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Board of Education Budget Meeting

Board of Education Budget Meeting. November 4, 2010. 11-4-10 Workshop Overview. The Purpose : Review and Update Deficit and Deferral Realities Fund Availability Reduction Options Answer Board Questions from Previous Workshops Provide a Timeline for Board Actions. 2. 2.

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Board of Education Budget Meeting

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  1. Board of Education Budget Meeting November 4, 2010

  2. 11-4-10 Workshop Overview • The Purpose: • Review and Update • Deficit and Deferral Realities • Fund Availability • Reduction Options • Answer Board Questions from Previous Workshops • Provide a Timeline for Board Actions 2 2

  3. Review of the Realities Deficit Reality of $120m Additional Deferrals May Necessitate Increased Borrowing It is Impossible to Keep Reductions Away from Classroom Board Must Approve Preliminary Reduction List by November 16 and First Interim Report by December 2 HR Must Begin PKS Process for Certificated Layoffs in December School Site Allocation Formula Must Be Decided in December

  4. Update to the District Deficit State Budget Approved by Governor in September $30.1m Additional Revenue Limit Restoration of Negative COLA and $252/ADA Reduction $ 3.5m Mandated Cost Claims Reimbursement District Received 90% or $19.0m of Federal Jobs Bill Fund District Received $9.0m for the 2009/10 SDA. Still Waiting for 2010/11 Remaining Amount of $9.0m 4 4

  5. Update to the District Deficit Baseline Current Deficit $ (141.6)m** Federal Jobs Bill Fund (One-time Only) $ 21.0m Projected Deficit* $ (120.6)m** Potential Revenue Increases State Approved Budget $ 30.1m Final ARRA SFSF Funding $ 4.0m Mandates ($3.5m less 50% reimbursement to schools $ 1.7m Parcel Tax (Prop J) offset $ 42.2m Best Case Deficit $ (42.6)m** *County is Requiring Districts to Provide Solutions Based on Projected Deficit **Deficit is Subject to Change Based on Final Ending Balance for 2010/11 and New State Actions 5 5

  6. Risks for State Budget Mid Year Cuts State Budget is Based on Very Optimistic Revenue Projections; Higher Than Projected at May Revise California July and August Revenues are Tracking to the May Revision Forecast, Not Exceeding It Assumes State Will Receive $5 Billion of Federal Funds Expenditure Cuts: $7.5 Billion Are Assumed However, One-third of the Fiscal Year Has Already Elapsed Without Reductions in Place Assumes Personal Income Growth of 3.2% in 2010 and 4.5% in 2011 UCLA Forecasts Weaker Growth 6 6

  7. Impact of Staffing/Enrollment to Ending Balance Over-budget - Certificated Staff (74.37) FTE $ (6.3)m Excess Staff Discipline Cases Over-formula Workers Compensation Mainstreaming Impact Over-budget - Classified Staff (51.35) FTE $ (2.3)m Excess Staff Discipline Cases Return to Work Program Workers Compensation 4th Friday Adjustment ( 22.00) FTE $ (1.8)m Earned Enrollment Reserve ___________ $ 2.6m Total (147.72) FTE $ (7.8)m Numbers Are As Of 11/2/2010 …. Will Change …. Moving Target 7 7

  8. State Budget Brings More Deferrals Delayed Funding For Schools 8

  9. Fund Ending Balances Not Available to Solve the Deficit 9 9

  10. Fund Ending Balances Available To Solve the Deficit 10 10

  11. Available Unrestricted Funds for $120.6m Reductions • $120.6m Represents 20% of Total Funds Available for Reduction • 2010/11 General Fund Unrestricted $ 688.59m • Total Fixed Costs (i.e. utilities, interest, licenses) $ (42.62)m • Required Reserves $ (31.11)m • Funds Available for Reduction$ 614.86m School Sites Central Office • Books and Misc Supplies $ 11.05m $ 2.85m • Other Non-personnel Budgets $ 10.40m $ 1.13m • Certificated Salaries & Benefits $ 442.86m $ 2.19m • Classified Salaries & Benefits $ 98.09m $ 46.29m Total$ 562.40m $ 52.46m 92% 8% 11 11

