EGEA Budget Philosophy

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EGEA Budget Philosophy

• EGUSD School Board
• February 17, 2009

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Objectives

• To explain why we are at impasse
• To explain where we go from here

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Philosophical Differences

• Budgeting should serve educational needs
• Spend this years money on this years students
• Make decisions based on real numbers

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Introduction to Graphs

• Slides 5, 7, 9, and 11 are graphs which show
  different projections of the Unrestricted Ending
  Fund Balance minus the 2 state mandated reserve.
• EGEA has subtracted the 2 reserve in all the
  graphs because this is the number that most
  accurately reflects the money available for
  bargaining purposes.
• The blue bar graphs represent projections made by
  the District.
• The red bar graph represents the actual ending
  balance.
• The blue graphs are extremely important because
  these are the numbers the District uses to make
  bargaining decisions.

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Slide 5 2005-2006

• All 7 projections were under the actual amount
  which came in around 6.3 Million.
• There is a great variance between projections and
  the real number. For instance, in June of 04 the
  District projected an ending balance deficit of
  over 10 million, a difference of over 16
  million from the actual amount.
• Notice the estimated projection, a projection
  made a month prior to the close of the fiscal
  year is not as accurate as the original budget
  made a year in advance. A difference of almost 6
  million form the actual number.

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Slide 7 2006-2007

• All 12 projections were under the actual amount
  which came in at almost 18 million
• 4 projections were for deficit ending balances,
  while the actual number was almost 18 million.
• In November of 2005, the District projected a
  deficit around 4.5 million, a difference of over
  22 million.
• The Estimated Actuals in June of 07, the most
  recent projection compared to the actual, you see
  a difference of almost 12 million.
• 2006-2007 was a pivotal year for bargaining. We
  were in the final year of a 3 year agreement. We
  had contingency language- if more money came in
  from the state, which it did, then we could
  bargain for those additional monies. We were
  meeting regularly during this year for that
  purpose. These projections were considerably off,
  and had a great impact on bargaining.

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Slide 9 2007-2008

• The District made 14 projections, 13 were under
  the actual amount, while 1 was over.
• Again the District projected deficit ending
  balances while the real number was over 23
  million.
• We see a difference of over 31 million from the
  projection made in Nov of 05 and the real number.
• The most optimistic projection made in Oct of 06
  for over 26 million. This projection and many
  others did not include the additional salary
  increase of around 2.4 (7.3) agreed upon in
  April.

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Slide 11 2007-2008

• This slide shows the current year projections.
• There is no red bar graph because there is no
  real number yet.
• Again we see a wide variance in projections with
  a difference of over 43 million between October
  of 06 and March of 08.
• The last projections come form the recently
  e-mailed budget watch projecting a deficit of
  around 600,000.

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Slide 13 Summary Graph

• This graph is a summary of the 4 previous graphs.
  
• The blue line and points represent all the
  District projections and the red stars represent
  the real number.
• For the 3 years that we have a real number
• 32 out of 33 projections were under projected.
• 9 projections were for a deficit ending balance
  while the actual numbers came in at 6, 17, 23
  million.
• Over half (17) projections were off by over 5
  million and almost 25 (8) were off
  by over 10 million.
• The districts projections are consistently and
  considerably under projected. 

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EGEAs Proposals

• The graphs in slides 16, 18 and 20 compare the
  Districts projections to EGEAs calculations for
  salary increase proposals .
• The District projected what the ending balances
  would be if the offers were accepted. These
  projections are once again seen in the blue bar
  graphs.
• EGEA recently calculated what the ending balances
  would have actually been working backwards from
  the real ending balance. These numbers are
  represented by the red bar graphs.

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Slide 15 EGEA Salary Proposal 11/06/06

• In November of 06 EGEA made an offer for a 2
  salary increase (retroactively) for 06/07, 2 for
  07/08 and 1 for 08/09.
• The District projected a little more than 4
  million for 06/07 and 07/08, and our calculations
  show ending balances would have been over 19
  million, a difference of over 15 million.
• For 08/09 the bar is orange because that number
  is based on the 1st Interim number of 08/09 and
  is not a real number. The difference is over 12
  million.
• EGEA believed then it was a reasonable and
  economically sound offer. The District claimed
  they the could not afford this offer. Obviously
  they could.

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Slide 17 EGEA Proposal 2/13/07

• EGEA made another offer in February of 07. No
  salary increase for 06/07, 5 for 07/08,  0 for
  08/09
• Again the blue graphs represent the Districts
  projections made in February of 07 with deficits
  in the years 07/08 and 08/09.
• Our calculations show there would have been a
  surplus of over 25 million in 06/07, over 22
  million in 07/08, and 14 million in 08/09. A
  difference of over 20 million in all three
  projections.
• Yet again, another offer that we felt then was
  reasonable and economically sound was denied due
  to deficit projections.

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Slide 19 EGEA Proposal Accepted

• After many prolonged negotiations and offers that
  were turned down, we finally agreed to a one year
  salary increase of over2.4 (2, 1 H step)
  retro for 06/07.
• A few weeks before we accepted this agreement,
  the district kept claiming that is all the could
  afford based in their projections. In fact they
  even projecting deficits in 08/09 and 09/10.
• The District projected at the time a little over
  1 million for 06/07, the actual ending balance
  was almost 18 million.
• A similar 1 million projection for 07/08 ended
  up with a real balance of over 23 million,
  almost a 22 million difference.
• So when we say we are still bargaining for 06/07
  this is the reason why.

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How does this impact bargaining?

• The District continually denies reasonable offers
  based on their 3 year budget projections.
• The projections are so varied and under projected
  making bargaining close to impossible.
• We cant bargain for the future because of these
  projections. When there is considerable amounts
  of money available like in the years 06/07 and
  07/08, we cant bargain for these dollars because
  the District claims it needs the money based on
  deficit projections in the future.
• So we cant bargain for the past.
• So in essence we cant bargain.
• This is the reason why we are at impasse.

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Slide 22 Reserves v Deficits

• The red and green bar graph represent actual
  ending balances and special reserve funds.
  (2008-2009 based on Districts 1st Interim)
• The amount of available reserves has grown
  considerably the last 3 years. The available
  reserves have grown by 23 million to reach
  almost 30 million by 08/09
• The blue graph represents the Districts
  projected deficit spending for the next 3 years,
  a projection of over 110 million.
• No amount of accumulated reserves could match
  this projected number.
• Again pointing out that without real numbers it
  is impossible for us to bargain intelligently.

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We need to

• Develop common agreements on how we budget for
  the future
• Put an emphasis on real numbers and real trends
• Plan for problems without creating a negative
  environment
• Create an educational and financial vision for
  the future