Crisis May Cost Schools $4.7 Million in Interest Alone
The Newport-Mesa Unified School District could lose $4.7 million in interest alone while its $80 million is tied up in the county's bankruptcy proceedings.
And the district could face a $3.7-million shortfall at the end of March if more bond funds or property taxes are not released, Finance Director Michael Fine said.
He said the district anticipated getting $22 million in property taxes in December, but received only $18.6 million.
Fine told the school board on Tuesday that the district is counting on the promised release of property taxes the county withheld after it filed bankruptcy.
But he said he is confident the district can meet its obligations through June by saving and shifting funds.
A list of expenses were "suspended" from the budget Dec. 13, including freezes on hiring, capital improvements and non-emergency repairs, an end to district-paid travel and in general, elimination of anything that is not essential to safety, security and educational programs.
Fine said the district expects to save $2.7 million with those suspensions, which are temporary.
Another $2.5 million the district set aside for "economic uncertainty," which district officials expected would cover any shortfall created by reduced property taxes, may be used to meet obligations, Fine said. The district also has more than $1 million in "other funds" that might be transferred.
Fine said the district put $1.4 million in interest income into reserves before the bond fund collapsed, but he expects to lose $500,000 in anticipated interest income on the $47 million borrowed to invest.
The district will seek permission from the state to carry some of its debts over to next year if necessary, Fine said.