Red Bluff Joint Union High School District’s Second Interim Report 2016-17 Based on most current budget data and actual expenditures through January 31, 2017

Financial Reporting Education Code requires the Board to certify whether or not the District will be able to meet its financial obligations The purpose of the reports is to ensure the Board is informed of budget conditions and alerted to any financial issues There are 4 reporting periods throughout a fiscal school year 2nd Interim is the third reporting period for 2016-17

Enrollment CBEDS enrollment number as of October 5, 2016 was 1,630 students district wide – with Average Daily Attendance(ADA) being projected at 1,496 or 91.78% Enrollment projections for October 2017 are projected to be 1,657 with ADA at 1,520 Enrollment projections for October 2018 are projected to be 1,702 with ADA at 1,561

Local Control Funding Formula LCFF is in the fourth year of an eight year phase in process Has reached 96% implementation COLA only years after full implementation “Gap funding” percentages fluctuate every financial reporting period Reporting Periods 2016-17 2017-18 2018-19 Budget (June 2016) 54.84% 73.96% 41.22% 1stInterim (Oct 2016) 54.18% 72.99% 40.36% 2ndInterim (Jan 2017) 55.28% 23.67% 53.85%

Governor’s Budget Proposal 2017-18 Slowdown of CA’s fiscal recovery from recession Passage of Prop 55 maintains education funding, does not increase – replaces Prop 30 At the Federal level – may see more bias towards charter schools and voucher programs COLA only years after full LCFF implementation COLA for 2017/18 is projected to be 1.48%

Governor’s Budget Projections GAP funding percentage is projected to decrease from 72.99% to 23.67% - only enough to cover the COLA – which means a reduction of over $377k in projected revenues for 2017-18 Projected to receive One-Time Discretionary funds at $48 per ADA or $70k – pays down mandate claims still outstanding at $1.9billion state wide Cash Deferrals Back – Approximately $118k of June’s State apportionment will be deferred (delayed) until July CalSTRS and CalPERS rates continue to rise due to rate of return on investments at State level

LCFF Gap Funding Calculation 2017-18 LCFF (Base, Supp, Conc) $15,844,178 (Target amount to be reached by 2020-21) 2012-13 Rate $15,078,054 Difference (GAP) $ 766,124 GAP Funding Percentage $ 559,194 $ 181,342 (was at 72.99%) (now at 23.67%) 2012-13 Rate $15,078,054 $15,078,054 Gap Funding $ 559,194 $ 181,342 Equals the LCFF State Funding $15,637,248 $15,259,396

CalSTRS Employer Rates Fiscal Year Employer Rate Cost Increase Over Prior Year 2014-15 8.88% $48,488 2015-16 10.73% $154,931 2016-17 12.58% $172,852 2017-18 14.43% $148,754 2018-19 16.28% $169,607 2019-20 18.13% $173,336 2020-21 19.10% $103,646 Total Projected Cost $971,614

CalPERS Employer Rates Fiscal Year Current Employer Rate Schedule Proposed Employer Rate Schedule Cost Increase Over Prior Year 2014-15 11.771% $25,689 2015-16 11.847% $20,909 2016-17 13.888% $72,960 2017-18 15.80% $62,730 2018-19 17.70% 18.70% $112,875 2019-20 19.70% 21.60% $116,348 2020-21 21.10% 24.90% $134,668 2021-22 n/a 26.40% 2022-23 27.40% 2023-24 28.20% Total Projected Cost $546,179

Combined CalSTRS/CalPERS Fiscal Year CalSTRS Actuals/Projected Increases CalPERS Actuals/Projected Increases Totals 2014-15 $48,488 $25,689 $74,177 2015-16 $154,931 $20,909 $175,840 2016-17 $172,852 $72,960 $245,812 2017-18 $148,754 $62,730 $211,484 2018-19 $169,607 $112,875 $282,482 2019-20 $173,336 $116,348 $289,684 2020-21 $103,646 $134,668 $238,314 $971,614 $546,179 $1,517,793

