The Clark County School Board of Trustees scolded district leadership Wednesday over a budget situation they say should have been brought to their attention sooner.

The issue: The district’s unassigned ending fund balance, which is the chunk of revenue not earmarked for specific expenses, is expected to drop to 1.25 percent for fiscal year 2017. It’s nearly 40 percent of an estimated budget shortfall of $34.4 million for the current fiscal year because the district plans to restore the ending fund balance to 1.75 percent.

The rest of the shortfall stems from state funding changes, a union’s arbitration victory and the launch of two new programs, including a recovery high school.

The school district’s chief operating officer, Rick Neal, said the ending fund balance reduction occurred because expenses totaling $13.2 million came to light at the very end of fiscal year 2017, which ended June 30. Those include $9.7 million for salary costs tied to an arbitration ruling in favor of the Clark County Association of School Administrators and Professional Technical Employees as well as $3.5 million the district isn’t receiving from the state for special education.

The district had applied for special education-related contingent funding from the state but found out last week that its request was rejected, officials said.

Earlier this spring, the board approved waiving a district policy that it must have a 2 percent ending fund balance. It was done with the understanding that the ending fund balance wouldn’t dip below 1.75 percent, according to the board.

Trustee Chris Garvey, who frequently questions the district’s financial matters, expressed frustration with district officials for not alerting the board about the ending fund balance before the Wednesday presentation regarding the amended final budget for the 2017-2018 school year.

“I am deeply concerned that appropriate briefings on this that are really, really important are not occurring,” she said. “To digest stuff like this on the fly is not a good way to do business.”

Other board members, including President Deanna Wright, shared her unease. The district’s ending fund balance was 2 percent in 2009 but then fell to 1 percent from 2010 through 2013.

The amended final budget estimates the ending fund balance for fiscal year 2017 will fall to 1.25 percent before increasing to 1.75 percent in fiscal year 2018.

“We’ve worked really hard and had a long-term plan to continue to raise that, and it’s disheartening when something comes at the last minute,” Wright said.  “I don’t think any of us are saying anybody did anything wrong … What we’re saying is: The minute that stuff starts to happen, the next thing should be, who’s calling the board?”

Neal took responsibility for the communication problem, saying he didn’t anticipate the last-minute funding changes. “I have to own that as the COO,” he said.

Another budget-related problem facing the district is related to attrition. The district historically has used savings generated by vacant positions to balance budgets or fund one-time projects, but per the state-mandated reorganization, some of that money must flow to the schools. The schools — instead of the central office — will get to keep the money saved by having a long-term substitute rather than a full-time teacher. 

As a result, the district will have less attrition money to cover budget deficits going forward.

“We’ve got big decisions we need to make by December when we input the official amended final budget,” said Steven Osburn, the director of the district’s budget department, after the meeting.

The district has submitted a tentative and final budget for the upcoming school year, but much of that is based on projections. A final amended budget will be submitted in December — after the district’s enrollment numbers have been solidified and it has received information from its annual audit. The audit establishes the true ending fund balance for fiscal year 2017 and the beginning fund balance for fiscal year 2018.

The tense budget discussion occurred as the district’s new CFO, Jason Goudie, sat in the audience and observed the meeting. It was his second day on the job.

This story has been updated to include additional information about the attrition issue.

Feature photo: Pat Skorkowsky, Clark County School District superintendent, during a board meeting in Las Vegas on March 01, 2017. Photo by Jeff Scheid.