Metropolitan Education District Estimated 2008-09 Actual and 2009-10 - - PowerPoint PPT Presentation

Metropolitan Education District Estimated 2008-09 Actual and 2009-10 Proposed Budget

Overview of the State Budget

 This is a terrible Budget year!

 State revenues have fallen dramatically  Expenditures continue to rise  Borrowing has been more difficult and more expensive than ever before  California continues to lose jobs  More people demand social services – that won't be available – during a

downturn

 There is no way to "trim around the edges" and not deal with the realities of the

imbalance between state revenues and the cost of public services

 That said, we do not want and should not have more cuts to education

 Nevertheless, there are more cuts to education and all other major areas of

the Budget

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Overview of the State Budget

 Proposition 98 has been on a rollercoaster ride

 Cuts to the revenue limit  Cuts to categoricals  Flexibility within categorical funding  Withdrawal of Public Transportation Funds with no backfill  Addition of one-time federal funds??

 What does it all mean?

 Less of everything for California's students  Coupled with cuts to health and welfare programs, the most

vulnerable Californians – mostly children – are in for a very tough year (or several years?)

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California's Economy

 California's economy is suffering even more than the

nation as a whole

 The state was at the epicenter of the subprime mortgage

collapse

 Home building fell for the fourth consecutive year in 2008, with

housing starts expected to be down 24% in 2009  The state's unemployment rate is among the highest in the

nation at 11.2% in March 2009, up from 6.4% one year earlier

 Personal income is projected to decline 1.0% in 2009, the first

time it has fallen since 1938

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May Revision Features

 The already reduced 17-month Budget adopted in February is reduced by

another $24.3 billion

 Major cuts to K-12 education, welfare, prisons, and higher education  No suspension of Proposition 98 – not needed as funding floor has dropped  No cost-of-living adjustment (COLA) and a huge deficit factor  Lottery and other special election proposals appear to be dead  More cuts to K-12 – $3.9 billion – between the February Budget and the May

Revision

 Some additional flexibility anticipated, but not yet approved  Even more funding deferred – placing an even greater burden on cash flow

 Our proposed 2009-10 budget is based on Governor’s

budget proposal enacted in February 2009 4

Remember this? Economic Trends (2nd Interim March 11, 2009)

• 10.0

20.0 30.0 40.0 50.0 60.0 July, 2007

• Jan. 2008

May, 2008

• Jan. 2009

June, 2009 ??

State Budget Deficits

In Billions

$42.0 B $14.5 B $6.1 B $60 B ?? $24.3 B

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California’s Personal Income

(Percent Change)

• 1.0%

1.4% 2.5% 5.9% 6.3%

• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2006 2007 2008 2009 2010

Source: 2007, 2008, and 2009 May Revisions

• ----Projection----

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California's Unemployment Rate

5% 6% 7% 8% 9% 10% 11% 12%

Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr Source: Employment Development Department; Historical Civilian Labor Force, May 27, 2009

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California’s Employment Rate

Wage and Salary Employment

14,100 14,200 14,300 14,400 14,500 14,600 14,700 14,800 14,900 15,000 Sept Oct Nov Dec Jan Feb Mar Apr

_________2008_________ _________2009_________

Source: Employment Development Department; Historical Civilian Labor Force, May 27, 2009

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2008-09 ROCP Revenue Limits – Metropolitan Education District

2008-09 Base Revenue Limit per ADA (A) Deficit Factor (B) Funded Base Revenue Limit (C) = (A) x (B)

• 1. 2007-08 Base Revenue Limit

3,492.80 1.00000 3,492.80

• 2. 2008-09 Base Revenue Limit

3,492.80 0.8415* 2,939.35

• 3. Dollar Change (Line 2, Column C, minus Line 1, Column C)

553.45

• 4. Percentage Change (Line 3 divided by Line 1, Column C,

converted to a percentage) 15.85

%

*0.8415 deficit factor = 84.15% funding, or a 15.85% deficit applied to ROCP

$ $ $ $ $ 9

2009-10 ROC/P Revenue Limits – Metropolitan Education District

2009-10 Base Revenue Limit per ADA (A) Deficit Factor (B) Funded Base Revenue Limit (C) = (A) x (B)

