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First Interim Financial Report as of October 31, 2018

First Interim Financial Report as of October 31, 2018. Presented to the Board of Trustees December 10, 2018. 2018/19 First Interim Assumptions General Fund Revenue. Local Control Funding Formula (LCFF) COLA 3.7% “Supplemental” Funds for targeted students of approximately $1,995,000

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First Interim Financial Report as of October 31, 2018

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  1. First Interim Financial Report as of October 31, 2018 Presented to the Board of Trustees December 10, 2018

  2. 2018/19 First Interim AssumptionsGeneral Fund Revenue • Local Control Funding Formula (LCFF) • COLA 3.7% • “Supplemental” Funds for targeted students of approximately $1,995,000 • ADA:3,055 (same as 2017/18) • Official enrollment of 3,150 (CBEDS) is 3 students more than 2017/18 

  3. 2018/19 Revenue

  4. 2018/19 First Interim AssumptionsGeneral Fund Revenue – Major Changes fromAdopted Budget • LCFF +$175,000 • COLA was increased by 0.7% when the state adopted its budget (after our Adopted Budget) • ADA remains unchanged from Adopted Budget projection • Federal Revenue +$205,000 • Title I unused 2017/18 award, and 2018/19 increase • Title II unused 2017/18 award • Title III unused 2017/18 award, and 2018/19 increase • LEA Medi-Cal receipts year to date

  5. 2018/19 First Interim AssumptionsGeneral Fund Revenue – Major Changes fromAdopted Budget (continued) • State Revenue -$194,000 • “One-time” Mandate reimbursement funded $184 per ADA (decline from $344, or $553,000) • Low Performing Student Block Grant ($270,000) • Mental Health reimbursement for 50% of program specialist compensation • Local Revenue +$37,000 • School Site Donations Received • Funding elimination from Education Foundation for after school sports • Increased reimbursement from Out of Home Care funds (special ed revenue)

  6. 2018/19 First Interim AssumptionsGeneral Fund Expenditures • Salary • Budgeted per Board approved salary schedules • January 1 minimum wage increase to $12.00 for noon duty aides • Step, Column and Longevity: Actuals for 2018/19 • Health and Welfare: Maximum medical benefits package $21,242 • STRS pension rate increase 1.85% (16.28% from 14.43%) • PERS pension rate increase 2.531% (18.062% from 15.531%)

  7. 2018/19 First Interim AssumptionsGeneral Fund Expenditures • Supplies • Elementary school site budgets at $68 per student and $109 at Rancho Intermediate per student (CPI increase of 3%) • 2017/18 Restricted Carryover, unrestricted school site/school donations carryover, and unused prior year federal awards are appropriated primarily in supply expenditure object codes

  8. 2018/19 Expenses

  9. 2018/19 First Interim AssumptionsGeneral Fund Expenditures – Major Changes fromAdopted Budget • Certificated Salaries +$213,000: • Addition of one teaching FTE for primary class at Meadow Green • Low Performing Students Block Grant (sub days for p.d.) • Classified Salaries +$6,000 • Student interns (employees, not indep. contracts) • Increase of NDA hours at every campus • Noon duty aide hourly wage increase eff January 2019 • Adjustment of retroactive salary raises to actuals

  10. 2018/19 First Interim AssumptionsGeneral Fund Expenditures – Major Changes fromAdopted Budget • Statutory and Health Benefits -$224,000 • Medical premium savings – Kaiser cap reduced by 3.7% • Statutory benefit increase for 3% off schedule payment • Benefits for additional staff – teacher, interns • Supplies +661,000 • Legally restricted and prior year unspent awards • School site carryover budgeted • School site donations budgeted

  11. 2018/19 First Interim AssumptionsGeneral Fund Expenditures – Major Changes fromAdopted Budget • Services +$30,000 • Water usage increase • Restricted carryover budgets • Low Performing Students Grant (training consultants) • Additional software licenses • Interns moved to classified employee category • Other Outgoing +$30,000 • 1 student attending outside program

  12. 2018/19 First Interim AssumptionsGeneral Fund Expenditures – Major Changes fromAdopted Budget • Transfers In/Out -$968,000 • One-time mandate funds (reduced by $553,000) • Transfer of Supplemental grant funds carryover done at closing in 2017/18, therefore not transferred in 2018/19

  13. 2018/19 First Interim AssumptionsGeneral Fund Reserve • The Designation For Economic Uncertainties Reserve target is at 5% per board policy • This additional 2% above the state required minimum is approximately $600,000 in reserve above $970,000 required by the state criteria • If the district were to reserve one month’s payroll, the total would be 8% (approximately $2,600,000)

  14. 2018/19 First Interim AssumptionsGeneral Fund Reserve • Chromebook Initiative reserve of $875,000 to fund replacement costs of all Chromebooks • Textbook adoptions for science and social studies funded from reserves of $430,000 and restricted lottery carryover • LACOE’s “BEST” project fee of $178,000 for financial system conversion reserved until decision is made to change county oversight which would avoid this fee

  15. Multi-year ProjectionsRevenue Assumptions(Subsequent Years) • Local Control Funding Formula and Special Ed Sources: • COLA 2.57% in 2019/20 2.67% in 2020/21 • ADA 0 ADA change in 2019/20 0 ADA change in 2020/21