  12. Breakdown of Fixed Costs - $(42.6)m Utilities-Includes Gas, Electric, Rubbish, Water, Sewer$(22.2)m Telephone-Data Network, Voice Communication$ (6.7)m Liability, Property Insurance Premiums $ (6.5)m Transfer to Adult ED Fund $ (.7)m Interest Expense (TRANS) $ (5.1)m Software Systems Licenses (PeopleSoft, Zangle) $ (4.7)m Transfers to Retiree Medical Funds $ (1.6)m Administration Cost Reimbursement $ 4.9 m Total$ ( 42.6)m 12

  13. Breakdown of District Reserves Unrestricted General Fund $(31.1)m Ending Balance Increase/Designated Reserve$ ( 6.0)m Designated Reserve Accounted for In the $120.6m Deficit Due to SDA Restoration Reserve for Economic Uncertainties (2%) $ (22.5)m State Require that Districts Set Aside 2% of Total General Fund Expenditures Revolving Cash $ ( .1)m Fixed Amount Reserved for Bank Accounts for Emergency Expenditures Stores Inventory $ ( 1.7)m Value of Instructional and Other Materials Held in Inventory Prepaid $ ( .8)m Reserve for Expenditures Paid in Advance Such As Travel and Postage Total $ (31.1)m 13 13

  14. Criteria For Available Central Office Resources Central Office Books and Misc Supplies $ 2.85m Other Non-personnel Budgets $ 1.13m Certificated Salaries & Benefits $ 2.19m Superintendent Deputy Superintendent Academics Area Superintendents Classified Salaries & Benefits $ 46.29m H/R, Payroll, Finance, Landscapers Police Service Officers Total$ 52.46m Unrestricted General Fund Only Excludes Departments or Personnel Directly Serving Schools Excludes Fixed Costs i.e. Software Licenses, Utilities, Interest 14

  15. Breakdown of the $52.5m Unrestricted General Fund in Central Offices 15 15

  16. Breakdown of the $52.5m Unrestricted General Fund in Central Offices (cont’d.) 16 16

  17. Legal Restraints to Outsourcing to the Private Sector • Contractual Ramifications • Employment Contracts Limit Outsourcing Potential • Education Code Section 45103.1 Restrictions • Severely Limits Circumstances under which a District can Outsource • Confidentiality Restrictions • SDUSD Must Maintain Strict Control Over Employee Records and Data • Private Sector Agencies Must Pay Prevailing Wages – This Severely Limits Savings Potential 17 17

  18. Barriers Around Outsourcing to SDCOE or Other Public Agency • Loss of Flexibility to Conduct Ad Hoc Analysis • Loss of Control Over Processes, Methods • Minimal Control Over Employee Flexibility and Priorities • Potential Systems/Technology Incompatibility • Conflict With SDCOE Oversight Role • SDCOE Has Oversight Over SDUSD Budget and Financial Reporting. • They Cannot Also Build the Budget (AB1200) • SDCOE Pays Prevailing Wages; No Cost Savings • SDUSD Scope is Too Large for SDCOE to Absorb • Public Agencies Operate Under Different Priorities 1 of 42 Districts 18 18

  19. Criteria for $137.3m Potential Solutions Solutions Must Help General Fund Unrestricted Solutions Must Be Ongoing in Nature Reductions to Other Funds Will Not Impact the Deficit Can Be Implemented Without Negotiations Given the Magnitude of the Deficit, It Is Impossible to Keep Cuts Away From the Classroom 92% of the Potential Reduction Pool is Budgeted at Sites 19 19

  20. Options for Solutions to the $120.6m Deficit 20 20

  21. Other Options for Solutions to the $120.6m Deficit (cont’d.) 21 21

  22. Other Options for Solutions to the $120.6m Deficit (cont’d.) 22 22

  23. Other Options for Solutions to the $120.6m Deficit (cont’d.) 23 23

  24. Impact of $30m Site Based Reductions School Allocations Will Be Reduced by an Equitable Percentage Formula That Takes Into Consideration Factors Such As: Grade Level Enrollment Number of Free and Reduced Eligible Students Number of ELL Students Sites Will Have the Discretion to Implement Reductions Where Least Impactful to Their Programs Schools will be Required to Maintain Class Sizes According to Contracts 24 24

