Encinitas Union School District Proposed Budget

Governor’s Budget The May Revision is, by statute, the Governor’s last chance to provide his Budget proposals to the Legislature It may differ from January only slightly, or be dramatically different Overall, the State Budget situation has gotten worse Federal dollars, upon which the January Budget depended, have been slow in coming Inaction by the Legislature has caused planned savings to slip away Costs of some programs have risen more than anticipated Revenues are still falling below the state’s already low forecasts Education was protected somewhat, relative to other programs, in January In May, education continues to be better protected than other programs It was anticipated that the best we could hope for was no new cuts, and that is, for the most part, what it’s been proposed

Governor’s Budget Education fares better than the rest of the Budget The rest of the Budget is absorbing even heavier cuts in order to protect education from deeper cuts But there is no “free ride” – the nearly $1.5 billion taken from education in January remains unrestored Child care takes a huge cut Social and health programs that serve K-12 students and their families are hit even harder California Work Opportunities and Responsibility to Kids (CalWORKs), which is California’s main avenue to welfare payments, is on the chopping block The Budget reflects two major unresolved problems: California’s finance system serves the state poorly in both good and bad times The current economic woes remain unresolved

Governor’s Budget Proposition 98 continues to provide little short-term protection The Proposition 98 guarantee continues to fall and is therefore technically “overfunded” Education funding, at this point, is totally at the discretion of the state In the longer term, Proposition 98 benefits education Restoration of the base is required During the good years ahead, Proposition 98 will drive higher levels of funding But until then, California faces a continuation of difficult budget years

Governor’s Proposal – May Revise 4 For the most part, the May Revision contains no further cuts to K-12 education Cuts proposed in January remain Targeted proposed administrative cut is eliminated Cuts to child care eliminate subsidized slots for 142,000 children No new federal dollars No new taxes are proposed Major additional cuts to the noneducation portions of the Budget are proposed The Legislature is expected to have great difficulty voting for the choices before them

Major May Revision Proposals 5 The revised Budget gap is projected to be $19.1 billion, slightly smaller than the $19.9 billion gap in the January Budget The Governor proposes to close this gap without raising taxes $12.4 billion in cuts $3.4 billion in additional federal funds $3.4 billion in borrowing fund shifts, asset sales, and surcharges A few programs are proposed for increases from the January Governor’s Budget: Restores $140 million for state parks Restores $46 million for Cal Grants Withdraws proposal to cut $112 million for University of California (UC) and California State University (CSU) enrollment growth

Major May Revision Proposals 6 Program cuts make up the majority of the Governor’s May Revision proposals, including: $1.1 billion in savings from the elimination of CalWORKs, the state’s welfare program for the poor $637 million in savings from cuts to the In-Home Support Services program for the disabled $750 million in savings from Medi-Cal, the state’s primary health care program for low-income residents $244 million in savings from transferring state prisoners to county jails $602 million in savings from reduced county mental health services

Potential Issues to the May Revised Budget Proposal 7 In January, there were several major risks to the Governor’s Budget proposals: Federal funds – no guarantee that $6.9 billion could be secured Voter approval – required for fund shifts Economy and revenues – the economy and revenues could underperform forecasts Some of these risks have in fact materialized: Only $3.4 billion in federal funds are expected to be received Fund shifts requiring voter approval will not be placed on the ballot Current-year revenues have fallen short by $1.6 billion

8 The May Revision, if enacted as proposed, contains other – but equally significant – risks Court challenges – rebenching Proposition 98, elimination of CalWORKs, state worker pay cuts, health care reductions, and other cuts could face court challenges Late Budget – a late Budget would delay implementation of program reductions, resulting in the loss of budgeted savings Economic and revenue risks – the state and national economies face the possibility of a “double dip” recession, especially in light of the turmoil in overseas economies These risks in turn could threaten California’s access to the capital markets, pushing borrowing costs even higher Potential Issues to the May Revised Budget Proposal

Revenue Limit Funding 9 Base revenue limit (BRL) funding under the May Revision would receive the following adjustments: Funding for growth and a “fully funded” statutory cost-of-living adjustment (COLA) of -0.39%, essentially unchanged from the -0.38% estimate in January No change in the deficit factor from the Governor’s January Budget Proposal % for K-12 school districts To implement the $1.5 billion cut to revenue limits, the DOF, was considering a 3.85% reduction to each district’s undeficited revenue limit

Revenue Limit – Without Deficit 10 District Type Statutory COLA % All Elementary Districts$250 All High School Districts$300 All Unified Districts$261

Special Education 11 The May Revision provides a fully funded negative COLA of -0.38% for special education (AB 602) on the state share of funding Growth is funded at $3.6 million, or $ per ADA There are several proposed adjustments for , including: $1.1 million decrease in ongoing federal aid (technical adjustment) $634 million decrease in one-time American Recovery and Reinvestment Act (ARRA) funding $65 million remains in the May Revision for the Behavior Intervention Plans on the mandate settlement Will add approximately $10.92 per ADA to AB 602 base However, legislative action is required before funding will occur

