Newport-Mesa Unified School District trustees signed off on a tentative budget for the upcoming fiscal year.
Paul Reed, the district's deputy superintendent and chief business official, presented the 2014-15 spending plan, which the board approved 6 to 0. Trustee Dana Black was absent.
The document, which will be up for final approval in August, projects $260 million in total expenditures, but $249.5 million in revenue. Trustees plan to make up the $10.5 million difference by dipping into reserves to balance the budget.
Reed, however, warned trustees that the 2014-15 budget is part of a trend that could hurt the district in the future.
"You're still solvent, but you have a trend that you're going to have to pay attention to," he told the trustees. "The trend isn't good. Expenditures are higher than revenues in future years."
Reserve spending was required last fiscal year as well. In 2013-14, expenses exceeded revenue by about $6.5 million, causing the district to dip into its reserves to cover its costs, Reed said.
Newport-Mesa, a basic-aid district, relies on property tax revenue for the majority of its budget. While that revenue is expected to remain stable in 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 the new Common Core standards.
Funding at the state and federal levels has also not recovered from the recession, which affects the district's budget as well, Reed said.
The district's personnel costs, including benefits and salary, make up roughly 86% of the 2014-15 budget.
"The district is not flush with income," Reed said. "I've heard people stand at this podium and say we are, and I think that's lovely, but they're not looking at the complexity of what we see here."
By 2016-17, the district's reserves will fall below the state's required 3% reserve level, he predicted.
Still, Reed asserted that Newport-Mesa's budget is conservative and puts the district in a stable position.
"We remain solvent and are moving forward," he said.