2. 1 Addressing Long-Term Budget Challenges (Part 9) Eva Rae Lueck Chief Business and Finance Officer Glendale Unified School District February 2, 2010 Glendale Unified School District Board Meeting – February 2, 2010

3. 2 The Budget Gap January 2010 – July 2012 B-13 Problems and Solutions (in billions) Reason for ShortfallProposed Solutions $19.9 $1.0 Build Reserve $2.3 Lost Budget Solutions $3.9 Alternative Funds $0.6 Fund Shifts $1.4 Caseload Growth $6.9 Operating Shortfall in 2009-10 Budget Act Revision $3.4 Revenue Decline $4.9 Adverse Court Decisions $6.9 Federal Funds $8.5 Expenditure Reductions

4. 3 Budget Solution Vulnerabilities January 2010 – July 2012 B-13 Solutions (in billions) Proposed Solutions $19.9 $3.9 Alternative Funds $0.6 Fund Shifts $4.9 Adverse Court Decisions $6.9 Federal Funds $8.5 Expenditure Reductions Schools Portion of Reduction $1.5 billion $1.2 billion Administrative Cuts $.3 billion Flexibility Savings $ 24 per ADA Reduction

5. 4 Contrast of Statutory and Actual Amount Paid to District Per “Average Daily Attendance” (ADA) Statutory & Actual Amounts to GUSD Per “Average Daily Attendance” 2007-082010-112009-102008-09 $5,777.86 $5,627.84 $6,106.86 $6,367.86 $4,949.04 $4,978.86 $6,343.86 $5,777.86 $1,365 Difference Per Student Actual Amount Statutory Amount 21.5% Deficit Factor

6. 5 Unbalanced State Budgets Cause Major and Sudden Shifts in School District Budgets The State is required to draft a budget for the following fiscal year in January (Governor’s Budget), update it in May (May Revise), and adopt a final budget in June (June 30). Drastic shifts can occur at and between these major revisions and districts must respond. One Example from Governor’s Budget: 2010-11 COLA Date Projected Impact to District Dec 2009.5% COLA $.7million Jan 8, 2010-.38% COLA/-$201 Reduction:

7. 6 Budgeting in Uncertain Times 2009-102010-112011-122012-132008-09 Adopted Budget First Interim Second Interim Unaudited Actuals Projected Budget Using State Figures, Dec 2009 Figures Adjusted Using Governor’s Budget, Jan 2010 Possible Additional Cuts if State Savings Unrealized Line of Probability Analyzing State’s Economy $4,946 per ADA $5,225 per ADA $5,199 $5,148 $4,928 $5,480 per ADA $5,346 per ADA $5,628 $4,979

8. 7 Budgeting in Uncertain Times 2009-102010-112011-122012-132008-09 Adopted Budget First Interim Second Interim Unaudited Actuals Projected Budget Using State Figures Figures Adjusted Using Governor’s Budget Possible Additional Cuts if State Savings Unrealized Line of Probability Analyzing State’s Economy $4,949 per ADA $5,225 per ADA $5,199 $5,148 $4,928 $5,480 per ADA $5,346 per ADA $5,628 Projected GUSD Deficit (Before Gov Budget) -- $32.8 million (0% COLA 2009-2012, One-Time $253 Cut in 2009-10) Projected GUSD Deficit (After Gov Budget) -- $50.3 million (-38%COLA 2010-11, 0% COLA 2011-13, $201 per ADA Cut) Projected GUSD Deficit (After Gov Budget) -- $40.9 million (-38%COLA 2010-11, 1.8% COLA 2011-12, 2.4% COLA in 2012-13, $201 per ADA Cut) If No Action Taken

9. 8 Governor’s Proposed Budget (January 2010) Need to address by 2 nd Interim or declare “Qualified” certification Need to address by 2010 Budget Adoption (June 2010) or declare “Negative” certification

10. 9 Governor’s Proposed Budget (January 2010) Need to address by 2 nd Interim or declare “Qualified” certification Need to address by 2010 Budget Adoption (June 2010) or declare “Negative” certification Caution: May Revise projections predict further reductions, thus increasing these deficit levels Caution: These figures do not include a possible $50 per ADA reduction equaling $1.28 m annually Caution: Does not include a potential revenue limit reduction in 2010-11 due to impact of increased absences in 2009-10 (potential -$1.1 m). Caution: Does not include the potential loss of $7m in 2012-13 if Class Size Reduction (CSR) flexibility is not extended

11. 10 The Budget Gap First Interim Budget December 15, 2009 (Ending Fund Balance in Excess of 3%) -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 2010-112011-122012-13 $13.4 m - $6.7 m- $32.8 m

12. 11 The Budget Gap Governor’s Proposed Budget with COLAs January, 2010 (Ending Fund Balance in Excess of 3%) -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 2010-112011-122012-13 - $15.6 m- $40.9 m $7.5 m

13. 12 The Budget Gap Governor’s Proposed Budget without COLAs January, 2010 (Ending Fund Balance in Excess of 3%) -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 2010-112011-122012-13 - $18.5 m- $50.3 m $7.5 m 1.8% COLA2.4% COLA

14. 13 Filling The Budget Gap -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 2010-112011-122012-13 - $18.5 m- $50.3 m $7.5 m K-3 Class Size 30-to-1 Furlough Days Health Insurance Containment Early Retirement Incentive Examine Summer School Alternatives

15. 14 Filling The Budget Gap -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 - $18.5 m- $50.3 m $7.5 m Furlough Days Health Insurance Containment Early Retirement Incentive $6.5 m 2010-112011-122012-13 $6.5 m Examine Summer School Alternatives $6.5 m $7.5m $6.5m K-3 Class Size 30-to-1

16. 15 Filling The Budget Gap -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 - $18.5 m- $50.3 m K-3 Class Size 30-to-1 $6.5 m 2010-112011-122012-13 $6.5 m Furlough Days Health Insurance Containment Early Retirement Incentive Examine Summer School Alternatives $7.5 m $6.5m

17. 16 Filling The Budget Gap -$10 m -$20 m -$30 m -$40 m -$50 m -$60 m $0 - $5.3.0 m- $30.5 m $14 m K-3 Class Size 30-to-1 2010-112011-122012-13 Furlough Days Health Insurance Containment Early Retirement Incentive Examine Summer School Alternatives

18. 17 Actions in Progress to Curb Future Budget Deficits Increasing Class Size in K-3 Examining Summer School Proposing to Limit the District’s Contribution to Health Benefits Offering Early Retirement Incentives Reconfiguring Work When Individuals Retire or Leave GUSD

19. 18 Increase K-3 Class Size to 30 Students Increase K-3 class size to 30 students Savings $3.7 to $6.6 m (beginning vs. average teacher salary) –Staff Reductions: 112 FTE Retirements Reassignments Reductions-in-Force

20. 19 Early Retirement Incentive Early retirement being offered to certificated (GTA), classified (CSEA), and management –Reduce the number of positions without Reductions-in-Force (RIFs/layoffs) –Re-examine staffing ratios –Fiscal impact unknown

21. 20 School Services General Recommendations for Savings Requiring Negotiations –Furlough days –Salary roll-backs –Reductions in hours, days, or work year –Elimination or reduction of preparation time –Freeze of step and/or column –Freeze or reduction of contributions for employee health and welfare benefits

22. 21 Immediate Direction Needed (to prepare for March 15, 2010) Initial target for class size in grades Kindergarten – 3 rd Grade