Budget Update Board of Education January 31, 2012
Today's agenda includes reviewing the Governor's January budget proposal, discussing impacts on San Diego Unified School District, and addressing budget shortfalls with potential solutions. The proposed budget outlines funding impacts, reductions, and changes affecting the district. Explore the financial overview and strategies presented to address budget gaps over the next three years.
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Presentation Transcript
Budget Update Board of Education January 31, 2012
Todays Agenda Governor s January Budget Proposal Review Budget Solutions List Respond to Board Questions Staff Budget Recommendations Budget Development Timeline Recommended Action 2
Governors Budget Proposal for 2012-13 Impacts to San Diego Unified 3
Governors Proposed Budget: Impacts to SDUSD Scenario Based on Successful Nov 2012 Tax Initiative: Flat Funding for K-12 Education Flat Funding is NOT a good budget for SDUSD Flat Revenues & Increasing Expenditures Result in an Increased General Fund Budget GAP (No COLA) Tax Initiative Revenues Used to Restore Cash Deferrals Flat Funding is NOT really Flat Elimination of Home-to-School Transportation Funding ($2.8 Mil) Elimination of Special Education Transportation Funding ($6.4 Mil) For a total of $9.2 Mil Loss of Transportation Funding 4
Governors Proposed Budget: Impacts to SDUSD Scenario Based on Unsuccessful November 2012 Tax Initiative : -$370 per ADA 2012-13 Mid Year Cuts estimated at $370 per ADA SDUSD ongoing cuts estimated at $40.5 Million Equivalent to approximately three weeks of school No tools yet to help districts implement mid year cuts Legislation needed or more Layoffs will be only solution This Scenario Required by San Diego County Office of Education and Recommended by School Services of CA 5
Governors Proposed Budget: Impacts to SDUSD Other Reductions/ Changes: No New Revenues No Funding for Transitional Kindergarten Programs Increased Categorical Flexibility through a Weighted Student Formula ( details to follow...) Cost Neutral or Funding Loss The Recent Decisions by the Supreme Court on RDAs further obfuscate the argument that CA Schools would see more Revenues if RDAs ceased to exist. The Governor has said these potential RDA revenues are factored into his Budget Proposal. 6
Budget Shortfall Overview & Budget Solutions 7
General Fund Unrestricted Three-Year View* Successful Tax Measure November 2012 2012/13 2013/14 2014/15 Balanced Budget Gap with No Solutions ($81 Mil) ($216 Mil) ($354 Mil) Balanced Budget Gap with Budget Solutions -0- ($76 Mil) ($154 Mil) * - Based on First Interim Budget Data and Governor s January Budget Proposal; Includes Budget Solutions of $81 Mil in 2012-13; Includes State COLAs in 2013-14 & 2014-15 (app. $37.9 Mil) 8
General Fund Unrestricted Three-Year View* with Mid Year Reductions of $370/ ADA (Unsuccessful Tax Initiative) 2012/13 2013/14 2014/15 Balanced Budget Gap with No Budget Solutions ($122 Mil) ($298 Mil) ($476 Mil) Balanced Budget Gap with Budget Solutions $ 2 Mil ($73 Mil) ($151 Mil) * - Based on First Interim Budget Data and Governor s January Budget Proposal; Includes Budget Solutions of $124 Mil in 2012-13; Includes State COLAs in 2013-14 & 2014-15 (app. $37.9 Mil) 9
General Fund Unrestricted Four-Year View* with Mid Year Reductions of $370/ ADA & Implemented Budget Solutions of $124 Mil in 2012-13 and $73 Mil in 2013-14 $850.0M $810.0M $770.0M Revenues Expenditures $730.0M $690.0M $650.0M 2011/12 2012/13 2013/14 2014/15 *- Includes State COLAs in 2013-14 & 2014-15 (app. $37.9 Mil) 10
Expense and Revenue Drivers for 2012-13 Expense Drivers Step & Column Salary increase Five day-furlough Transportation Funding Loss $ 9.2 Mil H&W / Benefits CPI increase contracts Revenues Variances Mid Year Cut s $40.5 Mil Other Reductions $ 2.1 Mil $16.1 Mil $20.7 Mil $17.4 Mil $ 7.1 Mil $ 1.0 Mil 12
