[PPT] - + 2019-20 FIRST INTERIM BUDGET REPORT Manhatt attan an Beach PowerPoint Presentation

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+

2019-20 FIRST INTERIM BUDGET REPORT

Manhatt attan an Beach Unified d School

l Distri

trict 325 S. Peck k Avenu nue Manhatt attan an Beach, , CA 902 0266 Phone: ne: (310) 0) 318-7345, , x5900 00

First Interim – December 11, 2019

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ECONOMIC INDICATORS

Yield Curve

10-Year U.S Treasury Bond minus 3 Month Treasury Bill, Jan 1982 – Nov 2019

First Interim – December 11, 2019

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CALIFORNIA’S BUDGET

First Interim – December 11, 2019

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ENROLLMENT

First Interim – December 11, 2019

K-5 6-8 9-12 Total 2014-15 2818 1528 2544 6890 2015-16 2760 1555 2459 6774 2016-17 2754 1473 2547 6776 2017-18 2636 1438 2573 6647 2018-19 2562 1440 2581 6583 2019-20* 2514 1433 2566 6513

*preliminary census day enrollment count

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ENROLLMENT

First Interim – December 11, 2019

K-5 6-8 9-12 Total 2014-15 2818 1528 2544 6890 2015-16 2760 1555 2459 6774 2016-17 2754 1473 2547 6776 2017-18 2636 1438 2573 6647 2018-19 2562 1440 2581 6583 2019-20 2514 1433 2566 6513 2020-21* 2393 1377 2502 6272 2021-22* 2297 1375 2579 6250 2022-23* 2539 1364 2650 6252

*projected using combined cohort/regression model

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SCHOOL FUNDING - LCFF

Grade Span 2019-20 Base Grant Augmentation Grant Total Base Grant TK-3 $7,702 $801 $8,503 4-6 $7,818 $0 $7,818 7-8 $8,050 $0 $8,050 9-12 $9,329 $243 $9,572 Grade Span Supplemental Grant

20% of Base Grant for Every High Needs Student

Concentration Grant

50% of Base Grant for Every High Needs Student over 55% of District Enrollment

TK-3 $1,701 $4,252 4-6 $1,564 $3,909 7-8 $1,610 $4,025 9-12 $1,914 $4,786

First Interim – December 11, 2019

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SCHOOL FUNDING - LCFF

District Type Basic Aid UPP Lennox Elementary N 96.28% Hawthorne Elementary N 89.40% CentinelaValley High School N 85.63% Inglewood Unified N 84.92% Lawndale Elementary N 84.80% Wiseburn Unified N 46.01% Torrance Unified Unified N 38.18% Culver City Unified N 37.23% Santa Monica-Malibu Unified N 28.60% South Pasadena Unified N 19.74% Redondo Beach Unified N 19.10% El Segundo Unified N 16.00% Beverly Hills Unified Y 15.60% San Marino Unified N 15.26% Palos Verdes Peninsula Unified N 11.95% La Canada Unified N 8.00% Manhattan Beach Unified N 5.32% Hermosa Beach City Elementary N 4.89%

First Interim – December 11, 2019

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+ SCHOOL FUNDING - LCFF

Unduplicated Counts

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Year UPP 2013-14 4.00% 2014-15 3.50% 2015-16 4.10% 2016-17 4.89% 2017-18 5.32% 2018-19 5.55% 2019-20* 6.20%

*proj. for current year; will be averaged with prior years in final calculation

First Interim – December 11, 2019

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+ MBUSD’S BUDGET

Local Funding

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◼ $225 per parcel ◼ 12,879 taxable parcels ◼ 13.9% exemption rate ◼ 11,089 parcels taxed ◼ Up to $2.49 million in

local revenue from 2018- 19 through 2023-24; 99%

f anticipated revenue

received to date

First Interim – December 11, 2019

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+ MBUSD’S BUDGET

Local Funding

10 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Grants to the District

(in millions)

First Interim – December 11, 2019

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REVENUE CHANGES

First Interim – December 11, 2019

Increases at the 45-day revision/unaudited actuals:

CalPERS On-Behalf state revenue (offset by corresponding

expense) – $782,744

One-time preschool special education revenue – $646,200

Increases in the First Interim Budget Report:

Low Performing Student Block Grant funding – $136,350
Federal Special Education funding – $39,753
Property Tax JPA – $34,817

Decreases in the First Interim Budget Report:

One-time preschool special education revenue – $106,602
State Special Education Funding – $63,343

