1. 2016-17 45 Day Revised Budget Workshop August 2, 2016
Jamie Metcalf
Chief Business Officer
Sara Smith
Incoming Director of Fiscal Services
Anna Pimentel
Director of Fiscal Services
Ken Forrest
Remote Advisor To Chief Business Officer
Good evening.

2. Purpose of this Budget Workshop:
Provide an opportunity for the Board to interact with staff regarding the current and projected state of our Budget based on what is known after the legislative process. Please ask questions as we proceed.
Allow staff to present more background to support budget recommendations.
Provide more information to the entire Travis community related to the fiscal operations and decisions of the school District.
Staff will use information previously presented coupled with new information received to accomplish these goals.
Good evening.

3. Requirement
Good evening.

4. Possible Requirement?
Good evening.

5. Good evening.
Previously Presented But Still True – To ensure the fiscal stability of the District we must not count on UNKNOWNS. Only what we know now can be used, not wishful thinking. The next slide is from the July School Services Workshop and again highlights this point!

6. Good evening.
Note that the uncertainty remains and if anything it may have gotten worse!

7. Good evening.
This slide when taken in context with the next slide points out the volatile nature of California K-12 funding.

8. Good evening.
Previously Presented.

9. Key words, volatile, temporary and UNSTABLE.
Good evening.
Key words, volatile, temporary and UNSTABLE.

10. Good evening.
The next slide points out the minor revenue changes that the Adopted State Budget have made to the Travis Adopted Budget.

11. 2016-2017 Estimates: Revenues ^^Previously Presented^^
Note this means total projected revenue is now down $1,037,924.18
SARA: This shows the revenues for the District which for is a decline of $937, That’s the number total in red below. Even then, the revenue changes for and on are a result of staffing reductions

12. Good evening.

13. Good evening.
As this cartoon from School Services points out navigating the fiscal waters is perilous! Caution is advised. Next 5 slides provide more background.

14. Headwinds 2-26 LCFF is now almost 96% fully funded
Since , rapid restoration of and growth in Proposition 98, as well as slow or no ADA growth, has fueled LCFF implementation
The “last mile” may be the hardest
Proposition 30 of 2012 expires, slowing Proposition 98 growth
COLAs are projected to be low over the next few years – in the range of 1% to 3%
The boom years of Proposition 98 growth may be over
Maintenance factor, generated during lean years, has been significantly paid down and was the primary driver of accelerated annual increases
© 2016 School Services of California, Inc.

15. 2-27
Headwinds
© 2016 School Services of California, Inc.

16. Impact of Proposition 30 2-28
© 2016 School Services of California, Inc.

17. What Happens With Proposition 30 Expiration?
2-29
What Happens With Proposition 30 Expiration?
EPA funds are 12% of school revenues
What happens if the temporary Proposition 30 tax surcharge on high-income earners isn’t extended?
Current law requires the state General Fund to backfill losses in EPA
What does the revenue pie look like after EPA tax revenues expire?
State share of education revenues goes up
The Department of Finance (DOF) estimates for LCFF implementation already incorporate the impact of the loss of EPA revenues
No additional adjustments for loss of the EPA revenues are needed for budget forecasts
If the income tax surcharge is extended, then additional revenues may become available through the Proposition 98 minimum guarantee
© 2016 School Services of California, Inc.

18. What Happens With Proposition 30 Expiration?
2-30
What Happens With Proposition 30 Expiration? 3
© 2016 School Services of California, Inc.

19. College Readiness Block Grant
2-36
The Budget appropriates $200 million in one-time funds to increase college preparation and college-going rates for English learners, foster youth, and low-income students
LEAs will receive an amount per ADA for unduplicated students in grades 9-12
SSC has calculated a preliminary estimate of $140 per student ADA until the California Department of Education (CDE) completes the official calculations
There is a minimum apportionment of $75,000 per LEA
The school must be Western Association of Schools and Colleges (WASC)-accredited or undergoing WASC accreditation in school year
This is unanticipated restricted new funds not clearly defined. A mid-year budget adjustment will be necessary once we know what the plan and funding will be.
© 2016 School Services of California, Inc.

20. College Readiness Block Grant
2-37
Eligible activities include but are not limited to:
Professional development
(teachers, administrators, counselors)
Student subsidies for
Advanced Placement test fees
Counseling services
for college admission
© 2016 School Services of California, Inc.

