1. 2011-12 Preliminary Budget Superintendent’s Recommendation February 10, 2011

2. 2 Budget OverviewSuperintendent Kowba Assumptions Budget Process Recommended BudgetRon Little, CFO Assumptions Impacts Special Issue AreasPhil Stover, Dep. Supt. Alternative BudgetRon Little Restoration items SummarySuperintendent Kowba Presentation Agenda

3. 3 Recommended Board Actions 1.Approve Superintendent’s Recommended Preliminary 2011-12 Budget 2.Approve Recommended Alternative Budget with Restorations 3.Direct HR Department to Proceed with Preparation of Staff Reduction (PKS) Resolution –Finalization of staff reduction numbers –Board approval on February 22 4.Direct Finance Department to Proceed with Completion of Second Interim Report for Submittal March 15 to SDCOE –Board approval on March 8

4. 4 Historical District Reductions Total Budget Deficits over 5 years

5. 5 Maintain Our Priority on the Classroom Realign Diminishing Resources Engage School Communities in Decision Making Take A Multi-Year Approach Our Approach to a Balanced Budget

6. 6 Key Fiscal Goals Immediate Goals Meet March 15 Statutory Deadlines for Staffing and Second Interim Submission Achieve Positive Fiscal Certification Meet SDCOE Requirements Overall Goals Balance the 2011-12 Budget June 30 Budget Adoption

7. 2011-12 Recommended Budget Ron Little, CFO

8. 8 Key Fiscal Requirements San Diego County Office of Education Middle of the Road Budget Assumptions: $350/ ADA of Reductions 2011-12 List of Specific Budget Solutions for 2011-12 to balance budget Evidence of Implementation of Solutions March 15 Certificated Notice Deadline Description of Budget Solutions from 2012-13 Maintain Legally Required Reserve Levels for all three years of Multi Year Projections

9. 9 Long Term Considerations A Sound Fiscal Footing for the District Will Require Multi-Year View –Need for Strategic Solutions to Balance Budgets –Exponential Power of Decisive Action Long Term Solutions Needed for: –Closing the deficit gap in 2012-13 –Ongoing GF Structural Deficit –Sustaining a Positive Cash Flow vis-a-vis deferrals –Restructure of PPO and Routine Maintenance

10. 10 Budget Factors Contributing to 2011-12 Deficit Continued & Increasing State Funding Reductions Rising Costs –Salaries & Benefits –Operations Loss of Federal Stimulus Funding (ARRA) –ARRA SFSF –ARRA IDEA Flat Federal Funding of Categoricals –Title I –Title II

11. 11 2010-11 Budget Snapshot: General Fund $480.5 Million Restricted Funds –$ 264 Million Special Education –$ 43 Million Title I –$ 22 Million EIA $688.6 Million Unrestricted Funds –$562.4 Million at School Sites –$ 52.5 Million Central Office –$ 42.6 Million Fixed Costs –$ 31.1 Million in Reserves

12. 12 2010-11 Total General Fund Budget $1.14 Billion $993 Million in Salaries & Benefits –87% of Total GF Budget –91% of GF Unrestricted Budget $52.5 Million Central Office Admin –8% of GF Unrestricted Budget

13. 13 Budget Development Process Path to a Balanced 2011-12 Budget 1.Take Projected Deficit Off the Top 2.Identify Minimal Central Office Service Levels 3.Provide Base Allocation to Schools 4.Localize Decision Making – Transparent & Inclusive –Site Based Budgeting (SBB) –“X” Factor Discretionary –Community Meetings –School Site Council (SSC) Input

14. 14 Recommended 2011-12 Budget: Preserves Basic School Needs Superintendent’s Budget Recommendation: Preserves $512 Million of Educational Programs and Site Support (unrestricted funds) Key Programs Preserved in Recommended Budget: – A-G Curriculum – Full-Day Kindergarten – Information Technology Support – Police & Safety Services – Centralized Nursing – Athletics – Discretionary Site Funding (“X” Factor) Counseling GATE VAPA Teachers

15. 15 2011-12 Budget: More Central Office Reductions Unrestricted Resources Business Services Cut 39% District Relations Division Cut 32% Finance Services Cut 13% Information Technology Services Cut 10% Academics Cut 9% Central Office represents only 8% of GF Unrestricted This is in Addition to 18% of Central Office Cuts and 619 FTE Reductions since 2007/08

