Transcript Budget Development 2011-201 2 SAN RAFAEL CITY SCHOOLS Statu s, Up d ates, & Challenges B o a r d o f E d uca t i.

Budget
Development
2011-201 2
SAN RAFAEL CITY
SCHOOLS
Statu s, Up d ates,
& Challenges
B o a r d o f E d uca t i o n
M e et i n g
Fe b r uar y 2 8 , 2 01 1
HOW BAD IS IT?
• In the past 3 years alone, funding for schools have been cut by more
than $18 billion – (Approx. $1900 per student)
• Defers more than $2 billion in funding owed to schools and students to
2012-2013.
• Over past 3 years – more than $7 billion in funding owed to K-12
education has been deferred.
• Schools now receive approximately 80 cents for ever $1 promised
under State law.
HOW BAD IS IT?
• 174 school districts on brink of fiscal disaster
• Of the 30 largest school districts – 16 are reducing the
number instructional days
 Educational funds for the state’s neediest students
(categorical programs) have been cut by 20%
CURRENT STATE BUDGET GAP
Current Year
Budget Year
Reserve
$8.2 Billion
$17.2 Billion
$1.0 Billion
Total Budget GAP: $26.4 Billion
GOVERNOR BROWN’S PROPOSED
INITIATIVE
 Requires 2/3 vote of both the Assembly and Senate, and
majority vote of CA voters
 Would extend current rates for personal income tax, sales and
use tax, vehicle license fees , and the lowered dependent tax
credit
 Would maintain San Rafael City School’s 2011-12 revenue at
approximately current -year levels (minus $ 18/ADA)
 SRCS would still need to make budget cuts of $3 million over
the next year, because of a loss of state revenues
BUDGET CONTINGENCY PLAN
 Governor’s Budget assumes that the temporary taxes are
extended by the voters for 5 more years
 Budget also proposes that additional reductions be made
in the event that the tax extensions are not approved
 This leaves schools in a position of needing at least two
plans
 A plan for if the election passes and a plan for if the
election doesn’t pass
 Additionally, economic changes between now and
enactment of the 2011-12 Budget could also cause a
revision, up or down
GOVERNOR’S BUDGET PROPOSAL
 $12.5 billion in cuts to State programs
 Extensions of the temporary taxes
 Must be approved by Legislature in March
 Must be approved by voters on June Ballot
 No Plan B if they don’t pass
 Flat funding for K-14 Education
 $18 per ADA reduction SRESD
 Extend Flexibility for Tier III Programs to 2014-15
 Extend K-3 CSR Program Flexibility to 2013-14
WITHOUT GOVERNOR BROWN’S
PROPOSED INITIATIVE
 California revenue would fall more than $8 billion if the initiative
does not pass
 Governor Brown did not propose a budget with the lower level of
revenues that would result from the sunset of the temporary tax
provisions
 Estimates vary on how much school funding would drop.
 The most conservative estimate is that school revenue would drop by
$1,000 per student (assuming Prop 98 would be suspended again in
2011-12).
 For planning purposes SRCS believes a prudent estimate is that
$330/ADA would be lost if Prop. 98 is suspended.
 SRCS would have to develop a ‘bridge’ spending plan for 2011 2012, with the potential that further cuts would be needed in
2012-2013 due to loss of Federal Jobs funds.
LEGISLATIVE ANALYST OFFICE (LAO):
UNSUCCESSFUL BALLOT INITIATIVE
 LAO issued recommendations for the
Legislature to consider for reductions in State
programs if the proposed ballot initiative is
unsuccessful – “All Cuts Budget”
 LAO’s recommendations would result in an
estimated reduction in K -12 funding of
$760/pupil
LAO SCENARIO:
EDUCATION PROGRAMS FOR S TATE TO CONSIDER FOR
REDUCTIONS IF BALLOT M EASURE DOES NOT PAS S
 Prop 98 (K-12 recommendations)
 Reduce K-12 General Purpose Funding by
2.2%
 Eliminate K-3 CSR
 Change Kindergarten start date
 Eliminate State Funding for Home-to-School
Transportation
 Reduce Economic Impact Aid 20%
 Suspend Quality Education Investment Act
(QEIA)
WHAT DOES THIS MEAN FOR SRCS?
Elementar y School District
 Potential Cut of $3 million
 Potential Increases in K-5 class sizes at San Pedro
($251,900)
 Potential Increase in K-3 class size all other schools ($1.9 million)
 Loss of 12.0 FTE teachers
 Loss of Home-to-school transportation services
($215,000)
 Loss of critical services at schools supported by EIA ($190,000)
 Loss of other services supported by the GF
($450,000)
estimated
WHAT DOES THIS MEAN FOR SRCS?
High School District
 Potential Cut of $1.3 million in Fair -share reductions
 Current Fair-share $845,000 (10-11)
 Maintains minimum $120 per ADA
 Potential Increases in 9-12 class sizes
 Loss of CAHSEE Funds and sections
 Loss of important services at schools supported by EIA
$28,000
 Loss of other services supported by the General Fund
District
Budget Gap
Scenario 1
Budget Gap
Scenario 2
Sacramento City
$9.05 million

