Board of Trustees:

1
Auburn Union School District
2009-10 Proposed Budget
Board of Trustees Lynn Hargrove - President
Clark Gehlbach - Clerk Linda Beasley - Member
Ken Nittler - Member Steve Weaver - Member
Michele Schuetz - Superintendent
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Table of Contents

• A. Introduction to the District Budget
• A1 - Message from the Superintendent 4
• A2 - District History 5
• A3 - Mission Statement and Strategies 6
• A4 - Budget Advisory Committee 7
• A5 - California State Budget 8
• A6 - Budget Development 9
• A7 - Organization of the Budget 10
• A8 - Timeline for Developing the Districts
  2009-10 Budget 11
• B. The General Fund/Enrollment/Revenue/Expenses/En
  ding Balances
• B1 - CBEDS Enrollment History and Projection 13
• B2 - Enrollment History and Projection 14
• B3 - District Revenues, 2009-10 15
• B4 - Unrestricted General Fund Contributions 16
• B5 - State Revenues Subject to Categorical
  Flexibility 17
• B6 - General Fund Expenditures, 2009-10 18
• B7 - Certificated Salary Growth, 2005-06 to
  2009-10 19
• B8 - Special Education 20

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Table of Contents

• C. Other Funds
• C1 - Cafeteria Fund 35
• C2 - Deferred Maintenance Fund 36
• C3 - Special Reserve for Post-Employment HW
  Benefits Fund 37
• C4 - Building Fund 38
• C5 - Capital Facilities Fund 39
• C6 - State School Building Fund 40
• C7 - Special Reserve Fund for Capital Outlay 41
• C8 - Mello Roos Capital Projects Fund 42
• C9 - Mello Roos Debt Service Fund 43
• C10 - Debt Service Fund 44
• D. Appendices
• D1 - Glossary of Common School Finance Terms 45

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A1 - Message from the Superintendent

• June 2009
• Dear School Community Stakeholders,
• Thank you for your interest in the Auburn Union
  School Districts budget. We hope that our
  budget format provides you with an understandable
  overview of the Districts budget. If you would
  like more detailed information on any aspect of
  the budget, you may contact Douglas Crancer,
  Assistant Superintendent of Business and
  Facilities at [phone] or
  dcrancer_at_auburn.k12.ca.us. The budget is also
  posted on the Districts website at
  http//www.auburn.k12.ca.us/business/
• It is always the goal of the Auburn Union School
  District to provide a challenging and enriched
  learning environment and we are committed to a
  quality education. A core value of our Board of
  Trustees is to maintain the integrity of our
  financial future to ensure our capacity to
  support a high quality of education.
• For the past several years significant declines
  in revenue have made it especially difficult to
  develop a budget that allocates the resources
  necessary to deliver on the hope and promise of
  those core values. Over the past 13 years
  enrollment has declined in excess of 26. The
  District has seen revenue streams commensurate
  with that decline. The Auburn Union School
  District is faced with the challenging task of
  developing a long-term spending plan that is
  financially sound.
• This budget document presents a scenario for
  2009-10 that
• Preserves a 3 General Fund reserve for economic
  uncertainties (except for the 201 version)
• Minimizes annual deficits and create a balanced
  budget trend which incorporates all programs as
  well as employee compensation
• Proactively works at reducing the rate at which
  Special Education costs require unrestricted
  general fund support
• Meet AB1200 requirements
• It is crucial that the District continue to
  examine priorities and what future changes will
  be made to maintain a fiscally sound budget.
  Based on current projections, without an increase
  in enrollment or reduction in expenditures, the
  District faces deficit spending for 2009-10 and
  subsequent years. Based on the current general
  purpose fund deficits, the District must reduce
  its expenditures by approximately 1.3 to 1.5
  million dollars by 2010-11 in order to remain
  solvent.
• The budget development process encourages input
  from all Stakeholders, program coordinators and
  the District Budget Advisory Committee, which is
  comprised of community members, parents,
  certificated and classified staff and
  administration. One of the three proposed budget
  versions must be adopted by June 30, 2009. The
  Board will continue to review budget updates
  throughout the year.
• As you work with this Budget document, please let
  us know if you have suggestions to make this a
  more user-friendly format which provides you with
  information on the Districts finances.
• Sincerely,
• Michele Schuetz, Superintendent

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A2 District History

• In 1848, gold was discovered in Auburn Ravine.
  The area quickly developed into a robust mining
  and supply camp and became officially known as
  Auburn in 1849. The Auburn Union School District
  is one of the oldest, continuously operating
  school systems in the State of California.
  Organized in 1852, it provides education to
  students in Kindergarten through eighth grade.
  The District serves approximately 64 square miles
  located in southeastern Placer County, including
  the City of Auburn and the adjacent
  unincorporated areas of the County. The District
  is located 40 miles northeast of Sacramento on
  the western slope of the California High Sierra.
  The District educates approximately 2,100
  students at three K-5 elementary schools (Auburn
  Elementary, Rock Creek and Skyridge), and one
  middle school (EV Cain).

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A3 - Mission Statement and Strategies
Core Values

• We believe that
• All students can learn in a challenging, academic
  environment where they are inspired to reach
  their highest potential.
• A safe learning environment is the foundation
  from which education grows.
• The active participation of families is critical
  to the success of students.
• The district and the Auburn community are
  partners in providing a quality education. As
  partners, the relationship requires open
  communication and transparency of process, so
  that each partner feels a sense of ownership in
  the outcome.
• We must maintain the integrity of the districts
  financial future to ensure capacity to support a
  high quality education.

