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Novato Unified reports 'qualified' 2nd interim budget, warns of multi-year shortfall
Summary
CFO Joshua Braff presented a 2nd interim budget certified as "qualified": the district can meet obligations this year and next but projects an unrestricted deficit of about $8.0 million by year three unless revenues grow or expenses are reduced.
Novato Unified School District Chief Financial Officer Joshua Braff presented the district's 2025-26 second interim budget, telling trustees the district's certification is "qualified," meaning it can meet obligations this year and the next but not in the third year.
"We are presenting this 2nd interim as qualified," Braff said, noting the snapshot is as of Jan. 31 and the district has lowered future COLA assumptions after recent state revisions. He said projected enrollment declines (about 92 students in the forecast) and a roughly $3 million increase in contributions to restricted programs are driving pressure on the general fund.
Braff walked trustees through reserve projections and said the district's unrestricted ending fund balance is projected to fall to a negative in the third year, which he described as the equivalent of an $8,000,000 shortfall if no corrective action is taken. He warned that certifying a negative status could lead to county financial oversight and, ultimately, state receivership if deficits persist.
Trustees pressed staff on assumptions: the budget uses a conservative attendance assumption (95% ADA) and a COLA projection of 2.41% for next year, lowered from earlier estimates. Braff said the district has also built in one-time revenues and spending reductions to limit near-term impact, but the structural gap remains in later years.
The board approved the 2nd interim budget report as "qualified" on a 7-0 vote with the student advisory vote recorded.
