1. Morongo Unified School District 2016-17 Preliminary Budget
Board Workshop
June 14, 2016

2. Governor’s May Revision

3. January Budget vs. May Revision
Item
January Budget
May Revision
LCFF Gap Funding
49.08% or
$2.8 billion
54.84% or
$2.9 billion
Proposition 98 Minimum Funding Guarantee
$66.7 billion
$69.2 billion
$71.6 billion
$67.2 billion
$69.1 billion
$71.9 billion
COLA
0.47%
0.00%
One-Time Discretionary Funds for
$1.2 billion
$214 per ADA
$1.4 billion
$237 per ADA 1

4. SSC Financial Dartboard
Factor
Statutory COLA
1.02% 0%
1.11%
2.42%
LCFF Factors
SSC LCFF Gap Funding Percentage
52.20%
54.84%
19.30%
34.25%
Department of Finance (DOF) LCFF Gap Funding Percentage
73.96%
41.22%
Factors for All Scenarios
California Consumer Price Index
2.02%
2.15%
2.26%
2.49%
Ten-year Treasuries
1.98%
2.05%
2.43%
2.58%
CalPERS
11.847%
13.888%
15.50%
17.10%
CalSTRS
10.73%
12.58%
14.43%
16.28% 2

5. CalSTRS Rate Increases
Employer rates are increasing to 12.58% in , up from % in
No specific funds are provided for this cost increase
Under current law, once the statutory rates are achieved, CalSTRS will have the authority to marginally increase or decrease the employer and state contribution rate
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% 3

6. CalPERS Rate Increases
The employer contribution to CalPERS was expected to increase to 13.05% in from % in
The actual employer contribution rate for is higher than anticipated, at %
Fortunately, out-year estimated contribution rates have been lowered since they were last released in 2014
Actual
Estimated
11.847%
13.888%
15.50%
17.10%*
18.60%*
19.80%*
*CalPERS-provided estimates, April 2016 4

7. Preparing for the Slowdown
The May Revision projects that the Local Control Funding Formula (LCFF) will be 95.7% implemented in
At full implementation the supercharged increases are over, all local educational agencies (LEAs) just get a cost-of-living adjustment (COLA)
The Department of Finance (DOF) projections assume:
Proposition 30 is allowed to expire
Very low COLAs for the next few years
Much lower growth in Proposition 98
If a recession occurs and Proposition 30 is not extended, state revenues could drop below prior-year levels, and cuts to education could be on the table again
Now is the time to start preparing for slower growth 5

8. Negotiations and Increased Employee Costs
Automatic cost increases for step and column, health and welfare benefits, and pension costs will leave little to nothing for pay raises in
For the average LEA, costs increase approximately as follows (as a percentage of salary):
Step and column 1.2%
Health and welfare 1.1%
CalSTRS/CalPERS 1.85%
Total increase in costs average about 4.15%
Basically, the first 4% of new revenues is already committed to employees
At full implementation of the LCFF, all LEAs receive only COLA, averaging around 2% for the foreseeable future
Unless funding increases beyond state projections (e.g., extension of the temporary taxes), many LEAs will be making budget cuts soon
Most school districts are declining in enrollment and that makes the problem even worse 6

9. MUSD 2016-17 Preliminary Budget

10. 2016-17 MUSD Budget Assumptions
In establishing the budget for the school year, certain assumptions were made. The following budget assumptions were used:
Enrollment has been estimated at 8,210 and ADA (Average Daily Attendance) is projected at 7,666. The District has a history of declining enrollment. Enrollment is estimated to decline by 120 students in the school year.
A 0% COLA (Cost of Living Adjustment) The Budget reflects a Cost of Living Adjustment (COLA) of 0%, which means there were no changes made to the grade span base calculation and each of the grade span calculations in the Local Control Funding Formula for the fiscal year. Since the COLA is 0%, there is no increase in funding for Special Education and Child Nutrition Programs.
One time Mandated Claim funding is being reserved in the Assigned Fund Balance. These funds were calculated using the Governors May Revise. Last year these funds were reduced from the Governors May Revise funding numbers to the Governors Adopted Budget funding numbers. After final funding numbers are issued the District will budget these funds to continue the implementation of the Common Core State Standards (CCSS) and other District priorities. 8

11. 2016-17 MUSD Budget Assumptions - Continued
Local Control Accountability Plan (LCAP) identified expenditures are included.
Increased STRS (1.85% increase) and PERS (2.04% increase) in retirement contributions are included. It is estimated that increased contributions to employee retirement accounts will consume 25% of new funds coming into the District in future years.
The funding for ROP programs is being reduced to zero over the next two years. $519,734 has been budgeted in the LCAP to maintain the ROP Program.
The projected increase cost of utilities is included. Solar savings has been budgeted resulting in a reduction of electricity costs. The $100,000 payment for the District’s portion of the Sewer Project is included starting in the school year. 9

