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Presented by Gary Rutherford, Ed.D. Superintendent February 24, 2009

UPLAND UNIFIED SCHOOL DISTRICT Charting a Safe Course During a State Fiscal Crisis STATE AND FEDERAL BUDGET UPDATES. Presented by Gary Rutherford, Ed.D. Superintendent February 24, 2009.

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Presented by Gary Rutherford, Ed.D. Superintendent February 24, 2009

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  1. UPLAND UNIFIED SCHOOL DISTRICTCharting a Safe CourseDuring a State Fiscal CrisisSTATE AND FEDERAL BUDGET UPDATES Presented by Gary Rutherford, Ed.D. Superintendent February 24, 2009

  2. Following a long delay, the 2008-09 and 2009-10 state budget package finally came together amidst a whirlwind of deal-making and political drama Budget bill language has only recently become available – our initial analysis is derived from briefing with legislative staff, budget language and analyses from state fiscal consultants The information contained in this report is subject to further clarification as information becomes available OVERVIEW AND DISCLAIMERS

  3. Even with a budget package finally in place, the state’s financial condition remains critical. The structural problems at the state level have not been addressed ($11 billion in borrowing, over-stated revenue projections, depends on voter approval). Factors education leaders will continue to consider: State’s credit rating is at junk bond status State revenues are projected to continue dropping through 2009 and into 2010 K-Adult Education will experience historic mid-year and budget year reductions If revenues continue to drop, additional 2009-10 reductions are possible We are monitoring cash flow status on a weekly basis We may have a clearer picture by May Revise THE STATE OF THINGS

  4. Adopted budget is a two-year package: 2008-09 mid-year K-Adult reductions and deferrals 2009-10 reductions and deferrals Lowers the Prop 98 funding level in the current and budget years Requires voter approval of five special election proposals All must pass in order for the plan to hold together One includes future restoration of Prop 98 maintenance factor (Prop 1C) Special election scheduled for May 19, 2009 THE BUDGET “CORRECTION” PACKAGE

  5. Reduces current year Prop 98 funding by more than $6 billion – via mix of reductions, deferrals and re-designation of funds 2008-09 funding cuts to K-12 = $1.9 billion Eliminates the .68 COLA (no COLA for 2008-09) 50% from revenue limits (about $160 per ADA) 50% from a 15% ($944 million overall) across-the-board cut to specified categorical programs K-ADULT FUNDING: 2008-09

  6. Jan. 20092008-09 Feb. 20092008-09 PROPOSED ADOPTED 5.66% COLA .68%COLA 4.56%CUT 2.63%CUT 2007/08 LEVEL $5,656 $5,544 REVENUE LIMIT FUNDING: 2008-2009 Nov. 20082008-09 $6,138 $5,862

  7. Summary of Proposed State Cuts Elimination of .68 COLA $429,000 4.5% Additional Cut $3,278,887 SUBTOTAL$3,707,887 Summary of Adopted State Cuts Elimination of .68 COLA $429,000 2.63% Additional Cut $1,875,011 SUBTOTAL$2,304,011 Impact on UUSD: 2008-2009

  8. Eliminates $2.5 billion in Prop 98 funding from 5.02% COLA for school districts and county offices – no COLA FOR 2009-10 Additional $530 million reduction to Prop 98 base due to revised 2008-09 base $265 million through cuts to base revenue limit $265 million through cuts to categorical programs $114.2 million savings from elimination of the High Priority School Grant Program K-ADULT FUNDING: 2009-10

  9. 5.02% COLA 5.02% COLA 5.66% COLA 5.66% COLA 4.56%CUT 2.5%CUT .958%CUT 2.63%CUT $5,500 $5,406 REVENUE LIMIT FUNDING: 2009-2010 $6,447 $6,447 PROPOSED ADOPTED Cumulative loss from statutory level = $947 per ADA) Cumulative loss from statutory level = $1,041 per ADA)

  10. Summary of Proposed State Cuts .68 Cut carried forward $429,000 4.5% Cut carried forward $3,278,887 2.5% Additional Cut $1,782,331 Previously identified Cuts $3,900,000 SUBTOTAL$9,390,218 Summary of Adopted State Cuts .68 Cut carried forward $429,000 2.63% Cut carried forward $1,875,011 0.958% Additional Cut $712,932 Previously identified Cuts $3,900,000 SUBTOTAL$6,916,943 Impact on UUSD: 2009-2010

