Lakeside Joint School District 2018-2019 Budget Education Protection Act

EDUCATION PROTECTION ACCOUNT California voters approved Proposition 30 on November 6, 2012 and Proposition 55 on November 8, 2016; Proposition 30 added Article XIII, Section 36 to the California Constitution effective November 7, 2012 (sun setting 12/31/2017), and Proposition 55 Article XIII, Section 36 to the California Constitution effective November 8, 2016 (commencing 01/01/2018); The provisions of Article XIII, Section 36(e) create in the state General Fund an Education Protection Account to receive and disburse the revenues derived from the incremental increases in taxes imposed by Article XIII, Section 36(f); Consistent with the current provisions of the EPA, basic aid districts would receive $200 per ADA in 2012-13 and each year thereafter through 2017-18. Prior to spending funds received from the EPA, the District must hold a public hearing and report on how the funds are to be expended At the same public hearing for the adoption of the Budget, the District will present a report on EPA funds and the Board will consider a resolution approving the expensing of these funds. The law does not restrict the amount of EPA funds that may be carried over, however the CDE expects most EPA funds to be expended each year. The 2017/2018 Budget accounts for all of the expected funding. The Following expense report is a detailing the projected expenses.

Lakeside Joint School District 2017-2018 Budget

General Budget Assumptions The 2017/2018 District Budget is a projection of revenues and expenses based on the most current available information from state and county agencies as of June 21, 2017 in consultation with District administration. The approved budget for Lakeside Joint School District was built upon the Governor’s May revised budget. Any changes from the State May Revised Budget implemented when the state budget was approved, will be reflected in first interim budget. The exception to this is the one time discretionary funds just approved for spring of 2018. The May revise had this income being held until 2019, but the budget as adopted by the legislature included it for 2018. These one-time funds are included in the 2017/2018 budget.   This budget projects the income for our successful passage of Measure A in March of 2017. Measure A was a parcel tax of $647 for 8 years. This additional revenue will allow the district to meet our fiscal demands and continue to provide the quality educational program our community expects. However, it does not provide for enhancements. Due to extreme unfunded mandated program costs, the district continues to be fiscally stressed. Here is the detail of our projected General Fund for 2017/2018

Revenue Assumptions The District is projecting a 4% increase in property taxes over last year. The 2017/2018 see in increase in our Parcel Tax revenue due to the passage of Measure A Under LCFF, basic aid districts receive minimum state funding of no less than the amount received in 2012-13. The Hold Harmless amount is calculated based on the categorical allocation net of 8.92% fair share reduction. The amount the District received from these programs in 2012-2013 totals $181,386. The amount of our “Fair Share” reduction totals $56,754. The net amount of funding Lakeside receives for the “Hold Harmless” principal apportionment is $124, 632. Current law states that Lakeside will continue to receive these funds annually without COLA.

Revenue Assumptions cont. EDUCATION PROTECTION ACCOUNT Consistent with the current provisions of the EPA, basic aid districts would receive $200 per ADA in 2012-13 and each year thereafter through 2017-18. Lottery: Lottery funding will be calculated in the same manner as prior years. The estimates for 2017-18 are $144 per annual ADA for unrestricted and $45 per annual ADA for Proposition 20 (restricted).   ONE TIME DISCRETIONARY DOLLARS The 2017/2018 May Revise State Budget provides a one-time $1 billion increase to all school districts. Funds will be distributed to all schools on a $148 per-ADA basis outside the LCFF calculation. Lakeside is projecting to receive approximately $11,544.

Revenue Assumptions cont. Proposition 39 The State Budget allocates to Lakeside no less than $15,000 per year for the five years for funds to be used for energy efficiency school construction and modernization projects. The total for Lakeside is $75,000. The district has contracted with Highland Energy to develop and implement our energy plan. We will be eligible for the fifth year, next year in 2018. Th 2017/2018 Revenue Breakdown is projected to look like this:

Expense Assumptions SPECIAL EDUCATION COSTS REMAIN LEVEL The District saw an unprecedented 300% increase in costs associated with our Special Education Programs in 2015/2016. Based on identified student needs the 2017/2018 budget is projecting that 26% of the expenses will be attributed to Special Education. This budget assumes that these costs remain level this year and the two following years. CONTRACTED SERVICES Fiscal year 2017/2018 will see an increase in contractual services to reflect the payment schedule with Campbell Union and Loma Prieta Joint Union school districts to provide services for Lakeside middle school students.   The majority of our contract services are attributable to educational support programs required by law. Facility improvements have been aligned to the MYP. This year the Lakeside School Community Foundation will be supporting our major summer project expense of recoating the playground blacktop. Other summer maintenance projects include roof repair and maintenance as well as portable repair. Spring of 2018 will see the final installment of our prop 39 funds and the final phase for implementing the projects designed at higher energy efficiency. The District is continuing to work on New Well System as well as implementing a Lead Abatement plan. Funds for these two programs are expected to come from the State Water Board and the State Hardship Funding approval is expected this fall. Both projects are being scheduled for the summer of 2018.

