San Diego schools face a second year of deficit spending, more cuts probable

San Diego County schools are once again facing a challenging reality as student enrollment declines: deficit spending and in some cases, discontinued positions.

Each of the county’s 10 largest school districts is spending more than they’re bringing in for the second year in a row, according to budget records that inewsource reviewed. However, spending will be offset by extra money left over from the previous years.

Six districts have considered cutting positions, including teachers, counselors, instructional assistants and liaisons. At Poway Unified, the county’s second-largest district, some 70 roles were eliminated in May, a spokesperson said. 

Several districts also have approved salary increases despite ongoing money problems, including San Marcos Unified, Oceanside Unified, Escondido Union and others. Board members at three of the 10 largest districts gave themselves raises, too. 

Sweetwater Union approved a 2.75% increase to the board’s annual pay. Grossmont Union and Cajon Valley also bumped up their board’s pay.

Districts’ pockets will likely get tighter now that California has a projected $12 billion budget hole. 

“We’re facing this deficit — much of it due to lower revenue projections — because of what’s happening with our economy right now, largely driven by the Trump tariffs,” said Laura Pryor, research director at the California Budget and Policy Center. 

Lower state revenue projections translated into a downgrade for Proposition 98, a major funding source that provides TK-14 schools a guaranteed minimum level of money, she said. That bucket now holds about $114 billion, down from $119 billion projected in January. 

Although the state budget maintains funding for most education programs, the cost-of-living adjustment is now reduced from 2.43% to 2.3%. 

A lower cost-of-living adjustment is a problem for districts across the state. Even fixed costs for schools such as utilities and insurance change from year to year, costing a total of about 5% more on average while funding per student only increases by 2%, Michael Fine, CEO at the Fiscal Crisis and Management Assistance Team, told inewsource.

“While the state can say they’re fully funding and they’re maintaining programs… at the local level, it feels like a cut,” he said, adding that schools will have to make up that gap. 

But lower state funding is only one of the reasons why many districts are facing budget shortfalls. Another reason: declining student enrollment. 

That’s because education funding in California is distributed to school districts based on their students’ average daily attendance. So fewer students means fewer dollars. 

Roughly 27,000 — or 5% — fewer students were enrolled in San Diego County’s public schools compared to a decade ago, state data shows. Declining birth rates, high housing costs and an increase in alternative schooling options are among the reasons why some districts are seeing fewer students. 

Experts expect that trend to continue through the next decade and a half. 

When school officials don’t take action early on, they end up having to make big cuts instead of small cuts along the way, Fine said. Officials can be proactive by looking at their district’s enrollment and keeping an eye on the number of students in transitional kindergarten and kindergarten, which typically makes up about 8.5% of a district’s total population, he adds. 

“When that is dropping… that’s an indicator of what’s to come,” he said. 

As districts work with smaller budgets, officials will be forced to cut more positions and potentially schools over the next couple of years, said Marguerite Roza, director of the Edunomics Lab research center, during a webinar in April. 

“This is not a time to spend down the reserves,” she said, adding that districts should avoid recurring financial commitments in order to stay financially healthy. 

Declining enrollment is already leading to school closures in San Diego County. In late May, officials at the South Bay Union School District in Imperial Beach voted to close three campuses over the next five years after losing roughly half of the student population it had a decade ago. 

District officials must file their budgets for the upcoming year with the county Office of Education by July 1. 

Correction: 9:15 a.m. June 25, 2025:

This story was previously updated to account for school districts’ deficit spending and to clarify eliminated positions. inewsource has also removed the graphics of individual districts’ operating expenses, as officials have since updated their financial reports.