DISTRICT WEIGHING BUDGET CASH FLOW A DECIDING ISSUE.

Byline: Eugene Tong Staff Writer

NEWHALL - Hit with a $1.8 million operation deficit mainly from a loss in state funding this year, Newhall School District officials are considering program cuts and staff reductions to bridge the gap.

According to the second interim budget approved by the governing board Tuesday, the shortfall would dwindle Newhall's cash reserves to about $2.9 million. The document reflects the district's fiscal status as of Jan. 31.

``What that becomes for the school district is a cash flow issue,'' said Don Hughes, assistant superintendent for business. ``Can we cover the salary payments we have to make?''

While Gov. Gray Davis and the Legislature have yet to agree on midyear spending cuts to offset an estimated $35 billion deficit, officials project a loss of more than $720,000 in state funding. The sum includes a $246,000 deferral for transportation to be paid next year and a 3.6 percent cut, or about $82,000, in special-education programs.

``The state has made no decision other than the deferrals that they have talked about,'' Hughes said. ``It's one of those things we have no control over. We're just waiting for the Legislature to address the problem so we would know how to address the problem.''

The district has also been hit with a $576,000 drop in revenue due to an unexpected reduction in enrollment. Compared with last July, average daily attendance fell by 98 students to 6,329, or a loss of about $96 per student.

``That's where the most significant amount of state funding comes into the school district,'' Hughes said.

But with an end to year-round schooling and new construction at housing tracts such as Stevenson Ranch, administrators expect enrollment and attendance growth to resume at about 2 percent for 2003-2004.

``We need every child we can get right now,'' Superintendent Marc Winger said.

Meanwhile, the district is struggling to cut operating costs and tighten staffing, even with two new elementary schools - J. Michael McGrath and Pico Canyon - scheduled to open later this year.

With a hiring freeze in effect, officials plan to staff the two schools with teachers who may have been shed as the district returns to a single- track schedule with an eight-week summer vacation, Hughes said.

``We're in kind of a unique situation because we're going off (year- round),'' he said. ``We're able to stack schools tighter.''

At the same time, a total of 15 music teachers, counselors and assistant principals face possible layoffs or reassignment as classroom instructors, Winger said. A final decision will be made by May 15.

``It's not absolute reality yet,'' he said. ``We're going to do everything we can to save these jobs, but we have to prepare ourselves.''

The district is also considering early retirement for higher-paid senior teachers. If seven teachers choose to retire and are not replaced, the Newhall district could save about $423,000, Hughes said.

``If we have teachers who are close to retirement, this is a good opportunity for the district to recover some savings,'' he said. ``But we're not looking at reducing the number of positions without significant savings.''

Despite concerns the move may compromise the quality of instruction, the governing board unanimously approved exploring the measure.

``(With younger teachers) I understand the quality of teaching may not be there, but they'll grow into it over time,'' board Chairman Ron Winkler said.