Feb. 15, 2026, 5:30 a.m. PT
- The audit cites deficit spending, declining enrollment and insufficient cash flow as the reason for its substantial doubt finding.
- The district agrees with those factors but not with the finding itself.
- The board voted 3-2 to submit a letter of disagreement with the finding in hopes of lessening the consequences.
Each year, Oxnard Union High School District, like all districts, is required to hire a firm to provide an independent audit of its financial records. The recently released report for the 2024-25 academic year, however, marks the first time an auditor declared that there is a high probability the district will be unable to meet its financial obligations for the upcoming year.
Eide Bailly LLP’s finding is based on the district’s pattern of deficit spending, declining enrollment and insufficient cash flow.
The district’s financial consultants said the finding is extremely rare and could have consequences for its financial reputation for years to come, potentially putting future bond initiatives at risk.
Oxnard Union oversees eight comprehensive high schools and several other schools and programs in Oxnard, Camarillo and Port Hueneme. Its enrollment stands at about 17,300.
District administrators acknowledge that financial obstacles continue to plague the district but insist they will meet all financial obligations by continuing to reduce spending in a way that minimizes impacts to educators.
“We disagree strongly with the opinion — their opinion — that we’re not going to continue to thrive here in the future,” Assistant Superintendent of Business Services Richard Urias said during the Jan. 31 board meeting. “We believe there’s a pathway to financial stability.”
To that end, the board of education voted to submit a letter of objection to the auditor’s finding in hopes of mitigating those negative impacts.
The auditor’s findings
The ultimate finding of Eide Bailly’s audit, dated Jan. 13, was that ongoing financial challenges raised “Substantial Doubt About the District’s Ability to Continue as a Going Concern.”
The report cited three main concerns that have adversely affected the district’s potential ability to meet future financial obligations.
First, unsustainable increases in expenses have created significant deficit spending.
That trend began in 2023, when deficit spending amounted to $28 million, and continued into the next year with additional deficit spending of $4.9 million, according to the report.
Long-term liabilities increased by $99.5 million over the two-year period, and the district was left with a $41.3 million deficit for the 2024-25 fiscal year, the auditor states. The district expected an operating deficit again during the 2025-26 fiscal year.
The second factor is declining student enrollment. The district reported an average daily attendance — the total number of days of student attendance divided by the total number of days in the school year — of 14,563 for the 2024-25 academic year, which was a decrease of 707 from the previous two years, according to the report. An additional decrease of 633 was expected during the 2025-26 academic year.
With initial adjustments not planned until early 2026, the auditor wrote, the district would be exposed to a gap between attendance-driven revenues and fixed or rising costs.
The third concern is inadequate cash flow to meet routine obligations for the upcoming year without relying on short-term debt.
Between October 2024 and July 2025, the district issued $51.6 million in tax revenue anticipation notes to meet immediate operational needs, the audit states.
The district also relied on significant contributions in retiree benefit payments during the 2024-25 fiscal year and expects to continue to rely on the funds going forward, Eide Bailly reported.
Oxnard Union’s general fund balance decreased by $32.9 million over the previous two years and was expected to decrease 4% during the 2025-26 year, according to the document.
With only slightly more than the recommended minimum of reserves, the district has no cushion against revenue decreases or expense increases, the auditor wrote.
The district agreed with the auditor’s recommendations of implementing enhanced budget monitoring and a comprehensive budget stabilization plan to reduce expenses, rebuild reserves and sustain long-term financial health, according to the report.
The district’s perspective
District staff and consultants said they agree with the financial challenges that served as the basis of the auditor’s finding but not with the severity of the finding itself.
“Deficit spending, declining enrollment, cash flow: We agree with all of those, and those are very common indicators of a district that is in trouble,” said Terena Mares, the consultant the district hired to review the audit. “Where we took issue is, ‘Wait a minute, we believe this is all pointing to a fiscal condition where you might be in trouble if you don’t do certain things — not will be in trouble.”
