Once at risk of going broke, San Diego school district touts comeback

San Ysidro School District officials said they’re beginning to regain their financial footing.

Earlier this year, the district filed a negative budget certification and was placed under increased county supervision after projections showed it would exhaust its reserve for economic uncertainties and be unable to meet financial obligations as soon as the 2026-27 school year. 

But late last month the district, bolstered by additional state funding, adopted a revised budget that restores the reserve and balances spending.

The district projects an ending fund balance of about $12 million at the end of this school year — roughly $4 million more than previously expected, its revised budget shows. That includes about $4 million in its reserve for economic uncertainties, nearly $2 million more than the minimum amount that the state requires. 

Officials announced that they expect to earn a positive certification when the district’s first interim budget report is due in December, which would then end the heightened county oversight.

“This is a proud moment for our entire school community,” Superintendent Gina Potter said in a news release. 

School districts across the state are required to adopt a budget for the following year by July 1 and can make revisions within 45 days after the governor signs the state’s budget. This year, the state budget included additional funding to increase the cost-of-living adjustment and a one-time block grant for student support and professional development.

The state also increased the base rate for special education services, a critical bump as districts strive to comply with state and federal requirements amid rising service costs. 

The COLA increase helps offset the costs of new paid pregnancy leave requirements, and the block grant allows flexibility to address immediate needs, according to the San Ysidro district’s revised financial report.

San Ysidro is among the dozens of San Diego County districts that have been grappling with a downward trend in enrollment. Schools are also facing rising costs and federal funding uncertainties.

The San Ysidro district serves some 4,000 students, about a 14%% decrease from a decade ago. As inewsource previously reported, the school board decided earlier this year to consolidate the district’s preschool program to help stabilize enrollment.

Officials said the additional state funding will be used to rebuild reserves, address declining enrollment and adopt curriculum. In addition, the one-time funds will be used to partially fund the child nutrition program. 

The revised budget also includes additional funding for timesheet software, a teacher induction program and technology such as Chromebooks. 

County education officials had placed the district under fiscal supervision earlier this year. San Ysidro was on track to be roughly $2.2 million in the red next year and more than double that the following year.

School districts with negative or “qualified” budget certifications trigger additional county oversight.

Bonsall Unified, a small district in the county’s rural northeastern area, filed a qualified certification last school year. Its board members presented a balanced budget by pulling from reserves to balance its nearly $40 million operating budget for the new school year, according to a June financial report. The district was at risk of not meeting its financial obligations as soon as the 2027-28 school year, the report said. 

Sweetwater Union, the county’s second-largest school district, filed a positive certification but its finance officials warned earlier this year that its reserves were projected to run dry in about three years.

The district’s revised budget, now totaling $756 million, shows it will receive an additional $46 million in state funding — almost double what was projected when board members initially approved the budget.