Anaheim City School District Budget Update: Governor’s Proposals for the 2012-13 State Budget and K-12 Education January 23, 2012

Presentation Overview 1 Presentation Overview Review of First Interim: Best and Worst Case Scenarios Governor’s Proposals for the 2012-13 State Budget and K-12 Education Historical Analysis of District Revenue and Expenditures 2012-2013 Multi-Year Projection ACSD Budget Solutions Implemented Cash Deferrals Continue Next Steps

Multi-Year Projections-General Fund Combined At First Interim Presentation-December (Best Case) 2 2011-12 First Interim 2012-13 Projected 2013-14 Beginning Balance, July 1 $21.2 Mil $19.0 Mil $4.9 Mil Total Revenue (Projected) $161.6 Mil $156.1 Mil $160.0 Mil Total Expenditures (Projected) $163.8 Mil $170.2 Mil $171.7 Mil Estimated Ending Balance June 30 -$6.8 Mil Less Set Aside for Economic Uncertainties 3% $5.1 Mil Less Designated Funds $3.0 Mil $2.9 Mil Undesignated Funds Available $11.1 Mil -$3.1 Mil -$14.9 Mil

Total Possible Loss of $11.1 Million over 3 Years First Interim Assumptions-Worst Case Scenarios December 2011 2011-12 First Interim 2012-13 Projected 2013-14 Projected Mid-Year Trigger Cuts -$5.1 Mil Unfunded COLA -$2.9 Mil -$3.1 Mil Total Possible Loss of $11.1 Million over 3 Years

Multi-Year Projections-General Fund Combined At First Interim Presentation in December (Worst Case) 4 2011-12 First Interim 2012-13 Projected 2013-14 Beginning Balance, July 1 $21.2 Mil $13.9 Mil -$3.1 Mil Total Revenue (Projected) $156.5 Mil $153.2 Mil $156.9 Mil Total Expenditures (Projected) $163.8 Mil $170.2 Mil $171.7 Mil Estimated Ending Balance June 30 -$17.9 Mil Less Set Aside for Economic Uncertainties 3% $4.9 Mil $5.1 Mil Less Designated Funds $3.0 Mil $2.9 Mil Undesignated Funds Available $6.0 Mil -$11.1 Mil -$26.0 Mil

Main Parts of the Governor’s Proposed Budget 5 Main Parts of the Governor’s Proposed Budget No Funding for Transitional Kinder Elimination of all Transportation Funding (-$1 Mil per year) Unfunded COLA (-$2.9 Mil per year) Creation of a “Weighted Revenue Limit” with more money going to school districts with high populations of Free and Reduced Students and English Language Learners ($?.?) Many categorical programs to be folded into the Weighted Revenue Limit (-$?.?) November Election to raise $7 Billion for K-14 public education (-$7.0 Mil per year)

Total Possible Loss of $22.7 Million over 3 Years 6 Governor’s Budget Assumptions-Worst Case Scenarios January 2012 2011-12 2012-13 Projected 2013-14 Projected Mid-Year Trigger Cuts -$0.2 Mil 50% Reduction to Transportation -$0.5 Mil 100% Reduction to Transportation -$1.0 Mil Unfunded COLA -$2.9 Mil -$3.1 Mil Failed Ballot Measure ($370 per ADA (Student)) -$7.0 Mil Total Possible Loss of $22.7 Million over 3 Years

Since the Governor’s Proposal 7 Since the Governor’s Proposal In December 2011, ACSD was planning for a three-year worst case scenario (-$11.1 Mil) After Governor’s Proposal in January 2012 Worst case Scenario: (-$22.7 Mil) 2011-12 Trigger Cuts (-0.7 Mil) Transportation cut in 2012-13 and 2013-14 (-$2 Mil) Unfunded COLA (Cost of Living Adjustment) in 2012-13 and 2013-14 (-$6 Mil) Trigger cuts in 2012-13 and 2013-14 due to failed election (-$14 Mil) Best case Scenario: No cut to transportation in 2012-13 and 2013-14 (Flat Funding) Funded COLA (Cost of Living Adjustment) in 2012-13 Election is Successful (Flat Funding)

Historical Analysis: ACSD 2007-2008 Actual Revenue Per ADA Expenditures Per ADA 2007-2008 $9,012 $9,108 ACSD Beginning Balance: $34.6 Mil ACSD Ending Balance: $32.7 Mil

Historical Analysis: ACSD 2008-2009 Actual Revenue Per ADA Expenditures Per ADA 2008-2009 $9,042 $9,295 Assistance Took from Fund 14: $1.0 Mil Federal ARRA Funds: $6.3 Mil ACSD Beginning Balance: $32.7 Mil ACSD Ending Balance: $27.9 Mil Designated Funds: -$18.1 Mil Undesignated Funds: $9.8 Mil Without Assistance Revenue Per ADA Expenditures Per ADA 2008-2009 $8,653 $9,295 ACSD Ending Balance Without Assistance: $20.6 Mil Designated Funds: $18.1 Mil Undesignated Funds: $2.5 Mil

