1 addressing long-term budget challenges (part 9) eva rae lueck chief business and finance officer...

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Addressing Long-Term Budget Challenges (Part 9)

Eva Rae LueckChief Business and Finance OfficerGlendale Unified School DistrictFebruary 2, 2010

Glendale Unified School District Board Meeting – February 2, 2010

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The Budget Gap January 2010 – July 2012B-13

Problems and Solutions (in billions)

Reason for Shortfall Proposed Solutions

$19.9 $19.9

$1.0 Build Reserve

$2.3 Lost Budget Solutions

$3.9 Alternative Funds

$0.6 Fund Shifts

$1.4 Caseload Growth

$6.9 Operating Shortfall in 2009-10

Budget Act Revision

$3.4 Revenue Decline

$4.9 Adverse Court Decisions

$6.9 Federal Funds

$8.5 Expenditure Reductions

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Budget Solution Vulnerabilities January 2010 – July 2012B-13

Solutions (in billions)

Proposed Solutions

$19.9

$3.9 Alternative Funds

$0.6 Fund Shifts

$4.9 Adverse Court Decisions

$6.9 Federal Funds

$8.5 Expenditure Reductions

Schools Portion of Reduction$1.5 billion $1.2 billion Administrative Cuts $ .3 billion Flexibility Savings$ 24 per ADA Reduction

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Contrast of Statutory and Actual Amount Paid to District Per “Average Daily Attendance” (ADA)

Statutory & Actual Amounts to GUSD Per “Average Daily Attendance”

2007-08 2010-112009-102008-09

$5,777.86$5,627.84

$6,106.86

$6,367.86

$4,949.04

$4,978.86

$6,343.86

$5,777.86$1,365

DifferencePer Student

Actual Amount

Statutory Amount

21.5%DeficitFactor

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Unbalanced State Budgets Cause Major and Sudden Shifts in School District Budgets

• The State is required to draft a budget for the following fiscal year in January (Governor’s Budget), update it in May (May Revise), and adopt a final budget in June (June 30).

• Drastic shifts can occur at and between these major revisions and districts must respond.

One Example from Governor’s Budget: 2010-11 COLA

Date Projected Impact to DistrictDec 2009 .5% COLA $ .7millionJan 8, 2010 -.38% COLA/-$201 <$5.7 million>

Reduction: <$6.4 million>

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Budgeting in Uncertain Times

2009-10 2010-11 2011-12 2012-132008-09

Adopted BudgetFirst Interim

Second Interim

UnauditedActuals

Projected Budget Using State Figures, Dec 2009

Figures Adjusted Using Governor’s Budget, Jan 2010

Possible Additional Cuts if State Savings Unrealized

Line of Probability Analyzing State’s Economy

$4,946per ADA

$5,225per ADA

$5,199

$5,148

$4,928

$5,480per ADA

$5,346per ADA

$5,628

$4,979

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Budgeting in Uncertain Times

2009-10 2010-11 2011-12 2012-132008-09

Adopted BudgetFirst Interim

Second Interim

UnauditedActuals

Projected Budget Using State Figures

Figures Adjusted Using Governor’s Budget

Possible Additional Cuts if State Savings Unrealized

Line of Probability Analyzing State’s Economy

$4,949per ADA

$5,225per ADA

$5,199

$5,148

$4,928

$5,480per ADA

$5,346per ADA

$5,628

Projected GUSD Deficit (Before Gov Budget) -- $32.8 million(0% COLA 2009-2012, One-Time $253 Cut in 2009-10)

Projected GUSD Deficit (After Gov Budget) -- $50.3 million(-38%COLA 2010-11, 0% COLA 2011-13, $201 per ADA Cut)

Projected GUSD Deficit (After Gov Budget) -- $40.9 million(-38%COLA 2010-11, 1.8% COLA 2011-12, 2.4% COLA in 2012-13, $201 per ADA Cut)

If No Action

Taken

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Governor’s Proposed Budget(January 2010)

Need to address by 2nd Interim or declare “Qualified” certification

Need to address by 2010 Budget Adoption (June 2010) or declare “Negative” certification

With future COLAs (1.8%, 2.4%)

Without future COLAs (1.8%, 2.4%)

2009-10 21.2$ 21.2$ 2010-11 7.5$ 7.5$ 2011-12 (15.7)$ (18.5)$ 2012-13 (40.5)$ (50.3)$

Ending Fund Balance in Excess of 3% Reserve (in millions)Unrestricted General Fund

