and next steps: the board moved to approve the proposed FY2026-27 budget as presented. The boards vote carried; Mrs. Brown will return in July and August with final forms and recommended tax rates as required by state law. "I'll come to you in July with the recommended tax rates and then we'll discuss the costs associated with that," Mrs. Brown said during the meeting.

What remains unsettled: several special-project and grant allocations are pending final notices from state and federal agencies; Mrs. Brown said final grant numbers will be captured in later budget revisions. Enrollment remains a key variable for final staffing and revenue estimates.

Votes at a glance (routine motions at the June 23 meeting): - Approval of agenda: motion passed. - Approval of FY2026-27 proposed budget as presented: motion passed. - Superintendent performance-pay determination (see separate report): motion passed. - Out-of-state travel (Gberto Lopez and Marine Alvarez to Rome, Feb. 13-16, 2027, expenses covered by EF Educational Tours): motion passed. - July 14 meeting scheduled as a business meeting at 8 a.m.: motion passed. - Consent agenda: motion passed.

The board is expected to consider final state forms and adopt the tax rate and final budget at subsequent meetings this summer. The superintendent and finance office will return with revised forms and any final grant allocations.