Board approves second interim budget report and supplemental MYP to county; trustees debate reserves and restrictions

The Santa Clara Unified School District Board of Trustees approved the district's second interim budget report and directed staff to submit the supplemental multiyear projection (MYP) and rightsizing details to the Santa Clara County Office of Education for review.

Deputy Superintendent and Chief Business Official Mark Scheel presented the report, noting a $1.2 million increase in ongoing property tax receipts since the first interim report and roughly $20.4 million in restricted carryover funds (including expanded-learning and grant carryovers). Scheel said the district's multiyear projection currently shows large deficit spending in the near term but that the rightsizing plan adopted at a prior meeting materially improves later-year balances.

Scheel summarized key points from the presentation: a $1,200,000 increase in property-tax revenue since the first interim; a total restricted carryover of about $20,400,000 (including Medi-Cal, restricted lottery and other grants); and a supplemental MYP that estimated $63,000,000 of deficit spending in the current year with $43,700,000 drawn from reserves under one scenario. He also said that if the rightsizing reductions are implemented, deficits shrink and the district could reach balanced projections in later years.

Trustees asked about appropriate reserve levels for a community-funded district, the county's likely reaction and how restricted funds can (or cannot) be repurposed. Scheel said many of the funds are legally restricted and that the county would likely view the supplemental materials favorably given the board's actions to reduce ongoing costs.

Trustee Roderman moved to approve the second interim report; after discussion the motion passed with Trustee Watanabe voting no and the remainder of the board voting yes (vote recorded as 6 to 1 with one member absent earlier in the meeting). The board's action triggers the required county review and keeps the financial path open to further changes as negotiations with employee associations continue.

Scheel emphasized the uncertainty in multiyear projections because negotiated salary increases were not yet finalized and because some one-time funds will not recur. He said staff will continue to monitor county assessor data, state and federal budget developments, and bargaining outcomes and will return to the board with updated projections as needed.