The Novato Unified School District is poised to adopt a stable $131.5 million budget, but the fiscal future is uncertain, officials said.

The district, which is projected to be above water for the next three years, nonetheless faces federal funding cutbacks by the Trump administration and potential state budget losses, said Joshua Braff, chief financial officer.

Braff said other education budget officials he has talked to in California “are worried about the state of education over the next couple of years.”

“Layoffs are going to hit everyone, and hit everyone really, really hard,” he said at a preliminary budget review on June 10.

Braff estimates that diminishing federal and state subsidies, combined with rising costs to offer competitive employee wages, will require an additional $3 million in revenue, or $3 million in cuts, over the next three years.

“Those two things are directly in conflict,” he said. “Money doesn’t grow, but wages do.”

Superintendent Tracy Smith underscored the problem.

“It is true that NUSD will need either $3 million in additional revenue or $3 million in expense reductions to maintain financial stability,” she said. “This shortfall is driven by state and federal funding that falls short of covering increasing unfunded mandates.”

Novato trustees are expected to adopt the district’s final budget on June 24.

At least for now, the spending plan reflects healthy reserves levels in all three years of the multiyear projection required by the county and state. The county and state mandate a minimum of 3% in reserves to make sure that school districts can pay their bills and also cover expenses in an emergency.

“NUSD is above that limit with 7.5% in 2025-26, 4.9% in 2026-27 and 3.4% in 2027-28,” Braff said.

But the stability is not guaranteed, Braff said. One example of uncertainty is the loss of $14.5 million in federal mental health program grants to the Marin County Office of Education. The Novato school district and several other Marin schools were slated to receive extra mental health program funding and staffing prior to the cancellation of the grants in May.

“Will the Marin County Office of Education’s mental health grants return?” Braff said in the budget presentation. “Will NUSD have access to school safety grants like the SAFE and STOP grants?”

On the plus side, the district’s budget restores funding for two athletic trainers, Brendan Graber of San Marin High School and Michael Dobie of Novato High School.

After a public outcry at the March board meeting, during which the trainers’ contracts were set to be canceled, Braff said the district received local donations to help offset part of the cost. The district contributed the rest of the funding, Braff said. “That will lead to potential reductions elsewhere,” he said.

“We really appreciate it,” Novato High School Athletic Director Michele Brovelli Smith told trustees on June 10. “Those trainers not only help with injuries, but they also help with rehab on a daily basis.”

Braff said the district won’t know about federal funding until the fall, when the federal budget is scheduled to be adopted by Oct. 1.

“Outside of the chaos, there’s the fact that that budget is not due until September,” Braff said. “That can have tremendous impact.”

The state budget, which is supposed to be adopted by July 1, is also up in the air, he said.

“The state budget won’t be happen until the end of June,” Braff said, “Right now, I know that the governor and the state Legislature don’t 100% agree on everything in the K-12 budget. We have to wait and see what happens there.”

The Novato district, Marin’s largest public school district, serves about 7,300 students in 12 schools and an independent study program.