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COE presents 2nd interim report: positive certification, multi‑year deficits projected
Summary
Business services staff presented the 2025–26 2nd interim report showing a positive certification and a 5% reserve policy, while noting projected multi-year deficit spending (~$2.9M) driven by restricted program sunsets and enrollment declines; staff flagged inputs such as Medi‑Cal pass‑throughs, one‑time grants and conservative COLA assumptions.
The Santa Cruz County Office of Education’s business services team presented the 2025–26 2nd interim financial report, summarizing revenue and expenditure projections through Jan. 31 and multi‑year projections through 2027–28.
The presentation concluded the district will issue a "positive" certification that it can meet its financial obligations for the current year plus two subsequent years. Staff said the board has approved a 5% reserve for economic uncertainty (the state minimum is 3%) and pointed to several revenue and expense changes since the 1st interim: modest increases in interest earnings, adjustments to the school‑based Medi‑Cal administrative-activity passthrough, prior‑year special‑education adjustments, increased participation in the outdoor science program (~$50,000) and receipt of certain bridge grants. The presenter said combined general-fund revenues are projected in the high‑$70 millions range and that projected deficit spending is approximately $2.9 million in the near term, with multi‑year projections showing declines as some restricted grants sunset and enrollment pressures continue.
Staff explained that the COE uses conservative assumptions for COLA (1% in projections) and estimated step-and-column adjustments; STRS and PERS rates and health-and-welfare cost increases were also noted as material drivers. Trustees asked clarifying questions about LEC (the Local Education Consortium) geography (including Santa Cruz, Monterey and Santa Clara), outdoor science revenue changes and facility‑purchase timing for a property referenced at 119 Beach Street (projected in 2026–27). No action beyond receipt of the report was taken at the meeting; staff noted ongoing monitoring and potential adjustments after the state May revise.
