Transcript Slide 1

Governor’s Budget Proposal
for K-12 Education
Presentation to the Board of Education
January 27, 2009
State Fiscal Crisis
The widespread national economic downturn and the dire
current state fiscal crisis are substantially impacting the
ability of the State of California to sustain K-12 funding
levels.
The Governor’s budget proposal for 2009-2010 contains
substantial reductions to educational funding for the
current year (2008-2009) and significant cuts to revenue
for 2009-2010 and the next two fiscal years.
REVIEW OF 2008-2009 ADOPTED
BUDGET PLAN AND RESTORATIONS
Review of Major Items from October 28th
Board Presentation
2008-09 Adopted Budget Planned Cuts,
Reallocations and Funding Changes
The District assumed that there would be no cost of
living increase to Revenue Limit for 2008-09. That
represented a loss of approximately $1,000,000 in
unrestricted revenue for 2008-09.
The following changes were made to achieve a balanced
budget:
• Elimination of General Fund Conference Budget $26,000
• Reduce Advertising Budget by $10,000
• Moved Encroachment from Counselors to Safety
Grant - $33,000
2008-09 Adopted Budget Planned Cuts,
Reallocations and Funding Changes (cont’d)_
• Reallocated Reading Specialists to Site Funds,
reduced allocation for EL Aides at elementary $72,300
• Elementary PE/Music teachers reprioritized from
Educational Foundation – reduction of aides – $93,500
• Transfer Drama and Screenwriting at High School to
Arts Ongoing Grant Funds – $36,000
• Eliminated Transfer to Fund 20.0 for ARC - $102,142
• Used Title II funding to support class sizes - $49,000
2008-09 Adopted Budget Planned Cuts,
Reallocations and Funding Changes (cont’d)
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Eliminated Electrician position - $77,300
Eliminated 4th/5th Grade Aide support - $51,000
Reduce District Driver hours to 4.0 - $6,400
ASB Bookkeeper salary absorbed by ASB - $53,000
Reduction to School Business Certificated Days $41,500
• Restructure of District Office staff for HR/Fiscal
Services - $62,000
2008-09 Adopted Budget Planned Cuts,
Reallocations and Funding Changes (cont’d)
• Eliminate sections/Increase Class size ratios at High
School - $141,000
• Transfer Crossing Guard Cost to City of El Segundo $40,000
• Reduction of consultant cost - $20,000
• Reduction of transfer to Routine Restricted
Maintenance - $40,000
• Total Changes from 2007-08 to 2008-09:
$954,142
Summary of Changes and Restorations
October 28th Board Presentation Overview
• Increased Revenue
$665,610
– .6668% COLA to Revenue Limit
– Elimination of 6.5% deficit to Categorical
– City of El Segundo one-time $150,000
• Restored expenditures
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$479,425
Restore 50% of Upper grade aides
Add cost of Crossing guards for Sept and Oct
Increase contribution to Maintenance to 3% of expenditures
Restore Site funds for Reading Specialists
Restore full allocation of School Business Days
Restore $10,000 of Title II budget for staff development
Cover benefit increases and step and column
Uncertainties - 10/28/08 Board Presentation
The adoption of the 2008-2009 State budget represented the third
latest budget in the history of the State and still had gapping holes
in the structure.
• 2008-09
– State Budget Structural Defect
• Current Revenue Limit Deficit – $(979,436)
• Mid Year Deficit/Cuts for 2008-09?
• 2009-10
– Release of 2009-10 Proposal by Governor in January, 2009
– Assumption of no COLA – Deficit grows to???
• 2010-11
– 3.50% COLA
GOVERNOR’S PROPOSAL
FOR 2008-2009
•Midyear Cuts
• Deferrals of Revenue Limit
Governor’s Proposal
2008-2009 Mid-Year Reductions
• No Cost of Living Adjustment (COLA)
– Elimination of .6668% COLA
• Application of 4.5% additional deficit
Additional Loss of 2008-09 Revenue Limit
• Add 4.710% Deficit at Adoption
Total Cost of 2008-09 Revenue Limit Deficits
$(139,290)
$(895,300)
$(1,034,590)
$(979,436)
$(2,014,026)
Deferrals of Revenue
The Governor proposes to defer payment of revenue limit
for February to July, 2009
• Revenue Limit makes up nearly 70% of total income
• February apportionment is largest payment of revenue limit –
approximately 13% - 15% of total revenue limit – This will be an
impact to cash flow of $1,804,568 for ESUSD
• In addition to the June apportionment that was moved during the
2004-05 budget crisis and the Class Size Reduction funds that have
been bumped into July starting this year, if the Governor’s proposal
is adopted, over $3,300,000 in revenue will now be deferred to July.
• Deferrals affect cash flow and interest earnings
• District must borrow to have sufficient cash to cover expenses but
loans must be repaid by end of fiscal year on June 30th
• Reserves are critical to cover cash needs
Schedule of Reserve Accounts
FUND
General Fund – Unrestricted – Fund 01.0
Reserve for Non-Capital Expenditures - Fund 17.0
RESERVE AMOUNT 7/1/08
$2,481,488
$555,197
Reserve for Post Employment Benefits – Fund 20.0
$1,402,387
Total Reserves Available for General Fund Cash Flow
and Expenditure
$4,439,072
Add for Cash Flow Only:
General Fund – Restricted – Fund 01.0
$1,144,651
Deferred Maintenance – Fund 14.0
$949,274
Bond Fund – Fund 21.0
$378,903
Developers’ Fees – Fund 25.0
$458,424
County Facilities – Fund 35.0
$2,528,728
Total Reserves Available for General Fund Cash
Flow but must be repaid by June 30th
$9.899,052
Flexibility for 2008-09
Understanding the extreme hardship of making cuts midyear, the Governor’s Proposal allows school districts
to use restricted funds (categorical) for their general
fund expenses in the current year.
