Garvey School District Financial Update April 19, 2012

Current Status Last year, Garvey cut $1.5 million from our budget as directed by LACOE in anticipation of a $250 per ADA cut for We laid off classified, certificated, and management staff to reach $1.5 million in reductions. We had no pay cuts, no furlough days, and no caps on benefits. The $250 cut did not materialize; instead we were cut $13 +$42 per ADA for a total of ~$300,000. This less than anticipated cut increased our fund balance in In , GSD lost 255 ADA equaling a revenue loss of $1,272,000 for We submitted a QUALIFIED 2 nd interim report.

What Does a Qualified Status Mean? It means that Garvey may not be able to meet the state requirements for a minimally solvent school district budget in When this occurs, districts must reduce expenditures to have sufficient funds. Districts cannot ignore this requirement; GSD must demonstrate sufficient reductions to meet the minimum.

What About ? Garvey must reduce $2,130,057 from our budget for and again in This is because LACOE requires that we cut $370 per ADA for the anticipated trigger cuts. Certificated employees have to be notified by March 15 and classified by May 15. We won’t know if the governor’s budget initiative or others get on the ballot until the end of June or if they pass until November. We must plan for the worst!

Why Were 32 Teachers Given Preliminary Layoff Notices? 10 notices were given due to loss of students. Actual reduction needed is 13 but 3 teachers turned in resignations before March notices were given to accommodate Resource Teachers returning to K-8 teaching assignments. 2.6 notices given because of LA & Math curriculum changes at Garvey & Temple and the addition of Spanish and Mandarin classes. For budgetary purposes, no savings are assumed. 6.5 notices issued to the ELD Teachers. As these positions are paid with categorical funds, there will no savings to the Unrestricted General Fund.

Why 32 Teacher Preliminary Layoff Notices? (cont.) 7 layoff notices given to allow the District to decide whether or not to continue planning periods for middle school teachers. 32 teachers noticed to cover 31.1 FTE positions.

Do We Still Have to Cut More? Despite these reductions in the number of teachers, we still have to cut nearly $1.2 million more. With almost 94% of our budget in salaries and benefits, we have few other areas to reduce beyond personnel costs.

14% Reserve: Fact or Myth? 2nd Interim Report projects a total Ending Fund Balance at 6/30/12 of $6,845,023. This amount is 14.67% of total (Unrestricted and Restricted) projected General Fund expenditures for $1,944,249 of this amount cannot be spent but must be set aside (saved) by State law. Garvey does not have a 14% reserve.

2 nd Interim Report Projections Set Asides Revolving Cash $30,000 Stores$65,676 Deferred Maintenance $448,913$672,978$903,316 Required Reserves $1,399,660$1, $1,402,206 Total Set Asides $1,944,249$2,150,694$2,401,198 Undesignated$4,900,773$247,603($4,260,115)

How Do We Get a Balanced Budget? Reduce $2,130,057 for and $2,130,057 x 2 = $4,260,115 – the amount of the deficit for Garvey in This will leave $0 above the required minimum reserve in This does not account for any additional students we lose for declining enrollment next year that will impact our revenue in

What’s Next? The Governor’s May Revise will be published in the next few weeks. The May Revise will include some changes from the Governor’s original budget proposal. However, it is unlikely that these changes will significantly alter the course of action we need to pursue.