Second Interim Budget Report 2012-13 Activity through January 31, 2013 Presented March 13, 2013

1. Mt. Diablo Unified School District Second Interim Budget Report 2012-13 Activity through January 31, 2013 Presented March 13, 2013 Budget Advisory Committee Meeting Steven Lawrence, Ph.D., Superintendent Bryan Richards, Chief Financial Officer

2. 2012-13: No COLA, but Prop. 30 passage reverses trigger cuts • The 3.24% COLA has been fully offset by an addition to the deficit factor ($5.2M ongoing reduction to the base). • Passage of Proposition 30 means no planned additional mid-year cuts this year. • School year remains at 180 days. • No furlough days. • Improving State economy leads governor to plan for 1.65% COLA in the 2013-14 budget. • This creates $2.8M ongoing revenue to help close deficit. • However, Local Control Funding Formula could affect this.

3. Funded Revenue Limit 2011-12 vs. 2012-13 one time trigger cut went away, No COLA Graph style courtesy of School Services of California, Inc.

4. What does a 22.272% cut look like? • School year is 180 days. • 22.272% of school year is just over 40 days. • To cut school by 22.272% we would have to close after school ended on April 17th. • A 22.272% reduction of the school day would equal about 1 hour and 20 minutes less instruction daily. • However, we still offer a full instructional year. We have reduced services throughout the district rather than reduce instructional year.

5. 12/13 revenue limit deficit widens to $1,492.45/ADA

6. Declining enrollment • We are still in a declining enrollment funding model, although not quite as large a drop as projected at first interim • We are projecting a decline of 118.56 ADA in 2012/13 from 2011/12 • This is in addition to the decline related to the CVHS charter school conversion (1,635.58 ADA)

7. MDUSD ADA is still declining!

8. How does revenue limit funding look? *Includes reduction due to CVHS Charter

9. Unrestricted General Fund Revenue

10. Revenue Limit is 80% of unrestricted general fund revenue.

11. Unrestricted General Fund Expenditures

12. Salaries and Benefits make up 89.57% of expenditures & transfers out.

13. Unrestricted General Fund Summary

14. Components of Ending Balance

15. Why do we need a higher fund balance than in years past? • Most of fund balance isn’t cash anymore: • State Deferrals mean more accounts receivable at year end • Need higher fund balance to maintain positive cash • To deal with declining enrollment • To deal with continued 22.272% deficit to state revenue limit funding • To equip us to keep programs going as long as we can • To decrease need for more layoffs • To prepare for required 3% reserve starting in 2015/16

16. Restricted General Fund Revenue

18. Restricted General Fund Expenditures

20. Restricted General Fund Summary

21. Other Funds of the District • Funds for special purposes excluded from the General Fund • Special Revenue Funds • Charter School – Form 09I • Adult Education – Form 11I • Cafeteria – Form 13I • Deferred Maintenance – Form 14I • Capital Projects Funds • Building (Proceeds of Measure C for construction) – Form 21I • Capital Facilities (a.k.a. Developer Fees) – Form 25I

22. Other Funds of the District (cont’d) • Capital Project Funds (continued) • County School Facilities Fund (Statewide bond Prop 1A, 55) – Fund 35I • Capital Project Fund for Blended Component Units (Mello-Roos, Measure A) – Fund 49I • Debt Service Funds • Bond Interest & Redemption Fund (Measure C) – Fund 51I • Debt Service Fund for Blended Component Units (Measure A) – Fund 52I • Trust Funds • Foundation Private-Purpose Trust Fund – Fund 73I

23. Supplemental Information • Form AI: Average Daily Attendance decrease of (116.55) in 11/12 will decrease funding for 12/13. Additionally, we lose declining enrollment protection for 1635.58 ADA due to CV Charter. Projected decrease of (118.56) ADA in 12/13 affects funding in 2013/14. • Form CASH: Cash Flow – Ending GF cash will be positive, but down from last year • Form RLI: Revenue Limit Calculations • Form 01CSI: Criteria & Standards • Form CI: Certification to sign summarizes Criteria & Standards – POSITIVE Certification

24. Form MYPI: Multi Year Projection • Undesignated @ 6/13 $ 24,951,418 • Operating Deficit 2013/14 (5,042,704) • Adjustment in 2% reserve 62,546 • Unappropriated Balance 6/14 19,971,260 • Operating Deficit 2014/15 (4,930,283) • Adjustment in 2% reserve 56,579 • Unappropriated Balance 6/15 $ 15,097,556 Based upon second interim guidance, and delay of CSR until 15/16. If CSR comes back in 14/15 the bottom line becomes $10,952,868.

25. Positive Certification – What does it mean? • The District projects that it will meet its financial obligations for the current fiscal year and two subsequent fiscal years. • If necessary, we can issue a TRAN to deal with cash flow issues due to the State’s continuing deferrals. • We have enough fund balance to offset our current (lower) level of deficit spending for two additional years with no additional cuts. However, we cannot continue to deficit spend indefinitely. • The return of K-3 Class Size Reduction adds another $4M in deficit spending under current law when it returns in full. This changes under the Local Control Funding Formula if it becomes law.

26. Local Control Funding Formula • An “Entitlement Target” will be calculated for each district • Equal to Base Grant + Supplemental Grant (FRL/EL/FY)+ Concentration Grant (FRL/EL/FY >50%) + Augmentations + Add-Ons • Entitlement Target adjusted each year for COLA, demographic changes, grade span changes • 2013-14: each LEA receives at least a hold-harmless amount equal to 2012-13 funding for revenue limits + included categorical programs • Each FY thereafter: each LEA receives some amount of growth, added to the hold-harmless amount, that moves the LEA toward its Entitlement Target • Administration estimates 7 years to reach Entitlement Targets • 50% of Prop. 98 growth used to move LEAs toward Entitlement Targets (other 50% buys down deferrals) • Growth funding proportionally moves all LEAs toward the Entitlement Targets Information Courtesy of School Innovations and Achievement

27. Local Control Funding Formula Graph courtesy of School Innovations & Achievement Hold Harmless Funding Entitlement Target TIIG Add-on Trans. Add-on 2012-13 TIIG CSR Augmentation CTE Augmentation 2012-13 Trans. Concentration Grant 2012-13 “Included” Categoricals Supplemental Grant 2012-13 Revenue Limit Base Grant

28. Local Control Funding Formula • Department of Finance released rose-colored glasses report of projected full funding under LCFF. Unfortunately, revenue streams to make it a reality long term do not exist. • A new report indicates the District would get less funding over time under the LCFF than under the Revenue Limit formula with COLA and gradual deficit elimination over same time period. • Some of the inter-year deferrals are projected to be bought down, however, the creation of the Education “Protection” Account means more intra-year deferrals until June.

29. What next?More fromSacramento • Governor Brown’s budget is going through policy and budget committees in the legislature, starting tomorrow. • The State has now closed its deficit and the Governor proposes funding the COLA in 2013-14 via the LCFF. • The May Revise will adjust projections for final proposed budget to legislature. • Budget is due from legislature June 15th.