The Board Approves the Districts First Interim Financial Report and - - PowerPoint PPT Presentation

2014-15 First Interim Financial Report Board of Education December 9, 2014

The Board Approves the District’s First Interim Financial Report and Resolution Reflecting the District’s Budget Status from July 1 through October 31, 2014

December First Interim Submittal Out of Sync with January Timing for Governor’s Budget Proposal First Interim Must Be Based on Current Level Funding Assumptions

Education Code §42130 Requires Approval in a public session by December 15, 2014 The Board is Also Certifying That the District’s Projected Financial Outlook for 2014-15, 2015-16 and 2016-17 is One of the Following Certifications:

Positive– District Will Be Able to Meet Its Financial Obligations Qualified– District May Not Be Able to Meet Its Financial Obligations Negative– District Will Be Unable to Meet Its Financial Obligations

Staff Recommends No Change From Second Interim Status (2013-14) Qualified Status for First Interim Report 2014-15

Due to insufficient information in December 2014 prior to Governor’s January budget proposal 2

Why Qualified?

No Status Change Since Second Interim, 2013/14 December’s First Interim Submission out of sync with January Timing for Governor’s Proposed Budget

“Sustainable Qualified”

Updated Deficit Projections by Staff will be prepared in January

Implications of Remaining Qualified

Requires Third Interim Report to SDCOE only if not Positive by Second Interim SDCOE Advanced Review of all Bargaining Agreements SDCOE Approves Requests for Short Term Lending (TRANs)

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* San Diego County Office of Education (SDCOE) and School Services of California (SSC)

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REVENUE ASSUMPTIONS

Description 2014/15 2015/16 2016/17

LCFF Funding Model Funded ADA 104,818 103,268 101,697 COLA* 0.85% 2.19% 2.14% Funding Gap* 29.56% 20.68% 25.48% Grade Span Adjustment (GSA) $(8.0) Mil Federal : Impact Aid $8.0 Mil $8.0 Mil $8.0 Mil Other State Mandated Cost Reimbursement $3.8 Mil $ 3.7 Mil $ 3.7 Mil Mandated Cost Reimbursement (one-time) $7.1 Mil Lottery* (GFU- $128; GFR- $34) $162/ADA $162/ADA $162/ADA Local : Interest 0.36% 0.36% 0.36% Transfers In Redevelopment Agency (RDA) $10.3 Mil $10.3 Mil $10.3 Mil Sale of Property $28.4 Mil Vision $1.4 Mil Retiree $0.4 Mil $0.4 Mil $0.4 Mil

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* Subject to change based on negotiation

EXPENSE ASSUMPTIONS

Description 2014/15 2015/16 2016/17

Salaries Step and Column: Cert / Class 1.79% / .65% 2.06% / .65% 2.06% / .65% Restoration: Cert Non-Mgmt / Cert Mgmt / Class* 5% / 2% / 0% 0% / 0% / 0% 0% / 0% / 0% Reinstate Furlough Days: Cert/Class* .54% / 0% 0% / 0% 0% / 0% STRS 8.88% 10.73% 12.58% PERS 11.77% 12.60% 15.00% Health & Welfare Premiums 7.00% 7.00% 7.00% Materials & Supplies (Consumer Price Index- CPI) 2.10% 2.30% 2.50% Contracted Services (CPI) 2.10% 2.30% 2.50% Utilities 5.00% 5.00% 2.00% Implemented Board Solutions/Budget Deficit $106.4 Mil $81.4 Mil $88.1 Mil Transfers Out Liability Insurance $3.5 Mil $3.5 Mil $3.5 Mil Property Insurance $3.3 Mil $3.3 Mil $3.3 Mil Child Development $3.5 Mil $2.0 Mil $2.0 Mil Retiree $0.6 Mil $0.6 Mil $0.6 Mil Contributions Special Education $191.8 Mil $193.2 Mil $196.2 Mil Restricted Routine Maintenance (RRM) $27.8 Mil $36.4 Mil $36.4 Mil Community Day School $1.8 Mil $2.0 Mil $2.1 Mil Transportation $10.1 Mil $10.2 Mil $10.3 Mil

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Description 2014/15 2015/16 2016/17

Economic Uncertainties- 2% $24.0 Mil $23.4 Mil $23.7 Mil Unexpended Set-Asides and Reserves: Mandates $7.1 Mil $0 Mil $0 Mil School designated contributions $4.5 Mil $4.5 Mil $4.5 Mil Stores Inventory $1.7 Mil $1.7 Mil $1.7 Mil Prepaid Expenses $0.9 Mil $0.9 Mil $0.9 Mil Revolving Cash Funds $0.06 Mil $0.06 Mil $0.06 Mil Subtotal $38.26 Mil $30.57 Mil $30.86 Mil

