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Overview of the 2014-15 Budget and Governor’s May Revision Implications for Education

This presentation outlines the key elements of the State Legislature's approved 2014-15 budget and the implications of the Governor's May Revision. Key topics include local control funding formula (LCFF), CalSTRS pension obligations, budget uncertainties, and funding for educational mandates. The Superintendent's recommended budget focuses on achieving a balanced budget while maintaining the required minimum reserve levels. Additionally, there are updates on specific programs like the Career Pathways Trust Fund, Early Childhood programs, and the Proposition 39 Energy Efficiency Grant Funds.

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Overview of the 2014-15 Budget and Governor’s May Revision Implications for Education

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Presentation Transcript

  1. Presentation Agenda • Opening Remarks • Implications of the Governor’s May Revision • State Legislature Approved 2014-15 Budget • Multi-Year Assumptions & Budget Uncertainties • Superintendent’s Recommended Budget • Cash Flow Schedule • Tax Revenue Anticipation Notes (TRANs) Loan Implications • Next Steps

  2. Implications of the Governor’s May Revision • Governor maintains Local Control Funding Formula (LCFF) as proposed in January 2014 • No additional programmatic funding • Stakeholders assume CalSTRS unfunded liability immediately effective July 1, 2014 • Establish a Rainy Day Fund • Continues to buy down “wall of debt”

  3. State Legislature Approved 2014-15 Budget • Mandates • $400.5 million towards funding of prior mandate claims on per average daily attendance basis • Can be used for one-time purposes with legislative intent that funds be dedicated to implementation of Common Core, English Language Development (ELD) Standards, Next Generation Science • Increased Ongoing LCFF Funding • $250 million towards implementation of LCFF above Governor’s proposed $4.5 billion • Awaiting gap funding percentage from Department of Finance expected at 29% from 28% at May Revise • CalSTRS • Governor’s proposed employer contribution rate of 1.25% reduced to 0.63%. Employer contribution rates increased in 2014-15 from 8.25% to 8.88%

  4. State Legislature Approved 2014-15 Budget • Local Reserves • New transparency requirements on assigned and unassigned fund balances starting with the 2015-16 budget adoption • Local district fund balances maximum provisions subject to the voter-approved Rainy Day Fund • Local reserve caps would only go into affect in years when the state actually puts money into the new State Proposition 98 reserve (Note: There are strict preconditions at the state that would have to be met to trigger the cap on the district reserves) • CTE Career Pathways Trust Fund • $250 million in one-time funds for this competitive grant program • Early Childhood Program • $155 million in Proposition 98 and $100 million in non-Proposition 98 additional funding for preschool and general slots, elimination of part-day preschool family fees, and quality improvement competitive grants • Revised qualifications and levels of experience for lead teachers placed in TK classrooms after July 1, 2015 • Proposition 39 Energy Efficiency Grant Funds • Reduction of $28 million, bringing statewide total for K-12 grants for 2014-15 to $279 million

  5. San Diego County Office of Education • San Diego County Office of Education (SDCOE) guidance letter dated June 5, 2014, recommends Department of Finance LCFF gap funding percentages • Pending Governor’s budget approval • California Legislature approved budget on June 15, 2014 • Governor scheduled to sign budget in San Diego on June 20, 2014 • Budget must be submitted to SDCOE by July 1, 2014 • The district is required to revise the adopted budget and submit to SDCOE within 45 days of state budget adoption,if there are significant changes

  6. Multi-Year Assumptions – Revenues

  7. Multi-Year Assumptions – Expenditures

  8. Multi-Year Assumptions and Reserves Requirements

  9. Superintendent’s Recommended Budget • The Superintendent’s recommended budget accomplishes the following important goals • Provide for a balanced budget • Manages multi-year deficits • Supports successful TRANs issuance in mid-July • Maintains state-required 2% minimum reserve level and board fund balance policy • Aligns with guidance provided by SDCOE memo dated June 5, 2014 • Supports Superintendent’s vision for quality schools in every neighborhood

  10. 2014-15 Budget –Multi-Year Projections General Fund Unrestricted

  11. 2014-15 Budget Solutions

  12. Other Restricted Funds – 2013-14 Estimated Actuals * June 10, 2014 Board meeting- slide was presented with “2014/15 Proposed Budget’ header, this has been revised to “2013/14 Estimated Actuals”

  13. Other Restricted Funds – 2014-15 Proposed Budget

  14. Other Fund Challenges • Cafeteria Fund 13 • Pending State Audit findings • Property Management Fund 40 • Loss of lease revenues due to property sales • State School Facilities Fund 35 • Limited resources to sustain ongoing expenditures (Routine Restricted Maintenance (RMM) $16 million starting in 2014-15)

  15. CalSTRS Pension Unfunded Liability Proposal • Impact to San Diego Unified General Fund Unrestricted

  16. 2014-15 Cash FlowBased on Estimated $200 million TRANs

  17. 2014-15 Tax Revenue Anticipation Notes • Estimated at $200 million or less • Resolution to Board on June 24, 2014 • Subject to EPA and LCFF entitlement adjustmentat P-2 certification, anticipated in July • Credit rating presentation in July • Early August close

  18. Next Steps • June 30 Submission of Budget to SDCOE • July 1 Implementation of 2014-15 Budget • Mid-July TRANs Issuance • July 29 Report to Board on Amended 2014-15 Budget, as a result of State Budget Adoption

  19. Questions?

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