District Financial Update and Planning for 2009/10

1. LODI UNIFIED SCHOOL DISTRICTBusiness Services District Financial Update and Planning for 2009/10 Board of Education Study Session October 28, 2008 Prepared by: Dr. Cathy Washer Douglas Barge Carrie Hargis Y:\business services\budget\2008-09\state\meetings\B10-28-08\District Financial Update & Planning for 09-10 B10-28-08.ppt

2. Executive Summary • State is moving toward mid-year changes to their budget • These will likely affect schools • The District may well continue to lose students as the housing and finance markets work themselves out • Budget reductions are clearly necessary • The amount needed to balance the District is growing • District’s cash investments seem to be in good hands per reports from the County Treasurer and NorCal Relief staff • This report outlines current trends and overall strategies for planning and making adjustments to the budget this year and next I-1

3. Table of Contents DESCRIPTION PAGE # • Introduction 1 • State Budget - Unrestricted 1 • State Budget – Impact on Categoricals 1 – 3 • Food Services 1 – 3 • Ending Fund Balances 1 • Enrollment 1 – 5 • Preliminary Financial Concerns for 2009/10 1 – 4 • Setting the Stage - Now 1 – 3 • Start Planning for Next Year – Now 1 – 2 • Recommendations 1 • Appendix A – D i

4. Introduction • The District is facing a compounding set of problems this coming year • International economy is tanking • National economy has tanked • State economy has tanked • State’s budget is out of balance • State’s budget is structurally out of balance • And now enrollment growth has not only evaporated, but the enrollment is declining • This report will show the impact on other District programs as well I-1

5. State BudgetUnrestricted II

6. 5.66% COLA Increase * .68% Funded 2008-09 Base Revenue Limit (Funded) Negotiated Agreements 2008-09 Revenue Limit Adopted K-12 Revenue Limit “COLA” $800,463 *Net result is 4.713% K-12 revenue limit deficit II-1

7. State Budget – Impact on Categoricals III

8. Restricted Funds Description Est. Funding Level LUSD Amount AB825 Block Grants No COLA + Declining ADA $278,598 After School Education & Safety $150,000 per Middle and $112,500 per Elementary This is no change $0 Arts & Music Block Grants $16.50 (est.) per student This is no change $0 CAHSEE Intensive Instruction & Services $520 per eligible pupil for the Class of 2009 (pro-rated share of remainder for Class of 2009) This is not a change $0 Economic Impact Aid No COLA & Declining ADA $474,467 Gifted & Talented No COLA & Declining ADA $0 Instructional Materials $69 (est.) per prior year CBEDS This is an increase because of the CBEDS increase $140,067 III-1

9. Restricted Funds - Cont. Description Est. Funding Level LUSD Amount Lottery Prop. 20 – Instructional Materials $19 per 2007/08 annual ADA Rates up ADA is down ($65,595) Oral Health Assessments for Grade K $8.40 per 1st grade student Rate is same as last year $19,614 Pupil Transportation No COLA $333,725 Quality Education Investment Act $500 per K-3 students; $900 per 4-8 students Same as last year $0 School Safety No COLA & Declining ADA $29,214 Special Education* No State or Federal COLA. Growth/Declining is provided ($228,176) *Federal share did not receive comparable COLA. III-2

10. Restricted Funds - Cont. Description Est. Funding Level LUSD Amount K-3 CSR $1,071 full day; $535 half day No change in rate – Fewer students $482,398 Lottery – excluding Proposition 20 $118 per 2007-08 annual ADA Up $3.25 (est.) ($33,779) 9th Grade CSR $213 pre student per subject No change in rate ($6,772) Summer School/Hourly Programs $4.08 per hour (undeficited) – may be prorated based on available funds $0 III-3

11. Food Services IV

12. Enrollment Challenges • District-wide enrollment has dropped significantly this year • While the lunch program is still available to students, due to program needs the Pre-school Readiness students no longer eat lunch during class time • As a result, we are serving approximately 500 less lunches every day for Pre-school alone • Overall, our meal counts are up 5% for breakfast and are tied for lunch compared to last year. IV-1

13. Comparison of First Seven Weeks IV-2

14. Food & Labor Costs • Rising costs of fuel • Food costs are going up rapidly • Our cost is up 15% compared to last year • 2008-09 Food Budget has increased $648,000 to $4,970,746 • Labor costs have risen approximately 5% this year. • 2008-09 Labor Budget has increased $154,000 to $4,754,811 IV-3

15. Ending Fund Balances V

16. General FundBeginning Balance Unrestricted Fiscal Year V-1

17. Enrollment VI

18. Change in CBED Students VI-1

19. CBEDS Enrollment Comparison 2007 & 2008 Schools 2007 CBEDS 2008 CEBDS Net Change Increase/Decrease Lodi Schools 12,998 13,121 123 North Stockton Schools 15,829 15,406 (423) Rural Schools 1,431 1,418 (13) Grand Total 30,258 29,945 (313) VI-2

