By SDCN Staff
San Diego, CA–The San Diego Unified School District Board of Education voted unanimously on Tuesday night to certify the Second Interim Financial Report for the 2025-26 budget.
Interim Superintendent Dr. Fabi Bagula’s Administration outlined a strategy to ensure the District can take a clear and responsible path to meeting all its financial obligations for the 2025-26 budget. Highlights of the strategy presented include eliminating the remainder of the projected deficit, increased revenue projections, limited to no layoffs, and an expected positive fund balance increase for 2024-25 of about $19 million in the District’s General Fund Unrestricted resources. With this strategy, the 2026-27 budget gap is also reduced from $210 million to $113.4 million, a 46 percent reduction.
“Our plan minimizes layoffs, increases revenues, and ensures that our students and educators feel the least impact,” said Dr. Bagula, San Diego Unified Superintendent (Interim). “What sets this year apart from previous years is our proactive, data-driven approach to financial decision-making.
“We have implemented a Fiscally Aligned Retention Management model — a new strategy that prioritizes long-term financial stability by making strategic decisions on which positions to maintain. Unlike past approaches that relied solely on reductions, this approach allows us to retain essential positions that directly impact student learning while ensuring responsible fiscal management and long-term budget stability.
“Also, too often, budget conversations focus solely on cuts—but that has not been the case here. We have actively pursued ways to increase revenue, including increased LCFF income survey completion, more accurate attendance projections, advocacy at the state and federal levels, and philanthropic efforts to expand funding opportunities.”
California requires school districts to issue preliminary layoff notices to employees whose positions will be eliminated in the next school year by March 15. During Tuesday’s meeting, District officials indicated that only roughly 30 notices of possible position eliminations will be sent. The expectation is that the Fiscally Aligned Retention Management strategy will be utilized to fill essential positions identified through this analysis.
The Fiscally Aligned Retention Management model was designed to uphold transparency, data-driven decisions, leadership autonomy and collaboration, staff retention, school stability, positive relationships with labor partners, and reductions as far as possible from classrooms.
Through the lens of these values, current and anticipated vacancies due to retiring employees were analyzed to determine which positions across the District are critical to fill. By leveraging the administrative transfer process, the District can use existing employees to address vacancy needs while simultaneously addressing the budget gap by reassigning employees from the Central Office and school sites to these critical vacancies. This process helps District officials realign resources to meet the needs of their students and schools.
Highlights of the Second Interim Financial Report:
SERP: Employees deciding to take the Supplemental Early Retirement Plan (SERP) was about 27 percent higher than originally anticipated. The estimated projection was 755, but 968 filed the SERP paperwork by the January 15 deadline.
Improved 2024-25 Revenue Projections: Current year increased revenues and lower expenses are expected to result in a $19 million improvement in ending fund balance. This is attributable to increases in attendance ($8 million), along with interest earned ($4 million), solar credits ($1 million), reduced utility costs ($2M), and other expenses ($4M).
Central Office Cost Reductions: For next year, Central Office leaders and staff reviewed existing practices to refocus services to mandated services only, and further attrition resulted in fewer budgeted positions next year.
A factor that remains unknown is Governor Gavin Newsom’s May Revise. The governor will release updates to his proposed budget in early May, which provides clarity on final projections that will inform the adoption of the 2025-26 budget. For instance, the COLA in the June 2024 budget was 2.93 percent however the Proposed Budget in January 2025 was 2.43 percent. This is a difference of $6 million for San Diego Unified.
Lead Up to June Budget Adoption – After the second interim report, the District will continue to work on the budget, make adjustments, issue possible notices for certified or classified employees – if needed, review the governor’s revised budget, and then in June, the Board of Education will adopt a final budget.
