2014-15 First Interim Financial Report Board of Education December 9, 2014
The Board Approves the District’s First Interim Financial Report and Resolution Reflecting the District’s Budget Status from July 1 through October 31, 2014 December First Interim Submittal Out of Sync with January Timing for Governor’s Budget Proposal First Interim Must Be Based on Current Level Funding Assumptions Education Code §42130 Requires Approval in a public session by December 15, 2014 The Board is Also Certifying That the District’s Projected Financial Outlook for 2014-15, 2015-16 and 2016-17 is One of the Following Certifications: Positive– District Will Be Able to Meet Its Financial Obligations Qualified– District May Not Be Able to Meet Its Financial Obligations Negative– District Will Be Unable to Meet Its Financial Obligations Staff Recommends No Change From Second Interim Status (2013-14) Qualified Status for First Interim Report 2014-15 Due to insufficient information in December 2014 prior to Governor’s January budget proposal 2
Why Qualified? No Status Change Since Second Interim, 2013/14 December’s First Interim Submission out of sync with January Timing for Governor’s Proposed Budget “Sustainable Qualified” Updated Deficit Projections by Staff will be prepared in January Implications of Remaining Qualified Requires Third Interim Report to SDCOE only if not Positive by Second Interim SDCOE Advanced Review of all Bargaining Agreements SDCOE Approves Requests for Short Term Lending (TRANs) 3
REVENUE ASSUMPTIONS Description 2014/15 2015/16 2016/17 LCFF Funding Model Funded ADA 104,818 103,268 101,697 COLA* 0.85% 2.19% 2.14% Funding Gap* 29.56% 20.68% 25.48% Grade Span Adjustment (GSA) $(8.0) Mil Federal : Impact Aid $8.0 Mil $8.0 Mil $8.0 Mil Other State Mandated Cost Reimbursement $3.8 Mil $ 3.7 Mil $ 3.7 Mil Mandated Cost Reimbursement (one-time) $7.1 Mil Lottery* (GFU- $128; GFR- $34) $162/ADA $162/ADA $162/ADA Local : Interest 0.36% 0.36% 0.36% Transfers In Redevelopment Agency (RDA) $10.3 Mil $10.3 Mil $10.3 Mil Sale of Property $28.4 Mil Vision $1.4 Mil Retiree $0.4 Mil $0.4 Mil $0.4 Mil 4 * San Diego County Office of Education (SDCOE) and School Services of California (SSC)
EXPENSE ASSUMPTIONS Description 2014/15 2015/16 2016/17 Salaries Step and Column: Cert / Class 1.79% / .65% 2.06% / .65% 2.06% / .65% Restoration: Cert Non-Mgmt / Cert Mgmt / Class* 5% / 2% / 0% 0% / 0% / 0% 0% / 0% / 0% Reinstate Furlough Days: Cert/Class* .54% / 0% 0% / 0% 0% / 0% STRS 8.88% 10.73% 12.58% PERS 11.77% 12.60% 15.00% Health & Welfare Premiums 7.00% 7.00% 7.00% Materials & Supplies ( Consumer Price Index- CPI ) 2.10% 2.30% 2.50% Contracted Services (CPI) 2.10% 2.30% 2.50% Utilities 5.00% 5.00% 2.00% Implemented Board Solutions/Budget Deficit $106.4 Mil $81.4 Mil $88.1 Mil Transfers Out Liability Insurance $3.5 Mil $3.5 Mil $3.5 Mil Property Insurance $3.3 Mil $3.3 Mil $3.3 Mil Child Development $3.5 Mil $2.0 Mil $2.0 Mil Retiree $0.6 Mil $0.6 Mil $0.6 Mil Contributions Special Education $191.8 Mil $193.2 Mil $196.2 Mil Restricted Routine Maintenance (RRM) $27.8 Mil $36.4 Mil $36.4 Mil Community Day School $1.8 Mil $2.0 Mil $2.1 Mil Transportation $10.1 Mil $10.2 Mil $10.3 Mil 5 * Subject to change based on negotiation
Description 2014/15 2015/16 2016/17 Economic Uncertainties- 2% $24.0 Mil $23.4 Mil $23.7 Mil Unexpended Set-Asides and Reserves: Mandates $7.1 Mil $0 Mil $0 Mil School designated contributions $4.5 Mil $4.5 Mil $4.5 Mil Stores Inventory $1.7 Mil $1.7 Mil $1.7 Mil Prepaid Expenses $0.9 Mil $0.9 Mil $0.9 Mil Revolving Cash Funds $0.06 Mil $0.06 Mil $0.06 Mil Subtotal $38.26 Mil $30.57 Mil $30.86 Mil 6
SDUSD % Change Fiscal Year Average Year Over ADA Year 2008-09 111,862 (.92)% 2009-10 110,836 (.44)% 2010-11 110,347 (1.00)% 2011-12 109,241 (1.61)% 2012-13 107,486 2013-14 106,110 (1.28)% 2014-15* 104,818 (1.22)% 2015-16* 103,268 (1.48)% 2016-17* 101,697 (1.52)% * Projected 7
Supplemental and Concentration Grants High-need eligible students Low Income English Learners Foster Youth Unduplicated Percentage Variable in the funding formula Current value is 62.5% Alternative family income surveys essential to receive funding Data submittal to State due December 12 8
