As a group of parents has become increasingly vocal about the Morgan Hill Unified School District’s dire financial outlook, the county superintendent recently contacted the board of education with unease about “the long-term fiscal health of the district.”
MHUSD staff earlier this year proposed a 2025-26 district budget that shows expenditures far outpacing revenues in the coming years, growing to a deficit of more than $13 million by 2025 that must be filled by spending cuts or other sources of money. If the district uses its reserves to cover the ongoing deficits, its local reserve fund will drop from its current level of about $31.3 million to less than $5 million by 2027, according to MHUSD staff.
The proposed budget includes about $5.5 million in districtwide spending cuts for 2024-25, plus at least another $5 million for 2025-26.
Santa Clara County Superintendent of Schools Mary Ann Dewan suggested in an April 12 letter to MHUSD Board President Adam Escoto that those proposed cuts might not be enough. Dewan asked the board to produce and submit to the county office “a board approved detailed plan to show how the District plans to bring ongoing expenditures into alignment with ongoing revenues,” Dewan’s letter states.
Such a plan is requested in addition to the board’s required approval by July 1 of a final draft budget for 2023-24.
Dewan’s April 12 letter was sent in response to the MHUSD board’s “second interim budget report” in March for the 2023-24 budget. Dewan sent a similar letter to Escoto in January, in response to the board’s “first interim budget report”—in which the superintendent expressed hopes that the March report would “bring projected ongoing general fund expenditures into alignment with projected ongoing general fund expenditures.”
That didn’t happen, resulting in Dewan’s April 12 letter.
MHUSD spokesperson Lanae Bays said on May 16 that district officials have been in contact with county office of education staff. “As we engage in a collaborative process to identify additional cuts for the 2025-26 school year, the county and the district have agreed that the plan (requested by Dewan) will be shared…in December,” Bays said.
Both of Dewan’s letters note that after reviewing MHUSD’s budget reports, she has “concerns for the long-term fiscal health of the district.”
The April 12 letter adds, “I would like to remind the District that continued deficit spending is not sustainable and will lead to fiscal insolvency if ongoing expenditures are not brought into alignment with projected revenues.”
Local school districts are required to submit interim budget reports to the county office throughout the year.
Also in recent weeks, a group of local parents—concerned about the proposed MHUSD budget cuts and their impact on education—has become increasingly active. Known as Concerned Parents of Morgan Hill, the group has created a website encouraging parents and community members to attend MHUSD board meetings and let district officials know if they are worried about the proposed budget cuts.
The group’s website says they are focused on three specific areas: academic performance, financial responsibility and transparency for parents.
Many of the parents are directing blame for the district’s current budget situation at MHUSD Superintendent Dr. Carmen Garcia. More than 150 parents attended the April 16 board meeting in person and online, lining up to speak about the projected budget deficit during the public comment period.
“We are in a budget free-fall and the endless array of resources that this leadership thinks the school can provide is NOT sustainable,” Concerned Parents of Morgan Hill Interim President Jeanne Schow said recently.
The group has also been circulating an online petition on change.org since March, and has been signed by 540 people.
Bays added that Garcia “continues to work with the Board of Trustees, staff, parents and other community stakeholders on our shared goal of providing Morgan Hill Unified students with a quality education ensuring they are college and career ready.”
Furthermore, the district’s reserves “remain strong” as MHUSD seeks more revenue through grants and an effort to increase “average daily attendance” at local schools—a rate that determines funding levels from the state of California, Bays added.
Recent grant funds to MHUSD include $1.1 million for school based wellness centers; $747,000 through the California Youth Behavioral Health Initiative and $70,000 per year for a community engagement initiative, Bays said. Additional pending grant funds add up to more than $2.2 million from a variety of sources including Golden State Pathways and the California Department of Education.
