2010-11 State Adopted Budget

LODI UNIFIED SCHOOL DISTRICTBusiness Services/Budget Department 2010-11 State Adopted Budget Board of Education October 19, 2010 Prepared by: Dr. Cathy Nichols-Washer Douglas Barge Carrie Hargis Y:\Business Services\Budget\2010-11\Adusted\Meetings\B10-19-10\10-11 State Adopted B10-19-10.ppt

DESCRIPTION i Table of Contents PAGE # • Opening Comments A1 – A2 • Revenue Limit B1 – B3 • Cash Flow C1 – C3 • Other Funds D1 – D4 • Budget Balancing Tools E1 – E2 • Categorical Programs F1 • Wrapping it Up G1 i

A1 Opening Comments • School District Governing Boards are required by Education Code 42127 to adjust their budgets within 45 days of the State adopting a budget plan • This report is the first step in the process • Staff will be reporting the major elements of the State Adopted budget that affect the Lodi Unified School District • On November 3, staff will report the impact of the State budget plan on the District and present recommendations for changing the District budget • Formal Board action to adjust the District budget will be presented on November 16

A2 Opening Comments • This report will focus on changes to the education budget based on what the State has for us • As with any State budget there are significant pluses & minuses • Pluses: • Fewer reductions than were being proposed back in May • Some new funding (one-time) • Minuses, lots and lots of minuses: • Retains huge deficits • Suspends Prop 98 • Sales of State assets to create one-time resources, which will require on-going expenditures (rents) • By all accounts the income assumptions have high risks • Does not address the long term structural balancing at the State level

B The 2010/11 Revenue Limit

Revenue Limit Deficit B1 2008/09 2009/10 2010/11 Adopted Change #1 Adopted Change #2 (.39%) Or $25

B2 Revenue Limit Deficit Factor • Revenue Limit is being increased by $1.5 B in 2010/11 • This increase amounts to about $246 per student • This is a reversal of the Governor’s proposal made back in May • The question of one-time verses on-going is still being researched by staff (.39%) Or $25

K-12 Revenue Limit Cola (.38%) Cola (.39%) Cola (.39%) 18.355% 18.355% 17.963% B3 Deficit Deficit Deficit ($1,147) Good Stuff Governor’s Jan. Proposal For 2010/11 Governor’s May Proposal For 2010/11 2010/11 State’s Adopted Budget

C Cash Flow

Aug 11 Aug 11 Apr 11 Apr 11 Mar 11 Feb 11 Jul 11 Jul 11 Jun 11 Jan 11 Nov 10 Oct 10 Sept 10 Aug 10 Sept 09 July 10 May 11 Dec 10 Dec 10 C1 2010/11 Cash FlowState Delays Paying Schools 9% 4.5% 4.5% 3% 6% 9% .5% 8.5% 25% of my cash next year? 9% 9% 9% 9% 9% 5% 5% C 1

C2 State Funding Allocations

C3 The Cash Flow Problem Panic Time

D Other Programs

D1 Special Education • The budget plan restores the loss of funding resulting from a negative COLA (.38%) • Growth Funding is provided • Mandate turmoil related to mental health services continues at two levels • Who provides the services? • How are they to be paid?

D2 Mandated Programs • These have historically been an extremely unreliable revenue stream • The May budget proposals contained only a few token dollars • This has changed with the new State Adopted budget for 2010/11 • There is “Settle Up” funding for 2009/10 payments • There is some funding for 2010/11 • The amounts coming to the District are not known and should be considered one-time resources

Kindergarten Entry Age D3 • SB 1381 (Chapter 705/2010) changes the date for students starting kindergarten – they must turn five on or before: • December 2 for the 2011/12 school year • November 1 for the 2012/13 school year • October 1 for the 2013/14 school year • September 1 for the 2014/15 school year and each school year thereafter • Requires school districts to offer a transitional kindergarten program, which is phased in over three years beginning in 2012/13 • Defines transitional kindergarten as the first year of a two-year kindergarten program • Uses curriculum that is age and developmentally appropriate

STRS Program is actuarially out of balance over the long term Rate increases are likely in the near future There will be other changes to the program Legislation will be required to increase contribution rates PERS Program is actuarially out of balance over the long term, as well Rate are going up D4 PERS & STRS Costs

E Budget Balancing Tools

E1 Flexibility Available • Expires January 1, 2012: • Proceeds from the sale of surplus property may be used in the General Fund – Ends June 30, 2012 • Expires June 30, 2012: • Minimum reserve requirements • Reduced penalties for K-3 CSR • Expires June 30, 2013: • Standard aligned instructional materials sufficiency • Base year of 2007/08 for ADA-Funded flexible programs (adult ed., ROP & others) 8

E2 Flexibility Available • Expires June 30, 2013 (cont.): • Routine Restricted Maintenance set aside reduced to zero (except for what is necessary for Williams compliance) • Deferred Maintenance hardship funding suspended • Suspension of Deferred Maintenance local match requirement • Tier III Categorical Program flexibility • Reduction of school year by up to five days and/or equivalent in instructional minutes • Suspension of instructional materials adoption requirement 8

F Categorical Programs

F1 Program Changes • Federal Jobs Program: • First 90% of funding has arrived • Funding may be used to support educational programs and related services • It’s intended for staff • Remaining funding may not equal the full 10% • State Fiscal Stabilization Fund (SFSF) • Final allocation adjustments will be coming to the District • Could be between $40 & $50 per ADA • This is one-time funding 6

G Wrapping It Up

G1 Conclusion • Our next report will provide recommendations for adjusting our budget • State Categorical Tier III flexibility will be coming to an end soon • There are a lot of unknowns • Funding is not guaranteed • Requirements may or may not change • Mandated income should not be budgeted until it arrives • Federal Job program provides only one-time resources • A plan can be put together to fulfill our negotiated agreement with LEA 10

The End!

2010-11 State Adopted Budget