Clark County School District officials are estimating a $68 million deficit for the upcoming academic year tied to arbitration awards and have asked schools to adjust their budgets accordingly.

Principals received a memo Monday from top district brass — Superintendent Pat Skorkowsky, Chief Financial Officer Jason Goudie and Chief Academic Officer Mike Barton — announcing the fiscal situation. The leaders said the shortfall stems from the following employee-related expenses:

• $51 million cost of providing teacher pay raises and larger health-care contributions during the 2017-2018 and 2018-2019 school years, per an arbitrator’s decision in April.
• $14 million to implement the Professional Growth System for the first year.
• $3 million cost of another arbitration decision that involves paying teachers who have completed advanced degrees more money.

“This is an unfortunate situation which could result in a reduction in force and a special late spring surplus for the employee groups,” district leaders wrote in the memo. “We know this is a challenging time and we appreciate your efforts as we work to improve the overall financial stability of the district.”

Last month, the school district filed an appeal in District Court, challenging the arbitrator’s decision in the dispute over a licensed educators’ contract. School district officials had warned that the award would force more budget cuts.

The memo made that a reality Monday, with school leaders noting that reopening budgets was the “fiscally responsible” course of action. The cuts would create a reserve pot of money to fund the arbitration award if a judge rules against the district’s appeal.

District spokeswoman Kirsten Searer said it could take the court as long as a year to render a decision.

“In the case we do win the decision, we will review the financial needs of the district at that point in time and utilize the funds to meet those needs, which could include pay increases for all employees,” she said in a statement.

In the meantime, the district is asking each school and department to absorb the cost of their increased employee salaries in their respective budgets. Most licensed educators work in schools, hence the $47 million needed to come out of school budgets. The remaining several million dollars would be cut from central services’ budget to reflect salary increases of licensed educators working there, Searer said.

Because elementary schools have less funding and flexibility, weighted per-pupil reductions will determine the budget cut necessary at each school. The per-pupil reductions will be $132.22 for elementary students, $153.30 for middle school students and $184.68 for high school students, officials said.

Class sizes stand to increase as a result of the budget cuts. District officials said they’re removing student-to-teacher ratio standards, as required by a class-size reduction law, for one- and two-star elementary schools and will work with the Nevada Department of Education on the matter.

The revised school budgets are due May 16 after principals consult with their school organizational teams.

This marks the district’s second budget deficit in less than one year. The district underwent a series of budget cuts in the fall to overcome an estimated $60 million budget deficit.

This is a developing story and will be updated.