1. Budget Development Building Blocks FY08/09 Communicating our budget and budget development process to our staff and our community Alameda Unified School District

2. Purpose 1.To present basic information and an over- view of the AUSDs budget development process 2.To inform the community about our districts finances in a user-friendly format This presentation was created with two goals in mind –

3. The Checkbook What is a budget? A budget is a spending plan. School districts develop spending plans for every fiscal year (July 1 – June 30). Our spending plan has components similar to your checkbook. It includes estimates of anticipated revenues and planned spending. The CheckbookAUSD Budget Deposits/ Income Revenue Checks Written/ Expenses Expenditures Balance at End of Page Ending Balance Balance Brought Forward to New Page Beginning Balance Our budget is our best guess of the income we will earn and the checks we will write. It changes just like the needs in a house- hold change.

4. The Checkbook What is a multi-year projection? A multi-year projection is our best guess of the income we will earn and the checks we will write over an extended period of time (three years). July 1, 2007 – June 30, 2008 July 1, 2008 – June 30, 2009 July 1, 2009 – June 30, 2010 July 1, 2010 – June 30, 2011 Deposits/ Income Deposits/ Income Deposits/ Income Deposits/ Income Checks Written/ Expenses Balance at End of Page Balance Brought Forward

5. The Annual Budget Cycle Budget Adoption Revised Budget First Interim Second Interim Third Interim Unaudited Actuals Audited Actuals At each period, we: Update budget Certify our financial condition Present summary to Board of Education Submit copies to County Office of Education and State

6. The Annual Budget Cycle PeriodFinances as ofDescription Adopted Budget July 1The Board of Education is required by law to adopt a budget by July 1. Revised Budget Signing of State Budget Act We are required by law to update our adopted budget within 45 days that the Budget is signed into law. 1 st InterimOctober 31Update budget and certify the state of our finances 2 nd InterimJanuary 31Update budget and certify the state of our finances 3 rd InterimApril 30Applies only to districts with Qualified or Negative Certifications Unaudited Actuals June 30Includes all transactions processed during the fiscal year Audited Actuals June 30An independent auditing firm audits the financials statements prepared by the district and issues an opinion regarding their accuracy.

7. Certification Status At Interim Reporting Periods: Positive – District will be able to meet its financial obligations for the current and two subsequent years Qualified – District may not be able to meet its financial obligations for the current or two subsequent years Negative – District will be unable to meet its financial obligations for the current or subsequent year

8. Our Districts Funds Other funds have very specific purposes and are very limited in use. Consequently, transfers between funds are subject to strict legal limitations and Board policy. Most day-to-day financial transactions are recorded in the General Fund (Fund 01). The district maintains a total of 12 different funds to record its financial transactions. Each fund is a separate financial entity with its own set of financial records.

9. Our Districts Funds OPERATING FUNDSCAPITAL FUNDS FundDescriptionFundDescription 01General Fund14Deferred Maintenance Fund 08Regional Occupational Program 21Building Fund 09Charter School Fund (Alameda Community Learning Center) 25Capital Facilities Fund 11Adult Education Fund35County Schools Facilities Fund 12Child Development Fund40Capital Reserve 13Food & Nutrition Services Fund 51Bond Interest & Redemption Fund

10. Fund 14 – Deferred Maintenance Fund Districts must establish a Deferred Maintenance Fund to receive deferred maintenance dollars. This fund is used to account for the States apportionment and the Districts contributions. Dollars are set aside in Fund 14 to maintain school facilities. The State makes a dollar for dollar match. Districts that participate in certain school facility programs are required by state law to establish restricted funds or accounts for facility maintenance purposes.

11. New District Fund – Fund 17 Staff recommends transferring the Reserve for Economic Uncertainties to Fund 17. This transfer will clarify the portion of the General Fund ending balance that is available for other spending priorities and highlight the importance of maintaining our reserves. Fund 17 – Special Reserve for Other Than Capital Outlay Projects. General Fund dollars can be accumulated in Fund 17 for various purposes. These dollars must be transferred into an appropriate fund before expenditures can be made.

12. New District Fund – Fund 17 What can $2.5M buy? Two months payroll? One months payroll? One-half months payroll? How much is our Reserve for Economic Uncertainties? Our Reserve for Economic Uncertainties is 3.0% of all General Fund expenditures and other financing uses, or $2.5M. Our 3.0% Reserve for Economic Uncertainties approximates 47% of the May 2008 payroll.

