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2010/11 Adopted Budget Development Report Board Meeting June 1, 2010 Y: Business Services/Budget/2010-11/Adopted/ Meetings/B6-01-10.

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Presentation on theme: "2010/11 Adopted Budget Development Report Board Meeting June 1, 2010 Y: Business Services/Budget/2010-11/Adopted/ Meetings/B6-01-10."— Presentation transcript:

1 2010/11 Adopted Budget Development Report Board Meeting June 1, 2010 Y: Business Services/Budget/2010-11/Adopted/ Meetings/B6-01-10

2 Executive Summary ☼ The State’s financial situation continues to look grim –A slow revenue recovery is not helping ☼ Under the proposals provided by the Governor, as part of his May revisions, the District stands to lose another $1.2 million ☼ To cover the estimated budget shortfall the District plans to use a number of strategies to place a balanced budget before the Board for approval on June 15: –Sweep Tier III resources as permitted by the State –Incorporate negotiated agreements and Board imposed employee compensation changes –Reduce operating expenditures –Use existing reserves –Reduce positions reflected in this report

3 Table of Contents A.Introduction B.View From the State C.Funding for the District D.Other Issues E.Updating the Problem for 2010/11 F.Proposal for Closing the Budget Gap G.Categorical Funding Goals H.Recommendations & Discussion I.Appendix SECTIONDESCRIPTION 1 PAGE # 1 - 2 1 - 4 1 - 12 1 - 3 i 1

4 Introduction to the May Revision ☼The May Revision is, by statute, the Governor’s last chance to provide his Budget proposals to the Legislature ☼Overall, the State Budget situation has gotten worse ☼Inaction by the Legislature has caused planned savings to slip away ☼Revenues are still falling below the state’s already low forecasts ☼In the May revision, education continues to be better protected than other programs A1

5 The View From the State Section B B

6 May Revision Features ☼ The May Revision contains one additional cut to K-12 education still remain –Cuts proposed in January still remain –Targeted proposed administrative cuts were eliminated ☼ Major additional cuts to the non-education portions of the Budget are proposed B1 ☼ We can expect the Legislature to have great difficulty voting for the choices before them ☼ The Governor dropped the targeted nature of proposed cuts, allowing broad local discretion in how the cut will be implemented ☼ One change will cost Lodi USD more than $1 million –How it’s implemented will dictate the actual amount

7 Risks to the Revised Budget Proposal ☼ The May Revision, if enacted as proposed, contains significant risks –Court challenges – rebenching Proposition 98, elimination of CalWORKs, state worker pay cuts, health care reductions, and other cuts could face court challenges –Late Budget – a late Budget would delay implementation of program reductions, resulting in the loss of budgeted savings –Economic and revenue risks – the state and national economies face the possibility of a “double dip” recession, especially in light of the turmoil in overseas economies ☼ These risks in turn could threaten California’s access to the capital markets, pushing borrowing costs even higher B2

8 Funding For the District Section C C

9 Revenue Limit Funding ☼Base Revenue Limit (BRL) funding under the May Revision would receive the following adjustments: -0.39%, –Funding for growth and a “fully funded” statutory Cost of Living Adjustment (COLA) of -0.39%, essentially unchanged from the -0.38% estimate in January –No change in the deficit factor from the Governor’s January Budget Proposal 18.355%18.355% for K-12 school districts –The flat rate funding reduction to the Revenue Limit has increased from the $201 reported in January This reduction will be about $244 per ADA and cost Lodi USD more than $1 million Department of Finance (DOF) is considering a 3.85% reduction to each district’s undeficited BRL in place of the specific amount per ADA by district type C1

10 Revenue Limit Deficit 2008/092009/102010/11 Or $244 May Revise C2

11 COLA K-12 Revenue Limits Governor’s Jan. Proposal For 2010/11 2009/10 Adopted 2009-10 Fiscal Year Deficit 18.355% Cola (.38%)Deficit 18.355% $655,46 4 Governor’s May Proposal For 2010/11 Cola (.39%)Deficit 18.355% $697,92 8 C3 $1,185,02 4