Multi-Year Projection Summarizes Revenues and Expenditures - Current budget - Projects next two years of budgets Requirement per AB 1200 & AB 2756 Gives the District a look at what the future holds if all variables remained status quo

Multi-Year Projections (cont’d) LCFF Revenues have increased in the current year by $56k since First Interim due to the State increasing the GAP funding percentage by 1.1% LCFF Revenues decrease in 2017-18 due to the projected GAP percentage decrease of 49.32% and then increase in 2018-19 due to projected enrollment increases and GAP percentage increase of 13.49% Federal revenues increase in the current year slightly due to small carryovers and then decrease in the out years due to reduced Sp Ed funding, reduced Title I funding, and no ASSETS carryover funds

Multi-Year Projections (cont’d) State revenues increased slightly in the current year since First Interim and then decrease drastically in the out years due to the loss of the one-time discretionary funds, CTEIG funding, and College Readiness funding Local revenues increased since First Interim by $25k due to an increase in Adult Ed funds and additional State Sp Ed funding (but lost it on the Federal revenue side)

Multi-Year Projections (cont’d) Step and Column costs have been added to all salaries Retirements, non-reelects, and potential program closure have been accounted for STRS and PERS rate changes have been budgeted Materials/Supplies and Services/Operating budgets have decreased in the current year to account for planned carryovers into 2017-18 and deferring expenses Capital Outlay budgets have been reduced in the out years with anticipation of bond funding Other Outgo has increased in current year due to Café contribution and in the out years for planned contributions to support transportation and deferred maintenance

Multi-Year Projection 2016-17 2017-18 2018-19 Beginning Fund Balance 3,195,347 2,491,564 1,702,885 Revenues 19,476,236 18,409,226 19,274,469 Expenses 20,180,019 19,197,905 19,552,811   Net Increase/(Decrease) (703,783) (788,679) (278,342) Projected Ending Fund Balance 1,424,543 Less – Restricted or Assigned (276,422) (i.e. – Prop 39, College Readiness) Designated for Economic Uncertainties (3%) (606,601) (575,937) (586,584) Undesignated 1,608,541 1,126,948 837,959

Changes in Deficit Spending Items budgeted to be spent and then not actually spent by end of fiscal year for various reasons Example – ASSETS (After School Program) Does not follow fiscal year but allows 18 months to spend the funds Required to budget funds in expense categories At end of fiscal year unspent funds are moved from budget amount to available ending balance and carried over to following year to spend within the following 6 months

Multi-Year Projections (cont’d) The Multi-Year Projection shows the District can issue a “Positive” certification for the 2016-17 Second Interim report This means the District predicts it will be able to meet its financial obligations for the current and next two fiscal years MYP includes projected enrollment growth but also deficit spending due to increased costs

Revenues vs Cost Costs continue to rise for Step/Column and CalPERS/CalSTRS contributions Minimum wage increases Ongoing revenues rise by only 1.48% COLA for 2017-18 Ongoing costs for most districts are likely to exceed 4% (State-wide average) New revenues will not cover new costs There is no “new targeted money” for GAP closure in 2017-18 Bottom line, most districts will have difficulty sustaining commitments made in prior years in the face of lower state revenue projections

Preparing for the Future There is no such thing as a good budget without an adequate reserve Equally important, there is no such thing as a good plan without an adequate backup plan if things don’t go as planned Preparing for the future includes: Maintaining an adequate reserve Building positive relationships Implementing the LCAP with fidelity Building community confidence in the district and its programs And most of all, ensuring that every student is given a full measure of opportunity for success

Upcoming Budget Events P-2 Attendance will be reported as of April 15th April’s State revenues will a have big impact on whether the Governor’s May Revise looks better or worse Governor’s May Revise Workshop is on May 18th Meeting with stakeholders to gather input for preparation of the 2017-18 LCAP and Budget LCAP and Budget will be presented at two different meetings in May and/or June, one for review and the other for adoption

Questions?