The District has identified approximately $300,000 in
one-time funds that could be transferred to backfill the
shortfall in revenue in 2008-09. But this solution
offers no relief in 2009-10.
Federal Government to the Rescue
Even if the Federal Government is able to send funds from
the economic stimulus package to California, 2% of our
total income or less than $500,000 is derived from federal
funds.
These funds are very limited in flexibility since they are part
of the NCLB legislation and are not part of the
Governor’s proposal for flexibility.
In addition, if these are not permanent changes to the
funding levels for these resources, this is a one-year
“fix,”and not a multi-year solution to our ongoing fiscal
crisis.
General Fund Revenue – 2nd Interim
June 30, 2009
16.7%
2.0%
11.7%
Revenue Limit Sources 69.4%
Federal 2.0%
State 16.7%
69.4%
County and Local 11.7%
GOVERNOR’S PROPOSAL
FOR 2009-2010
No COLA, Further Reduction of Revenue Limit, Shorten School Year to
175 days, CSR Flexibility
2009-2010 Revenue Limit
• Continuation of 2008-2009 mid-year cut to revenue
limit – Loss of COLA plus additional 4.5% = 9.685%
• Cost of Living Adjustment for 2009-2010 is offset by
deficit to eliminate it - 5.02%
• Further Reduction of the revenue limit by 2.5%
• Total deficit grows to 16.161%
• Loss in Revenue Limit funding is $(3,455,700)
Instructional School Year Proposal
• The Governor proposes to eliminate the requirement
for the 180 day instructional calendar to 175 days of
instruction to offset the additional 2.5% in revenue
limit deficit.
• Reducing the school year by 5 days would reduce
District costs – but the bargaining contracts require
that our employees be paid for all 180 days of
instruction unless negotiated with the employee
bargaining unit.
• The District cannot unilaterally cut the work year and
pay to teachers and staff.
Class Size Reduction Flexibility
• To backfill shortfall in revenue limit, the Governor
proposes to allow Districts to staff classrooms at
higher student to teacher ratios without financial
penalty.
• This proposal would assume that the Class Size
Reduction funds would be structured into a block grant
and added to a District’s revenue limit.
• The District would have the flexibility to allocate the
resources based on the priorities set at the local level.
Declining Enrollment
• The District is currently benefitting financially from
declining enrollment.
• District is paid on previous year’s ADA but only has to
staff on current year’s enrollment levels.
• But the District’s enrollment levels out in 2011-2012.
El Segundo USD Historical Data for P2
ADA
3,250
3,200
3182
3191
3,150
3108
3121
3101
3,100
3065
3054
3,050
3014
2994
3,000
2,950
2909
2,900
2,850
2,800
2,750
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
10-11
11-12
Revenue Limit - Summary
2009-10 Revenue Limit per ADA
Proposed Deficit of 16.161%
2009-10 Net Amount per ADA
2005-06 Revenue Limit per ADA
Percentage Increase in ADA
$ 6,788.44
$(1,103.05)
$ 5,650.39
$ 5,550.48
1.8%
2005-06 Average Cost per FTE for Teacher $
2009-10 Average Cost per FTE for Teacher $
Percentage Increase in Cost per Teacher
62,626
72,875
16.4%
We will be building a budget with 2005-06 revenue levels
and 2009-10 costs
Total Shortfall for 2009-2010
The District’s expenditures will exceed
revenues by $2,500,000
FTE 28
Teachers
FTE 49
Classified Staff
FTE 7
Classified Administrators
FTE 10
Certificated Administrators
0
1000000
2000000
3000000
Next Steps
Although we may not know the final result of the state’s fiscal crisis and
the state’s budget until late fall, all school districts are required to
adopt a balanced budget for the next school year by June 30, 2009.
– State Budget will most likely not be in place by then
– LACOE will require we use assumptions in the May revise if that is the latest
data and proposal
As you can see, building the district budget based on assumptions that
have yet to be validated is a very challenging process.
Developing the budget requires:
– Clarifying assumptions
• How much revenue?
• What flexibility options will be acted upon?
• How will expenditures change
Preparing for the worse case scenario
Summary
The Legislature now needs to act on the Governor’s proposal.
Absent action on their part, the District will adopt their budget
based on the assumptions in the May Revise from the
Governor.
In all likelihood, we will not have a state adopted budget until the
start of the school year.
Although this budget process is not new to school districts, the
magnitude of the reductions caused by the national and state
fiscal crisis is new.
The adoption of a balanced budget for 2009-2010 is going to take
a combination of strategies and changes to the way that our
schools and staffing levels are currently structured.
Impact on ESUSD
With the current proposal by the Governor:
• Must reduce 2008-2009 budget by $1,000,000
• Must reduce 2009-2010 budget by $2,500,000
Developing the 2009-2010 budget will take community,
parents, educators, students, staff, and all stakeholders
working together creatively and realistically to continue
to prepare our students for the challenges of the 21st
century