Garvey School District

1. Garvey School District 2012-13 Budget Preview January 19, 2012

2. Major Provisions of Governor’s Proposal • “Flat” Revenue Limit Funding ~ 0.98% increase $48.84/ADA x 5222 = $255,042 additional (???) • Estimated 3.17% COLA not funded – Rev. Limit Deficit increases to 21.666% • Elimination of funding for Special Ed Transportation Revenue budgeted in 11-12: $196,171 Total cost budgeted at $672,411; $476,240 difference is encroachment

3. Major Provisions (cont.) • Reverse $2.4B in Revenue Limit deferrals This is not additional funding, only animprovement in cash flow. $8 Billion in Revenue Limit deferrals remain.

4. The Other Shoe • The “flat” Revenue Limit funding and reversal of deferrals become reality only if the Governor’s tax increase is passed by the voters in November. • The cut to Special Ed Transportation goes through independent of the fate of the ballot measure.

5. The Other Shoe (cont.) Highlights of Governor’s ballot measure: • Increase personal income tax rates on highest earners by up to 2% • Increase sales tax by ½% • Increases expire in December 2016 Estimated to take in $6.9 Billion annually; (LAO estimates between $4 – 5 Billion)

6. The Other Shoe (cont.) • Even if the tax increases are approved by voters, there is no additional funding for education. • The new tax revenue reduces the State’s General Fund contributions to Prop 98 on a dollar-for-dollar basis.

7. The Other Shoe (cont.) • If the tax increase does not get the required simple majority vote, the full extent of the cuts kick in. Unlike 2011-12, there is no sliding scale before the trigger cuts take effect. • K-12 education will take nearly 80% of the trigger cuts, which equate to $370/ADA.

8. Calculating the ADA Cut • Potential 2012-13 cut per ADA • Amount per ADA set aside in Fund Balance for potential 2011-12 trigger • Actual amount of 2011-12 trigger • Shortfall per ADA

9. Calculating the ADA Cut (cont.) • $133/ADA x 5222 estimated P-2 ADA = $694,526 additional funds to be set aside to absorb full effect of 2012-13 trigger cuts.

10. Additional Challenges for Garvey • From 2010-11 to 2011-12, enrollment declined by 279 students. A decline of 279 ADA will result in a Revenue Limit loss of $1,400,217 in 2012-13. (279 x $5018.70) • $85,000 estimated increase in Health Insurance premiums • 5 Teachers and 1 Nurse paid with Ed Jobs funds which expire 6/30/12 ($475,000)

11. Proposed Reductions 2012-13 • $133 Per ADA cut • 279 Lost ADA • Health Insurance Increase • Loss of Ed Jobs $$ • Transportation $$ • Total for GSD

12. Impacts • Experts have calculated that the trigger cuts equal the cost of 15 instructional days. However, there is no provision in the budget that would allow for the school year to be reduced to less than the current 175-day minimum. • To receive a full year of service credit, teachers must work 175 days.

13. A Crowded Ballot? • There are 4 other education funding initiatives that could be on the November ballot. None have yet qualified; the deadline to do so is June 28. • None is included in state budget proposal. • Will voters be overwhelmed and vote No on everything? Simple majority required for approval.

14. What Comes Next • The Governor’s proposed budget is only the beginning of the process. • The May Revise will include updated information on the condition of the State’s economy and its impact on the 2012-13 budget. • By June 30, the budget is supposed to be approved by the legislature and signed by the Governor.

15. Hope is Not a Plan • We will hope that the Governor’s tax plan is approved and that the economy improves to the point where stable funding for education is the norm. • However, we will plan for 2012-13 as if none of the above will come to fruition.