Los Gatos-Saratoga Union High School District Minutes

Budget Advisory Committee - 8/3/2026 - Budget Advisory Committee

7/31/2026

We welcome you to this meeting of the LGSUHSD Budget Advisory Committee (BAC) meeting. The public may make comments relevant to agenda items at the time designated on the agenda. Public comment will not be heard outside the designated time. While not required, we would appreciate it if you would identify yourself with your name and address when addressing the BAC. Speakers are asked to limit remarks to three minutes (with a maximum of twenty minutes for one topic).

Assistance Information
Any individual requiring disability-related accommodations or modifications, including auxiliary aids and services, in order to participate in the BAC meeting should contact the Business Services office in writing. Please provide sufficient advance notice to allow the Committee time to arrange for your accommodation.

Please use the following link to join virtually (in-person required for Committee Members): https://lgsuhsd.zoom.us/j/96533754726

Attendees - voting members

Wendy Riggs		BAC Voting Member
Lee Fagot		BAC Voting Member
Daniel Snyder		BAC, CBOC Voting Member
Jim Bertonis		BAC, PTOC Voting Member

Attendees - other

David Poetzinger		BAC Non-Voting Member
Greg Louie		BAC Non-Voting Member
Soojin Lee		Non-Voting Member, Administrative Specialist
Dr. Deepa Mukherjee		Non-Voting Member, Associate Superintendent, Educational Services
Patrick Bernhardt		Non-Voting Member, Assistant Superintendent/CBO
Heath Rocha		Non-Voting Member, Superintendent
Steve Chen		Non-Voting Member, Trustee

OPENING BUSINESS

Call to Order/Establish Quorum
The meeting was called to order at 3:32 p.m. Roll call was conducted, and a quorum was not established due to an insufficient number of voting members present. Therefore, no action could be taken. However, discussion of agenda items proceeded.
Welcome and Introductions
Members of the Budget Advisory Committee took turns introducing themselves and providing brief background information.
Adopt Agenda
The Committee was unable to formally adopt the agenda because a quorum was not established.
Public Comment
No public comments were received.

ACTION ITEMS

Approval of the Minutes
Approval of the previous meeting minutes was deferred due to the lack of a quorum.
Set Meeting Dates
Staff presented the proposed 2026–27 Budget Advisory Committee meeting dates. Formal approval of the meeting schedule was deferred due to the lack of a quorum.
Selection of BAC Chairperson
Selection of BAC Vice Chairperson

REPORT/DISCUSSION ITEMS

45-Day Budget Revision
Presentation of the 45-Day Budget Revision 2026-27
Patrick Bernhardt, Assistant Superintendent/CBO of Business Services, presented the District’s 45-Day Budget Revision 2026-27.

Mr. Bernhardt explained that school districts generally adopt their budgets in June and do not formally revise them until the First Interim reporting period in December. However, when the State adopts its budget and the final State Budget results in material changes to a district’s anticipated revenues or expenditures, the district must revise its budget within 45 days of the Governor signing the State Budget.

Although the statutory requirement applies only to changes resulting directly from the State Budget, staff also used the revision process to incorporate salary increases approved after the District’s budget was prepared. The adopted budget already included the settlement with the District Teachers Association (DTA), but it did not include the subsequent settlement with the California School Employees Association (CSEA) or salary increases for unrepresented, confidential, and management employees.

The revised expenditures also include the estimated upper-bound cost of conducting as many as four elections. Three trustee areas are scheduled for election, and the Board has placed a districtwide bond measure on the ballot.

Revised Revenue

Mr. Bernhardt reviewed the four revenue categories that changed following adoption of the District’s budget — Property Tax Transfers, State Block Grant, Parcel Tax (Measure A), and AB 602 Special Education Funding.

The Santa Clara County Office of Education provided a minor update to projected property tax transfers, resulting in an increase of approximately $1,000.

The largest adjustment was approximately $2.6 million in one-time State block grant funding. Mr. Bernhardt explained that a similar block grant was provided during the prior fiscal year, although the District received approximately $900,000 at that time. The new grant had been included in the Governor’s January Budget proposal and May Revision, but the District did not include it in the adopted budget because the allocation methodology had not yet been finalized. Depending upon the final methodology, the District could have received little or no funding.

The Legislature ultimately approved a relatively broad allocation based upon average daily attendance (ADA), resulting in approximately $2.6 million for the District. Mr. Bernhardt explained that the funding is restricted, although the restrictions provide the District with significant flexibility. The funding is one-time and is not expected to recur.