Mission Statement
We provide our students with a rigorous and
well-rounded curriculum that challenges students
to become self-reliant individuals, critical
thinkers and responsible citizens.  
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A4 - Budget Advisory Committee

• Board Liaisons Clark Gehlbach
• Ken Nittler
• Superintendent Michele Schuetz
• Staff to the Committee Douglas Crancer
• Parents Kay Bryant, EV Cain
• Tris DeMauri, Rock Creek
• (Chair)
• Marion McKay, Auburn Elementary
• Shannon Breckenridge Anne Brown, Skyridge
• AUTA Mark Maxwell Karen Enghusen
• CSEA Roy Price
• Administration Susan Flint, EV Cain

• The District performs multiple tasks which ensure
  that its financial resources are responsibly
  allocated and managed and that all groups within
  the District have the opportunity to be involved
  in determining how money is allocated. Toward
  this purpose, the District has established a
  standing Budget Advisory Committee (BAC).
• The BAC is represented by
• Parents
• Employee Groups
• Administrators
• Community Members
• The Committee functions to develop an
  understanding of the Districts financial
  position as well as to serve as an advisory
  resource to the Board of Trustees and a liaison
  between the District and its stakeholders.
  Committee meetings are open to all interested
  parties.
• The Board of Trustees directed the Budget
  Advisory Committee to develop options for
  addressing projected budget shortfalls in 2009-10
  and future years. The BAC was able to present its
  findings to the Board in a timely fashion, which
  enabled the District to include its findings in
  the Districts Second Interim report and proposed
  budgets.
• The Board members, Superintendent and Staff to
  the Committee are non-voting members.

Non-voting
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A5 California State Budget

• During this past year, local educational agencies
  (LEAs) across the state have felt the impact of
  the decline of Californias economy as
  illustrated by below
• Californias Unemployment Rate is 11.2
• Home building fell for the 4th consecutive year
• Expected to be down 24 in 2009
• Personal income is projected to decline 1
• First time declined since 1938
• This collapse of the state economy has driven
  state tax revenues down. Following the latest
  state budget adoption in Californias history
  last September, the February enactment of the
  2009-10 budget was by far the earliest.
• However, since the enactment of the 2009-10
  Budget Act on February 20th, baseline revenues
  have further decreased. It was clear that the
  budget was immediately in need of substantial
  amendment.

• In response to Californias further decline, the
  already reduced 17 month budget, needs to be
  reduced by an additional 24.3 billion. In
  response to the projected 24.3 billion
  shortfall, the major budget-balancing proposals
  are as follows
• 16 billion in cuts and savings
• 7.2 billion from Proposition 98
• 2.8 billion from revenue accelerations fees
• 2 billion from local government borrowing
• 3.5 billion from program consolidations and
  fund shifts
• As a result, K-12 has experienced 3.9 billion of
  additional cuts from the February budget to the
  Governors May Revision.

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Introduction to the District Budget
A-6 Budget Development
  A school district budget is the document that
authorizes the district to accept revenues and
incur expenditures to deliver its educational
program. The budget is a statement made by a
district board of trustees regarding what it
holds as important to the education of its
students. It is, therefore, also an effective
planning document, enabling both the board and
staff to identify expenditure programs and the
revenues that support them, and to plan the most
effective delivery system to implement programs.
The General Fund

• It is in the General Fund that the educational
  program of the District is revealed. Revenues
  are made clear and educational priorities are
  reflected in the programs the District provides
  from those revenues. The information required to
  build the Districts General Fund budget consists
  primarily of enrollment and attendance data,
  staffing requirements per formula, and historical
  and prospective assessment of revenues and
  expenditures. This information is compiled on
  the following pages, and is reflected in the
  budget assumptions for the coming fiscal and
  school year.

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Introduction to the District Budget (cont.)
A-7 Organization of the Budget
For ease of administration, school district
budgets are divided into funds. The Auburn Union
School District uses the following funds
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Organization of the Budget (cont.)
A-8 Timeline for Developing the Districts Budget
  Because of the many revenue sources and the
complex pattern of making expenditures in public
school districts, the planning required for an
annual budget normally must begin early in the
preceding year. In the Auburn Union School
District, preparations for planning the 2009-10
school year began in February 2009. Each year
the preliminary budget is built from zero by
calculating revenues and expenditures based on
assumptions. Revenues and expenditures are not
rolled forward each category of income and
expense is reviewed for inclusion or exclusion
from the budget. The preliminary budget is
generally created in February and revised as new
information becomes known. Normally, the final
revision is made after the Governor makes known
his May revision of the California State Budget
for the upcoming year and prior to being proposed
for adoption by the Board in June. However, with
the early state budget adoption, a preliminary
budget was not necessary. School districts must
adopt a budget by June 30 whether or not the
State has adopted their spending plan. If
material changes are required, revisions to the
District budget must be made within 45 days of
the adoption of a State budget.
12
A8 - Timeline for Developing the Districts
2009-10 Budget
The following calendar represents an approximate
timeline for the 2008-09 and 2009-10 budget that
is used in the District
13
B1 - CBEDS Enrollment History and Projections
Summary of CBEDS Data from 1996-97 through 2009-10
P Projected
14
B2 Enrollment History and Projection
P Projected
15
B3 - District Revenues 2009-10

