Napa Valley Unified School District is facing the prospect of more budget deficits, program cuts and layoffs as a result of declining enrollment, increasing costs related to pensions, and other factors.
Assistant Superintendent Wade Roach broke the bad news to the school board last Thursday, informing trustees that projected deficits over the next four years could add up to more than $12 million.
The announcement follows last year’s cuts totaling $12.3 million to erase deficits in last year’s and this year’s district budgets.
As with last year’s reductions, Roach blamed the current projections on shrinking student enrollment that has lowered district revenues, and increasing costs associated with two large pension programs, the Public Employees Retirement System (PERS) and the State Teachers Retirement System (STRS).
“You have the declining enrollment impacting the revenue side of the ledger, and the increase in PERS and STRS impacting the expense side of the ledger,” Roach told the school board.
District spokesperson Elizabeth Emmett said on Tuesday that state-mandated employer contributions to PERS and STRS “are rising sharply and are scheduled to double by 2024.”
Emmett also noted that state education funding has not kept pace with costs incurred by school districts.
“Statewide, the Local Control Funding Formula funding increase is not enough to offset the cost increases necessitated by pensions, health care and other costs,” said Emmett. “It’s unsustainable. Districts all over the state are cutting programs and staff as they build their 2018-2019 budgets.”
Roach unveiled at the school board meeting a list of recommendations from the district’s budget advisory committee — made up of teachers, staff, union representatives, principals, trustees, parents and residents— to reduce costs and erase the red ink.
“It was an intense process,” said Roach, referring to the committee’s work as well as meetings held at school sites over the past few months to discuss the deficits and potential cuts.
The recommendations include possible layoffs of faculty and staff, as well as eliminating certain offerings, such as the seventh period at middle schools and high schools that allows students to take elective courses.
The suggested cuts have generated buzz and concerns among teachers and parents in American Canyon.
Many of them say the loss of the seventh period would deny students valuable electives like music, art, robotics, culinary and more.
The change could also impact other curriculum keystones like project-based learning (PBL).
“With the seven-period day, teachers are able — and are expected — to collaborate within their second prep period as well as attend professional development,” said one veteran teacher at American Canyon High School who asked not to be identified.
“Without this schedule [with a seventh period], it will only be a matter of time before we lose PBL as our foundation as teachers simply can’t and won’t spend their own time.”
Responding to concerns about losing the seventh period, Emmett said: “The seven-period day is a very popular feature because it allows for more choices for students. It is also an expensive program because it is people-intensive.”
She added, “So while that is not on our list of recommended cuts for this year, it certainly could be in the future if school funding remains low.”
Roach presented to the school board financial data and charts showing a somber outlook for a district that has been losing students for the past three years — and is expected to continue experiencing enrollment declines for at least four more years.
District officials and demographers have blamed skyrocketing housing costs for the student losses, saying area home prices and rents are unaffordable for many families with children.
District figures showed NVUSD is expected to lose 1,389 students between now and 2021-2022. Current enrollment stands at 17,818 pupils, but could drop to 16,429 by early next decade.
Fewer students means less education funding from the state, Roach explained. At the same time, district contributions to PERS and STRS will continue to go up over the next several years.
This combination is leaving NVUSD with projected budget imbalances for the remainder of this year ($3.39 million), plus deficits of $3.87 million for 2018-2019, $3.64 million in 2019-2020 and $1.35 million in 2020-2021.
Roach said those numbers could change as time goes on and the district has more solid information on enrollment in outlying years.
“Right now I would take [2019-20] and [2020-21] with a grain of salt,” he said, adding that any deficit reduction plans in the future will need to be “flexible.”
He said if the district has a deficit at the end of the current 2017-2018 year, it would be erased by trimming NVUSD’s rainy day fund.
“When we close the books this year, if we do have an operational deficit, then the offset will be a reduction in the reserve account,” said Roach.
As for next year and beyond, the list of recommended cuts includes eliminating a total of nearly 50 teaching positions over several years, plus some staff cuts.
Roach and Assistant Superintendent for Human Resources Alejandro Hogan said the district has already begun discussing possible faculty and staff cuts with union officials.
Last year, as part of eliminating the $12.3 million deficit, the district eliminated 110 faculty and staff positions. Most of those jobs (68) were held by teachers and other employees who retired, but 42 belonged to others who were laid off.
Last year, NVUSD also offered an early retirement incentive package that resulted in 52 teachers leaving.
Roach’s presentation to the school included brief discussions of ways for NVUSD to mitigate the impacts of enrollment declines.
One way would be to increase the number of inter-district transfers when students in other school districts decide to attend NVUSD schools.
An example provided by Roach showed if the district attracted 115 students through inter-district transfers, the gross revenue would be $1.23 million.
After factoring in costs from teaching these students, NVUSD could yield nearly $600,000 from such transfers.
“This is something we want to look at going forward to see if we can possibly increase inter-districts coming into Napa Valley Unified,” said Roach.
But, he added, “There’s a lot of issues involved. We can’t count those chickens until they’re hatched because the other district — the home district of that student — has to release the student to come” here.
Roach also floated the idea of trying to boost daily attendance by students, saying every excused and unexcused absence results in lost revenue for the district amounting to $65 per student each day.
If NVUSD increased student attendance rates by half a percent, it could generate $762,000 more money each year, officials said.
“The average Napa Valley Unified student is out seven days a year,” Roach told trustees. “If they are out only five days a year, that would give us 1.5 million dollars” more.
“So that’s how important attendance is,” he said.
Improving NVUSD’s student attendance could be challenging. School board President Joe Schunk noted that the district already has a high attendance rate of 96-97 percent.
Nevertheless, Trustee Thomas Kensok said the district should work on informing parents and students about the linkage between attendance and money for schools.
“I think it would be helpful to spread that information out there,” said Kensok.