DENAIR -- Denair Unified School District got official notice today that it is on the brink of insolvency and could run out of cash by February.

A financial report prepared by an outside expert will give the budget a “negative” declaration, believed to be the first such designation in Stanislaus County’s history.

Denair Unified Superintendent Ed Parraz said today the board expected the news and is set to begin negotiations with its teachers after the Dec. 13 board meeting to get immediate salary concessions. He said the district will resist laying off employees.

“That would be the last resort. We do not want to lay off people,” Parraz said. The district has cut by attrition only, shaving three administrative positions and one teacher in the last few years despite a 30 percent drop in enrollment.

Blame him for the financial fallout, Parraz said.

“That falls squarely on my shoulders. We know we’re being a little risky, for the fact that we were trying to save jobs. I know I was criticized for being overly optimistic, but that’s not a crime or a sin,” he said.

The financial report criticizes the district for reporting rising enrollment for 2012-13 and the next two years in the face of continuous declines, and anticipating a surge in developer fees in the face of ongoing recession. But Parraz said he counted the homes going up to get that figure.

The report, by Teresa Ryland, CPA, concludes, “The district is is poised to run out of cash for good before the end of the current fiscal year. That constitutes fiscal insolvency and is only fixed by a state bailout.”

That bailout would come with a state administrator who would replace the superintendent and could overrule the school board, in place for up to 20 years. Parraz said he knew superintendents who faced that, but he believes Denair’s situation is not that dire.

“I’m not looking to lose my job,” Parraz said.