12. 2016-17 MUSD Budget Assumptions - Continued
Transportation costs have been increased by $1Million to reflect the new contract with Student Transportation of America. The new contract will provide new busses with air conditioning for the school year.
An increase in the cost of the telephone bill is included, as ERATE funding is being reduced for telephone services for the next two years.
Routine Repair and Maintenance account has been increased to 3% of district expenditures as required.
The Estimated Actuals and the Budget reflects salary increases even though the District has not settled negotiations with bargaining units for or 10

13. 2016-17 MUSD Budget Assumptions - Continued11

14. California Basic Educational Data System (CBEDS)=Enrollment Average Daily Attendance ADA) History & Projection
P-2 ADA
CBEDS
ADA Inc/Dec
CBEDS Inc/Dec
8,571
9,233
(300)
(312)
8,266
8,854
(305)
(379)
8,007
8,596
(259)
(258)
8,015
8,506 8
(90)
7,741
8,236
(274)
(270)
7,778
8,330 38 94
7,666
8,210
(113)
(120)
7,553
8,090
7,440
7,970
7,327
7,850
Average
7,930
6,786
(154.38)
(169.50)
*Numbers in parenthesis () are negative numbers 12

15. 8923
* The District has experienced a loss of 1,269 Average Daily Attendance (ADA) from to present. This equates to losing the entire number of students currently attending YVHS. 13

16. Additional Revenue and Expenses
Additional LCFF Funds Projections:
STRS & PERS additional Expenses:
$7,876,530
$4,021,477
$1,814,683
$ 109,328
One Time Funds :
Mandated Cost $ 4,106,790
Educator Effectiveness $683,621
Mandated Cost $1,857,665
* Use for 1 time expenditures: One Time Benefits contribution, Textbooks, IT Infrastructure, Music Equipment, Deferred Maintenance, etc.
$ ,000
$ 1,018,742
$ ,437
$ ,744
Other annual increase in Expenses:
Step and Column
Salary increase
Utilities/fuel/contracts Transportation increase
Telephone – ERATE reduction in funding
Other unforeseen increases 14

17. 21 15

18. 12 16 22

19. Revenues – Changes from Estimated Actuals to 2016-17 Budget
LCFF shows a increase of $4,021,475 due to an increase in the Local Control Funding Formula (LCFF) GAP funding calculation.
Federal Revenues show a decrease of -$1,804,357. This represents the net decrease of various federal programs; Federal Impact Aid, Special Education and Title Grants.
Other State Revenues show a decrease of -$3,822,072 due to a decrease in one time prior year Mandated Claim funds and one time California Clean Energy Jobs Act funds.
Other Local Revenues show a decrease of -$667,036. This is the result of a decrease in ROP Funds and all other local revenue. 17

20. Expenses – Changes from Estimated Actuals to 2016-17 Budget
*Numbers in parenthesis () are negative numbers 18

21. Expenditures
Salaries and Benefits: The changes to Certificated Salaries, Classified Salaries and Benefits are due to budget realignment based on projected expenditures. Including: Step and Column increase, increase in Health and Welfare Benefits Cost, Increase in STRS and PERS costs. Projected Salary and Benefit increases are included. The District is still in negotiations with bargaining units for and
Books and Supplies: The Books and Supplies accounts (4000s) show decreases due to budget realignment based on projected expenditures. One time expenses have been removed including textbooks and other purchases made with one time funds.
Services and Other Operating Expenses: The Services and Other Operating Expenses accounts (5000s) show an increase due to budget realignment based on projected expenditures and increased transportation costs. 19

22. Expenditures Continued
Capital Outlay shows a decrease due to reduction in capital outlay projects.
Other Outgo, and Direct Support/Indirect Costs show a decrease due to reduction in indirect costs due to a reduction in restricted categorical funds.
Total Expenditures are currently projected to be an increase of $422,975 over the estimated actual expenditures for 20

23. Revenues - Restricted and Unrestricted

24. Revenues Unrestricted22

25. Expenditures - Restricted and Unrestricted23

26. Expenditures Unrestricted24

27. Expenditures/ Transfer Out
Other Funds Recap
Fund Recaps:
Description
Fund
Balance
Revenue/ Transfer In
Expenditures/ Transfer Out
General Fund 1
15,263,057
88,960,037
91,040,690
13,182,404
Cafeteria Fund 13
76,160
3,860,264
Deferred Maintenance Fund 14
96,837
Bond Fund 21
567,694
Capital Facilities Fund 25
6,439,305
498,678
6,618,066
319,917
County School Facilities Fund 35
141,061
531
141,592
Bond Int. & Redemption Fund 51
2,317,232
1,855,376
1,936,931
2,235,676
Self Insurance Fund 67
814,831
1,921
816,752
Total
$25,716,176
$95,176,807
$104,120,482
$16,772,501 25

