1. Board Budget Study Bassett Unified School District February 6, 2012

2. Bassett’s Overall Financial Condition All Funds

4. The Unrestricted General Fund

5. Financial Picture – Updated Gov 12-13 Budget Deficit = 7.3 million in 12-13 or 25% of budget To stay solvent = minimum cut of $8 million + more in 13-14 2010-11 2013-14 2012-13 2010-11 2011-12 2013-14

6. Assumptions: Zero COLA for 2012-13, 2013-14 Zero COLA for 2012-13, 2013-14 Trigger reductions Trigger reductions –$1.5 million or $370 per ADA –Elimination of transportation funding $257,000 K-3 class sizes revert to 20:1, add $800,000 in deficit if 4-12 class sizes revert to 32:1 totaling to $8.1 million K-3 class sizes revert to 20:1, add $800,000 in deficit if 4-12 class sizes revert to 32:1 totaling to $8.1 million

7. The following charts reflect the ratio of expenses by employee groups and other non-compensation expense to total budgeted expense. Unrestricted General Fund Expenditure Analysis

8. Unrestricted General Fund Budget 2012-13

9. $8.1 Million Applied to Each Expense Category

10. $6.6 Million Applied to Each Expense Category

11. Possible Solutions: 1.Unrestricted General Fund Furlough = $ 102,000 per day 1% Salary rollback = $212,000 Reduction in force Health benefit reduction 2.Other Funds Adult Education – Tier III flexibility Worker’s comp fund Special reserve for capital outlay

12. To Sell or Lease Surplus Property 17455. The governing board may sell any real property belonging to the school district or may lease for a term not exceeding 99 years. 17455. The governing board may sell any real property belonging to the school district or may lease for a term not exceeding 99 years. 17462. (a) The funds derived from the sale of surplus propertyshall be used for capital outlay or for costs of maintenance of school district property that the governing board of the school district determines will not recur within a five-year period. Proceeds from a lease of school district property may be deposited into a restricted fund for the routine repair of district facilities. 17464. Except as provided for in Article 2 (commencing with Section17230) of Chapter 1, the sale or lease with an option to purchase ofreal property by a school district shall be in accordance with the following priorities: (a) First, park or recreational purposes (b) Second, the property shall be offered for sale or lease with an option to purchase, at fair market value in several different ways subject to the terms stated in the article.

13. Helpful Information Market analysis Market analysis –Employee salaries and benefits –Other expenses Enrollment data Enrollment data –Class sizes

14. On-going vs. One-time Solutions On-going solutions = less cuts the following year; less interest to pay short term borrowing On-going solutions = less cuts the following year; less interest to pay short term borrowing One-time solutions = deeper cuts in the out years; additional cost to pay interest One-time solutions = deeper cuts in the out years; additional cost to pay interest

15. Why Maintain Fiscal Solvency? When a district reaches the point where they can no longer meet their financial obligations they must apply for a state loan, otherwise known as receivership. When a district reaches the point where they can no longer meet their financial obligations they must apply for a state loan, otherwise known as receivership. Once a state loan is received the state takes over control of the district Once a state loan is received the state takes over control of the district –District pays for the cost of the compensation package for the State Administrator (E.C. 41326[(b)][(8)] –The cost of additional staffing as determined by the State Administrator to be necessary for ensuring fiscal recovery (E.C. 41326[(b)][(9)] –The cost of management reviews and developing a recovery plan, including the cost of the initial comprehensive review and follow-up reviews every six months

16. Why Avoid State Loan or Receivership? If the district and the Board, while it has the power, do not take the necessary actions locally to restore fiscal solvency, the same actions and more will be imposed by the state. The typical state loan is established to be a 20-year payback. The district remains under some level of state control until that payback is complete. Generally, recovery costs more and takes longer if a state loan is required. If the district and the Board, while it has the power, do not take the necessary actions locally to restore fiscal solvency, the same actions and more will be imposed by the state. The typical state loan is established to be a 20-year payback. The district remains under some level of state control until that payback is complete. Generally, recovery costs more and takes longer if a state loan is required. In the long term, taking the necessary actions locally and avoiding a state loan will result in greater local control, less outside intervention, and better long-term outcomes for students, employees, and the community. In the long term, taking the necessary actions locally and avoiding a state loan will result in greater local control, less outside intervention, and better long-term outcomes for students, employees, and the community.

17. What’s Next? 1.Negotiate with employee groups 2.Work with Budget Advisory Committee (BAC) 3.BAC recommends to Superintendent 4.Staff/Community meetings 5.Superintendent recommends to the Board of Education 6.Board adopts solutions 7.Implementation