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VIDEO: SAUSD Board of Education Provides Latest Budget Update

The SAUSD Board of Education approved the Second Interim Budget Certification at the March 11, 2025 meeting. SAUSD is again submitting a positive certification, meaning the district will be able to meet its financial obligations for the current and next two fiscal years. See video of the budget presentation provided by SAUSD Chief Business Official Ron Hacker, along with answers to questions from Board members. See a summary of the presentation below.

 

Santa Ana Unified School District - 2025 Second Interim Report FAQ

1. What is the purpose of the Second Interim Report?

  • Timestamp: 00:00:03:08 - 00:00:08:03
  • The Second Interim Report provides a financial update on the district's budget and spending. It evaluates the district's ability to meet financial obligations for the current and upcoming years.

2. How can stakeholders access the presentation?

  • Timestamp: 00:00:25:56 - 00:00:33:44
  • A QR code is provided during the presentation, allowing stakeholders to scan and access the full report on their devices.

3. What is the financial outlook for the district?

  • Timestamp: 00:02:53:22 - 00:03:06:11
  • The district will submit a positive certification to the Orange County Department of Education (OCD), meaning it can meet its financial obligations for the current and next two years.

4. What is the district’s current budget deficit?

  • Timestamp: 00:04:48:05 - 00:05:08:17
  • The current budget deficit is $154 million, which is an improvement from the $187 million projected earlier.

5. How is the budget divided between restricted and unrestricted funds?

  • Timestamp: 00:05:18:34 - 00:05:54:28
  • The budget consists of restricted funds (earmarked for specific programs) and unrestricted funds (for general district expenses). The unrestricted portion is shrinking, with reserves expected to reach the legal minimum (2%) by 2026-27.

6. How does enrollment impact the district's budget?

  • Timestamp: 00:06:11:58 - 00:06:30:32
  • Enrollment is declining, which directly affects funding. The district is projecting a loss of 500 to 1,000 students, which impacts revenue from state funding.

7. What factors influence the district's funding?

  • Timestamp: 00:06:34:06 - 00:06:45:14
  • Funding is based on:
    • Cost of Living Adjustment (COLA): State-provided increase to funding.
    • Enrollment: The number of students in the district.
    • Attendance Rate (ADA): The percentage of enrolled students attending daily.
    • Unduplicated Pupil Percentage (UPP): The number of students qualifying for additional funding due to low income, English learner status, or other factors.

8. What is the district's current attendance rate?

  • Timestamp: 00:09:03:21 - 00:09:14:06
  • The attendance rate has declined from 95% to 93.6%. The district aims to improve this through targeted initiatives.

9. What steps are being taken to address the budget deficit?

  • Timestamp: 00:21:01:47 - 00:21:26:57
  • The district is forming budget subcommittees to analyze:
    • Facilities Optimization: Assessing school and facility usage.
    • Enrollment and Attendance Initiatives: Increasing student retention and daily attendance.
    • Operational Efficiency: Identifying cost-saving measures.
    • Site Funding: Managing school budgets more effectively.

10. How does the district plan to cut costs?

  • Timestamp: 00:23:01:24 - 00:23:33:41
  • The district is considering:
    • Reduction in workforce: 21% of savings will come from layoffs.
    • Early retirement incentives: Expected to save 16% of the deficit.
    • Revenue enhancement through attendance: Increasing ADA and UPP can recover 11% of needed funds.
    • Cuts in supplies and services: Accounts for 27% of reductions.
    • Reducing capital expenditures: 16% reduction from construction and technology purchases.

11. What are the long-term financial strategies?

  • Timestamp: 00:22:22:08 - 00:22:47:29
  • Long-term strategies include:
    • Implementing solar energy to reduce costs.
    • Ongoing reviews of utility and waste management expenses.
    • Maintaining strict control over capital projects and new expenditures.

12. How much does it cost to operate the school district per week?

  • Timestamp: 00:29:04:20 - 00:29:24:28
  • The district spends approximately $16 million per week on operations.

13. What happens if reserves drop too low?

  • Timestamp: 00:30:04:06 - 00:30:36:42
  • If reserves fall below the 2% required minimum, the district may need to take out short-term loans (Tax Revenue Anticipation Notes - TRANs) to cover expenses.

14. When is the next financial update?

  • Timestamp: 00:28:02:41 - 00:28:32:30
  • Next month, the district will present updated resolutions and fiscal stabilization plans to the board.