The auditor’s report of the deficit spending in 2023 fails to acknowledge that a large portion was tied to the required spending of one-time state and federal COVID-19 funds, district staff argued.
For the 2024-25 year, causes of deficit spending included unanticipated increased special education costs and excessive staff overtime, which district staff said they have addressed.
A recent agreement with employment groups will also save the district $8.6 million this year and the next three years to significantly reduce deficit spending, staff said.
As for declining enrollment, Oxnard Union has identified program reductions to align staffing and operating costs with projected average daily attendance, which will take place this spring.
Temporary borrowing is a safe, recommended and common way for educational institutions to increase cash flow, staff argued. The district has relied more heavily on tax revenue anticipation notes because the county recently began issuing deposits from property tax revenues less frequently, staff said.
This year, the district also implemented staff furlough days and a hiring freeze to cut costs.
“We’re moving at a really great pace, we’re getting a lot of things done and soon we’re going to get to that place where we’ve been able to structurally fix this budget,” Urias said, adding that none of the district’s actions in the current school year are reflected in the audit.
Despite communicating those explanations to Eid Bailly, the auditor refused to reverse its substantial doubt finding.
The district’s letter of objection
The audit finding could adversely affect the district’s bond rating. Because the finding can signal a decreased ability to repay debt and a higher risk for investors, Oxnard Union could be denied loans or given higher interest rates, which could cost taxpayers more money.
Because of those consequences, the consultants advised the district to formally object to Eide Bailly’s finding with a letter arguing that it was not adequately supported and that the district stands by its ability to meet its financial obligations.
“This is not a normal thing for a district to do with an audit report, but nor is a substantial doubt finding normal in any way,” said Mares, who has worked in public school finance for three decades. “I have never seen an opinion like this, and I worked in county offices during the great recession.”
The letter of disagreement will be submitted to the Ventura County Office of Education and the California State Controller’s Office. It will also be attached to the audit, ensuring that credit rating agencies and other entities that use the document to evaluate the district’s finances have the district’s perspective.
“Will it negate the opinion? No,” Mares said of the letter. “Maybe it might lessen it in terms of its impact.”
District leadership agreed with Mares.
“This is a very rare mismatch between what we’re seeing in our books, what the county verified in our books and what the auditor is doing, and we want to be on the record in noting this difference,” Superintendent Tom McCoy said.
Disagreement with the district’s response
Board members Karen Sher, Genevieve Flores-Haro and Elizabeth Botello agreed with the consultants and administrators. Two of the five trustees, Mari Estrada and Linda Baker Torres, voted against sending the letter of disagreement.
Baker Torres said she was concerned that protesting Eide Bailly’s finding could put the district’s reputation at risk, especially given that the Ventura County Office of Education certified the district’s 2025-26 first interim budget as qualified, meaning that it may not meet its financial obligations for that year or the next two years.
“I have a duty to acknowledge financial risk and focus my efforts on corrective actions rather than disputing the validity of a professional judgment based on financial evidence and accounting standards,” she said.
The three individuals who gave public comments were also critical of Oxnard Union’s response to the audit. Nic Gaffuri, a social science teacher at Pacifica High School, urged the board not to submit the letter and instead make “hard, unpopular decisions” for the financial health of the district.
“We’ve been deficit spending since 2023, and this is a problem that’s not going to be fixed with furlough days that are on the backs of the teachers,” he said.
Tim Allison, executive director of the Oxnard Federation of Teachers and School Employees, asked the district to be transparent about its finances.
“We cannot wait until the last minute again to fix these problems,” he said. “If this audit report is old news and the work that was done in the fall fixed the problem, tell us. If there is a bigger problem, tell us that too.”
Staff said they expect the county to positively certify the district’s second interim budget in March, when they will present the budget stabilization plan to the board for approval.
Makena Huey is an investigative and watchdog reporter for the Ventura County Star. Reach her atmakena.huey@vcstar.com. This story was made possible by a grant from the Ventura County Community Foundation’s Fund to Support Local Journalism.