13. Building Our Budget Our districts budget is only as good as the assumptions used in projecting revenues and expenses. Many of the items that impact the districts budget are unknown until AFTER the district is required to adopt a budget. Thus, the district must use a series of assumptions about those items in order to develop the budget. The accuracy of the proposed budget is only as good as the assumptions used in its development. If the assumptions are faulty, the budget will be inaccurate. Accordingly, the initial assumptions are carefully considered and revised throughout the year as more information becomes available.

14. Major Assumptions - Included AssumptionExpendituresRevenue Enrollment Average Daily Attendance (ADA) Cost of Living Adjustment (COLA) Step & Column Negotiated Salary Increases Mandatory Benefits

15. Major Assumptions - Included AssumptionExpendituresRevenue Consumer Price Index (CPI) Utilities Property & Liability Insurance Debt Service

16. Major Assumptions - Excluded AssumptionExpendituresRevenue One-TimeXX CarryoverXX Growth in Contribution to Special Education Program X

17. Unrestricted General Fund Expenditures

19. Unrestricted General Fund Expenditures – Professional Services

20. Enrollment & School Site Staffing Enrollment projections prepared by Cabinet and Principals are used as the basis for staffing allocations. School site staffing is comprised of two types – 1.) Administrative staffing 2.) Enrollment-based staffing Administrative staffing consists of positions responsible for the operations of the site (e.g., management, clerical, and custodial staff). Enrollment-based staffing consists of positions responsible for instructional and student support at the site (e.g., classroom teachers and clerical staff).

21. School Site Staffing PrincipalClassroom Teacher Vice PrincipalOther Clerical Office Manager IIHealth Office Assistant Media/Library Custodial Counselor Administrative staffing Enrollment-based staffing

22. Mandatory and Employer-Provided Benefits Benefit ItemRate State Teacher Retirement System (STRS)8.250% Public Employee Retirement System (PERS)9.306% Federal Insurance Contributions Act (FICA)6.200% Medicare1.450% Health &Welfare (H&W)7.171% State Unemployment Insurance (SUI)0.050% Workers Compensation1.850% Public Employee Retirement System Reduction (PERS Reduction) 3.714%

23. Mandatory and Employer-Provided Benefits

24. Enrollment & School Site Discretionary Funds School site discretionary funds are used to support site operations, such as classroom supplies, office supplies, and copy costs. Approximately $485K is budgeted annually. School site discretionary funds are determined by grade-level enrollment projections and grade- level per pupil allocations. Per Pupil Allocations K-5$24.76 6-8$45.77 9-12$81.73

25. Enrollment & School Site Custodial Funds While custodial supplies are budgeted by site, the dollars are managed by Maintenance, Operations and Facilities. Approximately $203K is budgeted annually. School sites are allocated funds for custodial supplies based on use, facility square footage and grade-level enrollment projections. Per Pupil Allocations K-5$8.00 6-8$9. 00 9-12$10. 00 Additional Allocations… $59K Summer Cleaning $16K Emergency Supply Stock $40K Contingency

26. General Fund Revenues Our BRL is a specific dollar amount the state gives us based on the number of days students attend school. Our income is based on our average daily attendance (ADA) - not the number of students enrolled. Our primary source of revenue is the Base Revenue Limit (BRL).

27. AUSD Base Revenue Limit – County Comparison

28. Base Revenue Limit and ADA

29. Unrestricted General Fund Revenues Our primary source of unrestricted revenue is the Base Revenue Limit (BRL). Revenue Limit Revenue Limit Sources$54.0M Federal Impact Aid$0.1M Other State Lottery$1.3M Class Size Reduction - Gr K-3$3.0M Class Size Reduction - Gr 9$0.3M Supplemental Instruction$0.3M Local Parcel Tax$3.3M Interest$0.4M

30. Loss of Federal Impact Aid

31. Variability of Interest Income

32. Restricted General Fund Revenues Our primary source of restricted revenue (i.e., categorical funds) is the State. These funds have restrictions on their use. Revenue Limit Revenue Limit Sources$2.2M Federal Title I$1.4M Special Education$1.7M Other State Gifted and Talented$0.1M Lottery$0.2M Instructional Materials$0.7M School/Library Improvement$0.8M Special Education$5.5M Local Donations$0.4M

33. Contributions to Restricted Programs Restricted programs are like mini-funds and should be self- sustaining – expenditures should match revenues. When expenditures exceed revenues, a contribution is made to the restricted program.

34. Additional Information Need additional information? Have suggestions about improving this presentation? Please share your thoughts. Luz T. Cázares Chief Financial Officer 510-337-7067 lcazares@alameda.k12.ca.us Need prior presentations or budget information? Our budget documents are posted on our website.