Budget and Financial Health

15. What is the district’s cash flow outlook over the next three years?

  • Timestamp: 00:29:56:45 - 00:30:42:40
  • A three-year cash flow analysis was conducted, showing monthly balances. By 2026-27, reserves are projected to dip so low that the district may need a Tax Revenue Anticipation Note (TRAN), a short-term loan, to meet financial obligations.

16. Why is it risky to reach the minimum required reserves?

  • Timestamp: 00:30:44:24 - 00:31:19:59
  • The 2% minimum reserve is the absolute lowest threshold and can lead to severe cash flow issues. The district may struggle to pay bills and face difficulties with vendors.

17. What portion of salaries and benefits come from unrestricted vs. restricted funds?

  • Timestamp: 00:32:00:57 - 00:33:09:57
  • 65% of salaries and benefits come from unrestricted funds. Restricted funds typically cover special education, maintenance, and some grant-funded positions.

18. Where will budget cuts primarily come from?

  • Timestamp: 00:33:29:25 - 00:34:19:48
  • Budget cuts must mainly come from unrestricted funds, as restricted funds have designated purposes. Cuts include:
    • Early retirement incentives (SERP): $34 million saved
    • Revenue enhancements (LCFF adjustments): $34 million
    • Services and supplies cuts: $53 million
    • Capital expenditure reductions: $30.3 million

19. What happens if expected revenue enhancements don’t materialize?

  • Timestamp: 00:34:40:47 - 00:35:34:04
  • There is no backup plan—the district must increase attendance and revenue. Attendance impacts funding, and any shortfall will make balancing the budget very difficult.

20. What external challenges affect attendance and funding?

  • Timestamp: 00:35:40:49 - 00:36:34:49
  • Factors impacting attendance:
    • Immigration policies causing fear among families
    • Labor disputes and site-level tensions
    • Economic uncertainty affecting family stability

21. Is there room for more cuts in supplies and services?

  • Timestamp: 00:37:01:10 - 00:37:39:31
  • Not much. The district has already cut substantial amounts from supplies and services. Further cuts could impact textbook adoption and essential school operations.

22. Why is the district running a deficit now?

  • Timestamp: 00:38:36:22 - 00:42:01:01
  • Before the pandemic, the district was near breakeven. The pandemic brought $400 million in emergency federal and state funding, creating a temporary surplus. Now that the one-time money is gone, deficits are returning.

23. How much is in the district's reserves, and can it be used to increase salaries?

  • Timestamp: 00:42:41:37 - 00:43:41:43
  • Reserves are at $208 million but will drop to:
    • $147 million next year
    • $97 million the following year
  • Reserves are already being used to cover ongoing deficits, meaning there’s no extra money for salary increases.

Staffing and Layoffs

24. Will the Superintendent receive a pay raise or retroactive pay?

  • Timestamp: 00:43:46:48 - 00:44:29:00
  • No. The Superintendent will not receive a pay raise, retroactive pay, or a bonus.

25. Why are layoffs happening now if the final budget isn’t known until May?

  • Timestamp: 00:49:29:19 - 00:50:37:42
  • State law requires layoff notices to be issued by March 15, even though the final state budget is confirmed in May. This timing creates uncertainty, but districts must comply with legal deadlines.

26. How many layoffs are planned, and are all notices final?

  • Timestamp: 00:51:06:19 - 00:52:57:27
  • 380 layoff notices were issued, but only 280 positions are expected to be eliminated. Some employees will be retained through the bumping process or if funding is secured.

27. Can the district delay layoffs until the fall?

  • Timestamp: 00:55:02:31 - 00:56:10:51
  • No. By law, March 15th is the deadline for layoff notices. The district cannot wait until fall to decide.

28. Will laid-off employees be rehired if funding improves?

  • Timestamp: 00:57:00:12 - 00:57:29:52
  • Yes. Employees will be placed on a 39-month rehire list and will be offered positions based on seniority if vacancies arise.

Fiscal Stabilization Plan and Future Outlook

29. What is the Fiscal Stabilization Plan, and why is it required?

  • Timestamp: 00:57:44:16 - 01:00:00:45
  • The plan outlines deficit reduction strategies and was approved early (December 2024) to maintain positive certification. The Orange County Department of Education required the plan due to deficit spending.

30. What steps are being taken to prevent future deficits?

  • Timestamp: 01:01:08:25 - 01:01:29:02
  • The district is focusing on:
    • Increasing attendance and enrollment to boost funding
    • Controlling discretionary expenses
    • Improving fiscal forecasting

31. How accurate have past enrollment projections been?

  • Timestamp: 01:02:03:23 - 01:02:52:59
  • Past projections have been fairly accurate, except for Transitional Kindergarten (TK). Future adjustments may be needed as demographics and birth rates change.