+ WORKLOAD BUDGET PLANNING Manhattan Beach Unified School District - - PowerPoint PPT Presentation

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WORKLOAD BUDGET PLANNING

Manhattan Beach Unified School District 325 S. Peck Avenue Manhattan Beach, CA 90266 Phone: (310) 318-7345, x5900

Budget Update – April 15, 2020

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BUDGET OUTLOOK

Budget Update – April 15, 2020

The adopted budget described the current and subsequent two fiscal years as having a positive fiscal outlook, but this was achieved

• nly through substantial expenditure reductions. The Board of

Trustees for the Manhattan Beach Unified School District has approved the reduction of 38.16 FTE’s for 2020-21. . . . Even with these reductions, the District will need to begin planning for the reduction of the equivalent of an additional 39 positions for 2021-22, and initial projections for 2022-23 indicate the need to reduce by the equivalent of another 25 positions in that year.

• MBUSD Second Interim Budget Report

March 4, 2020

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BUDGET OUTLOOK

Budget Update – April 15, 2020

Despite the sustained efforts, the virus continues to spread and is impacting nearly all sectors of California’s economy. Among these impacts is a potentially severe drop in economic activity, with corresponding negative effects on anticipated revenues for the upcoming 2020-21 fiscal year and beyond. In light of this evolving situation, the Department of Finance will not propose any . . . adjustments to the Governor’s Budget . . . . We will reevaluate all budget changes within the context of a workload budget.

• Department of Finance Letter

March 24, 2020

(A Workload Budget refers to the amount required to maintain current services)

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BUDGET OUTLOOK

Budget Update – April 15, 2020

We do have another storm—a recession—that may hit us even before this pandemic has subsided. Before the pandemic hit, more than half of all local school agencies had been declining in enrollment for years, and the slowdown of just the cost-of-living adjustment (COLA) for revenue increases for the Local Control Funding Formula (LCFF) had begun. Even local school agencies that haven’t been declining in enrollment found themselves to be deficit spending due to myriad cost pressures . . . . Considering all of this, we think it’s time to batten down the hatches—if your agency hasn’t

• already. That includes changing the way the local agency budget is

developed and planning ahead to prepare for lower funding.

• School Services of California

April 13, 2020

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POTENTIAL CHALLENGES

Budget Update – April 15, 2020

• Potential COLA Reduction:

2.29% à 0% or lower

• Potential loss in lease revenue
• Potential changes to STRS/PERS contributions

(early PERS indication – decrease)

• Potential June-July deferral
• Potential cash flow issues
• Potential August Revision
• Potential unemployment impact peak in

December 2020 (est. 16%) with impact through late 2022 (potential economic recovery beginning in early 2021)

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MULTI-YEAR PROJECTION

(as of Second Interim – 2.29% & 2.71% COLAs)

2019-20 2020-21 2021-22 Beg Balance $8,253,454* $4,254,864 $2,600,418 Revenues $85,983,758 $83,963,388 $83,123,958 Expenses $89,982,348 $85,617,834 $83,187,365 Net Inc/(Dec) ($3,998,590) ($1,654,446) ($63,408) Ending Bal $4,254,864 $2,600,418 $2,537,010 Undesignated Ending Bal. $1,147,980 $1,883 $11,390

Projections based on anticipated reductions of $4.36M in 2020-21 and $4.51M in 2021-22.

Budget Update – April 15, 2020

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MULTI-YEAR PROJECTION

(0% COLA – 2020-21 only)

2019-20 2020-21 2021-22 Beg Balance $8,253,454* $4,254,864 $1,375,693 Revenues $85,983,758 $82,738,663 $83,123,958 Expenses $89,982,348 $85,617,834 $83,187,365 Net Inc/(Dec) ($3,998,590) ($2,879,171) ($63,408) Ending Bal $4,254,864 $1,375,693 $1,312,285 Undesignated Ending Bal. $1,147,980 ($1,222,842) ($1,213,335)

Projections based on anticipated reductions of $4.36M in 2020-21 and $4.51M in 2021-22.