  25. Impact of 10% Cut to Central OfficeAuxiliary Services Value of 10% Reduction $ .58m Impacts: Reductions to Auxiliary Services will impact the management, leadership and bargaining unit interface affecting the operational, human resources and financial resources of one of the district’s largest groups of service providers Strictly “reactive” capabilities, no “pro-active” actions supported, focus reduced strictly to safety and security items Landscaping, custodial, maintenance, warehouse and distribution will all be negatively impacted 25

  26. Impact of 10% Cut to Central OfficeBoard of Education Value of 10% Reduction $ .08m Impacts: Memberships or other Board activities will have to be reduced accordingly. Contracted services will be reduced accordingly Cumulative Prior Years’ Reduction: $ Only -27%; FTE Only -27% 26

  27. Impact of 10% Cut to Central OfficeDeputy Superintendent-Academics Value of 10% Reduction $ .36m Impacts: Program oversight reduction or elimination may jeopardize program quality and funding compliance (Home/Hospital, Licensed Children’s Institute, Williams Legislation and McKinney Vento Education Assistance Act) Increasing staff workload may result in student safety concerns, compliance issues, audit findings, funding reduction in the upcoming fiscal year, reduction of students served, impact to families, schools and community Eliminate process for facilitating the evaluation and recommendation to BOE of newly adopted instructional materials. Jeopardize compliance with Education Code 60119, 60420-60422, AB 831 and SB 550 27

  28. Impact of 10% Cut to Central OfficeDeputy Superintendent-Business (Other) Value of 10% Reduction $ .22m Impacts: Reduction of services from Strategic Sourcing. Increased time for response to schools and employees seeking services. Longer response times for RFPs, bids and purchase orders Instructional Facilities will not be able to provide the level of Ad Hoc analyses currently provided to the Board and administration 28

  29. Impact of 10% Cut to Central OfficeDistrict Relations Value of 10% Reduction $ .20m Impacts: Reduction of event management, board meeting broadcasts, e-newsletters and/or publications Decreased capacity to deliver services directly to schools (e.g. student service learning) Reduction in required annual mandatory site volunteer and coordinator training Less assistance with fiscal and policy matters and issues that may impact the district Reduction in translation services to schools and departments during a trend in increased demand Legal repercussions for reduction of mandated translation services Cumulative Prior Years’ Increase/Reduction: $ Only 14%; FTE Only -22% 29

  30. Impact of 10% Cut to Central OfficeFinancial Services Value of 10% Reduction $ .97m Impacts: Scale down annual Budget Book and District Profile (print and web versions) to basic report Eliminate monthly financial reporting results and ad-hoc requests to the Board and Senior Leadership resort to reporting only at 1st and 2nd Interims Delays in payment process may result in delays or lack of procurement of needed classroom materials Compliance related reporting would be delayed Cumulative Prior Years’ Reduction: $ Only -13%; FTE Only -25% 30

  31. Impact of 10% Cut to Central OfficeHuman Resources Value of 10% Reduction $ .55m Impacts: The department will not be able to carry out human resources functions and meet the operational expectations set by the Board Personnel actions will require increased time – reclassifications, employee concerns, enrollment impacts on allocations, etc will all be delayed Hiring and all other job-related tasks will take longer Ad hoc analyses will be impossible Cumulative Prior Years’ Reduction: $ Only -32%; FTE Only -23% 31

  32. Impact of 10% Cut to Central OfficeIntegrated Technology Support Services Value of 10% Reduction $ 1.11m Impacts: Significantly impacts the support, implementation, and training for the i21 program Delay in computer support and repairs Reduction in support to the growing educational and business technologies at schools and central office Impacts all departments ability to do work when systems are down Reduction of SARB related services Delay in SARB cases referred to court Cumulative Prior Years’ Increase: $ Only 11%; FTE Only 4% 32 32

