Post Election Day Fiscal Analysis & Preliminary First Interim Look November 27, 2012

1. Post Election Day Fiscal Analysis & Preliminary First Interim LookNovember 27, 2012

2. Presentation Overview • Opening Remarks • Proposition 30 Impacts • Budget Outlook – LAO Report • SDCOE Guidance for First Interim • Cash Flow Projection/Deferrals • Budget Solutions List • Before Governor’s Budget proposal • Closing Remarks

3. Opening Remarks • Presentation Objectives: • Provide Post Election Fiscal Update to the Board • “Set the Table” for First Interim Report • Obtain Board Feedback/Concurrence for First Interim Strategy • Uncertain Budget Setting…But Encouraging Way Ahead • Prop 30, Prop Z, LAO Report • Reality…Still Have Deficits…and New Revenue • The Real Budget Development Begins with the Governors Proposed Budget – January 2013 • Focus: Must Stabilize District Operations and Advance Collaboration and Communications

4. Proposition 30 Highlights • Proposition 30 2012-13 Budget Impacts • Level Funding in current year 2012-13 • No Mid Year 2012-13 reduction…No Shortened School Year! • No $441 Revenue Limit/ADA or $47.2 M mid-year cut • Deferral buy down by state will improve cash flow projections in 2013-14, but will not help current year • Anticipate deferral buy down in July and August 2013 for 2012-13 fiscal year

5. 2013-14 Budget Outlook • No Specific Budget Guidance Available Until Governor Releases Budget in Early January • Early Indications Are Promising For Funding Improvements for K-12 • COLA and Deficit Factor Changes • November LAO Report Highlights Positive Signs • Manageable 2013-14 State Deficit • Prospects for budget surpluses in subsequent years

6. SDCOE First Interim Guidance • San Diego County Office of Education (SDCOE) First Interim Guidance • Still urges caution • Will allow flexibility in solutions proposed pending Prop 30 implementation in January Budget Proposal • Stresses need for adequate reserves to enhance stability

7. Cash Flow Projections • District Cash Flow Must Remain A Primary Short Term Budget Focus • State deferral schedule changes DO NOT help 2012-13 cash flow • District is at limit of TRANs borrowing • TRANs borrowing for 2013-14 will be constrained • By alternative liquidity limitations

8. 2012-13 Cash Flow Projection With Prop 30 Low Cash Balance

9. Prop 30 Impact on 2013-14 Deficit GFU Budget Shortfall for 2013-14

10. 2013-14 Budget Solutions • District Required to Submit Solutions List for 2013-14 in First Interim Report to SDCOE • Solutions List Based on 2012-13 Budget Solutions List Approved by the Board in June 2012 • With Board Concurrence, First Interim Report (SACS) Will Include Solutions List • Superintendent will return to the board in January with specific recommended adjustments to reflect Governor’s budget proposal

11. Budget Solutions List for First Interim Report * Specific solutions and adjustments will be made based on January Governor’s proposed budget. Notional strategy supports First Interim report.

12. Budget Development Timeline

13. Closing Remarks • Laser Focus on Stability, Trust, and Team Building • Maintain Solid Communications • Budget numbers will change based on First Interim Report and Jan-June cycle • Jan proposed budget, Legislative engagement, May Revision, state approved budget • Update all Stakeholders as Sacramento adjusts direction • Deal with deficits in transparent, inclusive way • Proceed with First Interim report refinement/finalize