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EGEA Budget Philosophy

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EGEA Budget Philosophy

EGUSD School Board

February 17, 2009

Objectives:

- To explain why we are at impasse
- To explain where we go from here

- Budgeting should serve educational needs
- Spend this yearâ€™s money on this yearâ€™s students
- Make decisions based on real numbers

- Slides 5, 7, 9, and 11 are graphs which show different projections of the Unrestricted Ending Fund Balance minus the 2% state mandated reserve.
- EGEA has subtracted the 2% reserve in all the graphs because this is the number that most accurately reflects the money available for bargaining purposes.
- The blue bar graphs represent projections made by the District.
- The red bar graph represents the actual ending balance.
- The blue graphs are extremely important because these are the numbers the District uses to make bargaining decisions.

- All 7 projections were under the actual amount which came in around $6.3 Million.
- There is a great variance between projections and the real number. For instance, in June of 04 the District projected an ending balance deficit of over $10 million, a difference of over $16 million from the actual amount.
- Notice the estimated projection, a projection made a month prior to the close of the fiscal year is not as accurate as the original budget made a year in advance. A difference of almost $6 million form the actual number.

All 12 projections were under the actual amount which came in at almost $18 million

4 projections were for deficit ending balances, while the actual number was almost 18 million.

In November of 2005, the District projected a deficit around $4.5 million, a difference of over $22 million.

The Estimated Actuals in June of 07, the most recent projection compared to the actual, you see a difference of almost $12 million.

2006-2007 was a pivotal year for bargaining. We were in the final year of a 3 year agreement. We had contingency language- if more money came in from the state, which it did, then we could bargain for those additional monies. We were meeting regularly during this year for that purpose. These projections were considerably off, and had a great impact on bargaining.

- The District made 14 projections, 13 were under the actual amount, while 1 was over.
- Again the District projected deficit ending balances while the real number was over $23 million.
- We see a difference of over $31 million from the projection made in Nov of 05 and the real number.
- The most optimistic projection made in Oct of 06 for over $26 million. This projection and many others did not include the additional salary increase of around 2.4% ($7.3) agreed upon in April.

- This slide shows the current year projections.
- There is no red bar graph because there is no real number yet.
- Again we see a wide variance in projections with a difference of over $43 million between October of 06 and March of 08.
- The last projections come form the recently e-mailed budget watch projecting a deficit of around $600,000.

- This graph is a summary of the 4 previous graphs.
- The blue line and points represent all the District projections and the red stars represent the real number.
- For the 3 years that we have a real number:
- 32 out of 33 projections were under projected.
- 9 projections were for a deficit ending balance while the actual numbers came in at 6, 17, 23 million.
- Over half (17) projections were off by over $5 million and almost 25 % (8) were off by over $ 10 million.

- The districts projections are consistently and considerably under projected.Â

- The graphs in slides 16, 18 and 20 compare the Districtâ€™s projections to EGEAâ€™s calculations for salary increase proposals .
- The District projected what the ending balances would be if the offers were accepted. These projections are once again seen in the blue bar graphs.
- EGEA recently calculated what the ending balances would have actually been working backwards from the real ending balance. These numbers are represented by the red bar graphs.

- In November of 06 EGEA made an offer for a 2% salary increase (retroactively) for 06/07, 2% for 07/08 and 1% for 08/09.
- The District projected a little more than $4 million for 06/07 and 07/08, and our calculations show ending balances would have been over $19 million, a difference of over $15 million.
- For 08/09 the bar is orange because that number is based on the 1st Interim number of 08/09 and is not a real number. The difference is over $12 million.
- EGEA believed then it was a reasonable and economically sound offer. The District claimed they the could not afford this offer. Obviously they could.

- EGEA made another offer in February of 07. No salary increase for 06/07, 5% for 07/08,Â 0 for 08/09
- Again the blue graphs represent the Districts projections made in February of 07 with deficits in the years 07/08 and 08/09.
- Our calculations show there would have been a surplus of over $25 million in 06/07, over $22 million in 07/08, and $14 million in 08/09. A difference ofÂ over 20 million in all three projections.
- Yet again, another offer that we felt then was reasonable and economically sound was denied due to deficit projections.

- After many prolonged negotiations and offers that were turned down, we finally agreed to a one year salary increase of over2.4 % (2%, 1% H step) retro for 06/07.
- A few weeks before we accepted this agreement, the district kept claiming that is all the could afford based in their projections. In fact they even projecting deficits in 08/09 and 09/10.
- The District projected at the time a little over $1 million for 06/07, the actual ending balance was almostÂ $18 million.
- A similar $1 million projection for 07/08 ended up with a real balance of over $23 million, almost a $22 million difference.
- So when we say we are still bargaining for 06/07 this is the reason why.

- The District continually denies reasonable offers based on their 3 year budget projections.
- The projections are so varied and under projected making bargaining close to impossible.
- We canâ€™t bargain for the future because of these projections. When there is considerable amounts of money available like in the years 06/07 and 07/08, we canâ€™t bargain for these dollars because the District claims itÂ needs the money based on deficit projections in the future.
- So we canâ€™t bargain for the past.
- So in essence we canâ€™t bargain.
- This is the reason why we are at impasse.

- The red and green bar graph represent actual ending balances and special reserve funds. (2008-2009 based on Districtâ€™s 1st Interim)
- The amount of available reserves has grown considerably the last 3 years. The available reserves have grown by $23 million to reach almost $30 million by 08/09
- The blue graph represents the Districtâ€™s projected deficit spending for the next 3 years, a projection of over $110 million.
- No amount of accumulated reserves could match this projected number.
- Again pointing out that without real numbers it is impossible for us to bargain intelligently.

- Develop common agreements on how we budget for the future
- Put an emphasis on real numbers and real trends
- Plan for problems without creating a negative environment
- Create an educational and financial vision for the future