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2009-10 Proposed Budget

2009-10 Proposed Budget. Encinitas Union School District. Governor’s Budget 2009-10. 1. This is a year that clearly puts substance ahead of process – virtually nothing in the development of the 2008-09/2009-10 17-month Budget has been normal

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2009-10 Proposed Budget

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  1. 2009-10 Proposed Budget Encinitas Union School District

  2. Governor’s Budget 2009-10 1 • This is a year that clearly puts substance ahead of process – virtually nothing in the development of the 2008-09/2009-10 17-month Budget has been normal • The January Governor's Budget was released in December • The 2008-09 and 2009-10 State Budgets were merged, amended, and adopted together in February • Following the latest Budget adoption in state history last September, the February enactment of the 2009-10 Budget was by far the earliest • Immediately after enactment, it was clear that the Budget was in need of substantial amendment • The special election was held on May 19 with disappointing results • The May Revision proposals have seeped out of the Capitol like molasses in December • And of utmost importance, the economy and unemployment continue to get worse • This is the backdrop for the 2009 May Revision

  3. Governor’s Budget 2009-10 2 • State revenues have fallen dramatically • Expenditures continue to rise on the natural • Borrowing has been more difficult and more expensive than ever before • California continues to lose jobs • More people demand social services – that won't be available – during a downturn • There is no way to “trim around the edges” and not deal with the realities of the imbalance between state revenues and the cost of public services • Nevertheless, there are more cuts to education and all other major areas of the Budget

  4. Governor’s Budget 2009-10 3 • Proposition 98 has been on a rollercoaster ride • Cuts to the revenue limit • Cuts to Categoricals • Flexibility within remaining categorical funding • Withdrawal of Public Transportation Funds with no backfill • Addition of one-time federal funds • Changes to federal MOE requirements • And much more to be detailed later in the program • What does it all mean? • Less of everything for California's children • Coupled with cuts to health and welfare programs, the most vulnerable Californians – mostly children – are in for a very tough year

  5. Governor’s Budget 2009-10 & May Revision Features 4 • The already reduced 17-month Budget adopted in February is reduced by another $24.3 billion • Major cuts to K-12 education, welfare, prisons, and higher education • No suspension of Proposition 98 – not needed as funding floor has dropped • No cost-of-living adjustment (COLA) and a huge deficit factor • Lottery and other special election proposals appear to be dead • More cuts to K-12 – $3.9 billion – between the February Budget and the May Revision • Some additional flexibility anticipated, but not yet approved • Even more funding deferred – placing an even greater burden on cash flow • Dramatically lower funding for every aspect of government services

  6. National Economy & California's Economy 5 • The current recession is the deepest since the Great Depression • The recession began in December 2007 and is now 17 months old • The U.S. unemployment rate is 8.9%, up from 5.8% in 2008 • California's economy is suffering even more than the nation as a whole • The state was at the epicenter of the sub-prime mortgage collapse • Home building fell for the fourth consecutive year in 2008, with housing starts expected to be down 24% in 2009 • The state's unemployment rate is among the highest in the nation at 11.2% in March 2009, up from 6.4% one year earlier • Personal income is projected to decline 1.0% in 2009, the first time it has fallen since 1938

  7. General Fund Revenues 6 • The state economy drives General Fund revenues through three major taxes: personal income tax, sales and use tax, and corporation tax • The collapse of the state and national economies has driven state tax revenues down • Since enactment of the 2009-10 Budget Act on February 20, 2009, baseline revenues (i.e., revenues absent new policy proposals) have dropped further: • -$3.4 billion in 2008-09, a 3.8% shortfall • -$8.9 billion in 2009-10, a 9.1% shortfall • The May Revision proposes to make up this shortfall with more program cuts, fee hikes, revenue accelerations, and borrowing

  8. Borrowing Proposal Dropped 7 • The May 14 release included a proposal to borrow $5.5 billion from the capital markets through a RAW • While in Washington, D.C., the Governor sought federal backing for California's RAWs • His request was apparently turned down • The Legislative Analyst said that using RAWs to balance the Budget, rather than for cash flow, “set a terrible precedent and was poor fiscal policy” • On May 26, the Governor withdrew the RAWs and proposed instead $5.6 billion in additional cuts

  9. Cuts Substitute for Borrowing 8 • The $5.6 billion in cuts include: • Elimination of the California Work Opportunity and Responsibility to Kids (CalWORKs) program, saving $1.3 billion • Reductions to the University of California (UC) and California State University (CSU) of $750 million • Phase out of remaining Cal Grant programs, saving $173 million • Cutting rehabilitative services for inmates, saving $789 million • Other reductions totaling approximately $2.5 billion • K-12 education was not targeted for cuts in this list • However, cuts to UC and CSU will reduce the amount of federal American Recovery and Reinvestment Act (ARRA) funds that are available to K-12 education

  10. Revenue Limits for 2009-10 9 • The May Revision recognizes the statutory COLA at 4.25%, down from an estimated 5.02% in the January Governor's Budget, but does not propose to fund it • The May Revision proposes to cut revenue limits an additional $1.894 billion from the 2009 Budget Act level • The new proposal will result in a base-revenue-limit-per-ADA reduction of 3.45% for the average district in 2009-10

  11. Revenue Limit – Without Deficit 10 • In order to determine your district's funded revenue limit per ADA, you must first determine the undeficited revenue limit, i.e., the revenue limit including the statutory COLA • The appropriate dollar amount must be added to your 2007-08 base revenue limit to determine your undeficited revenue limit per ADA in 2008-09

