The Clark County School District estimates that as of Thursday it has a potential district-level budget deficit of approximately $20 million.

The deficit was noted as part of district interim Superintendent Brenda Larsen-Mitchell’s response to questions sent last week by State Superintendent of Public Jhone Ebert regarding reports of potential budget shortfalls at the district level and at individual school sites.

Larsen-Mitchell said the district plans to offset the potential district level shortfall with funds from its unassigned ending fund balance, approximately $163 million, according to its 2024-24 final budget. She also clarified that the district is not asking schools to make up that deficit with their carry-forward funds from the prior year. 

“Our commitment to ensuring the public’s trust in our financial management and continuing to transparently report our finances is unwavering, and we look forward to working with state leadership,” the district said in a Thursday statement. 

A discussion on the district’s budget situation is on the agenda for the Clark County School Board’s Oct. 10 meeting. 

The budgetary crisis came to light last month after school principals began sounding the alarm after they were informed by the district that raises for teachers weren’t fully baked into the dollar amounts they were told they would receive for this school year. 

The mishap caused panic throughout the district with reports of schools’ budgets potentially being in the red, which could force them to make cuts in staffing and programs.

In addition, the district said in a Sept. 20 memo that it identified a potential deficit in its central budget separate from schools during its regularly scheduled year-end close-out accounting process. That possible deficit stems from unanticipated expenses for litigation and cybersecurity and doesn’t affect schools’ separate budgets, the district said last Friday.  

The district’s former chief financial officer, Jason Goudie, who was fired Sept. 19 after the district publicly confirmed the deficit, largely attributes the issues to financial constraints caused by the Clark County Education Association (CCEA)’s historic contract and prolonged negotiations that concluded just before the district’s Jan. 15 deadline to send schools’ preliminary estimates on their allocations for the 2024-25 school year. He said the estimates forced his team to build preliminary school budgets with average teacher pay costs that turned out to be lower than the actual amount. 

Last Wednesday, Ebert sent a letter to Larsen-Mitchell asking for information regarding the potential budget shortfalls CCSD is facing districtwide and at the school level. 

In her letter, Ebert asked the district whether a budgetary shortfall exists, and if so, what’s the approximate amount of the shortfall or its best estimate as of Oct. 3. 

In addition, Republican Gov. Joe Lombardo sent a letter to Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) to add the district’s budget issues to an ongoing performance audit of CCSD, the Washoe County School District and the State Public Charter School Authority as part of a 2023 bill, AB517. Lombardo also called for a second investigation into CCSD’s budget by the Committee on Local Government Finance under the state Department of Taxation. 

In his letter to Cannizzaro, Lombardo said he was concerned about reports that the budget issues could lead to staffing cuts at some schools, which he called “unacceptable” given “last session’s unprecedented increase in funding for education.”

During the 2023 legislative session, lawmakers approved $11.2 billion in K-12 education funding, a historic $2 billion increase to education spending. Lawmakers also approved an additional $250 million to create a matching fund to support salary increases for educators. As Nevada’s largest school district, Clark County received the lion’s share of the funds — more than $173 million. 

In addition to the investigation, CCEA has called for Larsen-Mitchell to withdraw as a candidate to permanently fill the position left vacant by the resignation of Superintendent Jesus Jara in February.

Next steps 

During the State Board of Education’s Wednesday meeting, Deputy Attorney General David Gardner, a former Republican assemblyman, said the state superintendent has the authority to ensure the district is in compliance with the reorganization law, AB469, including gathering any necessary information.

Another state statute allows the state superintendent to request a plan of corrective action from the board of a school district found to be in violation of a state statute or regulation.

Gardner said the state superintendent also has the power to assign a compliance officer to work with the school district, and that person would have the authority to gather information, access high level meetings and give regular reports to the state superintendent. 

The reorganization law also authorizes the state board to adopt regulations to make it easier for the superintendent to enforce the law. 

“(The board’s) main power in this fight is clarifying what the superintendent's power is and then allowing her to enforce it against the Clark County School District,” he said. 

Ebert also explained that CCSD, not the state, would pay for the compliance monitor. If, after 180 days the district remains noncompliant, she said they will need to come before the State Board of Education to present why they are still not in compliance.