In response to a question from Lee Fagot regarding the reliability of the funding, Mr. Bernhardt stated that once the Governor signs the State Budget, the State generally does not rescind the allocation. The State may defer payment into a subsequent fiscal year, but districts ultimately receive the funding.

Mr. Bernhardt clarified that the funds do not need to be spent entirely during the current fiscal year. Staff proposes using the allocation over the next two fiscal years to mitigate projected deficit spending.

The District also increased projected parcel tax revenue by approximately $32,000.

The final major revenue adjustment relates to Assembly Bill 602 special education funding. The May budget projection anticipated approximately $999 per ADA, while the final State Budget increased the amount to approximately $1,340 per ADA. This change results in an ongoing revenue increase of just under $1 million.

Superintendent Heath Rocha noted that educators throughout the State have advocated for increased special education funding for many years as program costs have continued to rise. He stated that the District receives approximately $3 million in special education funding while spending approximately $15 million annually on special education programs and services.

Mr. Bernhardt explained that although the additional funding is restricted to special education, it will replace General Fund dollars that would otherwise be contributed to the program. The increase therefore provides an equivalent benefit to the unrestricted General Fund.

The revised budget reflects a total revenue increase of approximately $3.6 million. Mr. Bernhardt emphasized that approximately $2.6 million of the increase is one-time funding and should not be considered an ongoing revenue source.

Committee members encouraged the District to continue pursuing expenditure reductions despite the additional revenue. Steve Chen stated that the one-time allocation should not eliminate the District’s commitment to improving operational efficiency and reducing ongoing deficit spending. Mr. Rocha confirmed that the District’s budget-reduction efforts are continuing.

Mr. Fagot suggested that a portion of the additional revenue be used to strengthen District reserves.

Chairperson Wendy Riggs recommended adding totals to the revised revenue and expenditure presentation slides to make the overall changes easier to identify.

Revised Expenditures

Mr. Bernhardt reviewed the expenditure adjustments associated with the CSEA settlement and salary increases for unrepresented, confidential, and management employees.

In response to a question from Ms. Riggs, Mr. Bernhardt clarified that the certificated adjustments apply to certificated management and unrepresented employees who are not members of DTA. These positions include the Superintendent, Associate Superintendent, principals, program specialists, and the District nurse.

The employee benefits adjustment primarily represents statutory costs associated with the salary increases, including pension contributions, unemployment insurance, and Medicare.

The services and operating expenditures adjustment reflects an estimated maximum cost of approximately $250,000 for conducting four elections. Three trustee areas and the districtwide bond measure could appear on the ballot. However, if only one candidate files for a trustee area, that election would not be placed on the ballot, reducing ballot and voter information guide expenses.

The Committee discussed the District’s transition from at-large trustee elections to trustee-area elections. Mr. Rocha explained that if no candidates file for a trustee area, the Board would conduct a public application and appointment process similar to the process previously used to fill a Board vacancy. Under the trustee-area system, applicants would be required to reside within the applicable trustee area.

Mr. Bernhardt also reviewed the increased personnel costs by fund. Most costs are reflected in the General Fund, while salary and benefit costs for cafeteria employees are recorded in Fund 13, the Cafeteria Fund.

Reserve and Multi-Year Projections

Mr. Bernhardt reviewed the revised reserve projections and the aggregated Multi-Year Projection.

Staff proposes using the one-time block grant funding over two fiscal years to mitigate projected deficit spending, with a larger portion used during the current fiscal year because the projected deficit is greater. The ongoing increase in special education funding also improves the District’s out-year projections.

With these adjustments, the District’s reserve is projected to remain relatively stable at approximately 12%. The District’s written Board policy establishes a minimum reserve of 10%, although the policy is currently suspended. Mr. Bernhardt stated that the Board previously indicated it would reconsider the suspension after reviewing the Unaudited Actuals in September.

Mr. Chen and Ms. Riggs requested that the presentation include the reserve projections from the adopted budget alongside the revised projections. They stated that a before-and-after comparison would help the Committee and Board understand how the additional revenue affected the District’s financial outlook.

Mr. Bernhardt reported that the adopted budget projected reserves of approximately 11.16% for 2026–27, 11.62% for 2027–28, and 13.16% for 2028–29. The first two years improved due to the one-time funding, while the third-year projection decreased because of the newly incorporated ongoing salary costs.

The Committee also discussed whether future Multi-Year Projections should include a placeholder for employee salary increases after current labor agreements expire.

Mr. Chen suggested including a nominal annual salary increase of approximately 2% to provide a more realistic representation of future expenditures. He noted that projections can appear overly positive when future salary increases are not included.

