Template for Board Presentation This Power Point presentation is provided as a template for use in preparing a district-specific Board presentation. Please modify or insert your district’s unique information. This Power Point presentation is provided as a template for use in preparing a district-specific Board presentation. Please modify or insert your district’s unique information.

 This Power Point presentation is provided as a template for use in preparing a district-specific Board presentation  Please modify or insert your district’s unique information Template for Board Presentation

May Revision Overview  No suspension of Proposition 98 ● Adds $1.1 billion to January proposed funding level  Replenishes cut to revenue limits and special education, but no cost-of- living increase  State categoricals left with approximate 6.5% reduction  Governor proposes balancing State Budget by borrowing against future Lottery revenues and/or adding 1¢ sales tax ● Could put at jeopardy contribution to K-12 in the future ● May stretch out resolution of the Budget problem 1

January vs. May Proposals January BudgetMay Revision Proposition 98 Suspend guarantee and cut funding $4 billion to $55.7 billion Fully fund revised guarantee at $56.8 billion COLA 4.94% not funded5.66% not funded Enrollment Decline of 0.51%*Decline of 0.52%* Deficit Factor No COLA and 2.4% year-over-year cut to revenue limits, yielding a 6.99% deficit factor No COLA; year-over-year cuts to revenue limits and special education withdrawn, yielding a deficit factor of 5.357% Mandates No reimbursement Categoricals No COLA or growth funding and 6.5% year-over-year cut 2 *The projected statewide decline in enrollment in May is actually fewer students, but on a higher base

District Budget Overview – Based on May Revision (Estimated Actuals) (January) (May Revision) Change January-May Revenues: Revenue Limit Federal State Other Local Contributions Flexibility Transfers Transfers Out Ending Fund Balance 3

Key Budget Assumptions  Following are key budget assumptions for based on the May Revision: ADA COLA0% for all state revenues Other adjustments-6.5% reduction to most state categorical programs Step and Column Health and Welfare Staffing Levels Operating - Fuel - Services - Contracts - Other Other???? 4

May Revision Flexibility Proposals  The May Revision includes a number of proposals to provide districts with added flexibility to mitigate the impact of budget reductions  Proposed options include: ● Reduce required reserves for economic uncertainty – half of required amount ● Reduce Routine Restricted Maintenance reserve from 3% to 2% ● Eliminate required Deferred Maintenance match ● Allows for redirection of categorical funds to unrestricted general fund ● Increase categorical flexibility  Mega-Item  AB 825 Block Grants Note: The May Revision has many flexibility proposals; however, caution should be used in adding back expenditures before the State Budget is adopted 5

What Does it Mean for Our District?  What is the available carryover balance in restricted programs that could be transferred?  Where do we stand relative to required ending fund balances?  What, if any, impact would reducing RRM funding have on staffing?  What, if any, impact would reducing or eliminating deferred maintenance funding have on planned projects?  What changes, if any, need to be made to take advantage of categorical flexibility? 6 Sample Questions that You May Wish to Consider When Adding Information to This Slide

Next Steps  Balanced budget must be adopted by district prior to June 30, 2008 ● State Budget will most likely not be in place by then  Developing the budget requires: ● Clarifying assumptions  How much revenue?  What flexibility options will be taken advantage of?  How will expenditures change?  Once the State Budget is adopted, district makes adjustments to budget within 45 days 7