New Orleans school board approved a plan Thursday to fill half of the district's $50 million deficit using its remaining operating dollars and some savings.
Sabrina Pence, the CEO of Firstline Schools, thanked board members and the district's Interim Superintendent Fateama Fulmore for taking a "critical step."
"This demonstrates that you stand by your promises," Pence said and urged them to work on other funding solutions.
District leaders have been looking for a solution since early October when they first noticed the hole, which they say was mainly due to overestimated tax revenue.
The board will use almost all remaining operating dollars, $7 million, and a large chunk of available savings, $18 million, to ensure charter leaders receive regular monthly payments to run schools.
Typically, schools would have to pay back the money taken from savings, but the board approved a waiver as part of Fulmore's larger plan.
Fulmore said the $10 million payment from the City of New Orleans, ordered by a judge this week, will help replenish the district's savings. District officials had hoped a judge would enforce the full settlement it reached with the city in October. That included two $10 million payments and long-term funding.
At Tuesday's committee meeting, Holly Reid, with the nonprofit New Schools for New Orleans, told board members that she thought Fulmore's solution was "strong and clear" and asked them to quickly address the remaining $25 million gap.
"School leaders are already having to budget and make big decisions for next year," Reid said. "Any delay in that is really going to cost. It's going to cost staff. It's going to cost their planning time."
Schools had expected to receive the second $25 million over the summer through deferred revenue. The district now expects to have $15 million in revenue for schools, down from an inflated estimate of $40 million.
In an interview last week, Fulmore said that solving this part of the problem will be harder since they now have less money.
Olin Parker, the board's finance chair, said the district will still have about $24 million in savings to work with.
"I have some confidence that we can at least fill part of the deferred revenue," Parker said on Tuesday, adding that while other districts across the country are facing cuts as federal funding dries up because of leaders' "conservative" approach, New Orleans schools still have a cushion.
The district has more than $60 million set aside for emergencies — under board policy — that it hasn't touched, and another $500,000 in back-up cash specifically for its direct-run school, The Leah Chase School.
Fulmore said the district will consider other sources of income to address deferred revenue, including its system-wide needs fund, an additional pot of money used for specific district-wide priorities (right now, they include teacher pipeline and retention program and special education).
Board members have discussed asking charter leaders whether they need the full amount they were promised this year and have floated offering loans to schools in need rather than filling the gap and sending the promised amount to all schools.
Fulmore said the district is waiting for this year's audit process to be complete before they decide since the numbers could change.
"We are being as transparent as possible," she said. "People appreciate, even if it's still unknown, to say, 'You know, we're working on it."
Nyesha Veal, the district's chief financial officer, said she's extended the audit through April to give auditors more time to complete the process.