Daniel Snyder explained that Los Gatos Union School District uses a 2% placeholder for years beyond an existing labor agreement. He stated that the placeholder is presented as a planning assumption rather than a commitment to a negotiated salary increase.

Mr. Fagot suggested clearly labeling the amount as a projected estimate. Ms. Riggs indicated that an assumption between 2% and 3% may be appropriate but stated that she did not have enough information to recommend a specific percentage.

Greg Louie noted that including a projected salary increase could create concerns that employees or bargaining units might interpret the assumption as a commitment. Mr. Bernhardt explained that the District’s existing projections include step-and-column costs but do not include an assumed percentage salary increase without specific Board direction.

No formal action was taken. Mr. Rocha suggested that Mr. Chen submit a request for a future Board discussion regarding the use of a salary-increase placeholder in the Multi-Year Projection.

Budget Reductions and Financial Communication

Mr. Chen asked whether the previously projected expenditure reductions remained in the revised budget. Mr. Bernhardt explained that staff had identified more budget reductions during the current year than originally anticipated and that the revised projection retained the same underlying assumptions regarding future savings.

Committee members encouraged staff to communicate the District’s expenditure reductions more prominently. Mr. Chen stated that highlighting the savings would demonstrate that the District is actively managing expenses rather than relying solely upon new revenue.

Ms. Riggs agreed and suggested presenting several of the most significant savings categories rather than providing a detailed itemization. She stated that communicating both the additional revenue and the District’s progress toward its savings goals would provide a more complete and positive financial message to the community.
2024/25 Unaudited Actuals Update
Public Comment - Report/Discussion Items
Budget Format
Public-Facing Budget Presentations

Mr. Bernhardt introduced a discussion regarding how the District could present budget information to the Board, employees, parents, and the broader community in a more accessible and user-friendly manner.

He explained that when he began his position, he received specific direction from the Board and Superintendent to provide extensive background and detailed financial information because confidence in the District’s budgeting and financial-management processes had declined. He stated that feedback during the past year indicates that the District has made progress in restoring that confidence.

Mr. Bernhardt stated that the next step is to develop presentations that remain transparent and accurate while being understandable to audiences without extensive financial knowledge.

The District plans to conduct a series of “Budget Roadshows” for employees at both school sites, parent organizations, and potentially community organizations. Mr. Bernhardt noted that the District regularly shares information regarding student programs and accomplishments but has fewer opportunities to explain its financial successes and challenges. Increased transparency may help build community understanding and support when the District seeks approval of future funding measures.

Mr. Chen recommended beginning with the primary messages the District wants the community to understand and then designing the presentation around those messages. He identified two common concerns: whether the District spends enough on teachers and whether District administration is disproportionately large.

He stated that financial presentations should clearly distinguish administrative overhead from costs that may be coded centrally but directly support students, including special education teachers, aides, and other student-serving employees.

Mr. Snyder recommended reviewing Los Gatos Union School District’s annual “LGUSD by the Numbers” publication. He explained that the publication uses graphics and high-level calculations to show student-facing salaries and expenditures, including contracted personnel and services that directly support students. The publication also compares teacher compensation with similar districts rather than relying only upon statewide averages.

Mr. Rocha noted that significant contracted special education costs may not appear as direct student services in standard financial reports, even though the expenditures support individual students with substantial needs. Committee members agreed that these costs should be represented accurately in public-facing materials.

Ms. Riggs stated that the formal reports submitted to the County and State should continue to be provided to the BAC and Board because they reflect the District’s official accounting records. However, the Budget Roadshow presentation should be framed around how District funds are used rather than around accounting codes.

She recommended using pie charts, bar graphs, photographs, peer-district comparisons, and other visual tools. She noted that simplified graphics would be more accessible to the general public than tables containing multiple accounting categories and large numerical figures.

Soojin Lee noted that the Committee’s comments were consistent with feedback previously provided by student representative Julian regarding the need to simplify Budget Roadshow presentations for a general audience.

School-Site and Per-Student Expenditure Analysis

The Committee discussed whether public-facing budget materials should include information regarding the cost of operating each high school and the average expenditure per student.

Mr. Bernhardt explained that Los Gatos High School has more students and employees than Saratoga High School, resulting in greater overall expenditures. However, Saratoga High School may have higher costs in certain areas because it houses the District’s most expensive special education program and students generally take more classes per year.

Committee members discussed whether special education costs should be shown separately when comparing average expenditures by school. Members noted that a per-student comparison could help determine whether spending is generally equitable, but it could also create misunderstandings or reinforce divisions between the two communities.

