2014-2015

2nd Interim

& 2015-2017

Multi-Year Projections

Governing Board of Trustees

2014-2015

Pat Rocha, President

Linetta Borrelli, Clerk

Crickett Brinkman, Trustee

Ernie Longoria, Trustee

Loretta Rose, Trustee

Dr. Ronald J. Estes

Superintendent

Page 1

The following report represents Gustine Unified School District’s 2nd Interim report for 2014-2015. This report includes the District’s financial and operational revenues, expenditures and all necessary disclosures through January 31, 2015.

The Executive Summary consolidates the most important financial information for the Board of Trustees. The Executive Summary consists of: a Narrative, Budget, Ending Balances & Reserves, Budget Assumptions/Highlights, and Enrollment Projections. In addition, detailed budget information and additional supplemental reporting are also available for further reference.

Below you will find the first part of the Executive Summary, it is the General Fund Combined (Unrestricted & Restricted) Budget with totals by category for the 2014-15 2nd Interim Budget and projections for the two subsequent years, 2015-16 and 2016-17. Over the 3 years we see a steady growth of income and a slight reduction in expenses. This results in the elimination of deficit spending and ends the 3 years with a slight growth to the ending fund balance.

Page 2

2014-2015

2nd INTERIM

2015-2016

PROJECTED

2016-2017

PROJECTED

REVENUE

LCFF Revenue 13,961,047$ 15,271,398$ 15,985,241$

Federal Revenue 1,409,024 1,080,517 1,080,517

Other State Revenue 929,182 924,124 944,177

Other Local Revenue 384,288 114,848 114,848

Total Revenue 16,683,541$ 17,390,887$ 18,124,783$

EXPENSES

Certificated Salaries 7,195,113$ 7,267,725$ 7,399,679$

Classified Salaries 2,050,502 2,075,898 2,101,697

Employee Benefits 3,143,523 3,319,476 3,533,776

Books & Supplies 1,788,182 1,079,849 1,106,845

Services & Other Operating Expenditures 2,347,112 2,303,364 2,360,948

Capital Outlay 538,837 416,060 426,462

Other Outgo 794,348 823,553 830,908

Direct Support/Indirect Costs (39,116) (40,058) (41,059)

Total Expenses 17,818,501$ 17,245,867$ 17,719,255$

Excess/(Deficiency) before Other Financing Sources (1,134,960)$ 145,020$ 405,528$

OTHER FINANCING SOURCES & USES

Transfers Out (192,697) (192,697) (192,697)

-$ -$ -$

NET INCREASE/(DECREASE) IN FUND BALANCE (1,327,657)$ (47,677)$ 212,831$

BEGINNING FUND BALANCE 2,734,309$ 1,406,652$ 1,358,975$

ENDING FUND BALANCE 1,406,652$ 1,358,975$ 1,571,807$

Gustine Unified School District

Multi-Year Projections - 2014-2017

2014-2015 2nd Interim

EXECUTIVE SUMMARY

General Fund-Combined

FINAL

The next part of the Executive Summary shows fund balance totals for the 2014-15 2nd Interim and the two subsequent years. This first green section represents the totals for the Unrestricted funds that are in the General Fund. The numbers show the increase/decrease to the fund balance after revenues, expenses, and transfers/contributions have been totaled. The projections indicate there would be deficit spending in 2014-15 but it is eliminated in the final year with a slight growth of the ending fund balance. The deficit spending in 2014-15 is temporary as the additional LCFF revenue grows and closes the funding gap that districts have been battling for the past several years.

The sections below shows the same information described above, but for the Restricted funds. Don’t be alarmed at the deficit spending projected in the budget for all of the years below. The large deficit spending in the 2014-15 year is mostly due to large fund balances in Common Core, Energy Efficiency and Site funds that have a limited time frame for spending. These are 1x balances that are being spent on 1x expenses. These expenses are reflected in the gradual reduction to the ending fund balance.

