2017-18 PROPOSED BUDGET June 13, 2017 1 Anna Pimentel Director, - - PowerPoint PPT Presentation

June 13, 2017 Anna Pimentel Director, Fiscal Services

2017-18 PROPOSED BUDGET

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INFLATION FORECAST

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2016 2017 2018 2.3% 2.8% 2.7% 2.3% 3.0% 3.1% 2.3% 2.7% 2.9%

Inflation Forecast (Percent Change)

2.0% Benchmark

B-12

LAO, November 2016 UCLA, December 2016 2017-18 Governor’s State Budget

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More Proposition 98 2017-18 funding up $1.1 billion from January proposal

NEW PROPOSITION 98 TOPICS

One-Time Funding Up May Revision adds almost $750 million to January’s one-time funds, but with a twist LCFF* Increases May Revision ups the LCFF funding increase to $1.4 billion Deferral Is Gone 2016-17 proposed deferral replaced by settle-up payment

*Local Control Funding Formula (LCFF) 3

PROPOSITION 98 FUNDING

$56.6 $49.2 $51.7 $49.6 $47.3 $58.0 $58.9 $67.1 $68.7 $71.4 $73.5 $69.1 $71.4 $74.6 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 $75.0 $80.0

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 (in billions)

Proposition 98 Funding 2007-08 to 2017-18

Proposition 98 Funding as of Governor's January Budget

Source: 2017-18 Governor’s Budget Summary, pg. 18 and 2017-18 May Revision, pg. 4

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STATUTORY COLA AT 1.56%

The Governor’s January Budget estimated the 2017-18 statutory COLA for K-12 education programs at 1.48% Based on actual Implicit Price Deflator factors available for the May Revision, the COLA increases to 1.56% What’s the impact?

COLA is applied to the LCFF base grant target rate, but that doesn’t directly affect LCFF growth, which is based on the funds appropriated each year for the transition to full implementation Local educational agencies (LEAs) already at their LCFF target (i.e., fully implemented) will see a slight increase from January due to the modest COLA revision

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2017-18 LCFF TARGET FUNDING FACTORS

• The K-12 COLA is 1.56% for 2017-18 and is applied to the LCFF base grants for

each grade span

Grade Span 2016-17 Base Grant Per ADA 1.56% COLA 2017-18 Base Grant Per ADA K-3 $7,083 $110 $7,193 4-6 $7,189 $112 $7,301 7-8 $7,403 $115 $7,518 9-12 $8,578 $134 $8,712

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PROGRESS TOWARD LCFF IMPLEMENTATION

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Actual Projected

2017-18 May Revision: 93% cumulative gap closure; 97%

• f full implementation

Full LCFF Implementation 7

ONE-TIME DISCRETIONARY FUNDS

 As a result of modest revenue increases since the release of the January Budget, the May

Revision proposes an increase in discretionary one-time funding of just under $750 million

 But, the Governor proposes to hold all of the funds until May 2019!  Funds can be used for any one-time expenditure as determined by a local governing board  One-time apportionments will offset LEAs’ outstanding mandate reimbursement claims on a

dollar- for-dollar basis

• We continue to believe that these funds should not count toward mandate reimbursement

January Budget May Revision Per-ADA $48 $170 Total $287 million $1.01 billion

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MINIMUM WAGE

• Senate Bill 3 (Chapter 4/2016) which was signed by the Governor in April 2016

gradually increases California’s minimum wage and provides clarity on exempt employees

• Governor can pause progress annually

MinimumWage Effective Date: > 25 Employees Effective Date: ≤ 25 Employees $10.50/hour January 1, 2017 January 1, 2018 $11.00/hour January 1, 2018 January 1, 2019 $12.00/hour January 1, 2019 January 1, 2020 $13.00/hour January 1, 2020 January 1, 2021 $14.00/hour January 1, 2021 January 1, 2022 $15.00/hour January 1, 2022 January 1, 2023

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CALPERS EMPLOYER CONTRIBUTION RATE INCREASES

Year Previously Released Employer Contribution Rates Employer Contribution Rate* 2017-18 15.8% 15.531% 2018-19 18.7% 18.1% 2019-20 21.6% 20.8% 2020-21 24.9% 23.8% 2021-22 26.4% 25.2% 2022-23 27.4% 26.1% 2023-24 28.2% 26.8% 2024-25 N/A 27.3% The California Public Employees’ Retirement System (CalPERS) Board adopted an employer contribution rate of 15.531% for 2017-18, almost 2% higher than the current-year rate of 13.888% While the new projected rates are slightly lower than those previously released by CalPERS, they are still significant annual increases that will add to the squeeze on base revenues CalPERS Board also adopted the contribution rate for employees subject to the Public Employees’ Pension Reform Act (PEPRA) Currently, PEPRA members are contributing 6%, which will increase to 6.5% for 2017-18 “Classic” members continue to pay 7.0%