20. CBEDS Enrollment Comparison 2007 & 2008 Grade LODI STOCKTON RURAL TOTAL Elementary 58 (251) (41) (234) Middle 46 (76) (30) Senior (35) (104) (139) Other 54 8 28 90 Grand Total 123 (423) (13) (313) VI-3

21. Declining vs. Growing (Sample) * *How do we pay for the growth needs? VI-4

22. Other District Enrollment Trends VI-5

23. Preliminary Financial Concerns for 2009/10 VII

24. Summary of Expense Increases Description On Going One Time 1. Projected Step & Column  2. Retiree Benefit Costs  3. Utilities, Fuel & Insurance  4. Re-Instate Teacher Staffing Reserves  5. Technology   6. Supply Inflation Costs  7. Re-Instate Construction Reserves  8. Program Improvement Strategies   9. Textbooks  10. Lockeford K-8 Conversion   11. State Statutory Requirements (Reserves & RRM) VII-1

25. Summary of Revenue Decreases Description On Going One Time 1. Revenue Limit  2. Special Education  3. Class Size Reduction  4. Transportation  5. Interest Income  6. 2008-09 Ending Fund Balance  7. Other Federal, State & Local Resources  VII-2

26. Other Pressures DESCRIPTION 1. Taking Care of Our Employees (Salaries/Benefits) 2. Prepare for Continued Loss of Students 3. Retaining Staff for Future Growth (i.e. construction) 4. Special Education – Non Public School Placements 5. Funding Strategies for Refreshing Technology 6. Operations Support Staff - Formulas 7. Preparing for Renewed Student Growth VII-3

27. 1. Textbooks $736,483 2. Capitalization of Energy Conservation Program 325,000 3. Modernization Support – F&E Needs 176,200 4. New School Start-Up (i.e. Lockeford K-8) 50,000 5. Classroom Furniture & Equipment Inventory 24,600 6. Total On-Going Expenses $1,312,283 Shock Absorbers Descriptions BUDGET VII-4

28. Setting the Stage Now! VIII

29. Options Development – Now! • Teacher • Vacancies – Will be filled with subs • Secondary – Efforts will be made to reduce staffing to reflect actual enrollments • Budgeting Guidelines • Vacant positions will not be filled (except for critical positions as determined by the Superintendent) • Dealing with the combination of vacant positions and overstaffing between sites • Staffing will be adjusted downwards to reflect fewer students at CBEDS (except for teachers) • Staffing will not be adjusted upwards per changes in students or square footage • Maximize Grant funding • Move staff from unrestricted resource programs to fill vacancies in restricted programs (do not supplant) VIII-1

30. Options Development – Now! • Restrict use of Budgeted Resources for: • Overtime • Consultants • Travel and Conferences • Limit Purchase of Equipment: • New Equipment • Replace equipment in critical areas only • Cell phones Caution: Vacant positions should not dictate the future structure of the District VIII-2

31. Other Issues with Tight Timelines • Forego New Facilities Operation Costs • Delay Lockeford K-8 • Other Construction Projects • Study Small School Closures for Schools with less than 250 Students • Review Budgeted Shock Absorbers • Begin Down Sizing Departments Supported with Independent Revenues VIII-3

32. Start Planning for Next Year - Now! IX

33. Future Development of Options • Teacher • Fully implement Committed/Growth staffing model • Hire only to the committed projections • Guidelines • Review all staffing formulas • Develop K-8 School Formulas • Implement staffing formulas • Review Textbook Adoptions • Eliminate Carryovers IX-1

34. 2009/10 Planning Process • Board will establish guidelines for planning • Staff will develop strategies for addressing guidelines • Staff will develop recommendations for Superintendent and Budget Advisory Committee’s consideration • Superintendent’s Budget Advisory Committee will review staff strategies and recommendations • Budget will be built using approved budget guidelines, enrollment projections, the Governor’s January budget plan, mid-year adjustments, May revisions by the Governor and Board approve budget reductions IX-2

35. Recommendations • Implement “Options Development – Now” list • Retain shock absorbers • Staff will begin working on “Other Issues with Tight Timelines” • Reporting back to the Board on 11/18/08 • Board direction will be required by December 9, 2008 • Administration will develop a plan for down-sizing staffing to reflect loss of students • If the District continues to experience a loss of students beyond projections, a plan will be developed to down size staff X-1

36. The End!

37. Appendix • 2008/09 Reduction Guidelines & Key Messages • Food Services • Additional Reductions if Necessary • 2008/09 SBAC Budget Reductions – Working Schedules

38. A. Reduction Guidelines & Key Messages

39. 2008/09 Reduction Guidelines • Be efficient • Hire new staff at a slower rate when feasible • Maximize student attendance to increase District income • Utilize all categorical funding opportunities • Strive to keep current permanent and probationary District staff employed • Be compliant with all laws and regulations • Ensure (maintain) safety • Maintain / improve student test results and academic performance • Avoid future unfunded costs without jeopardizing other funding * Approved by Superintendent’s Budget Advisory Committee on January 23, 2008 A-1