Net change since Budget Adoption: $1,479,457 Net change since Unaudited Actuals: $50,513

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EXPENSE CHANGES

First Interim – December 11, 2019

Increases at the 45-day revision/unaudited actuals:

CalPERS On-Behalf payments (offset by corresponding

revenue) – $782,744 Decreases at the 45-day revision/unaudited actuals:

Special Education and utility expenses – $820,124

Increases in the First Interim Budget Report:

Salary and Benefits – $493,611
Legal Services – $319,119
Special Education Services – $662,243
Travel and Conference – $312,105
Supplies - $142,592

Net change since Budget Adoption: $1,797,603 Net change since Unaudited Actuals: $1,852,231

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ADDITIONAL CHANGES – MBEF AND FUND 06

$1,336,601 $11,212 $145,898 $549,907 $53,672 $163,725 $980,463 $933,102 $20,000 $- $500,000 $1,000,000 $1,500,000 $2,000,000 Revenue Expense Capital Outlay Services Supplies Salary and Benefits Other Grants MBEF MBX PTA/Parent Donations

First Interim – December 11, 2019

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EXPENSE CHANGES – SPECIAL EDUCATION

$199,935 $761,505 $29,369 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 Other Supplies & Services Salary & Benefits

First Interim – December 11, 2019

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REVENUE

First Interim – December 11, 2019

LCFF Revenue $56,553,075 66% Federal Revenue $2,140,522 2% Other State Revenue $9,952,111 12% Local Revenue $16,932,523 20%

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EXPENSE

First Interim – December 11, 2019

Certificated Salary $36,740,469 41% Classified Salary $15,031,654 17% Benefits $22,641,552 25% Supplies $2,777,237 3% Services $12,085,482 14% Capital Outlay $20,000 0% Other Outgo/ Indirect $399,086 0%

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PENSIONS

First Interim – December 11, 2019

CalPERS Actuals/ Current Projection CalSTRS Actuals/ Legislative Limit 2010-11 10.707% 8.250% 2011-12 10.923% 8.250% 2012-13 11.417% 8.250% 2013-14 11.442% 8.250% 2014-15 11.771% 8.880% 2015-16 11.847% 10.730% 2016-17 13.888% 12.580% 2017-18 15.532% 14.430% 2018-19 18.062% 16.280% 2019-20 19.721% 17.100% 2020-21 22.800% 18.400% 2021-22 24.900% 18.100% 2022-23 25.900% 18.100% 2023-24 26.600%

can increase by up to 1% per year to a maximum employer contribution rate of 20.25%; unfunded actuarial obligation to be eliminated by 2046

2024-25 27.000% 2025-26 26.800% 2026-27 26.700%

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HEALTH CARE

First Interim – December 11, 2019

Health Benefits Costs 2016-17 $5,201,486 2017-18 $6,109,605 2018-19 $6,999,664 2019-20* $7,473,308

*projected at first interim.

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SPECIAL EDUCATION

First Interim – December 11, 2019

Revenue Expense 2016-17 $4,813,147 $17,915,974 2017-18 $4,960,701 $19,253,987 2018-19 $6,328,070 $22,601,161 2019-20* $6,425,146 $23,954,604

*projected at first interim.

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LCFF GROWTH / COST INCREASES

First Interim – December 11, 2019

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COLA

First Interim – December 11, 2019

Projected COLA Projected CPI 2019-20 3.26% 3.33% 2020-21 3.00%* 3.14% 2021-22 2.80%* 3.02% 2022-23 3.16%* 3.13%

*The LAO’s most recent projection reduces 2020-21 COLA to 1.79% and notes that the 20-year average COLA is 2.7% and that the consensus forecast by Moody’s Analytics sets the COLA at around 1.2% after 2020-21.

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MEASURE MB FUNDED POSITIONS

Fiscal Year Revenue Certificated Positions Salary Benefits 2018-19 $2,448,736 27 $1,816,208 $575,600 2019-20 $2,436,330 23.5 $1,773,212 $663,118

This anticipated revenue allowed the district to delay plans to reduce more than 65 positions beginning in 2018-19.

