The Power and Vulnerability of the MYP: Ways School Finance Leaders Can Maximize this Valuable Tool CBO Strand April 2018 The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

Your Presenters Keith Butler, Ph.D. Sheila Vickers Kate Lane Mary Hart Associate Superintendent Vice President Palos Verdes Peninsula USD School Services of CA, Inc. Kate Lane Mary Hart Assistant Superintendent Associate Superintendent Marin COE Santa Cruz COE Brett W. McFadden Associate Superintendent Monterey Peninsula USD

The Multi-Year Projection (MYP) Every Business needs a Plan, or a Roadmap Where are you heading? How long will it take you to get there? How will you know when you arrive? When did the MYP come into use? Why? What it is intended to do?

A “positive” MYP Fund 01 General Fund – Unrestricted and Restricted Funds 2017-18 First Interim Budget Report (In millions)

A challenged MYP: What’s wrong with this picture?   2016-17 2017-18 2018-19 Beginning Balance 38.58 24.93 17.93 Audit adjustment - finding (1.87) - Revenues 202.22 197.58 199.44 Expenditures 214.00 204.58 211.55 Increase/Decrease (11.78) (7.00) (12.11) Ending Balance 5.82 Revolving Cash/Rest.Bal 12.30 10.88 10.02 3% Reserve 6.36 6.08 6.31 Unapprop Reserve 6.27 0.97 (10.51)

County office oversight All California school districts adhere to the budget adoption process per Education Code School district budgets and interim reports must contain a three-year fiscal projection – current FY plus two more County offices of education are responsible for the fiscal oversight of districts within their jurisdiction County offices are authorized to approve and/or disapprove district budgets

County office review categories Per Education Code, the county office shall review and issue a certification of all school district budget and interim reports July budget adoption – positive certification, conditional, disapprove 1st and 2nd Interims – positive, qualified, negative Positive – the district can meets its obligations over the 3-year forecast Qualified – the district may not be able to meet its obligations over the 3-year forecast Negative – the district will not be able to meet its obligations over the 3-year forecast The COE can require the district to adopt fiscal stabilization plans to address current and out-year fiscal shortfalls

The MYP: Point #1 The MYP is a projection, … not a forecast. Notes _____________________________________ The MYP is a projection, … not a forecast.

The MYP: Point #2 Notes _____________________________________ It is a snapshot in time. It will change, and is meant to change.

The MYP: Point #3 Notes _____________________________________ It is based on a set of assumptions. These assumptions will change over the course of a fiscal year. And over the three years.

The MYP: Point #4 Notes _____________________________________ It is the best tool we have to protect our districts It is the only long term projection tool we have

Example: Using the MYP to make a point Real life scenario (yes, this really happened): Pajaro Valley USD teachers’ union makes proposal, district staff costs out total cost, totals more than $35 million per year, district displays impact in a MYP in public.   2013-14 2014-15 2015-16 Beginning Balance 40.88 -2.09 -45.18 Revenues 177.57 175.05 183.59 Expenditures 185.26 179.84 183.47 PVFT Proposal 09/19/13 35.28 38.3 41.42 Increase/Decrease -42.97 -43.09 -41.3 Ending Balance -86.48 Revolving Cash/Rest.Bal 4.92 5.37 5.8 3% Reserve 5.56 5.4 5.5 District budget goes into red -12.57 -55.95 -97.78 Estimated cost of union proposal Estimated impact in the MYP

The MYP – Highlighting reserves An appropriate reserve is equally critical to protecting student achievement. What are three things a good reserve provide to you as a leader? _____________________ NOTE: Overall reserve percentages are typically higher for small school districts.

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