Governors 2010 May Revise & Districts Proposed Budget June 22, 2010 Steven Lawrence, Ph.D., Superintendent Bryan Richards, Director, Fiscal Services

Negative COLA & Deficits A 0.39% DECREASE in funding; ($25) per ADA (which works out to about ($19.45)/ADA when deficited) Starting next year it will become ongoing and be 3.85% * undeficited revenue limit (including Beginning Teachers and Meals for Needy Adjustments and COE ADA, but with the cut not passed through to the COE for an effective cut of $247.00/ADA)

Funded Revenue Limit vs Graph courtesy of School Services of California, Inc.

What does a 22.21% cut look like? School year is 180 days 22.21% of school year is 40 days To cut school by 22.21% we would have closed after school ended on April 16 th A 22.21% reduction of the school day would equal about 1 ½ hours less instruction daily

10/11 revenue limit cut deepens to $1,409/ADA

Declining Enrollment Less Steep than projected at P-1 At adoption we projected a decline of ADA At P-1 we were down ADA For P-2 we are down ADA We are down 1.66% from 2008/09

MDUSD Enrollment Declining!

How does revenue limit funding look?

Unrestricted General Fund Revenues Without Negotiable With Negotiable Budget Items Budget Items Revenue Limit Sources $ 156,460,391$ 156,460,391 Federal Revenue 232, ,231 Other State Revenue 31,510,175 31,510,175 Other Local Revenue 1,123,770 1,123,770 Total Revenue 189,326, ,326,567 Less: Contribution to RGF (39,730,919) (36,721,363) Net Available Revenue $ 149,595,648$ 152,605,204

Health rates skyrocketing!

Compounding rate increases

MDUSD Benefit Costs

Unrestricted Expenditures Without Negotiable With Negotiable Budget Items Budget Items Certificated Salaries $ 90,791,443 $ 87,431,235 Classified Salaries 20,344,861 19,522,530 Employee Benefits 33,148,724 31,940,756 Books & Supplies 4,572,599 4,572,599 Services & Operating 12,579,787 12,470,786 Capital Outlay 86,707 86,707 Other Outgo 926, ,781 Interfund Transfers Out 3,486,037 3,486,037 Total Expenditures 165,918, ,437,431 Less: Indirect Cost Xfrs In (4,489,912) (4,489,912) Net Expenditures $ 161,447,026 $ 155,947,519

Unrestricted Bottom Line Without Negotiable With Negotiable Budget Items Budget Items Net Available Revenue $ 149,595,648 $ 152,605,204 Net Expenditures 161,447, ,947,519 Net (decrease) fund bal. (11,851,378) (3,342,315) Beginning Balance, July 1 18,725,556 18,725,556 Projected Ending Balance $ 6,874,178 $ 15,383,241

Components of Ending Balance Without Negotiable With Negotiable Budget Items Budget Items Revolving Cash $ 300,000 $ 300,000 Stores Inventory 536, ,118 Economic Uncertainties (2%) 5,438,064 5,267,883 IRS Audit 533, ,500 Undesignated Balance 66,496 8,745,740 Ending Balance $ 6,874,178 $ 15,383,241

Restricted Revenue Without Negotiable With Negotiable Budget Items Budget Items Revenue Limit Sources $ 6,797,720 $ 6,797,720 Federal Revenue 20,276,395 20,276,395 Other State Revenue 36,219,630 36,219,630 Other Local Revenue 7,180,556 7,180,556 Contribution from UGF 39,730,919 36,721,363 Total Revenue $ 110,205,220 $ 107,195,664

Restricted Expenditures Without Negotiable With Negotiable Budget Items Budget Items Certificated Salaries $ 33,678,278$ 32,447,599 Classified Salaries 18,950,519 18,307,785 Employee Benefits 22,472,480 19,904,284 Books & Supplies 7,754,201 9,186,256 Services & Other Operating 22,075,003 22,075,003 Capital Outlay 216, ,000 Other Outgo 1,560,284 1,560,284 Indirect Costs Xfr Out 3,749,404 3,749,404 Total Expenditures $ 110,456,169$ 107,446,615

Restricted Bottom Line Without Negotiable With Negotiable Budget Items Budget Items Total Revenue $ 110,205,220 $ 107,195,664 Total Expenditures 110,456, ,446,615 Net (decrease) in fund bal. (250,949) (250,951) Beginning Balance, July 1 1,892,665 1,892,665 Projected Ending Balance $ 1,641,716 $ 1,641,714

Multi Year Projection Without Negotiable With Negotiable Budget Items Budget Items Undesignated + Tier 6/10 $ 11,888,492 $ 11,888,492 Operating Deficit 2010/11 (11,851,378) ( 3,342,315) Adjustment in 2% reserve 170,181 Eliminate Prepaids 29,382 29,382 Unappropriated Balance 6/11 66,496 8,745,740 Operating Deficit 2011/12 (10,695,771) ( 894,845) Adjustment in 2% reserve (3,750) 22,087 Unappropriated Balance 6/12 $ (10,633,025) 7,872,982 Note: Both scenarios assume that bonds are sold prior to the 2011/12 COP and LPP payments

