1. James Brese Assistant Superintendent and CFO January 18, 2011 Update on FB 11-13 Operating Budget Committee on Budget & Fiscal Accountability Board of Education

2. Fiscal Biennium 2011-13 Board of Education approved On October 21, 2010 Not changed* in Executive Budget (*except two special fund ceiling increases) 2

3. EDNTitleDescription 100School Based BudgetingClassroom instruction; curriculum programs; at- risk programs. 150Comprehensive Student Support Services Special education; school-based behavioral health; autism; other related services. 200Instructional SupportSupport for curriculum, instruction and students; assessment; system accountability/monitoring; and complex areas. 300State AdministrationBoard of Education; Superintendent; communications; civil rights compliance; fiscal services; human resources; and information technology. 400School SupportSchool food services; utilities; facilities planning; construction; repairs and maintenance; student transportation. 500School Community ServicesAfter-school Plus (A+) program; adult education. DOE Budget Programs 3

4. Modified Zero Based Budgeting (for state level and centralized programs) Goal: reallocate existing funds to cover recurring unbudgeted needs within B&F general fund ceiling Identify items for additional budget request “Modified” ZBB because: Not required to justify positions; budgeted positions remained constant, no new positions allowed Provided base amount of non-salary funds for programs with positions Additional funds could be requested above the base amount, along with justification 4

5. B&F Instructions for FY 12 & 13 September 23, 2010 Restore $86.4M general fund furlough savings Restore $43.0M non-recurring WSF reduction Total general fund restorations = $129.4M Adjusted DOE general fund ceiling = $1,382.8M Departments could: Request tradeoffs/transfers, but no significant increases in expenditures List program increases for consideration by the new administration 5

6. General Funds ( $ in Millions) EDN FY11 Act 180/10 FY12 Executive Budget*Variance 100$705.2$791.4$86.2 150306.6322.215.6 20022.046.224.2 30042.943.70.8 400171.8174.22.4 5004.95.10.2 Total$1,253.4$1,382.8$129.4 *FY13 Executive General Fund Budget is the same as FY 12 6

7. General Fund Budget FY 2011-12 7

8. General Fund FTEs FY 2011-12 8

9. DOE Centralized Services Electricity bills and other utilities Network infrastructure support/development School food services Student transportation Diagnostic services for SPED services qualification Personnel hiring, recruitment, and recordkeeping Workers’ Compensation Unemployment benefits administration Financial accounting and reporting IT development, implementation, operations Litigation support Autism, school based behavioral health Special education provision and recordkeeping 9

10. DOE Statewide Responsibilities Strategic Planning Student Achievement Standards Development Budget Preparation and Execution Teacher Certification (Hawaii Teacher Standards Board) Hawaii State Assessments Policy Development Internal Audit Compliance with US DOE and State Regulations Federal Reporting Requirements Inter-governmental Relationship Management 10

11. DOE FY 2011-12 Budget $1.8 Billion Weighted Student Formula (WSF) $787.4 Million Federal Funds $150.0 Million Other Programs $112.7 Million Special Education (SPED) $202.7 Million Other SPED & Student Support Programs $171.4 Million Other Centrally Expended $122.6 Million Facilities (Repairs & Maintenance) $48.3 Million Utilities $59.5 Million Student Transportation $52.3 Million Food Services $107.7 Million All Means of Finance 11

12. Summary Expended by Principals for Students 69% ≈ $7,294 per student (excludes fringe benefits) Centralized Expenses for Students 24% ≈ $2,557 per student Other Centralized Expenses for Schools 7% ≈ $714 per student 93% of Budget Expenditures per student are based on SY 2011-12 Projected Enrollment Count 12 Categorical, SPED, Federal WSF

13. History of Budget Reductions Starting FY 2008-09 Annual Amount Description ($10.3 M)2008 Legislative reduction in Act 158/08, beginning FY 2008-09 (5.7 M)“Non-recurring costs” reduced by Department of Budget and Finance (B&F) in Fiscal Biennium 2009-11 budget, including -9.00 FTEs (40.0 M)Reductions approved by Board of Education October 9, 2008, including -239.5 FTEs (43.0 M)2009 Legislative reduction to EDN 100 in Act 162/09; a proviso in section 163 states it shall be restored in Fiscal Biennium 2011-13 (0.3 M)2009 Legislative reduction to programs in EDN 150 and 400 (127.7 M)Executive and BOE approved reduction FY 2010-11 (15.0 M)Executive reduction FY 2010-11 (2.1 M)Act 180/10: A+ subsidy deleted; $22M was reduced from categorical, state, and complex area programs and added to WSF ($244.1 M)Cumulative impact thru FY 2010-11 129.4 MAnnual restorations in Fiscal Biennium 2011-13 Executive Budget ($114.7 M)TOTAL: Cumulative annual impact on general funds FY12, FY 13 13

14. Total Department of Education Budget ( $ in Millions) All Means of Financing FY11 Act 180/10 FY12 Executive BudgetVariance General $1,253.4$1,382.8 $129.4 Federal (ceiling) 252.0263.6 11.6 Special (ceiling) 42.046.3 4.3 Trust (ceiling) 13.733.0 19.3 Interdept Transfer 14.210.6(3.6) Revolving (ceiling) 22.830.4 7.6 Federal Stimulus* 53.847.9(5.9) TOTAL $1,651.9$1,814.6 $162.7 *Federal Stimulus: FY 11 = ARRA SFSF Part A FY 12 = Education Jobs and Race to the Top 14

15. Additional General Fund Items for Consideration Description (in alphabetical order)Annual Amount Athletics – restoration of prior cuts $1.5 M Families for R.E.A.L. program $1.0 M Lease payments for new Enterprise Resource Planning project (fiscal systems) $5.0 M Skilled nursing services – contract for services previously provided by DOH $2.1 M Student Transportation shortfall $19.6 M TOTAL $29.2 M 15

16. Special Fund Ceiling Increase Requests not approved by B&F, added to List of “Items for Consideration” EDNDescription of Special Fund Current ceiling level FY 2011-12 increase amount FY 2012-13 increase amount 100Reimbursement for Lost Textbooks & Equipment (current ceiling $750,000; request is to double ceiling) $750,000 400Community Use of School Facilities (current ceiling is $2M, request is to increase to $4.8M) $2,800,000 16

17. Act 167/10 Instructional Time SY 11-12 SY 12-13 SY 13-14 SY 14-15 SY 15-16 (potential) Minimum days per year180 190 Minimum hours per year-elementary9151,0801,140 Minimum hours per year-secondary9901,0801,140 Requires collective bargaining Increases in cost need to be appropriated by Legislature as CB increases 17

18. B&F Instructions (New Administration) January 7, 2011 18 May request additional trade-offs and transfers May request replacement of general fund programs with other funds (e.g. federal, revolving, special, trust) May request general funds for needs related to health & safety, statutory requirements or court mandates, direct public services, department-wide impact, direct support services to other State agencies, or revenue collection and processing DOE is not recommending any changes to BOE’s 10/21/10 approved budget request

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