Transcript Lynette Kerr - SBUSD.. - South Bay Elementary School

South Bay Union School District
Presented at the
South Bay Union School District Budget Meeting
September 27, 2014
By Lynette Kerr, Director of Fiscal Services
2014-2015 State Level
 Overall budget policy decisions continue to be reflective of slow but
seemingly steady economic improvement
 State revenues surge for a variety of reasons, but:
 The Department of Finance (DOF) lowers its forecast for 2015-16 Local Control
Funding Formula (LCFF) funding levels significantly
 The revenue vitality we have been concerned about is coming into play
 There are no statutory or constitutional guarantees for out-year LCFF funding
levels
 The real story is on the expenditure and reserve side of the equation
© 2013 School Services of
California, Inc.
Expenditures – Where the Action Is
 While LCFF funding projections take a marked turn
downward in 2015-16, expenditures shoot up
 California State Teachers’ Retirement System (CalSTRS) contributions
go up for employers, employees, and the state beginning in 2014-15
 But by far the biggest impact is on the employer contribution which
will increase each year and represents a total increase of 4.33% BY 201617, the third year of the multiyear projection
 Beginning in 2015-16, California Public employees’ Retirement System
(CalPERS) rates also rocket upward
© 2013 School Services of
California, Inc.
The LCAP is King!
 2014-15 is the first year for which the Local Control and Accountability
Plan (LCAP) guides expenditures
 And the differences between district funding levels and flexibility are dramatic
 The State Board of Education (SBE) is struggling with demands for more
flexibility on one hand and tighter restrictions on the other
 For high-funded districts, about two-thirds of the new money is targeted
for improved or increased services to students
 The targeted funding can be used for across-the-board salary increases in only
very limited circumstances
 If the targeted funds are to be used for compensation, they have to be tied to
activities that “increase or improve” services to students.
© 2013 School Services of
California, Inc.
2014-2015 State Level - Recap
 The 2014-15 State Budget continues increased funding for the Local Control
Funding Formula (LCFF) which will continue the restoration of cuts that
began in 2008-09
 The new funding formula will be over one-third of the way to full implementation
after the first two years
 The LCFF increases of individual LEAs can vary significantly
 The Governor’s proposed to eliminate the cross-year apportionment deferrals
of $5.5 billion for school districts
 The Legislature reduced the deferral buy back by $900 million
 At their peak in 2011-12 K-12 deferrals totaled $9.4 billion
 Increased STRS/PERS contributions will have a material impact on LEA multi-
year projection budgets
 The Local Control Accountability Plan became one of the most important
considerations in the allocation of resources for districts
© 2013 School Services of
California, Inc.
Base Year Funding and LCFF Target
 A school district’s LCFF entitlement is based on three key elements:
 Its base year funding in 2012-13
 The demographics of its student population, specifically the percentage of
students who qualify for supplemental/concentration grants
 The state appropriation for LCFF
 In general, a school district is better off under the LCFF if:
 Its base year funding is below the statewide average
 The proportion of students qualifying for supplemental/concentration
grants is above the statewide average
 South Bay USD is projected to be 70.86% unduplicated for 2014-15
© 2013 School Services of
California, Inc.
LCFF Implementation Phase
 There are two distinct phases of the LCFF: (1) the eight-
year implementation phase, and (2) the fully funded phase
 The eight-year implementation phase is not set in statute and
can be longer or shorter than eight years, depending upon the
annual LCFF appropriation
 Numerous fiscal inequities could arise during the
implementation phase
 There is no statutory language for cost-of-living increases under
LCFF
 Funding is subject to state allocation
© 2013 School Services of
California, Inc.
LCFF – What it Does
 The LCFF makes fundamental changes to how we allocate state Proposition 98
revenues to schools
 There are direct parallels with how we have funded schools in the past
 The LCFF base grants are like revenue limits
 The LCFF base grant adjustments – class-size reduction (CSR), CTE,
supplemental grants, concentration grants – are like categorical programs
 At full implementation, the LCFF will fund every student at the same base rate
 Over time, most school district and charter school base grant funding will
equalize to the same level
 The LCFF provides that each school district receive at least as much state aid
in 2013-14 and future fiscal years as the district received in 2012-13
© 2013 School Services of
California, Inc.
South Bay Union School DistrictRevenue Comparison
2007-08
Revenue Limit
$2,104,482
State Categoricals-LCFF Base
621,370
Deferred Maintenance-LCFF Base
15,254
Total
$2,741,106
2014-15 (Budget Adoption)
Local Control Funding Formula (LCFF) $3,213,794
•
•
Based on updated FCMAT Calculator (5/8/14)
Based on 2013-14 P-2 ADA & CALPADS Data
South Bay Union School DistrictDistrict’s General Fund Deficit
2014-15 Budget Adoption:
Revenue:
$ 4,487,605
Expense:
4,638,776
Sub-total
(151,171)
Transfers Out (Charter-SE) (54,635)
Fund Balance Change
$ (205,806)
Deficit spending occurs when expenditures and transfer out
exceed revenues and other sources
South Bay Union School DistrictDistrict’s General Fund Deficit
A deficit is considered a “structural deficit” if the “on-going”
expenditures and transfers out exceed on-going revenues and
other sources.
2014-15 Adopted Budget - deficit adjusted for identified one-time
expenditures
General Fund:
Fund Balance Change
($205,806)
One-time Expenditures
Core Standard (RS 7405)
$80,866
Prop 39 (RS 6230)
54,689
OPEB-Retiree Benefits
43,258
Structural (on-going) Deficit
($26,993)
Charter Fund:
 Deficit spending
•
•
Dependent charter
Appropriate to be included in district deficit discussion
Budget Review/Assumptions
Key Data Points
• Revenues
• Enrollment
• Attendance rate
• Unduplicated percentage
• Class size
•
Expenditures
• Step & Column
• Per 2014-15 C & S $58,777
• Staffing levels
• Student/teacher ratios
Budget Planning
Other Considerations
• Balanced Budget
• LCFF “Reset” State Funding
• Every LEA should plan for a balanced budget
•
Understanding on-going vs one-time revenues and
expenditures
•
Carryover is considered a “one-time” resource
•
Draw-down of ending balance should be:
• Planned
• One-time resources should not be used for ongoing
programs or ongoing employee compensation
Budget Planning
Other Considerations (continued)
• Establishing a Local Reserve Level
SB 858 requires districts that adopt an ending fund balance for 2015-16 in
excess of the minimum reserve requirement identifying the amount in excess
and prepare a statement that substantiates need for the excess
• Considerations
•
Cash flow
•
District’s deferral level in 2011-12 was $587,320
•
Demographic changes, i.e., declining enrollment
•
Local
•
Funding Risk
•
Under LCFF, higher funded districts have a higher risk in
economic downturns
Budget Planning
Other Considerations (continued)
• Identifying Annual Set-asides
•
Facilities – long-term planning
•
•
Districts no longer receive restricted funding for deferred
maintenance projects
Textbook Adoptions
•
District’s no longer receive a per ADA allocation restricted to
meet state textbook adoption requirements
• Impact of increased STRS/PERS contributions
Currently the subject of ongoing conversations, subject to
change
• Initial projection for SBUSD
•
•
•
2015-16
2016-17
$47,266
$97,479
• Local Priorities
• LCAP
•
Budget must remain aligned with LCAP