School board dips into reserves to fund budget

Newport-Mesa Unified School District trustees have signed off on a budget that requires reserve spending for the upcoming fiscal year, but the district’s chief business official cautioned the board that it will need to taper off spending in future years.

Paul Reed, the district’s deputy superintendent and chief business official, presented the 2014-15 spending plan, which the board approved 6 to 0 on Tuesday night. Trustee Walt Davenport was absent.

The document projects $262.1 million in total expenditures, but $253.8 million in revenue. Trustees plan to make up the $8.3 million difference by dipping into reserves.

Reserve spending was required last fiscal year as well. In 2013-14, expenses exceeded revenue by about $6.5 million.

Reed warned trustees that after they spend money implementing the new Common Core education standards, they’ll need to be more conservative about spending.

“If you want to start new programs, you’re going to need to decide what you’re not doing anymore,” he said. “You’re almost supercharged right now and that’s great ... but you need to be prudent about the way you look at the longer-term future.”

Newport-Mesa, a basic aid district, relies on property tax revenue for the majority of its budget. While that money is expected to remain stable over the next several years, he said, the district is losing two one-time funding sources from the current fiscal year: money redistributed from state-dissolved redevelopment agencies and money to implement Common Core.

The state also will be pulling back money for education in future years, Reed explained.

Personnel costs, including salary and health benefits, make up about 85% of the district’s budget.

Recent employee raises have increased the cost of salaries and benefits for the district by about $16.2 million from last fiscal year, the budget shows.

The remaining 15% of the budget will go toward books, supplies and other services, according to fiscal documents.

While the district will need to cut back on spending in 2015-16, Reed praised trustees for their work in navigating difficult budget years brought about by the Great Recession.

“The sky is not falling,” Reed said. “You have to be concerned and cautious, just as you have been for the time that I’ve been here.”