For the second time in a week, the Napa County Grand Jury has issued a report on the Napa Valley Unified School District, this time regarding its persistent financial challenges.
The latest grand jury report, dated June 5, followed another, more critical report released May 29 that delved into NVUSD’s handling and oversight of Measure H, the $269 million school bond.
The June 5 report focused on the financial challenges at NVUSD, which has had five consecutive years of deficits and is facing at least three more years of fiscal imbalances.
The deficits are “primarily a result of shrinking student enrollment” that has lowered NVUSD revenues, as well as the increasing costs associated with two large pension programs, according to the report.
Those explanations echoed what district officials have previously said were the causes of the deficits. The grand jury also reiterated NVUSD’s position that the enrollment decline was brought on by a skyrocketing housing market that has made Napa and American Canyon increasingly unaffordable for many families with children.
At the end of its report, the grand jury suggested NVUSD go beyond yearly budgeting and produce a “comprehensive, five-year financial plan that articulates its vision for the future” as well as “make a serious effort to find ways to increase revenues.” It also recommended improved ways of communicating its budget issues with the public.
NVUSD said little on Monday about the report, adding the Board of Education will “approve an official response within the required time frame,” according to district spokesperson Elizabeth Emmett.
The grand jury’s foreperson, Alan Charles “Chuck” Dell’Ario, said the district has 60 days from the release of the June 5 report, which was June 7, to officially respond.
“We appreciate that this report reflects a Grand Jury that took the time to interview a wide variety of people and attempt to understand the facts before arriving at findings and recommendations,” Emmett said in an email. “The community is well served when that is the case.”
The June 5 report came only a week after the grand jury released its first report on NVUSD that criticized the district and a citizens oversight committee regarding Measure H, the $269 million school bond approved by voters in 2016.
The grand jury launched its investigation of NVUSD after receiving complaints from residents about the district’s handling of its budgets and Measure H bonds, including a complaint from Leon Brauning, a member of the Citizens’ Bond Oversight Committee.
Brauning, a director with the Napa County Taxpayers Association, said Friday that the release of another grand jury report demonstrated the existence of troubles with the school district’s handling of budgets.
“Considering that there are two negative grand jury reports for NVUSD in less than 2 weeks,” said Brauning, “it is apparent that there are serious problems with mismanagement at the top levels of the school district.”
Superintendent Patrick Sweeney responded by saying Brauning “doesn’t try to hide the fact that he is opposed to public funding for municipal, county or other public agency infrastructure, no matter how important the need.”
“That is his right,” Sweeney continued, “and we would never object to his expressing his opinion. However, we do object to his use of innuendo and hyperbole rather than facts in his attempts to discredit public agencies.”
Sweeney reiterated that the district’s written responses to the grand jury “will directly address the findings with which we agree or disagree, and the steps we already had taken or plan to take in response to recommendations.”
“But we would like to point out that the report released on June 7, regarding financial challenges, is in no way critical of management and in fact helps convey to the community the enormity of the issue of lack of funding for public schools. Constructive feedback and public oversight are valuable. But unfounded opinion and misstatements do not serve the public interest.”
NVUSD budget deficits began five years ago — before student enrollment started to drop — and are projected to continue until 2022, according to the June 5 report. The deficits have ranged in size from $1.1 million (2013-2014) to $5.7 million (2016-2017).
A drop in the district’s student population this decade is one big reason for the deficits. Like most school districts in California, NVUSD receives most of its funding from the state of California through the Local Control Funding Formula, which distributes education dollars based on average daily attendance by students.
NVUSD’s student enrollment first dipped in 2015-2016, and has continued to go down since then because of rising housing costs that have made Napa County unaffordable for many families with school-age children. The local housing market is currently ranked as the seventh least affordable in the United States, according to RealtyTrac, an online real estate information service cited in the report.
School district demographers project the student decline to last through the 2020-2021 school year.
By the time the decline ceases, the district will have lost nearly 2,000 students, from a high of 18,343 students in 2014-2015 to a projected total of 16,429 in 2020-2021, according to the report.
The grand jury also found that NVUSD is facing rising costs associated with two pension programs, the Public Employee Retirement System (PERS) and the State Teachers Retirement System (STRS). Pension costs are estimated to more than double over the next eight years, compared to the current year’s cost, the report said.
To erase its deficits, NVUSD has used a combination of budget cuts and reductions in its reserve fund. The district trimmed school and programs budgets by 9 percent in 2016, and eliminated 110 full-time positions and offered early retirement to faculty and staff in 2017.
The district’s reserve fund — money set aside for uncertain economic times — has gone as low as 3.41 percent in 2017-2018, the grand jury reported. NVUSD policy governing reserve funds states it should be set at 7.5 percent.
At the end of its report, the grand jury recommended NVUSD by the end of this year develop a detailed, five-year financial plan, implement a comprehensive marketing program to increase attendance, and create a website devoted to budget news and quarterly updates.