The Governor’s 2025–26 May Revision, released on May 14, 2025, proposes a 2.30% Cost of Living Adjustment (COLA) to education funding, lower than the 3.29% estimated in January. But for Rim of the World Unified School District (ROWUSD), even the reduced COLA offers little fiscal relief. The district’s financial picture continues to look grim — despite tangible progress in reducing the budget deficit — due not only to external economic pressures but also internal realities such as declining Average Daily Attendance (ADA) post-pandemic, underreported student need, and structural cost growth.
Understanding Statutory COLA vs. Effective COLA
While the Statutory COLA (see acronyms and definitions) is meant to keep pace with inflation, it does not equate to an equivalent percentage increase in funding for all districts. ROWUSD’s effective COLA — the actual increase in revenue after adjusting for ADA and enrollment changes — is projected to be just 1.7% for the 2025–26 school year. Meanwhile, the district’s expenditures are projected to grow by over 4.3%, creating an increasing structural deficit.
Jordan Zarate, the Trustee representing Area 5 (Running Springs, Arrowbear Lake, Green Valley Lake) notes:
“COLA-only environments do not equate to new dollars for districts, especially ones like Rim. In a world where our costs are rising twice as fast as the Statutory COLA, what you are effectively seeing are cuts to public education funding.”
In the May Revise, the state decreased the 2025–26 Statutory COLA from 3.29% to 2.30%.
Impact on the Budget: Revenue vs. Expenditure
The district’s unrestricted revenue from the Local Control Funding Formula (LCFF) is expected to increase by $627,145 in 2025–26. In contrast, unrestricted expenditures are projected to rise by nearly $1.86 million, driven largely by contributions to restricted programs that are underfunded at the Federal level and rising operational costs.
The result is a projected structural deficit of $5.68 million in 2025–26 according to the latest financial projections, an increase from San Bernardino County Superintendent of Schools’ (SBCSS) review of the district’s Second Interim Financial Report earlier this year.
COLA Doesn’t Close the Gap
Despite the state’s 2.30% COLA:
- Rim’s actual increase in LCFF per student is muted due to a projected decline in ADA.
- The statutory COLA is not the actual COLA a district receives — Rim’s calculated increase in total LCFF revenue is closer to 1.7%, not 2.30%, after adjusting for enrollment and ADA trends.
- Estimated expenditure increases are expected to top 4.3% in the next school year.
Managing the Deficit
ROWUSD has taken proactive steps, including a reorganization of the District Office to shield classrooms from cuts. Looking ahead to 2025–26, the District will lean more on its Budget Committee input process to identify at least $1.5 million in operational reductions.
These are not one-time adjustments; rather, they are part of a recurring deficit trend. If left unaddressed, the district’s reserve levels are expected to plummet to 7.0% in 2026–27 — a level that would cover payroll only for approximately four (4) weeks — and be completely depleted by 2027–28, only three (3) years from now.
A Pattern of Underfunded COLAs
Historical data shows that Rim’s actual funding increases often trail behind the state-funded COLA. For example, in 2023–24 fiscal year, while the Statutory COLA was 8.22%, Rim received nearly half of that in effective new dollars at 4.74%. The pattern is consistent: when the state’s COLA dips, Rim feels it more acutely; when it rises, Rim still cannot fully capitalize due to ADA decline and a lower official UPP.
The Bottom Line and What Comes Next
While the May Revise preserves K–12 funding levels and provides a 2.30% COLA, it does not address structural disparities in LCFF distribution. For Rim, these disparities compound with flat or declining enrollment, rising expenses, and low concentration grant funding to create a worsening financial position.
Without legislative adjustments that recognize the challenges of rural districts like Rim and a more equitable COLA, the district will continue to be underfunded due to geographic and climate-related barriers.
Later this month, the Rim of the World Unified School District Board of Trustees will discuss and adopt an advocacy platform to call for reforms that address LCFF inequities, protect Proposition 98, and ensure full & fair funding for rural and mountainous school districts. These efforts seek to secure the resources our students need and deserve.
2025–26 Budget Discussions
This is part of an ongoing series covering the implications of the 2025–26 budget on our local schools in Rim of the World Unified School District. Read more articles in the series now.