Ramona Unified School District May 8, 2012

 With the adoption of the Second Interim Report, Ramona Unified self-qualified  Qualified status means the School District is uncertain that it will be able to meet the State’s fiscal requirements  Education Code, as does the San Diego Office of Education, requires that a school district submit a Third Interim Report 2

 Revenues$46,561,841  Expenses$51,529,535  Difference($ 4,967,694)  Transfers from Special Reserve $ 986,000  Beginning Balance$ 8,194,395 (June 30, 2011)  Ending Balance$ 4,212,701 (Projected for June 30, 2012)  Fund 17, Special Reserve Fund, houses the 3% reserve, or $1,490,000, which is not reflected in the above number or in the multi-year projections 3

 Adjustments have been made to: Mental health expenditures due to additional students who have moved into the area Deficit factor for the revenue limit has changed slightly  With adjustments, the projected ending balance remains relatively unchanged 4

 This projection is based on factoring in the following actions and scenarios Reduction of funding and carryover for sites and departments Layoff of classified staff members Layoff of certificated staff members Elimination of positions through retirement or resignation Three unpaid furlough days for all classified and administrative employees Reduction of high school Summer School program Buy-up option for administrative employees who choose Health Net Other reductions, transfers, and flexibility 5

 Due to State deferral of cash, RUSD will NOT have enough dollars from the GENERAL FUND to meet all obligations on June 30, 2012 June 30 th payroll is largest expense  Borrowing from other district funds, together with tight cash control, will allow the district to meet its obligations Margin of error is a few hundred thousand dollars 6

Revenue46,561,84142,326,63241,301,963 Expenses51,529,53547,942,17049,311,010 Difference (4,967,694) (5,615,538) (8,009,047) Transfer from Reserve Fund 986, Beg. Balance 8,194,395 4,212,701 (1,402,837) Ending Balance4,212,701 (1,402,837) (9,411,884) 7

 Any projection must assume that certain things will occur  For example: A day for a family of four at Disneyland will cost:  Gas, hotel, food, tickets, parking, souvenirs A yearly family budget:  Food, housing, clothing, utilities  A school budget in July must project the following How much will the State fund education How many students will enroll and attend How much will health benefits increase  Are the assumptions being used reasonable? 8

 Revenue Current year P-2 ADA for revenue limit No COLA increase Loss of $370 per ADA (assuming November tax initiative does not pass) Loss of $624,000 in transportation funding Dollars from special education reduced due to declining enrollment Increase of transportation fees  Expenses 10% increase in health benefits Servicing all salary schedules Savings from classified and certificated layoffs Retirees as of May 1 st Assuming dollars budgeted in are spent 9

 Current year’s revenues are $46.5 million and next year’s projected revenues drop to $42.3 million In revenues were $55 million In revenues increased to $56.4 million  In , $4.87 million in revenues came from the Federal stimulus or ARRA Grant arrived after Ramona’s July budget adoption  In $1.2 million in additional Federal dollars came from the Jobs Bill money Grant arrived after Ramona’s July budget adoption 10

 With current projections, RUSD will NOT have enough cash to meet June 30, 2013 obligations Dollars in other funds will not be sufficient to meet demands A cross-year loan in the form of either a TRAN or County of San Diego Treasury loan will need to be secured  The fear is whether these outside agencies will loan the district sufficient dollars to meet demands  A district may only borrow a certain amount based upon the amount of state deferrals and its ability to repay the lender  In , Ramona will not have enough cash to meet its obligations, nor will it have the ability to borrow the cash 11

 With current projections, RUSD is one step from a NEGATIVE certification Ramona Unified is uncertain it will remain solvent  San Diego County Office of Education second interim report letter received Monday afternoon “…Of greater concern is the ability of the district to reduce its structural budget imbalance significantly enough to cover its negative cash position.” “Baring significant and immediate expenditure reductions, the district is at risk of a disapproved budget or being given a negative certification in , which may entail the appointment of a fiscal advisor by the County Superintendent of Schools.” 12

 Many changes can occur at the State May Revision  Changes to the Governor’s proposal  State cash received in April is $2 billion short of projections  Actual adoption of the State budget On time in June? What will be the outcome for initiatives such as weighted student formula or transitional kindergarten program What will be the reduction to revenues if a November ballot initiative fails 13

 November ballot measures Will they pass? What happens if they do not pass?  Even with the passage of the tax initiative: Further reductions will need to occur to right the financial ship 14