Garvey School District

Financial Update

April 19, 2012

Current Status

Last year, Garvey cut $1.5 million from our budget as directed by LACOE in anticipation of a $250 per ADA cut for 2011-12.

We laid off classified, certificated, and management staff to reach $1.5 million in reductions.

We had no pay cuts, no furlough days, and no caps on benefits.

The $250 cut did not materialize; instead we were cut $13 +$42 per ADA for a total of ~$300,000. This less than anticipated cut increased our fund balance in 2011-12.

In 2011-12, GSD lost 255 ADA equaling a revenue loss of $1,272,000 for 2012-13.

We submitted a QUALIFIED 2nd interim report.

What Does a Qualified Status Mean?

It means that Garvey may not be able to meet the state requirements for a minimally solvent school district budget in 2013-14.

When this occurs, districts must reduce expenditures to have sufficient funds.

Districts cannot ignore this requirement; GSD must demonstrate sufficient reductions to meet the minimum.

What About 2012-13?

Garvey must reduce $2,130,057 from our budget for 2012-13 and again in 2013-14.

This is because LACOE requires that we cut $370 per ADA for the anticipated trigger cuts.

Certificated employees have to be notified by March 15 and classified by May 15.

We won’t know if the governor’s budget initiative or others get on the ballot until the end of June or if they pass until November.

We must plan for the worst!

Why Were 32 Teachers Given Preliminary Layoff Notices? 10 notices were given due to loss of students. Actual

reduction needed is 13 but 3 teachers turned in resignations before March 15.

5 notices were given to accommodate Resource Teachers returning to K-8 teaching assignments.

2.6 notices given because of LA & Math curriculum changes at Garvey & Temple and the addition of Spanish and Mandarin classes. For budgetary purposes, no savings are assumed.

6.5 notices issued to the ELD Teachers. As these positions are paid with categorical funds, there will no savings to the Unrestricted General Fund.

Why 32 Teacher Preliminary Layoff Notices? (cont.) 7 layoff notices given to allow the District to

decide whether or not to continue planning periods for middle school teachers.

32 teachers noticed to cover

31.1 FTE positions.

Do We Still Have to Cut More?

Despite these reductions in the number of teachers, we still have to cut nearly $1.2 million more.

With almost 94% of our budget in salaries and benefits, we have few other areas to reduce beyond personnel costs.

14% Reserve: Fact or Myth?

2nd Interim Report projects a total Ending Fund Balance at 6/30/12 of $6,845,023.

This amount is 14.67% of total (Unrestricted and Restricted) projected General Fund expenditures for 2011-12.

$1,944,249 of this amount cannot be spent but must be set aside (saved) by State law.

Garvey does not have a 14% reserve.

2nd Interim Report Projections

Set Asides 2011-12 2012-13 2013-14

Revolving Cash

$30,000 $30,000 $30,000

Stores $65,676 $65,676 $65,676

Deferred Maintenance

$448,913 $672,978 $903,316

Required Reserves

$1,399,660 $1,382.040 $1,402,206

Total Set Asides

$1,944,249 $2,150,694 $2,401,198

Undesignated $4,900,773 $247,603 ($4,260,115)

How Do We Get a Balanced Budget?

Reduce $2,130,057 for 2012-13 and 2013-14. $2,130,057 x 2 = $4,260,115 – the amount of

the deficit for Garvey in 2013-14. This will leave $0 above the required minimum

reserve in 2013-14. This does not account for any additional

students we lose for declining enrollment next year that will impact our revenue in 2013-2014.

What’s Next?

The Governor’s May Revise will be published in the next few weeks.

The May Revise will include some changes from the Governor’s original budget proposal.

However, it is unlikely that these changes will significantly alter the course of action we need to pursue.