Officials expect the prospective Clark County schools' budget deficit to be $9 million less than originally projected

Clark County school officials now estimate a potential district-level budget deficit due to unexpected expenses is about $11 million — $9 million less than they calculated last week.

That amount represents less than 1 percent of the district's $4 billion budget, Interim Superintendent Brenda Larsen-Mitchell said at a school board meeting Thursday. The district's recently uncovered budget problems led to layoffs and scrutiny at the highest levels of state government.

Officials said if the district plugs that gap in its district-level budget with some of its approximately $152 million in unallocated funds, its new ending fund balance will be above 4 percent of its general fund revenue, more than its goal of 2 percent.

“I think we're going to be in a really great position at the end of this whole thing,” said Chief Strategy Officer Kellie Kowal-Paul.

In addition to the district-level deficit, some individual schools experienced budget problems due to errors that resulted in them receiving less funding than they needed to cover significant salary increases for new teachers, as well as inaccuracies in allocating additional funding for the students in question “at risk.” . Assistant Superintendent Melissa Gutierrez said schools that have had significant difficulty balancing their budgets can apply for and receive assistance from the district.

On Thursday, the Clark County School Board and district leaders discussed publicly for the first time the district and individual school budget issues that came to light last month and were identified during the regularly scheduled year-end accounting process. The news, which led to the firing of the district's chief financial officer, prompted Republican Gov. Joe Lombardo to call for state audits of the district's potential budget deficit. State Superintendent of Public Instruction Jhone Ebert also sent a letter to the district's interim superintendent asking for more information on the situation.

In her response, Larsen-Mitchell attributed the district budget shortfall to unexpected litigation and cybersecurity expenses.

On Thursday, Larsen-Mitchell told the school board that the district had budgeted $30 million for litigation, but the actual costs were about $23 million higher. She said the cybersecurity cost was about $15 million. She couldn't immediately answer how much the district had budgeted for its cybersecurity needs.

Some schools have made staff and program cuts in response to school-level budget challenges or have had to cover their deficits with unspent funds from previous school years.

CCSD schools have a total of $363 million in unspent funds, due in part to staff vacancies. The unspent amount at each school that they can retain and spend in future school years may vary.

“There were clearly some schools that didn't have a lot of money, but there were also some schools that had a lot of money,” said Trustee Lola Brooks, who is not running for re-election. “I think it is very important that people understand that this is the purpose of the transfer funds. If you find yourself in a financial bind, you need to be able to cover it.”

A proposal from the Council of Great City Schools, a coalition of large school districts that includes CCSD, for a $50,000 review of the district's financial operations failed in a 3-3 vote with Board President Evelyn Garcia Morales and Vice President Irene Bustamante Adams and Brooks supported the review and trustees Linda Cavazos, Brenda Zamora and Lisa Guzman opposed it.

Trustee Katie Williams' resignation in September – after an investigation revealed she no longer lived in the district she was supposed to represent – left the board with an even number of members.

Some community members, including local teachers union president Vicki Kreidel, opposed the audit, citing potential conflicts of interest and opposed spending additional money on an audit while the district is running a budget deficit and schools are facing cuts.

Larsen-Mitchell and former Superintendent Jesus Jara received leadership training from the council and served as advisors to the school board.

Brooks and Bustamante Adams said they welcomed the council looking under the hood of the district. Brooks added that it was unlikely the district would be able to find another provider with the council's expertise and price.

A second proposal to reallocate funds previously allocated to the council for the review failed by a 3-3 vote.

This story was updated on 10/10/24 at 11:40 p.m. to update the estimated size of the budget deficit.