Newport-Mesa school district OKs $291.3-million budget for 2017-18

Newport-Mesa Unified School District trustees signed off Tuesday night on a $291.3-million spending plan for the upcoming fiscal year as the district’s chief financial officer cautioned leaders to keep a close eye on rising pension costs.

Jeff Trader, who took over as chief financial officer following former chief business official Paul Reed’s retirement in December, presented the 2017-18 budget to the board of trustees, which voted unanimously to approve it.

The plan projects $294 million in revenue and $291.3 million in spending. Newport-Mesa relies primarily on property taxes for revenue.

The lion’s share of the budget — $247.3 million — is expected to be spent on salaries and benefits for employees, about $10 million more than in fiscal 2016-17, which ends Friday.

The district expects to spend about $16 million on books and supplies.

Newport-Mesa has about $28.9 million in reserves, according to budget documents. A portion of that will be used to install air conditioning at various campuses and help pay for new English-language arts and math instruction programs.

Trader said the district is in a favorable financial position now, with steady revenue growth from property taxes, but pension costs and a possible 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 will rise considerably during the next few years, Trader said.

Newport-Mesa’s pension costs, which were $12.6 million in 2013-14, are expected to spike to $32.8 million in 2019-20, when they would consume about 10.7% of the district’s budget.

“It’s going to squeeze something else out,� Trader said.

Trader warned that a recession also could put a damper on future budgets.

“If there’s not a recession within the next two years, it will be historic,� he said. “Things are very good now and we hope it will carry on, but we know that’s probably not going to be the case.�

Beginning with fiscal 2019-20, the district’s budget forecast is for slowing of both revenue and spending.

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