Budget Recommendations for Denver Public Schools 2009-2010 Budget Year 1/29/2009

1. Budget Recommendations for Denver Public Schools2009-2010 Budget Year1/29/2009

2. 2009-2010 budget recommendation and key assumptions • Currently, we are proposing a 2% cut to schools’ base funding dollars and similar cuts to departmental budgets • Even after these cuts, there is a need for conservatism because of the tremendous uncertainty we are facing • Key Revenue Assumptions: • Enrollment – projecting slight increase to 70,338 in 2009 from 70,083 • State rescission – currently projected at $9 million • Decrease of 15% expected in interest earnings and specific ownership taxes as compared to where we were projected to be in 2008-2009 • Decrease in pension savings to one third of originally projected $20m

3. With the aforementioned massive financial pressures on DPS, what does this mean for the 2009-2010 budget? (continued) • Key Expenditure Assumptions: • Inflationary costs such as utilities, fuel, software licenses projected to remain within inflation • Class Size Relief Fund to increase slightly as compared to 2008-2009 • Reduce spending on capital maintenance to the statutory minimum level of $307 per student • All weighted SBB allocations to remain flat (except for SBB base)

4. As we cautiously move forward, we need to be fully aware of our risks and opportunities: • Upside: • Enrollment greater than projected - $2-5 million • PERA merger - $15-30 million • Federal stimulus plan proposes significant increases to Title I, Title VI and significant funds for construction grants • Downside: • Unfavorable Mill Levy freeze court ruling - $5-10 million • Additional state rescission in 2009-2010 - $5-10 million • Increased PCOPS costs - $7-17 million

5. Summary of 2008-09 State Rescission and 2009-2010 cuts • 2008-09 - On January 19, the Governor’s Office recommended to JBC $52 million in general fund cuts to K-12 • At this point, we think the impact to DPS would be $3 million, but could increase • Joint Budget Committee to review in early February • 2009-10 - On January 27, Governor’s Office recommended to JBC $128 million in cuts to K-12 • At this point, we think the impact to DPS would be $9 million • Could increase or decrease in legislature

6. Summary of the House approved American Recovery and Reinvestment Act of 2009 $15 million for Title I-A for DPS • $3-6 million in various deductions – for example, choice transportation, supplemental services, charter/private schools, state deductions • $9-12 million would be total net number to schools • The use of these funds will be subject to rules and guidelines yet to be defined $9 million for Title VI for DPS • These funds could be used to increase services provided in our school buildings such as high school transition services, speech language and occupational therapy positions, multi lingual assessment teams $31 million for Construction grants for DPS to modernize and repair schools Other K-12 funding to be distributed nationally: • $1 billion for Title II-D Education Technology • $39 billion to states to address K-12 and higher education budget cuts

7. We have the following mitigations we could choose to implement in the event we are adversely impacted: • Freeze on capital spending – $5-10 million • Salary freeze – $15 million • Lower pension costs - $5-15 million • Reduction in salaries to match reduction in state revenue • Reduction in Force/Freeze on hiring • Additional cuts to departments or schools – TBD