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The Pleasanton Unified School District Board of Trustees recently approved the district’s First Interim Budget Report for its 2025-26 fiscal year, which indicated some small improvements in the district’s financials; however, the deficit is still $3 million more than what staff had hoped for going into the new year.
Due to the updated deficit numbers, PUSD is now projecting a negative ending fund balance of $2.5 million, which means the district will have to submit its first interim report to the Alameda County Office of Education (ACOE) with a negative certification.
“This is a serious matter,” Board President Kelly Mokashi said during the Dec. 11 board meeting. Prior to the discussion, Mokashi was voted in as board president for the new year — Trustee Laurie Walker was also named the new vice president.
“I am embarrassed to be in this state,” Mokashi added. “That being said, we’re all accountable, we’re going to have to do something about it … we’re going to have to get our sleeves back up and keep working.”
According to Assistant Superintendent of Business Service Ahmad Sheikholeslami, the negative certification indicates to the county that PUSD will not meet its financial obligations in the current or subsequent fiscal years. The classification will also bring additional oversight and support from the ACOE in the form of a fiscal advisor who will work with the county’s Fiscal Crisis Management and Assistance Team (FCMAT) to conduct a fiscal health risk analysis.
Sheikholeslami said with the county’s help, the district will continue to work through its budget cycles to clear the negative balance and return the district’s budget to a positive certification.
“The variance that we’re getting is smaller this time than last time but it’s still a variance,” Trustee Justin Brown said. “And I do think having the additional oversight will help (and) give us even more certainty than we have.”
The First Interim Budget Report is the first of two updates that staff present every year in regards to its annual budget. The report uses actual revenues and expenditures from July 1 through Oct. 31, as well as other updated financial information, to provide a clearer picture of the district’s current financial situation.
According to Sheikholeslami, some positive news is that the ending fund balance for the district’s unrestricted budget — funds that don’t have to be committed to certain expenditures — went down from negative $5.8 million to negative $2.5 million.
However, the first interim report projects PUSD to have a $4.7 million deficit for the current fiscal year, which is significantly larger than the $1.7 million the district had predicted in its 45 Day Budget Update.
When the school board first approved the 2025-26 budget, PUSD’s projected deficit was $7.7 million so in that sense, the $4.7 million deficit was an improvement. However, due to that $3 million deficit variance between the 45 Day Budget Update and the First Interim Budget Report, PUSD is expecting to exceed its available reserves, which is what led to the $2.5 million shortfall in the ending fund balance.
“I’m very frustrated that we’re in this position that we have a negative $2.5 million … I don’t know how we got to this position,” Trustee Mary Jo Carreon said during the meeting.
According to Sheikholeslami, the main reason behind the variance was increased costs for the district’s Special Education program. He also pointed to other expenditures such as increased projected costs as a result of salaries and benefits, settlements, legal expenses, and operational costs as reasons for the unexpected variance.
Sheikholeslami noted that the district has taken several steps over the past few years to address its fiscal challenges. He specifically pointed to transferring $11 million one-time proceeds from the sale of its Vineyard property to its General Fund reserves and identifying just over $11 million in budget reductions for the 2026-27 fiscal year.
However, he said that still wasn’t enough to get out of the negative unappropriated fund balance and that it was too late to do anything else but submit the budget as a negative certification. Instead, he said PUSD needs to start reconsidering how it develops its budget overall.
“I think as a district, we need to change our philosophy of budgeting,” Sheikholeslami said. “We have been budgeting pretty lean and tight and any variations can lead to some of the challenges we have.”
“If you budget lean, you better have reserves that can handle that. But we don’t have those reserves,” he added. “We also have to look at budgeting a little more conservatively and strategically looking at areas of risk in the budget and appropriating the appropriate level of contingency.”
Sheikholeslami explained that the county approved the district’s 2025-26 budget with conditions meant to help the district improve its financial situation. He said PUSD met most of the conditions but when the county learned more information about the district’s finances through the 45 Day Budget Update, county staff said it wasn’t likely that PUSD would meet its targets to receive positive certification.
Following last Thursday’s meeting, the district will continue to discuss the board-approved $11.2 million budget cuts for the 2026-27 fiscal year and will look to make any adjustments following discussions with labor unions — about half of the identified budget cuts depend on the teachers and classified staff unions agreeing with the reductions. Sheikholeslami said that could include further reductions but that the district wants to wait until it has more financial information in case next year’s projections turn out better.
Staff also noted that the $11 million from the Vineyard property sale, which has been placed in a committed “Stabilization Fund”, will allow for internal borrowing that helps PUSD cover this year’s $2.5 million shortfall and allows the district to pay its bills. But following next year, Sheikholeslami said the deficit will start to grow again and they will need to continue to find ways to improve the district’s budget in the future years.
In the meantime, Trustee Charlie Jones suggested that the board and district start drafting up letters and reaching out to local, regional and state officials and elected representatives to urge them to return delayed state funding to the district and to insist that the Cost Of Living Adjustment remains at 3%. He also suggested the district look into using more empty classrooms for after school programming.
“I’m frustrated, like my fellow trustees, that we knew this was coming … but we are all in this together and so part of this falls on us as a board in having to make direct, immediate actions and changes,” Mokashi said.
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