• We cannot cut our way out • We cannot tax our way out• With a combination of our reductions

already made and additional cuts and use of our Rainy Day Fund we can reach only a temporary “equilibrium” through 2011-2012 school year.

• We cannot afford current staffing.• We will be different—not done!

The Stark Reality:

2

Slide is from spring 2011

• After July 1– Review legislative outcomes

• Of financial and programmatic impact• For future planning

– Determine program change options to shed cost and sustain the most important opportunities that protect our student outcomes in a new era for public schools

– These are the tasks of leadership

Determining what’s next…Slide is from spring 2011

– Option 1: Use RDF for entire $1.75M shortfall next year– Option 2: RIF 16 and pay $900K from RDF– Option 3: RIF 33 and hold RDF for tax cap losses

and future deficits projected by financial experts

Reduction in Force InformationThere are three basic options developed by the Leadership Team to cover next year’s losses. It is necessary for the Board to authorize RIF this evening, if you are going to do so.

Slide is from spring 2011

Last April – the Board Chose:

2011-2012 2011-12 Opt 2RDF Balance $3,720,000

Deficit ($1,753,886)

Options RDF + RIF (15 FTE) SolutionReduction(s) RDF ($900,000)

RIF ($850,000)Est. RIF-'11-'12 16

2012-2013 Effects on 2012-2013

RDF Balance $2,816,114 GF Deficit $3,122,954

Options RDF + RIF (22 FTE) SolutionRIF Need $306,840

Est. RIF-'12-'13 6RDF Balance $0

Total RIF 22

End '13 RDF BAL $0

GF Deficit =$3,122,954

RDF Balance at June 30, 2013 would be ZERO.

Slide is from spring 2011

Rainy Day Fund (RDF)

• The $903K in RDF expenditures previously authorized by the Board will be completed by June 30, 2012

• Last year’s choice of Option 2 lowered RIFs needed through use of nearly $1M in RDF

• The Board’s potential courses of action for 2012-2013 are similar to those for ‘11-’12

2012 Budget Book – Page 133

Projected Projected ProjectedBudget/ Budget/ Budget/ Projected ProjectedCalendar Calendar Calendar School School

Year Year Year Year Year2011 2012 2013 2011-2012 2012-2013

General FundCash Balance Jan. 1 1,112,113$ 824,080$ 686,779$ 560,184$ 1,075,837$

Projected Revenues 32,975,193$ 32,990,265$ 33,126,467$ 33,099,266$ 33,058,366$ Projected Expenditures 34,235,409$ 35,245,863$ 36,273,344$ 34,527,979$ 35,851,353$

Deficit for Period (1,260,216)$ (2,255,598)$ (3,146,877)$ (1,428,713)$ (2,792,987)$

Support from Other Funds:Federal Teacher Job Stimulus 520,240$ 520,240$ -$ 1,040,480$ -$ Rainy Day Fund 451,943$ 1,598,057$ 1,700,000$ 903,886$ 2,846,114$

Net Change in Fund Balance (288,033)$ (137,301)$ (1,446,877)$ 515,653$ 53,127$

Projected Cash Balance Dec. 31 824,080$ 686,779$ (760,098)$ 1,075,837$ 1,128,964$

Zionsville Community SchoolsCombined Forecast

of General Fund Revenues and Expensesfor the Periods Shown

Budget PrepProjected GF

Deficit =$2.8 million

Expected Effect of Restructure20

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036 $-

$5,000,000.00

$10,000,000.00

$15,000,000.00

$20,000,000.00

$25,000,000.00

Annual Debt Service PaymentsAll Existing Lease-Rental Bond Debt

Historical Debt Service Payments Current Scheduled Payments WITHOUT RestructuringRestructured Payments

Since July, rates have remained favorable

Actual bond sale is expected around the third week of January

The Debt Restructuring helps:

Allows full CPF Payment of max legal amount for utilities & property Insurance

New GF deficit for2012-2013 projection should be $2.5 million

New Projected GF Deficit =$2.5 million

Why is the projected General Fund deficit for

2012-2013 so much larger than the deficit for 2011-

2012?

