1. Cambrian School District 2010-11 First Interim Report December 9, 2010 Presented by: Debbie Blow, Ed.D. Superintendent

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, 2010 ● Included in this report is a multiyear projection for fiscal years 2011-12 and 2012-13 1

3. Revenue Changes from Adopted Budget to First Interim Report Rev. Limit $1,255,638 Federal 0 Other State 259,771 Other Local Total $1,512,431 Revenue Changes from Adopted Budget to First Interim Report 2

4. Expenditure Changes from Adopted Budget to First Interim Report 3 1xxx $ 403,439 2xxx 117,585 3xxx 201,404 4xxx 285,372 5xxx 6xxx 0 7xxx 0 Total $

5. Budget Assumptions and Multiyear Projections ● 2010-11: -0.39% revenue limit cost-of-living adjustment (COLA) with 17.963%deficit ● 2011-12: 0.00% revenue limit COLA* with ongoing 17.963% deficit ● 2012-13: 1.90% revenue limit COLA** with ongoing 17.963% 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 ● Reserves increase in current year due to one-time federal dollars ● Deficit spending is projected in 2012-13 due to reversion of penalties for Class Size Reduction and collective bargaining agreement changes 4 *COLA not included in 2010-11 due to uncertainty of State budget and its ability to fund **Based on State’s ability to fund

6. Multiyear Projections – Many “Moving Parts” Current Year 2010-11 Current Year Plus 1 2011-12 Current Year Plus 2 2012-13* Just-Enacted State Budget ARRA funds Federal Jobs dollars Reserve for Economic Uncertainty flexibility gone ARRA funds must be spent by September 2011 Plan for another unfunded COLA K-3 Class-Size Reduction (CSR) graduated penalties end ARRA dollars are gone Federal Jobs dollars must be spent by September 2012 *2012-13 is the last year districts can take advantage of Tier III flexibility and the five-day reduction in the instructional year under current law 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 Budget relies so heavily on improved economics and revenues and billions of dollars from the federal government, any downturn would lead to another crisis ■ The Legislative Analyst’s Office has reviewed the newly enacted State Budget and has identified a $25.4 billion structural deficit ■ The current Governor has called the eighth extraordinary budget session to address the problem ■ By January, we will have a new Governor who will need to deal with this problem ● As in past crises, the state could again turn to education for the lion’s share of the cuts 7

9. Cautions About the State Budget ● How should we treat this Budget? ■ The recommendation from financial experts is:  Include the revenue increases in district budgets for the current year and out years  Wait, at a minimum, until the January Governor’s Budget Proposal for 2011-12, and preferably the May Revision next spring, before we actually spend these dollars.  The State Budget is based largely on political assumptions, not sound economic and expenditure projections  We have seen that the economic winds of change can gust in many directions ■ We plan to proceed cautiously before making commitments to spend the dollars 8

10. Questions ● Questions?