X Factor Development Collaborative Development with Principal Engagement from all School Levels Goals: Normalize Variation Issues from Last Year Provide as Much Equity As Possible Minimize Impacts on Small Schools Budget Realities Less Money Available Enrollment Changes Will Impact Certain Schools 13
X-Factor Recommendation X Factor Allocation X is in the Range of $69.5 Million Includes $8+ Mil for Counselors & $61+ Mil Discretionary Maintain Recommended Formula Weighted student adjustments would take some schools below basic funding levels Flat Funding harms schools with extra needs School to School Variances and Per Pupil Variances Created by Normalizing from last year Small School Enrollment impacts per pupil comparisons and availability of X 19 schools >300 11 schools > 250 14
Responses to Questions Board Questions Focus Year over Year Comparisons Central Office Reductions X Factor Revenue and Expense Drivers Other Funds Q&A Response Document Attachment Details 16
Summary of Attachment 3 Three Year View GFU* % Estimated Change Central Office Services 484.4 406.1 389.8 -94.6 -19.5 School Support Services 299.0 298.0 233.8 -65.2 -21.8 Schools/ Sites 6,347.4 6,159.0 5,211.0 -1,136.4 -17.9 * - Estimated 2012-13 Includes Proposed Budget Solutions. Adjusted for FTE moved from General Fund Unrestricted to Restricted in 2011-12. 17
Summary of Attachment 3 Three Year View GFU* % Change Estimated (in $ Mil) Central Office Services 54.6 47.4 48.0 -6.6 -12.1 School Support Services 29.0 28.1 21.3 -7.7 -26.6 Schools/ Sites 536.8 537.6 505.6 -31.2 -5.8 * - Estimated 2012-13 Includes Proposed Budget Solutions. Does not include Fixed Costs (Utilities; Insurance; TRANs; Phones; SW Maintenance; Contracted Services) 18
Summary of Attachment 3 Three-Year View GFU* % Change Estimated Central Office Services 8.2 7.3 7.9 -0.3 -3.7 School Support Services 4.4 4.3 3.5 -0.9 -20.4 Schools/ Sites 81.2 82.9 82.9 1.7 2.1 Fixed Costs 6.2 5.5 5.7 -0.5 -8.1 * - Estimated 2012-13 Includes Proposed Budget Solutions. Does not include Fixed Costs (Utilities; Insurance; TRANs; Phones; SW Maintenance; Contracted Services) 19
District Staff Recommendation 1. Take the Long-View in Developing Budget Assume significant ongoing/ multi-year financial challenges imposed by the state & national economies and by the district s own fiscal realities Assume No Employee Concessions Until We Receive Them Consider All District Funds (e.g.- significantly more of PPO/RRM must move to General Fund in the next few years) 21
District Staff Recommendation 2. Shore up all Cash Reserves to the Extent Possible to Maximize Future Flexibility Cash Flow Management Remains Critical TRANs/Financial Markets/Credit Agencies Hiring Freeze in place Currently Set Asides for Risk Factors Best Practices Prudent Reserves 22
Available General Fund Reserve Levels Budget Solutions Implemented in 2012/13 & 2013/14 $50.0M $45.2M $40.0M $28.9M $30.0M $25.2M $20.0M $10.0M $.0M 2011/12 2012/13 2013/14 % of Total General Fund Expenditures 4.5% 3.2% 2.9% Average Monthly District salaries & benefits costs = $78 Million 23
Title I Incentive Program $2 Mil Reserved for Competitive Grant Program 20 schools at 75+% FRL $1 Mil from central office funds $1 Mil from 40 to 74% FRL schools Competitive grant program requires Establishing criteria and application process Forming an application review committee Ranking Report provides Allocation with $2 Mil Grant Program Any Reduction in 2012-13 Title I Entitlement/Award will be offset by the $2 Mil Reserve 24
BUDGET DEVELOPMENT TIMELINE 25
Budget Development Timeline (Revised) February 3 Budget Workbooks to Schools February 3 Central Office Budget Reductions Due February 8 Budget Workbooks Due From Schools Second Interim to the Board March 13 Certificated Notice Deadline March 15 June 26 2012-13 Budget Adoption 26
Recommended Board Action Accept Superintendent s Recommendation for 2012-13 Budget Preparation Process Including: 1. Use Budget Solutions to Develop School Site and Central Office Budget Workbooks 2. Expand / Finalize Solutions List for Second Interim and Budget Submittal 3. $2 Mil Incentive Program Title I 27
Questions? 28