Glendale Unified School District

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Governor’s Proposed Budget(January 2010)

Need to address by 2nd Interim or declare “Qualified” certification

Need to address by 2010 Budget Adoption (June 2010) or declare “Negative” certification

With future COLAs (1.8%, 2.4%)

Without future COLAs (1.8%, 2.4%)

2009-10 21.2$ 21.2$ 2010-11 7.5$ 7.5$ 2011-12 (15.7)$ (18.5)$ 2012-13 (40.5)$ (50.3)$

Ending Fund Balance in Excess of 3% Reserve (in millions)Unrestricted General Fund

Glendale Unified School District

Caution: May Revise projections predict further reductions, thus increasing these deficit levels

Caution: These figures do not include a possible $50 per ADA reduction equaling $1.28 m annually

Caution: Does not include a potential revenue limit reduction in 2010-11 due to impact of increased absences in 2009-10 (potential -$1.1 m).

Caution: Does not include the potential loss of $7m in2012-13 if Class SizeReduction (CSR) flexibilityis not extended

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The Budget GapFirst Interim BudgetDecember 15, 2009

(Ending Fund Balance in Excess of 3%)

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

2010-11 2011-12 2012-13

$13.4 m

- $6.7 m - $32.8 m

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The Budget Gap Governor’s Proposed Budget with COLAs

January, 2010

(Ending Fund Balance in Excess of 3%)

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

2010-11 2011-12 2012-13

- $15.6 m - $40.9 m

$7.5 m

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The Budget Gap Governor’s Proposed Budget without COLAs

January, 2010 (Ending Fund Balance in Excess of 3%)

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

2010-11 2011-12 2012-13

- $18.5 m - $50.3 m

$7.5 m

1.8% COLA 2.4% COLA

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Filling The Budget Gap

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

2010-11 2011-12 2012-13

- $18.5 m - $50.3 m$7.5 m

K-3Class Size

30-to-1Furlough

Days

HealthInsurance

Containment

Early Retirement

Incentive

ExamineSummer School

Alternatives

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Filling The Budget Gap

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

- $18.5 m - $50.3 m

$7.5 m

FurloughDays

HealthInsurance

Containment

Early Retirement

Incentive

$6.5 m

2010-11 2011-12 2012-13

$6.5 m

$6.5 m

ExamineSummer School

Alternatives

$6.5 m

$7.5m

$6.5m

$6.5 m

K-3Class Size

30-to-1

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Filling The Budget Gap

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

- $18.5 m - $50.3 m

K-3Class Size

30-to-1

$6.5 m

2010-11 2011-12 2012-13

$6.5 m

$6.5 m

FurloughDays

HealthInsurance

Containment

Early Retirement

Incentive

ExamineSummer School

Alternatives

$7.5 m

$7.5m

$6.5m

$6.5 m

$6.5 m

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Filling The Budget Gap

-$10 m

-$20 m

-$30 m

-$40 m

-$50 m

-$60 m

$0

- $5.3.0 m - $30.5 m

$14 m

K-3Class Size

30-to-1

2010-11 2011-12 2012-13

FurloughDays

HealthInsurance

Containment

Early Retirement

Incentive

ExamineSummer School

Alternatives

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Actions in Progress to Curb Future Budget Deficits

• Increasing Class Size in K-3

• Examining Summer School

• Proposing to Limit the District’s Contribution to Health Benefits

• Offering Early Retirement Incentives

• Reconfiguring Work When Individuals Retire or Leave GUSD

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Increase K-3 Class Size to 30 Students

• Increase K-3 class size to 30 students

• Savings $3.7 to $6.6 m (beginning vs. average teacher salary)

– Staff Reductions: 112 FTE

• Retirements

• Reassignments

• Reductions-in-Force

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Early Retirement Incentive

• Early retirement being offered to certificated (GTA), classified (CSEA), and management

– Reduce the number of positions without Reductions-in-Force (RIFs/layoffs)

– Re-examine staffing ratios

– Fiscal impact unknown

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School Services General Recommendations for Savings

• Requiring Negotiations

– Furlough days

– Salary roll-backs

– Reductions in hours, days, or work year

– Elimination or reduction of preparation time

– Freeze of step and/or column

– Freeze or reduction of contributions for employee health and welfare benefits

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Immediate Direction Needed(to prepare for March 15, 2010)

• Initial target for class size in grades Kindergarten – 3rd Grade