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  1. Impact of the State Adopted Budget Board Study Session March 9, 2009 Prepared by: Dr. Cathy Nichols-Washer Mr. Douglas Barge & Staff Y: Business Services/Budget/2009/10//Adopted/Meetings/B03-09-09/Template for Presentation B03-09-09

  2. Executive Summary • The State has adopted budget plans for the remainder of 2008/09 and all of 2009/10 • Does that mean all of the work is done at the State level • Probably not • The current State plan has more flexibility than we had seen in prior proposals • Our strategies will take advantage of these opportunities • We will develop strategies to maximize the use of the Federal stimulus resources when they arrive • Balancing the budget for 2009/10 will still require expenditure reductions of $9,450,332 • This is in addition to the cuts already approved by the Board • We must remain mindful of the structural balancing of our budget • The excessive use of one time solutions will be necessary i

  3. Table of Contents Page # DESCRIPTION Introduction What Have We Done Organizing the Solution Redefining the Budget Problem Restricted (Categorical) Program Cuts Moving Towards a Balanced Budget for 2009/10 Cash Flow & How it is Changing Recommendations 1 2 3 4 – 8 9 – 15 16 – 21 22 – 25 26 ii

  4. Introduction • On March 3, staff reported on the latest information coming to the District about the newly adopted State budget for the remainder of this year and all of next • Staff will report on the estimated impact to the Lodi Unified School District • An overall strategy is being developed for balancing the District’s budget over the coming months • The strategy will take advantage of both the State flexibility and Federal stimulus resources • Setting the stage this year will be critical to the financial success of the District now and into the future 1

  5. What Have We Done? • Withheld final apportionments for restricted (categorical) programs where possible • Placed COLA increases into reserve accounts pending final legislative reaction to the State’s fiscal crisis • Asked all site/departments to reduce spending • Began reviewing expenditures in much greater detail, questioning those that might be put off until later to preserve cash • Reviewing contract terms for changes that might help the District • Gathered massive amounts of community and employee input • The Superintendent’s Budget Advisory Committee is working on recommendations for the Superintendent 2

  6. Organizing the Solutions Restricted Problem & Solutions? Unrestricted Ongoing Restricted One-time INCOME EXPENSE Unrestricted Ongoing One-time 3

  7. Redefining the Budget Problem iii

  8. Previously Reported Unrestricted General Fund Description On-Going One-Time Total A. Balances Reported on 1/13/09 ($13,286,387) ($6,384,273) ($19,670,660) B. Additional Income (Special Ed.) 373,371 373,371 C. Additional Income Loss (2.52%) (4,418,661) (4,418,661) D. Total Reduction Required ($17,331,677) ($6,384,273) ($23,715,950) 4

  9. Fiscal Year Breakdown Unrestricted General Fund Description On-Going One-Time Total I. 2008/09 Fiscal Year ($9,876,432) $3,503,883 ($6,372,549) II. 2009/10 Fiscal Year (7,455,245) (9,888,156) (17,343,401) III. Total Reduction Required ($17,331,677) ($6,384,273) ($23,715,950) 5

  10. 2008/09 What Has Changed? Description On-Going One-Time Total I. 2008/09 Fiscal Year ($9,876,432) $3,503,883 ($6,372,549) II. Income Changes A. Base Revenue Limit $4,013,142 $4,013,142 B. Interest Income (500,000) (500,000) C. Planned Sweeps ($1,116,004) (1,116,004) D. Total Income Changes $3,513,142 ($1,116,004) $2,397,138 III. Expense Changes A. Second Interim ($625,000) ($4,435,266) ($5,060,266) B. Total Expense Changes ($625,000) ($4,435,266) ($5,060,266) IV. Total Revised Estimate ($5,738,290) $6,823,145 $1,084,855 6

  11. 2009/10 What Has Changed? Description On-Going One-Time Total I. 2009/10 Fiscal Year ($7,455,245) ($9,888,156) ($17,343,401) II. Income Changes A. Base Revenue Limit $2,246,147 $2,246,147 B. Total Income Changes $2,246,147 $0 $2,246,147 III. Expense Changes A. Staff Reductions ($ 80,287) ($ 80,287) B. Utilities/Trans. Fuel 138,526 138,526 C. Routine Rest. Maint. 4,156 4,156 D. General Reserves $4,156 4,156 E. Total Expense Changes $ 62,395 $4,156 $ 66,551 IV. Total Revised Estimate ($5,271,493) ($9,892,312) ($15,163,805) 7