• The largest portion of Auburn Union School
  Districts income is called unrestricted because
  it can be expended as determined by the local
  agency for general educational purposes. On
  average, California school districts received
  more than two-thirds of their income as
  unrestricted. The remainder of the income is
  restricted, categorical state and federal income,
  and as such can be expended only for selected
  purposes as determined by the granting agency.
• The largest restricted programs in California are
  Special Education and Home to School
  Transportation. For each of these programs, local
  agencies are obligated to expend the income for
  these program purposes and, in some cases for
  very specific expenditures as determined by
  California or federal law.
• For special education, including the home to
  school transportation of those students, Auburn
  Union School District expends more than
  3,000,000 to meet the obligations of the program
  as well as state and federal law. The
  combination of state and federal special
  education income is significantly less than the
  cost of the program causing the use of
  unrestricted, or general-purpose income, to
  address the full obligations of the program. The
  difference between revenues and expenses is
  anticipated to be (1.9 million) or 56 of the
  total cost.
• While revenues to the district for Home to School
  Transportation do not equal the costs of the
  program, the District does charge fees to offset
  this difference.

More than 75 of the Districts income can be
expended as determined by the local agency
Transportation 3
Other Categoricals, Restricted 8
Special Education 10
Unrestricted 79
Unrestricted and Restricted Revenues, 2009-10
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B4 Unrestricted General Fund Contributions

• The budget includes the following transfers of
  unrestricted resources to restricted programs to
  cover restricted program expenditures in excess
  of revenues (encroachment)

Description 2008-09
2009-10 Auburn Youth Soccer Club
5,000 5,000 Restricted Maintenance
475,156 450,000 Special Education
Federal 262,117 0 Special Education
Preschool 150,980 0 Special Education
State 1,041,605 1,678,800 Sports
11,000 11,000 Theater
3,000 3,000 Transportation SD/OI
283,775 250,000 Total Contributions
2,232,633 2,397,800 Amount required is only
1 of General Fund Expenditures that amount to
161,000.
17
B5 State Revenues Subject to Categorical
Flexibility

• The Illustrated below are the estimated amounts
  that the District expects to receive for the
  following programs, which will be accounted for
  as unrestricted programs beginning in 2009-10.

Description 2008-09
2009-10 Art Music Block Grant (B/G)
34,000 26,000 Community Based English
Tutoring 10,000 9,000 Gifted
Talented Education (GATE) 18,000
16,000 IMFRP (Textbook Funds) 155,000
116,000 Peer Assistance Review (PAR)
16,000 10,000 Professional Development
B/G 150,000 128,000 School Library
Improvement B/G 289,000
246,000 School Safety B/G 12,000
6,000 Supplemental School Counseling
35,000 30,000 Targeted Instructional
Improvement B/G 30,000
22,000 Revenues Subject to Flexibility
Provision 749,000 609,000 Less
Appropriations 729,000 430,000 Net
Contribution 20,000 179,000
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B6 - General Fund Expenditures 2009-10

• As a a service industry, most of the expenditures
  of the district are salaries and benefits. In
  the Auburn Union School District, over 80 of the
  Districts budgeted expenditures are for the
  services of District employees.
• Employee salaries are divided into four
  categories certificated, classified,
  confidential and management. The certificated
  employees include teachers, nurses,
  psychologists, or others who provide services
  that require credentials from the State of
  California. Management employees include
  principals, assistant principals, supervisors and
  the Superintendent.
• Classified employee salaries include all of the
  support personnel in the District, including
  salaries for positions such as secretaries,
  account clerks, instructional aides, maintenance
  and custodial personnel.
• Confidential employees include positions such as
  administrative assistant to the Superintendent,
  payroll technician and accountant.
• The health and welfare benefits of the District
  represent nearly 18 of the budget and include
  expenses for retirement, health and welfare and
  workers compensation expenses.

Over 80 of the Districts total expenditures are
committed to salary and benefits
Books Supplies2
Other Outgo 4
Operating 13
Benefits18
Certificated45
Administration 7
Classified11
General Fund Expenditures (In Million )
General Fund Expenditures, 2009-10
Certificated 7.2 Classified 1.8 Management and
Confidential 1.1 Employee Benefits 3.0 Books and
Supplies .3 Operating 2.0 Other .7 Total
Expenditures 16.1
19
B7 - Certificated Salary Growth, 2005-06 to
2009-10
Currently, the District is expected to sustain
2009-10 salary levels from deficited general
purpose funds that are comparable to the general
purpose funding that the District received during
2005-06.
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B8 - Special Education

• School districts throughout the state struggle
  with funding the costs of serving students with
  special needs. The enactment of the Individuals
  with Disabilities Education Act (IDEA) codified
  the constitutions guarantee of a free
  appropriate public education that meets a
  students education and related service needs in
  the least restrictive environment. Special
  Education is an integral part of the total public
  education system, providing an education that
  promotes maximum interaction between children
  with disabilities and children who are not
  disabled that is appropriate to the needs of
  both.
• In 1997, California legislators passed Assembly
  Bill 602 which completely changed the funding
  structure for Special Education from one based on
  a personnel service unit to a population-based
  method. Special Education funds are allocated
  according to the total student population in a
  Special Education Local Planning Area (SELPA)
  rather than on the number of identified special
  education students. SELPAs are responsible for
  allocating funds for the services provided to the
  individual eligible students. Expenditures for
  special education programs remain subject to
  state audit under this law.
• In addition to the standard Revenue Limit income
  per ADA, the Auburn Union School District is
  expected to receive approximately 1,483,000 in a
  combination of state and federal sources. While
  anticipated expenses are expected to decrease,
  there is still a gap between expected revenue and
  expense of more than 1.9 million.
• The following chart gives a history of special
  education revenues and expenditures for the
  Auburn Union School District from 2003-04 to
  2009-10

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Special Education (cont.)

