1. Budget Recommendations for Denver Public Schools 2009-2010 Budget Year 1/29/2009 1

2. 2009-2010 budget recommendation and key assumptions Currently, we are proposing a 2% cut to schools’ base funding dollars and similar cuts to departmental budgets Even after these cuts, there is a need for conservatism because of the tremendous uncertainty we are facing Key Revenue Assumptions: – Enrollment – projecting slight increase to 70,338 in 2009 from 70,083 – State rescission – currently projected at $9 million – Decrease of 15% expected in interest earnings and specific ownership taxes as compared to where we were projected to be in 2008-2009 – Decrease in pension savings to one third of originally projected $20m 2

3. With the aforementioned massive financial pressures on DPS, what does this mean for the 2009-2010 budget? (continued) Key Expenditure Assumptions: – Inflationary costs such as utilities, fuel, software licenses projected to remain within inflation – Class Size Relief Fund to increase slightly as compared to 2008-2009 – Reduce spending on capital maintenance to the statutory minimum level of $307 per student – All weighted SBB allocations to remain flat (except for SBB base) 3

4. As we cautiously move forward, we need to be fully aware of our risks and opportunities: Upside: – Enrollment greater than projected - $2-5 million – PERA merger - $15-30 million – Federal stimulus plan proposes significant increases to Title I, Title VI and significant funds for construction grants Downside: – Unfavorable Mill Levy freeze court ruling - $5-10 million – Additional state rescission in 2009-2010 - $5-10 million – Increased PCOPS costs - $7-17 million 4

5. Summary of 2008-09 State Rescission and 2009- 2010 cuts 2008-09 - On January 19, the Governor’s Office recommended to JBC $52 million in general fund cuts to K-12 – At this point, we think the impact to DPS would be $3 million, but could increase – Joint Budget Committee to review in early February 2009-10 - On January 27, Governor’s Office recommended to JBC $128 million in cuts to K-12 – At this point, we think the impact to DPS would be $9 million – Could increase or decrease in legislature 5

6. Summary of the House approved American Recovery and Reinvestment Act of 2009 $15 million for Title I-A for DPS $3-6 million in various deductions – for example, choice transportation, supplemental services, charter/private schools, state deductions $9-12 million would be total net number to schools The use of these funds will be subject to rules and guidelines yet to be defined $9 million for Title VI for DPS These funds could be used to increase services provided in our school buildings such as high school transition services, speech language and occupational therapy positions, multi lingual assessment teams $31 million for Construction grants for DPS to modernize and repair schools Other K-12 funding to be distributed nationally: $1 billion for Title II-D Education Technology $39 billion to states to address K-12 and higher education budget cuts 6

7. We have the following mitigations we could choose to implement in the event we are adversely impacted: Freeze on capital spending – $5-10 million Salary freeze – $15 million Lower pension costs - $5-15 million Reduction in salaries to match reduction in state revenue Reduction in Force/Freeze on hiring Additional cuts to departments or schools – TBD 7