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Pleasanton Unified School District staff explained to the Board of Trustees last week that thanks to one-time state funds and other revisions that came out of the state’s recently enacted budget, PUSD is in a better place financially for the current school year.
The update was part of a discussion on the 45-day budget revisions made to the 2025-26 PUSD adopted budget, following the state enacting the 2025-26 Budget Act.
The district’s previously adopted budget was approved in June with the knowledge that, around this time, staff would return with the budget revisions and look at expenditures and other significant changes to the budget ahead of the first interim budget report later this year.
“We’re happy to report back that with those revisions and the additional state funding, we have reduced our deficit spending from $7.7 million to $1.67 million in the unrestricted budget,” Assistant Superintendent of Business Services Ahmad Sheikholeslami said during the Aug. 14 meeting.
He said that adjustment has improved the district’s budget ending fund balance which was going to be at -$5.77 million. Now, according to Sheikholeslami, the district’s ending fund balance will be at a positive $281,252 which he and the board members said is a significant improvement.
However, the board also acknowledged the district is still looking at an $8-$9 million budget deficit in its multi-year projection.
“When we were in July … that number was far worse and far more terrifying,” Trustee Charlie Jones said. “And I said that things tend to improve over time so, while not ideal, it is a relief to see that we are in a better position than we were in July and that gives us the ability to … work together to do something to get out of this.”
Staff also noted that there are other significant revisions in the budget that show an error in accounting salaries and a state deferral in funds next year that could leave the district short of money to pay employees.
Every time the district’s budget is developed and adopted by the board, the district updates it during the first and second interim budget reports. Sheikholeslami said that, in particular, the first interim report is when the district sees the most variance between the adopted budget and the new numbers because it comes off the heels of the state enacting and adopting its own budget, which provides several revenues of funding for the school district.
The final budget update of the fiscal year then occurs as the district works on building the budget for the following year — this stage of the process is called the estimated actuals for the budget.
Thanks to factors including a Cost of Living Adjustment of 2.3%; increased funding for the Expanded Learning Opportunities program; and ont-time discretionary funds from the Student Support and Professional Development Discretionary Block grant, Sheikholeslami said the district was able to close its 2025-26 deficit gap.
According to the Aug. 14 staff presentation, the revised general fund operating deficit for 25/26 will be -$1,670,270 and the net projected end funding balance for 25/26 unrestricted budget is $281,252, which Sheikholeslami said is a significant improvement. He added that the district is still closing the books and expecting further adjustments to come out of the unaudited budget actuals.
However, he also said the district is still facing challenges including not having enough in its reserves and continued declining revenues, meaning that the one-time financial help from the state won’t really help address the $8-$9 million deficit spending that the district is projecting in the coming years.
He also noted another issue that came out of the revisions: the budget not including placeholders for compensation increases as part of union contracts over the next few years.
“When we updated our estimated actuals, we saw a significant variance, especially in (the) salaries,” Sheikholeslami said.
He said when staff looked back at the significant variance, the under budgeting occurred during budget adoption in the areas of salaries both certificated and classified and other staff said that might have been due to a combination of issues including not getting invoices on time.
“That wasn’t caught appropriately in the first interim and second interim,” Sheikholeslami said.
Superintendent Maurice Ghysels chimed in during last Thursday’s conversation to say that he wants to take a look at the district’s system of developing the budget in order to have more checks and balances so that the process and the budget is monitored a bit more closely.
Board Vice President Kelly Mokashi said she appreciated Ghysels’ commitment to having a stronger pulse on the district’s finances.
“At the end of the day what I would like for the board to see … to not have these variances so stark moving forward,” Mokashi said
However, she also said in regards to the reserves that she doesn’t want to continue kicking the metaphorical can down the road and instead wants to find out what systemic changes need to be made in the long term, which she says hopefully starts with better financial accounting.
Board President Justin Brown echoed Mokashi’s comments and said he appreciates the fact that the district is considering outside help to make sure that their accounting and accruals for contract-related expenses and other things are correctly reflected in their budget.
Brown also noted that despite the one-time money and other factors helping improve the end fund balance for the 2025-26 year, there is still the lingering issue of not budgeting for labor cost increases and the ongoing multi-year deficit.
“I appreciate the clarity, I appreciate the state’s one-time funds that are helping improve the situation, but we have a big task ahead of us as a board to address that $9 million run rate gap,” Brown said.
The last major update from the 45-day budget revisions had to do with some of the state budget provisions — primarily a $1.9 billion in deferral from June 2026 apportionment to July 2026.
“That means that the district, when it should receive state monies in June, will not receive it that month and they’ll receive it in July,” Sheikholeslami said. “One month deferral may not seem a big deal but for the state it is because that $1.9 billion will now get allocated to their next fiscal year but they will count it as an allocation to schools this fiscal year.”
He continued, “Let’s say the state’s going to give us $50 million in LCFF money in monthly installments, so that last installment that the district would receive the district wouldn’t get it in June but in July. If our cash flow is tight, we’re either going to have to do interfund borrowing or borrow the county treasury for that month to make payroll.”
According to Sheikholeslami, the state is also withholding another $1.9 billion in education funding until the actual revenues for the 2024-25 fiscal year come in — which are in the air due to factors such as the Los Angeles fires earlier this year. But once those additional revenues are cleared, the state could use that money to reduce the June 2026 deferral.
The district will continue to discuss its reserve policy and look at its cash flow during its Finance Committee meeting this Wednesday before coming back to the board for its first interim report, which is where the board will discuss and approve most of the revisions.
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