28. Multi Year Projection 26 22

29. Multi-Year Projections – Unrestricted & Restricted Combined27

30. Multi-Year Projection Recap
ESTIMATED ACTUALS
PROJECTED BUDGET
Unrestricted
Restricted
Combined
Beginning Fund Balance
12,719,003
1,839,739
14,558,742
12,378,693
2,884,363
15,263,056
Revenues
76,374,677
14,857,351
91,232,028
77,561,478
11,398,559
88,960,037
Expenditures
76,714,987
13,812,727
90,527,714
78,707,797
12,332,893
91,040,690
Operating Deficit (Structural)
(340,310)
1,044,624
704,314
(1,146,319)
(934,334)
(2,080,653)
Projected Ending Fund Balance
11,232,374
1,950,029
13,182,403
Required 3%
2,715,831
2,731,221
Nonspendable & Assigned
2,618,656
5,503,019
2,712,532
4,662,561
Projected Balance Available
7,044,206
5,788,621
-To apply to deficit Fiscal Years and 28

31. Multi-Year Projection Recap
PROJECTED
Unrestricted
Restricted
Combined
Beginning Fund Balance
11,232,374
1,950,029
13,182,403
9,383,524
1,172,936
10,556,460
Revenues
77,518,496
11,398,559
88,917,055
77,627,824
89,026,383
Expenditures
79,367,346
12,175,652
91,542,998
81,357,693
12,167,206
93,524,899
Operating Deficit (Structural)
(1,848,850)
(777,093)
(2,625,943)
(3,729,869)
(768,647)
(4,498,516)
Projected Ending Fund Balance
5,653,655
404,289
6,057,944
Required 3%
2,746,290
2,805,757
Nonspendable & Assigned
2,712,532
3,885,468
3,116,821
Projected Balance Available
3,924,702
135,366
-To apply to deficit Fiscal Years and 29

32. Components of Ending Fund Balance
General Fund Components of Ending Fund Balance (all one-time resources):
Revolving Cash
35,000
Stores- Warehouse
50,000
Designated for Econ Uncertainties (3%)
2,731,221
2,746,290
2,805,747
Assigned & Restricted
4,577,562
3,800,469
3,031,822
Undesignated
5,788,621
3,924,699
135,373
Total
$13,182,404
$10,556,460
$6,057,944 30

33. Unrestricted Assigned Fund Balance31

34. Fund Balance Projections32

35. Balances in Excess of Minimum Reserve Requirements
Ed Code 42127(a)(2)(B) - Fund Balances in Excess of 3% Minimum Reserve Requirement
District:
Morongo USD
Adopted Budget
CDS #:
Budget Attachment
Balances in Excess of Minimum Reserve Requirements
Reasons for Assigned and Unassigned Ending Fund Balances in Excess of Minimum Recommended Reserves
Education Code Section 42127(a)(2)(B) requires a statement of the reasons that substantiates the need for
assigned and unassigned ending fund balances in excess of the minimum reserve standard
for economic uncertainties for each fiscal year identified in the budget.
Combined Assigned and Unassigned/unappropriated Fund Balances
Form
Fund
Budget
Objects 9780/9789/9790 01
General Fund/County School Service Fund
$13,182,413.80
Form 01 17
Special Reserve Fund for Other Than Capital Outlay Projects
$0.00
Form 17
Total Assigned and Unassigned Ending Fund Balances
District Standard Reserve Level 3%
Form 01CS Line 10B-4
Less District Minimum Reserve for Economic Uncertainties
$2,731,221.00
Form 01CS Line 10B-7
Remaining Balance to Substantiate Need
$10,451,192.80
Reasons for Fund Balances in Excess of Minimum Reserve for Economic Uncertainties
Description of Need
$35,000.00
Revolving cash
$50,000.00
Stores
$145,886.00
Health and Welfare Reserve (MTA)
$1,857,665.00
Mandated Cost one time funds H&W, Deferred Maintenance and other District Priorities
$240,471.00
Lottery Funds - salaries Campus Security, Noon Supes
$383,510.00
Deferred Maintenance
$1,950,030.00
Committed Restricted Funds
$5,788,630.80
Additional Reserve for future liabilities and unfunded liabilities - STRS/ PERS, Deferred Maintenance, Textbooks, Transportation. Reduce Deficit Spending.
Total of Substantiated Needs 33

36. Unrestricted Deficit Spending History34

37. Budget Issues History of declining enrollment
History of deficit spending
$1M increase in transportation costs
Reduction in Federal Impact Aid
Future Textbook Adoptions
ELA $2.1 Million
Small schools and small class sizes– enrollment
Employee salary increases
Increases in Health and Welfare Benefits- (Cap)
Yucca Valley Sewer System
Charter Schools
Deferred maintenance costs
Technology Costs 35

38. General Fund – Deficit Spending
In future years the District must get expenditures in line with revenue to assure the fiscal solvency of the Morongo Unified School District.
Fiscally this means that the Beginning Fund Balance plus the Negative Net for has moved forward to become the reduced Beginning Fund Balance of the fiscal year.
The process of reducing the Districts Fund Balance will also occur for the and school years.  36

39. Questions????