1. Second Interim
March 14, 2017

2. Statutory Requirements
Public Disclosure of Financial Status:
Budget by July 1
Two Interim Updates by Dec 15 and March 15
Interims provide opportunity to reflect changes since Budget Adoption and revised projections
Must Certify Financial Condition
Positive = Will meet financial obligations in current and two subsequent fiscal years
Qualified = May not meet financial obligations in current and two subsequent fiscal years
Negative = Will not meet financial obligations in current and one subsequent fiscal year
Qualified and Negative require additional reporting and results in LACOE oversight interventions

3. Lynwood USD Second Interim Details
Positive Certification
We will have sufficient funds to meet financial obligations and maintain minimum 3% reserves in through

4. Budget Preparation Timeline
JUNE LCAP and Budget Adoption
JUNE State Budget Adoption
DECEMBER First Interim Adoption
JANUARY Governor’s Budget Proposal
FEBRUARY Budget Preparation Starts
MARCH Second Interim Adoption
MAY LCAP and Budget Public Hearings
MAY Governor’s May Revision to the Budget Proposal
JUNE LCAP and Budget Adoption

5. Areas of Significant Change from First Interim
STRS and PERS Increases
Average Daily Attendance
Proposed Funding % COLA
Other Multi-year Considerations

6. STRS and PERS Increases
Both PERS and STRS were significantly underfunded
$80.4 billion shortfall
State’s solution was to increase the State, employee, and employer contribution beginning in
Employer contribution increases by the largest amount over 8 years and funds most of the shortfall
State total increase is 4.311% over 3 years
Employee total increase is between 2.10% and 1.105% over 3 years
Will restore STRS and PERS shortfalls within 30 years
In January, the Governor acknowledged the $80.4 billion shortfall within CalSTRS, but did not provide a proposal to address the shortfall
CalSTRS is projected to run out of money in 2046
Difference for employee rates is for employees in plan prior to reform and after (benefits are slightly different)

7. STRS and PERS Increases
General Fund Impact (millions)
13-14
14-15
15-16
16-17
17-18
18-19
19-20
20-21
STRS %
8.25%
8.88%
10.73%
12.58%
14.43%
16.28%
18.13%
19.20%
PERS % (est.)
11.442%
11.771%
11.85%
13.89%
15.5%
17.1%
17.7%
18.6%
19.7%
20.4%
21.10%
Annual Increase -
$0.5
$1.3
$1.8
$1.7
$1.9
$1.2
Cumulative Increase
$3.6
$5.3
$7.0
$7.2
$8.7
$9.0
$10.0
$10.2
Compounded Increase
$2.3
$5.9
$11.2
$18.2
$18.4
$26.9
$27.5
$36.9
$37.7
In January, the Governor acknowledged the $80.4 billion shortfall within CalSTRS, but did not provide a proposal to address the shortfall
CalSTRS is projected to run out of money in 2046

8. Average Daily Attendance
Declining enrollment trend is projected to continue
District is paid on greater of current or prior year’s ADA
*funded based on prior year ADA
14,022
13,648*
13,460*

9. Average Daily Attendance
Each ADA generates approximately $11,000 in unrestricted funding
loss in funding is $4.1 million
and projections assume staffing is aligned with staffing ratios
cost savings of $2.5 million
cost savings of $1.4 million

10. 2017-18 Governor’s Budget Proposal
projected Statewide revenues are now $953 million less than previously projected
1.48% COLA funded only
Additional increases in funding that were previously proposed are eliminated
$3.9 million decrease in District revenues from what was projected at First Interim

11. 2017-18 Governor’s Budget Proposal
The 1.48% COLA is not sufficient to fund ongoing increases in salaries and benefits costs
Description
Amount
1.48% COLA- LCFF Increase
$2.0 million
Step and Column salaries increases (1.5%)
$(1.5 million)
STRS and PERS Increase
$(1.7 million)
Difference
$(1.2 million)

12. 2016-17 Second Interim Projections
Revenues:
134,720,420
129,751,278
132,337,977
Expenditures
133,632,207
133,851,847
135,586,821
Increase/(Deficit)
1,088,213
(4,100,569)
(3,248,844)
Beginning Fund Balance
15,864,354
16,952,567
12,851,997
Ending Fund Balance
9,603,153
% Reserves
8.46%
6.75%
3.74%
Revenues:
134,106,250
132,594,969
132,369,362
Expenditures
133,530,703
133,534,522
135,343,630
Increase/(Deficit)
575,547
(939,553)
(2,974,268)
Beginning Fund Balance
15,864,354
16,439,901
15,500,349
Ending Fund Balance
15,500,348
12,526,081
% Reserves
9.23%
5.91%
3.07%
Salaries costs were scrubbed in $250 thousand in savings from budgeted but unfilled positions – added back in
One month’s salaries and benefits are about $11.65 million

13. Other Considerations 2016-17 One-time funds that will not recur
Discretionary funds - $2.9 million
ERP - $650,000
College Readiness - $627,000
Educator Effectiveness Grant - $292,000
Increases in Special Education costs
P-2 ADA Report
Governor’s Budget Proposal May Revision
Contributions to restrict programs dropped $500K for from First Interim
Salaries budgeted for were adjusted for salaries savings from positions that were budgeted but not yet filled. These costs savings were reversed in the out years to reflect the assumption that they would eventually be filled.
Restricted revenues were adjusted to reflect up-to-date state and federal rates and factors resulting in a decrease in revenues. This created deficit spending of $2 million in restricted programs.
The net impact on the available reserves is a decrease of a little more than $1 million ($1.2 million) with the % reserves dropping from 9.23% to8.46%

14. QUESTIONS?