Escondido Union School District Budget Update

May 28, 2009

• • • •

2008-09 ESTIMATED ACTUALS

The 2008-09 budget presented on March 19, 2009 represented our revenues and expenses at that time – State Budget signed 2-20-09 The 2008-09 budget has now been transformed into our “best estimate” of our final 2008-09 position – called Estimated Actuals CDE has interpreted that the Legislative intent behind the flexibility offered through SB 3X 4 means that districts must account for all Tier III programs as unrestricted – this year!

This has created the need to completely rework all aspects of the General Fund budget

• • • •

2008-09 ESTIMATED ACTUALS

The impact of CDE’s interpretation of SB 3X 4 is that all of the categorical flexibility the district had planned to recognize in 0910, must instead be recognized in 0809 This change has the effect of increasing the 2008-09 unrestricted ending fund balance, and increasing the 2009-10 deficit spending Approximately $7.7 million of restricted balance, and $4.4 million of restricted cost is moved to the unrestricted category in 2008-09.

Most of this revenue shift is in the form of “Restricted Contributions” to the General Fund

• •

2008-09 ESTIMATED ACTUALS

2008-09 revenues have increased by about $1.0 million – $319,787 increase in Revenue Limit – result of final P-2 attendance numbers – $613,766 is the result of now having to recognize the state’s 2007-08 payment for Deferred Maintenance – requires transfer out to the Deferred Maintenance Fund (14-00) Approximately $2.6 million of unrestricted “savings” from the 2008-09 budget freeze is also factored into this ending balance

A 3-19-09 2008-09 BUDGET Beginning Balance UNRESTRICTED $21,983,419 Revenues Expenditures $106,107,617 $102,115,412 Transfers In/Out Contributions Increase (Deficit) Ending Balance $1,331,000 ($6,596,148) ($3,934,943) $18,048,476 RESTRICTED $9,132,861 GENERAL FUND TOTAL $31,116,280 $42,351,952 $57,250,944 $148,459,569 $159,366,356 $830,018 $6,596,148 ($9,132,861) $0 $2,161,018 $0 ($13,067,804) $18,048,476 B 5-28-09 2008-09 EST. ACTUALS Beginning Balance UNRESTRICTED $21,983,419 Revenues Expenditures Transfers In/Out Contributions Increase (Deficit) Ending Balance $107,098,544 $103,169,243 $1,986,449 $340,272 $2,283,124 $24,266,543 RESTRICTED $9,132,861 $40,199,676 $44,446,373 $830,018 ($340,272) ($5,416,987) $3,715,874 GENERAL FUND TOTAL $31,116,280 $147,298,220 $147,615,616 $2,816,467 $0 ($3,133,863) $27,982,417

2009-10 ADOPTED BUDGET

• • • • 2009-10 Budget includes all of the reductions approved by the Board of Education on April 30, 2009 Shifts all approved categorical flexibility to the 2008-09 year, as required by CDE Initial staffing of K-3 classrooms is at 24:1 Due to the uncertainty of the state budget situation, and our declining enrollment, the budget currently contains the dollars for about 30 regular teaching positions in excess of initial planned staffing

2009-10 ADOPTED BUDGET

• • • Includes the usual number of work days for all employee groups Includes health insurance for eligible employees capped at $10,000 per employee The budget funds retiree benefits at the pay-as-you-go amount, and does not make progress in contributing toward the district’s liability for employee Other Post Retirement Benefits (OBEP)

2009-10 ADOPTED BUDGET

• • • • School discretionary allocations are set at 2008-09 levels (80% of the 2007-08 level) School staffing formulas are adjusted for anticipated 2009-10 enrollments Includes staffing changes consistent with adjustments to available site categorical funds – For 2009-10, the Governor has proposed to eliminate the High Priority Schools Program Includes full staffing for the elementary and middle school music programs

• • • • •

2009-10 ADOPTED BUDGET

Includes reading teachers/coaches for all elementary sites Maintains counseling staffing at 2008-09 levels Custodial services are at 2008-09 levels Includes the previously discussed enhancements to the district’s special education services for autism and DHH (Deaf and Hard-of-Hearing) Continues operations of the district’s Nicolaysen Community Day School and Home Education Programs