•  

22
Special Education Budget Projections

• REVENUE 2009-10 Funding sources for the
  Districts special education program, including
  transportation, are as follows
• State aid under AB602 including base, COLA,
  growth, equity, special disabilities adjustment,
  regionalized services/program specialists,
  high-cost Non-Public School funds and low
  incidence funds
• Federal local assistance (PL 94-142)
• Federal Preschool/PPPIP
• AARA Stimulus Funds
• Home to School Transportation revenue for
  students with transportation in their IEP
• Projected revenues for school year
  2009-101,483,223.

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Special Education

• EXPENDITURES
• The Auburn Union School District serves
  approximately 286 students with special needs.
  Our staff provides support to students with a
  variety of disabilities. All students have an
  assigned case manager to oversee their daily
  support, interface with mainstream teachers,
  provide an annual review of progress/present
  levels, the development of goals and objectives
  for the IEP and make recommendations for
  placement and appropriate service provisions.
•  
• We continue to meet the changing needs of our
  students with learning center models and
  classroom support for students who learn using
  multiple modalities and benefit from
  individualized instruction opportunities. Our
  changing population of students includes many
  students who are on the Autism Spectrum and we
  are looking at unique ways to better support
  their social cognitive development.
• Finally, our students who have the highest
  support needs are served in a variety of programs
  throughout the county or in non-public schools.
• Projected expense for school year 2009-10
  3,412,023

Expenditures
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Special Education Restricted General Fund
(cont.)
The cost of providing services to our students
with special needs has increased dramatically
over the years. It is unfortunate that the
Federal Government has not funded the Individuals
with Disabilities Act (IDEA) as promised at
40. This shortfall in dedicated funding as well
as the rapidly rising costs of providing services
has drastically increased the shortfall between
revenue and expense
P Projected
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B9 - Assumptions for the 2009-10 Budget

• During the months of May and June of each year,
  the school district finalizes its budget for the
  coming year. In order to project the budget, a
  series of assumptions about district conditions
  must be determined. These assumptions are then
  inserted into state and district formulas in
  order to determine next years budget.
• The accuracy of a districts budget projection is
  only as good as the assumptions that are used in
  developing next years budget numbers. As a
  consequence, the assumptions--at least the
  primary ones--have to be carefully considered in
  evaluating the accuracy of next years income and
  expense.
• Since it is impossible to accurately predict all
  of the assumptions that are needed in budget
  development, the Auburn Union District updates
  its budget--and the assumptions--three times
  after the original budget is adopted. The
  assumptions are updated with a revision that
  occurs within 45 days after the adoption of the
  state budget and with two interim reports that
  are delivered to the Board of Trustees in
  December and March of each fiscal year.

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B9 - Assumptions for the 2009-10 Budget (cont.)

• General Assumptions
• Average daily attendance (ADA) for the District
  (excluding COE programs that amount to 64 ADA) is
  estimated to be 1,982. However, the District will
  receive funding based on 2008-09 regular ADA,
  which is estimated to be funded at 2,032 ADA.
• The class size reduction program revenue for
  ongoing operations reflects the Districts
  intention to implement a K-3 class size reduction
  program at the following ratios
• At a maximum ratio of 241, the District will be
  funded between 856 and 1,071 (depending on
  class size). The District will only get funded
  for the first 20 pupils.
• At a maximum ratio of 281, the District will be
  funded between 750 and 1,071 (depending on
  class size). The District will only get funded
  for the first 20 pupils.
• At a maximum ratio of 201, the District will be
  funded at 1,071.
• Routine Restricted Maintenance contribution at
  2.85, and no Deferred Maintenance Match.
• Expect to transfer 312,000 from the Districts
  HW Post-Employment Benefit Fund (20).
• Revenue
• Statutory COLA for general purpose funds is
  4.25 however total funds will be deficited by
  approximately 18 - Funded at the general purpose
  level of 2005-06
• Lottery revenue is estimated to be 109.50 per
  ADA for unrestricted funds and 11.50 per ADA for
  restricted funds
• Expected to receive 960,000 of federal stimulus
  however after taking into account additional
  general purpose and SELPA revenue loss, the
  District will only receive an additional
  167,000.
• As illustrated on page 17 (B5), various state
  categorical funds will receive a 20 cut from
  2007-08 and will be considered unrestricted funds
  through 2012-13.

The Districts budget projections are only as
good as the assumptions that are used in
developing the Districts revenues and expenses
27
B9 - Assumptions for the 2009-10 Budget (cont.)

