CMS Budget Update March 10, 2010

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Adopted Current Expense Budget $1.14 Billion – Operating Funds 134,448 Projected K-12 Student Enrollment $8,483 Budgeted Cost Per Pupil (K-12) 3

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CMS Budget Trends 5

CMS Budget Update Sources of Revenue Trend 6

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8 Cut $161.3 million through reduction and redirections Opened 19 new and/or replacement schools Added more than 2.4 million additional square feet Grown to more than 5,031 acres Added more than 4,600 students Increased student achievement in 24 of 25 areas tested Since , CMS has:

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How are we planning for the budget? 10 CMS Budget Update

Framework for Budget Development Align resources to support Strategic Plan 2014 Keep strong academic focus coupled with data driven decision making Recognize and plan for the impact of the economic environment and employ sound fiscal management – respond to signals from state and local sources that funding may be limited Acknowledge uncertainty regarding expected funding levels from all sources, but be prepared for the worst Request funding from County for growth, sustaining operations and opening new schools Pay for Strategic Plan 2014 initiatives through budget reductions or redirections Establish flexibility in the budget to allow for various reduction levels CMS Budget Update 11

Local Budget Outlook Excerpts from earlier memo to County Department/Agency Directors (1/5/10) -  Anticipate that there will be limited or no growth revenue for FY2011  Greatest challenge will continue to be juggling competing needs for county, debt and education services  Possibility that departments/agencies will be asked to use existing resources to fund increased service demands Excerpts from more recent county budget update (2/16/10) -  Best case scenario presented was no growth in revenues  At best, departments can expect some services to be funded at current levels  However, departments are planning for reductions ranging from 5-15% - not across the board cuts  Departments and services will receive different reductions based on service priority and performance 12 CMS Budget Update

State Budget Outlook In the February 2010 General Fund Revenue Report and Economic Outlook, the Fiscal Research Division reported – Revenues through January are $35 million short of forecast of $11 billion Near the budget target due to $472 million of one-time collections from corporate taxpayers ($272 million more than budgeted) Final quarter of the fiscal year contains the majority of the forecast risk – unpredictability in corporate income tax payments and non-withholding personal income tax payments At this stage of the recovery economic signals remain mixed, yet most economist believe a sustainable recovery is underway CMS Budget Update 13

State Budget Outlook  Mounting budget pressures for remainder of and beyond as prolonged weaknesses in the economy affect revenue collections  Budget included a 1 cent increase in the State’s sales tax rate  Expenditures for Medicaid and other income assistance programs may exceed budgeted amounts  A looming issue on the horizon will be the FY revenue picture DPI recently reported to State Board of Education  Expecting an announcement lowering growth revenue projections for (budget anticipated a 3.2% revenue growth) 14 CMS Budget Update

What does this mean for CMS? Our crystal ball used to forecast revenue is extremely cloudy and uncertain We are facing another austere budget for Revenue growth from taxes and fees are slow to recover from the recession – at state level and locally –our two primary funding sources County is signaling that funding may not be available to cover growth, sustaining operations and opening new schools and may require a reduction in funding Reductions will be required to cover a $7.3 million increase in the state “discretionary reduction” planned in CMS Budget Update

What does this mean for CMS? Lagging state revenues may require additional cuts in addition to those originally planned for – another 5% cut would equate to $31.8 million for CMS Preparations to address funding cliff anticipated in of $47 million must begin Budget alignment to Strategic Plan 2014 and employing the strategic use of resource strategies gleaned from ERS work will be essential Emphasis must be on making education a priority at all levels 16 CMS Budget Update

Budget Scenarios 1-2 ($ in millions) 17

CMS Budget Update Budget Scenarios 3-4 ($ in millions) 18

CMS Budget Update Budget Scenarios 5 ($ in millions) 19

CMS Budget Update Budget Calendar Key Dates 20

Questions? Conclusion 21 9