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Fiscal Year SDUSD Average ADA % Change Year Over Year 2008-09 111,862 2009-10 110,836 (.92)% 2010-11 110,347 (.44)% 2011-12 109,241 (1.00)% 2012-13 107,486 (1.61)% 2013-14 106,110 (1.28)% 2014-15* 104,818 (1.22)% 2015-16* 103,268 (1.48)% 2016-17* 101,697 (1.52)%

* Projected

Supplemental and Concentration Grants

High-need eligible students

Low Income English Learners Foster Youth

Unduplicated Percentage

Variable in the funding formula Current value is 62.5% Alternative family income surveys essential to receive funding

Data submittal to State due December 12

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Local Control Funding Formula requires school districts to make progress toward maintaining an average class enrollment of no more than 24 students for each school site in K-3 grades, unless a collectively bargained alternative annual average is agreed to by the school district Individualized for each elementary school Dependent on State funding Can be changed based on a negotiated agreement with the teachers’ bargaining unit Risk of $8 million penalty included in First Interim assumptions

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Governor’s Approved Budget

$400.5 million towards funding of prior mandate claims on per average daily attendance basis

Can be used for one-time purposes District entitled to $7.1 million Reflected in reserves for 2014-15 for purposes of 2015-16 deficit The State Controller will apply amounts against any balances of unpaid claims for reimbursement of state-mandated local programs in chronological order beginning with the earliest claim State Controller to pay in two installments 90% November 10% March

Continued Advocacy for 2015-16 Budget

Current Balance due to the District is: $68.6 million

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According to Education Code 17462, the property sale proceeds have been utilized to offset an operational deficit for fiscal year 2014-15 and will not result in ongoing expenditures.

OVERAGE (millions) CLOSE DATE

$0.30

• Nov. 3 2014

($2.70) N/A $4.60

• Dec. 15, 2014

$2.20 $2.20

2014/15 New Sales FY 2014-15 ANTICIPATED REVENUE

Real Estates Sales

Cleveland

TBD

ORIGINAL BUDGET (millions)

$2.40 $8.60 $21.00

GROSS REVENUE (millions)

$2.70 $13.20 $15.90

NET REVENUE (millions)

$2.70 $13.10 $15.80 $7.30 2013/14 Carryover Budget Solutions

Bay Terraces #11 Stevenson Elementary

Board Action Not To Sell Property

Camp Elliott #3

$2.70 $15.80 $13.70 $15.90

Benchley

TBD

2013/14 Carryover Budget Solutions

Monthly Board Items

Launch First Learning Cycle Safe and Well Maintained Facilities Physical Environments Social Environments Broad & Challenging Curriculum Quality Leadership Quality PD Supportive Environments that Value Diversity

Advisory Meetings

DAC, DELAC, AAAE, LAC, CAC (SpEd), CAC (SDEA), GATE DAC, ASB President’s Council, CSEA/ POA Monthly Mtg, PTA Exec Bd, Panasonic Foundation, LCAP Large Group, LCAP Metrics

School Cluster Conversations

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Redirecting current resources to the classroom TK-3 Class Size Allocation High School Counselors Common Calendar Common Core Supports School Site Specialty Programs (Biliteracy, International Baccalaureate)

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Multi-Year Projection involves hybrid approach to include 2015-16 deficit solutions

2014/15 2015/16 2016/17 DESCRIPTION PROJECTIONS PROJECTIONS PROJECTIONS

• 1-
• 2-
• 3-
• 4-

Beginning Balance $95,981,513 $50,528,351 $30,573,659 Revenues 893,387,872 920,669,364 953,227,001 Expenditures (736,905,382) (781,455,660) (797,327,679) Budget Deficit Solutions 2015/16 81,360,944 Budget Deficit Solutions 2016/17 88,119,724 TOTAL EXPENDITURES (736,905,382) (700,094,716) (709,207,955) Other Sources / Uses (201,935,652) (240,529,340) (243,727,046) Ending Balance 50,528,351 $ 30,573,659 $ $30,865,659 SURPLUS/(DEFICIT) ($45,453,162) (19,954,692) 292,000 Required Reserves Economic Uncertainties $24,019,000 $23,431,000 $23,723,000 Unexpended Balances / Set Aside

• School Site Ending Balances

11,660,631 4,560,631 4,560,631 Stores 1,674,228 1,674,228 1,674,228 Prepaid Expenses 850,000 850,000 850,000 Revolving Cash 57,800 57,800 57,800 Total Required Reserve $38,261,659 $30,573,659 $30,865,659 Reserve (Shortfall) / Surplus $12,266,692 $0 $0

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2015-16 Potential Budget Solution Category Solutions in $ Millions

Mandates $(19.2) Grant Development $(9.0) Strategic Staffing – Position Review $(3.0) Increase High School Enrollment $(3.1) Early Childhood Enrollment $(2.5) Concentrated Effort with Unduplicated Counts $(1.6) Central Office Program Adjustments $(2.0) Protection Fund Against Layoff/ Program Cuts $0.3 Program Adjustments/ Operational Adjustments $(41.3)

