New Orleans’ school board will dip into its savings a second time to lessen the impact of the district’s $50 million deficit.
In March, the board voted to use its remaining operating cash for the year, along with a chunk of its savings, to send the city’s charter schools $25 million – enough to hold monthly payments steady through the end of the school year.
That covered half of the money schools had planned for and stood to lose, after the district realized they had overestimated sales and property tax revenue. The mistake happened under the district's prior superintendent, Avis Williams, and chief financial officer, Stuart Gay.
Gay left the district in September before the district reported the mistake, and Williams resigned after. Officials said Nyesha Veal, the district's new CFO, discovered the mistake in early October shortly after she stepped into the role.
The situation exposed not only forecasting challenges but also communication issues between the district and the city, as well as charter school leaders.
While the district doesn’t have enough cash on hand to fill the gap, its board unanimously approved another $10 million payment to schools this week.
“We trust the schools,” board member Carlos Zervigon said at Tuesday’s committee meeting. “Just get the money to where it needs to go, and all the repercussions of that, we’ll work it out later.”
The city’s charter school leaders have encouraged the board to push as much funding as possible to schools, especially since local funding is projected to be down again next school year.
State funding could also decrease as enrollment continues to decline and uncertainty over federal funding is at an all-time high.
“Although tragic and exhausting, the pandemic brought unprecedented resources to New Orleans,” and fueled significant growth, said Tanya Bryant, the head of ReNEW Schools.
Speaking on behalf of the city’s other charter leaders, Bryant urged the board at Tuesday’s meeting to select the plan members ultimately approved: $10 million for schools, which they do not have to repay, and another $2.5 million they can apply for, but have to pay back within five years.
In response to this year’s deficit and funding projections, schools have already dipped into their reserves and made cuts in different areas, including staff and programs.
Sending the additional $12.5 million to schools means the district will have less than two months of operating cash in its available savings, the standard recommended by a national finance officers association.
Board members said they weren’t concerned about the payout, pointing to the district’s other reserves, including its separate fund for facilities maintenance.
“I’d much rather the money in our fund balance go toward kids and teachers than a best practice from an organization that’s based outside of Louisiana,” said the board’s finance chair, Olin Parker.
Parker and other board members hope the district will be able to restore its reserves by winning its long-running legal battle over the tax collection fee the City of New Orleans charges.
An outside financial consultant presented a report on the district’s budget shortfall. They agreed with officials' explanations that outdated tax figures were not updated when they forecast revenue for the past school year.
Since the error was discovered in October, the district has formed a financial advisory council consisting of charter leaders and officials say they’re providing more regular and detailed forecasts, something they plan to continue.
At Thursday's vote, district officials expressed relief at having navigated the height of the crisis, though some also warned belt-tightening will be necessary as funding declines.
They praised the district's new superintendent, Fateama Fulmore, for her leadership.
"I'm just grateful for how we did this, together," Fulmore said.
