LENNOX SCHOOL DISTRICT 2014-15 First Interim Report to Board of Trustees December 9, 2014 Presentation for the Lennox School Board Juan Navarro, President Angela Fajardo, Vice President Sergio Hernandez Jr., Clerk Shannon Thomas-Allen, Member Mercedes Ibarra, Member Kent Taylor, Superintendent Presented By: Kevin Franklin

Interim Certifications Education Code (EC) Sections 35035(g), 42130, and 42131 require the Governing Board of each school district to certify at least twice a year to the district’s ability to meet its financial obligations for the remainder of that fiscal year and for the subsequent two fiscal years Positive Certification: A District will meet its obligations in the current and two subsequent years. Qualified Certification: A District may not meet its obligations in the current or two subsequent years. Negative Certification: A District will not meet its obligations in the current or two subsequent years Lennox School District is Self-Certifying Positive The District does not have to self certify for 3rd Interim.

Overview – State General Fund Priorities The major focus of the 2014-15 State Budget is the Local Control Funding Formula (LCFF) $4.75 billion to further implement LCFF Reserves and paying of debt are important priorities $4.7 billion to buy down K-12 deferrals CALSTRS – plan is to fully fund in 30 years ($74.5 billion)

Planning Considerations DOF revised their Gap Funding estimates Largest revision in 2015-16 2014-15 Revised from 28.08% to 29.56% 2015-16 Revised from 30.39% to 20.68% 2016-17 Revised from 19.50% to 25.48% No statutory guaranteed increase in any year LACOE recommends exercising extreme caution in obligating any increase in funds from LCFF Expiration of temporary tax increases EPA (Prop 30) Sales tax in 2016 and Upper-income tax payer in 2018

Planning Considerations – CALSTRS/CALPERS 2013-14 2014-15 2015-16 2016-17 CalSTRS 8.25% 8.88% 10.73% 12.58% CalPERS 11.442% 11.771% 12.60% 15.00% 2013-14 2014-15 2015-16 2016-17 CalSTRS $2,107,364 $2,486,050 $3,059,767 $3,640,934 CalPERS $824,032 $855,419 $1,008,640 $1,218,774

Local Control Funding Formula COLA is now just one factor that feeds into the district-specific increase in funding 2014-15 = 0.85% 2015-16 = 2.19% 2016-17 = 2.14% Gap Funding is just one more factor 2013-14 = 29.56% 2014-15 = 20.68% 2015-16 = 25.48%

First Interim 2013-14 The District Self-Certifies Positive First Interim Report Includes QEIA Implementation For 2014-15 only. QEIA is no longer funded after 2014- 15. No Proposed Staff Reductions, No Proposed Layoffs, No Proposed Compensation Changes 2014-15 Current Bargaining Unit Agreements Included In Projections

Summary of General Fund MYP 2014/15 2015/16 2016/17 Revenue $ 56,069,367 $ 52,972,997 $ 55,703,829 Expenditures $ 57,175,995 $ 55,752,409 $ 56,063,145 Surplus/ (Deficit) $ (1,106,628) $ (2,779,412) $ (359,316) Beginning Balance $ 10,886,949 $ 9,780,321 $ 7,000,909 Ending Balance $ 6,641,593 Reserve For Economic Uncertainties $ 1,715,280 $ 1,672,572 $ 1,681,894 Additional Available Reserves $ 6,537,543 $ 4,830,258 $ 4,950,166 Available Percentage 14.43% 11.66% 11.83%

Revenues 2015-16 & 2016-17 Projected Declining Enrollment & ADA 2015-16 Loss of Approx. 7 ADA 2016-17 Loss of Approx. 7 ADA QEIA Revenue no longer included in budget Common Core State Standards Funding ($1M) No longer included Use of LCFF Flexibility

Assumptions for Expenditures Projected increase in health benefits Step and column increases Increased CalSTRS and CalPERS contributions are included All items included from LCAP

What’s Next? Submit Approved First Interim to LACOE by December 15, 2014 LCAP Analysis Continue to meet with LTA Planning Committee and LTA Class-Size Committee Adjust Current Year and Multi Year Budgets as needed Await News of Release of Governor’s 2015-16 State Budget, January 10, 2015

Questions?