Governors 2010 May Revise & Districts Proposed Budget June 15, 2010 Steven Lawrence, Ph.D., Superintendent Bryan Richards, Director, Fiscal Services

State Fully Funds COLA! However, the COLA is NEGATIVE. That means a 0.39% DECREASE in funding; ($25) per ADA (which works out to about ($19.45)/ADA when deficited)

One Time Deficit now ongoing! This year we had a one-time additional deficit of $ per FUNDED ADA ( actual P-2 ADA) or about $ per funded ADA 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

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 Revenue Limit Sources $ 156,460,391 Federal Revenue 232,231 Other State Revenue 31,510,175 Other Local Revenue 1,123,770 Total Revenue 189,326,567 Less: Contribution to RGF (39,730,919) Net Available Revenue $ 149,595,648

Health rates skyrocketing!

Compounding rate increases

MDUSD Benefit Costs

Unrestricted Expenditures Certificated Salaries $ 90,791,443 Classified Salaries 20,344,861 Employee Benefits 33,148,724 Books & Supplies 4,572,599 Services & Operating 12,561,671 Capital Outlay 86,707 Other Outgo 926,781 Interfund Transfers Out 3,486,037 Total Expenditures 165,918,823 Less: Indirect Cost Xfrs In (4,471,797) Net Expenditures $ 161,447,026

Unrestricted Bottom Line Net Available Revenue $149,595,648 Net Expenditures 161,447,026 Net (decrease) fund bal. (11,851,378) Beginning Balance, July 1 18,725,556 Projected Ending Balance $ 6,874,178

Components of Ending Balance Revolving Cash$ 300,000 Stores Inventory 536,118 Economic Uncertainties (2%) 5,436,671 IRS Audit 533,500 Undesignated Balance 67,889 Ending Balance$ 6,874,178

Restricted Revenue Revenue Limit Sources $ 6,797,720 Federal Revenue 20,276,395 Other State Revenue 36,149,946 Other Local Revenue 7,180,556 Contribution from UGF 39,730,919 Total Revenue $110,135,536

Restricted Expenditures Certificated Salaries $ 33,678,278 Classified Salaries 18,950,519 Employee Benefits 22,472,480 Books & Supplies 7,702,632 Services & Other Operating 22,075,003 Capital Outlay 216,000 Other Outgo 1,560,284 Indirect Costs Xfr Out 3,731,289 Total Expenditures $ 110,386,485

Restricted Bottom Line Total Revenue $ 110,135,536 Total Expenditures 110,386,485 Net (decrease) in fund bal. (250,949) Beginning Balance, July 1 1,892,692 Projected Ending Balance $ 1,641,743

Multi Year Projection Undesignated + Tier 6/10 $11,889,885 Operating Deficit 2010/11 (11,851,378) Eliminate Prepaids 29,382 Unappropriated Balance 6/11 67,889 Operating Deficit 2011/12 (12,124,838) Adjustment in 2% reserve (32,345) Unappropriated Balance 6/12 ($12,089,294)

The end of flexibility is a big problem Unappropriated Balance 6/12 ($12,089,294) Projected Deficit in 2012/13 ($18,955,554) Unappropriated Balance 6/13 ($31,044,848) Projected Deficit in 2013/14 ($25,913,297) Unappropriated Balance 6/14 ($56,958,145) Projected Deficit in 2014/15 ($27,425,808) Unappropriated Balance 6/15 ($84,383,953) Average deficit is $19,194,768 per year

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 $19.2M 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 $42.9M 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.

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 bonds for construction) – Form 21 Capital Facilities (a.k.a. Developer Fees) – Form 25

Other Funds Capital Projects Funds (continued) County School Facilities (State Allocations 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 Supposed to be reconciled by June 15 Governors signature due June 30 Dont hold your breath

Meanwhile back in Concord… We must adopt a balanced budget by June 30 th Final Budget Public Hearing will be June 22 nd We must plan an additional contingency if the State doesnt fund the COLA when it returns to a positive number in (an additional $3,420,000 ongoing cut)

In next weeks season finale… PERS announces the 2011 insurance rates and benefit changes (meeting is today, information should come out tomorrow) Will the State Legislature pass a revised budget? Cannot agree on cuts versus revenue increases Today is June 15 deadline, June 30 deadline… (Julgusepoctemberary)

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 Have a great summer and stay tuned

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