governor’s proposed budget 2010-11

Governor’s Proposed Budget

2010-11Steve Bolman

Deputy Supt., Business and Administration

Midge Hoffman

Director, Budget & Accounting

The Economy

• Signs indicate that most of the nation is recovering…California not so much– California

Unemployment at 12.3% compared to 10% for the U.S.

– DOF estimates rate to remain above 10% through 2011

-206

-118

-70

-28

-283

Government

Financial Service

Leisure & Hospitality

Industrial Sectors (Jobs in Thousands)

Manufacturing

Construction

Employment Trends December 2007 to November 2009

Recovery

The Economic Cycle

Stabilization

December2007

Spring2010

2015

5-year return to December 2007

Governor Vows to Protect Education!!!

• Education will take less than it’s share of pro-rata cuts in 2010-11

Priorities

• Governor states that prison expenses will no longer be higher than higher education expenses, but speaks nothing about K-12 and the fact that it is next to dead last in funding in the Nation

GOOD NEWS!!!

• No Mid-Year cuts for 2009-10!!!

• Decrease in Prop 98 offset by sweep of underutilized K-3 CSR funds

GOOD NEWS!!!

•FUNDED COLA for 2010-11!!!

BUT WAIT, THIS GOOD NEWS DIDN’T LAST VERY LONG…

• If only it were real

• …the COLA is being ‘funded’ because it’s

negative• -.38% cut to the

Revenue Limit

GOOD NEWS THAT DIDN’T LAST

• The previous 2010-11 COLA reported was .5% positive…a negative swing of .88%– Elementary - $109K– Secondary - $318K– Cherry Valley - $17K– TOTAL - $444K

2011-12 COLA

• 2011-12 COLA re-benched to 1.8% from 2.4% - <.6%> decrease– Elementary - $ 66K– Secondary - $182K– Cherry Valley - $ 10K– TOTAL - $258K

• Cumulative Loss for 2010-11 & 2011-12 = $1.15 Million

It feels good to be “Protected”…or does it?

• “Protected” doesn’t mean no new cuts

NO CUTS FOR THE ‘PROTECTED’ EDUCATION BUDGET ???

• The one-time revenue limit cut of $252.83 per ADA in 2009-10 is deleted for 2010-11 … BUT

• This is being replaced by another on-going cut …

NO CUTS FOR THE ‘PROTECTED’ EDUCATION BUDGET ???

• The $1.5 B cut is to come from “District Administration”– $191 Elementary– $231 Secondary

• An additional loss of $1.5 M for the District

• This on-going additional cut won’t increase the revenue limit deficit factor – there’s no payback

NO CUTS FOR THE ‘PROTECTED’ EDUCATION BUDGET ???

• No basis in reality for this figure

• Only gives the

‘appearance’ that the Governor is keeping cuts from the classroom

• Would eliminate 3 out of every 4 positions in the District Office

NO CUTS FOR THE ‘PROTECTED’ EDUCATION BUDGET ???

• For example, The Business Office Staff is comprised of:– 2 Payroll– 2 Accounts Payable– 1 Budget Tech– 1 District Accountant– 1 Purchasing Coordinator– 1 Business Manager

• NOW, PICK TWO PEOPLE TO PRODUCE PAYROLL,PAY BILLS, MAKE DEPOSITS, BUY BOOKS & SUPPLIES, BALANCE & MANAGE THE BUDGET,MAKE SURE WE HAVE CASH, ENSURE INTERNAL CONTROLS AND SO ON…

2009-10 2010-11 2011-12

Elementary $

506,199 $

496,647 $

565,488

Secondary

$ 1,294,045

$ 1,197,129

$ 1,301,941

Cherry Valley

$ 82,541

$ 85,865

$ 97,431

$ 1,882,785

$ 1,779,641

$ 1,964,860

$253/ADA $245/ADA $278/ADA

Revenue Update - LossesSince 1st Interim

Revenue Limit Changes

Per-ADA Revenue Change

-15%

-10%

-5%

0%

5%

10%

15%

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Year

Incr

ease

to th

eB

ase

Rev

enue

Lim

it Pe

r AD

A

Average

-13.9% from 2007-08

Revenue Limit Changes

Average Unified District

$6,387$6,411$6,150

$5,821

$5,821

$5,668

$4,981 $5,014

$4,000

$5,000

$6,000

$7,000

2007-08 2008-09 2009-10 2010-11

Dol

lars

Per

AD

A

Projected Statutory COLA

Flat Funding

Actual Funding

Loss of COLA

Loss of baseline dollars

$566

$807

$1,373$1,430

$482

District Options/Flexibility

• Reduce calendar by 5 days through 2012-13

• Tier III Categorical funding can continue to be used with flexibility through 2012-13

• Eliminate Deferred Maintenance Transfer

• Reduce Reserve for Economic Uncertainties

State Problems & Solutions

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

Problems with Assumptions – Pick your Metaphor…

• More Gimmicks• Funding Shifts may

be legally challenged• May not see $6.9 B

from the Federal Government

• When will the State figure out they’re out of smoke & mirrors?

2009/2010 2010/2011 2011/2012

TOTAL INCOME $64,391,563 $61,419,468 $61,105,833

LESS TOTAL EXPENSES $67,197,801 $66,133,400 $66,399,713

NET INCREASE (DECREASE)

$ (2,806,238)

$ (4,713,932)

$ (5,293,880)

PLUS BEGINNING BALANCE $12,786,321 $ 9,980,083 $ 5,266,151

EQUALS ENDING BALANCE $ 9,980,083 $ 5,266,151

$ (27,729)

Less RESERVES

(3,062,888)

(2,877,089)

(2,775,650)

UNAPPROPRIATED $ 6,917,194 $ 2,389,062

$ (2,803,380)

Trends with Revenue Cuts

Average Daily Attendance

2009/2010 2010/2011 2011/2012

COLA 4.25% -0.38% 1.80%

18.355% Deficit 18.355% Deficit

18.355% Deficit

Elementary ADA

2,002

2,027

2,034

Cherry Valley ADA

350

350

350

Secondary ADA (funded)

5,058

4,886

4,683

Total ADA

7,410

7,263

7,067

Net Change over Prior Year

(32)

(147)

(196)

2009/2010 2010/2011 2011/2012

TOTAL INCOME $64,391,563 $61,419,468 $61,105,833

LESS TOTAL EXPENSES $67,197,801 $64,914,400 $65,180,713

NET INCREASE (DECREASE) $ (2,806,238) $ (3,494,932) $ (4,074,880)

PLUS BEGINNING BALANCE $12,786,321 $ 9,980,083 $ 6,485,151

EQUALS ENDING BALANCE $ 9,980,083 $ 6,485,151 $ 2,410,271

Less RESERVES (3,062,888) (2,840,519) (2,739,080)

UNAPPROPRIATED $ 6,917,194 $ 3,644,632 $ (328,810)

Trends with 2.75% Salary Cut for All Employees