Newport-Mesa Unified School District trustees got their first public look Tuesday night at a $304.6-million spending plan for the 2018-19 fiscal year.
The plan projects $318 million in revenue and $304.6 million in spending. The revenue figure is 3.7% higher than in fiscal 2017-18; the proposed expenditures are 3.6% higher.
The board did not vote on the budget Tuesday. It will return to trustees for further consideration June 26. The new fiscal year starts July 1.
The lion’s share of the budget — $258.6 million — is expected to be spent on salaries and benefits for employees. That’s about $9.7 million more than in 2017-18.
The district expects to spend about $14.8 million on books and supplies, nearly $468,000 less than in the current fiscal year.
Newport-Mesa has about $31.5 million in reserves, according to budget documents.
“We’re living within our means,” Chief Financial Officer Jeff Trader told trustees.
Newport-Mesa relies primarily on property taxes for revenue to fund operations. The district expects property values to increase about 4.3% in the upcoming fiscal year, down from 7% growth in the current year. But the state is expected to provide additional one-time revenue that will bolster district funds, according to budget documents.
Trader said the district is in a solid financial position now, with revenue from property taxes continuing to grow, but pension costs and any recession in future years could eat into that.
The California public employees’ and state teachers’ retirement systems’ lackluster investment returns in recent years mean the district’s pension costs are expected to continue to rise considerably in the next few years, Trader said.
Newport-Mesa’s pension costs, which were $12.6 million in 2013-14, are expected to spike to $38.1 million in 2020-21, when they would consume about 11.8% of the district’s budget.
“This is concerning,” Trader said. “If the economy slows or a recession occurs, what does that mean for us? This is a problem that needs to be addressed probably at the state level.”