What You Need To Know About Your Childs School

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What You Need To Know About Your Childs School
District and State Budget Update March 12, 2009
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Scope of the State Budget, and affects to Schools
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• State Budget
• New taxes and other revenues to be implemented as
  soon as possible
• Increased borrowing
• Reductions to all state-funded programs
  especially education
• Schools
• No relaxation of the Designated Reserve for
  Economic Uncertainties requirement
• Cuts are now evenly split between revenue limit
  and categorical programs
• Cuts come too late to save anything this fiscal
  year most districts will lose the revenue for
  this fiscal year and then make cuts in the next
  fiscal year to restore the reserve

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Special Election Ballot Issues
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• Six propositions have qualified for the May 19,
  2009, statewide special election ballot the
  first three are most significant for local
  educational agencies (LEAs)
• Proposition 1A State Finance
• Increases the size of the states rainy day
  fund and requires above-average revenues to be
  deposited into it
• Proposition 1A and 1B are joined at the hip
• If Proposition 1B is approved, a portion of the
  fund would be transferred to fund supplemental
  payments to K-14 education

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Special Election Ballot Issues
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• Proposition 1B Education Finance
• Requires supplemental payments of 9.3 billion
  over time, commencing in 2011-12, in lieu of
  Maintenance Factor amounts related to fiscal
  years 2008-09 and 2009-10
• If passed, this proposition guarantees that
  education funding will be restored
• If it fails, we must pursue reimbursement by
  other means
• Proposition 1C California State Lottery
• Allows Lottery to be modernized to improve its
  performance
• LEAs would no longer receive funding based on
  Lottery sales, but would continue to receive
  per-ADA amounts equal to what they received in
  2008-09
• If this proposition fails, there is a 5 billion
  hole in the Budget

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Other Propositions on Special Election Ballot
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• Proposition 1D Budget Act of 2008 California
  Children and Families Act Use of Funds Services
  for Children
• Temporarily allows the redirection of existing
  money to fund health and human service programs
  for children of up to five years of age
• Proposition 1E The Mental Health Services Act
  Proposition 63 Amendments
• Redirects specified Mental Health Services Act
  monies for fiscal years 2009-10 and 2010-11 to
  support a pre-existing mental health program

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Impact of Uncertain Election Results
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• Much of the State Budget is contingent upon
  success of ballot measures
• If Proposition 1A, relating to the Budget
  Stabilization Fund, fails
• K-14 schools will not automatically get the
  additional 9.3 billion in maintenance factor
  amounts
• Will pursue those monies through alternative
  means
• Temporary tax increases included in ABX3 3 will
  expire one or two years earlier than if voters
  approve Proposition 1A
• The Budget relies on issuance of Lottery
  securitization bonds to generate 5 billion
  creates a shortfall if Proposition 1C fails
• But credit markets may not be interested
• Recent poll indicates that 61 of likely voters
  oppose the idea of borrowing against future State
  Lottery income
• Voters may not want to divert monies from
  initiatives they previously passed
• If Propositions fail, the May Revision could
  include more cuts

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Categorical Program Funding
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• Most but not all categorical programs are reduced
  for 2008-09 with further reduction in 2009-10
• To help offset the impact of categorical and
  revenue limit cuts, the Budget provides two types
  of flexibility
• Ending balance sweeps based on 2007-08 ending
  balance for state categorical programs with
  specific exceptions
• These transfers may be executed in 2008-09 or
  2009-10, but do not include ending balances
  accrued after June 30, 2008
• Transfer flexibility for 42 state categorical
  programs funds may be transferred from eligible
  programs to any other educational purpose
• Permitted as of 2008-09 until 2012-13

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Categorical Cuts and Transfer Flexibility
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• The state categorical programs are organized into
  three categories
• Tier I programs for which funding remains at
  2008-09 original Budget enacted level
• No cuts, no additional flexibility
• Tier II programs for which funding is reduced
• Funding reductions, no additional flexibility
• Tier III programs for which funding is reduced,
  but flexibility to transfer funding to other
  education purposes is allowed
• Funding reductions, flexibility to transfer up to
  100 to another purpose

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Categorical Cuts and Transfer Flexibility
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• Tier II and III programs are reduced as follows
• 15.38 in 2008-09 plus an additional 4.46 in
  2009-10 cumulative reduction of 19.84
• Cuts applied to 2008-09 funding level
• Flexibility to transfer applies as of 2008-09 and
  extends to 2012-13
• Must allow for comment at a public hearing
• Must report to the California Department of
  Education (CDE) how it is being used

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42 Programs Affected by Categorical Reductions
GTUSD qualifies for only the following
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Tier III Reduction and Flexibility
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Federal StimulusAmerican Recovery and
Reinvestment Act of 2009
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• Lots of money, with direct funding to education
• This is one-time money
• Title I
• Special education
• Educational technology
• Other?
• There are many unknowns including
• How much will reach schools?
• When will we receive it?
• What are the appropriate uses?

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American Recovery and Reinvestment Act of 2009
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• Do not budget the funds until you receive an
  official notification of an allocation
• Do begin to plan what you are going to do with
  one-time dollars even though the determination of
  appropriate uses has not been finalized
• Possible one-time uses
• Training/staff development
• Materials
• Capital outlay
• Payment on Certificates of Participation
• Use for projects already in the queue and shovel
  ready
• Consider the needs in your district and use
  accordingly
• We anticipate that the funds will have to be
  spent within 27 months of the federal
  governments allocation to the state
• The timeline to spend these dollars will pass
  very quickly so you have to be good to go
  plan ahead!

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District Budget Overview Based on the 2009-10
Budget Act
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Why a Pink Slip NOW?
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• Education Code requires certificated staffing
  reduction notices be provided to teachers by
  March 15 for the next fiscal year
• Final notification to teachers must by made by
  May 15
• Voter Election is May 19
• May Revise, usually early May, is scheduled for
  June 8, after the election
• Certificated contracts are legal and binding with
  no fiscal free remedy to rescind after May 15
• Districts normally must predict August grade
  level enrollment and notify staff accordingly by
  May
• This year, we must predict the outcome of the
  election, and monitor whether the State continues
  a downward trend or begins to stabilize
• Incorrect assumptions could create fiscal
  difficulties.

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In The Next Few Months.
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• Balanced budget must be adopted by district prior
  to June 30, 2009
• Developing the budget requires
• Clarifying assumptions
• How much revenue?
• What flexibility options will be acted upon?
• How will expenditures change?
• We will stay tuned for the results of the Special
  Election and the May Revision
• THANK YOU FOR YOUR INTEREST