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NVUSD Districtwide Financial Update
Posted 6/4/19

español

Hello NVUSD Community,

I hope this message finds everyone ready to enjoy the summer time. I know it’s a very busy time preparing for the summer break. I am sending this important message to proactively communicate about the district’s financial condition as we end the 2018-2019 school year.

Most of you have heard about the district’s financial challenges at a budget meeting, a school board meeting, in the newspaper, or from your site administrator. I wanted to personally write and provide you with up-to-date information regarding our current circumstances and our long-term plan for the future. In alignment with Goal #3: Robust Communication, Community Engagement and Advocacy of our NVUSD 2019-2022 strategic plan, my goal is to ensure NVUSD families and staff feel informed about important topics, including the district’s current budget reality and financial future. Today I’m sharing my plan for how we will succeed.

As you may know, California public school systems across the state are facing declining enrollment mainly due to low birth rates statewide. In addition, high housing costs have made our community increasingly unaffordable. Our school district’s enrollment numbers have been steadily declining over the last decade, and are anticipated to continue dropping. Why does this matter? California public school systems like ours are dependent on California’s Local Control Funding Formula which provides revenue based on the number of students enrolled in the district. To put it simply, enrollment equals revenue. When enrollment declines, revenue declines.

enrollment graph

                       Figure shows NVUSD 10 year enrollment trend.

I inherited a very precarious set of financial circumstances in NVUSD. Since I arrived in July, I have uncovered that the district has had a five-year structural deficit. In 2014, the district had an 8% reserve level (approximately $22M). Since that time, the district dipped into its reserve funds, and today we are down to a 3.6% reserve level (approximately $6.5M). The state requires that school districts maintain at least a 3% reserve level. If a school district falls below the state mandated 3%, it is categorized as fiscally insolvent and can be assigned a fiscal advisor through the state/county who will direct all district financial decisions. Our current 3.6% reserve level is low and puts NVUSD at risk. As your new superintendent, it’s my job and my priority to stabilize the budget. Through thoughtful, data-driven decision-making, I’m working to ensure we maintain local control of our schools. We need to get our reserve level back to the board policy level of 7.5%.  

Ending balance percent

 Figure demonstrates declining reserves over the last 5 years.

You may ask, how did we get here? The development of a structural deficit such as ours can happen over time for many reasons, including: 1) declining enrollment as described above; 2) rising pension costs mandated by the state; 3) increases in the cost of special education; 4) operating small schools;  5) implementation of a costly instructional schedule, such as addition of seven-period day; 6) subsidizing charter schools; and 7) our necessary and important commitment to annual compensation increases for NVUSD employees in order to remain competitive in the marketplace.

In my first year, I had to lead the process of cutting $7 million dollars to ensure our budget would be positively certified by the county office of education. Earlier this spring, we made budget reductions for the upcoming 2019-2020 school year that included the following:

  • Reduced 60 teaching positions across the district due to less students

  • Eliminated of the seven-period day in our middle schools

  • Reduced teachers on special assignments working outside of the classroom

  • Reduced staffing levels in the food services program based on the declining number of students and lunches served

  • Made adjustments in the district’s transportation schedule for next year in order to increase bus route efficiency which led to cost savings

  • Shifted classroom technology expenses from the general fund to the bond program as articulated in the Measure H technology plan

Unfortunately, despite these assertive cuts, future reductions will be required. It’s absolutely essential that I ensure the district has a long-term financial stabilization plan so that we can continue delivering on our commitment to an excellent, enriching education for all NVUSD students. This critical work is detailed under Goal #4: Tactical, Proactive and Effective Asset Management in our strategic plan.

Over the course of the next couple of years, the district will consider the following deliberate, large-scale actions and/or variables to address deficit spending and spearhead a financial turnaround that will position us for success:

  • Reduce central office administration and staff

  • Examine the costs of operating small elementary schools (schools less than 300 students) and make decisions about potential school closures and/or consolidations

  • Maximize Measure H bond dollars in a fiscally-responsible way, based on current, concrete facility needs and enrollment data and projections

  • Reduce teaching positions to correspond with enrollment decline

  • Consider the number of teachers on special assignment

  • Ensure charter schools are completely self-sufficient and not subsidized by the district

In addition to these considerations, we are taking the following proactive steps:

  • Launch a proactive marketing campaign to boost enrollment

  • Ensure we are generating profits from the rental and usage of our facilities

  • Renegotiate agreements with external partners to ensure contracts and resources are favorable to our school district’s needs.

I believe if we implement these proposed next steps appropriately, we can bring our financial condition out of its current precarious state. The actions identified above will help us avoid reductions that more closely impact our students’ educational experiences. With a strategic approach to our resources, we can avoid dramatic increases in class size, elimination of academic programs, elimination of athletics and visual and performing arts programs, and salary freezes for our teachers and staff.

The plan I have outlined will require lots of hard work, a steady focus, tremendous collaboration, community and staff engagement and ongoing and frequent communication. However, we all know that NVUSD students, staff and families are undoubtedly worth it -- and I believe we have the team in place to succeed.

NVUSD is an amazing place! I feel truly honored to serve here as your superintendent of schools. By having a comprehensive financial stabilization plan, we will be able to ensure we continue to thrive, to improve and most importantly to deliver on our school district’s vision of transforming lives by instilling and inspiring lifelong learning in every student.

Thank you for time, support and collaboration. Wishing each of you and your family an amazing summer!

Best regards,

Dr. Rosanna Mucetti
Superintendent
Napa Valley Unified School District