Impact of the State Adopted Budget

Impact of the State Impact of the State Adopted Budget Adopted Budget

Board Study SessionMarch 9, 2009

Prepared by: Dr. Cathy Nichols-Washer Mr. Douglas Barge & StaffY: Business Services/Budget/2009/10//Adopted/Meetings/B03-09-09/Template for Presentation B03-09-09

Executive Executive SummarySummary

The State has adopted budget plans for the remainder of 2008/09 and all of 2009/10

Does that mean all of the work is done at the State level– Probably not

The current State plan has more flexibility than we had seen in prior proposals

– Our strategies will take advantage of these opportunities– We will develop strategies to maximize the use of the Federal stimulus

resources when they arrive

Balancing the budget for 2009/10 will still require expenditure reductions of $9,450,332

– This is in addition to the cuts already approved by the Board

We must remain mindful of the structural balancing of our budget– The excessive use of one time solutions will be necessary

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Table of Table of ContentsContents

DESCRIPTIONDESCRIPTION Page #Page #

A.A. IntroductionIntroduction

B.B. What Have We DoneWhat Have We Done

C.C. Organizing the SolutionOrganizing the Solution

D.D. Redefining the Budget ProblemRedefining the Budget Problem

E.E. Restricted (Categorical) Program CutsRestricted (Categorical) Program Cuts

F.F. Moving Towards a Balanced Budget for Moving Towards a Balanced Budget for 2009/102009/10

G.G. Cash Flow & How it is ChangingCash Flow & How it is Changing

H.H. RecommendationsRecommendations

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11

22

33

4 – 84 – 8

9 – 159 – 15

16 – 2116 – 21

22 – 2522 – 25

2626

IntroductionIntroductionOn March 3, staff reported on the latest information coming to the On March 3, staff reported on the latest information coming to the District about the newly adopted State budget for the remainder of this District about the newly adopted State budget for the remainder of this year and all of nextyear and all of next

Staff will report on the estimated impact to the Lodi Unified School Staff will report on the estimated impact to the Lodi Unified School DistrictDistrict

An overall strategy is being developed for balancing the District’s An overall strategy is being developed for balancing the District’s budget over the coming monthsbudget over the coming months

The strategy will take advantage of both the State flexibility and The strategy will take advantage of both the State flexibility and Federal stimulus resourcesFederal stimulus resources

Setting the stage this year will be critical to the financial success of the Setting the stage this year will be critical to the financial success of the District now and into the futureDistrict now and into the future

1

What Have We What Have We Done?Done?

Withheld final apportionments for restricted (categorical) programs where possible

Placed COLA increases into reserve accounts pending final legislative reaction to the State’s fiscal crisis

Asked all site/departments to reduce spending

Began reviewing expenditures in much greater detail, questioning those that might be put off until later to preserve cash

Reviewing contract terms for changes that might help the District

2

Gathered massive amounts of community and employee input

The Superintendent’s Budget Advisory Committee is working on recommendations for the Superintendent

Organizing the Organizing the SolutionsSolutions

3

Problem & Solutions?Problem & Solutions?

INCOMEINCOME EXPENSEEXPENSE

UnrestrictedUnrestricted

RestrictedRestricted

One-timeOne-time

OngoingOngoingUnrestrictedUnrestricted

RestrictedRestricted

One-timeOne-time

OngoingOngoing

Redefining the Redefining the Budget ProblemBudget Problem

iii

Previously Previously ReportedReported

4

A. Balances Reported on 1/13/09 ($13,286,387) ($19,670,660)($6,384,273)

Description On-Going TotalOne-Time

B. Additional Income (Special Ed.) 373,371

C. Additional Income Loss (2.52%) (4,418,661)

D. Total Reduction Required ($17,331,677) ($23,715,950)($6,384,273)

373,371

(4,418,661)

Unrestricted General FundUnrestricted General Fund

Fiscal Year Fiscal Year BreakdownBreakdown

5

III. Total Reduction Required ($17,331,677) ($23,715,950)($6,384,273)


I. 2008/09 Fiscal Year $3,503,883 ($6,372,549)($9,876,432)

II. 2009/10 Fiscal Year (9,888,156) (17,343,401)(7,455,245)


2008/092008/09 What Has What Has Changed?Changed?