Page 3

2014-2015

2nd INTERIM

2015-2016

PROJECTED

2016-2017

PROJECTED

UNRESTRICTED

NET INCREASE/(DECREASE) IN FUND BALANCE ($921,697) ($13,255) $347,955

BEGINNING FUND BALANCE 2,048,533 1,126,836 1,113,581

ENDING FUND BALANCE $1,126,836 $1,113,581 $1,461,536

GENERAL FUND DESIGNATIONS

Reserve for Economic Uncertainties - Dollars $723,689 $710,434 $1,058,389

Reserve for Economic Uncertainties - Percent 4.02% 4.07% 5.91%

Assigned for Site & Other Designations 403,147 403,147 403,147

Gustine Unified School District

Multi-Year Projections - 2014-2017

2014-2015 2nd Interim

EXECUTIVE SUMMARY

GENERAL FUND

FINAL

RESTRICTED

NET INCREASE/(DECREASE) IN FUND BALANCE ($405,960) ($34,422) ($135,123)

BEGINNING FUND BALANCE 685,776 279,816 245,394

ENDING FUND BALANCE $279,816 $245,394 $110,271

GENERAL FUND DESIGNATIONS

Legally Restricted $279,816 $245,394 $110,271

This next section below shows the combined totals for Unrestricted and Restricted funds, representing the total General Fund. As noted previously, there is deficit spending projected for the first year below, but the deficit is eliminated in the final year as the LCFF funding increases.

The other significant information to be aware of is our reserve levels. For the 2014-15 2nd Interim Budget, our reserves decrease to 4.02%, a decrease from the previous 6.70% level at 1st Interim. For the future years, our reserves show a slight to steady increases over the 2015-16 and 2016-17 years. It is important to know that it is strongly recommended to have a reserve that exceeds the 3% state required minimum reserve, which for our district goes averages $534,000 over the 3 years . This 3% reserve amount is only just over half of our average monthly payroll, currently at approximately $915,000 and growing. As we move forward, we should be conscious of this and remain vigilant of our district spending patterns and our reserves to ensure the fiscal stability of our district.

Page 4

2014-2015

2nd INTERIM

2015-2016

PROJECTED

2016-2017

PROJECTED

Gustine Unified School District

Multi-Year Projections - 2014-2017

2014-2015 2nd Interim

EXECUTIVE SUMMARY

GENERAL FUND

FINAL

UNRESTRICTED & RESTRICTED COMBINED

NET INCREASE/(DECREASE) IN FUND BALANCE ($1,327,657) ($47,677) $212,831

BEGINNING FUND BALANCE 2,734,309 1,406,652 1,358,975

ENDING FUND BALANCE $1,406,652 $1,358,975 $1,571,807

GENERAL FUND DESIGNATIONS

Reserve for Economic Uncertainties - Dollars $723,689 $710,434 $1,058,389

Reserve for Economic Uncertainties - Percent 4.02% 4.07% 5.91%

Assigned for Site & Other Designations 403,147 403,147 403,147

Legally Restricted 279,816 245,394 110,271

UNDESIGNATED FUND BALANCE -$ -$ -$

Minimum Reserve Requirement @ 3% $540,336 $523,157 $537,359

The chart and graph below illustrate our historical fund balances and demonstrate our ability to remain fiscally solvent as we worked together during the most difficult financial times, with the use of federal stimulus and one-time relief funding. Now that we have come out of the reductions in State funding, we need to remain vigilant of the importance of maintaining a balance between spending and a healthy fund balance.

Page 5

The amounts that follow are the projected ending balances for Fund 17. The district plans to continue building this fund for potential facility needs. This can help comply with Williams requirements, as it is one of the state priorities of the LCAP.