12 Special Education ☼ The May Revision provides a fully funded negative COLA of - 0.38% for special education (AB 602) on the state share of funding –Growth is funded at or $463.67 per ADA ☼ There are several proposed adjustments for 2010-11, including: –$634 million decrease in one-time American Recovery and Reinvestment Act (ARRA) funding –Funding remains in the May Revision for the Behavior Intervention Plans on the mandate settlement Will add approximately $10.92 per ADA to AB 602 base However, legislative action is required before funding will occur C4

13 Other Issues Section D D

14 State Delays Paying Schools 2010/11 Cash Flow Feb 10July 10 March 10 April 10 May 10 Jun 10 Aug 10 Sept 10 Oct 10 Nov 10 Dec 09 Dec 10 Jan 10 Sept 10 Aug 10D1 Jan 10 Aug 10 July 10 Aug 10 Feb 10 Mar 09 April 10 Jan 10

15 Employee Retirement Contribution Rates ☼State Teachers Retirement System (STRS) ☼State Teachers Retirement System (STRS) has an unfunded liability in the billions –We should expect to see an increase in the employer contribution rates in the future ☼Increasing the employer contribution rate does require legislation ☼Public Employees Retirement System (PERS) ☼Public Employees Retirement System (PERS), also, has an unfunded liability in the billions D2 Fiscal YearEmployer Contribution Rate 2009-109.709% (actual) 2010-1110.707% (pending approval) 2011-1212.107% (estimated) 2012-1314.207% (estimated) 2013-1414.507% (estimated)

16 SERP – Sample Break Even 77 as of May 27th District must spend money to purchase insurance annuity 60 40 20 D3

17 Unemployment Insurance Rates will more than double ☼School Employees Fund (SEF) contribution rates, which are based upon a percentage of total wages paid, will more than double in 2010-11, from the current 0.30% to 0.72% –This is a reflection, at least in part, of increased layoffs –In addition to the uniform contribution rate increase, employers that have increased layoffs will see an increase in their local experience charge (LEC) that lags the layoffs The LEC is based on data for the fiscal year that began 24 months prior to the fiscal year for which the rate is being calculated –School districts will receive a corresponding increase in their revenue limit income, pursuant to E. C. 42241.7 D4

18 Updating the Problem for 2010/11 Section E E

19 Where We’ve Come? E1 The process won’t be over until the State adopts its budget and we make final adjustments ☼The Board & public were formally briefed about the structural balancing problem at the October 6, 2009, Board meeting ☼Negotiations with the bargaining groups began on November 19, with a clearly defined target ☼SBAC gave recommendations to the Superintendent on December 2, 2009 –Those recommendations were sent to the Board, all employees and have been published on the District web site since December 2009 ☼A problem model reflecting the Governor’s budget proposals for 2010/11 was presented to the Board on January 26, 2010 ☼Negotiated / Imposed concessions with Confidential, L.P.P.A., L.U.S.D.A.A. and Supervisors have been approved by the Board ☼We’re now presenting the changes proposed by the Governor on May 14, 2010 ☼The Board will be asked to adopt a budget for 2010/11 on June 15

20 Enrollment Projections PROGRAMS PROJECTEDSTUDENTSCHANGE2009/10CBEDS ADA 1. Regular K-6 15,172 (149) 2. Regular 7-8(37)4,222 3. Regular 9-12 (99)7,862 15,023 4,185 (141) (34) (91)7,763 4. All Other Programs 2,138 5. Serna Charter School290 6. Total K-12 Increases29,399(285)29,684 (266) -- -- Enrollment is projected to continue declining E2 Rio Valley Charter is not expected to have an impact

21 Summary of Growth Expenses DESCRIPTIONF.T.EBUDGET 1. Teacher Staffing($696,553)(11.12) 4. Site Clerical, Noon Duty & Campus Supv. 3. Custodial Support & Bus Drivers 2. Special Ed. Staffing (Cert. & Class.) 5. Per-Pupil Allocations(18,911) 6. Total Growth Expenses ($715,464) (11.12) There is more declining enrollment projected for 2010/11 E3

22 Mandatory On-Going Expenses DescriptionsF.T.EBUDGET 2. Health & Welfare - Retiree 145,721 8. Total Mandatory On-Going Expenses $2,666,300.25% Increase 3. Worker’s Compensation -.25% Increase 163,814 1. Projected Step & Column Costs $2,082,410 E4 5. Elect., Gas, Heat, Disposal & Sewage210,541 7. Technology Maint. Agree. & New Systemsn/c 6. Phone & Wide Area Network Services(101,733) 4. Aspire Special Education-Stockton/Oakland 165,547

