20082009 Budget Crisis

1
2008-2009 Budget Crisis

• Ramona Unified School District
• March 4, 2008

2
State Fiscal Crisis

• Weakness in the State economy and revenues
• Failure of prior State budgets to come to terms
  with the structural budget gap
• Failure to set dollars aside for eventual
  downturn in the economy
• Inability of economy to outgrow the problem
• Faulty assumptions in the current budget resulted
  in a 14.5 Billion (now 16.1) deficit for
  2008-09
• 16.1 Billion deficit is an 11 increase in the
  projected deficit problem
• Governor has declared it will be dealt with by
  strictly making across-the-board cuts

3
2007-2008 (Current Year)

• Governor proposed 360 Million current year
  reduction to K-12 Education
• Governor believed this would come from sweeping
  up unspent categorical funds
• However, Schools Services of California, along
  with FCMAT, believed the Governor would only get
  half from the sweep and the other half would have
  to come from a 0.5 reduction to revenue limit,
  or about 134,000 for RUSD
• Delay in the second principal apportionment from
  July until September, which creates a cash flow
  issue for schools
• Tighten current RUSD budget, keep positions open,
  limit spending to soften the potential cut and/or
  to help in 2008-09

4
2007-2008 (Current Year)Update

• 507 Million has been taken away from Education
• The cuts, so far, have been away from the general
  fund
• No certainty more 2007-08 cuts wont occur
• Delay will occur in the July and August advanced
  principal apportionment until September, creating
  a cash flow issue for schools districts
• January revenues were 277 Million, or 2.4 below
  projections

5
Governors Proposed 2008-2009 Budget

• Increase COLA to revenue limit and categorical
  programs
• Deficit of 6.99 applied to increased revenue
  limit
• Net effect is a 2.4 reduction to the revenue
  limit from the 2007-08 base
• Most categorical programs have a net loss of
  about 6.5 from the 2007-08 base

6
Governors Proposed 2008-2009 Budget

• Special Education is especially hit hard
• No COLA
• A 6.5 cut from prior year levels
• Increased costs
• No help from the Feds (bifurcated COLA)
• Required services have to be maintained and the
  funding has been reduced
• Any shortfall in funding will have to come from
  the general fund
• Losses to State total more than 4 Billion
• To maintain programs, such as Special Education,
  class size reduction, transportation, etc., cuts
  will need to be backfilled from school districts
  general funds

7
RUSD Impact on 2008-2009 Budget

• Loss in Revenues
• Revenue Limit 880,759 2.4
• Class Size Red. 119,635 6.5
• Transportation 33,224 6.5
• Special Ed. 190,950 6.5
• Total Loss in Revenues 1,224,568

8
RUSD Impact on 2008-2009 Budget

• Increased Expenses
• Step/Column 742,342 2
• Util./Ins. Increase 106,387 5
• Health Benefit 679,000 14
• Ongoing Operational 150,000
• Total Increase in Expenses 1,677,729

9
RUSD Impact on 2008-2009 Budget

• Decrease in Revenues 1,224,568
• Increase in Expenses 1,677,729
• Total Deficit 2,902,297
• Set-Aside for 2008-09 800,000
• Total Deficit for 2008-09 2,102,297

10
RUSD Impact on 2008-2009 Budget

• If the deficit is 16.1 Billion, or an 11
  increase in the State deficit, this could
  translate into an additional shortfall of
  134,702 to RUSD, for a total of 1,359,270 in
  decreased revenues
• Potential Compensation Adjustment Should the
  District and all employee groups agree on
  compensation adjustments, the cost impact could
  be 220,000 in 2007-08 and slightly higher in
  2008-09 -- approximately 224,446 -- for a total
  net expense impact of 444,446

11
The Budget Process

• The Governors January proposal is the start of a
  long deliberation among many parties
• It reflects the Administration's general policy
  intent for the fiscal year
• But it is by no means a final deal

12
The Budget Process

• The Legislatures role is to respond and develop
  the budget
• It still takes a 2/3 majority to pass
• A lot can change between now, the May Revise, and
  budget enactment fiscally, socially,
  politically
• Outside and unforeseen factors can and will
  significantly influence the final 2008-09 State
  budget
• Does not relieve a district from meeting the
  State/Ed Code budget development timelines

13

• EDUCATION COMMUNITY MUST
• ANTICIPATE AND PLAN FOR THE WORST

14
The Budget Process

• Revenue Enhancements
• How much and in what form?
• Budget Flexibility
• What programs? How much?
• Length of the Budget Woes
• Will the State recover for 2009-2010? . . . or
• Continue or get worse?
• State budget timelines have no effect on the
  State/Ed Code requirements school districts must
  follow for adoption of their own local budgets

