Transcript 1st Interim Report 2013-14 - Palm Springs Unified School

2013/14 FIRST INTERIM REPORT
FOR THE 13/14 FISCAL YEAR THRU OCTOBER 31, 2013

Purpose of the Interim Report:
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School districts are required to certify their financial position twice
during each fiscal year. The certification addresses a district’s ability to
meet its financial obligations for the current and two subsequent fiscal
years.
Certifications include the following options:
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Positive Certification – will be able to meet financial obligations
Qualified Certification – uncertainty around ability to meet obligations
Negative Certification – will NOT be able to meet financial obligations
The LOCAL CONTROL FUNDING FORMULA (LCFF):
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New funding formula for California schools (most significant change in 40 years)
 Provides for a Base Grant for all students
 Provides a Supplemental Grant based on English Language Learners (ELL), Free
and Reduced Priced Meal (FRPM) eligible students, and foster youth unduplicated
count
 Provides a Concentration Grant based on ELL, FRPM, and foster youth
unduplicated count students above 55% of the District wide enrollment
Districts must develop a Local Control Accountability Plan (LCAP) that will align the
academic plan with the District expenditure plan each year
 LCAP is a work in progress
Districts will no longer get a Revenue Limit guarantee but will have revenues
fluctuating based on student demographics and changes in ADA
LCFF funding in FY 2013/14 will not be finalized until July, 2014, therefore making
current year actual revenues uncertain until that time
LCFF targeted funding is phased in over 8 years through fiscal year 2020/21
1st INTERIM MULTI-YEAR PROJECTION
Unrestricted/Restricted General Fund Combined
Fiscal Year 2013/14
1st Interim
Budget
Budget
FY13/14
FY14/15
FY15/16
Revenues
$
188,308,372
$
192,723,451
$
205,663,190
Expenditures
$
205,023,323
$
187,859,547
$
190,136,777
Excess/(Deficiency)
$
(16,714,951)
$
4,863,904
$
15,526,413
Transfers In
$
11,597,915
$
5,944,862
$
5,943,362
Transfers Out
$
44,466,971
$
1,029,345
$
1,029,345
Net Increase/(Decrease)
$
(49,584,007)
$
9,779,421
$
20,440,430
Beginning Fund Balance
$
71,197,162
$
21,613,155
$
31,392,576
Ending Fund Balance
$
21,613,155
$
31,392,576
$
51,833,006
Revolving Cash
$
100,000
$
100,000
$
100,000
Stores
$
170,000
$
170,000
$
170,000
Reserve for MAA
$
527,395
Legally Restricted
$
4,263,472
$
7,053,978
$
9,720,566
$
7,484,709
$
5,666,667
$
5,734,984
$
9,067,578
$
6,116,182
$
10,881,969
$
9,535,964
$
9,535,964
$
2,749,785
$
2,749,785
$
10,042,266
$
2,897,472
$
51,833,006
Components of Ending Fund Balance:
3% Reserve for Economic
Uncertainty (STATUTORY MINIMUM)
Unassigned Reserve
Year 2 LCFF Base
LCFF Supplemental/Concentration
Year 3 LCFF Base
LCFF Supplemental/Concentration
Ending Fund Balance
$
21,613,154
$
31,392,576
Unassigned Reserve & New LCFF Funds:
1st Interim
FY13/14
Unassigned Reserve
$
9,067,578
Year 2 LCFF Base
LCFF Supplemental
Year 3 LCFF Base
LCFF Supplemental
TOTAL RESERVES TO ADDRESS
$9,067,578
Budget
FY14/15
Budget
FY15/16
$
6,116,182
$
10,881,969
$
$
9,535,964
2,749,785
$
$
$
9,535,964
2,749,785
10,042,266
$
2,897,472
$36,107,456
$18,401,931
SEE NEXT SLIDE FOR CAUTIONS AND CONSIDERATIONS
CAUTIONS & CONSIDERATIONS FOR UNASSIGNED & LCFF:
 Cautions:
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LCFF funding in current year 13/14 still uncertain
Future LCFF funding not guaranteed
Cost of LCAP not known at this time
Implementation over 8 year period creates uncertainty of funding
Design of LCFF will create competing interests seeking share of pie
Class Size Reduction tied to the funding – 8 year implementation
Categoricals rolled into LCFF must still be addressed
Considerations:
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Class Size Reduction
Implementation of LCAP
Salary Increases
Educational Goals/Programs
Q&A:
Q: What makes up the $21,751,651 Unrestricted General Fund (03) Contribution to the Restricted General Fund (06)?
