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

1 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

2 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?)

3 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

4 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

Remember this? 5 Economic Trends (2 nd Interim March 11, 2009) State Budget Deficits $60 B ?? 60.0 $42.0 B 50.0 40.0 $24.3 B In Billions 30.0 $14.5 B 20.0 $6.1 B 10.0 - July, 2007 Jan. 2008 May, 2008 Jan. 2009 June, 2009 ??

6 California’s Personal Income (Percent Change) 7.0% 6.3% 5.9% 6.0% 5.0% 4.0% 3.0% 2.5% 2.0% 1.4% 1.0% 0.0% -1.0% -1.0% -2.0% 2006 2007 2008 2009 2010 -----Projection---- Source: 2007, 2008, and 2009 May Revisions

7 California's Unemployment Rate 12% 11% 10% 9% 8% 7% 6% 5% 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

8 California’s Employment Rate Wage and Salary Employment 15,000 14,900 14,800 14,700 14,600 14,500 14,400 14,300 14,200 14,100 Sept Oct Nov Dec Jan Feb Mar Apr _________2008_________ _________2009_________ Source: Employment Development Department; Historical Civilian Labor Force, May 27, 2009

2008-09 ROCP Revenue Limits – 9 Metropolitan Education District Base Revenue Funded Base 2008-09 Limit per ADA Deficit Factor Revenue Limit (A) (B) (C) = (A) x (B) 1. 2007-08 Base Revenue Limit $ $ 3,492.80 3,492.80 1.00000 2. 2008-09 Base Revenue Limit $ $ 2,939.35 3,492.80 0.8415* $ 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

2009-10 ROC/P Revenue Limits – 10 Metropolitan Education District Base Revenue Funded Base 2009-10 Limit per ADA Deficit Factor Revenue Limit (A) (B) (C) = (A) x (B) 1. 2008-09 Base Revenue Limit $ $ 2,939.35 3,492.8 0.8415 2. 2009-10 Base Revenue Limit $ $ 2,808.26 2,939.35 0.9554* $ 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, 4.46 % converted to a percentage) *0.9554 deficit factor = 95.54% funding for ROC/P, or a 4.46% deficit

Categorical Funding Overview 11  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

Recap of Flexibility Plus Updates – Tier III 12 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  9 th Grade CSR  Advanced Placement Fee Waiver Program

May Revision Flexibility – 13 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

14 Deferrals

15 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"

2009-10 Budget Assumptions for ROCP 16  Budgets are built based on several important assumptions 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%) 0 0 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 17  Budgets are built based on several important assumptions. Fund 110 Budget 2009-10 2010-11 2011-12 Assumptions 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 $11,737 $12,324 $12,940 Maximum 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%

18 District Budget Overview – Fund 010 ROCP 2008-09 2009-10 2010-11 2011-12 General Fund - Operations Estimated Budget Budget 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 0 0 0 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