  33. Impact of 10% Cut to Central OfficeLegal Services Value of 10% Reduction $ .29m Impacts: It is not impossible to make reductions without reducing staff Increased need for outside counsel at a higher cost Smaller law library and reductions in professional growth and continuing legal education Additional burden on Legal Services support staff Lengthened response time on legal issues and inquiries Focus on urgent audit issues instead of routine district-wide audits Cumulative Prior Years’ Increase: $ Only 0%; FTE Only 18% 33

  34. Impact of 10% Cut to Central OfficeOffice of Accountability Value of 10% Reduction $ .01m Impacts: Some district assessments may need to be eliminated Mandated reporting deadlines at risk leading to sanctions or loss of funding for programs Delays in DataDirector support Program evaluations not conducted in a timely manner Delays in responses to data requests Delayed efforts/processes to improve data accuracy, completeness and innovation 34

  35. Impact of 10% Cut to Central OfficeSchool Police Value of 10% Reduction $ .55m Impacts: Mandated and BOE policy programs will become a site based responsibility Support of Community Based Organizations (CBO’s) related to school and child safety (Safe Routes to School, Project Safe Way, City Heights Collaborative, STAR/PAL, Crime Stoppers, etc) may be eliminated All fire, intrusion, and camera monitoring/dispatching will be outsourced All telephone calls requiring an actual police response will be directed to SDPD All 3,000 annual criminal investigations and 850 criminal arrests will be directed to SDPD. NOTE: According to SDPD, failure to pass City proposition “D” will result in the elimination of all “juvenile service offices Cumulative Prior Years’ Reduction: $ Only -24%; FTE Only -32% 35

  36. Impact of Elimination of Central Office - Special Projects Value of 10% Reduction $ .03m Impacts: The Special Projects Office is on the list for elimination If that occurs, it will not be possible to reduce a further 10% If the office is sustained, a 10% reduction creates a department with minimal non-staff resources to maintain its services to senior administration and the Board 36

  37. Impact of 10% Cut to Central OfficeSuperintendent Value of 10% Reduction $ .05m Impacts: It is not possible to make this reduction without reducing or eliminating staff This would adversely impact the ability of the Superintendent to fulfill his obligations to all stakeholders Cumulative Prior Years’ Reduction: $ Only -42%; FTE Only -40% 37

  38. Impact of 10% Cut to Central OfficeStudent Services Value of 10% Reduction $ .24m Impacts: Delayed or outsourced responses to ADA investigations Additional staff may need to be trained to meet the routine and emergency health needs of students Crisis team response could be negatively impacted and/or delayed Suicide risk assessments could be negatively impacted Proactive guidance groups could be limited Career and college planning sessions with students could be limited Instructional services/time to Home/Hospital and Foster Youth could be restricted Cumulative Prior Years’ Reduction/Increase: $ Only -43%; FTE Only 4% 38

  39. School Closure Update Schools Recommended for Closure Will Not Be Identified Solely By Enrollment Other Factors Enrollment Capacity of Schools Cost Per Pupil Academic Achievement The Impact of Eliminating Magnet and VEEP Transportation is Also a Contributing Factor Two Committees are Developing the List of Closure Candidates and Other Impacts Notification Per Procedure is Due in November 39 39

  40. November – January Budget Timeline • November 4 Special Budget Meeting (No Action) • November 9 Regular Board Meeting (Agenda Item) • November 16 Special Board Meeting (Action) • December 2 Special Board Meeting (Action 1st Interim) • December 15 Final Day to Submit to County • January School Allocations Distributed to Sites Based on 1st Interim Reductions and State Budget 40 40

  41. Conclusion-Review of the Realities • Deficit Reality of $120m • Additional Deferrals May Necessitate Increased Borrowing • It is Impossible to Keep Reductions Away from Classroom • Board Must Approve Preliminary Reduction List by November 16 and First Interim Report by December 2 • HR Must Begin PKS Process for Certificated Layoffs in December • School Site Allocation Formula Must Be Decided in December 41 41

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