Local Control Funding Formula requires school districts to make progress toward maintaining an average class enrollment of no more than 24 students for each school site in K-3 grades, unless a collectively bargained alternative annual average is agreed to by the school district Individualized for each elementary school Dependent on State funding Can be changed based on a negotiated agreement with the teachers’ bargaining unit Risk of $8 million penalty included in First Interim assumptions 9
Governor’s Approved Budget $400.5 million towards funding of prior mandate claims on per average daily attendance basis Can be used for one-time purposes District entitled to $7.1 million Reflected in reserves for 2014-15 for purposes of 2015-16 deficit The State Controller will apply amounts against any balances of unpaid claims for reimbursement of state-mandated local programs in chronological order beginning with the earliest claim State Controller to pay in two installments 90% November 10% March Continued Advocacy for 2015-16 Budget Current Balance due to the District is: $68.6 million 10
ORIGINAL BUDGET GROSS REVENUE NET REVENUE OVERAGE CLOSE (millions) (millions) (millions) (millions) DATE 2013/14 Carryover Budget Solutions Bay Terraces #11 $2.40 $2.70 $2.70 $0.30 Nov. 3 2014 Camp Elliott #3 $2.70 Board Action Not To Sell Property ($2.70) N/A Stevenson Elementary $8.60 $13.20 $13.10 $4.60 Dec. 15, 2014 2013/14 Carryover Budget Solutions $13.70 $15.90 $15.80 $2.20 2014/15 New Sales Benchley TBD Cleveland TBD Real Estates Sales $7.30 FY 2014-15 ANTICIPATED REVENUE $21.00 $15.90 $15.80 $2.20 According to Education Code 17462, the property sale proceeds have been utilized to offset an operational deficit for fiscal year 2014-15 and will not result in ongoing expenditures. 11
Monthly Board Items Launch First Learning Cycle Safe and Well Maintained Facilities Physical Environments Social Environments Broad & Challenging Curriculum Quality Leadership Quality PD Supportive Environments that Value Diversity Advisory Meetings DAC, DELAC, AAAE, LAC, CAC (SpEd), CAC (SDEA), GATE DAC, ASB President’s Council, CSEA/ POA Monthly Mtg, PTA Exec Bd, Panasonic Foundation, LCAP Large Group, LCAP Metrics School Cluster Conversations 12
Redirecting current resources to the classroom TK-3 Class Size Allocation High School Counselors Common Calendar Common Core Supports School Site Specialty Programs (Biliteracy, International Baccalaureate) 13
2014/15 2015/16 2016/17 DESCRIPTION PROJECTIONS PROJECTIONS PROJECTIONS -1- -2- -3- -4- Beginning Balance $95,981,513 $50,528,351 $30,573,659 Revenues 893,387,872 920,669,364 953,227,001 Expenditures (736,905,382) (781,455,660) (797,327,679) Budget Deficit Solutions 2015/16 81,360,944 Budget Deficit Solutions 2016/17 88,119,724 TOTAL EXPENDITURES (736,905,382) (700,094,716) (709,207,955) Other Sources / Uses (201,935,652) (240,529,340) (243,727,046) Ending Balance $ 50,528,351 $ 30,573,659 $30,865,659 SURPLUS/(DEFICIT) ($45,453,162) (19,954,692) 292,000 Required Reserves Economic Uncertainties $24,019,000 $23,431,000 $23,723,000 Unexpended Balances / Set Aside - - - School Site Ending Balances 11,660,631 4,560,631 4,560,631 Stores 1,674,228 1,674,228 1,674,228 Prepaid Expenses 850,000 850,000 850,000 Revolving Cash 57,800 57,800 57,800 Total Required Reserve $38,261,659 $30,573,659 $30,865,659 Reserve (Shortfall) / Surplus $12,266,692 $0 $0 Multi-Year Projection involves hybrid approach to include 2015-16 deficit solutions 14
2015-16 Potential Budget Solution Category Solutions in $ Millions Mandates $(19.2) Grant Development $(9.0) Strategic Staffing – Position Review $(3.0) Increase High School Enrollment $(3.1) Early Childhood Enrollment $(2.5) Concentrated Effort with Unduplicated Counts $(1.6) Central Office Program Adjustments $(2.0) Protection Fund Against Layoff/ Program Cuts $0.3 Program Adjustments/ Operational Adjustments $(41.3) Total Potential Deficit $(81.4)M 15
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