15
The Budget Process

• Ed. Code March 15th preliminary layoff notices
• Ed. Code Classified notice of 45 or 60 days
• March 13th and April 24th board meetings
• RUSD 2008-09 budget being built right now
• Board adoption by June 30
• Uses best available information
• State budget and budget deals are not formulated
  yet
• In other words, we try to build an accurate
  budget on a yet to be determined State budget
  that we anticipate will be built on different
  assumptions
• What happens if we ignore the Governors proposed
  budget and we move forward with little or no cuts?

16
Action Plan

• As of March 4, the budget plan that follows is an
  aggressive response that stretches the envelope
  for savings to be realized from each of the
  classifications
• Not all savings may be realized
• Unforeseen expenses could go up
• Uncertainty of the State budget
• Uncertainty of State revenues
• January revenues were down 2.4, or 277 Million
  over projections
• These uncertainties, in all likelihood, will lead
  to a dollar deficit higher than current
  projections

17
Action Plan Step 12007-2008

• Site Department recapture of 2007-08 budgets
• School sites recapture 25, with a 20,000
  maximum
• BE 6,000 RCS 6,106 MW 20,000
• HE 10,266 RHS 11,831 OP 6,942
• MHS 1,050 FB 0 RE 6,011
• MVA 2,025 JD 9,362
• Department recaptures
• Supt. 17,000
• Admin. Services 75,000
• Ed Services 40,000
• Total Dollars 200,000
• These are one-time dollars

18
Action Plan Step 22007-2008

• Savings from unfilled positions
• Shift cost into categorical programs
• Budgeted expenses pulled from budget
• 534,000 total dollars to be used for next years
  crisis
• Most are one-time dollars

19
Action Plan Step 32008-2009

• Recapture of 0.5 2007-2008 revenue limit
  reduction as proposed by San Diego County Office
  of Education and School Services of California
• Was part of the Governors proposal in January to
  reduce K-12 Education by 360 Million
• Recently passed legislation did not reduce the
  revenue limit
• 134,000 cost reduction

20
Action Plan Step 42008-2009

• Transfer of expenses from general fund to
  categorical programs
• Student support services technician salary
• Percentage of custodial salaries
• 1 FTE Salary of Education Services Teacher On
  Assignment
• 136,000 cost shift

21
Action Plan Step 52008-2009

• Others
• Mega item transfers
• Cafeteria
• School Library Improvement Program
• Discontinue institutional memberships
• Coalition for Adequate School Housing, National
  School Boards Association, Coalition of Declining
  School Districts, North County Professional
  Development Federation, Association for
  Supervision and Curriculum Development
• Discontinue electrical overrides
• Change in Student Information System
• Reduction in expenses for retiree incentives
• 267,000 cost shift/reduction

22
Action Plan Step 62008-2009

• Administrative Leadership Team (ALT) Personnel
• Not filling Purchasing Supervisor position
• Reassign Director of Maintenance, Operations and
  Transportation position to Director of
  Transportation
• Leave Supervisor of Transportation position open
• 80,000 cost reduction

23
Action PlanStep 72008-2009

• Classified Personnel
• 1 Grounds position - leave position vacant
• Fiscal Department - leave position vacant
• 3 FTE classified positions - layoff
• 1 FTE Custodian position - layoff
• 1 FTE Custodian position - to be paid by Extended
  School Program
• Reconfigure Secretary III position in Pupil
  Services
• 354,000 cost reduction

24
Action Plan Step 82008-2009

• Certificated Personnel
• 15.26 FTE reduction in forces
• In addition to the 9 FTE elementary teachers due
  to declining enrollment or other staffing
  considerations
• 994,000 cost reduction

25
Bottom Line

• Total cuts, shift of expenses, and use of
  one-time dollars
• 2,699,000
• Use of set-aside for 2008-09 budget
• 800,000
• Total
• 3,499,000
• Projected deficit
• 2,902,000
• Again, based upon Governors Budget Proposal and
  a 14.5 Billion deficit

26
Bottom Line

• Projected deficit 2,902,000
• Proposed plan 3,499,000
• Difference 597,000
• Potential compensation adjustment 444,446
  2007/08 and 2008/09 impact
• 11 increase in loss of revenue, or 134,702
• 17,852 net flexibility to address unrealized
  cost reductions, unanticipated expenditures
  and/or an increase in the size of the State
  deficit