  11. 2008-2009 Adopted Mid Year Cuts Elimination of .68 COLA $429,000 2.63% Additional Cut $1,875,011 SUBTOTAL$2,304,011 2009-2010 Adopted Budget .68 Cut carried forward $429,000 2.63% Cut carried forward $1,875,011 0.958% Additional Cut $712,932 Previously identified Cuts $3,900,000 SUBTOTAL$6,916,943 Impact on UUSD: Base Revenue LimitSummary of Adopted State Budget

  12. The State Solution:Categorical Cuts and Flexibility • Categorical programs are divided into three tiers to protect some and provide flexibility to others • TIER I: No funding reduction, no program flexibility, no statutory requirements waived • TIER II: Funding reduction of about 15% from 2008-09 levels; NO flexibility; must be operated according to current requirements • TIER III: Funding reduction of about 15%; maximum flexibility to shift spending for any educational purpose • Changes start this year and continue until 2012-13

  13. The State’s Solution:Categorical Cuts and Flexibility • TIER I: Child Development, Child Nutrition, EIA, K-3 CSR, Prop 49 after school, Special Ed, Home to School Transportation, QEIA • TIER II: State Testing, ELAP, plus ten others not significant in UUSD • TIER III: All other state categoricals, including Adult Ed, supplemental grants for music, PE, arts, school counseling, PAR, ROP, instructional materials (textbooks), Gr. 9 CSR, GATE, CAHSEE support, CBET, and dozens of others…

  14. There were SOME changes in… • Reduced penalties for K-3 Class Size Reduction • Accessing prior year categorical balances (sweep ups) from 2007-08 only for any educational purpose – with 8 programs excluded • Routine Restricted Maintenance Transfer (reduce transfer from 3 to 1 percent until 2012-13) • Deferred Maintenance – Eliminates local .5% statutory match until 2012-13 • Mega Item categorical flex provision - replaced with broader flexibility package • Instructional materials timelines suspended for two years – must maintain Williams compliance

  15. There were NO changes to… • Current law regarding Reserve for Economic Uncertainty (3 percent) • Minimum number of minutes and the minimum school year remains 180 days • K-Adult mandated cost reimbursement program remains in place – the district will continue to process claims and maintain records

  16. The Nation’s Solution:The Federal Stimulus Package • K-12 will benefit primarily from: • State Fiscal Stabilization Fund (UUSD est. TBD) • IDEA - Special Education (UUSD est. $2,530,000) • Title I – Restricted (UUSD est. $1,135,000) • It is one-time money • Districts won’t see funds until after July 1, 2009 • Unable to factor into 2008-09 budget solution • May not be able to include in 2009-10 budget by June deadline; hope to be able to add in fall • Awaiting instructions from Feds, CDE & County

  17. What does all this mean? • The cuts to the base revenue limit were not as deep as the Governor’s proposal – but they are still the largest reductions in public education’s history and the impact will be devastating • The flexibility to shift state categorical funds to address these losses is not as broad as proposed by the Governor – limiting district’s ability to shift funds to protect our core programs and meet local priorities • In summary, the combination of the cut in the district’s income and the updated “menu” of solution options is no better and no worse than earlier projected. The district has some very difficult decisions to make and implement

  18. More questions than answers… • How will the district’s Supplemental Early Retirement Program affect lay-off decisions? • What does the change in penalties for K-3 CSR mean to districts? • How much of the federal money will make it through to districts – and how much discretion will there be to spend what we receive? • What will happen in the May Special Election… and what is the State’s back-up plan?

  19. Q: How will Upland USD respond? A: We will “stay the course.” • Enhance the bottom line by the spending and hiring freeze implemented in November (this is one-time money) • Conservative, planned deficit spending using supplemental reserves, again a temporary ‘fix’ • Exercise categorical flexibility in state budget with discretion; factor in Federal Stimulus Package once confirmed

  20. How will Upland USD respond? • Identify additional revenue sources • Identify additional cuts in spending • Seek negotiated solutions with employees • Hope for the best; plan for the worst • Communicate and stay focused • Advocate, advocate, advocate www.capta.org www.protectourstudents.org www.csba.org

  21. Early - Issue lay-off notices to 78.5 certificated March non-management employees - Issue release/reassignment letters to all certificated administrators Mid - Issue lay-off notices to classified March employees (number & positions TBD) April - Make decision re: SERP program participation Ongoing - Monitor budget & revisit lay-off actions May - Analyze Governor’s May Revise By June - Adopt 2009-10 Budget NEXT STEPS

  22. www.upland.k12.ca.us Email: budget@upland.k12.ca.us

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