  12. Summary Revised Estimates Unrestricted General Fund Description On-Going One-Time Total I. 2008/09 Fiscal Year ($5,738,290) $6,823,145 $1,084,855 II. 2009/10 Fiscal Year (5,271,493) (9,892,312) (15,163,805) III. Total Revised Estimate ($11,009,783) ($3,069,167) ($14,078,950) * Note Structural Balance 8

  13. Restricted (Categorical ) Programs Cuts v

  14. Tier I – No Funding Cuts Description • No program flexibility & No ability to waive statutory requirements • Programs are: • Economic Impact Aid (EIA) • K-3 Class Size Reduction • Prop 49 After School Programs (Bridge) • Special Education • Quality Education Investment Act (QEIA) • Transportation • Child Nutrition • Child Development 9

  15. Tier II – Funding Cuts Description 2008/09 2009/10 • Funding will be reduced 15.38% in 2008/09 & 4.46% in 2009/10 • No current year or future flexibility • Programs current available to Lodi USD: ($3,851) ($945) 1. Ag – Vocation Education (Lodi High) (1,372) (337) 2. Ag – Vocation Education (Tokay) (59,946) (13,483) 3. English Language Acquisition Program (40,219) (10,115) 4. Partnership Academies ($101,388) ($24,880) 5. Total Tier II 10

  16. Tier III – Funding Cuts 2008/09 2009/10 Description • Funding will be reduced 15.38% in 2008/09 & 4.46% next year • Up to 100% flexibility is permitted • Programs will be cut: • 2007/08 End Fund Balances from most programs may be swept ($2,439,491) ($581,818) * General Fund Programs only 11

  17. All Categorical Funding Cuts Description 2008/09 2009/10 ($0) ($0) 1. Tier I (101,388) (24,880) 2. Tier II 3. Tier III (2,439,491) (581,818) 4. Other Funds (396,965) (97,410) ($2,937,844) ($704,108) 5. Total Restricted Program Cuts 12

  18. 20.5 No Penalty Prior No Penalty? 20.0% 40.0% 80.0% K-3 Class Size Reduction Student/ Teacher Up To New Funding Loss $0 21.0 5.0% $702,576 21.5 10.0% $865,368 21.9 10.0% $1,456,560 22.0 15.0% $2,230,893 25.0 20.0% $3,170,160 Over 25.0 30.0% $4,129,776 * Funding will be based on a class size of 20 students. District would not receive any funding for excess students. 13

  19. Categorical Sweeps Descriptions June 30, 2008 • 2007/08 Ending Fund Balances from “some” categorical programs is permitted to be swept by the State: • Tier I • Tier II • Tier III • Other Categorical Programs • Total Carryover Sweeps ($0) (572,295) (4,080,749) (1,605,571) ($6,258,615) 14

  20. Other Flexibility • Adult Education • 15.38% cut in 2008/09 resulting a loss of $228,347 • The same 4.46% cut, as other restricted program, in 2009/10 for another hit of $56,033 • There is provisions for 2.50% growth if funding is available • Routine Maintenance Reserves • Only required to set aside 1% vs. 3% of the General Fund • For 2008/09 • Next Four years • Program would have to be built back up over time • Deferred Maintenance • No local contribution required (0.5%) for 2008/09 • Next Four years 15

  21. Moving Towards a Balanced Budget for 2009/10 iv

  22. Closing the Final Gap • The Resource vs. Expense gap can be closed considerably using: • Categorical flexibility • Increased funding to the base revenue limit • Previously approved reductions • The remaining gap will have to be eliminated using budget reductions • Those reduction will be presented to the Board after the Superintendents Budget Advisory Committee and Administrative team have completed their recommendations 16

  23. Categorical Program Strategy Flexibility 2009/10 Reductions Categorical Operations 2008/09 Reductions 17

  24. A Possible Strategy Additional Cuts Unrestricted General Fund New Resources Additional Cuts Board Action Flexibility 18

  25. Moving Towards a Balanced Budget Description On-Going One-Time Total I. 2008/09 Fiscal Year ($5,738,290) $6,823,145 $1,084,855 II. Income Options A. Categorical Flexibility $525,111 $1,883,878 $2,408,989 B. Other Flexibility 271,523 271,523 C. Total Income Options $525,111 $2,155,401 $2,680,512 III. Expense Options A. B. Total Expense Options $0 $0 $0 IV. Total 2008/09 Fiscal Yr. ($5,213,179) $8,978,546 $3,765,367 19

  26. Moving Towards a Balanced Budget Description On-Going One-Time Total I. 2009/10 Fiscal Year ($5,271,493) ($9,892,312) ($15,163,805) II. Income Options A. Categorical Flexibility $123,442 $ 123,442 B. Total Income Options $ 123,442 $0 $ 123,442 20

