IR: FUSD’s growing budget deficits under CA’s LCFF financing reforms

By Staff Writers Cecilia Cheng, Joseph Miao, Aarav Vashisht & Matthew Zhang

FUSD’s recently proposed budget decreases expenditures in response to high spending in previous budgets. Approved in June, the plan follows the district’s budget crisis last year, when it faced a $27.1 million deficit. With current deficits projected at around $12-13 million, FUSD is expected to fall below the required annual emergency reserve fund threshold of 3%  by 2027-28.

To mitigate this trend, the district’s updated budget includes a 15.1% reduction in long-term deficit spending. Despite these measures, the district continues to face short-term financial pressure, driven by the expiration of “hold harmless” funding — which allowed FUSD to maintain higher staff capacity — the parcel tax, and increased economic costs following the coronavirus. The newly established General Fund, from which FUSD’s non-essential funding is operated,  is projected at $502.2 million, a $3 million decrease from the previous year.  

FUSD’s deficit spending is largely attributable to the expiration of millions of dollars in coronavirus relief funding, declining student enrollment, and increased personnel costs. Throughout the pandemic, the government continued to hold funding levels similar to previous years despite enrollment decreases. However, since FUSD is funded based on the number of students currently enrolled, the “hold harmless” funding initiatives allowed FUSD to preserve its staff capacity. Unfortunately, because the “hold harmless” funding ended last year, the district has sought to lay off faculty to reduce further budget constraints.

Overall, funding for CA school districts is procured through the Local Control Funding Formula (LCFF), a system that accounts for approximately 80% of the district’s revenue. It ensures that additional funding is provided to the unduplicated pupil percentage (UPP), which is the percentage of a school’s total students that fall under three categories: English learner, low income, and foster or homeless.

Although LCFF is designed to improve outcomes for UPP students, its base funding for operational costs does not cover local expenses, leaving districts in higher-income areas like Fremont with less funding. Despite the high percentage of low-income individuals, FUSD is ineligible for supplemental grants, as LCFF requires a UPP of at least 55%. This further exacerbates the district’s deficits, as state-wide projects are continually extracted from the FUSD budget, leaving insufficient funding for staff, instructional resources, and transportation. 

Moreover, the expiration of Measure I, FUSD’s most recent $73 million annual parcel tax that funded the salaries of Library Media Technician personnel, retained high-quality faculty, and protected student safety and security, has had lasting effects on the district. 

FUSD is now required to supplement funding from general funds, which increased financial rigidity and made it harder for the district to address operational concerns. As the budgets are tightened, this may mean cutting down on some staff and reducing programs or resources for students.

Despite inadequate funding, the district still has ways to support UPP students through inexpensive tutoring, mental health services, and language support programs. Facility planning, a long-term process that coordinates the maintenance of school campuses, also advanced through the adoption of voter-approved bonds providing a one-time funding source. This allowed the district to modernize its facilities without drawing from its own budget. 

FUSD is reducing its budget, but its 2025-26 plan still projects a deficit.  As a result, because 80-90% of our district’s budget is spent on personnel, the district may need to reduce or scale back essential programs and services such as art and music funding, emergency learning recovery grants, and staff salaries. The gap between available funding and student needs is likely to widen with the 2025-26 budget, sustaining long-term challenges for educational quality and equity across FUSD.