• Expenses at 241 ratio
• Step and column costs (salary benefits) are
  budgeted for 2009-10 and subsequent years.
• Certificated - 158,000 (2.0)
• Classified - 61,500 (3.0) 69,000
  for all Funds
• Management Conf. - 6,500 (0.5)
  7,000 for all Funds
• Illustrated below are the salary benefit costs
  (savings) of a 1 salary increase (decrease)
• Certificated - 79,000
• Classified - 20,500 23,000 for all
  Funds
• Management Conf. - 12,500 13,000 for
  all Funds
• Payroll taxes are estimated to remain constant
  for 2009-10
• Unrestricted supplies and other operating costs
  reflect 2008-09 adopted budget (as a whole)
• One-time expenses from 2008-09 have been removed
  from 2009-10 budget
• Developer Fees will continue to be dedicated to
  the repayment of Districts Certificates of
  Participation (COPs)
• As result of the work performed by the Budget
  Advisory Committee, the following expenditure
  cuts have been proposed and adopted by the Board
  of Trustees
• Net Categorical Fund Transfers into the
  unrestricted portion of the general fund -
  179,000 Release certificated staff as a result
  of operating class size reduction at 241 -
  330,000
• Discontinue grades six through eight at
  Skyridge School - 153,000
• Eliminate one period of Spanish - 17,000
• Eliminate / Reduce Clerk time through-out the
  District - 65,000
• Reduce Noon Duty Supervisor and Custodial Time
  - 47,000

The Districts budget projections are only as
good as the assumptions that are used in
developing the districts revenues and expenses
28
B9 - Assumptions for the 2009-10 Budget and
Multi-Year Projections
Average Daily Attendance Revenues
29
B9 - Assumptions for Multi-Year Projections
Staffing Other Expenditures

• Step column costs for salary and benefits are
  included for subsequent years
• Assumes a 2.0 FTE decrease in certificated
  positions for each subsequent year
• Expect a decline of restricted salaries for
  2011-12 as a result of fully expending stimulus
  funds in prior years
• Unrestricted supplies and other operating
  expenditures are estimated to reflect no changes
  from the 2009-10 proposed budget
• Restricted other operating expenditures are
  estimated to decrease by approximately 5 each
  year
• Negotiations with employee groups have not been
  settled for 2008-09 and beyond
• Although District is taking back some special
  education services, the District is budgeting no
  change in the bill-back for PCOE special
  education program
• Other than federal stimulus funds, no restricted
  deferred revenues and planned expenditure
  carryovers are included in the budget

30
B10 - Multi-Year Projection Report at 241
31
B10 - Multi-Year Projection Report at 281
32
B10 - Multi-Year Projection Report at 201
33
B11 Summary of Estimated Deficits Fund
Balances

• Estimated Deficits
• Fiscal Year 2009-10
• 241 717,616
• 281 634,183
• 201 816,772
• Fiscal Year 2010-11
• 241 1,430,332
• 281 1,277,071 1,343,371
• 201 1,467,056 1,533,356
• Fiscal Year 2011-12
• 241 1,434,543
• 281 1,279,332 1,347,532
• 201 1,470,217 1,538,417

• Estimated Ending Fund Balances
• Fiscal Year 2009-10
• 241 515,963 (3 Economic Uncertainty Met)
• 281 599,396 (3 Economic Uncertainty Met)
• 201 416,807 (3 Economic Uncertainty Not Met)
• Fiscal Year 2010-11
• 241 (914,369)
• 281 (677,675) ( 743,975)
• 201 (1,050,249) (1,116,549)
• Fiscal Year 2011-12
• 241 (2,348,912)
• 281 (1,957,007) (2,091,507)
• 201 (2,520,466) (2,654,966)

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B12 Subsequent Budget Factors

• Recently, the Joint Budget Conference
  Committee made the final votes to close the
  hearing on the state budget. This sets the stage
  for the state budget bills to be presented to the
  entire Senate and Assembly for a floor vote. For
  the most part, the Conference Committee adopted a
  majority of the reductions from the Governors
  May Revision, which all three proposed budgets
  take into account. Illustrated below are various
  components not in the proposed budgets that would
  effect Auburn Union School District
• Authority for school districts to reduce the
  number of instructional days to 175
• Any corresponding salary adjustments must be
  approved by AUTA CSEA
• Allow school districts to sell surplus property
  and use the proceeds for General Fund purposes
• Reduce Home-to-School Funds by 20 (not 65 as
  previously reported), and be included with the
  revenues that are subject to categorical
  flexibility
• Suspend requirements that school districts
  purchase newly adopted instructional materials
  for an additional three years, and prohibits the
  State Board from initiating new adoptions during
  this period
• Change the minimum state requirement for reserves
  for economic uncertainty to one-third of the
  currently required level for 2009-10
• In addition, this past week a proposal to change
  the class size reduction program has begun to
  gain steam.  The proposal in essence, would
  increase the cap of fully implementing class size
  reduction to a ratio of 251 with harsher
  deductions after the 25th student.
• Today, Legislative Democrats failed in their
  attempt to pass a Budget-balancing package that
  included 11 billion in spending cuts. The
  pressure to plug the gaping 24 billion gap
  increased as State Controller John Chiang issued
  a press release stating that, without immediate
  action on the Budget, his office would begin
  issuing IOUs on July 2. Luckily, payment
  categories protected by the State Constitution,
  federal law, and court decisions will receive
  regular payments in July, including K-12 revenue
  limits, categorical programs, and the State
  Teachers' Retirement System. All other General
  Fund payments will receive IOUs.