Mr. Bernhardt explained that the District staffs both schools using a formula that considers student enrollment and course demand. Saratoga students take a higher average number of classes, resulting in more staffing per student. Los Gatos High School, because of its larger enrollment, can offer more sections and a broader range of electives.

The Committee discussed how differences in program offerings, class demand, staffing levels, special education placements, and employee experience could affect site-level calculations.

Mr. Bernhardt stated that the Standardized Account Code Structure (SACS) is not designed to easily determine the complete cost of operating an individual school. The District has established site codes that allow many expenditures to be separated by school. However, districtwide costs would still need to be allocated between the sites.

Historically, certain District Office expenses have been apportioned 60% to Los Gatos High School and 40% to Saratoga High School. Mr. Bernhardt explained that the ratio may have originally reflected enrollment but has remained in use because auditors generally prefer consistent allocation methodologies.

Employee experience may also produce differences between schools. Because most District expenditures are personnel-related, a school with a more experienced and stable staff may have higher per-student costs than a school with greater employee turnover. Recent retirements and replacements could therefore cause a measurable change in a school’s average cost without reflecting a change in programs or service levels.

Mr. Bernhardt cautioned that creating a single per-student figure may require extensive explanation of the underlying variables. However, Committee members stated that the District should understand the data internally even if it ultimately determines that the information should not be included in public-facing materials.

Ms. Riggs stated that a significant disparity could prompt an important discussion regarding the reasons for the difference and whether any adjustments are necessary to ensure equitable services. Mr. Chen agreed that it would be preferable for the District to understand the data proactively rather than respond later to an analysis prepared without full context.

Mr. Fagot suggested that the Committee review any available data and help staff develop an accurate, understandable summary for the community.

Mr. Bernhardt stated that he would attempt to provide preliminary summary information with the Unaudited Actuals presentation in September. He noted that some calculations may be difficult and that he could not guarantee that every requested analysis would be available within that timeframe.

Mr. Rocha suggested involving Tanya in developing the messaging and reviewing examples from other districts’ publications.

The Committee emphasized that the District should begin by identifying the core messages it wants the community to understand and then build the Budget Roadshow presentation around those messages.

ADJOURNMENT
The meeting was adjourned at 4:43 PM.

Budget Advisory Committee - 5/26/2026 - Budget Advisory Committee

5/23/2026

We welcome you to this meeting of the LGSUHSD Budget Advisory Committee (BAC) meeting. The public may make comments relevant to agenda items at the time designated on the agenda. Public comment will not be heard outside the designated time. While not required, we would appreciate it if you would identify yourself with your name and address when addressing the BAC. Speakers are asked to limit remarks to three minutes (with a maximum of twenty minutes for one topic).

Assistance Information: Any individual requiring disability-related accommodations or modifications, including auxiliary aids and services, in order to participate in the BAC meeting should contact the Business Services office in writing. Please provide sufficient advance notice to allow the Committee time to arrange for your accommodation.

Please use the following link to join virtually. (Committee Members must attend in person.) https://lgsuhsd.zoom.us/j/98605687497

Attendees - voting members

Mathew Day		BAC Voting Member Classified Staff
Daniel Snyder		CBOC, BAC Voting Member
Fan Steinke		BAC Voting Member
Peter Hertan		BAC Voting Member
Julian Juan		BAC Voting Member-Student Representative 2025
Wendy Riggs		BAC Voting Member
Jennifer Young		BAC Voting Member Certificated
Jim Bertonis		PTOC Voting Member
Lee Fagot		Budget Advisory Committee Member

Attendees - other

Pola Michelle Alas		Administrative Assistant, Business Services
Steve Chen		Trustee
Greg Louie		BAC Non Voting Member
Dr. Deepa Mukherjee		Associate Superintendent, Educational Services
Patrick Bernhardt		Executive Director, Business Services Non Voting Member
David Poetzinger
Katherine Tseng		Board Vice President

OPENING BUSINESS

Call to Order/Establish Quorum
The meeting was called to order at 4:16 p.m and a quorum was established.
Approval of the Agenda
The agenda was approved as submitted.
Approval of the Minutes
The minutes were approved as submitted.
Motion made by: Jennifer Young
Motion seconded by: Fan Steinke
Voting
Unanimously Approved
Public Comment
There were no public comments.

REPORT/DISCUSSION ITEMS

2026-27 Fiscal Year Proposed Budget
Patrick Bernhardt, Executive Director of Business Services, shared greetings and apologies from Superintendent Rocha for today's absence.

Mr. Bernhardt welcomed and thanked Mr. Bertonis and Mr. Fagot for joining the Committee.

