First Interim Report December 18, 2014

Tonight’s Presentation District’s First Interim Report Provides a summary to the Governing Board of the District’s current financial situation with updated assumptions and projections District’s multi-year outlook Provides a summary to the Governing Board of the assumptions of multi-year projections

Budget Most changes occur from the adoption of the budget (July 1) until the First Interim Report State of California Budget Trailer bills, which define some of the funding that was not signed, includes one-time mandated cost dollars RUSD’s previous year’s budget was not closed Unspent dollars from the previous year needed to be budgeted in the current year and the previous year’s ending balance needed to be updated in the new projections Information was not yet known on other budget items The final cost of employee settlements from June of 2012 Summertime resignations Current year enrollment and staffing This year, changes are similar to changes which occurred in past years

The Budget First Interim Totals Total Revenues$48,645,308 Total Expenses$53,678,724 Beginning Balance $ 7,928,488 Ending Balance* $ 2,895,070 *Projected Ending Balance for June 30, 2015

Carryover Factored Into Budget Carryover in Budget* Site/Dept. Carryover $ 1,564,137 Formerly Restricted Cat. $ 1,716,708 Total $ 3,280,845 Consists of budgeted expenditures, no new revenues Revenues are from previous years *From Unaudited Actuals, presented to the Governing Board in August 2014

Changes from Budget Adoption To be able to spend the dollars from the ending balance, expenditure budgets must be developed The expenditures go up by $3.28 million The majority of dollars are in the 4000 object code Revenues that significantly increased Local Control Funding Formula increase One-Time Mandated Costs revenues Out-of-Home Beds Federal dollars from Title One and Medi-Cal Reimbursements

Changes from Adopted Budget Significant changes to expenses Increase to the utility budget for electricity This was offset by the reduction to diesel fuel costs Employee compensation Step and column is corrected Resignations, replacements, and new hires are in place The final cost of the settlement to all employee groups for the June 2012 agreement and the August settlement with CSEA Additional dollars budgeted for deferred maintenance needs COP payments

Certificates of Participation With the increase of revenues from developer fees, the current year’s General Fund contribution to the Certificates of Participation dropped to $1,425,000 Since the development of this report, an additional $35,000 has been received, so this expense will decrease by at least $35,000 In : $1,685,381 payment from General Fund In : $1,760,494 payment from General Fund

Multi-Year Projections AB 1200 requires each district to project the current year and next two fiscal years to maintain fiscal health and to identify any significant issues RUSD’s reserve meets State’s requirement for the and school years With the current set of assumptions, RUSD’s reserve will likely not meet State’s requirement for the school year Qualified Status: A district might not be able to meet its financial obligations for the current year and two (2) additional years A qualified budget can change at the second interim with new or updated information

Multi-Year Projections Current Yr. Revenues $ 48,645,308 $ 48,839,437 $ 49,031,620 Current Yr. On-Going Expenses $ 47,452,879 $ 48,761,728 $ 50,816,343 Deficit/Surplus $ 1,192,429 $ 77,709 $ (1,784,723) COP Payment From General Fund $ 1,425,000 $ 1,685,381 $ 1,760,494 One-time Expense from Carryover** $ 3,280,845 $ - One-Time Expense for Employee Settlements from $ 470,000 $ - One-Time Expense for Professional Development $ - $ 125,000 $ - One-Time Expense for Math and Language Arts Textbooks $ 550,000 $ 200,000 $ - Additional Expense for Deferred Maintenance Plan $ 500,000 $ - Beginning Balance $ 7,928,488 $ 2,895,072 $ 962,400 Ending Bal. $ 2,895,072 $ 962,400 $ (2,582,816) ** $1,716,708 from Restricted Programs, $1,564,137 Site and Departments

Assumptions for Multi-Year Revenue a 20.68% Gap funding to the LCFF increase Based upon the Department of Finance projections a 8.2% Gap funding to the LCFF increase Based upon School Services of California recommendations Continued declining enrollment is factored into the LCFF A lower than expected decline in student enrollment is factored in all the years However, drop of 70 next year for the funded ADA of is assumed 11

Assumptions for Multi-Year One-Time revenues, such as Mandated Costs and Out- of-Home beds, are not included RUSD will receive significantly smaller amount of Out-of- Home beds in the future Expenses The assumption is that all the carryover dollars are spent in their entirety The expenses dramatically drop Backing out of other one-time expenses The expenses from the June 2012 settlement Textbooks dropping to $200,000 and then to zero

Assumptions for Multi-Year Expenses Increase in healthcare costs at 10% each year Step & Column salary increases at 2% per year Savings from the new District copier lease agreement General Fund contribution to the payment of Certificates of Participation at $1.68 and $1.76 million These will be adjusted in those years as developer fees are realized

Points to Ponder A qualified vs. a positive budget certification Any budget needs to be based upon sound and reasonable assumptions Elimination of deficit spending New one-time projects Governor’s Budget proposal in January

Alternative Multi-Year Budget Current Yr. Revenues $ 48,645,308 $ 48,839,437 $ 50,520,169 Current Yr. On-Going Expenses $ 47,452,879 $ 48,686,728 $ 50,516,343 Deficit/Surplus $ 1,192,429 $ 152,709 $ 3,826 COP Payment From General Fund $ 1,425,000 $ 1,660,381 $ 1,735,494 One-time Expense from Carryover** $ 3,280,845 $ - One-Time Expense for Employee Settlements from $ 470,000 $ - One-Time Expense for Professional Development $ - One-Time Expense for Math and Language Arts Textbooks $ 550,000 $ - Additional Expense for Deferred Maintenance Plan $ - Beginning Balance $ 7,928,488 $ 3,395,072 $ 1,887,400 Ending Bal. $ 3,395,072 $ 1,887,400 $ 155,732 ** $1,716,708 from Restricted Programs, $1,564,137 Site and Departments

Changed Assumptions Revenues in are based upon State Department of Finance Changes assumption of GAP funding to LCFF from a 8.2% to 25.48% One-Time expenses of Deferred Maintenance plan in , and one-time expenses of textbooks and Professional Development in have been eliminated Assumes slightly more developers fee revenues in the next two years Assumes a reduction of expenses for utilities

Alternative Multi-Year Both scenarios are based upon sound assumptions Both School Services of California and Department of Finance are credible sources of information Developer Fee revenues have been greater than anticipated the last two years, and potential housing construction projects are inline to support this increase of revenues Training and planning have begun to continue the savings from utilities

Board Options Must have approval of an Interim Budget Adoption of current budget and multi-year plan A qualified budget Adoption of the alternative budget and multi-year plan A positive budget Consideration of new assumptions before adopting

What is Next Governor Brown’s January Budget What are the Governor’s priorities for current year’s increase in State revenues Increase to LCFF More one-time projects such as mandated costs, common core New programs such as expanded pre-school Enrollment Projections Help to determine staffing and revenues

Questions Questions? Comments? Concerns? 20