  16. Multi-year ProjectionsRevenue Assumptions(Subsequent Years) • Mandated Costs one-time funding removed ($530,000) • All other revenues remain relatively constant (including Mandate Block Grant of $94,000)

  17. Multi-year Projections Expense Assumptions (Subsequent Years) • 2019/20 Salaries and Employee Benefits • 1.8% Certificated step and column costs • 2.0% Classified step and longevity costs • 0.8% Non-unit step and longevity costs • 6.0% Increase in employee health and welfare benefits • LJEA step/column costs assume 2 teacher retiree savings • STRS pension increase 1.85% (from 16.28% to 18.13%) • PERS pension increase 2.74% (from 18.06% to 20.80%) • Classified Noon Duty Aide minimum wage increase to $13/hr

  18. Multi-year Projections Expense Assumptions (Subsequent Years) • 2017/18 Legal and Board restricted carryover is fully spent in 2018/19 • 2019/20 Other District Expenses $155,000 Remove Chromebook Initiative Costs $100,000 Special education encroachment increase $95,000 General Election Costs removed (bi-annual) • 3.50% Consumer Price Index (CPI) cost increase for supplies, services, utilities, contracted services, insurance services, transportation, non-public schools

  19. Multi-year Projections Expense Assumptions (Subsequent Years) • 2020/21 Salaries and Employee Benefits • 1.8% Certificated step and column costs • 2.0% Classified step and longevity costs • 0.8% Non-unit step and longevity costs • 6.0% Increase in employee health and welfare benefits • LJEA step/column costs assume 2 teacher retiree savings • STRS pension increase 0.97% (from 18.13% to 19.10%) • PERS pension increase 2.70% (from 20.80% to 23.50%) • Classified Noon Duty Aide minimum wage increase to $14/hr

  20. Multi-year ProjectionsExpense Assumptions(Subsequent Years - Continued) • 2020/21 Other District Expenses $100,000 Special education encroachment increase $85,000 General Election Costs added (bi-annual) • 3.23% CPI increase for supplies, utilities, contracted services, insurance services, transportation, non-public schools

  21. Multi-yearGeneral Fund Summary

  22. Surplus/Deficit Spending • Minor deficit spending is projected in 2018/19 primarily for one-time expenses of 3% off-schedule payment to CSEA and final phase of chromebook program • Surplus in 2019/20 of $449,000, reducing to $123,000 in 2020/21 • 2019/20 and 2020/21 are the final years of large pension increases public agencies must absorb in addition to routine costs of step and column and health and welfare increases

  23. Future Considerations…. • State budget projections for 2019/20 will be released in January 2019. New Governor! Will he fund above COLA as Brown did? Will more one-time dollars become available? • Governor Newsom’s focus for education is stated to be early education – will there be funding dedicated to new/existing programs for preschoolers?

  24. Facilities • 2018/19 is a GREAT year for district facilities! • Voters approved a general obligation bond – MEASURE LL last month with overwhelming support! • Architects are dusting off the Olita project and the facilities team is determining best course of action for all sites. The Olita project will be “first up” during the 2019/20 school year. • Proposition 39 funds totaling over $700,000 have been spent on energy reduction (lighting retrofit to LED’s and a/c replacement at El Portal)

  25. Facilities • Alexander Graham Bell said, “when one door closes, another one opens” • We were saddened to hear that Heights Christian Schools will not continue operating at our Maybrook campus  • $240,000 rental income will be missed to support facility repairs and deferred maintenance • Having a vacant campus presents a possible opportunity for interim housing of students while construction occurs at their home campuses • Timelines are very tight, but we are hoping this can work 

  26. Facilities (continued) • Special Reserve Fund receives ongoing lease income and contains sale of Carden property funds • This income supports deferred maintenance and repairs expenses (which keep growing) • Ongoing annual lease income will now be approximately $670,000 (Starbuck property)

  27. Nutrition Funds • The “food shaming” law put in place January 2018 has created a large and growing number of negative balance student accounts • Negative balances cannot be absorbed by the federal nutrition fund – general fund currently pays for these accounts at the end of each year • 2017/18 contribution was $2,573. 2018/19 is projected to be over $11,000 • Staff has made phone calls, mailed letters, emailed letters informing of these negative balances with little success 

  28. Nutrition Funds • Staff is reviewing changes to the meal serving line coupled with the introduction of an alternative meal policy for negative balance accounts to contain this growing deficit • In the meantime, this federal program requires no more than 3 months operating expenses in reserves: • In 2017/18 the fund spent $141,000 of reserves on various kitchen equipment and a delivery truck • Planned deficit spending remains this year to reduce reserves to meet this federal requirement

  29. Nutrition Funds • Estimated to take an additional three years to spend down approximately $600,000 • Staff are finalizing plans to direct charge this fund for custodial cleaning time, which will benefit the general fund slightly and reduce the dollars going into reserve

  30. First Interim Financial Report Certification of Financial Condition  Positive Certification • ‘As president of the governing board of this school district, I certify that this district will be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years.’ Qualified Certification • ‘As president of the governing board of this school district, I certify that this district may not meet its financial obligations for the current fiscal year and subsequent two fiscal years.’ • Negative Certification • ‘As president of the governing board of this school district, I certify that based upon current projections this district will be unable to meet its financial obligations for the remainder of the fiscal year or for the subsequent fiscal year.’

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