Bassett USD 2019-20 Proposed Budget June 25, 2019 Linda Bermudez, Executive Director of Business Services Daniel Menyon, Fiscal Consultant Both

Presentation Outline Budget Hearing and Adoption Requirements National & State Budget Highlights BUSD Trends Key Assumptions & 2019-20 Budget Multi-Year Projections Ongoing Stabilization Plan Q & A LB

Budget Cycle Year-End Closing 2018-19 (July-Aug) 1st Interim Financial Report (Dec) Data & Info Collection (Jan-Feb) 2nd Interim Report (Mar) Preliminary Budget (Apr) May Revise Budget Workshop Adopt LCAP & Budget 2019-20 (Jun) Budget Cycle LB

Budget Adoption Process Public hearings on the LCAP and the budget shall be held before the budget adoption School districts shall adopt a budget by July 1 The governing board shall file the budget with the County Superintendent By August 15 the County Superintendent shall approve or disapprove the adopted budget Budget Adoption Process LB

National & State Budget Outlook Global economy is starting to show signs of weakness California economy ranks 5th in the world Low unemployment 4.3% Forecast for Personal Income Tax Revenue is higher in 2019, but lower 2020 CA’s Rainy Day Fund Reserve is projected to be $16.5 billion in 2019-20 and $18.7 billion by year-end 2022-23. LB

CA School Funding- Underfunding California’s per capita personal income ($44,173) is above the national average, but it provides only $34 for each $1,000 of personal income to support schools By contrast, New York had a comparable per capita personal income ($46,445), but provided $55 for each $1,000 of personal income – 62% higher funding than California New Mexico, with considerably lower per capita personal income ($36,814) nevertheless provided $48 for each $1,000 of personal income – 41% higher funding than California LB

Governor’s Proposed Budget 2019-20 Three items have emerged from the Governor’s Budget for 2019-20 have a positive effect on BUSD’s multi-year budget: Increased funding due to COLA State assistance with increasing STRS (State Teacher Retirement System) district contributions Increased funding for Special Education Absent from the proposed budget is any mention of one-time funding from the state which was the norm in previous budgets. LB

Since FY 2001-02 until FY 2018-19, the district has lost an enrollment of 2,661 students. This equates to the loss in revenue of approximately $25 million. LB

Enrollment, Attendance, & Attendance Ratio MA District receives LCFF revenues on the attendance (ADA) reported every year during the month of April commonly known as P-2

STRS & PERS CONTRIBUTION RATES STRS & PERS Contribution History ONTRIBUTION RATES used for 2018-19 budget STRS & PERS CONTRIBUTION RATES 2017-18 2018-19 2019-20 2020-21 2021-22 STRS 14.43% 16.28% 16.70% 18.10% 17.80% PERS 15.53% 18.06% 20.73% 23.60% 24.90% Continue increases to STRS and PERS contributions MA

General Fund Budget Assumptions (Based on May Revise) Description 2019-20 2018-19 BUSD P-2 Funded ADA 3,403.36 LCFF Statutory COLA 3.26% Unduplicated Count (3-year rolling average) 53.90% LCFF Gap Funding None planned for the future One-Time Discretionary Funding $0 LCFF Per ADA $9,194 Lottery Per ADA $204 LB

Governor’s Proposed Budget 2019-20 Description 2019-20 Funded ADA 3,403.36 LCFF Statutory COLA 3.26% Unduplicated Count (3-year rolling average) 53.90% LCFF Gap Funding None planned for the future LB

General Fund Budget Assumptions (Based on May Revise) Description 2019-20 Unrestricted Certificated Step and Column Increase $734,589 Unrestricted Classified Step Increase $299,241 Current Employee Health & Welfare Premium Cap Sgl/2P $16,600 Family $17,400 District Unrestricted STRS Contribution 16.70% $2,382,075 District Unrestricted PERS Contribution 20.733% $1,047,814 LB

General Fund Balance/ Reserves Multi Year 2018-19 Estimates 2019-20 Budget 2020-21 Projections 2021-22 Projections Beg. Balance $3,832,684 $4,151,765 $6,177,080 $5,568,698 Surplus/(Deficit) $ 319,081 $2,025,315 $(608,392) $ (2,816,909) End. Balance $2,751,789 Audit Adjustments Components Reserves for bus repairs & replacement $0 $ 100,000 $100,000 Reserve for textbook adoption $1,000,000 Statutory Reserve @ 3% $1,392,973 $1,368,937 $1,420,794 $1,453,391 Carryover/ Restricted Reserves $2,567,924 $2,851,431 $2,515,578 $139,905 Assigned Designations --- Unappropriated/ Deficit Reduction $190,868 $856,712 $1,532,326 $1,058,494 Total Components $4,201,197 MA

Bassett Unified School District Multi Year Projections ($ Millions) 2018-19 2019-20 2020-21 2021-22 Estimated Actuals Proposed Budget Projections Projects Beg Balance – July 1 $ 3.83 $ 4.15 $ 6.18 $ 5.57 Revenues $ 46.75 $ 47.66 $ 46.75 $ 45.63 Less: Expenditures $(46.43) $(45.63) $(47.36) $(48.45) Spending: Surplus/(Deficit) $ 0.32 $ 2.03 $ (0.61) $ (2.82) _________________________________________________________________________________________________________ Ending Balance – Jun 30 $ 4.15 $ 6.18 $ 5.57 $ 2.75 MA *In order to restore the reserve balances and give a surplus of $337,000 to the ending fund balance in FY 2021-20, projected adjustments in reductions through attrition, layoffs, overtime cost, etc. are factored in.

2019-20 Sources of Funds (Revenues) MA

2019-20 Uses of Funds (Expenditures) MA

Capital Outlay & Transfers How do we spend our funding? 77% of the unrestricted budget is allocated to staff salaries and benefit costs. Capital Outlay & Transfers 4% MA

Statutory Requirements Interim Reports provide opportunity to reflect changes since Budget Adoption and revised projections must certify financial condition: Positive Will meet financial obligations in current and 2 subsequent fiscal years Qualified May not meet financial obligations in current and two subsequent fiscal years Negative Will not meet financial obligations in current and one subsequent fiscal year Positive Certification We will have sufficient funds to meet financial obligations and maintain minimum 3% reserves in 2019-20 through 2020-21 LB

Key Budget Challenges Unsustainable Deficit Spending Declining enrollment Average daily attendance STRS and PERS increases Multi-year considerations Tax revenues are variable LB

Ongoing Fiscal Recovery Stabilization Plan The area(s) of focus are as follows: Optional Program Expenditure Reductions Mandated Program Reductions Ongoing Staffing Analysis Outsourcing Analysis Positive Certification, but additional stabilization is required… LB

Revenue & Expenditures 2019-2020 NO One-Time Revenue NO LCFF GAP Funding (Shut-off in 2019-20) COLA STEP & COLUMN INCREASES STRS/PERS INCREASES Gen. Fund ADA FUNDING LOSS CONTRIBUTION INCREASES

Thank You! Q&A Linda Bermudez Executive Director of Business Services lbermudez@bassettusd.org Daniel Menyon Fiscal Services Consultant dmenyon@bassettusd.org Both