  12. Special Education 11 • No reductions to special education funding in the May Revision • The Governor proposes to fund $65 million for the Behavioral Intervention Plan (BIP) settlement agreement beginning in 2009-10 as ongoing funding • The estimated per-ADA amount is $10.92 per ADA rolled into AB 602 funding • Legislation is needed to fund the settlement • Federal funding for special education is expected to increase by $53.5 million in 2009-10 based on the 2009 federal budget appropriation funding • This funding is ongoing, and we will provide per-ADA funding amounts as soon as additional information becomes available • This funding is in addition to ARRA funds

  13. Recap of Flexibility 12 • To help offset the impact of categorical program and revenue limit cuts, the February 2009 Budget provided two types of flexibility: • Ending balance sweeps – based on the 2007-08 ending balance for state categorical programs with specific exceptions • These transfers may be executed in 2008-09 or 2009-10, but do not include ending balances accrued after June 30, 2008 • Transfer flexibility for 42 state categorical programs – funds may be transferred from eligible programs to any other educational purpose • Permitted as of 2008-09 through 2012-13 • Plus relaxation of K-3 Class-Size Reduction caps and timelines for purchasing State Board-approved instructional materials

  14. Recap of Flexibility Plus Updates – Tier III Categorical Programs 13 • Funding for 42 programs are permitted to be shifted to any other education purpose as of 2008-09 through 2012-13 • CDE has indicated that this funding will be provided as unrestricted funding and that LEAs may use locally defined codes to track the funds • In addition, SBX3 4 stated that a public hearing is required as a condition of exercising the allowed flexibility; however, CDE has clarified that a hearing is required to receive the funds for the affected programs • This hearing need not be a separate hearing, but may be addressed as part of the regular budget adoption hearing process

  15. Federal Budget Proposals 14 3-18 • President Obama signed the 2009 Federal Budget in March 2009; funding will be built into California's 2009-10 State Budget • The 2010 Budget proposal is in beginning stages of negotiations with Congress Note: California's share is approximately 10%

  16. Effectively Using New Federal Stimulus Funds 15 6-32

  17. Deferrals 16 5-16

  18. What are the Budget Assumptions for EUSD for 2009-10? 7-3

  19. 2009-10 Key Budget Assumptions 17 • Following are key budget assumptions for 2009-10 based on the Governor’s Budget:

  20. Key Budget Assumptions 18

  21. 2009-10 Budget Assumptions 19 • Annual Property Liability Premium of $239,059 • Total Regular Ed. FTE budgeted is 242 • Step and Column is budgeted for Certificated and Classified employees • No salary increases included for any bargaining units • Staffing @ 20:1 for K-3 and 31:1 for 4-6 • Maintain retiree benefits as they now exist • Employer Labor Related Costs: • STRS 8.25% • PERS/PERS Reduction 13.02% • Social Security 6.20% • Medicare 1.45% • SUI 0.30% • Workers Comp. 1.7452% • Health & Welfare $10,680

  22. 2009-10 Budget Assumptions 20 • Utilities Increase of 15% • Funding of $35,000 for safety monitor positions • State Funding of Deferred Maintenance of $186,043. District match of $275,500 will be suspended for one year only • Site allocation of $34.50 per prior year CBEDS enrollment (will be adjusted at 2009-10 CBEDS) • Site allocation of $5.30 per prior year CBEDS enrollment for Media books and supplies • 10 days of teacher sick leave per FTE • Custodial supplies of $300 per classroom • Routine Restricted Maintenance to be funded at 2.5% of total General Fund expenditures if district match toward Deferred Maintenance Fund is suspended for one year • Transportation expense of $471,749

  23. Governor’s Budget Flexibility Proposals & EUSD 21 • The Governor’s Budget includes a number of proposals to provide districts with added flexibility to mitigate the impact of Budget reductions • Proposed flexibility options include: • Reducing required reserves for economic uncertainty – half of required amount for 2009-10 (Definitely the reserve must maintain as established in district philosophy) • Reducing Routine Restricted Maintenance (RRM) reserve from 3% to 1% (The district has reduced RRM approximately by .5% for One year only) • Eliminating required Deferred Maintenance match (The district will save an estimated $275,500 for One year only) • Allowing for complete flexibility of categorical funds • Utilizing prior-year restricted fund reserves, with certain limitations • Note: The Governor’s Proposal has many flexibility opportunities; however, caution should be used in adding back expenditures in future years

  24. Average Daily Attendance

  25. Unrestricted General FundRevenues, Expenditures, and Changes in Fund BalanceJune 30, 2009

  26. Unrestricted General Fund Revenues

  27. Unrestricted General Fund Expenditures

  28. Components of the Ending Fund BalanceJune 30, 2009

  29. Restricted General FundRevenues, Expenditures, and Changes in Fund BalanceJune 30, 2009

  30. Restricted General Fund Revenues

  31. Restricted General Fund Expenditures

  32. General Fund Expenditures(Unrestricted & Restricted)

  33. District Expenditures by Function

  34. Child Nutrition FundJune 30, 2009

  35. Deferred Maintenance FundJune 30, 2009

  36. Special Reserve-Non Capital FundJune 30, 2009

  37. Special Reserve Fund For Post Employment BenefitsJune 30, 2009

  38. Capital Facilities FundJune 30, 2009

  39. Special Reserve-Capital Outlay FundJune 30, 2009

  40. Paul Ecke Central Trust FundJune 30, 2009

  41. Self Insurance FundJune 30, 2009

  42. THANK YOU!

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