Preliminary 2018-19 Budget Workshop Presented by: Mark Mathers, Chief Financial Officer Mike Schroeder, Budget Director February 27, 2018

Agenda Review of District’s Historical Deficits FY19 Budget Process FY19 Budget Recommendations Review of Individual Budget Reduction Recommendations (separate handout)

Review of District’s Historical Deficits or How did we get from there to here?

Stages of Financial Recovery Adapted from GFOA 12-Step Financial Recovery Process

WCSD Historical Deficits Actual

Per-Pupil Support Has Not Kept Up with Inflation 6 6 6

Neither Have Property Values

Changes to Budgeted Expenditures over the Last Three Years (in mil.) 8

FY19 Budget Process 9

Budget Process Update August 2017 – Strategic Plan - Best Practices in School Budget – Achieve Structurally Balanced Budget in 3 years September 2017 – Budget Policies and Principals, Current Budget Overview October/November 2017 – Budget Updates, Revision of Projections, Discuss Budget Survey December 2017 – Budget Survey Launched, Revision of Projections, Discuss New Budget Methodologies including Priority Based Budgeting (PBB), Work With Departments to Identify Reductions January/February 2018 – Budget Survey Results, Five Budget Forums, Revision of Projections, Compile Reduction Information 10

General Fund (in Millions) Structural Deficit FY19 General Fund (in Millions) FY18 Structural Deficit Carryforward ($16.6) Revenue Increases $2.1 Employee Salary Increments & Health Ins ($9.5) Salary & Benefit Basis Adj $4.9 Other Operating Increases ($1.8) Special Education Transfer $1.8 Structural Deficit Before Rebase/Contras $ (19.1)

Addressing the Budget Deficit The District must file a balanced final budget Most of the tools and savings used to balance prior year deficits are gone Difficult decisions now need to be made Proactive measures have been implemented to address the challenge Financial Review Committee Ongoing review to identify more savings opportunities Prioritizing all the pieces to balance the budget 12

New Budget Methodologies Re-basing of department budgets based on historical spending patterns Based on an analysis of 3-year actual expenses, certain areas showed consistent savings annually. Better alignment of budget to actual expenses Use of Contras for Salary Savings For areas in which we have seen savings on a fundwide basis, such as vacancy savings, versus in specific departments or resource centers, we will consider “contra” accounts. Benchmarking analysis Academic Return on Investment (AROI) 13

Identification of Budget Reductions Finance team met with all departments in December and January. Chiefs proposed cuts to services and staff. Impacts of these cuts could include service level reductions, process improvements and work-arounds, incorporating a new service delivery model, or in theory strategic divestment of a program. Review of benchmarking data and other data.

Scoring of Budget Reductions by Financial Review Committee (FRC) Each reduction received a score of 1-4 from each member. FRC met numerous times to review scoring. 1: Minor impact 2: Moderate but tolerable impact 3-4: Severe impact to an operation where a work-around was not immediately identifiable Only items receiving a 1 or 2 from each member is recommended at this time.

Scoring Criteria for Budget Reductions Alignment to Strategic Plan Degree of Impact on Direct Instruction Risk Assessment – degree to which reduction would create unsafe conditions or noticeable impact to educational programs Fiscal Impact – “bang for the buck” Perceived Results of Program Availability of Alternative Service Delivery 16

Cost Benchmarking Results Lower Cost than Peer Group Source/Peer Group Business and Finance (Controller and Budget) Other Washoe County governments’ finance offices Facilities Management Work Order Completion 2013 Review by Council Greater of Greater Schools Custodial Office of Academics Gifted and Talented Clark County School District Special Education (overall compared to CCSD)

Cost Benchmarking Results High Cost than Peer Group Office of Academics Office of Student Support English Learners 1 Counseling 2, 3 Speech and Language Pathologists 2 Special Ed. Teachers 2 Special Ed. Aides and Assistants 2 Overall Metrics 3 Overall Class Sizes Lower, compared to CA peer school districts Total Staff per 1,000 Students Higher, compared to CA peer school districts Sources or Peer Group: 1 – Clark County School District 2 – GFOA Smarter Spending Tool 3 – Peer group of California agencies

FY19 Budget Recommendations

Major Budget Recommendations Total of $4.6 million of reductions identified, in addition to $9.6 million in base budget reductions and contra accounts Deletion of Positions 6.05 positions shifted from General Fund to other funds 34.62 positions beginning in FY19 2.00 positions identified for FY20 Reduce District travel budgets by 50% Increase ES and MS walk zones by ¼ mile Further reductions of operating budgets 20

Summary of Budget Recommendations by Office 21

Summary of FY19 Reductions by Office (Base Budget Cuts + Position Reductions) 22

Summary of Admin./Operations Reductions Compared to Community Survey Results Qu # Area Rank based on Responses Total Recommended Reductions Reductions Needing Further Review Not Recommended 5 Reduce the number of school administrators/executive management 1 (186,352) - 6 For the next year, defer some purchases of buses and other fleet vehicle to replace aging vehicles 2 4 Reduce/cut central services positions, such as accounting staff and computer programmers, and other central services costs such as replacement of central service computer systems 3 (427,572) (93,248) Increase elementary and middle school walk zones by ¼ mile (550,000) 7 For the next year, defer or reduce maintenance operations such as custodial services and/or minor repairs. (68,558) Suspend field trip transportation Eliminate transportation for high school students   Other (620,481) (700,000) (1,860,073)