23 Mandatory One-Time Expenses DescriptionsF.T.EBUDGET Replenish 1. Contingency Reserve – Replenish $104,195 3. Total Mandatory One-Time Expenses $145,958 -0- 2. General Reserve Requirement (3%) 41,763E5

24 Other On-Going Expenses DescriptionsF.T.EBUDGET 2. Tier III 2,334,011 4. Total Other On-Going Expenses $9,553,766 3. Federal ARRA Expenses6,279,706 1. Categorical Programs that Encroach $940,049E6 (*) (*) Use of these funds to retain staff was supported by employee groups, management and the Board

25 Other One-Time Expenses DescriptionsF.T.EBUDGET 2. Total Other One-Time Expenses $ 286,613 -0- 1. General Reserve Requirement (3%) $ 286,613E7

26 Summary of Increased Costs DescriptionF.T.EBudget A. Growth Costs($ 715,464)(11.12) F. Total Estimated Uses$11,937,173(11.12) C. Increased Mandatory One-Time Costs145,958 B. Increased Mandatory On-Going Costs2,666,300 D. Additional Other On-Going Costs9,553,766 E. Additional Other One-Time Costs286,613E8

27 Estimate of Growth Income Fewer Students Equals Less Income A. Net Growth Income($1,378,393) B. Special Education Growth(123,336) DescriptionBudget C. Class-Size Reduction – Grades K-3(74,907) F. Total Estimated New Income($1,605,896) D. Interest Income E. Lottery Income(29,260) There is declining enrollment projected for 2010/11 E9

28 Other Funding Sources Descriptions ON-GOING TOTAL ONE-TIME 1. Revenue Limit COLA (-.39%) ($ 682,775) 2. Revenue Limit Reduction (-3.85% or -$244) (6,674,535) 3. Other Program COLAs (-.38%) (113,166) 4. A.R.R.A. – Title I Carryover (est.) $ 588,337 588,337 7. Total Funding Sources ($7,470,476)($4,165,438) $3,305,038 5. A.R.R.A. – IDEA Carryover (est.) 1,747,112 6. Reduce 3% General Reserve969,589 E10

29 Defining “Now” the Problem DescriptionTotal One Time On Going A. Structural Balancing (Prior) ($13,641,534) B. Funding Sources(1,605,896) D. Other Sources (4,165,438) (7,470,476) 3,305,038 E. Total Problem E. Total Problem($31,350,041)($34,222,508) $2,872,467 $2,872,467 C. Estimated Uses(11,937,173) (11,504,602) ($ 432,571) E11

30 Defining “Future” the Problem Description Budget A. Structural Balancing B. Cost of Doing Business D. Revenue Sources 0 E. Total Problem E. Total Problem $0 $0 C. Projected Budget Reductions ($ 10,056,225) E12 (155.05) (155.05) (155.05) F.T.EBudget 0 $0 $0 (2,756,386) (43.49) (43.49) (43.49) F.T.E 2011/122012/13 ($ 7,790,114) $2,266,111 ($ 235,955) 2,520,431

31 Proposals for Closing the Budget Gap Section F F

32 Agreements & Board Imposed ConfidentialCSEALEALPPALUSDAASupervisors Furlough Days 2009/10 5555 Furlough Days 2010/11 77712 Freeze Salary Schedule Yes Reduce Salary Schedule Yes No Staff ReductionsYes F1

33 Unrestricted Program Only Summary of the Proposal Unrestricted Program Only ☼Sweeps from Tier III Programs$5,357,399 DescriptionAmountFTE ☼Bargaining Agreements/Imposed3,575,21012.90 ☼L.E.A.12,074,479260.17 ☼C.S.E.A.5,885,553124.27 ☼Reserves Set Aside for 2010/111,713,634 ☼Prior Year ADA1,000,000 ☼Operating Expenses (Transportation & Others) 645,407 ☼Capital Outlay Reserves543,359 ☼Declare 2009/10 Ending Fund Balance325,000 ☼ARRA Construction @ Needham West230,000 ☼T0TAL ADJUSTMENTS $31,350,041 397.34 F2

