2008/09 2 nd Interim Reporting Proposed Budget Adjustments Board Meeting January 27, 2009 Prepared by: Mr. Douglas Barge Mr. Douglas Barge & Staff & Staff Y:\Business Services\Budget\ \Adopted\Meetings\B

Executive Summary  The 2 nd Interim Financial Report will be brought before the Board for approval in March  Our goal is for a positive certification, even in these difficult times  To accomplish that goal a strategy of budget reductions has been developed that reflects:  The Governor’s current proposals for reducing income to the District  The Governor’s proposed “opportunities” for reducing expenditures within the District  These reduction total $6,372,549 i

Table of Contents DESCRIPTION PAGE # A. Introduction B. Balancing the 2 nd Interim Financial Report C. Recommendations D. Appendix 1. Qualified 2. Negative ii

Introduction  The State requires Districts to report on their interim financial and budgetary status twice a year, as of October 31 and as of January 31. This report must be certified as Positive, Qualified, or Negative.  Qualified Certification means the District may not meet its financial obligations.  Negative Certification means the District will not be able to meet its financial obligations.  Certifying Qualified will require the County Office of Education to intervene on the district’s financial and educational operations.  Certifying Negative will require the County Office of Education and the State to intervene on District operations. The intervention will include staying and rescinding of district’s board action.  The goal of the District is to continue certifying “Positive” 1

Balancing the 2 nd Interim I. The Problem $6,372,549 DescriptionBudget II. Budget Adjustments A. Shock Absorbers$1,312,283 B. Phase I Expenditure Reductions300,000 III. Total Reduction Required$0 2 C. Categorical Flexibility/Sweeps D. R.R.M./Deferred Maint. Program E. Net Additional Income F. Development Fee Staffing G. Contingency Reserve 1,896,979 1,200,000 1,000, , ,000 H. Budget Adjustments in 2008/096,372,549

Recommendations  Approve 2 nd Interim Adjustments totaling $6,372,549  Budget Revisions, reflecting this plan, will be brought to the Board for approval in February  These adjustment will allow for a positive certification at 2 nd Interim assuming the County recognizes Governor’s proposal for reducing income Governor’s proposed flexibility for reducing expenditures 3

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Appendix iii

Qualified Certification  COE may assign a fiscal expert to provide assistance to the district in resolving its budgetary issues  COE may conduct a financial study of the district, including a review of internal controls  COE may require the district to:  Submit projections of all fund and cash balances as of June 30 of the current year and subsequent year as specified  Encumber all contracts and other obligations  Prepare appropriate cash flow analysis  Prepare monthly or quarterly budget revisions  Appropriately record all receivables and payables  Submit a proposal to address the financial issues causing the problem  COE may withhold compensation of the Board and Superintendent for failure to provide requested financial information  COE may assign the FCMAT to review and make recommendations to improve the teacher hiring process, teacher retention rate, extension of teacher assignment, and provision of highly qualified teachers  The District must then follow the recommendations or show good cause for not doing so 4

Negative Certification  COE may develop & impose, in consultation with the Superintendent of Public Instruction (SPI) & the District board, a revised budget to enable financial obligations to be met in the current year  COE may stay or rescind any action of the District’s board that is inconsistent with the ability of the school district to meet its obligation  COE may assist in developing, in consultation with the District’s board, a financial plan that will enable the District to meet its obligations  COE may assist in developing, in consultation with the District’s board, a budget for the subsequent fiscal year  COE may appoint a fiscal advisor to perform any or all of the above duties 5