16. 16 Significant Reductions/ Eliminations: Increased Class Sizes (K-3) Suspension of Magnet School Supplemental Allocations Arts & Music Program Reductions Special Education Reductions Suspension of OCILE Reduced Central Office Services Eliminate Non-Critical Vacancies 2011-12 Budget: School and Program Reductions

17. 17 2011-12 Budget Solutions Summary Millions Projected Reductions Required (Based on Current Financial Assumptions at First Interim) $ 120.60 ($141.6 Million - $21 Million) A. Revenue Generation 1Increase ADA 3/4 % $ 4.30 2Mandated Claims Reimbursement $ 1.50 Sub-Total $ 5.80 B. Central Office Options 15370-Reduce GATE District Administration- retain 1 FTE SME + 1 Admin $ 0.77 2Eliminate GATE Discretionary Funding $ 0.65 35409-Eliminate American with Disabilities Act (504)-(task into Accountability) $ 0.22 45440-Restructure Student Programs & Prof Learning (Resource Teachers to Restricted funding) $ 0.38 55532-Magnet Programs Office Transfer to Restricted MSAP Grant $ 0.31 65537-Eliminate Utilities Management Program $ 0.60 75547-Teacher Prep and Student Support (Eliminate Unrestricted Support) $ 0.08 85606-Office of School Innovation Elimination $ 0.22 95596-Chief Special Projects Office Elimination $ 0.31 105343-JROTC Office (Eliminate Centralized Oversight) $ - 115451-College, Career & Tech Ed-Transfer to Restricted; Eliminate Open PARS $ 0.36 125542-Community Relations Department Elimination $ 0.37 13Adult Education (Eliminate GFU Support of Centralized Oversight) $ 0.35 14CBET (Elimination of Program) $ 0.52 155638-Drop Out Prevention Realignment $ 0.38 16Area Superintendents (Elimination of Current Area Supt Vacancy + support staff) $ 0.29 175457-Reduce P.E and Health (Resource Teacher to Title II) $ 0.16 1814% Additional Reduction to Central Office (FTE Estimated) Academics / Student Services $ 0.87 Business/ Auxiliary Services, Instructional Facilities, & Strategic Sourcing $ 2.27 Business/ Human Resources $ 0.62 District Relations $ 0.28 Finance $ 1.23 IT SS $ 1.40 Legal $ 0.33 Office of Accountability $ 0.42 195533-Enrollment Options-Consolidate with Magnet Office Reduce by 30%; others to Restr $ 0.32 20Eliminate Transportation for Magnet and VEEP $ 3.75 215605-School Police Services (Reduce 12.5%) $ 0.67 225446-Visual & Performing Arts (Retain 1 SME + Admin ; Resource teachers to "X") $ 2.80 23Area Superintendents Budget Reductions & Restructure $ 1.73 24Eliminate Supplemental Secondary Counselors (to "X") $ 2.15 25Reduce Visiting Teachers Budget due to reduced Professional Development $ 0.50 26Race & Relations Department (50% costs moved to Title I) $ 0.38 Sub-Total $ 25.67