He noted the Committee meeting date is set to occur earlier in the week, of the week when the board receives the four quarterly financial presentations in the year. This budget reports is the biggest report of the year and this is in preparation for the public hearing on the budget, which will take place Thursday night. The presentation being shared is the exactly the presentation that is appearing on the board's agenda. Mr. Bernhardt will run through it and you can ask questions so he can be prepared and members are welcome to ask the two board members who are present questions so that they can be papered to do a more robust public hearing on Thursday evening.

Mr. Bernhardt presented the Adopted Budget Report 2026-27 presentation that will be presented to the board. Chairperson Riggs noted the Committee's part is to see the presentation with the eyes of the public and provide Mr. Bernhardt with feedback on what if anything could be improved to inform their understanding of the budget better. Mr. Bernhardt indicated their will not be any changes made to the presentation. The budget adoption process is a two-board meeting process. There is a public hearing on Thursday at which the board will receiving the presentation in this form, but the board will not take action on the budget until June 11. And so after the public hearing, Mr. Bernhardt can bring back changes.

Mr.Bernhardt indicated what is highlighted on the budget presentation is what will affect the District, basic aid funded by our local property taxes, not the state or county budget state that may impact the district's colleagues. The district receives ~6% to 7% per year of our total district revenue directly from the state.
However, there are some significant program changes in the governor's budget that will have some meaningful impact on the district. The governor proposes changes in January, then proposes a May revision in May and then between that
and which happens by law by May 14th by constitutions, the end of June the governor and legislator will sign the budget and we will know the governors budget at the end of June what the state budget is.

The governor is proposing another round of discretionary on-tien block grands paid on a per Average daily attendance (ADA). Anything the state pays on a per pupil or a per ADA basis the district receives. Last year the district received ~$900,000 in a one-time discretionary block grant paid on a per ADA basis. At the governor's current proposal, the district would receive~$2.5 million. Although there is afaction in the assembly that is strongly advocating to change the allocation basis of that block grant from per ADA to per unduplicated pupil count (UPP), which the district would then go from about $2.5 million to about $170,000 because we only have about 7% of our students are unduplicated. Unduplicated pupils are students that are low socioeconomic, English language learners, or they're foster youth. The term unduplicated comes for the fact that if you fall into more than one of those categories, you only count once. Changing that allocation basis, even for a portion of that block grant, would be significant to the district because the district would lose 90% of the fund. there aren't any assumptions about how much that revenue the district will receive. None of that revenue is in this budget presentation.

There may likely be an increase in special education funding that is paid on a per ADA basis. The governor's proposing this year is likely to be incorporated is the district would receive $917 per student and the proposal is to increase that to $1,340 per student, a 35% increase. That money is paid to the SELPA, which is a regional consortium of school districts that pool their special educator resources. They take some of that money off the top and the balance is passed through onto the District. The district will not know until the budget has to be adopted and then the SELPA needs to decide how much fit is goingto get passed through on to us. If the complete total were to be passed on to the district, it could be a million dollars per year of ongoing funding, which would be a permanent increase in resources. This money is not yet incorporated into the budget and we do not have the final number that would be in the budget or how much of that is potentially SELPA going to keep for special education programs, for loc incidence disabilities, where it does not make sense for district's to rund their own program because they do not have enough students. For example, are blind, There are just a handful of programs around the county that are run for students who are blindand all school districts send their students who need those services to these programs. SELPA will skim some off the top.

On the expenditure side, the district is running about three-tenths of a percent, a little more than a third of a percent higher, and that is mainly in the employee benefits category. Mr. Bernhardt plans to do a little more investigation after we lose the books as to why the change. It does seem that the average cost for benefits has increased significantly over the last six months. Employee benefits are calender ear plans. In January, the district paid higher premiums, which was accounted for at second interim. It could be due to more employees taking family coverage than previously. Full time eqivelant (FTE) employees is currently 330.
Mr. Snyder noted its a significant differences from $300,000 to $239,000 in the last three months, which would equate to ~ a quarter of all employees changed benefit plans. Mr. Bernhardt noted employee benefit changes are recorded in January and there is currently not a system in place to where the budget is updated when employees change benefit plans.

There is a slowing of property tax growth this year and the district is tuning down that number on the budget, building in a 4 1/2% increase for next year, which that trend is then carried out for the three years of the multi-year projections. It is higher than most districts will budget for, higher than the state cola is projected. over that period.

ADJOURNMENT
The meeting was adjourned at 6:10 p.m.

