1. SEPTEMBER 23, 2015 BUDGET FORUM Jeremy Meyers, Superintendent Robbie Montalbano, Deputy Superintendent

2. 2015-16 State Budget 2

3. The National Economy 3  The U.S. economy continues to add jobs  280,000 jobs added in May On average, about 200,000 jobs per month have been added during the past year Professional and business services, leisure and hospitality, and health care account for most of the gain  Unemployment is still a challenge © 2015 School Services of California, Inc.

4. The California Economy 4  The California economy continues to show strength  Added 54,200 jobs in May, outperforming the U.S. average  If the state had added only its proportionate share of jobs based on population, it would have gained 35,000 jobs  California’s unemployment rate in May was 6.3%, still above the U.S. average  One year ago, the State’s unemployment rate was 7.5%  The State’s housing market continues to strengthen  The statewide median home price in April was $481,800, up 7.4% from April 2014  Residential building permits are up almost 21% for the first four months of 2015, compared to the same period one year ago © 2015 School Services of California, Inc.

5. The California Economy 5  It was a great year for the State’s highest income earners, whose income and capital gains taxes make up a significant part of the growth in General Fund revenues  Proposition 30 continues to be a strong and steady source of State income  $7 billion to $8 billion in combined sales and personal income taxes  Continued concerns  The economic effect of the drought is still unknown  Rising gas prices could hinder domestic consumer spending  Job growth in the innermost California communities still lags way behind the nation and other areas of the state © 2015 School Services of California, Inc.

6. The California Economy 6 © 2015 School Services of California, Inc.

7. Highlights in the Education Budget  The budget includes Prop. 98 funding of $68.4 billion for 2015-16, an increase of $7.6 billion over the 2014- 2015 budget  Since 2011-12, Prop. 98 funding for K-12 education has grown more than $18.6 billion  The Prop. 98 maintenance factor will be reduced to $772 million by the end of 2015-16 7

8. Highlights in the Education Budget  Funding for the LCFF of $5.994 billion, 2015-16 gap funding 51.52%  Cost of Living Adjustment (COLA) of 1.02% to categorical programs outside of LCFF  $3.2 billion one-time to pay down past unpaid state mandates  The funding is unrestricted and may be used by LEAs to meet local needs as determined by their governing board Legislative intent is to prioritize funding for investments necessary to support implementation of Common Core, English Language Development and Next Generation Science standards 8

9. Highlights in the Education Budget  Establishes the Career Technical Education (CTE) Incentive Grant Program  Provides $900 million in one-time Prop. 98 funding over the next three years to establish new or expanded high-quality CTE programs $400 million is provided in 2015-16 Competitive, matching grants 9

10. Highlights in the Education Budget  Adult Education funding of $500 million  $375 million is provided to School Districts and County Offices of Education for Adult Education Maintenance of Effort on the basis of the 2012-13 Maintenance of Effort certification  Preschool and Child Care received Prop. 98 and non- Prop. 98 funding totaling $2.851 billion. 10

11. Highlights in the Education Budget  $60.1 million directed to Special Education in response to recommendations from the statewide Special Education Task Force  $50.1 million is on-going and $10 million is one-time  Does not increase the amount of money allocated through the AB 602 process  Routine Restricted Maintenance Account (RRMA) now has extended flexibility delaying full implementation of the 3% requirement until 2019-20 11

12. 2015-16 EDCOE Budget 12

13. Local Control Funding Formula 13 County Office LCFF Funding  LCFF Funding for our organization includes sources/support for the following major programs:  Juvenile Hall/Court Schools  Mandatorily expelled students  Community Day Schools  AB 1200 (fiscal oversight) activities and support to school districts

14. Other Funded Student Programs 14 Additional programs outside of the LCFF  Preschool  Head Start/Early Head Start  Special Education  Adult Education

15. Preschool 15  COLA of 1.02%  A 5% increase to the reimbursement rate for State Preschool and other direct-contracted child care and development providers  Challenge – with the increase in minimum wage some families will no longer qualify for subsidized slots

16. Head Start/Early Head Start 16  Year two of a five year grant  Flat funded  Possibility of small COLA (less than 1%) if approved in federal budget in October  Challenge – with the increase in minimum wage some families will no longer qualify

17. Special Education 17  SELPA revenues continue to decline as enrollment declines  Costs are not declining  Deficit factor in 2015-16 of 0.9707  Deficits each year since 2012-13  So far, all have eventually been restored when final property tax allocations came in  If this does not occur, the deficit will be funded out of special needs pool for 2015-16

18. Adult Education 18  The Governor’s 2015-16 budget proposal calls for $500 million in ongoing Prop. 98 funding for a new Adult Education Block Grant supporting activities such as:  $350 million for ongoing maintenance of effort of programs  Elementary and secondary basic skills  Citizenship, English as a second language, and Workforce Preparation for immigrants  Education for adults with disabilities  Career Technical Education and Apprenticeships

19. Adult Education Block Grant 19  From the $500 million appropriation, LEAs will directly receive an amount equal to the amount they spent in 2012-13  $53,838 for EDCOE  After those allocations have been made, any remainder of the $500 million will be allocated to the Adult Education consortia

20. Career Technical Education (CTE) 20  The Governor’s Budget Proposal includes $250 million for each of the next three years for a Career Technical Education (CTE) Incentive Grant  The grant is established as a State Education and Workforce Development Initiative with the goal of providing pupils in kindergarten through grade 12 with the knowledge and skills necessary to transition to employment and postsecondary education  School districts, County Offices and Charter Schools interested in this program will need to complete an application for this competitive grant program  The grant requires a dollar for dollar match and priority for these State funds will be given to LEAs applying in partnership with other LEAs

21. CalPERS ■ The employer contribution to CalPERS is increasing from 11.771% in 2014-15 to 11.847% in 2015-16 ■ Estimates of the resulting future contribution rate increases for school employers are as follows: 21 ActualProjected 2015-162016-172017-182018-192019-202020-21 11.847%13.05%16.6%*18.2%*19.9%*20.4%* *CalPERS provided these estimates in 2014 and has not yet issued revised estimates

22. CalSTRS 22 ■ Consistent increases up to final implementation ■ Once the statutory rates are achieved, CalSTRS will have the authority to increase or decrease the employer and state contribution rates YearEmployer Pre- PEPRA* Employees Post- PEPRA* Employees 2015-1610.73%9.20%8.56% 2016-1712.58%10.25%9.205% 2017-1814.43%10.25%9.205% 2018-1916.28%10.25%9.205% 2019-2018.13%10.25%9.205% 2020-2119.10%10.25%9.205%

23. Other Factors 23 ■ Additional Factors ■ Affordable Care Act ■ Increase in Minimum Wage ■ AB 1522 – Healthy Workplace Healthy Families Act ■ Declining enrollment

24. 2015-16 Net Position 24

25. 25 Adjustments for One-Time Revenues and Expenses

26. Final Thoughts 26  Many factors impact our budget  US economy, California economy  State budget  Enrollment  Increasing costs  Negotiated settlements

27. Questions? 27 Robbie Montalbano rmontalbano@edcoe.orgrmontalbano@edcoe.org Diane Lacombe dlacombe@edcoe.orgdlacombe@edcoe.org