18. 18 2011-12 Budget Solutions Summary C. Centrally Managed Programs 1Eliminate/Suspend OCILE Program (a) Balboa $ 0.66 (b) Old Town $ 0.73 (c) Palomar $ 2.58 (d) OCILE Transportation $ 0.60 2 Eliminate RELI Program $ 0.13 3 Reduce Landscapers by 10 FTEs-10% $ 0.59 Sub-Total $ 5.28 D. School Admin. Options (Part of Allocation Formula) 1K-3 CSR Program - Increased Class Sizes 29:1/ Contract Maximum (Net of Revenue Penalties) (a) Kindergarten $ 6.73 (b) 1st Grade $ 6.81 (c) 2nd Grade $ 6.29 (d) 3rd Grade $ 6.38 2Reduce Kindergarten to 1/2 Day at 29:1 (168.3 FTE) (Net of Revenue Penalty) 3 Split Principal Assignment Between Small High Schools $ 1.22 4 Reduce Allocation Model for Alternative and Atypical Schools (8 schools) $ 1.00 5 Increase Class Size for Gate Seminar Program (Per School Formula) 6Reduction to Unrestricted Allocation Model- Site Based Decisions (FTE Estimated): $ 25.96 Options for Sites to Consider Include, but are Not Limited to: (a) Librarians (Allocation = 21.50 FTE) (b) Library Technicians (Allocation = 54.50 FTE ) (c) Vice Principals (Allocation = 80 FTE) (d) Nurses (Allocation = 57.4FTE) (e) Student Information System Site Tech II (Allocation = 45 FTE) (f) School Clerk II Reduced by One at Each High Schools (Reduction = 14 FTE) (g) Health Technicians (Allocation = 90.88 FTE) (h) School Counselors (Allocation = 171.90 FTE) Sub-Total $ 54.39 E. District wide Options 1Close Schools (@ $450K per) TBD 2K-8 Schools - Reduction of 1 CPU $ 0.93 3Solar Energy Implementation Savings $ 0.50 4 Eliminate additional unrestricted vacancies (not already included in B18 above) $ 1.80 Sub-Total $ 3.23 F. School Supplemental Allocations 1Suspend Supplemental Allocations for Magnet Programs $ 6.40 2Change Prep time Allocation to Comply with Minimum Contract Requirements 3Eliminate 4 Operation Specialists $ 0.35 Sub-Total $ 6.75 G. Federal Stimulus Funded Program (ARRA Title I Funding Expires) 1Eliminate K-2 ARRA Positions CSR 16.5:1 (29 Schools) 12.23 Sub-Total $ 12.23 H. Special Education 1Reduce Special Education local contribution- Program & Transportation Reductions $ 6.25 2Eliminate Intersession and Second Session of Special Education $ 1.00 Sub-Total $ 7.25 Total Deficit Reduction Solutions (with estimated FTE impacts) $ 120.60

19. 19 Operationalizing Budget Solutions Recommended Budget Is Based on a Set of Assumptions –Variances could occur –Zero-Sum Game Options for Possible Shortfalls in Deficit Solutions –Second Interim Adjustments –Use of Reserves for Economic Uncertainties –Increase in Deficit Projection for 2012/13 –Explore Other Budget Solutions

20. 20 Preliminary Estimates of Staffing Impacts General Fund Unrestricted Estimated FTE Reductions CertificatedClassifiedTotal Central Office 68 215 283 Schools (Classroom Teachers) 756 (535) 273 1,029 Total 824 488 1,312

21. 21 Site Discretionary Fund Staffing Results “X” Factor FTE Purchases (preliminary estimates) FTE PurchasedFTE Not Purchased Counselors 199.5346.15 Nurses40.7540.90 Librarians12.6013.40 Health Tech49.716.74 GATE Seminar17.6029.90 Vice Principals92.6020.40 Network Support18.87 2.63 Campus Security Asst.61.0524.14 Library Assistants32.7826.91 Office Support320.22105.29

22. Overview of Special Budget Issues Phil Stover, Deputy Superintendent Business

23. 23 2011-12 Transportation Reduction Impact Impact of Reductions equal 20% of Transportation $39.2M Budget: –Magnet & VEEP Reduction $3.75M –Special Education Reduction$3.00M –OCILE Transportation$0.60M –Central Office Reduction$0.50M Total Reduction$7.85 Million Magnet Busing is not Eliminated Complete redesign of routing patterns for 2011/12 Routes will be streamlined Goal is to mitigate student impact Mandated Programs (PI & Special Ed.) will be the new foundation Minimum of 65 staff impacted Including bus drivers and office

24. 24 2011-12 Transportation Reduction Impacts Board Adoption of Budget Recommendation Will Include: Elimination of bus stops within 5 mi. radius of school Increase ridership rule to 25 per bus Buses Will be Utilized To Maximize Capacity Centralized pick-up points will be used 43 Schools Impacted A maximum of 20% of transported students will be impacted at any one school Some percentage of those students will continue to ride or find alternative transportation Surveys will be conducted to determine impact on enrollment

25. 25 2011-12 Transportation Reduction Impacts 3,623 General Education Students Impacted Only 3% of SDUSD’s non-charter population Additional Special Education students will be impacted Exact number unknown at this time Special Education ridership will be limited to students qualifying for transportation as a related service in their IEP 84 Routes Eliminated affecting 1,464 students 138 Routes modified/consolidated affecting 2,159 students Longer walk to bus stop, longer bus ride etc.