Budget Advisory Committee - 3/2/2026 - Budget Advisory Committee

2/26/2026

We welcome you to this meeting of the LGSUHSD Budget Advisory Committee (BAC) meeting. The public may make comments relevant to agenda items at the time designated on the agenda. Public comment will not be heard outside the designated time. While not required, we would appreciate it if you would identify yourself with your name and address when addressing the BAC. Speakers are asked to limit remarks to three minutes (with a maximum of twenty minutes for one topic).

Assistance Information: Any individual requiring disability-related accommodations or modifications, including auxiliary aids and services, in order to participate in the BAC meeting should contact the Business Services office in writing. Please provide sufficient advance notice to allow the Committee time to arrange for your accommodation.

Please use the following link to join virtually. (Committee Members are required to attend in person.) https://lgsuhsd.zoom.us/j/93121656204

Attendees - voting members

Mathew Day		BAC Voting Member Classified Staff
Daniel Snyder		CBOC, BAC Voting Member
Fan Steinke		BAC Voting Member
Julian Juan		BAC Voting Member-Student Representative 2025
Wendy Riggs		BAC Voting Member
Jennifer Young		BAC Voting Member Certificated

Attendees - other

Pola Michelle Alas		Administrative Assistant, Business Services
Steve Chen		Trustee
Greg Louie		BAC Non Voting Member
Dr. Deepa Mukherjee		Associate Superintendent, Educational Services
Heath Rocha		Superintendent
Patrick Bernhardt		Executive Director, Business Services Non Voting Member
David Poetzinger
Katherine Tseng		Board Vice President

OPENING BUSINESS

Call to Order/Establish Quorum
The meeting was called to order at 4:31 p.m and a quorum established.
Approval of the Agenda
The agenda was approved as submitted.
Motion made by: Jennifer Young
Motion seconded by: Daniel Snyder
Voting
Unanimously Approved
Approval of the Minutes
The minutes were approved as submitted.
Motion made by: Daniel Snyder
Motion seconded by: Jennifer Young
Voting
Unanimously Approved
Public Comment
There were no public comments.

REPORT/DISCUSSION ITEMS

Second Interim Update and Discussion
Patrick Bernhardt presented the 2025–26 Second Interim Report and reviewed the accompanying presentation with the Committee.

Mr. Bernhardt explained that the District is utilizing a new reporting format for the Second Interim Report. The purpose of the Budget Advisory Committee (BAC) meeting was to review the presentation prior to Board consideration and anticipated approval of the Second Interim Report. Due to the complexity and size of the reports, the Second Interim documents were finalized and posted on the day of the meeting. Hard copies of the presentation and the 14-page report summary were provided to Committee members. Mr. Bernhardt noted that there are more than 100 additional pages available within the Board agenda and the Committee agenda materials.

Mr. Bernhardt stated that the BAC’s role is to advise the Board, ask questions regarding the report, provide recommendations, and assist the BAC Board representatives in identifying questions that may arise during the Board meeting. Because the Board agenda had already been publicly posted, the presentation could not be revised prior to the Board meeting.

The Second Interim Report includes actual financial data from July 1 through January 31, representing seven months of actual revenues and expenditures, along with projections for the remaining five months of the fiscal year. Mr. Bernhardt explained that this is the final interim report prior to budget adoption in June. The final budget will be estimated actuals, which will be presented at the final Board meeting in June, will include approximately 10 months of actual data and estimates for the remaining months of the fiscal year to close out the reporting for this fiscal year.

Mr. Bernhardt reviewed the District’s financial position and noted that the First Interim Report reflected approximately $3.3 million in deficit spending, partially due to unexpected cafeteria program costs and increased expenditures from the prior fiscal year. He stated that overall, revenues and expenditures are generally tracking as projected in the First Interim Report with minor changes.

One significant change in the savings is reflected in the Second Interim Report is a $2,525,353 reduction in net transfers out of the general fund. Mr. Bernhardt explained that this change relates to the District’s longstanding practice regarding the use of Redevelopment Agency (RDA) pass-thru revenues. Historically, the District transferred these funds to Fund 14, Maintenance Fund, and Fund 40, Special Reserve for Capital Outlay for facilities and maintenance-related purposes. Instead, the revenue will be used for routine restricted maintenance requirements within the general fund. By doing so, this will eliminate ongoing deficit spending, restoring the required 10% reserve.

