1. STATE FISCAL CRISIS: UPDATED IMPACTS ON K-12 AND RUSD August 16, 2012

2. 2012-13 State Budget It Is All About November  Education was treated better than any other state-funded program in the June version of the 2012-13 State Budget.  K-12 received a very slight increase in revenue limit funding.  In the “final” budget, only one of four of the governor’s policy and reform initiatives was enacted by the legislature.  A semi-reasonable form of mandated cost reimbursement program reform promoted by RUSD was approved.  Not approved (for now) was Weighted Student Formula, elimination of Pupil Transportation funding, and making optional Transitional Kindergarten  2012-13 revenue levels assume the passage of the governor’s tax initiative on November 6.  Without Proposition 30 revenues, the state’s General Fund is $9 billion further in the hole. Education is set up to make up the largest portion of the balancing act. 2

3. Despite the State Fiscal Environment Source: SSC Governor's Proposed Budget, updated for impact of SB 81 in 2011-12 Dollars Per ADA Average Unified District Loss of COLA Loss of Baseline dollars Loss due to Midyear cut Actual vs. Statutory Funding Levels 3

4. What if Proposition 30 Fails? – “Plan B” Mid-Year Automatic Triggers Cut Education Hard  Following the 2011-12 State Budget strategy, the proposed budget contains a new set of automatic trigger reductions linked to the failure of the governor’s proposed tax initiative (Proposition 30).  Education is the hardest hit – 98.4% of the mid-year trigger cuts.  “Plan B” impact to RUSD is estimated at -$18.4 million. Programs Targeted for Trigger Cuts ProgramAmount% Share Proposition 98$5,354M90.0% University of California$250M4.2% California State University$250M4.2% Developmental Services$50M0.8% All Other$49M0.8% Total$5,951100% 4 Source: LAO

5. Proposition 30 and Proposition 38 The November Ballot Is Busy With Initiatives Tax Initiatives That Help Schools Proposition 30 “Governor’s Tax Initiative” Proposition 38 “Munger/PTA Initiative” Personal Income Tax and Sales Tax - $6 billion per year Personal Income Tax - $10 billion per year Revenues flow to State General Fund and are distributed with existing formulas (i.e., K-14 gets its Proposition 98 determined share) Majority of revenues flow to a special account that is distributed to local schools. Other funds to early childhood and state debt service. K-12 portion creates a “Part A” and “Part B” to the revenue limit with the new Part B tied to some restrictions. Funds are restricted from being spent on existing staff. No additional funding to K-14 over July 1 budget. $1,000 per student in additional funds to schools; but $447 per student offset. Most recent polling: 54%-56% favorableMost recent polling: 38%-46% favorable 5

6. 6 RUSD Structural Deficits Recurring Expenditures Are Greater Than Recurring Revenue Prop 30 Passes 2012-13: $16.2M 2013-14: $19.9M Prop 30 Fails 2012-13: $36.5M 2013-14: $40.2M Prop 30 passes Prop 30 fails Structural Deficit covered by one- time revenues and resources Structural Deficit covered by one-time resources Increased Structural Deficit Amounts shown are “structural deficits”, not total deficits. 6

7. State’s Fiscal Crisis: Local Implications Running Out of Options 2012-132013-14 Deficit Spending ($27.5)($36.1) Fund Balance $37.2$0.5 Minimum Fund Balance Required $18.8$20.0 Shortfall in Fund Balance Components $0($19.5) 7 Dollars in Millions

8. State’s Fiscal Crisis: Local Implications General Fund: Fund Balance and Cash Dynamics Have Changed 8 Dollars in Millions 2007-082008-092009-102010-112011-12(E)2012-13(P) Total Fund Balance $56.9$72.6$71.0$90.2$85.9$64.7 June 30 Cash Balance (% of Fund Balance) $47.3$45.6$39.7$44.9$14.7($8.3) 83.1%62.8%55.9%45.4%17.1%(12.8%)

9. Collective Bargaining Status Health and Welfare Is The Biggest Topic  Current Plan Year (Jan 1 – Dec 31, 2012)  Contingent second, one-time $250 increase in District contribution has been triggered by State Budget. (New one-time contribution level of $10,000.)  $700,000 impact to current year included in budget  Will be paid in equal installments Sept., Oct. and Nov.  Next Plan Year (Jan 1 – Dec 31, 2013)  Tentative Agreement with RCTA to continue $9,500 District contribution plus a one-time increase of $250 ($9,750) plus a second, one-time $250 increase contingent upon the passage of Proposition 30 in November.  $1.3 million impact not included in budget  Preliminary premium rate increase ranges: Kaiser: 6.4%, EPO: 16%, PPO: 20% 9

10. Collective Bargaining Status Other Collective Bargaining Items  All  No furloughs for 2012-13  $5.1 million impact to current year included in budget  RCTA  MOUs to provide 1) Staff Development Specialist flexible work year, and 2) $500 stipend for optional materials based professional development 80 hour practicum (both pending approval) 10