21. College Readiness Block Grant
2-38
Spending Requirements
Must spend or encumber funds by fiscal year end
Planning Requirements
Develop a plan describing how funds will increase or improve services for unduplicated students
Shall align with LEA’s LCAP and describe extent to which all pupils will have access to “a-g” courses
Discuss at regular board meeting and adopt at a subsequent board meeting
Reporting Requirements (January 1, 2017)
© 2016 School Services of California, Inc.
Report to State Superintendent about how LEA will measure impact of funds for unduplicated students

22. To ensure fiscal stability we must keep our eye on these items
Good evening.

23. Good evening.
As if the fiscal concerns are not enough ENSURING PROPORTIONALITY will be a major focus and one we cannot fail to achieve.

24. Good evening.
For example questions have been raised about why we are NOT projecting more students with all of the building taking place. Since we failed to meet our professional demographers projection by over 100 students this fiscal year we must be cautious about anticipating student ADA increases until we can verify an upward trend.

25. Good evening.
Our ADA went down from of 5, to 5, in – 100 ADA or roughly 2%. We must be cautious until we see this actually turn around.

26. Number of Students Served as a Percentage of Total Enrollment
5-42
Number of Students Served as a Percentage of Total Enrollment
One more area that puts pressure on the budget. Received a 0% increase in funding from the State this year.
What does this data tell us about high cost disabilities?

27. Good evening.
Previously Presented.

28. Minimum wage changes are not just for hourly employees.
Good evening.
Minimum wage changes are not just for hourly employees.

29. Reminder, no additional funding for this mandate.
Good evening.
Reminder, no additional funding for this mandate.

30. Good evening.
We are meeting this requirement but it is yet another demand on the budget.

31. Good evening.
K-12 operations, especially in California, are complicated and there are few simple answers to the complex issues facing Districts.

32. Expenditure Assumptions
CalSTRS Rates
Year
Employer
Pre-PEPRA*
Employees
Post- PEPRA*
10.73%
9.20%
8.56%
12.58%
10.25%
9.205%
14.43%
16.28%
18.13%
19.10%
Expenditure Assumptions
Previously Presented.
So here are more expenditure assumptions for the CalPERS and CalSTRS rates. Remember we are under a NON-Funded mandate to significantly increase the employer (our) portion of our employees retirement fund. The District is responsible for funding these increasing retirement contributions.
CalPERS Rates
Actual
Estimated
11.847%
13.888%
15.50%
17.10%*
18.60%*
19.80%*
*CalPERS-provided estimates, April 2016

33. 2016-2017 Estimates: Expenditures
Note how we have had to reduce expenditures in a number of areas to balance the budget, primarily as previously mentioned staffing.
Previously Presented.
SPECIAL NOTE
The Business Office is still working hard on Year End Closing so we will not be presenting any anticipated expenditure changes at this time. However the next slide points out some adjustments that may be required.

34. Good evening.
We are anticipating significant carry over of funds for some operational budgets and Certificated Staff Development, in excess of $500,000.
The Vacaville Crossing Guard cost of approximately $90,000 will have to be added to the expenditure budget.
As we close the previous fiscal year other adjustments may come to light.

35. Good evening.
Previously Presented.

36. Previously Presented Anticipated Update.
Good evening.
Previously Presented Anticipated Update.

37. Requires Future Staffing Reductions! Previously Presented Note Added.
Proposed Budget
Requires Future Staffing Reductions!
Seems to be a need to point this out.
Due to the combination of increasing expenses and limited projected funding a hiring freeze has been instituted and future administrative, certificated and classified staffing reductions are projected to be required to maintain a balanced budget.
Previously Presented Note Added.
The hiring freeze is the first step in reducing staffing. If at all possible, if reductions can be made through attrition, then layoffs will not need to be done in order to maintain the District’s positive certification. As you all know, layoffs are expensive and really, no one wants to deliver a notice to an employee we just hired. In order for the District to maintain the 3% required reserve in addition to having cash for operating expenses, these reductions had to be made in order to balance the budget.

38. 2016-2017 Proposed Budget Dangerously Low Ending Fund Balances
Previously Presented. Still dangerously low.
This historical and projection of ending fund balances shows just how dramatic the predicted revenue slow down will be to our budget. These predicted historically low ending fund balances leave NO room for error and pose a significant risk to the District.

39. Previously Presented Anticipated Update.
More Information On Next Slide.
So here is a detailed analysis of how Impact Aid funds are used in the District. Technology refresh, district furniture refresh, and textbooks are projected for the next 4 fiscal years. If necessary, district copier and paper costs could be re-directed back to site budgets and not paid for out of Impact Aid funds. Additionally, $500,000 has been set aside for to fund the increasing costs of the Scandia project. As you’ll hear later on in the Board meeting, I’ll be discussing the increasing costs for the Scandia project. Lastly, as you’ll see in red, all the expenditures Impact Aid is being used to pay for. CalSTRS, CalPERS, salaries, class-size reduction and benefit increases. And let me remind you, Impact Aid could go away tomorrow. The amount the District receives is never guaranteed and we’re required to apply for the funding every year. The amount we’ve received becomes less and less every year.