Mr. Bernhardt provided historical background regarding the Town of Los Gatos Redevelopment Agency. Following the 1989 Loma Prieta earthquake, the Town established the Redevelopment Agency to support recovery efforts, seismic safety improvements, and downtown revitalization projects. The Central Los Gatos Redevelopment Plan was adopted in 1991 to finance earthquake-related repairs, infrastructure upgrades, and seismic strengthening projects. As property values within the redevelopment project area increased, tax increment revenues generated pass-through payments to local taxing entities, including the Los Gatos-Saratoga Union High School District.

Mr. Bernhardt explained that prior to 2011, RDA revenues were considered unrestricted property tax revenues. Following changes in state law related to redevelopment dissolution, RDA pass-through revenues received by basic aid districts became restricted for facility-related purposes. Residual tax revenues distributed after debt service and pass-through obligations remain unrestricted.

The District researched the original 1991 RDA agreement and determined that the original restrictions have sunset. As a result, staff determined that it is legally permissible to use the RDA pass-through revenues to satisfy the District’s state-required Routine Restricted Maintenance contribution, which requires approximately 3% of the General Fund to be spent on maintenance activities each year.

Mr. Bernhardt explained that under the current practice, unrestricted General Fund dollars were being used to satisfy the Routine Restricted Maintenance requirement. Staff’s recommendation to the Board is to instead use as much eligible RDA pass-through revenue as allowable for this purpose. Approximately $2.5 million of RDA pass-through revenue would remain in the General Fund to satisfy the maintenance requirement, thereby releasing an equivalent amount of unrestricted General Fund revenue. Approximately $600,000 would continue to be transferred out for facility-related purposes, with approximately $400,000 continuing to be transferred into Fund 40.

Mr. Bernhardt stated that this change would create approximately $2.5 million in newly available unrestricted General Fund revenue, significantly reducing ongoing deficit spending. He noted that the RDA is projected to make its final debt service payment during the 2032–33 school year, after which the RDA will fully dissolve and property tax revenues will revert to standard secured property tax distributions. At that time, the District will no longer receive RDA pass-through or residual revenues. Mr. Bernhardt noted that there is no guarantee that the replacement secured property tax revenues will equal the current RDA revenue amounts, as the final allocation will depend upon the negotiated agreements and assessed property values.

Mr. Bernhardt stated that the tradeoff associated with this recommendation is the reduction of a long-term funding source for capital facilities projects, which may cause Fund 40 reserves to be depleted more quickly over time. However, he noted that the District continues to receive other revenue sources for Fund 40, including capital components of facility rental fees. Fund 40 currently supports major facility repairs and replacements, including roofing, HVAC systems, and emergency repairs not covered by insurance.
Staff indicated that the recommendation is financially manageable because Fund 40 currently maintains sufficient reserves projected to last approximately five years without additional contributions, assuming no extraordinary expenditures. Mr. Bernhardt stated that implementing the proposed change during the current fiscal year would improve the District’s reserve percentage and significantly reduce projected deficit spending in future years.

Mr. Bernhardt further explained that absent this change, the District would likely need to implement significant budget reductions that could impact classroom programs.

The Committee reviewed the General Fund Multi-Year Projection (MYP), including projected transfers and reserve levels. Mr. Bernhardt explained that transfers into the General Fund from Fund 20 continue to support retiree benefit costs of approximately $250,000 annually. The significant reduction in transfers out of the General Fund reflects the proposed change in treatment of the RDA pass-through revenues.

Mr. Bernhardt noted that the District’s projected deficit spending improves substantially under the revised approach. The prior year reflected approximately $2.26 million in deficit spending, while the revised current year projection reflects approximately $234,382. Property tax growth is projected to continue improving the District’s financial position over the next two fiscal years.

The Committee also reviewed the District’s reserve projections and the changes reflected in the out-year projections.

Mr. Bernhardt informed the Committee that the District is preparing to issue the second tranche of refunding bonds within the next several weeks. As part of the refinancing process, the District underwent a credit rating review and successfully maintained its AAA credit rating.

Mr. Bernhardt explained that maintaining the AAA rating will remain important for future General Obligation bond issuances and upcoming Tax Revenue Anticipation Notes (TRANS). He stated that due to the expiration of one-time funding sources, the District will likely need to issue short-term TRANS borrowing next year to maintain cash flow between July and December until property tax revenues are received.

Mr. Bernhardt explained that districts with AAA credit ratings generally receive more favorable interest rates and may even generate positive arbitrage revenue through TRANS borrowing. He stated that during the credit rating review, Standard & Poor’s indicated that the District’s reserve level of approximately 12% was among the lowest they had seen for a AAA-rated district, although the agency otherwise viewed the District’s finances positively. The District’s Board policy currently requires a minimum reserve level of 10%, which had previously been recommended by the BAC.

