WE ARE LAUSD BUDGET OVERVIEW OCTOBER 5, 2010

Funding Requirements  After rejecting the District’s budget on August 4, 2010, the Los Angeles County Office of Education (LACOE) requires the District to balance a multi-year budget by October 8, 2010  Multi-year General Fund projections:  Still without a State Budget – the longest impasse  The numbers above to NOT factor in the May Revision proposal for additional cuts  The numbers above do NOT factor in the loss of Title I and IDEA Stimulus in Multi-year General Fund Projections as of 9/14/ Noncumulative Balance$93.70($361.60)($623.10) Cumulative Balance$93.70($268.00)($891.10)

Deficit Timeline The Superintendent proposes a budget plan that addresses a defined portion of the deficit and recommends 4 alternative scenarios which will enable us to balance the budget for the upcoming year. * Approximations using average salary ~ $61,  The American Reinvestment and Recovery Act Stimulus saved over 8,400 jobs  Loss of State Fiscal Stabilization  Projected ending balance of $93.7M (Balance as of 14 September)  Identify funding from Adult Education of $42.9M without curtailing current program  Federal Jobs Bill $103.3M  Loss of Title I and IDEA funds  Deficit of $361.6M ($268M cumulative)  Savings of $93.7M carried over (saving 1,500 jobs)*  Apply Adult Education funds of $42.9M (saving 700 jobs)* without curtailing current program  Apply one time Federal Jobs Bill $103.3M (saving 1,700 jobs)*  Classified positions saved by furloughs in ($-20.6M)  Loss of Title I and IDEA funds  Loss of Federal Jobs Bill  Deficit of $623.1M ($891.1M cumulative)

Four Solutions to Save $142.4 million in : minimizing job loss & stabilizing the District Option 1Option 2Option 3Option 4 Salary reduction: Salary reduction % for all employees Salary reduction + furlough: Salary reduction % for all employees plus 7 furlough days for all employees Salary reduction(x) + furlough(y) + placeholder(z): 7 furlough days, variable salary reduction, plus alternative ways to recover funds (X+Y+Z)= Remaining Deficit Personnel reductions: Will reverse reductions that were averted as well as reversed in the certificated collective bargaining agreement  Will maintain the current number of days in the school calendar  Will preserve the instructional program for students  Saves over 3,300 jobs This option is open to negotiations.  Will reduce the number of days in the school calendar by 5  An additional 2 pupil free days  Saves over 3,300 jobs, but will likely reduce the instructional calendar utilizing State flexibility This option is open to negotiations.  Recovery of funds may include; rightsizing central office, local district, “freezing” step advances, etc.  Will reduce the across the board sacrifices asked of all employees by restructuring This option is open to negotiations.  Potentially over 3,300 personnel reductions This option is NOT open to negotiations. This is the Superintendent’s proposal to balance out the General Fund deficit for next year. However, potential job reductions are anticipated due to the following; loss of Title I & IDEA ARRA, declining enrollment and rightsizing: central office, local district, basis changes.

Ways to Save  Our deficit will continue to grow if we do not: 1.Reach a solution for balancing the budget o Dollars are lost for every day of delay 2.Bring spending in line with revenues o ADA has been decreasing without corresponding reductions in expenditures o Increase revenues  Future potential liabilities: 1.Disallowed audit costs (e.g. $23M of disallowed costs in ) or from the retirement reconciliation and California State Teachers’ Retirement System audit disallowances 2.$4M -$100 M could be for Cafeteria repayment for past charges 3.Health and welfare multi-year contract

Balancing the Budget  We can expect to see a budget deficit in the hundreds of millions in the next two years  A collective agreement on how to balance the budget needs to be resolved  The impact of the decision will determine our course of action  Our desired outcome is for a solution with the least amount of negative impact