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State budget windfall could prevent School District layoffs

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Leila Navidi

Teachers walk out of Harney Middle School at 2:41 p.m., the end of their contractual workday, as a protest to education budget cuts Wednesday, April 27, 2011.

Updated Tuesday, May 3, 2011 | 5:54 p.m.

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Economic Forum Chairman John Restrepo speaks during a hearing Monday, May 2, 2011, at the Legislature in Carson City.

The Clark County School District will receive $160 million from the state general fund as a result of revised revenue estimates by the state Economic Forum, potentially preventing the layoff of an estimated 1,800 district employees, said Dale Erquiaga, senior adviser to Gov. Brian Sandoval.

The projected windfall counters a projection delivered earlier Tuesday by Jeff Weiler, the School District’s chief financial officer, who said he expected the district to receive just $60 million in additional general fund dollars as a result of the Forum’s estimates. That amount would not have been enough to prevent the anticipated layoffs.

Erquiaga noted that the additional $160 million, along with Sandoval’s previous call for a 5 percent across-the-board reduction in wage and benefits to all school district employees in the state, as well as the governor’s prior proposal that school district employees pay 25 percent of their retirement costs, would prevent layoffs while maintaining class-size reduction and restoring all-day kindergarten.

Failure to adopt Sandoval’s budget proposals would place the burden of any school district layoffs on local school boards and the teachers' union, Erquiaga noted, issuing a political challenge.

Citing state budget office figures, the governor’s aide noted that the revised revenue forecast by the five-member Economic Forum would generate an estimated $241 million in additional revenues for the state’s public elementary schools, middle schools and high schools, with two-thirds of that total, or the $160 million, going to the Clark County School District.

Another $20 million would be earmarked for the state’s colleges and universities. The remainder of the money, about $13 million, would go toward the state budget’s ending-fund balance.

Nevada’s public school system consumes 40 percent of the general fund budget, while higher education receives 15 percent, according to the state Budget Office.

Sandoval, who is set to appear for a statewide televised speech at 6 p.m. Tuesday, is expected to call for the adoption of “triggers” that would transfer to the state’s school districts additional unexpected revenues generated during the 2011-2013 budget period.

Despite the pessimism of Economic Forum Chairman John Restrepo, Erquiaga said, the expectation of “continued economic growth” increases the likelihood that the triggers will generate additional dollars for Nevada school districts.

Earlier today, the Clark County School District’s Weiler said the estimated 1,800 Clark County School District employees remain targeted for layoffs, despite the state’s slightly improved fortunes. The 37,000-employee district previously had identified about $340 million in cuts prompted by Nevada’s continued economic crisis but had left an additional $60 million in cuts to be determined, hoping that the revenue picture might change.

It did slightly with Monday’s Economic Forum forecast that projected an additional $274 million in tax revenue for the 2011-13 budget period. Weiler said the 309,000-student School District expects to receive about 22 percent of that added revenue, which equates to about $60 million.

The district’s chief financial office said the symmetry between the previously unidentified cuts and the expected windfall were coincidental.

“At best, it seems we hit the bottom,” Weiler said of the Nevada economy. “Obviously, though, things could be better.”

The Economic Forum developed the improved revenue numbers after studying a variety of measurements throughout the state, including casino industry projections, gasoline and gold prices, and forecasts for the state and local employment markets. Panel members believe the economy has bottomed out, but it will be several years before economic activity significantly accelerates in Nevada.

The added $274 million in tax revenue is expected to come from a temporary amnesty to pay back sales taxes owed by companies doing business in the state, record gold prices that have benefited Northern Nevada mining operations, increased clothing and equipment sales linked to the mines, sales tax revenue generated by purchases for a natural gas pipeline under construction in Northern Nevada, and unclaimed personal bank and investment accounts forfeited to the state after they go unclaimed.

“We’re not seeing a fundamental change in the economy,” said Economic Forum Chairman John Restrepo, a Las Vegas-based economic consultant. “None of these things are an indication of a rapidly improving economy in Nevada. It’s troubling. While we had a bit of a spike in 2011, that spike in 2012 and 2013 is unlikely.”

Economic Forum members also considered the effect on Nevada of billionaire Sheldon Adelson’s newest casino in Singapore and the holdings of Adelson, Wynn Resorts and MGM Resorts International and others in Macau. Both markets are generating significantly more gaming revenue than the Las Vegas Strip.

As a result, members of the Economic Forum project that Southern Nevada gaming revenue will continue to decline during the upcoming two-year state budget period, which would place greater financial strain on such tax revenue-dependent entities as the School District and the Nevada System of Higher Education.

UNLV has been targeted for a $47.5 million reduction in state funding during the 2011-13 budget period, or a 27 percent funding reduction. University officials have said the lost revenue would lead to the elimination of 315 jobs, bringing total job cuts to more than 800 during the past two years.

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