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Newark Unified projects roughly $12 million deficit in 2027–28; board approves first interim report
Summary
The Newark Unified School District Board on Dec. 10 approved its first interim financial report after staff warned of structural deficits driven largely by declining enrollment and rising special-education costs, and projected reserves falling below the state'required 3% minimum by 2027'28.
The Newark Unified School District Board of Education on Dec. 10 voted to approve the district's 2025'26 first interim financial report after a lengthy presentation and questions from trustees. Fiscal Director Nancy Chen told the board the district's multiyear projection shows a roughly $12 million shortfall in fiscal year 2027'28 and that reserves could fall below the state'required 3% minimum if structural adjustments are not made.
Chen said the district's beginning general-fund balance on the first interim was $31.6 million and that funded average daily attendance (ADA) was 4,489, a decline the district said reduces LCFF revenue and contributes to the out'year deficit. "Based on current assumptions, we remain stable for the current fiscal year and the next, but we are projecting a deficit about $12,000,000 in 27'28," Chen said during the presentation (Nancy Chen, fiscal director).
Board members pressed staff for line'by'line detail on the revenue and expenditure changes between the adopted budget and first interim. Member Hill requested a "total cost picture" for grants and an itemized explanation for the roughly $3 million net revenue adjustment and larger increases on the expenditure side. Chen and Superintendent Pekar said some increases reflect required booking of restricted carryovers and newly available one'time funds; staff also pointed to a large increase in the district's contribution to special'education services as a major driver of the multiyear deficit.
Trustees discussed certification status. Chen said the projection currently requires a "qualified" certification because the third year of the multiyear projection falls short of the state'mandated reserve threshold. "That third year out is always concerning," Chen said; she and trustees agreed that meaningful savings and structural changes will be necessary over the next one to two years.
Superintendent Pekar told trustees the district is already examining vacancy savings, service reductions, and program-level adjustments and that staff will return with more detailed proposals. "We have to continue to navigate savings and try to live within our means," Pekar said.
After the presentation and discussion, a motion to approve the first interim report carried. Next procedural steps: staff will deliver more detailed revenue and expenditure breakout information and follow up with proposals before the second interim.