Summary of Instruction Reductions Compared to Community Survey Results Qu # Area Rank based on Responses Total Recommended Reductions Reductions Needing Further Review 5 Reduce the frequency and type of academic assessment of students to the extent allowed by law 1 - 4 Reduce/cut teachers and principals on special assignment, which assist new teachers in implementing curricula and in professional development 2 (370,328) (2,363,637) 9 Reduce teacher professional development and training 3 (611,205) Reduce/cut Gifted and Talented Education (GATE) programs (443,958) 12 Defer purchase of textbooks and computers in the classroom 11 Increase class sizes in Grades 4-12 by 1-2 students per classroom 6 Reduce/cut English Language Learning (ELL) programs that assist students who speak a language other than English at home 7 (682,764)

Summary of Instruction Reductions Compared to Community Survey Results Qu # Area Rank based on Responses Total Recommended Reductions Reductions Needing Further Review 10 Reduce student support services such as the number of counselors and other non-teaching staff to the extent allowed by law 8 (503,711) - Reduce Career and Technical Education (such as health care, auto shop) 9 7 Reduce library services 6 Reduce extracurricular activities (athletics, music, elective courses beyond state minimum requirements) 11 (10,000) 1 Reduce/cut special education programs for students with disabilities to the extent allowed by law 12 (103,800) Total (2,725,766) (2,363,637)

Structural Budget Deficit FY19 (in millions) General Fund Revenue $ 462.1 M Expenditures (before rebase/contras) ($481.3)M Structural Budget Deficit (before rebase/contras) ($ 19.1 M) Budget Rebase and Use of Contras $ 9.6 M Structural Budget Deficit before Reductions ($ 9.5)M Recommended Reductions $ 4.6 M Deficit (before Additions) ($ 5.0)M

Transition Plan for Deleted Positions The preliminary budget identifies positions that are proposed to be eliminated by Fiscal Year 2020-21.  Some of these flagged positions are currently occupied by an employee(s).  For incumbents in these positions, below is a summary of the process that is recommended to the Board: Professional-Technical and Educational Support Professional Positions For Pro-Tech and ESP employees in one of these flagged positions, if that position or a comparable positon becomes vacant prior to FY 2020-21, the position would be eliminated and negotiated agreements would be followed. Human Resources and Labor Relations will assist employees to find other positions. If there are no vacancies in a flagged position by FY2020-21, there would be a reduction in force in FY2020-21 following the negotiated agreements.

Transition Plan for Deleted Positions Certified Positions Certified staff in one of these flagged positions would go through the regular transfer and overage process for open positions as outlined in the negotiated agreement. Historically, the high turnover rates of certified positions for the District has allowed teachers to fill positions that have been vacated because of retirements and separations.

Budget Deficit – FY18 to FY19 $1.3 million represents proposed budget additions.

Items for Further Analysis For Follow-up with the Board in March Review the possible reduction of up to 24.3 Teachers on Special Assignments, Implementation Specialists, and Consulting Teachers Possible cost reductions, subject to through labor negotiations

Additional Budget Requests 31

Budget Process Moving Forward Must File a Balanced Budget Identify Additional Reductions or Additional Sources of Revenue Offset By Use of Fund Balance Public Input Budget Timeline Board Direction 32

FY18-19 Budget Timeline March thru June, 2018 February-March Board Budget Work Sessions April Last Opportunity for Board Approval of Tentative Budget (due April 15) May Public Hearing on Tentative Budget Last Opportunity for Board Approval of Final Budget (due June 8) June 6/27/17 Last Opportunity for Board Approval of Amended Final Budget (due July 5) March thru June, 2018 Continued Budget Review, Alignment with Priorities and Initiatives, Ongoing Review and Prioritization of Budget Offsets Workshop and Town Hall Meeting Department of Taxation Final Revenue Projections File Tentative, Final and Amended Final Budgets 33

Further Analysis for FY20 and FY21 Alternative approaches to providing School Police coverage English Learners reconfiguration of services, including use of itinerant teachers Review of Gifted & Talented programs in high schools Alternative approaches to providing professional development to teachers Consolidate Special Education self-contained programs Alternative approaches to 1:1 Special Education aides and assistants Growing online enrollment for North Star Online School Enrollment task force team to find ways to increase District enrollment

Further Analysis for FY20 and FY21 (Cont’d.) Business Plus implementation of Applitracks to automate hiring process procedures Review of athletic fees to help offset athletics transportation costs Review allocations of personnel to bond programs based on actual time spent in bond and non-bond areas Analyze Priority-Based Budgeting results for cost reduction ideas

Review of Individual Budget Reduction Recommendations and Budget Additions

Budgets By Executive Cabinet Member Summary Pages Individual EC Member Pages Budget Summary Benchmarking Data Budget Reduction Submission Forms