Flexibility Opportunities Continue 12 The flexibility options introduced in continue without changes 42 Tier III flexible categorical programs Including suspension of deferred maintenance match requirements and instructional materials adoption timelines Relaxation of K-3 Class-Size Reduction (CSR) funding penalties Lowering of reserve for economic uncertainty requirements Shorter school year The May Revision proposes no changes to existing flexibility – nor does it offer answers to questions about the future of flexibility Tier III flexibility continues through K-3 CSR funding penalties remain relaxed through

Recap of Flexibility Plus Updates – Tier III Categorical Programs 13 Funding for 42 programs are permitted to be shifted to any other education purpose as of through In addition, SBX3 4 stated that a public hearing is required as a condition of exercising the allowed flexibility. The following programs and amounts will be applied toward the District’s obligation for the “Fair Share” repayment. These Tier III Programs are as follow:  Deferred Maintenance$186,043  Physical Education$ 87,710  Arts & Music Block Grant$ 27,356  Gifted & Talented (GATE) $ 13,909  State Instructional Materials – IMFRP $300,940  Peer Assistance & Review (PAR)$ 7,296  Math & Science Staff Development$ 26,973  Teacher Credential Block Grant$ 16,974  Staff Professional Development$ 39,167  Targeted Instruction (SLIP Supplemental)$ 97,393  School & Library Block Grant (SLIP)$179,893  English Language Acquisition (ELAP)$ 8,104  Community Based Tutoring$ 6,640

Federal Budget Proposals (Actual) (Estimated) Special Education$1.3 billion Title I, Basic Grant$1.7 billion Title II, Part A, Improving Teacher Quality$327.1 million$331.1 million Title II, Part D, Educational Technology$29.1 million$10.6 million Title III, Language Acquisition$168.5 million$173.3 million Title IV, Safe and Drug Free Schools$35.2 million$0

Deferrals 15

What are the Budget Assumptions for EUSD for ? 16

Key Budget Assumptions Following are key budget assumptions for based on the Governor’s Budget: 17 DescriptionEstimated Funding Levels Average Daily Attendance (ADA)Based on 5, ADA Estimated Property Tax$32,752,632 (Approx. $567K less than ) District of Choice funding It is anticipated that the funding is going to be continued (an estimated amount of $192,337) Revenue Limit COLA-.39% with % Deficit Basic Aid “Fair Share”A negative impact of 5.81% of Total R/L or $1,925,714 Targeted Reduction of Funding**Reduction of State Revenues by $191 to $230 Special Education income based on AB 602 Funding COLA The Negative.38% COLA applies Lottery Funded at $ per ADA - $ Unrestricted, $14.50 Prop. 20 (Restricted) ** This has not been determined how it would affect Basic Aid School Districts

Key Budget Assumptions DescriptionEstimated Funding Levels K-3 CSR$1,067 full day Gifted and Talented Education$7.22 per ADA (After the Deficit) Instructional Materials Block Grant$55.20 after the deficit per prior year CBEDS Special Education Mandated Cost Settlement$4.25 per ADA (Year 10 of 10) Summer School Core, Remedial Intervention $3.95 per pupil hour. However, planning on 47% reduction in funding in Transfer-In for General Operating budget expenses from Special Reserve and Employees Post-Employment Reserve Funds $3,554,900

19 Annual Property Liability Premium of $254,242 Total Regular Ed. FTE budgeted is 226 Step and Column is budgeted for Certificated and Classified employees No salary increases included for any bargaining units 20:1 for K-1, 22:1 for 2 nd -3 rd, and 31:1 for 4-6 Maintain retiree benefits as they now exist Employer Labor Related Costs: STRS8.25% PERS/PERS Reduction 13.02% Social Security6.20% Medicare1.45% SUI0.72% Workers Comp % Health & Welfare $10, Key Budget Assumptions

Key Budget Assumptions Utilities Increase of 12% Funding of $37,500 for safety monitor positions State Funding of Deferred Maintenance of $186,043. District match will be suspended for one more year Site allocation of $34.50 per prior year CBEDS enrollment (will be adjusted at CBEDS) Site allocation of $5.50 per prior year CBEDS enrollment for Media books and supplies 10 days of teacher sick leave per FTE Custodial supplies of $325 per classroom Routine Restricted Maintenance to be funded at 2.5% of total General Fund expenditures if district match toward Deferred Maintenance Fund is suspended for one more year Transportation expense of $487,666

21 Average Daily Attendance

Unrestricted General Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Unrestricted General Fund Revenues 23

Unrestricted General Expenditures 24

Components of the Ending Fund Balance June 30,

Multi Year Projection 26

Multi Year Projection 27

Restricted General Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Restricted General Fund Revenues 29

Restricted General Fund Expenditures 30

General Fund Expenditures (Unrestricted & Restricted) 31

District Expenditures by Function 32

Child Nutrition Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Deferred Maintenance Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Special Reserve – Non Capital Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Special Reserve - Post Employment Benefits Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Capital Facilities Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Special Reserve – Capital Facilities Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Paul Ecke Central Trust Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Self Insurance Fund Revenues, Expenditures, and Changes in Fund Balance June 30,

Questions July August Who Knows? July August Who Knows?

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