6


I. 2008/09 Fiscal Year $3,503,883 ($6,372,549)($9,876,432)

II. Income Changes

$4,013,142$4,013,142 A. Base Revenue Limit(500,000)(500,000) B. Interest Income

($1,116,004) (1,116,004) C. Planned Sweeps

($1,116,004) $2,397,138$3,513,142 D. Total Income Changes

III. Expense Changes

($4,435,266) ($5,060,266)($625,000)A. Second Interim

($4,435,266) ($5,060,266)($625,000)B. Total Expense Changes

$6,823,145 $1,084,855($5,738,290) IV. Total Revised Estimate

2009/102009/10 What Has What Has Changed?Changed?

7


I. 2009/10 Fiscal Year ($9,888,156) ($17,343,401)($7,455,245)

II. Income Changes

$2,246,147$2,246,147 A. Base Revenue Limit

$0 $2,246,147$2,246,147 B. Total Income Changes

III. Expense Changes

($ 80,287) ($ 80,287)A. Staff Reductions138,526138,526B. Utilities/Trans. Fuel

$4,156 $ 66,551$ 62,395 E. Total Expense Changes

($9,892,312) ($15,163,805)($5,271,493) IV. Total Revised Estimate

4,1564,156C. Routine Rest. Maint.$4,156 4,156D. General Reserves

Summary Revised Summary Revised EstimatesEstimates

8


I. 2008/09 Fiscal Year $6,823,145 $1,084,855($5,738,290)

(9,892,312) (15,163,805)(5,271,493) II. 2009/10 Fiscal Year

($3,069,167) ($14,078,950)($11,009,783)III. Total Revised Estimate


* Note Structural Balance

Restricted (Categorical ) Restricted (Categorical ) Programs CutsPrograms Cuts

v

Tier ITier I – – NoNo Funding Funding CutsCuts

No program flexibility & No ability to waive statutory requirements

Programs are:

1. Economic Impact Aid (EIA)

2. K-3 Class Size Reduction

3. Prop 49 After School Programs (Bridge)

4. Special Education

5. Quality Education Investment Act (QEIA)

6. Transportation

7. Child Nutrition

8. Child Development

9

Description

Tier IITier II – Funding – Funding CutsCuts

Funding will be reduced 15.38% in 2008/09 & 4.46% in 2009/10

No current year or future flexibility

Programs current available to Lodi USD:

1. Ag – Vocation Education (Lodi High)

2008/09

($3,851)

(1,372)

(59,946)

(40,219)

($101,388)

2. Ag – Vocation Education (Tokay)

3. English Language Acquisition Program

4. Partnership Academies

5. Total Tier II

10

2009/10

($945)

(337)

(13,483)

(10,115)

($24,880)

Description

Tier IIITier III – Funding – Funding CutsCuts

Funding will be reduced 15.38% in 2008/09 & 4.46% next year

Up to 100% flexibility is permitted

Programs will be cut:

2007/08 End Fund Balances from most programs may be swept

($2,439,491)

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2008/09 2009/10

($581,818)

Description

* General Fund Programs only

All Categorical All Categorical Funding CutsFunding Cuts

1. Tier I

2008/09

($0)

(101,388)

(2,439,491)

($2,937,844)

2. Tier II

3. Tier III

5. Total Restricted Program Cuts

12

2009/10

($0)

(24,880)

(581,818)

($704,108)

Description

(396,965)4. Other Funds (97,410)

K-3 Class Size K-3 Class Size ReductionReduction

20.5 No Penalty

21.0 5.0%

21.5 10.0%

22.0 15.0%

25.0 20.0%

Over 25.0 30.0%

21.9 10.0%

Student/Teacher

New

No Penalty?

20.0%

40.0%

80.0%

PriorUp To

* Funding will be based on a class size of 20 students. District would not receive any funding for excess students.

