Del Norte Unified School District’s director of fiscal services painted a slightly brighter financial picture for the Board of Trustees on Thursday, though he said the district is still in an overall deficit.
In his second interim financial report, Greg Bowen said the district had a positive budget, which means DNUSD can make its payroll for the current and next two fiscal years. The district’s projected deficit also decreased to $3.3 million from the $5.89 million figure Bowen gave during his first interim financial report in December.
But he cautioned that many of the assumptions included in his report, especially for fiscal years 2025-26 and 2026-27, are based on California Gov. Gavin Newsom’s budget workshop held in January. That workshop occurred before the fires in the Los Angeles area as well as changes in the federal government, Bowen said.
Bowen said he and other education officials are waiting to see what kind of budget revisions Newsom proposes in May.
“We do have a positive certification but it’s teetering on the edge,” Bowen told trustees. “Obviously everybody’s concerned about what’s happening within the federal government and federal revenues, so we’re keeping a close eye on that.”
The second interim financial report includes actual budget information from July 1 to Jan. 31 and the projected budget from Feb. 1 to June 30, Bowen said. Four members of the Board of Trustees voted to accept the report. District 3 representative Frank Magarino was absent.
Bowen’s report came after parents, staff and students confronted the Board of Trustees over preliminary layoff notices they approved for teachers, paraprofessionals and library technicians on March 4.
Those layoff notices were necessary due to the loss of about 450 students, which led to a decrease of about $6.2 million in revenue. District officials also cited the expiration of COVID-era monies as a reason for the layoffs. Those dollars allowed DNUSD to hire instructional support staff and librarians to mitigate learning loss from the pandemic, but the positions weren’t meant to be permanent.
Bowen’s report also comes after DNUSD and the Del Norte Teachers Association reached a tentative agreement on their contracts.
According to Assistant Superintendent Jeff Napier, the district agreed to one-time cash bonuses of $2,000 for each certificated staff member as well as increases in other stipends. Napier said the anticipated cost to the district as a result of that agreement is about $600,000.
Bowen said the $600,000 cost to the district that is a result of the negotiated contract with DNTA “did not help with the positive certification.”
The current budget accounts for an overall vacancy rate of 75.8, which, as of Feb 1, accounts for a savings of about $6.1 million. Local Control Funding Formula dollars that are allocated to the district based on its enrollment and average daily attendance decreased by $225,000 and DNUSD is still waiting on $475,000 in federal Secure Rural School dollars.
Federal lawmakers are working on reauthorizing the Secure Rural Schools program, DNUSD Trustee Mike Greer said. The program was approved in 1908 to compensate counties with large swaths of non taxable public lands. In Del Norte County, SRS dollars go toward schools and to fund county road repair projects.
According to Greer, there are enough votes for the SRS program to be reauthorized, but that vote has yet to take place.
Bowen said he removed that $475,000 line item from the district’s budget, saying DNUSD uses that money for extra cash flow.
As for state revenue, DNUSD will receive an extra $128,000 in Local Control Funding Formula Equity Multiplier funds, Bowen said. The LCFF Equity Multiplier provides additional dollars to districts in economically disadvantaged areas.
DNUSD’s projected ending fund balance is currently $28.6 million with $13.1 million in restricted funding in its reserves. According to Bowen, 65 percent of those restricted dollars come from the Klamath Promise Neighborhood grant, the Expanded Learning Opportunities Program, also known as the after school program, and the California Community Schools Partnership Program.
According to DNUSD Superintendent Jeff Harris, the Klamath Promise Neighborhood grant is a five-year program that included $5 million for Del Norte Schools. The California Community Schools Partnership Program grants $10 million for every school in the district with the exception of Mary Peacock Elementary and Redwood schools.
Harris said that even though they don’t qualify for community grants, Mary Peacock and Redwood get the support that grant provides.
In his report, Bowen said DNUSD increased its legal liability reserve from $2 million to $5 million “based on a recommendation from our legal team for pending cases that are unresolved.”
The school district also currently has $2.3 million set aside for economic uncertainty, Bowen said.
When he got to his multi-year projection, Bowen told trustees that it’s the district’s best educated guess as to what will happen in the next two years, adding that better information will present itself in the future.
According to Bowen’s report, DNUSD’s projected multi-year deficit goes from $732,433 in the 2024-25 fiscal year to $1.83 million in the 2025-26 fiscal year and $3.6 million in the 2026-27 fiscal year.
This is an improvement over Bowen’s projections in his first interim financial report in December. During his presentation to the Board on Dec. 12, Bowen said had a qualified budget, which meant DNUSD might not be able to meet its payroll obligations for the current and next two fiscal years.
