The Santa Clara Unified School District (SCUSD) has rounded out its most recent fiscal year, curbing a shortfall of $32.6 million.
The 2025-26 fiscal year marks the third consecutive one in which the district faced an operating deficit. Property tax income, SCUSD’s primary funding source, came in higher this year than in 2024, but it still fell short of the district’s 40-year growth average. This year’s property tax revenue sank below preliminary district projections by more than $200,000.
SCUSD has historically maintained a 7.1% annual growth rate on property tax collections, according to data presented at Thursday’s board of trustees meeting. The district plans its annual budget more conservatively, assuming a 5% growth rate — but this is still higher than what SCUSD brings in. Deputy Superintendent Mark Schiel told trustees high interest and mortgage rates in the region are partially to blame for the slowdown.
“That is probably keeping people from selling their homes and moving to something else,” he said, “and that keeps us from being able to see the reappraisal on those homes.”
In June, trustees authorized the transfer of nearly $31 million in rainy day funds to satisfy the bulk of the operating shortfall. The remaining balance was paid using interest earned on the district’s OPEB account. The OPEB — Other Post Employee Benefits — pays the insurance for future district retirees. Schiel told the Voice the transfer of funds from OPEB will not affect access to retirees’ insurance.
SCUSD is now bracing for a projected deficit of $13 million for the current fiscal year, which started in July and runs through June. The district already cut $22 million in spending this spring, through the termination of more than 100 employees, but its ongoing contract negotiations with faculty and employee labor unions — along with any unaccounted expenses — could inflate the shortfall.
“Last year was tough,” Schiel said to the Voice. “We still have an operating deficit, and we have declining enrollment. Those are things that we’re going to have to continue to look at.”
Chris Ramirez is a California Local News Fellow.
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SCUSD to Give Teachers Additional Training on Sensitive Topics
Santa Clara Unified Layoffs Pass Unanimously
Santa Clara Unified: Heartbreaking Layoffs Move Forward
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