1. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Slicing and Dicing Your Principal Apportionment FIN-20 APRIL 3-6, 2013, LONG BEACH, CA These materials have been prepared by the CASBO Finance Professional Council – Southern Section. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.

2. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Slicing and Dicing Your Principal Apportionment Marlene Dunn Director, Business Advisory Services Los Angeles County Office of Education Ambur Borth Director, Fiscal Services Palos Verdes Peninsula Unified School District 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO

3. Slicing and Dicing Your Principal Apportionment Components of Principal Apportionment Apportionment Calculations Payment Schedule Deferral Schedule Cash Flow Management Options Impact of LCFF

4. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 4 Principal Apportionment Delivers funding for several different programs including: –Revenue Limit –Special Education –GATE –ROC/P –Adult Education –Supplemental Instructional Programs

5. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 5 Principal Apportionment Since 2008-09, amounts for all but revenue limit and special education have not changed. Revenue Limit experiences greatest variances due to changing factors: TaxesADACOLA PERSUIDeficit

6. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 6 Principal Apportionment Recalculated four times annually: Advance Apportionment (July through January) –Estimate based on prior year P-2 and adjusted for current year COLA, deficits, and other factors contained in enacted Budget First Principal (February through May) –Based on P-1 data including estimated taxes, ADA, and other data Second Principal (June) –Based on P-2 data including estimated taxes, ADA (final data for most programs), and other Annual (Adjustment paid February through June) –Based on final year-end data included actual taxes, ADA (P-2 for most programs, Annual for specific), and other data

7. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 7 5-5-9 Schedule - The monthly payment schedule used in a “normal” year with no deferrals (if apportionments are equal, then Feb through June would be 9%) MonthPayment Amount July5% of the Advance Apportionment August5% of the Advance Apportionment September9% of the Advance Apportionment October9% of the Advance Apportionment November9% of the Advance Apportionment December9% of the Advance Apportionment January9% of the Advance Apportionment February 1/5 of the difference between the amount received YTD and the P ‑ 1 Apportionment March1/5 of the difference April1/5 of the difference May1/5 of the difference JuneDifference between the amount received YTD and the P ‑ 2 Apportionment

8. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 8 Principal Apportionment CDE releases: – “Apportionment Summary” that details the amount for each program for each district –“Payment Schedule Summary” that details the amount the monthly payment for the total PA for each district The 2012-13 P-1 Apportionment documents are posted on the CDE’s Web site at: http://www.cde.ca.gov/fg/aa/pa/iassf12p1.asp

9. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 9 Deferrals 2012-13 Deferrals (Updated by CDE February 2013) Timeframe Exemption Available? Amount Principal Apportionment Payment Impact July 2012 to Sept. 2012Yes$700 million 75% July 2012 to Jan. 2013 Dec. 2012Yes$500 million 25% Aug. 2012 to Jan. 2013 Dec. 2012Yes$600 million 60% Oct. 2012 to Jan. 2013 Dec. 2012Yes$800 million 46% Feb. 2013 to July 2013No$531.7 million 31% March 2013 to April 2013Yes$900 million 27% March 2013 to Aug. 2013No$1.3 billion 60% April 2013 to July 2013No$594.7 million 35% April 2013 to Aug. 2013No$763.8 million 45% May 2013 to July 2013No$1.98 billion 100% June 2013 to July 2013Yes$474 million 100% Deferred across fiscal years $5.64 billion

10. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 10 2012-13 Adjusted Payment Schedule (Assumes Equal Apportionments)

11. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 11 Revenue Limit Cash Flow 1.For 2012-13, understand what payments have been made YTD (CDE’s Payment Schedule Summary) 2.Calculate what you expect final Revenue Limit will be using: –Projected P-2 ADA –Estimated Taxes, other data (i.e., PERS, UI, etc.) –Estimated other data (i.e., PERS, UI, etc.)

12. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 12 Revenue Limit Cash Flow 3.Create table that calculated monthly payments based on % of each apportionment 4.Fill in Advance Apportionment and Projected Apportionment amounts 5.Confirm that YTD totals match CDE’s data 6.Adjust to match as CDE releases apportionment and as projected data is revised OR

13. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 13 Revenue Limit Cash Flow Use Revenue Limit Cash Flow developed by LACOE, Division of BAS Reflects: –Current Adjusted Monthly Payment Schedule –CDE’s Advance Apportionment data –Projected Revenue Limit Allows for changes to projection by user –Adjust as appropriate – trigger reductions, major PY adjustments (RDA recovery or other audit findings)

14. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 14 Revenue Limit Cash Flow Sample District Revenue Limit Cash Flow.xlsSample District Revenue Limit Cash Flow.xls

15. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 15 Principal Apportionment Accruals Accruals: –Annual Apportionment Difference between PY P-2 and Annual applied as an adjustment to CY P-1 in February –CY Deferral Amount deferred from 2012-13 to 2013-14 –PY Unsatisfied Accruals Portion of PY Accruals deferred to following year Ex: Annual Apportionment is adjustment to P-1, which is paid Feb through May. Any deferral of Feb through May payments to 2013-14 results in deferral of accrued amounts resulting in unsatisfied accruals.

16. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 16 Taxes Assume taxes to be same as prior year –Same amounts –Same monthly distribution County A-C Estimates drive revenue limit calculation –Actual taxes not considered in revenue limit until Annual Apportionment

17. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 17 Taxes Any change to tax estimate has corresponding change to revenue limit –If taxes go up, state aid portion of revenue limit goes down and vice-versa Most RDA revenue is treated as tax revenue –Exception is facilities portion of pass-through payments

18. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO EPA Cash Flow EPA is now third component of Revenue Limit (State Aid, Property Tax are other two) Based on DOF estimates Offset State Aid for each EPA dollar () For 2012-13, lump-sum payment in June 2013 Thereafter, to be paid quarterly (September, December, March & June) 18

19. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Prop 30 EPA The vehicle to collect and disburse revenues generated by temporary taxes from Prop 30 State Aid is reduced for each dollar districts received from EPA Treat as a third revenue limit source: –Total Revenue Limit less Property Taxes and EPA equals State Aid 19

20. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Prop 30 EPA For 2012-13, distributed by June 30, 2013 State Aid payments already reduced by estimated EPA (about 21.2% of revenue limit - refer to EC 14140 Reduction) P-2 State Aid payment to be based on updated estimate to be released by DOF For 2013-14, distributed on quarterly basis 20

21. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 21 Considerations Should prepare 24-month cash flow projection to allow time to address issues TRANs require 90-120 days to prepare –Mid-year issuance in March (covering deficiencies in Spring and Summer) S/B identified and process initiated by December –July 1 issuance by March/April –Cash flow projection should cover pledge dates and subsequent months

22. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 22 Considerations (cont.) Principal Apportionment and Taxes are not posted until the end of the month –Typically rec’d around the 27 th -29 th –With processing time, may not be reflected for several days but will be posted with date of receipt Consider Payroll Cycles and Amounts –Month-end cash balances must be sufficient to cover payrolls issued prior to receipt of revenue –Ex: month-end balance of $1 M, but $2 M payroll issued on 5 th means insufficient cash of $1 M Don’t wait for projected negative month-end balances – may be too late

23. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 23 Cash Flow Deficiency Management Tools TRANs Inter-fund Borrowing Borrowing from County Office Borrowing from County Treasurer All have restrictions and requirements Responsibility of District to manage cash

24. 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 24 Questions?