1. Cambrian School District 2011-12 First Interim Report December 8, 2011 Presented by: Don Fox Interim CFO

2. First Interim Report ● School boards are required to certify the projected year end and subsequent years’ financial condition twice a year ■ Known as Interim Reports ● The First Interim is a snapshot of the District’s financial position as of October 31, 2011 ● Included in this report is a multiyear projection for fiscal years 2012-13 and 2013-14 1

3. Revenue Changes from Adopted Budget to First Interim Report Rev. Limit $ 226,883 Federal 45,970 Other State 745,778 Other Local Total $ 981,456 General Fund Revenue Changes from Adopted Budget to First Interim Report 2

4. Expenditure Changes from Adopted Budget to First Interim Report 3 1xxx $ 759,157 2xxx 72,584 3xxx 150,087 4xxx 574,162 5xxx 224,863 6xxx 0 7xxx 0 Total $ 1,780,853

5. Budget Assumptions and Multiyear Projections ● 2011-12: 2.24% revenue limit COLA with ongoing 19.754% deficit ● 2012-13: 3.10% revenue limit COLA* with ongoing 19.754% deficit ● 2013-14: 2.80% revenue limit COLA* with ongoing 19.754% deficit ● From 2011-12 to 2012-13: Revenues in other state and federal funding remains “flat” – no COLA applied ● ADA projected to be static in “out” years ● One-time federal funding is exhausted in 2011-12 ● Deficit spending is projected in 2012-13 due to reversion of penalties for Class Size Reduction and collective bargaining agreement changes 4 *Based on State’s ability to fund

6. Multiyear Projections – Many “Moving Parts” Current Year 2011-12 Current Year Plus 1 2012-13 Current Year Plus 2 2012-13 State’s Structural Budget Deficit State Budget “Trigger”pulled Federal Jobs Dollars State Budget Uncertainty Remains No Furlough Days State Budget Unceretainty 5

7. Certification of Financial Condition ● The recommendation from staff to the Board is to approve the First Interim Report as submitted ■ Positive Certification  This means that based upon current assumptions and projections the District will meet its financial obligations for the current fiscal year and subsequent two fiscal years 6

8. Ongoing State Budget Concerns ● The current State Budget assumed dramatically improved revenues. ● Revenues have fallen short and as a result it appears that the trigger mechanism defined in the budget compromise will certainly be pulled. ● Most experts doubt that the trigger cuts will ultimately be as are currently statutorily defined, but what??? ● First preview will likely be in conjunction with the release of the Governor’s 2012-13 proposed budget in January. 7

9. Cautions About the State Budget ● How should we treat this Budget? ■ The recommendation from financial experts is:  Include a provision for midyear revenue cuts in the current year.  Reevaluate in January in the context of the Governor’s Budget Proposal for 2012-13.  Assuming no legislative solution in the interim, the Governor’s May Budget Revision next spring, will be the next important peek at what the future may hold..  The State Budget solution is ultimately more a matter of politics than sound economics 8

10. Questions ● Questions?