Board Budget Update January 15, 2015

January Governor’s Budget Proposal $4 billion in additional Prop 98 revenues 8.7% increase in LCFF funding Projected to eliminate 32% of the remaining LCFF funding gap. One-time funds to implement Common Core and the Next Generation Science Standards.

Rainy Day? The Brown Administration does not anticipate fiscal conditions that would require a deposit into the Proposition 98 Rainy Day Fund (the action that would trigger the local reserve caps) at any time during the budget forecast period

Reserve Cap Brown: “appreciates the concerns expressed by stakeholders regarding potential caps on school district reserves and will engage in a dialogue with these groups in the coming months to protect the financial security and health of local school districts."

SSC Reserve Cap Trigger Summary Maintenance Factor Test 1 Funding Enrollment and Growth Capital Gains Reserve Cap Trigger Possible Met 2014-15 Possible Probable 2015-16 Probable Possible 2016-17 © 2015 School Services of California, Inc.

STRS Employer Rate Increases   2014-15 (8.88%) 2015-16 (10.73%) 2016-17 (12.58%) 2017-18 (14.43%) 2018-19 (16.28%) 2019-20 (18.13%) 2020-21 (19.1%)

Impact of STRS Rate Increase Increase of $316,500 per year for the next five years and $166,000 for the last year’s increase.  Almost 1% of the reserve each year.  Assumes stability: When raises are given and/or enrollment/staff increases, the STRS budget would need to increase commensurately.

Next Steps MVMS facilities assessment Parcel tax planning Bond planning STRS rate increase prep and strategies MVSD reserve policy review Finance preparation for negotiations: comps, analysis of district funds