34 Categorical Funding Goals For the 2010/11 Adopted Budget Section G G

35 Categorical Positions Eliminated G1

36 G2 Eliminated Positions That Can Be Restored With Categorical Resources (*) Funding resource has been changed to Restricted * * * *

37 Categorical Funding Site Allocations G3

38 Recommendations & Next Steps to move towards the 2010/11 Adopted Budget Section H H

39 Recommendations 1.Recognize the decline of enrollment projected for 2010/11 a.This decline is less than the past two years 2.Recognize the impact of the Governor’s May revisions on the budget for Lodi USD 3.Recognize the budget gap is $31,350,041 4.Recognize that with the proposed balancing solutions, the structural out of balance will remain $7,790,114 going into next year 5.Approve the categorical goals strategy 6.Approve the budget balancing strategy H1

40 Appendix I. Details of Superintendent Recommendations II. Categorical Program Goals III. Superintendent’s Budget Advisory Committee Recommendations IV. Routine Restricted Maintenance V. Flexibility Opportunities Continue VI. Chart School Funding VII. Acronyms

41 Superintendent’s Recommendations Details I.

42 Resources DescriptionTotal One Time On Going A. Tier III Sweeps $5,357,399 $5,212,092 B. Ending Balance Reserves1,713,634 D. Capital Outlay Reserves 543,359 F. Total Resources F. Total Resources$8,939,392$5,212,092 $3,727,300 $3,727,300 C. Prior Year ADA1,000,000 $ 145,307 E.Estimated Ending Bal. 325,000 I-1

43 Reduce Expenditures DescriptionTotal One Time On Going A. LEA ($12,074,479) B. CSEA(5,885,553) D. Other Expenses (645,407) F. Total Problem ($22,410,649)($21,220,302) ($1,190,347) ($1,190,347) C. Negotiations(3,575,210) (2,614,863) (12.90) (260.17) (124.27) ($960,347) E. ARRA Construction (230,000) (397.34) (397.34) FTE 2 (*) Includes major reductions in Transportation Services * *

44 Balancing DescriptionTotal One Time On Going A. The Problem ($31,350,041) ($34,222,508) B. Proposed 2. Expenses (22,410,649) (21,220,302) (1,190,347) C. Total C. Total $ 0 ($7,790,114) $7,790,114 $7,790,114 1. Resources8,939,392 5,212,092 3,727,300 $2,872,467 I-3

45 Resources – Tier III Sweeps I-4 The State does allow Districts to move funds from some categorical programs to help address the budget crisis DESCRIPTIONEXPLANATIONOn-GoingNo. Total One-Time

46 Savings Achieved Through Agreements & Board Imposed Changes with Employee Groups I-5 Additional details in slide I-10 and I-11

47 CSEA Reductions I-6 (@) Partially retained with categorical resources DESCRIPTIONEXPLANATIONOn-GoingNo. Total @ @ @ @

48 CSEA Reductions I-7 (*) Retained with categorical resources * * * * * *

49 L.E.A. Reductions I-8

50 Other Reductions I-9

51 Negotiated Agreements DESCRIPTIONFTEOn-GoingNo. Total On-Going FTEOn-Going FTEOn-Going I-10 Included in slide I-4, B1 and B6

52 Confidential & Management I-11 DESCRIPTIONFTEOn-GoingNo. Total On-Going FTEOn-Going FTEOn-Going (*) Moved to categorical resources * Included in slide I-5, B1 and B5

53 Categorical Goals II

54 Funding Sources ☼ The following Categorical funds sources were identified: –Adult Education –ARRA – IDEA & Title I Carryover –Aspire Special Education Carryover –BTSA (svcs. through the County) –CAHSEE –CBET –District Program Improvement –Economic Impact Aid –English Language Acquisition Program –Gifted And Talented –IMF & Lottery Textbooks –Medi-Cal Carryover –Mega Redirection –School Safety & Violence Prevention –School & Library Block Grant Program –Supplemental Counseling –VAPA (on-going) –Title I - Basic Low Income –Title II - Teacher Quality –Title II – Principal Training Carryover –Title III – Limited English proficiency II-1

