1. 1 LAUSD State of the Budget Understanding the District’s Budget Challenges 10/9/12

2. CA Education Funding: The Alligator Chart State funding for K-12 education has dropped significantly since 2007-08 Source: School Services of California, Inc. http://www.sscal.com/brl_calc.cfmhttp://www.sscal.com/brl_calc.cfm 2 Loss of COLA Loss of baseline dollars Loss due to potential failure of Prop 30 1 2 3 4 5 6

3. Supported by Governor Brown ¼ percent sales tax increase; up to 3% increase in personal income tax for high- income earners (>$250,000) Generates $6 billion in 2012-13 through 2016-17; with smaller amounts in 2017- 18, and 2018-19 DURATION: Sales tax for 4 years; Income tax for 7 years Supported by Molly Munger Increase in personal income tax for all but low-income earners, from 0.4% for lowest income individuals to 2.2% for individuals earning >$2,500,000 Generates $5 billion in 2012-13; $10 billion thereafter DURATION: Income tax for 12 years Proposition 30 Proposition 30 Proposition 38 Proposition 38 Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/38_11_2012.pdf November Tax Initiatives Propositions 30 & 38 3 “The Schools and Local Safety Protection Act of 2012” “ Our Children, Our Future: Local Schools and Early Education Investment and Bond Reduction Act”

4. Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/38_11_2012.pdf Comparison of Propositions Increase in personal income tax rates 4 $0 - $7,316$0 - $14,6320% $7,316 - $17,346$14,632 - $34,6920%0.4% $17,346 - $27,377$34,692 - $54,7540%0.7% $27,377 - $38,004$54,754 - $76,0080%1.1% $38,004 - $48,029$76,008 - $96,0580%1.4% $48,029 - $100,000$96,058 - $200,0000%1.6% $100,000 - $250,000$200,000 - $500,0000%1.8% $250,000 - $300,000$500,000 - $600,0001.0%1.9% $300,000 - $500,000$600,000 - $1,000,0002.0%1.9% $500,000 - $1,000,000$1,000,000 - $2,000,0003.0%2.0% $1,000,000 - $2,500,000$2,000,000 - $5,000,0003.0%2.1% Over $2,500,000Over $5,000,0003.0%2.2% Single Filer’s Taxable Income Joint Filer’s Taxable Income Proposition 30 Proposition 30 Proposition 38 Proposition 38

5. Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdfhttp://www.lao.ca.gov/ballot/2012/38_11_2012.pdf What if Both Propositions Pass? 5 If provisions of two or more measures that are approved at the same election are in conflict with each other, the provisions of the ballot measure receiving the most affirmative votes goes into effect (Article II, Section 10(b) of the California Constitution). Both initiatives contain language deeming them to be in conflict with the other

6. 1234567 891011121314 15161718192021 22232425262728 293031 6 Impact on our Instructional Calendar if Prop 30 Passes or Fails LAUSD’s school year might need to be shortened an additional 15 days -15 instructional days -15 instructional days Passes Fails 177-180 days 160 days + 2-5 instructional days + 2-5 instructional days Current 175 days

7. - $255 million - $252 million 2012-132013-14 ≈ - $400-500 million ≈ -$650-750 million What if Prop 30 Fails? LAUSD’s fiscal picture over the next 18 months if Prop 30 fails Prop 30 Cuts Structural Deficit 7

8. Impact of Federal “Sequestration Cuts” Federal revenue would be cut by nearly $65 million in 2013-14 8 * Estimated revenues Note: Assumes sequestration cuts are on-going at maximum cut of 9.1%. Sequestration cuts could range from 5.5% to 9.1% depending on congressional action. New America Foundation report estimated a $111 million impact because it used 2009-10 Census data which included stimulus funds which are no longer available. Source: Superintendent's 2012-13 Final Budget. Page IB - 9. Revenue if sequestration cuts go through