Transcript EGEA Presentation to EGUSD School Board January 17, 2012

Budgeting, Bargaining and its Effects
EGEA PRESENTATION
TO
EGUSD SCHOOL BOARD
JANUARY 17, 2012
School Services Presentation
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School Service presentation only focused on
expenditures.
General agreement with exceptions on School
Services expenditures report
Complete picture would have included revenues
EGEA’s major disagreement is over budgeting
philosophy regarding revenue forecasts employed.
Problem Solving during Difficult Times
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EGEA acknowledges the difficulties we have all faced
with cuts and the continued uncertainty in funding
education, the huge increases in cost of health care,
and the need for fiscal solvency.
EGEA also acknowledges the positive decisions that
EGUSD has made since the economic difficulties
starting in 2008-2009.
 Using Reserves and Federal Stimulus money in
2008-2009 and 2009-2010 to save people and
programs
 Creating an early retirement program to keep less
senior employees
 Collaborating on the 2 year agreement
 Paying one time stipend, from Federal Jobs money
However…
The decisions that have been made the
past year has caused great anxiety,
resentment, distrust and the
destruction of the positive relationship
between the District and EGEA and
between the District and its
employees.
WHY?
History
2010-2011
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EGUSD projected a need to cut $60 million for 20102011 and 2011-2012
EGUSD and EGEA signed a 2 year agreement
EGEA members sacrificed over $ 20 million PER YEAR in
concessions including furlough days, compensation cuts,
loss of lottery compensation, freeze in column, increased
health care co-pays
In addition, class sizes were raised, programs were
reduced leading to over 200 EGEA positions eliminated
EGEA members vote 89% to ratify agreement
Budget vs. Reality 2010-2011
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District projected ending fund balance of around $15 million
for 2010-2011 (Original Budget)
District received federal jobs funds- allocates ½ to employees
State allocated an additional $17 million for 2010-2011
Deferral
District ended 2010-2011 with $46. 8 million ending fund
balance (Unaudited Actuals)
District projections off by over $30 million
History
2011-2012
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In the beginning of 2011, the District projected an additional
$40 million loss of revenue for 2011-2012 based on a
projected Base Revenue Limit ADA cut of $679.
School Services only recommended using a cut of around $330
BRL ADA. Many Districts used this number, less, or no cuts.
The amount of actual cuts to the District for 2010-2011 will be
around $3 million dollars.
Projected $40 million in cuts. Reality $3 million.
Budget Projections Have Consequences
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District presented Plan A (flat funding) and Plan B ($40 million cut).
District acts on Plan B.
Board approved over $34 million Budget reductions in March 2011includes class size 30-1, increased secondary class size, eliminated
computer resource teachers, reduction in library and counseling
services, health care cap and elimination of lottery compensation
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Over 800 certificated staff received preliminary layoff noticessome with over 10 year experience in the District
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Over 400 certificated staff are actually laid off
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Fortunately, all the certificated employees had the opportunity to
return after the state budget was signed.
Plan A
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The District operated under plan B until State Budget was signed in
June, then switched back to Plan A.
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Plan A- If flat funding, maintain 2010-2011 staffing levels, AND a
Health Care Cap and the elimination of lottery compensation.
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Even though the District received (will receive) over $45 million
dollars in unanticipated revenue after we made our 2 year
agreement and will have an ending fund balance of over
$60 million, the District felt it necessary to continue to demand a
health care cap and loss of lottery for the 2011-2012 Contract.
Unrestricted Ending Fund Balance
$70,000,000.00
$60,000,000.00
$50,000,000.00
$40,000,000.00
$30,000,000.00
$20,000,000.00
$10,000,000.00
$0.00
2007-2008
2008-2009
2009-2010
Unaudited Actuals
2010-2011
1st Interim
2011-2012
Why?
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What is the District’s rationale?
Have to PLAN for the worst and HOPE for the best.
The District’s hands are tied because of decreased
state funding and increased cost in health.
Here We Go Again
It is not planning for the worst- it is planning for the
worst-worst, worse case
Important decisions are being made based on
extreme and unrealistic projections
Projected Cuts vs Actual Cuts
Projections vs Reality
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
2010-2011
2011-2012
Projected Cut
2012-2013
Actual Cut
2013-2014
Cuts in Funding
Base Revenue Limit per ADA Cuts
2008-2009
2009-2010
0
2010-2011
0
2011-2012
2012-2013
-13
-100
-200
-209
-300
-400
-373
-500
-600
-700
-800
-900
-941
-1000
Actual Cuts
Projected Cut
2013-2014
0
Cuts In Funding 2
Base Revenue Limit per ADA Cuts
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
-373
-373
-373
-373
-373
-373
-209
-209
-209
-209
-209
-941
-941
0
-200
-400
-600
-800
-1000
-1200
-1400
-1600
-1800
Actual Cut 2008-2009
Actual Cut 2009-2010
Actual Cut 2011-2012
Projected Cut 2012-2013
What to Do Now?
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EGEA understands the District has to plan for the uncertainty of
the State budget based on possible cuts to education next
year
EGEA understands the problems of increased cost in health
care.
EGEA does NOT understand the continual use of extreme
projections, that never come true, and lead to the continual
threat of lay-offs, increased class sizes, reduction in important
educational services and a health care cap.
Start protecting educational services and treat your employees
with respect.
Current Economic Trends
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“State’s jobless rate eases a bit - Unemployment in
California is falling, as the economy seems to be emerging
from its spring-summer slumber.”
- Sacramento Bee November 19, 2011
“Jobless rates drop- Regions is Lowest in 2 1/2 years…;
State trend also good.” - Sacramento Bee December 17, 2011
“The job market is looking healthier, and UCLA forecasters
say the California economy is finally kicking it up a notch.”
- Sacramento Bee December 7 2011
Economic Reports
Legislative Analyst’s Office (LAO) November 11th Report
 “By making very difficult budgetary decisions- including
trigger cuts- the legislature and the Governor have
strengthened the states fiscal condition considerably.”
 $12.8 Billion budget problem for 11-12 and 12-13
 Forecast Proposition 98 minimum guarantee increase of $4
Billion for 12-13
 Forecast Proposition 98 minimum guarantee increase of
4%-5 % for each of the next 5 years
Trigger Cuts
California Department of Finance Revenue
Forecast/Determination December 2011
 Revenue shortfall for 2011-2012 $2.2 billion and
not $3.6 billion in LAO report
 Trigger Cuts- $248 Home to School Transportation;
$79.6 million Proposition 98
 Around $3 million cut for EGUSD and not the
projected$13-17 million cut
Governor’s Budget Proposal
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Governor’s Proposed Budget January 2012
“California fiscal condition is improving. A year ago, the state
faced an immediate $26.6 billion shortfall and future
estimated annual budget gaps of $20 billion. This year the
state faces a $9.2 billion budget problem and the future
budget gaps of $5 billion or less.”
Tax increase or not
Depends of how state legislature acts
Given light of economic trends, recent economic data, the
District needs to re-evaluate its extreme revenue projections.
Where Do We Go From Here?
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We must recognize each other’s interests and positive intents.
We must double our efforts to reach an agreement before
March 15th to avoid lay-offs.
We should recognize an agreement as possible even without
new taxes if more probable and realistic forecasts are
employed.
We must not forget our own educational imperatives while
dealing with budget restrictions.
EGEA has always been willing to do what it could to properly
support the needs of the entire District and will continue to do
so.