STATE FISCAL CRISIS: UPDATED IMPACTS ON K-12 AND RUSD August 16, 2012

State Budget It Is All About November  Education was treated better than any other state-funded program in the June version of the State Budget.  K-12 received a very slight increase in revenue limit funding.  In the “final” budget, only one of four of the governor’s policy and reform initiatives was enacted by the legislature.  A semi-reasonable form of mandated cost reimbursement program reform promoted by RUSD was approved.  Not approved (for now) was Weighted Student Formula, elimination of Pupil Transportation funding, and making optional Transitional Kindergarten  revenue levels assume the passage of the governor’s tax initiative on November 6.  Without Proposition 30 revenues, the state’s General Fund is $9 billion further in the hole. Education is set up to make up the largest portion of the balancing act. 2

Despite the State Fiscal Environment Source: SSC Governor's Proposed Budget, updated for impact of SB 81 in Dollars Per ADA Average Unified District Loss of COLA Loss of Baseline dollars Loss due to Midyear cut Actual vs. Statutory Funding Levels 3

What if Proposition 30 Fails? – “Plan B” Mid-Year Automatic Triggers Cut Education Hard  Following the State Budget strategy, the proposed budget contains a new set of automatic trigger reductions linked to the failure of the governor’s proposed tax initiative (Proposition 30).  Education is the hardest hit – 98.4% of the mid-year trigger cuts.  “Plan B” impact to RUSD is estimated at -$18.4 million. Programs Targeted for Trigger Cuts ProgramAmount% Share Proposition 98$5,354M90.0% University of California$250M4.2% California State University$250M4.2% Developmental Services$50M0.8% All Other$49M0.8% Total$5,951100% 4 Source: LAO

Proposition 30 and Proposition 38 The November Ballot Is Busy With Initiatives Tax Initiatives That Help Schools Proposition 30 “Governor’s Tax Initiative” Proposition 38 “Munger/PTA Initiative” Personal Income Tax and Sales Tax - $6 billion per year Personal Income Tax - $10 billion per year Revenues flow to State General Fund and are distributed with existing formulas (i.e., K-14 gets its Proposition 98 determined share) Majority of revenues flow to a special account that is distributed to local schools. Other funds to early childhood and state debt service. K-12 portion creates a “Part A” and “Part B” to the revenue limit with the new Part B tied to some restrictions. Funds are restricted from being spent on existing staff. No additional funding to K-14 over July 1 budget. $1,000 per student in additional funds to schools; but $447 per student offset. Most recent polling: 54%-56% favorableMost recent polling: 38%-46% favorable 5

6 RUSD Structural Deficits Recurring Expenditures Are Greater Than Recurring Revenue Prop 30 Passes : $16.2M : $19.9M Prop 30 Fails : $36.5M : $40.2M Prop 30 passes Prop 30 fails Structural Deficit covered by one- time revenues and resources Structural Deficit covered by one-time resources Increased Structural Deficit Amounts shown are “structural deficits”, not total deficits. 6

State’s Fiscal Crisis: Local Implications Running Out of Options Deficit Spending ($27.5)($36.1) Fund Balance $37.2$0.5 Minimum Fund Balance Required $18.8$20.0 Shortfall in Fund Balance Components $0($19.5) 7 Dollars in Millions

State’s Fiscal Crisis: Local Implications General Fund: Fund Balance and Cash Dynamics Have Changed 8 Dollars in Millions (E) (P) Total Fund Balance $56.9$72.6$71.0$90.2$85.9$64.7 June 30 Cash Balance (% of Fund Balance) $47.3$45.6$39.7$44.9$14.7($8.3) 83.1%62.8%55.9%45.4%17.1%(12.8%)

Collective Bargaining Status Health and Welfare Is The Biggest Topic  Current Plan Year (Jan 1 – Dec 31, 2012)  Contingent second, one-time $250 increase in District contribution has been triggered by State Budget. (New one-time contribution level of $10,000.)  $700,000 impact to current year included in budget  Will be paid in equal installments Sept., Oct. and Nov.  Next Plan Year (Jan 1 – Dec 31, 2013)  Tentative Agreement with RCTA to continue $9,500 District contribution plus a one-time increase of $250 ($9,750) plus a second, one-time $250 increase contingent upon the passage of Proposition 30 in November.  $1.3 million impact not included in budget  Preliminary premium rate increase ranges: Kaiser: 6.4%, EPO: 16%, PPO: 20% 9

Collective Bargaining Status Other Collective Bargaining Items  All  No furloughs for  $5.1 million impact to current year included in budget  RCTA  MOUs to provide 1) Staff Development Specialist flexible work year, and 2) $500 stipend for optional materials based professional development 80 hour practicum (both pending approval) 10