Newark Unified closes 2024-25 year stronger than feared but multi-year deficit risk remains

Nancy Chen, the districtdirector of fiscal services, told the Newark Unified School District Board on Sept. 16 that audited financial statements for 2024-25 closed the year in a stronger position than earlier estimates but signaled significant fiscal risk in coming years.

Chen said the district ended 2024-25 with roughly $79.8 million in total revenue and $82.1 million in expenditures, producing an audited combined fund balance of about $31.57 million. "We ended the year with an unrestricted general fund deficit of about $759,000," she said, adding that the restricted program balance remains roughly $9.9 million. "Our reserve for economic uncertainties stands about $5 million, which is 6.1% of total expenditures," Chen said.

Why it matters: the audited close is materially better than some prior estimates and provides breathing room in the near term. But Chen and staff warned that enrollment and average daily attendance (ADA) declines are projected to reduce revenues in coming years while expenditures and mandated contributions to restricted programs, especially special education, remain high.

Chen laid out a multi-year projection showing contributions from the general fund to restricted programs rising from roughly $16.9 million to nearly $17.9 million across the next three years, while the ending unrestricted fund balance could fall to about $1.3 million in 2026-27 and turn negative in 2027-28 without corrective action.

Board concern: Trustee Thomas and Trustee Hill pressed staff for explanations of the swings between earlier estimated actuals and the audited close. Hill argued the districtmust tighten expense controls and better track categories such as consulting and books and supplies, which showed yearoveryear variances.

Staff response: Chen and the superintendent said some of the yearoveryear differences reflect one-time textbook purchases, utility and insurance costs, salary adjustments, and higher-than-anticipated special education contracted services and paraprofessional costs. Chen identified special education as an area that contributed over $2 million more than planned and said staff will review FTEs, contracts and service arrangements to reduce contributions from the unrestricted general fund.

Board action: After discussion, the board voted to approve the 2024-25 audited (unodited) actuals.

Next steps: Chen outlined actions including auditor finalization, updating the 2025-26 budget to align with audited numbers, a first interim report in December, continued enrollment monitoring and a budget-saving plan that includes reviewing contracts, staffing and use of restricted funds.

Ending: Trustees said they will pursue deeper dives on special education, services spending and strategies to increase ADA; staff agreed to return with additional detail in upcoming interim reports.