First Interim – December 11, 2019

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EXPENDITURE REDUCTIONS

First Interim – December 11, 2019

Previously budgeted reductions

The district’s professional development budget was reduced

by nearly $260,000

The district’s instructional materials budget was reduced by

$400,000

The district’s technology budget was reduced by just over

$400,000 (reducing the technology replacement budget by

ver $315,000 and ongoing services by nearly $100,000)
The district’s legal services budget was reduced by almost

$135,000

The district’s overtime budget was reduced by nearly $120,000
The district’s budgets for other departments was reduced by

approximately $75,000

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EXPENDITURE REDUCTIONS

First Interim – December 11, 2019

Fiscal Year Amount 2020-21 $3,949,274 2021-22 $3,601,474

Note: additional reductions would be needed in subsequent years; current estimates place additional 2022-23 reductions at $1.5 million

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MULTI-YEAR PROJECTION

2018-19 2019-20 2020-21 2021-22 Beg Balance $11,149,419 $8,324,150 $4,206,901 ($1,282,700) Revenues $85,707,344 $85,578,231 $86,345,472 $85,831,491 Expenses $88,558,943 $89,695,480 $91,835,072 $93,557,396 Net Inc/(Dec) ($2,851,599) ($4,117,249) ($5,489,600) ($7,725,902) Ending Bal $8,324,150 $4,206,901 ($1,282,700) ($9,008,602) Undesignated Ending Bal. $1,276,290 $1,089,412 ($4,067,752) ($11,845,323)

First Interim – December 11, 2019

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MULTI-YEAR PROJECTION

2018-19 2019-20 2020-21 2021-22 Beg Balance $11,149,419 $8,324,150 $4,206,901 $2,685,629 Revenues $85,707,344 $85,578,231 $86,345,472 $85,831,491 Expenses $88,558,943 $89,695,480 $87,866,744 $85,887,511 Net Inc/(Dec) ($2,851,599) ($4,117,249) ($1,521,272) ($56,020) Ending Bal $8,324,150 $4,206,901 $2,685,629 $2,629,609 Undesignated Ending Bal. $1,276,290 $1,089,412 $19,626 $22,984

First Interim – December 11, 2019

Note: projections based on anticipated reductions in 2020-21 and 2021-22

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MULTI-YEAR PROJECTION ENDING FUND BALANCE

$- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 2018-19 2019-20 2020-21 2021-22 3-Year Escrow Restricted REU (5%) REU (3%) Undesignated Amount

First Interim – December 11, 2019

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CASH FLOW

First Interim – December 11, 2019

Year Amount Borrowed* 2017-18 $0 2018-19 $6 million 2019-20 $7.5 million 2020-21 $13 million

For the past three years, the District has engaged in short- term borrowing in the form of Tax Revenue Anticipation Notes through a county-wide borrowing pool. All funds are repaid in the same year they are borrowed.

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MULTI-YEAR PROJECTION ADOPTED-UNAUDITED “SWING”

Adopted Budget Unaudited Actuals Total Change 2011-12 ($2,176,236) ($1,078,135) $1,098,101 2012-13 ($5,682,446.00) ($2,956,204.00) $2,726,242 2013-14 ($2,977,006.00) $1,127,733.00 $4,104,739 2014-15 ($3,211,807.00) ($1,402,405.95) $1,809,401 2015-16 ($683,646.00) $79,099.47 $762,745 2016-17 ($3,339,507) ($373,275) $2,966,232 2017-18 ($3,303,012) ($2,300,560) $1,002,452 2018-19 ($145,480) ($2,851,599) ($1,468,980) 2019-20 ($3,771,859) ($4,117,249) ($345,390)*

*year-to-date projected “swing” at first interim.

First Interim – December 11, 2019

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ONGOING CONCERNS AND PRIORITIES

An ongoing structural deficit
Increasing STRS and PERS costs
Diminishing available reserves
Diminishing increases to state funding provided through

the LCFF

Ongoing increases to other expenditure areas, including

health & welfare benefits and special education programs

Future negotiated settlements with the district’s bargaining

units

Maintenance, facilities, and operational needs
Technology infrastructure and hardware needs
Ongoing need for further human capital investment
Textbook and instructional material costs

First Interim – December 11, 2019

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NEXT STEPS

Assess staffing recommendations related to special

education study and provide direction

Assess other areas of potential expenditure reductions and

provide direction

Monitor upcoming budgetary information, including the

Governor’s January Budget Proposal

Continue to work with the Budget Advisory Committee to

identify potential sources of revenue enhancement and expenditure reductions

Continue planning with stakeholder groups, including

MBEF

First Interim – December 11, 2019

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+

2019-20 FIRST INTERIM BUDGET REPORT

Manhatt attan an Beach Unified d School

l Distri

trict 325 S. Peck k Avenu nue Manhatt attan an Beach, , CA 902 0266 Phone: ne: (310) 0) 318-7345, , x5900 00

First Interim – December 11, 2019