The Fountain Valley School District’s business office told trustees Dec. 11 that the district’s revised 2025–26 budget shows improved revenues this year and a positive certification for the first interim report, but staff warned about rising special‑education costs and the fragility of future state funding.

Assistant Superintendent of Business Isidro Guerra and Director of Fiscal Services Puja Shaw led the presentation. Shaw said, “It’s our pleasure to bring to you our revised budget for 2526 school year as of first interim.” Guerra highlighted enrollment growth and the expansion of transitional kindergarten as a key driver: he said Fountain Valley “is 1 of only 2 districts that’s experienced an enrollment increase in the current year,” noting the TK expansion and the district’s status as a district of choice.

Presenters told the board that local control funding formula (LCFF) revenue rose with higher average daily attendance (ADA) and finalized TK add‑ons, and that certain one‑time state block grants and federal funds have supported programs implemented since the pandemic. Shaw explained that restricted funds — federal and targeted state grants — continue to comprise a large portion of the district’s ending fund balance and that the district is budgeting to spend some one‑time monies before their expiration dates.

At the same time, Guerra and Shaw flagged cost pressures. Guerra said special‑education costs and related identifications have risen across the state and in Fountain Valley, and the district has increased contributions from unrestricted funds to cover restricted programs. Trustees asked about pension and utilities trends; the board was told STRS obligations are holding near 19.1% while PERS employer rates have inched up, and that utilities are increasing "across the board."

Presenters also reviewed the state fiscal picture. Guerra summarized recent state revenue gains tied to capital‑gains receipts and a concentrated stock‑market run‑up but warned that the Legislative Analyst’s Office projects substantial out‑year deficits absent policy changes. He said the state’s recent Prop 98 true‑up is producing one‑time funding the district can expect in 2026–27, while cautioning the district should not assume sustained elevated state revenues.

After questions from trustees, the presenters said the district’s multi‑year projection supports a positive certification for the first interim report for the current and next two fiscal years; they described the next steps as submitting the report for Orange County Department of Education review and then updating projections at second interim and the May budget revision.

The board’s discussion emphasized monitoring enrollment cohorts (board members noted larger upper‑grade cohorts leaving the system compared with incoming elementary cohorts), maintaining reserves and planning strategically for potential reductions when one‑time funds expire. The superintendent and trustees thanked the fiscal team for the presentation. The board had no recorded roll‑call motion on the interim in the transcript; presenters stated the practice is to approve the certification before submitting it to the county office.