Lynette Kerr - SBUSD.. - South Bay Elementary School

Report
South Bay Union School District
Presented at the
South Bay Union School District Budget Meeting
September 27, 2014
By Lynette Kerr, Director of Fiscal Services
2014-2015 State Level
 Overall budget policy decisions continue to be reflective of slow but
seemingly steady economic improvement
 State revenues surge for a variety of reasons, but:
 The Department of Finance (DOF) lowers its forecast for 2015-16 Local Control
Funding Formula (LCFF) funding levels significantly
 The revenue vitality we have been concerned about is coming into play
 There are no statutory or constitutional guarantees for out-year LCFF funding
levels
 The real story is on the expenditure and reserve side of the equation
© 2013 School Services of
California, Inc.
Expenditures – Where the Action Is
 While LCFF funding projections take a marked turn
downward in 2015-16, expenditures shoot up
 California State Teachers’ Retirement System (CalSTRS) contributions
go up for employers, employees, and the state beginning in 2014-15
 But by far the biggest impact is on the employer contribution which
will increase each year and represents a total increase of 4.33% BY 201617, the third year of the multiyear projection
 Beginning in 2015-16, California Public employees’ Retirement System
(CalPERS) rates also rocket upward
© 2013 School Services of
California, Inc.
The LCAP is King!
 2014-15 is the first year for which the Local Control and Accountability
Plan (LCAP) guides expenditures
 And the differences between district funding levels and flexibility are dramatic
 The State Board of Education (SBE) is struggling with demands for more
flexibility on one hand and tighter restrictions on the other
 For high-funded districts, about two-thirds of the new money is targeted
for improved or increased services to students
 The targeted funding can be used for across-the-board salary increases in only
very limited circumstances
 If the targeted funds are to be used for compensation, they have to be tied to
activities that “increase or improve” services to students.
© 2013 School Services of
California, Inc.
2014-2015 State Level - Recap
 The 2014-15 State Budget continues increased funding for the Local Control
Funding Formula (LCFF) which will continue the restoration of cuts that
began in 2008-09
 The new funding formula will be over one-third of the way to full implementation
after the first two years
 The LCFF increases of individual LEAs can vary significantly
 The Governor’s proposed to eliminate the cross-year apportionment deferrals
of $5.5 billion for school districts
 The Legislature reduced the deferral buy back by $900 million
 At their peak in 2011-12 K-12 deferrals totaled $9.4 billion
 Increased STRS/PERS contributions will have a material impact on LEA multi-
year projection budgets
 The Local Control Accountability Plan became one of the most important
considerations in the allocation of resources for districts
© 2013 School Services of
California, Inc.
Base Year Funding and LCFF Target
 A school district’s LCFF entitlement is based on three key elements:
 Its base year funding in 2012-13
 The demographics of its student population, specifically the percentage of
students who qualify for supplemental/concentration grants
 The state appropriation for LCFF
 In general, a school district is better off under the LCFF if:
 Its base year funding is below the statewide average
 The proportion of students qualifying for supplemental/concentration
grants is above the statewide average
 South Bay USD is projected to be 70.86% unduplicated for 2014-15
© 2013 School Services of
California, Inc.
LCFF Implementation Phase
 There are two distinct phases of the LCFF: (1) the eight-
year implementation phase, and (2) the fully funded phase
 The eight-year implementation phase is not set in statute and
can be longer or shorter than eight years, depending upon the
annual LCFF appropriation
 Numerous fiscal inequities could arise during the
implementation phase
 There is no statutory language for cost-of-living increases under
LCFF
 Funding is subject to state allocation
© 2013 School Services of
California, Inc.
LCFF – What it Does
 The LCFF makes fundamental changes to how we allocate state Proposition 98
revenues to schools
 There are direct parallels with how we have funded schools in the past
 The LCFF base grants are like revenue limits
 The LCFF base grant adjustments – class-size reduction (CSR), CTE,
supplemental grants, concentration grants – are like categorical programs
 At full implementation, the LCFF will fund every student at the same base rate
 Over time, most school district and charter school base grant funding will
equalize to the same level
 The LCFF provides that each school district receive at least as much state aid
in 2013-14 and future fiscal years as the district received in 2012-13
© 2013 School Services of
California, Inc.
South Bay Union School DistrictRevenue Comparison
2007-08
Revenue Limit
$2,104,482
State Categoricals-LCFF Base
621,370
Deferred Maintenance-LCFF Base
15,254
Total
$2,741,106
2014-15 (Budget Adoption)
Local Control Funding Formula (LCFF) $3,213,794
•
•
Based on updated FCMAT Calculator (5/8/14)
Based on 2013-14 P-2 ADA & CALPADS Data
South Bay Union School DistrictDistrict’s General Fund Deficit
2014-15 Budget Adoption:
Revenue:
$ 4,487,605
Expense:
4,638,776
Sub-total
(151,171)
Transfers Out (Charter-SE) (54,635)
Fund Balance Change
$ (205,806)
Deficit spending occurs when expenditures and transfer out
exceed revenues and other sources
South Bay Union School DistrictDistrict’s General Fund Deficit
A deficit is considered a “structural deficit” if the “on-going”
expenditures and transfers out exceed on-going revenues and
other sources.
2014-15 Adopted Budget - deficit adjusted for identified one-time
expenditures
General Fund:
Fund Balance Change
($205,806)
One-time Expenditures
Core Standard (RS 7405)
$80,866
Prop 39 (RS 6230)
54,689
OPEB-Retiree Benefits
43,258
Structural (on-going) Deficit
($26,993)
Charter Fund:
 Deficit spending
•
•
Dependent charter
Appropriate to be included in district deficit discussion
Budget Review/Assumptions
Key Data Points
• Revenues
• Enrollment
• Attendance rate
• Unduplicated percentage
• Class size
•
Expenditures
• Step & Column
• Per 2014-15 C & S $58,777
• Staffing levels
• Student/teacher ratios
Budget Planning
Other Considerations
• Balanced Budget
• LCFF “Reset” State Funding
• Every LEA should plan for a balanced budget
•
Understanding on-going vs one-time revenues and
expenditures
•
Carryover is considered a “one-time” resource
•
Draw-down of ending balance should be:
• Planned
• One-time resources should not be used for ongoing
programs or ongoing employee compensation
Budget Planning
Other Considerations (continued)
• Establishing a Local Reserve Level
SB 858 requires districts that adopt an ending fund balance for 2015-16 in
excess of the minimum reserve requirement identifying the amount in excess
and prepare a statement that substantiates need for the excess
• Considerations
•
Cash flow
•
District’s deferral level in 2011-12 was $587,320
•
Demographic changes, i.e., declining enrollment
•
Local
•
Funding Risk
•
Under LCFF, higher funded districts have a higher risk in
economic downturns
Budget Planning
Other Considerations (continued)
• Identifying Annual Set-asides
•
Facilities – long-term planning
•
•
Districts no longer receive restricted funding for deferred
maintenance projects
Textbook Adoptions
•
District’s no longer receive a per ADA allocation restricted to
meet state textbook adoption requirements
• Impact of increased STRS/PERS contributions
Currently the subject of ongoing conversations, subject to
change
• Initial projection for SBUSD
•
•
•
2015-16
2016-17
$47,266
$97,479
• Local Priorities
• LCAP
•
Budget must remain aligned with LCAP

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