  27. Moving Towards a Balanced Budget Description On-Going One-Time Total I. 2009/10 Fiscal Year (cont.) III. Expense Options A. Workers Comp. Rate ($311,629) ($311,629) B. Site Supply COLA (161,305) (161,305) C. Teacher Staffing Res. (351,730) (351,730) D. Capital Projects Res. ($1,000,000) (1,000,000) E. Total Expense Options ($824,664) ($1,000,000) ($1,824,664) IV. Total 2009/10 Fiscal Yr. ($4,323,387) ($8,892,312) ($13,215,699) 21

  28. Summary Revised Estimates Unrestricted General Fund Description On-Going One-Time Total I. 2008/09 Fiscal Year ($5,213,179) $8,978,546 $3,765,367 II. 2009/10 Fiscal Year (4,323,387) (8,892,312) (13,215,699) III. Total Revised Estimate ($9,536,566) $ 86,234 ($9,450,332) Note the structural out of balance! 22

  29. Cash Flow & How it is Changing vi

  30. Cash Flow Problems Continue 2008/09 Fiscal Year • July Revenue Limit was deferred to September • January apportionment did not get deferred • February Revenue Limit & K-3 CSR will get deferred to July 2009/10 Fiscal Year • A significant amount of the July & August apportionments will be deferred to October • Half of the February Revenue Limit & K-3 CSR will get deferred to July * These are on-going changes 23

  31. 2nd Ouch! Royal Pain! 1st Ouch! Revenue Limit Apportionments 24

  32. Cash Flow Changes Continue 25

  33. Instructional Materials Fund • Under the current strategy this Tier III program will not be swept • The program carried over $2,922,586 into this year and retains a current balance of $2,898,261 at this time • Even with the Tier III reductions the program will have no problems with the estimated $300,000 of costs for adoptions in: • Geometry • Pre-Calculus • Algebra II 26

  34. Recommendations vii

  35. Onward & Upward • Recommendations • Expand the use of Tax/Revenue Anticipation Notes (TRANS) to support the cash flow needs of the District • Use the State authorized flexibility and carryover sweeps where possible to support unrestricted District operations • Strategize the use of Federal stimulus (Title I) resources to support District class size reduction efforts • Strategize the use of Federal stimulus (IDEA) resources to reduce the need for further reductions and staff cuts • Take another look at the decline in student enrollment • Continue the process of developing a balance budget plan for 2009/10 27

  36. Good News We still have a heart beat viii

  37. Appendix Tier III Funding Cuts ix

  38. Tier III – Funding Cuts 2008/09 2009/10 • Funding will be reduced 15.38% in 2008/09 & 4.46% next year • Flexibility is permitted • Programs are: ($54,662) ($13,413) 1. CSR 9th Grade (168,618) (41,377) 2. Deferred Maintenance (320,249) (78,585) 3. Instructional Materials Fund (40,165) (9,856) 4. GATE (68,472) 5. High Priority Schools & II/USP (*) * Not continued into 2009/10 A1

  39. Tier III – Funding Cuts 2008/09 2009/10 • Programs are (continued): (34,397) (8,441) • Instructional Improvement Block Grant • Teacher Credentialing Block Grant • Professional Development Block Grant • Pupil Retention Block Grant • School Safety Consolidated (C. Wash.) • School & Library Improvement (SIP) • Administrator Training Program • Adult Education • Arts & Music Block Grant (70,091) (17,199) (186,353) (45,729) (35,277) (8,657) (72,669) (17,832) (325,610) (79,900) (14,765) (3,623) (228,347) (56,033) (81,268) (19,942) A2

  40. Tier III – Funding Cuts 2008/09 2009/10 • Programs are (continued): (12,454) (50,752) • California High School Exit Exam (Interv) • Certificated Staff Mentoring Programs • Child Oral Health Assessment • Community Based Eng Tutoring (CBET) • Community Day Schools • Counselors, Grades 7-12 (SB 1802) • National Board Certification • Peer Assistance and Review • Regional Occupational Center/Programs (994) (4,051) (664) (2,705) (10,972) (44,713) (64,782) (263,998) (37,502) (152,826) (377) (1,538) (5,310) (21,640) (68,124) (277,617) A3

  41. Tier III – Funding Cuts 2008/09 2009/10 • Programs are (continued): (4,718) (19,225) 24. Specialized Sec. Prgms. – Health Care (66,879) (272,545) 25. Supplemental Hourly Programs (1,798) (7,327) 26. Cal SAFE Academic & Suppt. Serv. (3,407) (13,884) 27. Cal SAFE Child Care & Dev. Serv. (2,692) (660) 28. Alternative Credentialing ($2,836,456) ($679,228) 29. Total Tier III A4