26. 26 2010-11 Police Services Reduction Reduce Police Services Staffing by 12.5% (8 FTE’s) for a Savings of $.67M –4 Campus Police Officers –3 Community Service Officers –1 School Police Clerk Impacted Campuses –La Jolla High, Scripps Ranch High, –Wilson Middle, Mann Middle, –Euclid, Edison and Sherman Elementary Business Office Reduced Hours of Service –Closed two hours per day (or an entire day if remaining clerk is off)

27. 27 School Realignment Committee The School Realignment Committee Composed of 16 staff members representing all geographies, grade levels and major academic, HR and finance services (complete list in backup materials) Focus on realignment of schools rather than on the closing of small elementaries Values the work of previous school closing committees The School Realignment Committee Recommends: The district pursue a year-long holistic and thorough review of a comprehensive plan for school realignment, including : –Grade level alignment –School size and configuration –Attendance boundaries –Choice/community school priorities

28. 28 School Realignment: Initial Considerations Items for Continued Study: Examination of high cost per student, non-mandated atypicals for closure or movement to a district school site Reduction of one elementary school in the Mission Bay Cluster and Clairemont cluster Reduction of one elementary school in the Taft feeder pattern of the Kearny cluster Revisit grade configuration, reduce one elementary school and review need for two middle schools in Point Loma Cluster Development of a long term strategy for the consolidation and alignment of the Logan/Memorial campuses Creation of a school marketing strategy and training for site administrators for competitive purposes The negative impact on school enrollment of premature discussions related to specific school closure The need for middle schools to be the focus of a district-wide right- sizing and realignment Potential for consolidating district staff on fewer sites

29. 29 Special Education – Key Reductions $7.25 million Total Special Education Reduction –From $264 million budget (3% cut) Non-Special Education Personnel –Human Resources Support –Finance Support Resource Teachers (Cluster Support Teachers) Certificated Staff –Education Specialists Classified Staff Transportation (reduce overall special education costs) Reduce Special Education Summer School program

30. Alternative Budget Recommendation Ron Little, CFO

31. 31 Alternative Budget Recommendation June Special Election Impact Potential Restoration of $57 million Alternative Budget Can Only Be Implemented After Passage Of State Ballot Measure Superintendent Recommended Alternative Budget Includes: Restoration of K-3 Class Size to 24:1 Set Aside Reserve for 2012-13 Deficit Allocate Funds to Site Discretionary “X” Factor Partial Restoration of Magnet, Gate and VAPA Funds Other restorations

32. 32 Restoration Plan - $57 Million List of 2011-12 Restorations K-3 Class Size Reduction Program 24:1 Kindergarten $6.7 Million 1st Grade $6.8 Million 2nd Grade $6.3 Million 3rd Grade $6.4 Million Supplemental Allocations for Magnet $4.5 Million VAPA/Other Resource Teachers $1.9 Million Police & Safety Services $0.3 Million Landscapers $0.6 Million Increase “X” Factor to Schools $11.5 Million Contingency for Multi-year Deficits $12.0 Million

33. Summary Comments Bill Kowba Superintendent

34. 34 Feb. 10 – Recommended Budget Action Feb. 22 - PKS Resolution & Vacancies Elimination March 8 - Second Interim Approval March 15 - Submit Second Interim March 15 - Certificated Notices Deadline Next Steps and Timeline

35. 35 Recommended Board Actions 1.Approve Superintendent’s Recommended Preliminary 2011-12 Budget 2.Approve Recommended Alternative Budget with Restorations 3.Direct HR Department to Proceed with Preparation of Staff Reduction (PKS) Resolution –Finalization of staff reduction numbers –Board approval on February 22 4.Direct Finance Department to Proceed with Completion of Second Interim Report for Submittal March 15 to SDCOE –Board approval on March 8

36. 36 Board Discussion and Questions Questions? Backup Materials: –Transportation Impact spreadsheet –School Realignment memo –Central Office Reduction spreadsheet 2011-12 –School Site Allocations list for 2011-12 –Special Education Reductions list