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Cambrian School District

2010-11 State-Adopted Budget and the Impact on Cambrian School District. Cambrian School District. The Economy. The economy is the key to financial recovery for the state as a whole and for public agencies Unemployment is key and remains higher than the rest of the nation

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Cambrian School District

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  1. 2010-11 State-Adopted Budget andthe Impact on Cambrian School District

    Cambrian School District

  2. The Economy The economy is the key to financial recovery for the state as a whole and for public agencies Unemployment is key and remains higher than the rest of the nation Predictions of an early recovery in the spring of 2010 proved to be overly optimistic Recovery is slow at best and realistically nearly nonexistent Most projections are that the economy will remain sluggish until at least 2012 Still, not all the news is bad Things are not getting worse No “double-dip” recession – at least not yet The ugly real estate and construction markets are economy killers The keys to recovery? Improvement in the construction industry Improvement in employment
  3. Major Changes from May Revisionto the Final Budget May Revision: Reduced revenue limits by $1.5 billion Final Budget: Fully restores revenue limit cut May Revision: “Fully funded” negative 0.39% cost-of-living adjustment (COLA) Final Budget: Holds school agencies harmless from negative COLA May Revision: No funding for prior-year mandates Final Budget: $300 million in one-time mandate funds, of which$100 million is for 2010-11 claims and $200 million is for prior-year claims allocated on a per-ADA basis
  4. 2010-11 Final Budget vs. May Revision The Budget agreement did not include the $1.5 billion revenue limit reduction, estimated to be 3.85% on the total undeficited base revenue limit The Budget agreement eliminated the effect of the negative COLA with the lower deficit factor -$1,172 for 18.355% deficit
  5. 2010-11 Final Budget vs. 2009-10 Funding 2009-10 revenue limits were reduced by the 18.355% deficit and the $253 per-ADA one-time reduction Note: The $253 per-ADA reduction was related to the recapture of the 2008-09 “overappropriation” of Proposition 98
  6. What Do the Changes Mean for Our District? Revenue limit increases by $282/ADA Due to reduction in deficit factor Negative COLA of 0.39% not included in Adopted Budget Elimination of 3.85% additional cut from May Revision Revenue limit funding will increase by approximately $1.15 million in the District’s 2010-11 budget
  7. Cautions About the State Budget The politics of this State Budget are very different from the economics of the Budget While the underlying economic conditions for our state are, at best, getting no worse, the state is counting on an economic expansion that has not yet occurred The entireBudget—not just for education—allows more spending than the structural revenues will allow The budget includes more spending for education by relying on deferrals “The check is in the mail” mentality While deferrals are better than another Budget cut, in the long term, they pose a huge barrier to a sound budget for the state and for local educational agencies
  8. Cautions About the State Budget On the face of this Budget, we go from a total revenue limit deficit of more than 22% to just under 18% There is uncertainty as to whether or not the cuts are over and concern that the state will maintain the level of funding specified in the 2010-11 Budget Act By January, we will have a new Governor, a number of new legislators, new financial and economic projections, and new political priorities The Budget relies so heavily on improved economics and revenues and billions of dollars from the federal government, any downturn would lead to another crisis As in past crises, the state could again turn to education for the lion’s share of the cuts
  9. Cautions About the State Budget How should we treat this Budget? The recommendation from financial experts is: Include the revenue increases in district budgets for the current year and out years Wait, at a minimum, until the January Governor’s Budget Proposal for 2011-12, and preferably the May Revision next spring, before we actually spend these dollars. The State Budget is based largely on political assumptions, not sound economic and expenditure projections We have seen that the economic winds of change can gust in many directions We plan to make budget revisions to include the revenue changes based on the State‘s Adopted Budget and proceed cautiously before making commitments to spend the dollars
  10. Next Steps The first interim reporting period closes October 31 and the report will be received by the Board by December 9 Adjustments to the budget will be made based on the Adopted State Budget and local changes Our revision to the budget requires: Clarifying assumptions How much revenue? What flexibility options remain available? How will expenditures change? What is the impact of Federal Jobs Bill funding? We will continue to watch Sacramento closely and provide updates on changes to the Board
  11. Questions
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