CCSD says board needs to find another $22M in budget cuts

The Clark County School Board faces an additional $22.5 million in budget cuts, the district said in an announcement Wednesday that blamed some of the remaining red ink on rising charter-school enrollment.

The district said in a statement that it lost about $4 million in revenue this year because of Clark County students enrolling in a charter school. That loss occurred because the state reduces funding for the district by $1,023 for each pupil who attends a charter school, it said.

That reduction comes on top of roughly $8 million in funding the district will lose this year because it enrolled 1,400 fewer students than projected. It also lost $1.5 million when per-pupil funding for special education students came in lower than expected.

The School Board has already authorized three rounds of cuts that have amounted to about $40 million in savings to cover a projected $50 million to $60 million deficit. It will face the remaining cuts at a meeting later this month.

The deficit was reduced by an unexpected state reimbursement of $11 million in funding for full-day kindergarten in October. The state Education Department requested authorization to use that funding from the Interim Finance Committee, a district representative said.

Wednesday’s announcement adds $13.5 million to the shortfall, leaving the board to find another estimated $22.5 million in cuts.

The estimates of the deficit have been fluid since the deficit was first revealed in July. Though the board has made more than $40 million in budget cuts, the district has not realized that amount in savings because it has already spent some of that money in the first quarter of its fiscal year.

The district’s announcement seems certain to heighten tensions between charter schools advocates and traditional public school backers who claim the charters siphon off funding. The school district also sponsors a number of charter schools in Clark County.

Asked to respond to the district’s salvo, Patrick Gavin, executive director of the State Public Charter School Authority, said only that the authority is committed to providing high-quality options to students and families throughout Nevada. 

Independent audit finds no fraud

The announcement of the impending budget cuts came after independent auditors completed an annual financial review of the CCSD and found no material instances of fraud.

But the Eide Bailly accounting firm raised several issues with the way money was handled as the district plummeted toward its deficit.

Despite the findings, two trustees and other community members continue to call for another audit to delve deeper into the district’s financial woes.

The annual audit by Eide Bailly reviewed a sampling of the district’s financial statements from last fiscal year and examined how it spent money from four federal programs — including the federal Preschool Development Grant, which provides preschool programs for low-income families.

Auditors found that less than 4 percent of the children enrolled in the program had a disability, less than half the required level of 8.7 percent. The program also had at least one student that did not meet the low-income requirements, and three others for which the district did not have information to determine whether they were eligible.

Funds transfers violated state law

The report also found noncompliance with state laws in two transfers of funds between district accounts.

The School Board did not authorize the $29.3 million transfer from the general fund into the State Grants Fund — more than initially approved. That move came as the district realized it would not receive the amount of funding it was anticipating for full-day kindergarten from the state. State law requires School Board approval of such transfers.

The district’s general fund also was overspent by roughly $17.3 million, partly because of the arbitration award for the district’s administrators, school district Chief Financial Officer Jason Goudie said. State law forbids governing bodies from spending more than the appropriated amount of money for a specific function.

These and other financial issues ultimately led to the district’s deficit.

District officials said they are working to address the deficiencies.

“We are working to essentially more transparently present the revenues to the board,” Goudie told the School Board on Wednesday.

Tami Miramontes of Eide Bailly said although there were eligibility issues with the preschool program, the firm believes the district will not have to refund any of that money to the state and federal government.

“That, I guess, would make (the finding) not as egregious,” she said. “Just as long as you get your internal controls in place and correct the situation, it should be fine.”

Calls for more extensive review

Nevertheless, Trustees Kevin Child and Chris Garvey are calling for another audit.

Garvey said she believes the audit uncovered more issues than any other she has seen in her roughly nine years on the board.

“It’s just concerning that these things are just a sampling, and they’re pretty significant compared to past audits,” she said.

The teachers’ union is reiterating calls for another audit.

“The school district’s $2.4 billion general operating fund is too large to neglect third-party oversight in assisting trustees with their fiduciary responsibilities,” the union said in a statement.

Contact Amelia Pak-Harvey at apak-harvey@reviewjournal.com or 702-383-4630. Follow @AmeliaPakHarvey on Twitter.