Adopted Budget Walnut Valley Unified School District Board of Trustees June 19, 2013

22 Agenda Recap of State Budget Local Budget Multi Year Projections Next Steps In conclusion…… Questions?

33 Recap of COLA of 3.24% Net funded COLA 1.08% K-12 Revenue Limit Deficit of % Proposed cuts Midyear “trigger” – shorten school year by 15 days Average cut of $ per ADA Passage of Proposition 30 Flat funding Established the Education Protection Account 21.2% of Revenue Limit funding deferred to June 2013 Apportionment deferrals

44 Recap of Adopted Budget (7/1/2012) Conditional approval by LACOE First Interim Report (10/31/2012) Negative Certification Implementation of Fiscal Stabilization Plan Furlough Days Reductions in Force Second Interim Report (01/31/2013) Positive Certification

State Budget Increased revenues to Prop 98 in of $2.9 billion over the January proposal Quicken the pace of deferral buy backs $4 billion in $270 million in Fund a one-time augmentation for Common Core State Standards (CCSS) – in the amount of $1.250 billion $170 per ADA (estimated) Implementation of the Local Control Funding Formula (LCFF) - $2.1 billion No district loses funding Adds very restrictive accountability provisions (LCAP) Reduced Prop 98 funding Declining state revenues Offset by reducing the amount of deferral buy back - $920 million to $270 million Programmatic spending remains relatively unchanged

Local Budget Revenues, Expenditures and Fund Balance Revenues 1.565% Statutory COLA – $243 per ADA % deficit factor $(18,764,542) annually Net funded revenue R/L change 5.85% Enrollment remains relatively “flat” , , ,412 Expenditures Staffing for enrollment, and step and column increases No increase on salary schedules; includes 4 furlough days Increases to statutory benefits 8.66% adjustment for the potential increase in the cost of H&W benefits in January 2014 Continued flexibility

Local Budget Revenues, Expenditures and Fund Balance Fund Balance (Estimated) Decrease in General Fund balance in the amount of $34,593 from Second Interim Unrestricted$165,405 Restricted$(199,998) General Fund unrestricted balance - $7,387,889 Reserve for revolving cash$35,000 Stores$245,029 Prepaid Expenditures$311,709 DEU (Mandated 3% reserve)$3,357,156 Other Commitments$2,449,818 Other Assignments (Flex)$989,177 Represents in total a 6.60% reserve level

Local Budget Revenues, Expenditures and Fund Balance Fund Balance (Budgeted) Decrease in General Fund balance in the amount of $98,331 from Estimated Actuals This represents the ongoing structural deficit, not including “transfers in” of $700,000 General Fund unrestricted balance $7,289,558 Reserve for revolving cash$35,000 Stores$245,029 Prepaid Expenditures$311,709 DEU (Mandated 3% reserve)$3,296,898 Other Commitments$183,657 Other Commitments (R/L)$3,217,265 Represents in total a 6.63% reserve level

Multi Year Projections Budget Year +2 ( through ) Statutory COLAs: 1.565%, 1.800%, and 2.200% R/L deficit factor of % Approximately $(18,764,542) annual ADA is maintained at 14,412 in the projection years State Categorical COLAs: 0.00% all years Special Education – 0.00%, 2.50%, and 2.70% Includes cost of collective bargaining agreements through Step and column H & W – 8.66%, 10.00%, and 10.00% Furlough days Adjustments made to expenditures for one-time items; i.e. election expenses Increase to utilities (electricity) Structural deficits $(98,331) $620, $(305,254) Projected fund balances in the current and two subsequent fiscal years are positive, with the required 3% reserve (DEU) Other Commitments – above 3% to mitigate loss of potential revenues or increases to expenditures $3,400, % $3,328, % $3,418, % 99

10 Multi Year Projections Budget Year +2 ( through ) Combined General Fund Adopted Budget Beginning Fund Balance $8,656,735$8,558,404$9,178,611 Total Revenues$109,798,248$111,571,714$113,636,192 Total Expenditures$109,896,579$110,951,507$113,941,446 Net Increase/Decrease in Fund Balance (Structural Deficit) $(98,331)$620,207$(305,254) Ending Fund Balance$8,558,404$9,178,611$8,873,357 Required Components of Ending Fund Balance $5,157,482$5,189,130$5,232,947 Ending Fund Balance (Committed) $3,400,922$3,989,481$3,640,410

11 Next Steps Close books on Determine actual beginning balances (Sept) Monitor legislative actions LCFF Implementation Advance apportionment with “true up” at P1 (February 2014) Revise District Adopted Budget Within 45 days of State Budget Adoption Continually monitor cash flow and reserves The combination of deferrals, ongoing expenditure increases, and the reduction of reserves is diminishing the cash cushion that we’ve been able to maintain

12 Next Steps Conference Committee LCFF Compromise Grade span specific Base Grant - 84% of formula (May Revision was 80%) “Economic Recovery Payment” funding levels adjusted for inflation Supplemental Grant 20% of base grant for low income and ELL (May Revision was 35%) Concentration Grant 55% of students are low income and ELL (May Revision was 50%) Rate 50% of Base Grant above 55% threshold (May Revision was 35%/50%) Full implementation to take 8 years ( ) Target rate is funded based on annual budget appropriation Hold-harmless provision in the budget year

13 Next Steps Local issues Cash borrowing and liquidity Increased cost of H & W benefits Managing the structural deficit Monitoring the fiscal stabilization plan Implementation of the Affordable Care Act (ACA) Implementation of Common Core State Standards (CCSS) Implementation of the Local Control Funding Formula and Accountability Plan (LCFF and LCAP) Collective bargaining – Negotiations Land lease and sale

14 In conclusion…… Budget No more cuts, and the deficit factor is slightly reduced $1.25 billion for CCSS paid on a per ADA basis LCFF A pathway toward restoration of the base, but not until More expeditious elimination of deferrals

15 Questions? Sources: School Services of California, Los Angeles County Office of Education, WVUSD Prepared by: Jeanette Ullrich, Assistant Superintendent, Business Services