35
C1 Cafeteria Fund (13)
36
C2 Deferred Maintenance Fund (14)
37
C3 Special Reserve for Post-Employment HW
Benefits (20)
38
C4 Building Fund (21)
39
C5 Capital Facilities Fund / Developer Fees (25)
40
C6 State School Building Program (Proposition
1A) (35)
41
C7 Special Reserve Fund for Capital Outlay (40)
42
C8 Mello Roos Capital Projects Fund (49)
43
C9 Mello Roos Debt Service Fund (52)
44
C10 Debt Service Fund (56)
45
D1 - Appendix

• Glossary of Common School Finance Terms
•  
• ADA Average daily attendance. There are several
  kinds of attendance, each counted in different
  ways. For regular attendance, ADA is equal to
  the average number of pupils actually attending
  classes who are enrolled for at least the minimum
  school day. In summer school attendance is
  counted by hours and is funded based on the
  actual hours attended. Attendance is counted
  every day of the school year and is reported to
  the California Department of Education three
  times a year (see Attendance Reports).
•  
• AB 1200 Reference to AB 1200 (Chapter 1213/1991)
  that imposed major fiscal accountability controls
  on school districts and county offices of
  education, by establishing significant
  administrative hurdles and obligations for agency
  budgets and fiscal practices. See especially
  Education Code Section 1240 et sec. and 42131 et
  sec.
•  
• Accrual Basis Accounting Transactions are
  recorded when they have been reduced to a legal
  or contractual right or obligation to receive or
  pay out cash or other resources. School
  districts in California use a modified accrual
  basis of accounting where revenues are recognized
  when they become measurable and available to
  finance expenditures.
•  

Apportionment State aid given to a school
district or county office of education.
Apportionments are calculated three times for
each school year. The First Principal
Apportionment (P-1) is calculated in February of
the school year corresponding to the P-1 ADA (see
Attendance Reports) the Second Principal
Apportionment (P-2) is calculated in June
corresponding to the P-2 ADA and, the annual
recalculation of the apportionment is made in
February following the school year and is based
on P-2 ADA, except for programs where the annual
count of ADA is used. Appropriation Bill A bill
before the Legislature authorizing the
expenditure of public money and stipulating the
amount, manner and purpose for the expenditure
items. Appropriation For Contingencies That
portion of the current fiscal year's budget that
is not appropriated for any specific purpose but
is held subject to intrabudget transfer i.e.
transfer to other specific appropriation accounts
as needed during the fiscal year.  
46
D1 - Appendix

• Attendance Reports Each school district reports
  its attendance three times during a school year.
  The First Principal Apportionment ADA, called the
  P-1 ADA or the P-1 count, is counted from July 1
  through the last school month ending on or before
  December 31 of a school year. The Second
  Principal Apportionment ADA, called the P-2 ADA,
  is counted from July 1 through the last school
  month ending on or before April 15 of a school
  year. Fiscal or annual ADA is based on the count
  from July 1 through June 30. The final
  recalculation of the apportionment is based on
  the P-2 ADA except for adult education programs,
  regional occupational centers and programs and
  nonpublic school funding, all of which use the
  annual count of ADA. Also, under certain
  circumstances when a district has a very large
  influx of migrant students in the spring, a
  district may request the use of annual ADA in
  lieu of P-2 ADA.
• Base Revenue Limit See Revenue Limit.

• Categorical Aid Funds from the state or federal
  government granted to qualifying school districts
  for specialized programs regulated and controlled
  by federal or state law or regulation. Examples
  include programs for children with special
  needs, such as special education special
  programs, such as the School Improvement Program
  or, special purposes, such as transportation.
  Expenditure of most categorical aid is restricted
  to its particular purpose. The funds are granted
  to districts in addition to their revenue limits.
• CBEDS California Basic Education Data System --
  the statewide system of collecting enrollment,
  staffing, and salary data from all school
  districts on an "Information Day" each October.
• Certificated Personnel School employees who hold
  positions for which a credential is required by
  the state -- teachers, librarians, counselors,
  and most administrators.
• Classified Personnel School employees who hold
  positions that do not require a credential, like
  aides, custodians, etc.
•  
• Class Size Penalties The penalties imposed on
  school districts that have classes in excess of
  certain maximum sizes. Class size penalties
  result in a reduction in ADA which, in turn,
  results in a loss in revenue limit income. (See
  Education Code Section 41376).
•  

47
D1 - Appendix

• Consumer Price Index (CPI) A measure of the cost
  of living compiled by the United States Bureau of
  Labor Statistics. Separate indices of inflation
  are calculated regularly for the United States,
  California, some regions within California, and
  selected cities. The CPI is one of several
  measures of economic change.
• Cost-of-Living Adjustment (COLA) An increase in
  funding for government programs, including
  revenue limits or categorical programs. Current
  law ties the COLA for most education programs to
  the annual percentage change in the "Implicit
  Price Deflator" for State and Local Governments
  -- a government price index. (See Education Code
  Section 42238.1.)
•   
• Criteria and Standards Local district budgets
  must meet state-adopted provisions of "criteria
  and standards." These provisions establish
  minimum fiscal standards that school districts,
  county offices of education and the State use to
  monitor district fiscal solvency and
  accountability. (See Education Code Sections
  33127 et sec.)

