1. 0 Economic Crisis Update How Reduced State School Funding Is Effecting North Santiam School District Dr. Jack Adams Update to Classified Staff 12.08.09

2. 1 2007-09 Biennium State School Funding 2007-09 Biennium—State funding allocation for K-12 education was set at $6.0 Billion in March of 2007 Final allocation for 2007-09 was $5.7 Billion Loss to NSSD General Fund= $974,685* *Stimulus dollars were received, but had to be used for Special Education/Title programs and were not part of the general fund budget

3. 2 Board and Superintendent Goal We are committed to doing what is best for kids; making any reductions in staffing in a way that is fair and equitable to ALL employees; and making an effort to keep as many people employed as possible while maintaining programs

4. 3 March 2008 Preparing the 2009-10 Budget Information given to Board and staff on projection for 2009-10 SSF and the difference between a $5.4, $5.6, $5.8, and $6.0 Billion allocation for K-12 Education $6.0 Billion is the best case scenario, NSSD took the conservative road and built budget on $5.6 Billion allocation

5. 4 Balancing the Budget in 2008-09 Implemented freeze on Professional Development Limit field trips Release of NSSD Rainy Day Fund Prepared budget on $5.6 Billion allocation 30-34% of districts across the state budgeted at this conservative level

6. 5 State Legislature Funds K-12 at $6.0 Billion with Revenue Package and Stipulations NSSD keeps budget based on $5.6 Billion allocation, due to nature of stipulations and history of tax implementations in Oregon

7. 6 Along with reducing the state budget, the 2009 Oregon Legislature passed two bills that would increase some corporate and personal income taxes. These bills are expected to raise $733 million in revenue, which is included in the 2009-11 state budget to prevent further cuts to schools, healthcare and public safety. What is the revenue package?

8. 7 Budget Cuts$1.994 billion Federal Stimulus$978 million Additional State Revenue$801 million State Reserves$255 million Legislative actions taken to fill the projected 2009-11 state budget gap of $4.028 billion Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 5, September 2009

9. 8 97.5% of Oregonians personal income taxes would not change (for single people making less than $125,000, or couples making less than $250,000) Measure 66 Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009

10. 9 For individuals with annual incomes above $125,000, or For couples with annual incomes above $250,000, it raises the state income tax rate by 1.8%-2.0%, but only on income above those amounts Personal Income Taxes Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 7, September 2009

11. 10 Corporations would pay an additional: o 1.3% on profits over $250,000 in 2009 and 2010 o 1.0% on profits over $250,000 in 2011 and 2012 o 1.0% on profits over $10,000,000 starting in 2013 Measure 67 Sources: HB 3405 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009

12. 11 Two-thirds of corporations doing business in Oregon currently pay an annual minimum tax of just $10 Since 1938 Corporations Have Paid $10 Minimum Tax Sources: Oregon Corporate Excise and Income Tax”, 2008 Edition, Oregon Department of Revenue, pages 3-14 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009

13. 12 Corporate Income Tax Those with revenues less than $500,000 would pay a minimum tax of $150 Those with revenues over $500,000 would pay about one one-thousand th of their Oregon revenues in taxes Sources: Oregon Corporate Excise and Income Tax”, 2008 Edition, Oregon Department of Revenue, pages 3-14 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009

14. 13 Oregon’s business taxes are currently at 3.7% of gross state product, which ranks 3 rd lowest among the 50 states If the revenue package would be affirmed by voters, Oregon’s corporate taxes would go up to 3.9% of gross state product, which would rank as 5 th lowest How do Oregon’s business taxes compare? Sources: ”Total State and Local Business Taxes,” Council on State Taxation, Ernst & Young, 2009 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 18, September 2009

15. 14 Washington5.5% California 4.6% Nevada 4.6% Idaho 4.7% Oregon3.7% Current Comparison Source: ” Total State and Local Business Taxes,” Council on State Taxation, Ernst & Young, 2009

16. 15 Of the $733 million raised by the revenue package, about 40% – some $285 million – would be targeted for schools. This amount would be included in the $6.0 billion allocated to schools for 2009-11. What would this mean for Oregon’s schools? Source: ” 2009-10 Distribution of Formula Revenue to Districts,” Oregon Department of Education

17. 16 Funding Levels Next Three Slides

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21. 20 Staff Communication Plan 2009-10 Continue to be honest and transparent Superintendent to meet NSEA/OSEA Executive Council members and all staff to keep them informed of latest information and how staffing and programs in the District may be effected

22. 21 Details to Communicate Beginning fund balance for 2009-10 was $1,500,000 Ending fund balance for 2009-10 is projected to be $106,450 based on $5.6 billion K-12 funding Carrying it forward, the beginning fund balance for 2010-11 is projected to be $106,450

23. 22 Additional Things to Consider District used its entire Rainy Day Fund to supplement the 2009-10 Budget ($600,000) Cuts were made to Co-Curricular Middle School and High School Athletics and Activities for 2009-10 ($43,239) District lost over $500,000 in federal grant money for 2009-10 due to economic crisis

24. 23 Financial Costs To Consider for 2010-11 Budget Federal dollars may decrease another 1-3% (stimulus, federal grants) in 2010-11 Unemployment costs for reduction in force equals $12,000 for each employee Employee roll over cost would be about $662,000* *Based on actual savings from 2009-10

25. 24 Cash Reserves $600,000 in reserves are needed to run the district plus an additional $300,000 is needed to fund early retirement ($900,000 total) 90% of districts cannot pass bonds, so general fund dollars must be spent on portables and boilers depleting reserves 110-140 out of 198 school districts in Oregon may end up with no cash reserve for 2010-11

26. 25 Reducing the Budget Reduction in ForceReduction in Budget Work from a list of all employees with date of hire and endorsements Graphs of budget areas are updated regularly and include: (1) budgeted amount, (2) amount encumbered, (3) amount spent, and (4) amount remaining in each budget area

27. 26 Community Communication Plan Board and Management Team members to meet and communicate with local clubs or groups regarding the impact from the loss of SSF Board members to submit commentary for local newspapers

28. 27 Time Line November 2009 —Update Licensed Staff December 2009 —Update Licensed Staff January 2010 —Oregonians Vote March-June 2010 —Budget prepared for 2010- 2011

29. 28 Failure of Measures 66 & 67 Adjusted Timeline February 2010 —Legislature to Meet and adjust the K-12 budget allocation (hopefully they will keep funding intact for 2009-10 and have districts take the whole hit in 2010-11) February-March 2010 —District and Board to prepare Action Plans, begin discussions with unions and community March-June 2010 —Updates to Staff and Preparation of 2010-2011 Budget

30. 29 Strategies for Balancing 2010-2011 Budget  Employee Lay Offs—Larger Class Sizes  Salary and Benefit Freezes  Cut Contract/School Days  Reductions to Co-Curricular Athletics  Reductions to Elective/Academic Courses  Reductions to Transportation and Food Service  Reductions to School Programs/Curriculum  Review School Configurations

31. Questions or Comments Full PowerPoint Available On District Website Under District Budget>State School Funding Updates