Budget Update

News from the State May Revise Overall the state budget situation has gotten worse Federal dollars upon which the January udget depended, have been slow in coming Costs of some programs have risen more than anticipated Revenues are still falling below the state’s already low forecasts

News from the State May Revise Education was protected somewhat, relative to other programs in January In May, education continues to be better protected than other programs We had anticipated that the best we could hope for was no new cuts, and that is, for the most part what we got

News from the State May Revise For the most part, the May revision contains no further cuts to K-12 education Cuts proposed in January remain No new federal dollars No new taxes Major additional cuts to noneducation portions of the Budget are proposed We expect the Legislature to have great difficulty voting for the choices before them We anticipate a late budget

News from the State The May revision if enacted as proposed contains some risks: Court challenges A late budget would delay implementation of program reductions, resulting in the loss of budgeted savings State and national economies face further recession These risks could threaten California's access to the capital markets, pushing borrowing costs even higher

News from the State Continued Deferrals February Principal Apportionment to July K-3 CSR Principal Apportionment – February to July April Apportionment to August May Apportionment to August In California deferred current-year revenues into the following year and has continued this trend every year This means cash flow problems have moved from the state to local school agencies

What this means for our District  The state budget has a structural imbalance with more obligations for payment than it receives in revenue  School districts are dependent on the state for the majority of their funding  Revenue limit, the District’s primary source for unrestricted funding, and other state funding have been reduced by almost 19% from full funding  This means the District is receiving only 81¢ on every dollar it is due

District Reserves Required 3% Reserve for Economic Uncertainty Board policy requires a 5% Reserve for Economic Uncertainty The state defines the minimum: we need more than the state defined minimum Other items that are sometimes considered part of the reserve Ending fund balance Special reserve accounts

Things to consider in determining the amount of reserve Enrollment Deficit spending Potential audit of legal costs Size of district – smaller districts need a higher reserve Stability of State Revenues Employee contract obligations Reserves are “one time money”, employee costs are ongoing

Cash and Our Reserves State required minimum reserve is 3% - $800,000 The 3% minimum reserve covers 7.5 days of payroll Districts need a cash cushion due to the state’s deferral of revenue to school districts

Cambrian School District - Multi-Year Projection Without any reductions

What does a “Qualified” Budget Mean State law requires that California school districts submit a three-year balanced budget. If not, the budget is considered “qualified” We are on watch by the county One step before state receivership Loss of local control

What Cambrian has done to date Began budget review in October Presentations to board, school staffs, Home and School Clubs, & District office staff Gathered input from all these presentations Reconvened Budget Information Committee Received and reviewed recommendations from school sites and employee groups Continued to take input Information presented to board

What Cambrian has done to date Ideas generated from budget information committee categorized Board workshop Began investigating options generated from the BIC Continued to look at other options Took necessary actions based on legal timelines

Non-Personnel Eliminated regular education summer school Eliminated home-to-school transportation for regular education students Make middle-school sports programs revenue neutral Reduced site discretionary funds Investigated potential savings related to copier leases Investigated potential savings related to phone/data services Formed an Energy Conservation Committee Delayed adoption of new English Language Arts materials Increased attention to accurately projecting supply needs Implemented a variety of small cost-savings measures

Personnel - Certificated Potential teacher layoffs Offered supplemental retirement option Audited District administrators’ driving patterns - reduced appropriate auto-allowances Reduced work year for certificated administrators Reviewed stipends

Personnel - Classified Potential classified layoffs Reduced work year for confidential classified managers Reviewed stipends

District Office Represents all four employee groups: Teachers Certificated managers Classified Confidential classified managers Only area where reductions were made last year $120,000

District Office Reductions through Teacher layoff Classified layoff Shortened work year certificated administrators Shortened work year classified managers Reduced auto allowances Reduction/elimination of stipends All departments included in reductions When combining last year’s and this year’s reductions, the district office is taking twice their fair share of reductions

Revenue Enhancement District will recognize cost savings by offering expanded special education services in Began process to assess feasibility of additional parcel tax We will continue to explore ways to reduce costs and/or increase revenues