2020 2021 Proposed Budget JUNE 18, 2020 2 BUDGET ADOPTION OMSD - PowerPoint PPT Presentation

2020 ‐ 2021 Proposed Budget JUNE 18, 2020

2 BUDGET ADOPTION  OMSD Budget Philosophy  District budget is an expression in dollars of the educational program  Serves as an outline for estimated revenue and expenses for the fiscal year  Description of resources available to support the educational plan  Financial plan outlining proposed actions

3 BUDGET ADOPTION  By adopting the 2020 ‐ 21 Proposed Budget, the Board of Trustees will certify the following:  Public hearing on Proposed Budget was held  District meets minimum State reserve levels in current and subsequent two years  Ending general fund balance in excess of reserve is identified  State ‐ adopted Criteria and Standards were utilized for budget development

4 2020 ‐ 2021 STATE BUDGET Possible Mid ‐ Year Governor’s Budget Fiscal Year Begins Budget Adoption Governor Newsom’s May May Revision Adjustments Revision announcement was on May 14 th . This is the basis for our Adopted Budget May Jan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec 1 st 6 months of Budget Year Proposals and Deliberations

5 2020 ‐ 2021 BUDGET TIMELINE First Second Estimated Adopted Interim Actuals Interim Budget (TBD) (TBD) (TBD) (June 18, 2020) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2020 2021

6 MORE INFORMATION COMING  May Revision gives us important anchors for state and local budgets that must be adopted by July 1, 2020  Additional information coming  Final State budget adoption  Unemployment rates change  Personal Income Tax (PIT) revenue  State will likely need to revise its Budget when more information becomes available later this summer

7 ESTIMATED ACTUALS HIGHLIGHTS  Current Year Assumptions (2019 ‐ 2020)  Average daily attendance (ADA) based on attendance data through February 29, 2020  One ‐ Time Special Education Early Intervention Preschool Grant  $8.4m Transfer In from Funds 17 and 40 to purchase over 20,000 student devices and replace staff devices  Phone system/Voice over Internet Protocol (VoIP) installation complete

8 ESTIMATED ACTUALS HIGHLIGHTS  Current Year Assumptions (2019 ‐ 2020)  Impact of COVID ‐ 19  Spending reduced for final quarter leading to a larger ending balance than anticipated (substitutes, contracts, supplies)  However, there were costs related to COVID ‐ 19 (learning packets, cleaning, PPE, etc.) that offset the savings from above  Food Services fund balance lower due to reduced participation

9 PROPOSED BUDGET HIGHLIGHTS  Budget Year Assumptions (2020 ‐ 2021)  Local Control Funding Formula (LCFF) COLA set at 2.31%, but then offset by 10% reduction  Reduction of approximately $22.6 million from May Revision proposal  2020 ‐ 2021 AB602 Special Education base funding increase  Increase in Property and Liability rates  Cash Deferrals Return!

10 PROPOSED BUDGET HIGHLIGHTS  Federal CARES Funding  Estimated $6.6M (ESSER funding, net of private school $)  Currently budgeted to backfill Fund 17 and Fund 40 contributions for purchase of 20,000 student Chromebooks at $6.2 million  Remaining $14M ‐ $19M (Special Ed + Learning Loss) – not included in Budget as of yet.  Awaiting legislature/Governor agreement on final terms  OMSD range dependent on outcome of ‘Concentration’ compromise  Restrictions on spending likely  Must be spent by December 30, 2020

11 ENROLLMENT Every year, the District 23,500 Students works with a firm that 22,767 specializes in 22,521 enrollment and 22,500 demographic 21,952 projections. 21,665 These projections are 21,500 21,100 used for multiple purposes, including 20,606 the estimation of 20,500 20,089 Average Daily Attendance (ADA) and 19,595 facilities needs. 19,368 19,500 Budget The projections at left 18,733 Year are based on Year 2 Estimate 18,500 18,276 Estimate information from the Year 3 most recent Year 4 Estimate Estimate enrollment projection 17,500 report, prior to COVID ‐ 19

12 REVENUE VARIABLES LCFF = Local Control Funding Formula The Local Control Funding Local Control Funding Formula grants Formula was enacted in 2013–14, and it replaced the previous K–12 finance system (OMSD largest source of revenue) which had been in existence for roughly 40 years. Enrollment COLA* UPP* The LCFF establishes base, supplemental, and • 2020-21: -494 • 2020-21: -7.92% • 2020-21: 88.78% concentration grants in place of previously existing K–12 • 2021-22: -227 • 2021-22: 2.48% • 2021-22: 88.57% funding streams. • 2022-23: -635 • 2022-23: 3.26% • 2022-23: 88.13% Funding Factors: • 2023-24: -457 • 2023-24: 1.80% • 2023-24: 87.69% Average Daily Attendance (ADA) – a function of enrollment *Cost of Living Adjustment *Unduplicated Pupil Cost of Living Adjustment Count (COLA) Supplemental and Concentration Grants – UPP