2009-10 ADOPTED BUDGET

• • • Routine Restricted Maintenance (RRM) is funded at 2% (calculated at 2% of the total 2009-10 planned expenditures and transfers out), as allowed by SB 3X 4 The district has not planned a Deferred Maintenance Match, as allowed by SB 3X 4 The state’s Deferred Maintenance contribution is set at $613,677 for the next five years, - and is flexible in its use – We have it budgeted as a transfer out of the General Fund to the Deferred Maintenance Fund for 2009-10

A 3-19-09 2009-10 Beginning Balance Revenues Expenditures Transfers In/Out Contributions UNRESTRICTED RESTRICTED $20,047,877 $100,512,701 $97,542,084 $1,331,599 ($4,539,094) $6,800,000 $40,199,323 $51,538,417 $4,539,094 Increase (Deficit) Ending Balance ($2,900,076) $17,147,801 ($6,800,000) $0 GENERAL FUND $26,847,877 $140,712,024 $149,080,501 $1,331,599 $0 ($9,700,076) $17,147,801 B 5-28-09 2009-10 Beginning Balance Revenues Expenditures Transfers In/Out Contributions UNRESTRICTED RESTRICTED $24,266,543 $106,620,547 $100,955,326 ($1,947,748) ($7,434,435) $3,715,874 $33,337,452 $44,487,761 $0 $7,434,435 Increase (Deficit) Ending Balance ($3,716,962) $20,549,581 ($3,715,874) $0 GENERAL FUND $27,982,417 $139,957,999 $145,443,087 ($1,947,748) $0 ($7,432,836) $20,549,581

• • • •

2009-10 MAY REVISE

During the past several months, the state’s fiscal picture has continued to deteriorate State tax collections continue to be dismal – with the latest estimate by the LAO of deficit as large as $24.3 billion Last week the Governor released a two-scenario May Revision proposal – contingent on the outcome of the special election.

With the results of the special election now known, we are left with the implementation of the second, more onerous scenario

• • •

2009-10 MAY REVISION

Initial estimates of the May Revision proposal have districts losing an additional $1.6 billion in 2008-09, and $4.6 billion in 2009-10 Rough initial estimates for EUSD losses are $225/ADA for 2008-09, and $243/ADA for 2009-10 Most of these reductions are proposed to come in the form of Revenue Limit reductions –and deferrals

• • • •

2009-10 MAY REVISION

About $1.7 billion in Proposition 98 funds are proposed to be deferred to 2010-11 – Most likely this would apply to revenue limits, and would add to the current practice of deferring the April and June apportionment, along with about 32% of the CSR funding The LAO is projecting that the state could run out of cash by this summer Cash flow issues are going to be among the most serious faced by all districts for the next couple of years Adequate reserves will be critical to financial survival

• • •

2009-10 MAY REVISION

The Governor’s proposal includes allowing the school year to be reduced by as much as seven days (subject to negotiations) While no details have been released, the Administration is rumored to be looking for further flexibility options for LEAs – CSR program is a possibility – – LAO has recommended some program closures (Year-round schools, CTAP, child care extended day) Home-to-school transportation Contracting out for selected services is also rumored to be part of the Governor’s proposal

• • •

2009-10 MAY REVISE

The Governor’s original May Revision proposal also included borrowing (in the form of Revenue Anticipations Warrants – RAWs) of $5.5 billion In response to severe criticism related to this borrowing from the LAO, the Governor has amended his proposal – to include an additional $5.6 billion of program cuts These reductions are not to K-12 education – but will affect higher education, social services, and corrections

2009-10 – FEDERAL STIMULUS

• • Indirectly, the additional reductions to higher education will impact the State Fiscal Stabilization Funding (SFSF) to be received by LEAs – Higher education is to share in the SFSF funding based on their proportionate share of the reductions, thus, as their reductions go up, our share of SFSF will go down SFSF monies will need to be accounted for in the the Restricted General Fund – initial amount for EUSD is $4.4 million – meant to backfill for 2008-09 losses