A: Special Education Encroachment
$9,159,276
Transportation Encroachment
1,452,833
Routine Repair & Maintenance
4,487,482
Certain LCFF Contributions (a)
6,650,283
Site Contributions
1,777
(a) In this transition year to LCFF, some of the categoricals rolled into LCFF still have their expenses in Restricted
Fund (06), while the revenues are included in the LCFF revenue in Unrestricted Fund 03. It is anticipated that the
impacted categorical programs (EIA and Transportation) will be transferred into the Unrestricted Fund 03 by the time
the 2nd Interim Report is prepared and CDE has issued more detailed guidelines for the LCFF.
Q: What is the relationship of the General Fund to Fund 17:
A: Fund 17 is titled Special Reserve for Other Than Capital Projects and the District established this reserve years
ago in order to have funds available for such things as the initial expenses of a new school. Sources of the funds
included mandated cost reimbursements and lottery receipts. This fund had a balance of $12,603,242 at the beginning
of the current fiscal year. Painted Hills Middle School is in the third year of startup administrative costs in the
amount of $1.3 million. Rancho Mirage High School (RMHS) is in the first year of startup operational costs, in the
amount of $2.5 million. The General Fund is financed this way for a new school’s first three years of operation.
Therefore, this reserve fund will end the current year with an estimated balance of $8,850,242. Two more years of
RMHS at $2.5 million will reduce the balance in this fund to less than $4,000,000 in 2016. This has been an excellent
reserve in lessening the impact of the operating expenses of new schools. Additional funding to this reserve could be a
consideration in prioritizing available funds under the new funding formula.
Q&A (Cont):
Q: What is the relationship of the General Fund to Fund 40?
A: Fund 40 is titled Special Reserve for Capital Projects. The District established this reserve years ago in order to
account for funds received primarily through capital outlay rebates and reimbursements for construction/
modernization projects. During the current fiscal year, Redevelopment funds have been transferred into this fund
from the General Fund. The purpose of these funds is for capital and maintenance type projects. For many years
these funds were housed in the General Fund with a specific reserve designation attached to them. A side advantage
of this was that it provided the General Fund with a large cash reserve. A disadvantage was that it made the General
Fund appear to some to be maintaining excessive fund balances. Fund 40 funds various capital programs, such as
Deferred Maintenance, Routine Repair & Maintenance, and the District’s Educational Technology plan.
Q: What is the relationship of the General Fund to Fund 14?
A: Fund 14 is the Deferred Maintenance Fund. For many years this fund has been used for major renovations and
repairs to school properties. Prior to the recent recession districts were required to contribute ½ of 1% of their
General Fund to this fund and that amount was matched by the State. The recession stopped contributions by the
State and most districts “swept” their deferred maintenance funds into the Unrestricted General Fund. PSUSD
continues to maintain this fund, even without State assistance. District contributions are made from the
redevelopment fees in Fund 40. Currently, this fund has a projected fund balance of approximately $750,000 as of
June 30, 2014.
CONCLUSIONS
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The District CAN meets it financial obligations for the current fiscal year and the
two following fiscal years, and it is recommended the Board approve the 1st Interim
Report with a Positive Certification.
The District has positioned itself well over a number of years to maintain a healthy
operation even under poor state and national financial conditions.
The new LCFF financing model will bring about major changes to how California
school districts are financed. Uncertainty of funding is a concern districts must take
into consideration.
The new LCAP requirements will have a dramatic impact in how school districts
allocate their resources, but the full impact of those changes will not be known
completely for some time.
For the first time in over six years the District has the opportunity to address
increases in the budget as opposed to budget cuts, but must do so cautiously until all
of the intricacies of the new laws are fully known and understood.