General Fund cliff:1. The expiration of the federal stimulus grant at the end of the 2011-2012 school year – $1.04 million

2. The continuation of the $1.6 million state funding cut in 2011 into 2012 with an additional $300,000 reduction

3. Exhaustion of the 90-16 funds ($125K) used to recall two teachers

Over $1.4 million less in funding

for 2012-2013 than in 2011-2012

Options for ActionThe options for 2012-2013 are the same as those presented last spring for 2011-2012:

1. The Board can fund all of the General Fund deficit using Rainy Day Funds alone.

2. The Board can fund a portion of the deficit with a combination of Rainy Day Funds and a RIF.

3. The Board can eliminate the deficit using Reduction in Force alone.

Options 1, 2 and 3:

2012-2013 2012-2013 Opt 1 2012-2013 Opt 2 2012-2013 Opt 3Est. RDF Balance $2,700,000 $2,700,000 $2,700,000

Estimated Gen Fund Deficit ($2,500,000) ($2,500,000) ($2,500,000)

Options RDF Solution Alone RDF + RIF Solution RIF Solution AloneReduction(s) $2,500,000 RDF ($1,250,000) RIF ($2,500,000)

RIF ($1,250,000)Est. RIF-'12-'13 0 15-20 30-35

2013-2014 Effects on 2013-2014 Effects on 2013-2014 Effects on 2013-2014Est. RDF Balance $200,000 $1,450,000 $2,700,000

Projected Gen Fund Surplus (Deficit) ($2,446,877) ($1,196,877) $53,123

Option One:

1. Use of $2.5 million of Rainy Day Fund for 2012-2013 school year

2. No RIF required

3. Would completely deplete RDF in 2013. No emergency reserve left. Would create yet another funding cliff in 2013-2014, requiring a substantial number of additional RIFs.

To consider about the RDF• This money is our only reserve against

contingencies, e.g. major building system emergency repairs, etc.

• The funding cliff expected in 2012 and for the 2012-2013 school year may be made worse by expenditures of RDF money now. (Steepens the drop!)

• Changes to the funding formula and issues such as the charter school and voucher bills before the legislature may materially affect our future funding negatively.

Slide is from spring 2011

To consider about the RDF• Using this one-time money to buy a

temporary fix for continuing expenses destines you to “buy” the same position(s) again or downsize more in the next cycle.

• Use of the RDF as the fix is an unsustainable approach. Our decline in revenue requires a decline in spending in the largest area of expenditure for our district.

Slide is from spring 2011

Option Two:

1. Use approx. $1.25 million of the Rainy Day Fund for 2012-2013 school year

2. RIF required – Preliminary estimates would be 10 – 15 teachers*

3. Would reserve some RDF for 2013-2014, leaving approximately $1.4 million for emergencies or use. Would not guarantee no further RIFs needed in 2013-2014.

Option Three:

1. Use no Rainy Day Funds for 2012-2013 school year

2. RIF required – Preliminary estimates would be 20 – 25 teachers*

3. Would reserve remaining RDF for 2013-2014, leaving approximately $2.7 million for emergencies or use. Still could not guarantee no further RIFs needed in 2013-2014.

Comments on Options 2 and 3:*The estimated number of RIFs includes consideration of planned retirements and related cost savings from non-replacement (where possible) or lower costs for replacements. Additional attrition due to resignations or other unforeseen events would be replaced as needed. This is critical for program planning.• Assumes contractually required salary increases for

teachers• Assumes no additional private fund raising (e.g. 90-

16)• Assumes no additional RIF for non-certified staff• Assumes no changes in school funding levels by the

legislature in 2012

Possible RIF Mitigations1. Known teacher retirements already

submitted total 5 teachers for 2012 and 8 in 2013.

2. Earned Income proceeds and elimination of remaining ECA subsidies could reduce the RIF number by another 4 to 6.

3. However, certain pending legal actions may offset these mitigations or even exacerbate the RIF need.

Options 1, 2 and 3:

2012-2013 2012-2013 Opt 1 2012-2013 Opt 2 2012-2013 Opt 3Est. RDF Balance $2,700,000 $2,700,000 $2,700,000

Estimated Gen Fund Deficit ($2,500,000) ($2,500,000) ($2,500,000)

Options RDF Solution Alone RDF + RIF Solution RIF Solution AloneReduction(s) $2,500,000 RDF ($1,250,000) RIF ($2,500,000)

RIF ($1,250,000)Est. RIF-'12-'13 0 15-20 30-35

2013-2014 Effects on 2013-2014 Effects on 2013-2014 Effects on 2013-2014Est. RDF Balance $200,000 $1,450,000 $2,700,000

Projected Gen Fund Surplus (Deficit) ($2,446,877) ($1,196,877) $53,123