To further address deficit spending, staff plans to recommend approximately $720,000 in ongoing General Fund savings. These savings are anticipated to result from reductions in program expenditures, staffing adjustments, operational efficiencies, and anticipated attrition. The proposed changes will be presented to the Board at the March 5 meeting.

Mr. Bernhardt stated that staff’s goal is to keep reductions as far removed from the classroom as possible. Detailed recommendations are included in the presentation materials for the March 5 Board agenda.
Budget Advisory Committee Membership/Terms

ADJOURNMENT
The meeting was adjourned at 5:45 PM.

Budget Advisory Committee - 12/8/2025 - Budget Advisory Committee

12/5/2025

We welcome you to this meeting of the LGSUHSD Budget Advisory Committee (BAC) meeting. The public may make comments relevant to agenda items at the time designated on the agenda. Public comment will not be heard outside the designated time. While not required, we would appreciate it if you would identify yourself with your name and address when addressing the BAC. Speakers are asked to limit remarks to three minutes (with a maximum of twenty minutes for one topic). Any individual requiring disability-related accommodations or modifications, including auxiliary aids and services, in order to participate in the BAC meeting should contact the Superintendent's office in writing.

Upon request by a student's parent/guardian, or by the student aged 18 or older, the minutes shall not include the student's or parent/guardian's address, telephone number, date of birth, or email address, or the student's name or other directory information as defined in Education Code 49061. The request to exclude such information shall be made in writing to the Secretary or Clerk of the Board. (Education Code 49073.2)

Please use this link to join virtually (in-person required for Committee Members) https://lgsuhsd.zoom.us/j/92265513682

Attendees - voting members

Daniel Snyder		CBOC, BAC Voting Member
Peter Hertan		BAC Voting Member
Julian Juan		BAC Voting Member-Student Representative 2025
Arnav Mana		BAC Voting Member-Student Representative 2025
Wendy Riggs		BAC Voting Member
Jennifer Young		BAC Voting Member Certificated

Attendees - other

Pola Michelle Alas		Administrative Assistant, Business Services
Steve Chen		Board President
Dr. Deepa Mukherjee		Associate Superintendent, Educational Services
Patrick Bernhardt		Executive Director, Business Services Non Voting Member
David Poetzinger

OPENING BUSINESS

Roll Call/Establishment of a Quorum
The meeting was called to order at 3:34 PM. Roll call was conducted, and a quorum was established.
Motion made by: Daniel Snyder
Motion seconded by: Peter Hertan
Voting
Unanimously Approved
Approval of the Agenda
The agenda was approved as written. Due to committee member Ms. Young needing to depart the meeting at 4:00 p.m., the Agenda was reordered to address the Action Item, Approval of the Minutes, at the start of the meeting.
Motion made by: Daniel Snyder
Motion seconded by: Peter Hertan
Voting
Unanimously Approved
Public Comment - Items Not on the Agenda

There were no public comments.

REPORT/DISCUSSION ITEMS

Report/Discussion: First Interim Update

Mr. Bernhardt presented the 2025–26 First Interim Report, which provides the financial and budgetary status of the District for the period of July 1 through October 31. The report will be presented to the Board at its meeting on December 8, 2025. Student representatives and Chairperson Ms. Riggs identified several calculation errors, which will be corrected prior to the Board presentation. Mr. Bernhardt thanked the students and Ms. Riggs for their careful review.

A summary of the 2025-26 First Interim Report and the Multiyear Fiscal Projections are included in the 2025-26 First Interim Report, pages 3 to 13.

Mr. Bernhardt reported that the District has requested a 45-day audit extension from the Santa Clara County Superintendent of Schools under Education Code section 41020.2(a)(1). The extension was requested because the 2024–25 fiscal year Audit Guide has not been finalized, and the Federal Office of Management and Budget has not yet released the Federal Compliance Supplement due to the federal government shutdown. Chavan & Associates, LLC, the District’s auditors, notified the District that the FY 2025 audit cannot be completed by the statutory December 15 deadline.

Mr. Bernhardt stated that the District will file a positive certification with the Santa Clara County Superintendent of Schools.
Committee Members Comments

ACTION ITEMS

Approval of the Minutes
The September 15, 2025, minutes will reflect that Kathy Granger, Chairperson, did not attend the September 15 meeting and resigned from the Committee due to other commitments. The minutes have been approved, with the correction.
Motion made by: Jennifer Young
Motion seconded by: Peter Hertan
Voting
Unanimously Approved
Public Comment - Agendized Items

ADJOURNMENT
The meeting was adjourned at 4:23 p.m.