Historical Analysis: ACSD 2009-2010 Actual Revenue Per ADA Expenditures Per ADA 2009-2010 $8,257 $8,803 ACSD Beginning Balance: $27.9 Mil ACSD Ending Balance: $17.8 Mil Designated Funds: -$8.6 Mil Undesignated Funds: $9.2 Mil Assistance Took from Fund 67: $2.0 Mil Federal ARRA Funds: $8.3 Mil Increased Class Size: $2.0 Mil Reduced Positions: $1.0 Mil Without Assistance Revenue Per ADA Expenditures Per ADA 2009-2010 $7,660 $8,910 ACSD Ending Balance Without Assistance: $4.5 Mil Designated Funds: $8.6 Mil Undesignated Funds: -$4.1 Mil

Historical Analysis: ACSD 2010-2011 Actual Revenue Per ADA Expenditures Per ADA 2010-2011 $8,062 $7,876 Assistance Took from Fund 67: $2.0 Mil Furlough Days: $4.5 Mil Increased Class Size: $5.3 Mil Reduced Positions: $7.4 Mil ACSD Beginning Balance: $17.8 Mil ACSD Ending Balance: $21.2 Mil Designated Funds: -$7.8 Mil Undesignated Funds: $13.4 Mil Without Assistance Revenue Per ADA Expenditures Per ADA 2010-2011 $7,911 $8,749 ACSD Ending Balance Without Assistance: $2.0 Mil Designated Funds: $7.8 Mil Undesignated Funds: -$5.8 Mil

Projection: ACSD 2011-2012 12 Projected Revenue Per ADA Expenditures Per ADA 2011-2012 $8,710 $8,731 Assistance Took from Fund 67: $2.0 Mil Federal Jobs Money: $3.4 Mil Furlough Days: $2.5 Mil Increased Class Size: $5.3 Mil Reduced Positions: $7.4 Mil ACSD Beginning Balance: $21.2 Mil ACSD Projected Ending Balance:$20.8 Mil Designated Funds: -$8.0 Mil Undesignated Funds: $12.8 Mil Projected Revenue Per ADA Expenditures Per ADA 2011-2012 $8,336 $9,455 ACSD Ending Balance Without Assistance: $0.2 Mil

Projection: ACSD 2012-2013 13 Projected Revenue Per ADA Expenditures Per ADA 2012-2013 $7,847 $8,933 Assistance Increased Class Size (2009-2010 Level): $2.0 Mil Reduced Positions Continued $7.4 Mil Projected Beginning Balance: $20.8 Mil Projected Ending Balance: -$0.4 Mil Designated Funds -$8.0 Mil Undesignated Funds -$8.4 Mil Projected Revenue Per ADA Expenditures Per ADA 2012-2013 $7,777 $9,439 ACSD Ending Balance Without Assistance: -$9.8 Mil

2011-2012 Mid-Year Cuts and the Governor’s Proposed 2012-2013 Budget for Anaheim City School District (In Millions) 14

Revenue and Expenditure Comparisons 15 Revenue and Expenditure Comparisons Revenue Per ADA Expenditures Per ADA Deficit Spending (In Millions) 2007-2008 $9,012 $9,108 $1.9 2010-2011 $8,062 $7,876 -$3.5 2011-2012* $8,710 $8,731 $0.4 2012-2013* $7,847 $8,986 $21.2 2013-2014* $7,940 $8,996 $19.8 Beginning in 2012-2013, ACSD will have a $21.2 Million Deficit Gap if the Election in November fails If the Election is successful, the Deficit Gap will still be $14.2 Million per Year (*Projected)

What has ACSD done to Weather the Storm? 16 What has ACSD done to Weather the Storm? Taken and Borrowed Used $7 million from ACSD funds (not returned) Borrowed $29 million to deal with Cash Deferrals (paid back) Found ways to increase Revenue Increased Student Attendance (From 96.25% to 97.11%) Increased MAA Participation (From $138 K to $1.1 Mil) Found ways to reduce Spending Reduced Positions (Over 230 Positions) Implemented Furlough Days (9 days in 2010-11 & 8 days in 2011-12) Increased Class Size (From 20:1 to 28:1 in 1st and 2nd Grades) Monitored Spending to Maximize Savings

Cash Deferrals Continue 17 Cash Deferrals Continue Cash deferrals for ACSD result in a $20 million cash deferral from 2011-12 to 2012-13. The cash deferrals are expected to be paid by the end of August 2012. ACSD is forced to borrow cash 2010-11 ACSD borrowed $16 million for one year 2011-12 ACSD borrowed $13 million for 10 months 2012-13 ACSD must borrow between $15 and $20 million to meet payroll obligations during the year ACSD has a good credit rating however the cost to borrow has been on average $200,000 per year for the last 2 years

Next Steps 18 Present Second Interim Report in March Need to identify and approve $8.4 Mil in Budget Reductions Plan for the Worst and Hope for the Best Requires the Creation of Budget based on Worst Case Scenario Develop Restoration Plans should the Election Pass Continue to Maximize Revenue Continue to Minimize Expenditures Closely Monitor Cash Flow Present Third Interim Report in May Adopt ACSD Balanced Budget for 2012-13 by July 1, 2012