Expenses cont. PERSONNEL The 2017/2018 Budget still does not reflect an increase in expense for a part time maintenance position and a part time IT position. The District has been operating with very limited maintenance support since June 2014 and has determined that we have a need for a part time employee with regularly scheduled hours, although there are no available funds for this position. There is a minor increase for our “at will” maintenance support.   Our IT Support has been provided by a parent volunteer. This parent has transitioned out of Lakeside with the matriculation of his children, however we have another volunteer who will help on a weekly basis, for the time being. Although it is vitally important to have someone on staff to be able to provide the level of service these two volunteers have provided, there are no funds currently available for this position. Both the Maintenance an IT support positions align with the District LCAP goals and the 5-year strategic plan objectives. The 2017/2018 reflects two one-on-one paraprofessional positions and one RSP paraprofessional. There are no other classroom support positions reflected in this budget. The 2017/2018 Budget calls for a decrease from 1.4 FTE to 1 FTE for the Resource Teacher. There is an additional $10,000 placeholder for additional Administrative oversight for Special Education. Neither certificated nor classified employees have settled salary negotiations for 2016/2017. The Budget reflects an additional increase in salaries over 2016/2017 due to step and column changes on the Salary Schedule. The benefit cap remains at $8,900 per full-time employee per year. At the June 21, 2017 Board meeting, the District will be considering approving a new three year contract with a new Superintendent/ Principal and may renew the three year contract for the CBO. The Budget for 17/18 shows a 3.7% reduction in the cost for the Superintendent/principal over 2016/2018 based on the proposed contract. The annual 3% increase for the CBO contract has been deferred for 2017/2018.

Expenses Cont. Here is the detail of how the projected expenses compare to 2016/2017 Here is a look at projected expenses by program This is how the projected expenses look by function

Multi-Year Projections Based on the latest information available from CDE, DOF, Lottery Commission, SSC and the proposed State Budget for 2017/2018 as of June 21, 20167 Funding: Continued Fair Share Hit (8.9% reduction) 4% growth in property taxes for the budget year, 4% for next two years Parcel tax revenue for eight years Expiration of one-time discretionary funds in 2018/2019 Expiration of Prop 39 Funding in 2018 Expiration of MOU with the County to offset Special Education Expenses Staff: Step and Column increases are in place for both classified and certificated. Stable certificated and classified classroom staffing

Multi Year Projections cont. General Expenses: Foundation Funding Music, PE, Black top. Still to be determined: (These programs are not currently in the district budget. Depending on available funding these programs may impact the budget.) July 10 Next Meeting Teacher Grants. Science Weed abatement Family life Bottled water Classroom and teacher computer upgrades Special Education costs based on current IEPs and no additional offsite placement. Facilities repairs based on the Facilities Schedule Costs associated with Middle School MOU’’s based on annual increase to the property tax per ADA calculation for Loma Prieta. Increased STRS and PERS rates based on current information Increase in cost of High Speed Internet as the district assumes the cost of COMCAST Increase to general expenses based on School Services Dart Board. (CPI)   2017/2018 2018/2019 2019/2020 2020/2021 CPI 3.19% 2.86% 2.7%

Multi Year Projections cont. Increased STRS and PERS Good got hi oohing

Multi Year Projections con’t Concerns   Enrollment is continuing to decline; the district is going from an average class size of 17.8 in 15/16, 17.2 in 16/17 to 15.6 projected for 17/18. Facilities continue to be of great concern to our parents and community, based on our LCAP Survey and on input received during the Parcel Tax campaign. Currently the district does not have the funds to repair and maintain our facilities as outlined in the facilities schedule. Although the 2017/2018 budget shows an increase to ending balance, for the second and third years of the budget outlook, it is projected that the District annual expenses will exceed the annual revenue. And while many circumstances may arise that may affect the budget, it would be prudent for the Governing Board and Administration to plan for potential significant reductions in expenses beginning in the 2018/2019 school year to stem the deficit spending. Ending Balance Lakeside projects a positive ending fund balance in the General Fund as of June 30, 2017 as well as for June 30, 2019 and June 30, 2020. In addition, Lakeside is projected to meet the required 5% minimum standard reserve. Lakeside staff will present to the public an explanation of the amount of our projected ending balance as well as an explanation of the need for higher than required reserves at the Public Hearing to be held on June 22, 2017. All other funds are projected to have a positive ending balance as of June 30, 2018. Here is a look at our Multi-Year Projections Here is our projection for all district funds:

Lakeside Joint School District 2017-2018 Budget Assigned and Unassigned Ending Balances in Excess of the Minimum Reserve Standard