Historical Fund Balance Unrestricted Restricted Combined

2006-07 1,027,440$ 1,649,325$ 2,676,765$

2007-08 873,523$ 1,737,938$ 2,611,461$

2008-09 2,408,835$ 1,560,940$ 3,969,775$

2009-10 2,043,659$ 1,464,085$ 3,507,744$

2010-11 2,829,419$ 1,035,382$ 3,864,801$

2011-12 2,483,526$ 1,081,729$ 3,565,255$

2012-13 2,022,902$ 1,025,373$ 3,048,275$

2013-14 2,048,533$ 685,776$ 2,734,309$

2014-15 2nd Interim 1,126,836$ 279,816$ 1,406,652$

2015-16 Projections 1,113,581$ 245,394$ 1,358,975$

2016-17 Projections 1,461,536$ 110,271$ 1,571,807$

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

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Unrestricted Restricted Combined

FUND 17 SPECIAL RESERVES DEDSIGNATIONS

2014-2015

2nd INTERIM

2015-2016

PROJECTED

2016-2017

PROJECTED

Assigned for Facilities $100,095 $150,180 $200,265

Projected District Reserve-General Fund & Fund 17 4.57% 4.94% 7.03%

The Budget Assumptions and Highlights below are what drive the numbers in the budget projections. It is very important to be aware of this because if we change the assumptions, then the budget projections change.

ASSUMPTION CHANGES from 1st Interim to 2nd Interim:

One of the most significant changes to the 2014-15 2nd Interim Budget vs. 1st

Interim is the decrease of $200,972 to the Local Control Funding Formula (LCFF) revenue. This difference is due the decrease of our Supplemental & Concentration Funding rate, illustrated in red below. This means the number of high need students we were allowed to count was reduced. Other changes reflected at 2nd Interim include revisions to revenue and expense projections, projected salary increases (detailed on the next page), addition of 1x carry-over revenues and expenses , and 1x expenses to spend down fund balances in restricted programs. Some of these restricted programs with large balances include Microsoft Voucher Grant ($146K) and Title I Program Improvement ($150K). Overall, the combination of these changes resulted in a decrease of $456,896 to the Combined General Fund Balance. For future years, additional adjustments are included in the projections, such as STRS/PERS rate increases, One to One device purchases and other actions listed in the LCAP plan. Our projections will be adjusted as needed as we develop the 2015-16 LCAP & Adopted Budget.

Page 6

BUDGET ASSUMPTIONS / HIGHLIGHTS2014-2015

2nd INTERIM

2015-2016

PROJECTED

2016-2017

PROJECTED

Enrollment/ADA Projections

CBEDS Enrollment (Actual/Projected) 1,863 1,868 1,873

LCFF ADA 1778.03 1779.76 1787.49

LCFF, COLA & CPI Projections

LCFF Funding $13,961,047 $15,271,398 $15,985,241

LCFF: COLA 0.850% 1.58% 2.170%

LCFF: GAP Funding Rate 29.150% 32.190% 23.710%

LCFF: Supplemental & Concentration Funding Rate (EL's & F&R students) 77.68% 75.67% 71.74%

State Categorical COLA 0.850% 1.580% 2.170%

California Consumer Price Index Per SSC Projections 1.80% 2.10% 2.50%

STRS Employer Rates 8.880% 10.730% 12.580%

PERS Employer Rates 11.771% 12.600% 15.000%

LCAP Actions

Edu-Academy: One to One devices 90,000$

Common Core Materials 36,040$

Williams' Act Compliance (Capital) 60,000$

STRS/PERS rate increases 160,000$ 190,000$

Other Adjustments

Special Education Program Cost Increase & District Contribution Increase 27,000$ 4,000$

MCOE transfer for District referred ADA 8,192$ 8,719

2014-2015 2nd Interim Budget Revenue & Expenses

Page 7

Salaries & Benefitsmake up

70%, or $12.4M, of the

Expenses in2014-2015

The Local Control Funding

Formula makes up

84%, or $14M,of the

Revenue in2014-2015

Page 8

As we move forward and continue operations and planning, we are aware that our most important asset is our staff, and in turn they are the largest part of the budget. Projected ongoing increases to salary are included at an estimated 3.5% for all staff. These are strictly projections at this point and are pending negotiation settlements. The financial impact of this 3.5% is detailed and highlighted in green below by employee group. This ongoing increase projection is included in the 2014-15 2nd Interim Budget and all subsequent years. Also included are the cost of Step & Column Increases to all staff, an average of $173,000/year over each of the next 3 years.

The following schedule represents a comparison for all Governmental Funds from the 1st Interim Fund Balances to the 2nd Interim Fund Balances for 2014-2015.