• 1. 2008-09 Base Revenue Limit

3,492.8 0.8415 2,939.35

• 2. 2009-10 Base Revenue Limit

2,939.35 0.9554* 2,808.26

• 3. Dollar Change (Line 2, Column C, minus Line 1, Column C)

131.09

• 4. Percentage Change (Line 3 divided by Line 1, Column C,

converted to a percentage) 4.46 %

*0.9554 deficit factor = 95.54% funding for ROC/P, or a 4.46% deficit

$ $ $ $ $ 10

Categorical Funding Overview

 With more than a billion dollars already cut from

categoricals in 2008-09 and 2009-10; the Governor has stayed away from making proposals for further across-the-board cuts

 However, there are a few programs that are proposed for

significant reduction or elimination:

 Home-to-School Transportation – reduced by 65%  High Priority Schools Grant Program – eliminated for 2009-10  Child Care – funding drops with CalWORKs cut

 Our Budget Proposal is based on

Governor’s February Budget Enactment

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Recap of Flexibility Plus Updates – Tier III Categorical Programs

 Funding for all Tier III programs is to be provided based on

the proportion of funding received by each LEA of the state's total 2008-09 funding for the included programs

 In subsequent years, this amount would be adjusted based on

statewide budget adjustments

 SBX3 4 identified 2008-09 as the base year for all programs,

but CDE has indicated that, for several programs that rely on attendance/participation data, the base year legislatively will be changed to 2007-08

 Supplemental Hourly Programs  ROC/P  Adult Education  Community Day Schools  Cal-SAFE  9th Grade CSR  Advanced Placement Fee Waiver Program

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May Revision Flexibility – Reduction in the School Year

 The Governor's January Budget proposal, calling for a

shorter school year, was shot down by the Legislature

 However, given the further cuts that are being proposed,

the proposal is revived and expanded

 Permits, does not require, schools to drop from a minimum of

180 days of instruction to 173 days (seven fewer days) for a period of no more than three years

 The Governor's proposal reduces revenues and makes

it possible to legally reduce expenditures

 But, ultimately, LEAs would need to renegotiate contracts

to realize expenditure savings

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Deferrals

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Cash is King

 Many LEAs are forced to use their reserves to balance

their budgets this year because of the midyear cuts

 The use of reserves will affect future cash flows  Fewer reserves mean less working capital – less

cash on hand to meet expenses

 Remember that "cash is king"

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2009-10 Budget Assumptions for ROCP

 Budgets are built based on several important assumptions

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Fund 010 Budget Assumptions

2009-10 2010-11 2011-12

Revenue Limit COLA

0.00% 0.90% 2.40%

Revenue Limit Reduction

(4.46%) 0.00% 0.00%

Total ROCP Revenue Limit

$2,808.26 $2,833.53 $2,901.54

ADA Cap Growth

(0.55%) 0.00% 0.00%

Reserve-Economic Uncertainty

6.00% 6.00% 6.00%

General Reserve for Cash Flow

4.00% 4.00% 4.00%

Employer Paid Benefits Increase

5.00% 5.00% 5.00%

Employer Paid Benefits Maximum

$11,737 $12,324 $12,940

Salary Increase COLA

(4.00%)

Workers Comp Rate Increase

0.00% 0.00% 0.00%

PERS Contribution Rate Increase

0.28% 0.00% 0.00%

2009-10 Budget Assumptions for Adult Ed

 Budgets are built based on several important assumptions.