Total Potential Deficit $(81.4)M

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Fund

Fund Description Beginning Balance Revenue Expenses Trans In/ (Trans Out) Ending Balance 01 General Fund 126,616,646 $ 1,095,456,032 $ (1,189,889,469) $ 29,544,611 $ 61,727,820 $ 11 Adult Education 225,753 648,600 (633,230)

• 241,123

12 Child Development 15,273 20,791,663 (26,046,141) 5,254,476 15,271 13 Cafeteria Special Revenue 2,960,704 62,992,553 (63,266,242)

• 2,687,015

14 Deferred Maintenance 180,859 640

• 181,499

15 Pupil Transportation Equipmen 478,470 583,300 (91,163)

• 970,607

20 Special Reserve - Retiree Benef 1,618,803 3,855

• 177,456

1,800,114 21 Building Fund 477,284,219 1,308,300 (231,931,215)

• 246,661,304

25 Capital Facilities Fund 40,116,507 30,093,882 (21,507,182) (12,000,000) 36,703,207 35 County School Facilities Fund 92,563,283 2,212,701 (9,308,073)

• 85,467,911

40 Special Reserve - Capital Projec 9,896,987 26,462,843 (3,530,620) (28,431,543) 4,397,667 51 Bond Interest & Redemption 232,399,201 158,634,438 (155,091,549)

• 235,942,090

67 Self Insurance Fund 75,734,614 24,311,567 (24,081,493) 5,455,000 81,419,688 Total 1,060,091,319 $ 1,423,500,374 $ (1,725,376,377) $

• $

758,215,316 $

General Fund Unrestricted- Continue to monitor Real Estate Sales and Attrition savings to avoid exceeding budget and creating negative cash balance. Need to ensure correct identification of Free and Reduced, Foster and English Learner students to avoid potential loss of revenue of LCFF

• implementation. ROP funding shortfall from County could create local contribution from Unrestricted

Reserves General Fund Restricted- Continue to monitor Federal Sequestration to avoid exceeding budget and creating local contribution from General Fund Unrestricted. Potential funding concerns with ROP

• apportionments. Potential further Sequestration remains a risk for federal funding in 2015/16.

Continued Resolution Omnibus Bill

Child Development Fund 12- Potential General Fund Unrestricted Local Contribution due to decline in enrollment, excess staffing due to no layoffs and contract compliance Cafeteria Fund 13- Ongoing discussions with CDE, State Auditor and Federal representatives, regarding Audit Findings State School Facilities Fund 35- Need to sustain Ending Fund Balance for loans to GFU for cash flow needs and source for TRANS alternative liquidity Property Management Fund 40- Continue to monitor expenditures to avoid negative fund balance

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Monthly Payroll

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April and May deferrals eliminated. June deferred.

$- $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $175.0 $200.0 $225.0

JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN Actual $74.61 $50.83 $98.22 $95.04 Projected $73.82 $220.42 $199.26 $162.01 $153.36 $140.60 $133.99 $92.39

Millions

Passed by voters on November 4, 2014 Amended State Constitution on rules for the Budget Stabilization Act, known as the state Rainy Day Fund, and created a new state reserve for schools known as the Public School System Stabilization Account New rules define how State pays down debt and saves money in reserves Senate Bill 858, Section 27, as part of state budget, became

• perational when Proposition 2 passed. SB 858 establishes

maximum budget reserves for school districts, including caps on the combined assigned and unassigned ending fund balance Upon the first deposit to the State Public School System Stabilization Account , the district’s maximum reserve would be capped at 4%

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Step Task Date

1 Monthly LCAP Presentations and Community Advisory Meetings September 2014 – June 2015 2 Board Approval of First Interim Report- BOARD ACTION Dec 9, 2014 3 Vision 2020/ LCAP Planning

(finalize priorities with LCAP Planning Team)

Dec 2014 – Jan 2015 4 Governor’s Proposed Budget Released mid-January 5 Superintendent Report on 2015/16 Budget Solutions Adjustments Jan 20, 2015 6 Release of SBB Budget Workbooks Feb 2015 7 Board Approval of 2nd Interim Report- BOARD ACTION Mar 15, 2015 8 Board Approval of 3rd Interim Report- BOARD ACTION May 15, 2015 9 Board Adoption of 2014/15 Budget and LCAP-BOARD ACTION June 30, 2015

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December First Interim Submittal Out of Sync with January Timing for Governor’s Budget Proposal

First Interim Must Be Based on Current Level Funding Assumptions

Staff Will Update Deficit Projections Immediately After January Budget proposal

Detailed 2015-16 Budget Solutions List to be Presented to the Board in Mid-late January

Tight Timeline For Budget Development: January – February

Stakeholder Communications Solutions Implementation Decisions to Board in late January More Centralized Budget Preparation for School Sites

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