Corbett Elsen, assistant superintendent for finance and operations, told trustees that the cuts are necessary to maintain a minimum 17% of annual expenditures in reserves — or as ending fund balances — for the current school year and two years out.
Trustees voted unanimously to approve the updated version of the budget, which covers the first three months of the 2025-26 school year through Oct. 31 and two years ahead.
The 17% minimum reserves level has been set for Tam Union as the amount it needs to cover expenses for several months if there were a major emergency or unexpected financial shortfall, Elsen said.
The Marin County Office of Education and the state Department of Education monitor school district budgets in three-year reporting periods. Districts that fall below a certain reserves level in any of the three years could drop from a “positive” rating to a “qualified” budget status, which means it is not certain if the district can pay its bills. If the “qualified” status is not corrected, the district budget could receive a “negative” rating — meaning it is unable to pay its bills — and be at risk of takeover by the state.
In September, Breean Brown, an assistant superintendent at the Marin County Office of Education, sent the district a note to approve its adopted budget, but added some warnings. She noted that even though the state sets minimum reserves levels for school districts at 3% of annual expenditures, Tam Union has adopted a policy of keeping it higher.
“Board Policy 3100, which requires a 17% reserve inclusive of the state minimum, is not being met in the second or third projection years,” Brown said. “As such, it will be critical for the district to continue monitoring the budget frequently and evaluate spending levels until a fully balanced budget is achieved.”
According to Elsen’s presentation on Tuesday, the district’s 2025-26 spending plan is running a $937,000 deficit, but it does have a 17% reserves level. However, in 2026-27, the budget deficit is projected to grow to $2.3 million and the reserves will drop to 15.5%.
In 2027-28, the district foresees an operating surplus of $1.3 million, but that does not include potential compensation costs if there are new contracts with employee unions. Even with the surplus and without subtracting the costs of union contract settlements, the reserves are still at 16.4%, under the 17% minimum.
“The big key here is that we haven’t settled on compensation for that third year,” Elsen said. Most likely, he added, once the union contracts are settled, the district will again be operating at a deficit for the third year out.
“This means we truly have a structural deficit,” Elsen said. “It requires a course correction so that we’re sustainable and we’re balanced.”
As to contributing factors, Elsen pointed to rising costs for everything from utilities to special education student transport costs as part of the reason for the budget crunch.
“Inflation has lowered to near pre-COVID levels, but school district annual costs continue to grow greater than 5.5%,” Elsen said, referring to the statewide outlook.
For the Tam Union district, that problem is compounded by a decline in property tax growth rate projections. For 2025-26, the growth rate has dropped from 4.37% to 4.1%, Elsen said. The rate is expected to decline to 3.9% in 2026-27 and rise slightly to 4.15% in 2027-28.
Property taxes are the main source of revenue for the district. The district, which is considered community funded, or “basic aid,” receives no per-pupil state subsidies if it adds students, and it does not lose state subsidies if enrollment declines. However, with enrollment in a decreasing trend, the district is pressed to reduce staffing to adjust to fewer students.
The district, which hit its enrollment peak in 2020-21 with 5,146 students, had 4,542 students last year and has 4,316 this year, according to Elsen. He called declining enrollment trend the “No. 1 fiscal challenge for school districts” for the next two decades.
The district also faces the threat of thousands of dollars in federal funding cuts for everything from universal free meals to the English as a second language program at Tamalpais Adult School.
Elsen did not indicate on Tuesday how the $2.2 million reduction could be achieved. One of the proposals is to consolidate the district’s two alternative high schools, Tamiscal and San Andreas, on one campus in Larkspur.
The controversial proposal, which is expected to maintain both schools’ programs but with fewer teachers and administrators, will be considered at a special board meeting on Monday.
Chris French, a math teacher at San Andreas High School for the last 10 years, urged the board Tuesday to pause plans for making an immediate decision on the cuts until there is more clarity on the “logistics” of the changes.
“What we’re asking is that the board not accept the plan at this time,” French said during the public comment period. “We need more information as to what the day would look like and how these changes would affect our most vulnerable students.”
Tam Union, like all school districts in the state, has until March 15 to issue any staff layoff warning notices, or pink slips, for the upcoming school year. The notices could be rescinded later in the school year if the budget situation changes.