40. Possible Extract of Certificate of Participation Repayment Schedule.
Good evening.

41. Note the anticipated changes in yellow
Note the anticipated changes in yellow. The ongoing subsidy remains essentially the same despite the need to pay the Certificate of Participation (COP)
Good evening.
The District continues to believe that Impact Aid is not a guaranteed revenue source. However due to the continued lack of proper funding from the State the District has made the decision to fund some ongoing expenditures to maintain a reasonable level of service to our students.

42. 2016-2017 All Funds Summary Previously Presented.
Please note that all funds balances are significantly inflated due to the Scandia project. Also note that Capital Funds may only be used for Capital Projects!
Previously Presented.

43. 55% Minimum Classroom Compensation Report
While this calculation shows us right on the edge of meeting this requirement historically we exceed this requirement in actual expenditures. The District continues to monitor this calculation to ensure compliance. Back in March, we were at 57.57%, well above the minimum. Since this is a proposed budget, we should meet the minimum requirement easily and should have an updated number as we get through part of the next fiscal year.
Previously Presented.

44. 2016-2017 Proposed Budget Summary
Previously Presented.
Revenue:
Prop 98 funding
Cost-of-Living Adjustment (0%)
Mandated Costs Per Student
No Additional Special Education Funding
Train Station Funding
Status Quo: Prop 98 Funding (ONE-TIME) & Impact Aid
Expenditures:
STRS, PERS, Minimum Wage
Healthy Families Act & Child Bonding
Certificated/Classified Step & Column
Scandia Modernization Project
Based on the Governor’s May Revise, these are our projections and can change tomorrow. These projections are a result of decisions based on the following assumptions.

45. Good evening.

46. Good evening.
All but 9/10 of a % of the revenue increase went to employee compensation! It is estimated that another 3/10 of a % went to utility increases.

47. Discussion Related To Two Previous Slides
The analysis on the two previous slides shows that there have been changes in the distribution of the available financial resources during the recession. The data also shows that the District is slowly building back.
This type of analysis can assist the District is navigating the LCFF requirements and the 55% requirement. However it should be noted that you must be careful in equating salaries to revenue increases. ESPECIALLY in light of the LCFF requirements.
Good evening.

48. Questions We Have Heard
As previously stated K-12 operations in California are complex. Very little is simple. Analysis of needs versus fiscal resources takes experience and time. Seldom are solutions readily apparent.
Warehousing – why have one?
While it is true many items that once requiring warehousing now may be direct shipped to schools many other, food for instance, has been tried with less than perfect results. Intra-District mail will always need to be picked up and delivered even if you could convince everyone to go 100% paperless.
Do will really want a forklift at every school? And personnel trained to operate them?
Good evening.

49. Questions We Have Heard
As previously stated K-12 operations in California are complex. Very little is simple. Analysis of needs versus fiscal resources takes experience and time. Seldom are solutions readily apparent.
Warehousing – why have one?
Purchasing in bulk and bidding still saves money, much less opportunity to do this without a warehouse.
Central receiving saves time for personnel at the schools and ensures that goods are properly received and accounted for.
Just a few reasons of why almost ALL districts and businesses of any size have a warehouse function of some kind.
Good evening.

50. Questions We Have Heard
As previously stated K-12 operations in California are complex. Very little is simple. Analysis of needs versus fiscal resources takes experience and time. Seldom are solutions readily apparent.
Double staffing of critical functions for training?
Grow your own has many significant advantages and this question failed to address that some positions were left vacant to offset the cost of this program.
It fails to mention that this idea was presented at a public Board Meeting.
It fails to recognize the savings of training your own personnel.
Fails to acknowledge the value of promoting personnel familiar with the District.
Good evening.

51. Questions We Have Heard
As previously stated K-12 operations in California are complex. Very little is simple. Analysis of needs versus fiscal resources takes experience and time. Seldom are solutions readily apparent.
Contracts?
Nationally this always comes up. Why do we contract with a firm or individuals? Why not just hire a qualified employee?
Easier said than done. Many skills are very specific to a task that may be one of a kind or not done very often. Usually contracts are for services that we can’t obtain from our own employees.
Many times there is not sufficient need to justify full time staffing.
Good evening.

52. Questions?

53. Good evening.

54. Good evening.