Declining Enrollment Adjustment A formula that
cushions the drop in income in a district with a
shrinking student population. Under current law,
districts can count the higher of either last or
current year ADA.   Deficit Factor When an
appropriation to the State School Fund for
revenue limits -- or for any specific categorical
program -- is insufficient to pay all claims for
state aid, a deficit factor is applied to reduce
the allocation of state aid to the amount
appropriated.   Encroachment The expenditure of
school districts' general purpose funds in
support of a categorical program, i.e. the
categorical expense encroaches into the
district's general fund for support.
Encroachment occurs in most districts and county
offices that provide special education and
transportation. Other encroachment is caused by
deficit factors or local decisions to allocate
general-purpose funds to special purpose
programs.  
48
D1 - Appendix

• Encumbrances Obligations in the form of purchase
  orders, contracts, salaries, and other
  commitments chargeable to an appropriations for
  which a part of the appropriation is reserved.
•  
• Ending Balance Generally a reference to a school
  districts net ending balance of their general
  fund. The ending balance is divided into
  restricted and unrestricted funds that a school
  district has remaining at the end of a fiscal
  year. A school district must have a Reserve for
  Economic Uncertainties within their ending
  balance which meet the criteria and standards
  minimums as established by the State Board of
  Education.
• Equalization Aid The extra state aid provided in
  some years -- such as 2006-07 -- to a low revenue
  district to increase its base revenue limit
  toward the statewide average.
•  
• ERAF Education Revenue Augmentation Fund -- the
  fund used to collect the property taxes shifted
  from cities, the county and special districts
  within each county prior to their distribution to
  K-14 school agencies.
•  

Full-Time Equivalent (FTE) The ratio of time
expended in a part-time position to that of a
full-time position. The ratio is derived by
dividing the amount of employed time required in
the part-time position by the amount of employed
time required in a corresponding full-time
position. Gann Spending Limit A ceiling, or
limit, on each year's appropriations of tax
dollars by the state, cities, counties, school
districts, and special districts. Proposition 4,
an initiative passed in November 1979, added
appropriations limits in Article XIIIB of the
California Constitution. Using 1978-79 as a base
year, subsequent years' limits have been adjusted
for (1) an inflation increase equal to the
change in the Consumer Price Index or per capita
personal income, whichever is smaller and, (2)
the change in population or, for school agencies,
change in ADA. Proposition 111, adopted in June
1990, amended the Gann limit inflation factor to
be based only on the change in per capita
personal income.
49
D1 - Appendix

• Implicit Price Deflator See Cost-of-Living
  Adjustment.
• Indirect Expense and Overhead Those elements of
  indirect cost necessary in the operation of the
  district or in the performance of a service that
  are of such nature that the amount applicable to
  each accounting unit cannot be separately
  identified. Examples of indirect costs include
  expenses for the Board of Education,
  superintendent and the business office.
• Individualized Education Program (IEP) A written
  agreement between a school district and parents
  or guardians of a handicapped child specifying an
  educational program tailored to the needs of the
  child, in accordance with PL 94-142 regulations.
  The program is comprised of a placement team
  consisting of a certified district employee who
  is qualified to supervise special education, the
  child's teacher, one or both parents, the child,
  if appropriate, and other individuals at the
  discretion of the parent or school. The program
  must include a statement of the child's present
  levels of educational performance, a statement of
  annual goals and short term instructional
  objectives, a statement of the specific special
  education and related services to be provided to
  the child, the extent to which the child will
  participate in regular education programs, the
  projected dates for starting services,
  appropriate objective criteria, evaluation
  procedures, and schedules for determining, on at
  least an annual basis, whether the short term
  instructional objectives are being achieved.

• Least Restrictive Environment Federal law
  requires handicapped students be placed so that
  they can, to the extent appropriate to their
  individual needs and abilities, be educated with
  non-handicapped students.
• Mandated Costs School district expenses that
  occur because of federal or state laws, decisions
  of state or federal courts, federal or state
  administrative regulations. See California
  Constitution, Article XIIIB, Section 6.
• Maintenance Factor See Proposition 98.
•  
• Miscellaneous Funds Local revenues received from
  royalties, bonuses, and other payments in lieu of
  taxes. Fifty percent of such revenues are used
  as an offset to state aid in the revenue limit
  formulas.
•  
• PERB Public Employment Relations Board. Five
  persons appointed by the Governor to regulate
  collective bargaining between site and school
  employers and employee organizations. (See
  Government Code Sections 3541, et al.)
• PERS Public Employees' Retirement System. State
  law requires that classified employees, their
  employer, and the state contribute to this
  retirement fund. The fund is the largest public
  pension fund in the world with over 150 billion
  in investments.

50
D1 - Appendix

• Proposition 13 An initiative amendment passed in
  June 1978 adding Article XIII A to the California
  Constitution. Tax rates on secured property are
  restricted to no more than 1 of full cash value.
  Proposition 13 also defined assessed value and
  required a two-thirds vote to change existing or
  levy other non property or special taxes.
•  
• Proposition 98 An initiative adopted in 1988 and
  then amended by Proposition 111 in 1990
  Proposition 98 contains three major provisions
  (1) a minimum level of state funding for K-14
  school agencies (unless suspended by the
  Legislature) (2) a formula for allocating any
  state tax revenues in excess of the state's Gann
  Limit and, (3) the requirement that a School
  Accountability Report Card be prepared for every
  school. The minimum funding base is set equal to
  the greater of the amount of state aid determined
  by two formulas, commonly called "Test 1" and
  "Test 2" -- unless an alternative formula, known
  as "Test 3," applies.
•  
• Test 1 originally provided that K-14 school
  agencies shall receive at least 40.319 of state
  general fund tax revenues in each year, the same
  percentage as was appropriated for K-14 school
  agencies in 1986-87. Due to the shift in
  property taxes from local governments to K-14
  agencies, the "Test 1" percentage has been reset
  at 34.0.

