Cambrian School District

1. Cambrian School District Budget Update 5-25-10

2. News from the State • May Revise • Overall the state budget situation has gotten worse • Federal dollars upon which the January udgetdepended, have been slow in coming • Costs of some programs have risen more than anticipated • Revenues are still falling below the state’s already low forecasts

3. News from the State • May Revise • Education was protected somewhat, relative to other programs in January • In May, education continues to be better protected than other programs • We had anticipated that the best we could hope for was no new cuts, and that is, for the most part what we got

4. News from the State • May Revise • For the most part, the May revision contains no further cuts to K-12 education • Cuts proposed in January remain • No new federal dollars • No new taxes • Major additional cuts to noneducation portions of the Budget are proposed • We expect the Legislature to have great difficulty voting for the choices before them • We anticipate a late budget

5. News from the State • The May revision if enacted as proposed contains some risks: • Court challenges • A late budget would delay implementation of program reductions, resulting in the loss of budgeted savings • State and national economies face further recession • These risks could threaten California's access to the capital markets, pushing borrowing costs even higher

6. News from the State • Continued Deferrals • February Principal Apportionment to July • K-3 CSR Principal Apportionment – February to July • April Apportionment to August • May Apportionment to August • In 2002-03 California deferred current-year revenues into the following year and has continued this trend every year • This means cash flow problems have moved from the state to local school agencies

7. What this means for our District • The state budget has a structural imbalance with more obligations for payment than it receives in revenue • School districts are dependent on the state for the majority of their funding • Revenue limit, the District’s primary source for unrestricted funding, and other state funding have been reduced by almost 19% from full funding • This means the District is receiving only 81¢ on every dollar it is due

8. District Reserves • Required 3% Reserve for Economic Uncertainty • Board policy requires a 5% Reserve for Economic Uncertainty • The state defines the minimum: we need more than the state defined minimum • Other items that are sometimes considered part of the reserve • Ending fund balance • Special reserve accounts

9. Things to consider in determining the amount of reserve • Enrollment • Deficit spending • Potential audit of legal costs • Size of district – smaller districts need a higher reserve • Stability of State Revenues • Employee contract obligations • Reserves are “one time money”, employee costs are ongoing

10. Cash and Our Reserves • State required minimum reserve is 3% - $800,000 • The 3% minimum reserve covers 7.5 days of payroll • Districts need a cash cushion due to the state’s deferral of revenue to school districts

11. Cambrian School District - Multi-Year ProjectionWithout any reductions

12. What does a “Qualified” Budget Mean • State law requires that California school districts submit a three-year balanced budget. • If not, the budget is considered “qualified” • We are on watch by the county • One step before state receivership • Loss of local control

13. What Cambrian has done to date • Began budget review in October • Presentations to board, school staffs, Home and School Clubs, & District office staff • Gathered input from all these presentations • Reconvened Budget Information Committee • Received and reviewed recommendations from school sites and employee groups • Continued to take input • Information presented to board

14. What Cambrian has done to date • Ideas generated from budget information committee categorized • Board workshop • Began investigating options generated from the BIC • Continued to look at other options • Took necessary actions based on legal timelines

15. Non-Personnel • Eliminated regular education summer school • Eliminated home-to-school transportation for regular education students • Make middle-school sports programs revenue neutral • Reduced site discretionary funds • Investigated potential savings related to copier leases • Investigated potential savings related to phone/data services • Formed an Energy Conservation Committee • Delayed adoption of new English Language Arts materials • Increased attention to accurately projecting supply needs • Implemented a variety of small cost-savings measures

16. Personnel - Certificated • Potential teacher layoffs • Offered supplemental retirement option • Audited District administrators’ driving patterns - reduced appropriate auto-allowances • Reduced work year for certificated administrators • Reviewed stipends

17. Personnel - Classified • Potential classified layoffs • Reduced work year for confidential classified managers • Reviewed stipends

18. District Office • Represents all four employee groups: • Teachers • Certificated managers • Classified • Confidential classified managers • Only area where reductions were made last year $120,000

19. District Office • Reductions through • Teacher layoff • Classified layoff • Shortened work year certificated administrators • Shortened work year classified managers • Reduced auto allowances • Reduction/elimination of stipends • All departments included in reductions • When combining last year’s and this year’s reductions, the district office is taking twice their fair share of reductions

20. Revenue Enhancement • District will recognize cost savings by offering expanded special education services in 2010-11 • Began process to assess feasibility of additional parcel tax • We will continue to explore ways to reduce costs and/or increase revenues