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Fund 110 Budget Assumptions

2009-10 2010-11 2011-12

Revenue Limit COLA

0.00% 0.90% 2.40%

Revenue Limit Reduction

(4.46%) 0.00% 0.00%

Total ROCP Revenue Limit

$2,138.62 $2,158.62 $2,210.62

ADA Cap Growth

0.00% 0.00% 0.00%

Reserve-Economic Uncertainty

6.00% 6.00% 6.00%

General Reserve for Cash Flow

4.00% 4.00% 4.00%

Employer Paid Benefits Increase

5.00% 5.00% 5.00%

Employer Paid Benefits Maximum

$11,737 $12,324 $12,940

Salary Increase COLA

(4.00%) 0.00% 0.00%

Workers Comp Rate Increase

0.00% 0.00% 0.00%

PERS Rate Increase

0.28% 0.00% 0.00%

District Budget Overview – Fund 010 ROCP

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General Fund - Operations

2008-09 Estimated 2009-10 Budget 2010-11 Budget 2011-12 Budget Total Revenues 15,479,475 13,943,950 14,019,370 14,316,473 Total Expenditures 14,866,001 13,629,316 13,524,499 13,661,264 Net Revenues/Expenses 613,474 314,634 494,871 655,208 Other Sources (Uses) (1,537,242) (286,840) (286,840) (286,840) Changes to Fund Balance (923,768) 27,793 208,031 368,368 Reserves & Designated: Revolving Fund, Prepaid 20,000 20,000 20,000 20,000 General Reserve (4%) 656,550 557,066 552,873 558,344 Economic Uncertainty (6%) 984,824 835,599 829,310 837,516 Contingency for State Deficits 220,493 602,822 767,162 1,067,781 Lottery Contingency 102,780 156,953 211,126 265,299 Cosmetology Contracts 160,000 Total Reserves 2,144,647 2,172,440 2,380,471 2,748,840 Total Fund Balance 2,144,647 2,172,440 2,380,471 2,748,840

District Budget Overview – Fund 110 Adult Ed

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General Fund - Operations

2008-09 Estimated 2009-10 Budget 2010-11 Budget 2011-12 Budget Total Revenues 10,836,242 10,164,466 10,237,722 10,422,991 Total Expenditures 11,601,520 10,207,738 10,233,248 10,385,584 Net Revenues/Expenses (765,278) (43,272) 4,474 37,407 Other Sources (Uses) (314,665) 137,335 137,335 137,335 Changes to Fund Balance (1,079,943) 94,063 141,809 174,742 Reserves & Designated: General Reserve (4%) 482,141 408,310 409,330 415,423 Economic Uncertainty (6%) 723,211 612,464 613,995 623,135 Contingency for State Deficits 386,100 527,405 529,328 551,503 Lottery Contingency 137,335 274,670 412,005 549,340 Total Reserves 1,728,787 1,822,849 1,964,658 2,139,401 Total Fund Balance 1,728,787 1,822,849 1,964,658 2,139,401

District Budget Overview – Fund 140 Deferred Maintenance Fund

2008-09 Estimated Actual 2009-10 Budget 2010-11 Budget 2011-12 Budget

Beginning Balance 7/1 415,486 1,404,682 445,377 347,129 Sources of Funds Revenues 323,840 323,840 323,840 323,840 Transfers In 810,402 160,000 160,000 160,000 Total Sources of Funds 1,134,242 483,840 483,840 483,840 Uses of Funds Expenses 145,046 1,274,760 413,703 413,703 Transfers out 168,385 168,385 168,385 Total Uses of Funds 145,046 1,443,145 582,088 582,088

Net Sources (uses) of Funds

989,196 (959,305) (98,248) (98,248)

Designated: Def erred Maintenance Projects

1,404,682 445,377 347,129 248,881

Total Fund Balance

1,404,682 445,377 347,129 248,881

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What's Next?

 We expect that at least some of the revisions requested by the Governor as

May revision will be enacted in June or July to avoid yet another cash crisis

 Our calendar for the 2009-10 school year is scheduled for a full

181 days unless and until the following items become clear;

 The state acts on the Governor's request to shorten the school year  Our member districts acted on Governor’s proposal  A shorter work year is negotiated with your bargaining units

 We have to adopt our district budget before June 30, 2009, even though

more changes are expected

 We will monitor the revision of the 2009-10 Budget and take necessary

actions.

To be continued!!

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Recommendation

 The Governing Board review the 2008-09

Estimated Actual and 2009-10 Proposed Budget Report. The Final Budget will be brought to the Board on June 24 for public hearing and final adoption.

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