Budget Update – April 15, 2020

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MULTI-YEAR PROJECTION

(3% Reduction – 2020-21 only)

2019-20 2020-21 2021-22 Beg Balance $8,253,454* $4,254,864 ($311,109) Revenues $85,983,758 $81,051,861 $83,123,958 Expenses $89,982,348 $85,617,834 $83,187,365 Net Inc/(Dec) ($3,998,590) ($4,565,973) ($63,408) Ending Bal $4,254,864 ($311,109) ($374,517) Undesignated Ending Bal. $1,147,980 ($2,909,644) ($2,900,137)

Projections based on anticipated reductions of $4.36M in 2020-21 and $4.51M in 2021-22.

Budget Update – April 15, 2020

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ADA v. REVENUE

Budget Update – April 15, 2020

Declining enrollment leads to a decrease in revenue provided through the LCFF. Current year revenues are based on the higher of the current or the prior year’s enrollment numbers. When a district’s enrollment declines, the effects on LCFF revenue are thereby delayed until the following year, providing the district with time to plan and prepare and to determine whether a single year’s decline in enrollment is anomalous or ongoing. However, with MBUSD’s enrollment declining for the third time in a row, revenue is impacted.

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ENROLLMENT

K-5 6-8 9-12 Total 2014-15 2818 1528 2544 6890 2015-16 2760 1555 2459 6774 2016-17 2754 1475 2547 6776 2017-18 2636 1438 2573 6647 2018-19 2562 1440 2581 6583 2019-20 2516 1440 2568 6524 2020-21* 2393 1377 2502 6272 2021-22* 2297 1375 2578 6250 2022-23* 2238 1364 2650 6252

*projected using combined cohort/regression model

Budget Update – April 15, 2020

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EXPENDITURE REDUCTIONS

Previously budgeted reductions

• The District’s professional development budget was

reduced by over $500,000

• The District’s instructional materials budget was

reduced by over $540,000

• The District’s technology budget was reduced by

almost $1,030,000 (equipment replacement reduced by almost $300,000; services/supplies reduced by over $730,000)

• The District’s budgets for other departments were

reduced by almost $220,000

Budget Update – April 15, 2020

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EXPENDITURE REDUCTIONS

Additional reductions at second interim

• Beginning in 2020-21:
• Certificated reduction by 32.7 FTE’s
• Classified reduction by 7.4 FTE’s
• Reduction in services by approximately

$700,000

• Future years:
• Equivalent of an additional 39 FTE’s in 2021-22
• Equivalent of an additional 25 FTE’s in 2022-23

Budget Update – April 15, 2020

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POSSIBLE SECOND LAYOFF WINDOW

Budget Update – April 15, 2020

California Education Code Section 44955.5 (a) During the time period between five days after the enactment of the Budget Act and August 15 of the fiscal year to which that Budget Act applies, if the governing board of a school district determines that its total revenue limit per unit of average daily attendance for the fiscal year of that Budget Act has not increased by at least 2 percent, and if in the opinion of the governing board it is therefore necessary to decrease the number of permanent employees in the district, the governing board may terminate the services of any permanent or probationary certificated employees of the district, including employees holding a position that requires an administrative or supervisory credential.

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NEXT STEPS

• Continue with implementation of approved staffing

and other budgeted reductions for 2020-21

• Assess staffing recommendations related to special

education study and provide direction

• Monitor upcoming budgetary information, including

the May Revision, the Enacted Budget, and the potential August/September Revision

• Monitor enrollment and current year expenditures
• 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

Budget Update – April 15, 2020

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WORKLOAD BUDGET PLANNING

Manhattan Beach Unified School District 325 S. Peck Avenue Manhattan Beach, CA 90266 Phone: (310) 318-7345, x5900

Budget Update – April 15, 2020