*Actual for 2017-18 10

FUNDING CALSTRS

Year Employer Pre- PEPRA* Employees Post- PEPRA** Employees

2016-17

12.58% 10.25% 9.205%

2017-18 14.43% 10.25% 9.205% 2018-19 16.28% 10.25% 9.205% 2019-20 18.13% 10.25% 9.205% 2020-21 19.10% 10.25% 9.205%

Employer rates are increasing to 14.43% in 2017-18, up from 12.58% in 2016-17 No specific funds are provided for this cost increase Under Education Code Section 22950.5, once the statutory rates are achieved, the California State Teacher’s Retirement System (CalSTRS) will have the authority to marginally increase

• r decrease the employer and state

contribution rate CalSTRS cannot increase rates by more than 1% in a year and cannot exceed 12%

• verall, until the remaining unfunded

actuarial obligation is eliminated

* First hired on or before December 31, 2012

** First hired on or after January 1, 2013

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ROUTINE RESTRICTED MAINTENANCE ACCOUNT

3% of total General Fund expenditures 2016-17 Lesser of: The amount deposited in 2014- 15 Lesser of 3% of total General Fund expenditures or the amount deposited in 2014-15 2017-18 to 2019-20 Greater of: 2% of total General Fund expenditures 2020-21 and beyond At least: Legislative intent: Comply with minimum 3% deposit at full LCFF implementation 3% of total General Fund expenditures Note: Flexibility goes away and the requirement becomes 3% in the year after a local agency receives its first apportionment from Proposition 51. District current funding is 2.5% or $1,434,048.

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2017-2018 GENERAL FUND REVENUES

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2017-2018 GENERAL FUND EXPENDITURES

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GENERAL FUND – FEDERAL SOURCES

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3,068,474 61,336 244,022 760,660 26,237 48,692 80,188 8,077 20,541 430,278

• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 MAINTENANCE & OPERATIONS (IMPACT AID) JROTC TITLE I, BASIC LOCAL ENTITLEMENT SPECIAL EDUCATION, K-12 BASIC LOCAL SPECIAL EDUCATION, PRESCHOOL LOCAL SPECIAL EDUCATION, PRESCHOOL BASIC TITLE II, TEACHER QUALITY TITLE III, IMMIGRANT EDUCATION TITLE III, LIMITED ENGLISH PROFICIENCY DODEA, PROJECT CONNECT

GENERAL FUND – STATE SOURCES

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199,348 808,864 252,770 440,911 286,543 24,000 1,500 275,586 43,630 1,687,297

• 200,000

400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 MANDATED COSTS REIMBURSEMENTS LOTTERY - UNRESTRICTED LOTTERY - RESTRICTED PROP 39 CLEAN ENERGY JOBS ACT CAREER TECHNICAL EDUCATION INCENTIVE GRANT STATE TESTING FEES STATE STUDENT IDENTIFIER SPECIAL EDUCATION, MENTAL HEALTH SVCS SPECIAL EDUCATION, WORKABILITY STRS ON BEHALF OF

GENERAL FUND – LOCAL SOURCES

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60,000 55,000 65,025 206,090 1,000 65,000 275,000 15,000 40,500 25,000 465,997 50,000 40,504

• 50,000

100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

LEASES & RENTALS INTEREST ALL OTHER FEES & LOCAL REVENUES SALARY REIMBURSEMENTS DISTRICT CONTINGENCY FUND INSTRUCTIONAL SERVICES SUPPORT CARRYOVER HOME-TO-SCHOOL TRANSPORTATION FEES HOME-TO-SCHOOL TRANSPORTATION FEES OUTSIDE AGENCIES AP TEST FEES SPECIAL EDUCATION SCOE AB602 EXCESS SPECIAL EDUCATION SELPA PLAN ALLOCATION FIRST FIVE JUMPSTART KINDERGARTEN GRANT SAFETY CREDIT PROGRAM

2017-18 STEP & RETIREMENT INCREASES

• Cost of Step movement – All groups $484,144
• Cost of STRS Increase – Certificated

$448,342

• Cost of PERS Increase – Classified $168,587
• Other Statutory on Step movement $ 26,909

Total Increase $1,127,982 LCFF Increase $1,265,234 $ 137,252

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UNRESTRICTED FUND BALANCE – STATEWIDE AVERAGES

2015-16 Average Unrestricted General Fund, Plus Fund 17; Net Ending Balances as a Percentage of Total General Fund Expenditures, Transfers, and Other Uses Change From Prior Year* Elementary School Districts 21.54% 2.58% High School Districts 17.19% 2.33% Unified School Districts 16.45% 3.36%

Source: Statewide certified data *Increase relative to the reserve levels of 2014-15 21

2017-2018 PROPOSED BUDGET MANDATORY RESERVE ANALYSIS

• District Reserves/Unassigned Ending Fund Balance above Standard 3% Reserve Level

= 8.2%

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2017-2018 ALL FUNDS SUMMARY

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Questions?

FINAL THOUGHTS

• Assumptions are based on current available

information

• District budget to be adopted June 20, 2017
• State budget must be adopted before June 30,

2017

• Staff will attend School Finance and Management

Conference in July

• District required to prepare 45-day budget

revision to reflect state adopted budget

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