55 Funding by Goal & Resource II-2

56 Funding by Goal & Resource (cont.) II-3

57 II-4

58 Superintendent’s Budget Advisory Committee (SBAC) Recommendations III

59 SBAC Reduction Recommendations III-1

60 DESCRIPTIONEXPLANATIONAMOUNTNo. III-2 SUPT. PLAN

61 SBAC Reduction Recommendations DESCRIPTIONEXPLANATIONBUDGETNo. III-3 SUPT. PLAN FTE

62 SBAC Reduction Recommendations DESCRIPTIONEXPLANATIONNo. III-4 SUPT. PLANBUDGET FTE

63 Flexibility Opportunities Continue ☼The flexibility options introduced in 2008-09 continue without changes –42 Tier III flexible categorical programs Including suspension of deferred maintenance match requirements and instructional materials adoption timelines –Relaxation of K-3 Class-Size Reduction (CSR) funding penalties –Lowering of reserve for economic uncertainty requirements –Shorter school year ☼The May Revision proposes no changes to existing flexibility – nor does it offer answers to questions about the future of flexibility –Tier III flexibility continues through 2012-13 –K-3 CSR funding penalties remain relaxed through 2011-12 IV

64 Charter School Funding ☼The May Revision provides estimated General Purpose rates for charter schools based on statewide average revenue limits (Education Code Section [E.C.] 47633[a]) –Reflects -0.39% COLA, 18.355% deficit, and other anticipated changes –The CDE will recalculate the General Purpose rates at each apportionment Final amounts could vary by ±$20 per ADA -0.38% ☼Categorical rates reflect a -0.38% COLA K-34-67-89-12 General Purpose Block Grant (will vary) $5,005$5,081$5,227$6,067 Proposed Adjustment (est. 3.85% reduction) (236)(240)(247)(286) Categorical Block Grant399 Total$5,168$5,240$5,379$6,180 V

65 Acronyms ☼AB – Assembly Bill ☼ADA – Average Daily Attendance ☼ARE – Assessment, Research & Evaluation ☼ARRA – American Recovery and Reinvestment Act ☼AVID – Advancement Via Individual Determination ☼BB – Better Beginnings ☼BRL – Base Revenue Limit ☼BTSA – Beginning Teacher Support & Assessment ☼CAHSEE – California High School Exit Examination ☼CalWORKS – California Work Opportunity and Responsibility to Kids ☼CBEDS – California Basic Educational Data System ☼CBET – Community Based English Tutor ☼CDE – California Department of Education ☼C/O – Carryover ☼COLA – Cost of Living Adjustment ☼CSEA – California School Employees Association ☼CSR – Class Size Reduction ☼DOF – Department of Finance ☼DSLT – District School Leadership Team VII-1

66 Acronyms - continued ☼ED – Education Code ☼EIA – Economic Impact Aid ☼EIA/LEP – Economic Impact Aid/Limited English Proficiency ☼EIA/SCE – Economic Impact Aid/State Compensatory Education ☼ESEA – Elementary & Secondary Education Act ☼F&P – Facilities and Planning ☼FTE – Full-Time Equivalent ☼GATE – Gifted and Talented Education ☼IDEA – Individuals with Disabilities Education Act ☼IMF – Instructional Materials Fund ☼ISP – Independent Study Program ☼LAO – Legislative Analyst’s Office ☼LEA – Lodi Education Association ☼LEA – Local Education Agency ☼LEC – Local Experience Charge ☼LPPA – Lodi Pupil Personnel Association ☼LUSDAA – Lodi Unified School District Administrators Association ☼M&O – Maintenance and Operations ☼PC – Personal Computer VII-2

67 Acronyms - continued ☼PERS – Public Employees Fund ☼QEIA – Quality Education Investment Act ☼RL – Revenue Limit ☼ROP – Regional Occupation Program ☼RSP – Resource Specialist ☼RTTT – Race to the Top ☼SBAC – Superintendent’s Budget Advisory Committee ☼SEF – School Employees Fund ☼SETPD – Special Education Teacher Professional Development ☼SLIP – School and Library Improvement Program ☼STRS – State Teachers Retirement System ☼USD – Unified School District ☼VAPA – Visual and Performing Arts ☼VEA – Vocational Education Act VII-3


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