$0

$702,576

$865,368

$2,230,893

$3,170,160

$4,129,776

$1,456,560

Funding Loss

13

Categorical Categorical SweepsSweeps

2007/08 Ending Fund Balances from “some” categorical programs is permitted to be swept by the State:

1. Tier I

2. Tier II

3. Tier III

4. Other Categorical Programs

5. Total Carryover Sweeps

14

June 30, 2008

($0)

(572,295)

(4,080,749)(1,605,571)

($6,258,615)

Descriptions

Other FlexibilityOther FlexibilityAdult Education

– 15.38% cut in 2008/09 resulting a loss of $228,347– The same 4.46% cut, as other restricted program, in 2009/10 for another hit

of $56,033– There is provisions for 2.50% growth if funding is available

Routine Maintenance Reserves

– Only required to set aside 1% vs. 3% of the General Fund• For 2008/09• Next Four years• Program would have to be built back up over time

Deferred Maintenance

– No local contribution required (0.5%) for 2008/09– Next Four years

15

Moving Towards a Moving Towards a Balanced Budget for Balanced Budget for 2009/102009/10

iv

16

Closing the Final Closing the Final GapGap

The Resource vs. Expense gap can be closed considerably using:

– Categorical flexibility– Increased funding to the base revenue limit– Previously approved reductions

The remaining gap will have to be eliminated using budget reductions

– Those reduction will be presented to the Board after the Superintendents Budget Advisory Committee and Administrative team have completed their recommendations

Categorical Categorical Program StrategyProgram Strategy

17

Categorical Categorical Operations

2009/10 Reductions

2008/09 Reductions

Flexibili

ty

A Possible A Possible StrategyStrategy

New Resources

Unrestriced General Fund

Flexibility

Board Action

Additional

Cuts

18

New

Res

ourc

es

Board ActionU

nres

tric

ted

Gen

eral

Fun

d

Add

ition

al C

uts

Flexibility

Moving Towards a Moving Towards a Balanced BudgetBalanced Budget

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I. 2008/09 Fiscal Year $6,823,145 $1,084,855($5,738,290)

II. Income Options

$1,883,878 $2,408,989$525,111 A. Categorical Flexibility

271,523 271,523 B. Other Flexibility

$2,155,401 $2,680,512$525,111 C. Total Income Options

III. Expense Options

A.

$0 $0$0 B. Total Expense Options

$8,978,546 $3,765,367($5,213,179) IV. Total 2008/09 Fiscal Yr.


20


I. 2009/10 Fiscal Year ($9,892,312) ($15,163,805)($5,271,493)

II. Income Options

$ 123,442$123,442 A. Categorical Flexibility

$0 $ 123,442$ 123,442 B. Total Income Options


21


I. 2009/10 Fiscal Year (cont.)

($311,629)($311,629)A. Workers Comp. Rate

III. Expense Options

($1,000,000) (1,000,000) D. Capital Projects Res.

($1,000,000) ($1,824,664)($824,664)E. Total Expense Options

($8,892,312) ($13,215,699)($4,323,387) IV. Total 2009/10 Fiscal Yr.

(161,305)(161,305)B. Site Supply COLA

(351,730)(351,730)C. Teacher Staffing Res.

Summary Revised Summary Revised EstimatesEstimates

22


I. 2008/09 Fiscal Year $8,978,546 $3,765,367($5,213,179)

(8,892,312) (13,215,699)(4,323,387) II. 2009/10 Fiscal Year

$ 86,234 ($9,450,332)($9,536,566)III. Total Revised Estimate


Note the structural out of balance!Note the structural out of balance!

Cash Flow & How it is Cash Flow & How it is ChangingChanging

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Cash Flow Problems Cash Flow Problems ContinueContinue

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•July Revenue Limit was deferred to September

2008/09 Fiscal Year

•A significant amount of the July & August apportionments will be deferred to October

2009/10 Fiscal Year

•January apportionment did not get deferred

•February Revenue Limit & K-3 CSR will get deferred to July

•Half of the February Revenue Limit & K-3 CSR will get deferred to July

* These are on-going changes* These are on-going changes

Revenue Limit Revenue Limit ApportionmentsApportionments

24

0%2%4%6%8%

10%12%14%16%18%

Original 2008-09 2009-10

1st

Ouch!

