The Closing of the Books for the 2024-25 Budget Continues the Sobering Financial News for the District

We are still early in the 2025-26 school year, but there is significant budget news to share. This is the time of year when the District “closes the books” on last year’s budget. The "Closing of the Books" for last year sets the beginning for this year’s budget. While we must always approve the new year’s budget in June, we don’t actually know its true beginning balances until the final receipts and revenues for the previous year can be reconciled over the summer. These Unaudited Actuals or Year-End Close are presented each year in early September.

The good news is our budget projections are getting more precise. The bad news is they continue to tell a story of the District moving in the wrong financial direction. With all revenues and receipts from 2024-25 now processed, the Unaudited Actuals show that the Unrestricted General Fund Balance dropped from $58.4 million to $55.8 million. That is our starting point for this year, 2025-26. While $55.8 million may seem like a lot of money, that same Unrestricted General Fund Balance was $118 million just one year ago. That’s a 53% decrease. Importantly, within that total Unrestricted Fund Balance, the Base General Fund Balance - which makes up the core operational fund for the District - has worsened significantly, dropping from $21.8 million at June budget adoption to $3.4 million after Unaudited Actuals.

Back at budget adoption in June, we projected that our current spending patterns would further decrease the Unrestricted General Fund Balance this year by $30 million and that we might barely maintain our 3% reserve at the end of the year as required by Board policy. Now, with the Unaudited Actuals showing an even lower Beginning Balance of $55.8 million for 2025-26, we are projected to fail to meet the State-required 2% reserve in June 2026.

The District must develop a plan to restore its reserves as we navigate through the 2025-26 budget and prepare for the 2026-27 Budget Development process. The District will present its First Interim Report in December, reflecting its revised projections for the budget and reserves, which will then be reviewed by the County.

As we have been saying since early in the 2024-25 school year, the District is currently deficit spending about $4 million per month, that is, spending $4 million more every month than it’s receiving in revenues. The more we do that moving forward, the more we diminish our reserves, until eventually, we run out of money.

As a school district where the mission is educating children, we cannot run out of money, and the State and County won’t let that happen. But we need to prevent it from getting to that point in the first place. The District will need to make some very difficult choices in the near future to remain financially solvent, and the closing of the books is just the latest evidence of the urgency of our situation.

This will be a challenge that will take the attention of all of us to overcome - Board, staff, families, and community. To support your engagement, staff from the Finance Division, Office of Equity, and Strategic Resource Planning Department initiated a Community Learning Series on the OUSD budget and how it works. The first session, "How District Budgeting Works" is linked here.

The next session, "Unpacking Our Centralized Budget," will be held on Zoom on September 29.

At the September 24 and October 8 Regular Board Meetings, the Board of Education will discuss and vote on strategies and parameters for the Superintendent and staff to explore during the budget development process that will take place in October through December for the 2026-27 budget. Additionally, the Budget and Finance Committee will meet on October 2 to discuss these initial budget development strategies.

We expect to receive a budget review letter from the Alameda County Superintendent of Schools by September 15. This letter will inform the District whether the County Superintendent has approved the budget adopted by the OUSD Board of Education. Even though OUSD exited receivership and the accompanying additional oversight by the State and County, the County Superintendent still must approve every school district’s budget in the County.

Over the next few months, there will be many opportunities for you to share your ideas and make clear to staff and the Board what you feel is most important as we formulate plans moving forward. We will update and invite you when all of these engagements are scheduled.

We look forward to partnering with you to find solutions that will ensure the District remains on the right track for the future of our students.

In community,

Lisa Grant-Dawson
Chief Business Officer