California's budget woes will affect Napa public schools (2024)

Forecasts in the Napa Valley Unified School District’s latest financial report in response to California’s 2024-25 budget paint a grim picture for district schools, as job and program cuts seem likely in the coming years.

At a NVUSD board meeting last month, an assistant superintendent reported on the school district's finances, pointing to California's looming deficit and its trickle-down effects on public schools statewide.

“The revenue shortfall is just so large that cuts to the education budget will just have to occur,” said Rabinder (Rob) Mangewala, the district's chief of business services.

Mangewala said that the state's Legislative Analyst Office predicts a $78 billion shortfall, while the office of Gov. Gavin Newsom projects a $38 billion deficit. Mangewala noted that the governor's outlook may be too optimistic.

“We appreciate the fact that the governor has a rosy outlook, but it is dangerous,” he said.

According to a financial report released by NVUSD after Mangewala spoke, school districts across California were most likely given more money from the state than they were entitled to based on unclear analytics from past years.

The district's report explained that the LAO can now provide a more transparent picture of California’s finances because it can now access 2022 tax year data that wasn’t complete due to deadline extensions. (Most counties, including Napa, extended the tax filing deadline from April to November due to widespread winter rainstorms and flooding during early 2023.) That means that the budget for the current fiscal year was adopted under ambiguous circ*mstances and didn’t reflect the reality of state revenue.

Mangewala also mentioned that cost of living adjustment, which provides an increase to school funding due to inflation, has been what he calls a "roller coaster" and will be reduced for the 2024-25 school year even though inflation remains high. He said that this year's adjustment for the district is around 8%, but next year's is projected at about 1%.

Mangewala said that analyst's office may not even fund the COLA at all, and that uncertainty will significantly impact the Napa school district.

At the March meeting, Mangewala laid down a harsh reality— with the state's poor budget outlook, NVUSD’s declining enrollment, the economic uncertainty wrought by approval of the Mayacamas Countywide Middle School and the expiration of COVID-19 relief money, Napa's school system will have to downsize both programs and staffing.

“We will have to dig down deep and really look at positions before we refill them,” Mangewala said.

NVUSD spokesperson Julie Bordes said in a statement earlier this month that the district does not plan any layoffs in the current year, but that district leaders will continue monitoring the budget situation.

Declining enrollment

In the financial report, NVUSD sees declining enrollment as a persistent budget challenge for the foreseeable future. California funding to local public school systems is based on average daily attendance (ADA), so lower enrollment leads to less income.

Marguerite Roza, director of Georgetown University’s Edunomics Lab, specializes in education finances. She said that NVUSD is not alone, and is smart to pay attention to the downward trend.

Declining enrollment "means you have to be more nimble with your budget and make changes year to year on that. You might need fewer staff and fewer schools,” Roza said.

The Napa school system has already moved in that direction to address shrinking finances. The district sold two vacant school sites this year, Yountville Elementary and Carneros Elementary, while consolidating its spending. Bordes said such decisions are currently softening the blow.

“After five years of hard decisions, NVUSD now has the systems and structures in place to absorb the immediate impacts this year,” Bordes said in a statement. “As we look to next year and the years to follow, we continue to explore what shifts might need to happen.”

According to NVUSD’s website, the district is exploring a $230 million bond to make repairs and upgrades at existing Napa campuses. Bordes clarified in another statement that the proposed bond measure would not impact district operating budgets and would not relieve financial stresses caused by state funding cuts or shrinking enrollment.

As its student count shrinks, the district also faces the loss of a pandemic-era state funding adjustment that helped bolster California school systems.

After the closure of campuses in early 2020 and during the transition from remote learning back to in-person instruction, California fixed its per-student funding formula at a level higher than actual attendance, providing districts more money than their actual head counts otherwise would have merited, Mangewala told NVUSD trustees in March.

Public school systems across the U.S. also received one-time federal funding during the pandemic, which went to creating staff positions and extra services to students needing additional support during the emergency.

Mangewala said the Napa district hoped to make some of those services and the 41 positions the money was supporting permanent, but California's worsening budget outlook now makes that unlikely.

“Departments will need to make some difficult decisions to cut expenditures by using data to determine what’s working and what isn’t,” he said.

According to Roza of Georgetown, NVUSD has until September to spend its remaining COVID-19 relief funding. Data from the Edunomics lab shows the Napa school system still has $6 million to spend before that deadline.

Mayacamas charter school

The approval of the Mayacamas charter school also will impact enrollment at NVUSD schools. The middle school, which is operating outside of the district, plans to eventually enroll 324 students, which equates to about $3.4 million less revenue to the district each year. Mangewala said NVUSD must assume that Mayacamas will reach its maximum head count.

“When you’re planning for a budget, you have to prepare for the worst,” he said at district's March meeting.

In its financial report, NVUSD says it holds about $30 million in reserves for the 2023-24 school year, and that is expected to shrink by about $3 million in the next budget year.

Bordes, the Napa district spokesperson, said in her statement that reserves are intended to give districts time to reduce costs and respond to future economic uncertainty.

“We are fortunate we have been both fiscally proactive and responsible over the last five years. We will continue to be both,” Bordes said. “We will only utilize our reserves if absolutely necessary.”

From Roza’s perspective, the reserves signal that Napa school officials are taking the trend of declining enrollment seriously, but the fact that NVUSD’s expenditures are higher than revenue for 2025-26 school year is a separate issue that is troubling.

Mangewala said the district will need to cut vacant positions, prepare for little to negative revenue growth, and cannot add new programs until the California budget picture becomes clearer.

The state budget revision occurs in May, and Mangewala told the NVUSD board that once the budget is adjusted, more facts will be revealed to help guide NVUSD’s decision making.

Reaching out

Roza emphasized that one of the most important things a school district can do is to communicate with its families.

“The district is obviously facing unstable enrollment and some hard to predict enrollment projections," Roza said. "That means changes are coming and parents are going to notice the changes.”

At the Napa district's March meeting, Superintendent Rosanna Mucetti and board member David Gracia said NVUSD leaders need to reach out to local families to inform them of the difficulties facing their schools.

Mucetti suggested that the district wait until next month's state budget revision to communicate a more accurate financial picture, then communicate with district residents throughout the summer.

“It’s a complex issue," she said. "We’ll have some explanation to families for sure around what the district is doing and why, and how it’s in the best interest to students.”