SBUSD Budget Warning: $14 Million Gap & Shrinking Reserves – Board Meets Dec 11- 6:00 PM COMMUNITY VOICES NEEDED - Two Action Items
Santa Barbara Unified School District - 720 Santa Barbara St. Santa Barbara, CA 93101 - 6:00 PM - Agenda
SBUSD Budget: What the District’s Own Numbers Really Show
1. Big Ongoing Deficit
SBUSD’s own First Interim shows the unrestricted General Fund is projected to lose about -$12.9 million in 2025–26.
Their multi‑year projection shows continued deficits in 2026–27 and 2027–28.
2. Reserves Are Being Drained
The unrestricted fund balance drops from $19.7 million → about $6.8 million in just one year (2025–26).
The required “Reserve for Economic Uncertainties” in the main General Fund falls below the state’s 3% minimum and is only kept compliant by using money parked in Fund 17 (Special Reserve).
3. Where This Year’s $14 Million Hole Comes From
In 2025–26, restricted programs (Special Ed and other grant‑funded programs) are projected to spend about $40.5 million more than their own revenues.
The unrestricted side can only sustainably cover about $26.2 million of that.
The remaining ≈ $14 million gap is what blows a hole in the unrestricted budget and forces SBUSD to drain reserves.
4. “5% Reserve Goal” ≠ Real Safety Net
The district says it will “maintain a minimum 5% unrestricted General Fund reserve.”
Their own projections show total reserves sliding down toward 5% and landing at about 5.2% by 2027–28, with almost no cushion.
The core operating fund (Fund 01) is actually projected to go negative in 2026–27 and 2027–28; the percentage only looks okay because Fund 17 is propping it up.
5. If Nothing Changes…
If SBUSD continues on the 2027–28 path with no real fixes:
Around 2028–29: total reserves likely fall below the state’s 3% minimum the district goes into “Receivership”.
Around 2029–30: reserves are essentially exhausted - $0
(These years are a simple extension of SBUSD’s own projections, assuming similar deficits continue.)
Bottom line for the front page:
A $14 million gap in restricted funding is being plugged by draining the unrestricted General Fund and reserves. Without a real plan, we’re on track to burn through the safety net.
Behind the Numbers: Why SBUSD’s “Budget Sustainability” Slide Isn’t Enough
https://go.boarddocs.com/ca/sbunified/Board.nsf/files/DP4PBQ63DB0B/$file/First Interim Slides(a).pdf
1. Big Ongoing Deficit (Unrestricted)
Unrestricted General Fund, 2025–26 (First Interim):
Revenues ≈ $193.8M
Expenditures ≈ $167.6M
Before transfers/contributions, it looks like about a $26.2M surplus.
Then the district sends out $40.5M as “Contributions from Unrestricted Revenues” to subsidize underfunded restricted programs.
Result: a net unrestricted deficit of about $12.9M and a steep drawdown of reserves.
2. Where This Year’s ≈ $14M Overspend in Restricted Funds Comes From
Compared to the adopted budget, restricted programs are projected to spend about $14.2M more in 2025–26. That increase comes from:
Certificated salaries (teachers, counselors, etc.)
+$3.1M – more staff time charged to restricted funds (ELOP, Community Schools, intervention, etc.).
Employee benefits
+$1.0M – benefits increasing with those added restricted‑funded salaries.
Books & supplies
+$3.6M – driven by one‑time grants and carryover (Titles, Arts & Music/Prop 28, instructional materials, Strong Workforce, Universal PK, etc.).
Services & other operating costs
+$4.8M – including:
Contracted support for unfilled Special Education positions
Legal costs
Rentals, repairs, field trips, catering, E‑Rate internet work, and other grant‑funded services.
Capital outlay (equipment, devices, facilities)
+$2.0M – tied to one‑time restricted grants and leases.
Put simply:
Restricted programs are over‑spending their own revenues by about $40.5M.
The unrestricted budget can only cover about $26.2M.
The remaining ≈ $14M is what blows the hole in the unrestricted budget and drains reserves.
3. The “Budget Sustainability Efforts” Slide - Still Not a Real Plan
The district’s slide promises:
$6M in reductions over 2026–27 and 2027–28.
A 5% reserve goal.
Inventory of initiatives.
Staffing analysis tied to enrollment.
Cost reduction strategies.
What’s missing:
The multi‑year only shows about $2.8M less in total expenditures by 2027–28 compared to 2025–26, not $6M.
No clear where: no breakdown of cuts between central administration vs. school sites or contracts vs. classrooms.
No clear how: no timeline, no specific categories, no sizing of reductions.
The 5% goal depends on draining Fund 01 and leaning on Fund 17, not rebuilding a true operating reserve.
4. Reserve Trajectory
Reserves as % of General Fund Expenditures
(based on SBUSD’s own projections + simple extension)
2025–26 → 8.45% (district projection)
2026–27 → 5.41% (district projection)
2027–28 → 5.19% (district projection)
❗ ≈2028–29 → ~ 2.6% (falls below district goal 5% and state 3% minimum of 3%)
❗ ≈2029–30 → ≈ 0% (reserves essentially exhausted)
“2028–29 and 2029–30 are estimates based on extending SBUSD’s 2027–28 pattern if similar deficits continue and no new solutions are implemented.”
5. Why This Matters
The combination of a $14M restricted gap, ongoing deficits, and declining reserves means that if nothing changes, SBUSD will eventually face sudden, deep cuts.
Without a clear, public plan that prioritizes classrooms and student supports, there is a real risk that students and school sites will bear the brunt instead of excess contracts and administrative costs.
At some point this stops being an accounting issue and becomes a leadership test.
SBUSD’s own numbers show a $14 million gap in restricted funding, repeated multi‑year deficits, and reserves sliding toward the legal minimum. You don’t need to be a CFA or a CPA to see where that road leads: if we keep doing what we’re doing, we are pushing this district toward serious financial insolvency and putting students, staff, and schools at risk. In that context, the choices our Board of Education makes right now are not technical; they are ethical.
At the same time, SBUSD is proposing to change the rules so that the Finance Committee chair can no longer be an elected community member, and must instead be one of the two Board representatives. This would remove the current chair - a credentialed community finance professional and CFA - at the very moment the district is facing a $14 million gap and rapidly declining reserves. Instead of strengthening independent oversight, this change concentrates control back in the hands of the very officials whose financial decisions the committee is supposed to review. (RESOLUTION NO. 2024-25-3)
A board that is serious about high‑quality governance and student outcomes does not:
Paper over structural deficits with optimistic slides,
Rely on one‑time money while reserves quietly erode, or
Weaken independent financial oversight by taking the Finance Committee chair away from a credentialed community finance professional and reserving it for board members.
In a moment like this, strong board leadership means the opposite:
Facing the numbers honestly, even when they are uncomfortable.
Protecting independent financial expertise, not sidelining it.
Putting students and classrooms first when decisions are made about where to cut and where to save.
Holding itself to the same standard it sets for everyone else: transparency, accountability, and a clear line of sight to better outcomes for kids.
Families are asking for a Board that will step up, not look away - a Board that will demand a real, structural plan to fix the budget, openly debate the trade‑offs, and strengthen (not weaken) the Finance Committee’s independence.
If we stay on the current path, we risk driving SBUSD to the brink and forcing panicked, last‑minute cuts that hurt students the most. If we change course now - with honest numbers, independent oversight, and ethical leadership focused on student outcomes - we can still protect both our schools and our future.
