Budget Study Session (Open Session)

Summary

On May 12, 2026, the LBUSD Board held a budget study session that opened with a closed-session report announcing a 3-2 vote (Hills and Perry in favor of the motion, Malczewski and Kelly opposing) approving a mutual separation agreement and general release between the board and Superintendent Glass, with a May 31, 2026 resignation date and paid administrative leave effective May 13, 2026. CBO Roychowdhury then presented the proposed 2026-27 general fund budget: approximately $94 million in projected revenue against approximately $90 million in expenditure, including roughly $83 million in LCFF/property-tax revenue and an assumed 4% property-tax growth rate. The presentation covered multi-year fund-balance projections showing reserves declining from $20.7 million (23%) in 2024-25 to a projected $8.76 million (9.37%) at the end of 2025-26 and $7.79 million (8.64%) at the end of 2026-27, driven largely by general-fund transfers for the high school pool. Discussion also addressed Fund 17 (currently $23.9 million against a 2005 board-policy aspirational target of approximately $49 million), special education costs rising from $7.17 million (2022-23) to a projected $10.54 million general-fund contribution in 2026-27, and legal/settlement cost trends.

Key insights (14)

• The board president opened by reporting that "upon the motion of Trustee Howard Hills and seconded by Trustee Dee Perry and a vote of three to two, with Member Malczewski and Member Kelly opposing," the board approved in closed session a "mutual separation agreement and general release" with Glass, effective May 31, 2026, with Glass on paid administrative leave starting May 13, 2026.
• Proposed 2026-27 general fund: ~$94M in revenue, ~$90M in expenditure, with $83.37M in projected LCFF/property-tax revenue (a 4% assumed increase over $80M in 2025-26).
• Property-tax growth assumption set at 4%; third-party vendor HDL Coren & Cone projected 3.79% for 2026-27 and 4.77% thereafter.
• Multi-year reserve trajectory: $20.7M (23%) at end of 2024-25, projected $8.76M (9.37%) at end of 2025-26, projected $7.79M (8.64%) at end of 2026-27 — still well above the board's 5% reserve policy and the state's 3% requirement.
• Approximately $11M transferred from general fund in 2025-26 plus $1.04M for healthcare overpayments; another approximately $4M in 2026-27 budgeted toward the high school swimming pool (total contract approximately $22-23M plus contingency to approximately $24M).
• Special education: revenue projected at $2.91M against $13.45M in expenditure for 2026-27; unrestricted general fund contribution rising from $7.17M (2022-23) to $10.09M (2025-26) to a projected $10.54M (2026-27).
• Legal costs rose from approximately $250,000 in 2022-23 to a projected $1M+ in 2025-26, carried forward at $1M for 2026-27; parent special-education settlements rose from $550,000 (2022-23) to $900,000 (2025-26). Hills attributed part of the upward trend to "the litigation that we're in right now over the Aliso property" and "the 218 claims," characterizing AB 218 as "a pretty sterile euphemism for situations where there was sexual abuse of students by staff."
• Hills stated: "the budget problems don't have to do with money, we have money. The budget problems that we've had to deal with... have involved the budget execution, how you spend money, and not spending public money the way you spend private money." Malczewski responded that legal costs "doubled" and cited the board attorney and "payments for investigations of staff."
• Fund 17 (Special Reserve for Non-Capital Outlay): currently $23.9M; established by a 2005 board resolution targeting the basic-aid differential between property tax and LCFF entitlement, which now stands at approximately $49M; no contributions have been made since 2019-20.
• Roychowdhury proposed a one-year temporary suspension reducing the Routine Restricted Maintenance Account (RRMA) contribution from 4% to 3% (approximately $900,000 reduction), deferring district-office parking-lot resurfacing and painting; this requires board action to suspend the board policy.
• District retains a Standard & Poor's AAA credit rating; the CBO stated: "Very few school districts in the state are fiscally rated triple A... We are rated higher than the state of California."
• New 2026-27 LCAP-funded positions include a Coordinator of Arts (Kelly described it as "a $200,000 position with benefits"), a BCBA funded for two years from one-time funding, and bus monitors.
• SRO contract from the City of Laguna Beach: city's proposal is "significantly higher" — "like two or three times" the 2025-26 cost — and remains under negotiation.
• LCAP/budget public hearing scheduled for May 14, 2026; board adoption scheduled for June 8, 2026; statutory deadline June 30, 2026.

Linked timeline events (4)

• Jul 1, 2025 Glass officially begins as Superintendent
• Dec 16, 2025 Board votes 5–0 to absorb $850K health benefits shortfall
• May 12, 2026 Board votes 3–2 in closed session on Glass separation; joint statement issued
• May 31, 2026 Glass's scheduled last day as Superintendent