40. 2008/09 Key Messages • Restrict General Fund conferences and travel beginning 2/25/08 • Delay the hiring process in some vacant positions • Not fill some vacant positions • Maximize use of categorical funds • Limit food for meetings to water, coffee and snacks • Decrease expenditures for equipment • Maintain employment of existing probationary and permanent staff • Honor 2008/09 agreement with employee groups • Open Podesta Ranch Elementary School on time • Reduce site General Fund carryover to 10% (vs. current 15%) (submit hardship appeal, if necessary) A-2

41. B. Food Services

42. Ala Carte Sales 07-08 08-09 • Following state requirements, we are no longer selling soda in our ala carte lines. • This accounts for $2,500 less in sales each day. B-1

43. Ala Carte Sales 07-08 08-09 • Following state requirements, we are no longer selling soda in our ala carte lines. • This accounts for $2,500 less in sales each day. B-2

44. Ala Carte Sales 07-08 08-09 • Following state requirements, we are no longer selling soda in our ala carte lines. • This accounts for $2,500 less in sales each day. B-3

45. C. Additional Reductions If Necessary

46. SBAC – If Additional Cuts Are Necessary RESTORATIONS DESCRIPTION FTE AMOUNT Comments 1. 2.25 $ 234,106 K-6 Vice Principals Program improvement (half) 2. 2.57 252,695 Elkhorn Site Operations Close Elkhorn 3. 129,600 Co-Curricular - Transportation Eliminate Transportation 4. 2.00 123,758 Senior High Teachers Reduce planned reserve 5. 1.00 133,848 7-8 Vice Principal .50 FTE Morada & Delta Sierra 6. Summer School - 51,870 Reg. Ed. Transp K-8, From summer school 7. 1.00 105,117 Grant Writer Eliminate position 8. TOTAL 8.82 $ 1,030,994 C-1

47. D. 2008/09 SBAC Budget Reductions – Working Schedules

48. SBAC - Work • The Superintendent’s Budget Advisory Committee (SBAC) began its work with a goal of reducing the budget by $8.2M. • Using staff’s list and adding their own thoughts, a $7.1M potential reduction list was in progress. The Committee had not completed nor taken action on this list prior to the Governors May revision. • After the May Revise it was determined the necessary reductions would be $4.5M. • The SBAC was given this new goal and completed its work with a recommendation for the Superintendent’s consideration. • The SBAC took further action on $1M and prioritized that list, should more reductions be necessary. D-1

49. Budgets Retained From 2007/08 WORKING OPTIONS SBAC OPTIONS DESCRIPTION FTE AMOUNT FTE AMOUNT Comments I. POSSIBLE APPROPRIATION REDUCTIONS A. Hand Sanitizer $90,000 $90,000 B. Podesta Ranch Opening/Program 0.16 12,863 0.16 12,863 Delay hiring of Princ/Sec. 1 mo. 0.08 3,000 0.08 3,000 Delay hiring of /Sec. additional 1 mo. C. Unallocated Growth 0.43 24,130 0.43 24,130 D. McNair Startup Supplies 281,000 181,000 181,000 Reduce allocation l Textbooks 140,000 125,000 125,000 Use to support districtwide prgm l Theater Staffing 1.00 82,437 1.00 82,437 Delayed opening l Supplies 39,985 39,985 Delayed opening l Theater Startup 123,000 l E. Mosher Library 25,000 - Per Assist. Supt. l Literacy Closet 10,000 5,000 5,000 Per Assist. Supt. l Startup Supplies 13,250 5,000 5,000 l F. Woodbridge 25,928 10,000 10,000 Startup Supplies G. McAuliffe 55,397 30,000 30,000 Library books H. Total Possible Appropriation Reductions 1.67 608,415 1.67 608,415 D-2

50. Instruction, On-Going Options WORKING OPTIONS SBAC OPTIONS DESCRIPTION FTE AMOUNT FTE AMOUNT Comments A. 4.50 4.50 K-6 Vice Principals $ 468,212 $ 468,212 Program improvement (half) B. Grade 3 Teachers 43.88 3,564,197 CSR - Grade 3 only CSR - Income (2,355,129) C. Site Operations 1.22 95,128 Close Turner D. Site Operations 1.22 95,128 Close Clements E. Principals Salaries 34,471 Reduce workyear by 2 days Elkhorn Site Operations 2.57 252,695 2.57 252,695 F. Close Elkhorn site Principals Salaries 1,250 G. Reduce workyear by 2 days H. Teachers (grades 4-6) 6.87 425,109 6.87 425,109 Increase class size by 1 I. 7-8 Vice Principal 1.00 133,848 1.00 133,848 .50 FTE Morada & Delta Sierra J. Middle School Teachers 5.26 325,484 5.26 325,484 Increase class size by 1 K. Principals Salaries 6,790 Reduce workyear by 2 days Roll fixed allocations into L. Senior High Teachers - - variable formula M. Senior High Teachers 9.40 581,663 9.40 581,663 Increase class size by 1 N. Senior Project - Eliminate Grad. Req. 4.80 297,019 4.80 297,019 CSR & Release period O. Senior High Teachers 2.00 123,758 2.00 123,758 Reduce planned reserve P. Freshman Sports Cut some sports? Q. Principals Salaries 6,540 Reduce workyear by 2 days D-3