The end of flexibility is a big problem Without Negotiable With Negotiable Budget Items Budget Items Unappropriated Balance 6/12 $(10,633,025) $ 7,872,982 Projected Deficit in 2012/13 (17,520,091) (5,894,546) Unappropriated Balance 6/13 (28,153,116) 1,978,436 Projected Deficit in 2013/14 (24,478,957) (11,104,134) Unappropriated Balance 6/14 (52,632,073) ( 9,125,698) Projected Deficit in 2014/15 (25,992,314) (10,865,983) Unappropriated Balance 6/15 $(78,624,387) $ (19,991,681) Average deficit is $18,108,452 per year without negotiable items Average deficit is $ 6,381,911 per year with negotiable items

How much less must we spend? Enrollment declines projected to continue through 2014 at rates between 0.78% and 1.43% per year We must decrease ongoing annual spending by a minimum of $18.1M by 7/1/2010 for the 2010/11 school year to fully address the problems including flexibility loss in 2013/14 OR, Cut at least $40.1M plus a cushion over three years by 1 st interim and plan for substantially deeper cuts to solve the structural deficit as K-3 CSR returns and flexibility goes away.

What if we cannot get negotiable items in mediation? Additional Cuts to M&O ( FTE) 1 FTE Carpenter (currently vacant) 2 FTE Painter (currently vacant) 6 FTE Night Custodian each High School) FTE Night Olympic 1 FTE Night Custodian (RMS/SAES split) 1 FTE Equipment Mechanic 1 FTE General Maintenance Worker 1 FTE Equipment Operator 2 FTE Network Technician I 3 FTE Groundskeeper/Gardener 1 FTE Sprinkler Technician

What if we cannot get negotiable items in mediation? Additional Cuts to CST 29 – FTE (7 hr/day) Elementary Secretary reduced by half to FTE (3 ½ hr/day) each 16 – FTE (7 hr/day) Secretary (one at each Middle & High School) reduced by half to FTE (3 ½ hr/day) each Additional Cuts to CSEA Approximately 100 – (6.5 hr/day), 0.75 FTE (6 hr/day) or FTE (5 hr/day) reduced to FTE (3 ½ hr/day) each or less and creation of additional FTE positions as needed to continue services, fewer positions reduced if hours not needed to be covered

What if we cannot get negotiable items in mediation? Additional Cuts to MDEA Increase minimum class sizes Other cuts or adjustments to be determined Additional Cuts to MDSPA All current positions that are less than 1.0 FTE will be consolidated into whole FTE to eliminate extra fully-benefited but part-time worked positions

What about management? DMA has already accepted: 3-4 unpaid furlough days in 2009/10 (waiving rights to prior year March 15 th notice) 7-9 unpaid furlough days in 2010/11 Cap of district contribution to health benefits at 2010 Kaiser rates Reduction of post retirement health coverage from two-party to employee only for new retirees effective July 1, 2011 No vacation payoffs beyond carryover limits effective July 1, 2010 (use it or lose it)

Other Funds Funds for special purposes excluded from the General Fund Special Revenue Funds Charter School – Form 09 Adult Education – Form 11 Cafeteria – Form 13 Deferred Maintenance – Form 14 Capital Projects Funds Building (Local bond for construction) – Form 21 Capital Facilities (Developer Fees) – Form 25

Other Funds Capital Projects Funds (continued) County School Facilities (State allocation of funds for construction) – Form 35 Capital Project for Blended Component Units (Mello-Roos) – Form 49 Debt Service Funds Bond Interest and Redemption – Form 51 Debt Service for Blended Component Units (Mello- Roos) – Form 52 Foundation Private-Purpose Trust Fund (Scholarship Fund) – Form 73 All Other Funds projecting positive fund balances

What next? More from Sacramento Both houses of legislature sent their versions of the State budget to conference committee Legislature did NOT finish by June 15, still not finished Governors signature due June 30, but unlikely

Meanwhile back in Concord… We must adopt a budget tonight We must prepare an additional contingency if the State doesnt fund the COLA (an additional $3,420,000 ongoing cut based on May revise estimates)

Season Finale… PERS announced the 2011 insurance rates and benefit changes (some co-pays are increasing, Kaiser rates up 6.84%) The State Legislature did not pass a revised budget

Events to watch for next season… Will we have a budget out of the legislature by the time school starts? Will the Governor sign it? The end of ARRA We must conquer our deficit spending or find new revenue sources Have a great summer!

Starring: ARNOLD SCHWARZENEGGER the Governor MARIA SHRIVER the States First Lady DARRELL STEINBERG the Senate President JOHN PÉREZ the Assembly Speaker MAC TAYLOR the Legislative Analyst JOHN CHIANG the State Controller and JACK OCONNELL the Superintendent of Public Instruction