Royal

Pain!

2nd

Ouch!

Cash Flow Changes Cash Flow Changes ContinueContinue

($30,000,000)

($20,000,000)

($10,000,000)

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

July

Aug.

Sept. Oct.

Nov.

Dec. Jan.

Feb.

Mar.Ap

ril MayJu

ne

1st Interim No State Action Governor 12/31/08 Revised 2008/09 Adopted for 2009/10

25

Instructional Instructional Materials FundMaterials Fund

26

Under the current strategy this Tier III program will not be swept

The program carried over $2,922,586 into this year and retains a current balance of $2,898,261 at this time

Even with the Tier III reductions the program will have no problems with the estimated $300,000 of costs for adoptions in:

Geometry

Pre-Calculus

Algebra II

RecommendatRecommendationsions

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Onward & Onward & UpwardUpward

RecommendationsRecommendations– Expand the use of Tax/Revenue Anticipation Notes (TRANS) to

support the cash flow needs of the District

– Use the State authorized flexibility and carryover sweeps where possible to support unrestricted District operations

– Strategize the use of Federal stimulus (Title I) resources to support District class size reduction efforts

– Strategize the use of Federal stimulus (IDEA) resources to reduce the need for further reductions and staff cuts

– Take another look at the decline in student enrollment

– Continue the process of developing a balance budget plan for 2009/10

27

Good NewsGood News

We still have a heart beat

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AppendixAppendixA. Tier III Funding Cuts

ix


Funding will be reduced 15.38% in 2008/09 & 4.46% next year

Flexibility is permitted

Programs are:

1. CSR 9th Grade

4. GATE

* Not continued into 2009/10* Not continued into 2009/10

($54,662)

2. Deferred Maintenance

3. Instructional Materials Fund

5. High Priority Schools & II/USP (*)

(168,618)

(320,249)

(40,165)

(68,472)

A1

2008/09 2009/10

($13,413)

(41,377)

(78,585)

(9,856)


Programs are (continued):

6. Instructional Improvement Block Grant

7. Teacher Credentialing Block Grant

8. Professional Development Block Grant

9. Pupil Retention Block Grant

10.School Safety Consolidated (C. Wash.)

11.School & Library Improvement (SIP)

12.Administrator Training Program

13.Adult Education

14.Arts & Music Block Grant

(34,397)

(70,091)

(186,353)

(35,277)

(72,669)

(325,610)

(14,765)

(228,347)

(81,268)

A2

(8,441)

(17,199)

(45,729)

(8,657)

(17,832)

(79,900)

(3,623)

(56,033)

(19,942)

2008/09 2009/10



15.California High School Exit Exam (Interv)

16.Certificated Staff Mentoring Programs

17.Child Oral Health Assessment

18.Community Based Eng Tutoring (CBET)

19.Community Day Schools

20.Counselors, Grades 7-12 (SB 1802)

21.National Board Certification

22.Peer Assistance and Review

23.Regional Occupational Center/Programs

(12,454)

(994)

(664)

(10,972)

(64,782)

(37,502)

(377)

(5,310)

(68,124)

A3

2008/09 2009/10

(50,752)

(4,051)

(2,705)

(44,713)

(263,998)

(152,826)

(1,538)

(21,640)

(277,617)



26. Cal SAFE Academic & Suppt. Serv.

(19,225)

(272,545)

(7,327)

24. Specialized Sec. Prgms. – Health Care

25. Supplemental Hourly Programs

A4

2008/09 2009/10

(4,718)

(66,879)

(1,798)

27. Cal SAFE Child Care & Dev. Serv. (13,884) (3,407)

28. Alternative Credentialing (2,692) (660)

29. Total Tier III ($2,836,456) ($679,228)

Impact of the State Adopted Budget

Documents

adopted state budget

balanced budget

budget plans

districts budget

state flexibility

state levelprobably

income changes

executive summarythe