The Pleasanton Unified School District Board of Trustees reviewed the district’s fiscal health risk analysis last week, which shows that despite the recent budget cuts the board approved, the district is still at a moderate risk of fiscal insolvency.
The analysis that was conducted by the Fiscal Crisis and Management Assistance Team, a state agency that helps school districts across California identify, prevent and resolve financial challenges, also outlined the key areas of concern that are causing those financial challenges, which district staff said they will be working on addressing over the next year.
“I’ve always been one to state that we, as a district and in particular as a board, have to own up to the accountability of some of the errors that have put us in this situation, and we needed to own up on that,” Board President Kelly Mokashi said during the March 26 board meeting. “We need to be accountable, we need to have that long-term strategic planning.”
Back in December, the district submitted its first interim budget report to the Alameda County Office of Education as a negative certification after finding out that the district’s deficit was higher than originally projected. During the first interim report, the district projected a negative ending fund balance of $2.5 million — that number jumped up to $3.3 million by the district’s second interim report, which came out in March.
The increase in the deficit projection was largely attributed to increases in compensation costs like salary and benefits. However, the overall deficit and financial challenges stem from several factors the district has been dealing with like declining enrollment, depletion of one-time funds and other fiscal challenges.
In working to clear the negative certification, which indicates to the county that PUSD will not meet its financial obligations in the current or subsequent fiscal years, the district was able to bring in a fiscal adviser who worked with FCMAT representatives to conduct the fiscal health risk analysis that was presented to the board March 26.
According to Tami Montero, chief analyst with FCMAT who conducted the fiscal health risk analysis, the report is meant to help evaluate PUSD’s fiscal health and risk of insolvency in the current and two subsequent fiscal years.
She described it as “a processes and procedures type of audit”.
Montero went over the work she and her team performed over the last two months, which included conducting dozens of interviews and reviewing over 400 documents of the district’s finances.
The result of all that work showed that PUSD falls at a 25.7% risk score of fiscal insolvency. According to Montero, the goal for every district — like the rules of golf — is to get as close to or exactly at 0% as possible. She also noted two key things: 25% is the cut off point between low and moderate risk, and the analysis only took into account the first interim budget report and not the second.
In the analysis, Montero said her team analyzed over a hundred questions which took a look at the district’s finances and how the district was managing them.
Based on the district’s answers, FCMAT was able to determine five areas where the district needed to improve if it wanted to remain fiscally solvent: deficit spending; leadership and stability; fund balance and reserve for economic uncertainty; the general fund; and position control.
One of the questions related to deficit spending asked if PUSD is projected to avoid deficit spending in the next two fiscal years even if the district implemented the millions of board-approved budget cuts. The answer, according to the analysis, was no.
“The district projects unrestricted general fund deficit spending of $25,783 and $1,642,683 in 2026-27 and 2027-28, respectively,” according to the report analysis. “This projection assumes the district will implement the planned and board-approved $11.2 million in expenditure reductions. Failure to implement these reductions will increase these deficits significantly.”
In regard to the other areas of concern, the analysis showed that for fund balance and reserve for economic uncertainty, the district is not meeting the minimum reserve requirement in any of the three years in its multiyear projection. For leadership and stability, Montero said the analysis found that the district needs to train board members on budget and governance on a more regular basis, even though certain board members said they already attend these types of training.
The analysis also showed that the district does not account for “non-positional costs in position control such as substitute, overtime and stipend costs”.
“During development of its original 2024-25 budget, an error occurred that omitted the non-positional costs,” the analysis stated, referring to the substitute and temporary hire costs that the district did not account for in that year.
“Because the district does not regularly reconcile position control with budget and payroll … the error went undetected until the 2024-25 estimated actuals were prepared and also affected the 2025-26 budget once the non-positional costs were included,” the analysis continued. “The impact of these adjustments resulted in approximately $5 million in deficit spending in both 2024-25 and 2025-26.”
When asked about that $5 million in deficit spending, Montero said that had to do with newer staff turnover in various positions and she doesn’t see that happening in the future now that the district knows what happened.
The board also spent time going through some of the details in the analysis including special education and salary costs and after going through and discussing those and other line items, Montero said she has high hopes for the district’s financial future.
“I have a sense that your situation is just temporary, and that you’ll be on the road to fiscal recovery soon,” Montero said.
Mokashi also stated toward the end of the analysis presentation that she hopes the district will consider using this type of assessment moving forward and continue to take advantage of these types of fiscal support services.
“It’s our job,” Mokashi said. “We need to do the long term planning so that our students aren’t paying the price and our staff, for our community.”
In fact, the next item the board discussed that night fully had to do with the district’s long-term financial health.
During the meeting, the board received a presentation from staff regarding all of its revenue generating efforts that have either already been implemented, are being implemented currently, or are being looked at in the future.
One of the main topics that came up during the discussion was the possibility of introducing a parcel tax for voters to approve.
While progress on that is listed at 25% complete, Superintendent Maurice Ghysels continued to advocate for why the tax is one of the best ways to bring in crucial revenue to the district.
Ghysels said one of the reasons why the district wanted to go through the entire FCMAT process of reviewing its finances was to gain the trust of the Pleasanton community after hearing from people that the district can’t be trusted or that it is mismanaged.
“We’re working as hard as we possibly can to demonstrate integrity, credibility, process improvement,” Ghysels said. “Because what we have to do and what … our kids deserve is a parcel tax.”
Assistant superintendent of business services Ahmad Sheikholeslami also went over several slides that showed the dozens of other school districts in the Bay Area that have some sort of a parcel tax.
“Many school districts in the Bay Area recognize that state funding is not enough and they utilize property taxes to supplement it,” Sheikholeslami said.
However, some members of the audience who spoke during public comment were still wary about the idea of a parcel tax and instead asked the trustees to look elsewhere for additional revenue. One said the district’s recent budget cuts are forcing parents to consider placing their kids in private schools or moving to another district entirely.
Trustee Charlie Jones said he too doesn’t want a parcel tax to be the solution to the district’s financial problems but he also recognized the problem of declining enrollment and said in order to keep certain programs, PUSD needs to cover its costs while they continue to lose students.
“I don’t just believe that we can weather it. I believe we can find ways to be sustainable so we don’t have to keep making these asks,” Jones said.
In addition to the parcel tax, Sheikholeslami also reviewed the current revenue generating efforts that are projected to generate $9.9 million in revenue for the 2025-26 fiscal year and the new efforts that are currently underway and have either been implemented or are guaranteed to bring in new money. Those efforts, including the parcel tax, could generate anywhere from $7.1 million to $10.6 million in ongoing funding in future years.
Staff said they are still looking into other things like decentralizing the district offices, declaring a portion of the Donlon Elementary School property as surplus in order to sell it and even looking into subsidizing water utility costs, an ask that came from Jones at the meeting.