The General Fund change reflects reduced LCFF revenues, carry-over and 1x funds and changes in expenses as explained in the Assumption Changes section.

At this time there was not other changes to the other funds that affected the ending fund balance.

ALL FUNDS: FUND BALANCE COMPARISONS

2014-15 2014-15

1st Interim 2nd Interim % Change

FUND 01 - General Fund $1,863,548 $1,406,652 -24.52%

FUND 11 - Adult Education $47,303 $47,303 0.00%

FUND 13 - Cafeteria $94,062 $94,062 0.00%

FUND 14 - Deferred Maintenance $200,650 $200,650 0.00%

FUND 17 - Special Reserves $100,095 $100,095 0.00%

FUND 25 - Capital Facilities $412,518 $412,518 0.00%

FUND 35 - School Facilities $282 $282 0.00%

FUND 40 - Special Reserve for Capital Outlay $36,104 $36,104 0.00%

FUND 56 - Debt Service Fund $0 $0 0.00%

2014-2015 2015-2016 2016-2017

Step & Column Increases Included

Certificated Teachers $109,086 $133,153 $134,804

Classified Staff 39,639 27,607 27,611

Administrators & Confidential/Management Staff 15,258 15,637 15,637

TOTAL $163,983 $176,398 $178,052

Cost of Projected 3.5% Salary Increase (Amounts included in budget) 2014-2015

Certificated Teachers $225,784

Classified Staff 68,700

Administrators & Confidential/Management Staff 63,563

TOTAL $358,047

The following graph shows six years of actual enrollment and projections. The actual enrollment numbers, for the first 4 years, reflect our enrollment at the time of CBEDS reporting to the state, which is measured in October. The successive 2 years are projections of our enrollment based on a graduating movement by grade and a conservative Kindergarten enrollment. Actual enrollment for October 2014 CBEDS reporting is included showing a sizeable increase of 73 students over 2013. This is the largest increase for the district over the past several years. The district prepared accordingly and hired several new teachers and support staff in the beginning of this 2014-15 school year. The projections indicate this growth will hold over the next two years and the district will remain vigilant of these projections and their implications.

In closing, we would like to acknowledge that we appreciate the fiscal support provided by the Gustine Unified School District Board of Trustees, Staff and the Community for the development, implementation, and maintenance of an excellent educational program for the students of Gustine Unified School District.

Sincerely,

__________________________ __________________________

Lizett Aguilar, CBO Dr. Ronald J. Estes, Superintendent

Page 9

2011-2012

Oct 2011

CBEDS

Actuals

2012-2013

Oct 2012

CBEDS

Actuals

2013-2014

Oct 2013

CBEDS

Actuals

2014-2015

Oct 2014

CBEDS

Actuals

Projected

2015-2016

CBEDS

Projected

2016-2017

CBEDS

124 145 138 166 140 140

144 133 128 126 166 140

119 144 133 129 126 166

133 124 144 144 129 126

133 146 119 148 144 129

149 136 144 117 148 144

139 152 144 150 117 148

135 143 157 148 150 117

129 128 146 159 148 150

9th Grade 145 135 146 160 159 148

10th Grade 123 141 131 146 160 159

11th Grade 115 124 142 135 146 160

12th Grade 136 108 118 135 135 146

1724 1759 1790 1863

1868 1873

(11) 35 31 73 5 5

1630.33 1649.85 1707.33

Projected 94.58% 94.57% 93.79% 95.38% 1762.03 1763.76 1771.49

County/NPS ADA 15.10 13.02 13.06 16.00 16.00 16.00

1654.15 1662.87 1720.39 1778.03 1779.76 1787.49

2.87 8.72 57.52 57.64 1.73 7.73

Kindergarten

5th Grade

6th Grade

7th Grade

Projected

1st Grade

2nd Grade

3rd Grade

4th Grade

Enrollment Actuals & Projections for Gustine (as of 3/13/15)

Increase (Decrease) in LCFF (RL) ADA

Increase (Decrease) in Enrollment

P-2 ADA

Actuals

LCFF ADA

(formerly Rev Limit)

8th Grade

Total EnrollmentActuals

Grades