13 2020 ‐ 21 LCFF FUNDING FACTORS

14 CASH DEFERRALS End of the month on the calendar, but also month ‐ end payroll

15 EXPENDITURE VARIABLES  Compensation Costs  Staffing changes Salary and Benefits  Step/Column costs (Compensation Costs)  Pension (STRS/PERS) cost changes represents approximately 81% of  Employer Health/Welfare costs the General Fund  Other Budget  Utilities  Inflation  Operating costs  Technology costs

16 Decrease to COMPENSATION COSTS Pension PERS/STRS by $633K in 2020 ‐ 21 Salaries and Benefits 240,000,000 $235.5m $233.0m $228.3m $225.9m $224.5m $220.4m $219.7m 220,000,000 $206.7m 200,000,000 $193.7m $188.1m 180,000,000 Budget Year $167.1m Year 2 Estimate Estimate 160,000,000 Year 3 Estimate Year 4 Estimate 140,000,000 120,000,000 100,000,000

17 PENSION COSTS (PERS/STRS) Year 2 Estimate

18 FACTORS OF DEFICIT BUDGET  Before the year begins, new compensation expenses increase by the equivalent of a 2.0% salary increase  Expected 2020 ‐ 2021 budget changes:  Step/Column salary increases 2.0%  PERS rate increases 1.0%  STRS rate decrease (1.0)% Total new compensation 2.0%   Comparatively, the projected COLA in 2020 ‐ 2021 is (7.92)%  Declining enrollment reduces LCFF revenue

GENERAL FUND (FUND 01) 19 2020 ‐ 2021 PROPOSED BUDGET UNRESTRICTED GENERAL FUND ‐ PROJECTIONS 2020 ‐ 21 2021 ‐ 22 2022 ‐ 23 2023 ‐ 24 Beginning Balance 54,978,660 34,048,614 23,485,352 20,143,980 Revenues 211,108,106 217,692,671 230,180,402 204,413,916 Expenditures 232,038,152 228,255,934 233,521,773 235,431,229 Net Increase (Decrease) (20,930,046) (10,563,262) (3,341,372) (31,017,312) Ending Balance 34,048,614 23,485,352 20,143,980 (10,873,333) Components of Fund Balance Minimum Reserve (3%) 8,398,945 3.0% 8,286,647 3.0% 8,436,276 3.0% 8,485,342 3.0% Board Reserve (add'l 14%) 39,195,073 14.0% 38,671,015 14.0% 39,369,284 14.0% 39,598,260 14.0% Budget Stabilization (17,482,888) ‐ 6.2% (27,409,795) ‐ 9.9% (31,599,065) ‐ 11.2% (62,894,419) ‐ 22.2% Site Carryover 3,593,490 1.3% 3,593,490 1.3% 3,593,490 1.3% 3,593,490 1.3% Other Restrictions 343,994 0.1% 343,994 0.1% 343,994 0.1% 343,994 0.1% 34,048,614 23,485,352 20,143,980 (10,873,333) 12.2% 8.5% 7.2% ‐ 3.8%

GENERAL FUND (FUND 01) 20 2020 ‐ 2021 PROPOSED BUDGET UNRESTRICTED GENERAL FUND ‐ PROJECTIONS 2020 ‐ 21 2021 ‐ 22 2022 ‐ 23 2023 ‐ 24 Beginning Balance 54,978,660 34,048,614 23,485,352 20,143,980 Revenues 211,108,106 217,692,671 230,180,402 204,413,916 Expenditures 232,038,152 228,255,934 233,521,773 235,431,229 Net Increase (Decrease) (20,930,046) (10,563,262) (3,341,372) (31,017,312) Ending Balance 34,048,614 23,485,352 20,143,980 (10,873,333) Components of Fund Balance Minimum Reserve (3%) 8,398,945 3.0% 8,286,647 3.0% 8,436,276 3.0% 8,485,342 3.0% Board Reserve (add'l 14%) 39,195,073 14.0% 38,671,015 14.0% 39,369,284 14.0% 39,598,260 14.0% Budget Stabilization (17,482,888) ‐ 6.2% (27,409,795) ‐ 9.9% (31,599,065) ‐ 11.2% (62,894,419) ‐ 22.2% Site Carryover 3,593,490 1.3% 3,593,490 1.3% 3,593,490 1.3% 3,593,490 1.3% Other Restrictions 343,994 0.1% 343,994 0.1% 343,994 0.1% 343,994 0.1% 34,048,614 23,485,352 20,143,980 (10,873,333) 12.2% 8.5% 7.2% ‐ 3.8%

21 CERTIFICATION  A Positive Certification requires a minimum 3% reserve is required in all 3 years  To achieve Positive Certification:  Include Department of Finance revenue COLA of 2.48% and 3.26% in 2021 ‐ 22 and 2022 ‐ 23  Draw down nearly all of one ‐ time set ‐ aside funds totaling $37 million

22 ONE ‐ TIME FUNDING One ‐ time Funding Sources Fund 17 ‐ Textbooks 2,441,707 Fund 17 ‐ Retiree Benefits 2,992,898 Fund 17 ‐ Pension Reserve 9,679,824 Fund 20 ‐ Retiree Benefits 8,385,359 Fund 40 ‐ Technology 552,651 Fund 40 ‐ Facilities 7,591,346 OPEB Trust (4 years @ $1.5) 6,000,000 Total 37,643,785