• "Test 2provides that K-14 school agencies shall
  receive at least the same amount of combined
  state aid and local tax dollars as was received
  in the prior year, adjusted for the statewide
  growth in K-12 ADA and an inflation factor equal
  to the annual change n per capita personal
  income.
• "Test 3" only applies in years in which the
  annual percentage change in per capita state
  general fund tax revenues plus 1/2 is lower than
  the "Test 2" inflation factor (i.e. change in per
  capita personal income), and in this case the
  "Test 2" inflation factor is reduced to the
  annual percentage change in per capita state
  general fund tax revenues plus 1/2.
• One of the provisions of Proposition 98/111 is
  that if the minimum funding level is reduced due
  either to "Test 3" or the suspension of the
  minimum funding level by the Legislature and
  Governor, a "maintenance factor" is calculated as
  the amount of the funding reduction. In
  subsequent years when state taxes grow quickly,
  this "maintenance factor" is added to the minimum
  funding level until the funding base is fully
  restored.

51
D1 - Appendix
Purchase Order An encumbrance document that
shows the vendor from whom a purchase is being
made, what is being purchased by the school
district, the amount of the purchase, the fund
from which the purchase is being made (general,
building or bond fund), an accounting code to
which the purchase shall be applied, the
signature or initial approval of the designed
central office personnel responsible for
approving the ordering of goods.   Reduction-in-Fo
rce (RIF) The process whereby employment is
terminated because of a need to reduce the staff
rather than because of any performance
inadequacies of the employee.   Reserves Funds
set aside in a school district budget to provide
for estimated future expenditures or to offset
future losses, for working capital, or for other
purposes. Revenue Limit The amount of revenue
that a district can collect annually for general
purposes from local property taxes and state aid.
The revenue limit is composed of a base revenue
limit -- a basic education amount per unit of ADA
computed by formula each year from the previous
year's base revenue limit -- and any of the
number of revenue limit adjustments that are
computed anew each year.   The total revenue
limit of a school district is generally
determined by multiplying the district's P-2 ADA
times the base revenue limit, adding the
applicable revenue limit adjustments and applying
a deficit factor.

• Revolving Cash Fund A stated amount of money
  used primarily for emergency or small or sundry
  disbursements and reimbursed periodically through
  properly documented expenditures, which are
  summarized and charged to proper accounting
  classifications.
•  
• SB 90 Reference to Senate Bill 90/1972 that
  established the revenue limit system for funding
  school districts. The first revenue limit amount
  was determined by dividing the district's 1972-73
  state and local income by that year's ADA. This
  per-ADA amount is the historical base for all
  subsequent revenue limit calculations.
•  
• SB 813 Reference to Senate Bill 813/1983 that
  provided a series of education "reforms" in
  funding calculations. Longer day, longer year,
  mentor teachers, and beginning teacher salary
  adjustments are a few of the programs implemented
  by this 1983 legislation.

52
D1 - Appendix

• at that time was in compliance with the earlier
  Court order. The case was subsequently appealed
  to the Appellate Court that upheld the Superior
  Court ruling. In March 1989, all of the
  plaintiffs in the case agreed to dismiss their
  appeals, thereby settling Serrano as a legal
  issue.
• State Allocation Board (SAB) The regulatory
  agency that controls most state-aided capital
  outlay and deferred maintenance projects and
  distributes funds for them.
•  
• State School Fund Each year the state
  appropriates money to this fund, which is then
  used to make state aid payments to school
  districts. Section A of the State School Fund is
  for K-12 education and Section B is for community
  college education.
• STRS The State Teachers' Retirement System,
  funded by certificated employees, their employer
  and the state.
•  
• Test 1/Test 2/Test 3 See Proposition 98.

SACS Standardized Account Code Structure is the
method for school agencies to account for their
revenue and expenditures. Districts will use a
22-digit accounting record that will allow
agencies to track costs by resource, program goal
and function as well as by object code.   Scope
of Bargaining The range of subjects that are
negotiated between school districts and employee
organizations during the collective bargaining
process. Scope includes matters relating to
wages, hours, and working conditions as defined
in the government code. PERB and the courts are
responsible for interpreting disputes about
scope. Serrano Decision In 1974, the California
Superior Court in Los Angeles County ruled in the
Serrano v. Priest case that school district
revenues in California depended so heavily on
local property taxes that students in districts
with a low assessed value per pupil were denied
an equal educational opportunity in violation of
the "Equal Protection" clause of the California
Constitution. This ruling established certain
standards under which the school finance system
would be constitutional and was upheld by the
California Supreme Court in 1976. In 1983, the
California Superior Court in Los Angeles County
ruled that the system of school finance in effect
 
53
D1 - Appendix

• Unduplicated Count The number of pupils
  receiving special education or special services
  under the Master Plan for Special Education on
  the census dates of December 1 and April 1. Even
  though a pupil may receive multiple services,
  each pupil is counted only once in the
  unduplicated count.
•  
• Unencumbered Balance That portion of an
  appropriation or allotment not yet expended or
  obligated.
•  
• Unsecured Roll That portion of assessed property
  that is movable, such as boats, planes, etc.
•  
• Waivers Permission from the State Board of
  Education -- or, in some cases, from the
  Superintendent of Public Instruction -- to set
  aside the requirements of an Education Code
  provision upon the request of a school district.
  (See Education Code Section 33050.)