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The Clark County School District administrative building as seen on Friday, July 27, 2018. (Jeff Scheid/The Nevada Independent)

Clark County School District’s chief financial officer says the school district is preparing for even more cuts in the 2021 school year, regardless of how ongoing litigation over the district’s decision to eliminate school deans plays out.

In an at-times contentious meeting on Friday of the Committee on Local Government Finance — an appointed board under the Department of Taxation that oversees municipalities placed under ‘fiscal watch’ — district CFO Jason Goudie told the eleven-member board that while the district was on an eight-year plan to restore its budgetary reserve account to the necessary 4 percent required under state regulations, it nonetheless requires additional cuts to avoid a deficit in the 2021 fiscal year.

Goudie said the district had a projected $35 million deficit over the next two fiscal years, and while the projected elimination of the school deans would save the district $17 million, that alone would not be enough to cover the entirety of the deficit. He said the areas of the cuts would be announced “soon” but declined to give the panel any additional details, noting they would be shared with other “parties that the superintendent deems appropriate.”

“We're going to try and identify enough cuts during this period to roll out over the full biennium, and that way we have a list or a menu for when we close out 2020 or start getting closer in 2020 to build the 2021 budget, we have those available,” he said. “We're not going to wait until we get to 2021 and decide what those are, but I don't have any more detail at this point.”

The meeting became contentious not because of plans for future budget cuts, however, but over the district refusing to send the committee an updated version of their 2019-2020 budget (approved in late May). In a letter sent to the committee, district general counsel Eleissa Lavelle said it would be “premature” to submit an updated budget with roughly $151 million in money approved by the 2019 Legislature, given the lawsuit over attempts to cut dean positions, unknown enrollment of students until September and threatened litigation over a bill extending the state’s payroll tax that helps fund roughly $72 million for teacher pay raises statewide.

Though the district said it would submit an updated budget prior to December, that explanation left committee Chairman Marvin Leavitt “disappointed” with the district, saying their decision left the committee and anyone else looking at the district’s budget with a misleading impression.

“For anyone looking at the budget, they would have an idea that you are $154 million different than what your budget is actually going to be,” he told Goudie during the meeting. “And I suppose in your mind that's all right. But in my mind it's not.”

Goudie countered by saying that nearly all of the legislatively approved funds would go toward teacher salary raises and cost rollups that are already accounted for, and so creating a new interim budget before the other unknown factors affecting district income have been resolved would be quickly made out of date.

“It really doesn't matter whether we go budget for that school to have an extra $5,000 for that teacher, and then we take it away when we charge them,” he said during the meeting. “There's no operational challenges as it relates to that.”

The school district was placed on “fiscal watch” by the committee in January 2018 as a way to monitor its fiscal condition, after it had lowered its ending fund balance to just 0.78 percent (or $6.4 million) of its general fund as a way to address a $60 million budget shortfall, far below the 4 percent required under regulatory code.

Fiscal watch doesn’t mean the state takes over any operations of the district, but acts more as a monitoring mechanism with requirements that the district (or any other entity under fiscal watch) submit monthly cash-flow statements and provide periodic reports to the committee. 

Goudie told the committee that the district had substantially improved its reserve account since that low-water mark in 2018, and said the budget now included a 2 percent reserve that the board of trustees and superintendent had agreed not to touch. 

Although he said the district planned to slowly raise that ending fund balance by 0.25 percent every subsequent year, Leavitt said the district’s actions were “an improvement, but it’s still not very much,” and that he expected the board to take action during its upcoming fall meeting to add further restrictions or requirements of the district.

“I think if you have in your mind right now that you're going to go off fiscal watch in the near future, that thought is incorrect,” he said, “I think you're going to stay there for awhile until we see some improvement, particularly when you resist what we're trying to get you to do what we think is fiscally responsible.”

Goudie also told the committee that his “biggest concern” with the budget was the legal status of SB551, a bill passed by legislative Democrats that ended a scheduled reduction in the state’s payroll tax and will provide $53 million to the district earmarked for teacher pay raises. Legislative Republicans have threatened to sue over the bill, which did not pass with a two-thirds majority required for tax increases. 

Goudie said he was hoping for certainty from lawmakers and remained “very, very apprehensive about that money.”

“We're hoping that we can get something from the state from a more definitive perspective as to where that's going to last, or maybe a message from the state that says regardless of which way it goes, if it gets overturned and then the Legislature can't approve that, we will pull it out of the rainy day fund and ensure that the education piece is fine,” he said.

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