Reduce Adult Ed

Class size to 35:1- MS

Reduce staff pay
$22.3 million

Eliminate busing

End stipends

Eliminate Adult Ed

Class size to 40:1 – HS

Class size to 36:1 – MS

Class size to 34:1 – Elem
San Juan Unified
$36.7 million

Pink slip 357 teachers

Increase K-2 class size

Eliminate Adult Ed

Eliminate all mandatory
busing
$49.6 million

Unknown - Board will
discuss & determine
$700,000
$12.4 million

Eliminate 66 classified
positions

Eliminate 37 teaching
positions

Eliminate 4.5
administrators

Cut operating expenses by
$1.8 million
Folsom-Cordova
Not just in
San Rafael..
AND WHAT ABOUT THOSE RESERVES?
Current reser ves in the Elementar y School District are inadequate
to address the potential cuts for even one year (2011-12)




One-time State Flexibility (Tier 3)
Mid-year budget cuts
Available
Total available
$1 .1 million
$ 725,000
$ 350,000
$ 2,175,000
Note:
 Identified reserves are one-time dollars
 Does not include Reserve for Economic Uncertainty.
 Reduced reserves mean less cash-on-hand to manage payroll and other
cash needs due to State deferrals
USING RESERVES NOW?
Districts continue to have the option to lower their minimum
budget reserve for economic uncertainties to one -third of the
normal requirement –
Should a district consider this option?
Answer:
No!
 Maintaining the minimum level of reserves is not adequate to protect
LEAs from negative surprises
 Having a healthy reserve has never been more important
 Relying on reserves alone to solve a structural budget imbalance is
not the answer
 Reserves are one-time dollars and are not all cash
 All federal stimulus funds have been
distributed & spent by September
2011.
 All federal Jobs funding must be spent
by September 2012
 State can no longer borrow from local
governments (Prop 22)
 Temporary tax hikes enacted in 2008
are expiring
The state will eventually have to cover
other large payments:
 Unfunded liabilities of at least $100
billion in government employee pension
funds.
 A $10 billion deficit in the Unemployment
Insurance Fund.
 Repayment of $15 billion borrowed to
close deficits in the recent past
CALIFORNIA
FACES
SEVERAL
FINANCIAL
CHALLENGES
RESERVES: INADEQUATE TO ADDRESS
POTENTIAL CUTS FOR MULTIPLE YEARS
San Rafael High School District:
Contingency
Available
Total available
$ 550,000
$3,370,000
$ 3,920,000
Note:
 Reserves are one-time dollars
 Does NOT include Reserve for Economic Uncertainty.
 Reduced reserves mean less cash-on-hand to manage payroll and other
cash needs. due to State deferrals.
 Provide District with more time to plan, but cuts will need to be made
 Reserves needed to address projected growth and volatility in property
taxes
 Potential for State take-back of Basic-Aid funds?
OTHER RISKS...
San Rafael Elementary School District
 AB 3632 (Mental Health)
 Potential Increase in Special Education costs of $200,000 per
year
 Potential loss of Federal Counseling Grant
 Unknown Funding for MCF grants
 Loss of Federal Stimulus Funds
 Must be spent by September 2011
OTHER BUDGETARY “RISKS”
San Rafael High School District
 Other Legislative “Hit”
 Budget Conference Committee discussion of additional $200 million
from Basic Aid school districts
 AB 3632 (Mental Health)
 Potential Increase in Special Education costs of
$220,000 per year
 Anticipated enrollment growth in 3 years
 More students - No additional funding
 Actual Local Property tax revenues
 Potential commercial market impact
 Basic Aid status
 Could this change?
 Loss of Federal Stimulus Funds
 Must be spent by September 2011
 Potential Loss of ROP Funding
ELEMENTARY SCHOOL DISTRICT
WHAT COULD “PLAN “B” LOOK LIKE?
Possible Scenario:
Use Federal Jobs funding as “bridge” funding
for one year (2011-12)
$700,000
Use combination of cuts and reserves for one
year (2011-12)
Cuts
Reserves
$1.1 million
$1.1 million
$2.9 million
HIGH SCHOOL DISTRICT
WHAT COULD “PLAN “B” LOOK LIKE?
Possible Scenario:
Use Federal Jobs funding as “bridge” funding
for one year (2011-12)
$440,000
Use combination of cuts and reserves for one
year (2011-12)
Cuts
Reserves
$450,000
$450,000
$1,340,000
SUPPORT FOR PUBLIC SCHOOLS
 Voters understand the importance of investing in education as
the foundation of a strong economy and well-educated workforce.
 82% of Californians oppose reductions in K-12 schools to fix
California’s budget deficit (Public Policy Institute of California
Poll)
 A statewide ballot initiative to extend temporary revenues will
help prevent further cuts to schools and students in 2011-2012.
NEXT STEPS
 Board Feedback & Direction
 Adhere to legally mandated notice requirements for
certificated and classified staff
 Monitor State Legislative Actions
 Site and Department Feedback and Prioritization of
Potential Reductions
 Collect additional ideas & suggestions
 Budget Advisory Committees
 Meetings with Employee Group Leadership
 Community Budget Forums
 Prepare items for Board consideration/action