Newport-Mesa schools reach balanced budget for 2015-16

The Newport-Mesa Unified School District board of trustees Tuesday unanimously approved a tentative budget that shows higher revenues than expenditures for the first time since the 2011-12 school year.

Paul Reed, deputy superintendent and chief business official, said the final 2015-16 budget will be presented in September when his office can give a more accurate depiction of the district’s finances.

The budget shows the district with $262.38 million in total revenue and $262.34 million in expenditures. The budget is balanced and steady, Reed said.

It was a different picture from last year, when Reed said the budget was part of a trend that was heading in the wrong direction, with expenditures looking like they would continue to be higher than revenues in future years.

The recession and certain state requirements, he said, had taken their toll on the district’s finances.

“As state standards and Common Core came in, we had this huge curriculum push where teachers needed to be trained and technology needed to be added, so we dipped into our reserves,” Reed said. “But the board has been very careful in not overspending the last couple years, so we were going to even out.”

The district has dipped into its reserves for the past two fiscal years, but this year Reed said that won’t be necessary. In fact, though the district is required to meet only a 3% reserve, he said this year it can do better.

“When things were tight, a 3% reserve had to do,” he said. “Now we’re in a position where we can reach and maintain a 4% reserve over each of the next three years.”

Not all the news was positive. Pension costs are creating a challenge for the district.

“Pension costs are expected to increase from $12.6 million in 2013-14 to $28.6 million in 2018-19,” Reed said. “Because pension costs are expected to grow faster than overall expenditure growth, pension costs will assume a greater portion of the district’s total budget with the percent of the budget dedicated for pensions increasing from 5.5% in 2013-14 to about 10% in 2018-19.”

Reed also warned that California’s funding formula could mean higher spending obligations for the district that won’t be offset by increased state funding.

But in the end, Reed said, the district’s finances are strong and will allow the board to move forward on its priorities, including Common Core development and Signature Academies, which are a means for students to focus on their preferred areas of study.