While the Newport-Mesa school district is projecting a positive end to the 2011-12 fiscal year, it is looking at possible significant cuts in the 2012-13 year,
Paul Reed, deputy superintendent and chief business official, presented the second period budget report to the Newport-Mesa trustees during their March 8 meeting.
According to the report, the district is expecting a positive unrestricted fund balance and a positive year-end cash position for the general fund for the 2011-12 school year.
That may not be the story for the next year, though. According to the report, there are a few scenarios that could cause major cutbacks. It all depends on the fate of Gov. Jerry Brown’s proposed budget and whether or not tax extensions will be approved by voters.
The district could be facing a revenue cut of as much as $15 million, according to the Reed’s report.
In that scenario – the governor’s budget passes without the tax extensions, and with the Legislative Conference Committee’s proposed “fair share” reduction – Reed estimates a $570 loss per student.
Reed said he would “anticipate massive cuts to education” in that event.
The district already has pared $24.8 million out of the budget over the last three years, according to the report, due to “funding shortfalls at the state level and a decrease in local revenues.”
The “worst case” scenario, Reed stated in his report to the board, will leave the district budget in the black but with stripped reserves and a “huge problem” in a widening structural deficit.
The report noted that, even in the worst-case scenario, the district could still balance its books for the current year and two years out, but it’s a warning flag for the “worst-case future.”
The best possible outcome, according to the report, would be for the budget to pass with the tax extensions and without the “fair share“ reduction. This would result in a manageable $19 per student loss.
The district budget would remain fairly stable and the reserves smoothed out within three years, Reed said. The lingering affects of the recession could create a problem in the 2012-13 year, but the budget would stay fairly balanced.
The scenario in the middle – the budget is approved but not the tax extensions – would result in a $349 loss per student. Revenue then would go flat and there would be a greater need to draw on reserves. Reserves would be able to hold for two years, but there would still be a structural problem that would have to be addressed.
The district will continue to follow and assess funding and legislative activities at the state level. Board members encourage the local community to review the governor’s budget and the tax extension proposal.
“Over the last several years, K-12 education funding has taken a disproportionate amount of budget cuts,” wrote district spokeswoman Laura Boss in a summary report. “State and local funding for schools has been cut by more than $18 billion. … To begin to reverse this downward spiral, Californians must retain the revenues that enable us to invest in our schools and students.”