• • •

2009-10 FEDERAL STIMULUS

A second amount of SFSF funding should arrive during 2009-10 – the amount is intended to help backfill the categorical losses This amount is not yet known and is the amount that could be affected by the need to provide SFSF funding to higher education With greater state reductions now imminent, there likely won’t be any SFSF money to help backfill Proposition 98 losses in 2009-10

2009-10 FEDERAL STIMULUS

• All forms of federal stimulus money are categorized as restricted – – – Since all restricted programs must be budgeted to balance to zero during the year, this means adding cost to the budget to offset any revenues – resulting in a larger budget, higher required reserves and larger RRM contribution Indirect costs may be charged Interest will be charged on remaining balances of federal dollars –

• • • •

2009-10 FEDERAL STIMULUS

In order to improve the district’s “bottom line” in the unrestricted fund, costs will need to be identified and moved into the SFSF restricted resource The latest date to obligate federal stimulus funds is September 30, 2011 (three years of availability) Districts are cautioned that this is one-time money Districts have been advised to plan for the careful use of the stimulus funds over the next two to three years, depending on district priorities

• •

2009-10 FEDERAL STIMULUS

The estimated amount of supplemental Title I stimulus dollars is included in the 2009-10 budget - $2.2 million – Subject to all of the regular provisions of Title I law, including timelines for expenditure Special Education IDEA supplemental funds are now estimated and included in the 2009 10 budget – – EUSD to receive about $785,000 for 2008-09 2009-10 funding reported to be about $3.1 million

2009-10 FEDERAL STIMULUS

• • • Rules related to the IDEA stimulus funds limit the use by districts for purposes of offsetting special education encroachment to one-half of the amount of “new money” Thus a district that normally receives $2 million in IDEA funding, but receives $3 million with the stimulus, is thus limited to using just $500,000 to offset encroachment The district will need to set priorities for the appropriate use of this funding

B 5-28-09 2008-09 EST. ACTUALS Beginning Balance UNRESTRICTED $21,983,419 Revenues Expenditures Transfers In/Out Contributions Increase (Deficit) Ending Balance $107,098,544 $103,169,243 $1,986,449 $340,272 $2,283,124 $24,266,543 RESTRICTED $9,132,861 $40,199,676 $44,446,373 $830,018 ($340,272) ($5,416,987) $3,715,874 GENERAL FUND TOTAL $31,116,280 $147,298,220 $147,615,616 $2,816,467 $0 ($3,133,863) $27,982,417 C 5-28-09 MAY REVISE 2008-09 Beginning Balance UNRESTRICTED $21,983,419 Revenues Expenditures $103,301,714 $103,169,243 Transfers In/Out Contributions Increase (Deficit) Ending Balance 1,986,449 640,272 (1,213,706) $20,769,713 RESTRICTED $9,132,861 GENERAL FUND TOTAL $31,116,280 $44,992,486 $44,446,373 $148,294,200 $147,615,616 830,018 (640,272) (924,177) $8,208,684 2,816,467 0 ($2,137,883) $28,978,397

B 5-28-09 2009-10 Beginning Balance UNRESTRICTED RESTRICTED $24,266,543 $3,715,874 Revenues Expenditures $106,620,547 $100,955,326 $33,337,452 $44,487,761 Transfers In/Out Contributions Increase (Deficit) Ending Balance ($1,947,748) ($7,434,435) ($3,716,962) $20,549,581 $0 $7,434,435 ($3,715,874) $0 GENERAL FUND $27,982,417 $139,957,999 $145,443,087 ($1,947,748) $0 ($7,432,836) $20,549,581 B 5-28-09 MAY REVISE 2009-10 Beginning Balance UNRESTRICTED RESTRICTED $20,769,713 $8,208,684 Revenues Expenditures Transfers In/Out Contributions Increase (Deficit) Ending Balance $102,552,009 $100,671,100 ($1,947,748) ($7,119,425) ($7,186,264) $13,583,449 $37,785,900 $53,114,019 $0 $7,119,435 $0 GENERAL FUND $28,978,397 $140,337,909 $153,785,119 ($1,947,748) $10 ($8,208,684) ($15,394,948) $13,583,449