Pacifica School District Budget Study Session

1. Pacifica School DistrictBudget Study Session January 23, 2008

2. Agenda: 6:00 p.m. -- Review State Budget Process 6:15 p.m. -- Impact of the 2008-2009 Governor’s Proposal • Current Year 2007-2008 (mid-year cuts) • Budget Year 2008-2009 (next school year) 7:15 p.m. -- Other Financial Information 7:25 p.m. -- Community Input 8:00 p.m. -- Board Discussion 8:30 p.m. -- Next Steps

3. Budget Development Calendar ActivityDates • Governor’s 2008-2009 Proposed Budget January 2008 • 2008-2009 Second Interim Report February 27, 2008 (Board Meeting) • Deadline for certificated reassignments or reductions March 15, 2008 • Governor’s May Revise May 2008 • 2008-2009 Tentative Budget Presented to Board of Trustees (Work Study Session) June 4, 2008 • Public Hearing on Proposed Budget June 18, 2008

4. Review of Prior Year Budget Cuts

5. Governor’s Proposal for the Current Year (2007-2008) – Mid-Year Cuts • The Governor has proposed to eliminate $360 million from K-12 education budgets for the current year. There are no specific K-12 programs identified for the reduction. The Governor stated that the reductions will most likely come from funds that have not yet been allocated to school districts and then any remainder by applying a deficit factor to the revenue limit. The San Mateo County Office Of Education has directed school districts to deduct a .50% deficit factor for the second interim report as a precaution for mid-year cuts. • For the Pacifica School District a .50% deficit factor is equal to $84,527. These funds are currently in the budget and allocated for current year expenditures. Failure to receive these funds will result in a further draw down of reserves.

6. Governor’s Proposal for the Current Year (2007-2008) • The proposal also includes to further delay a payment to school districts funds that the state would normally release in June. The past several years, the state has delayed payment by one month and paid school districts in July. It is proposed to shift this June payment to September, which would cause cash flow issues for school districts. The Pacifica School District would have to draw on a yearly loan (TRAN) in order to meet cash flow needs. • The amount of money that the state would delay paying the Pacifica School District is approximately $545,000. • In prior years the district has been able to accrue for this delayed payment as an accounts receivable when the books are closed on June 30th. It is likely that the district will still be able to accrue for this late payment when the books are closed on June 30th.

7. Projections for 2008-2009 • The Pacifica School District’s annual budget is $22 million. • The Pacifica School District would need approximately $318,415 for 2008-2009 just to roll over this year’s programs with no salary increases or additional services. This cost includes projected step and column and benefit increases offset by projected retirements.

8. Impact of the Governor’s Proposed Cuts to the PSD Unrestricted General Fund for 2008-2009 over the 2007-2008 Levels: • $365,638 -- Revenue Limit ($/student) • $ 40,000 -- Class Size Reduction • $ 90,000 -- Special Education • $ 58,287 -- Mandated Cost Reimbursements TOTAL = $553,925

9. Governor’s Proposal 2008-2009 Following is a list of reductions that would apply to the Pacifica School District based on the Governor’s Proposal: • The Governor’s Budget proposes that K-12 revenue limits first be increased by a 4.94% COLA (cost of living adjustment), but then be reduced by a deficit factor of 6.99%. The net result is a cut of about 2.4% over the current year’s revenue limit. • For the Pacifica School District this equals $365,638.

10. Class Size Reduction • The 2007-2008 total cost of Class Size Reduction for the Pacifica School District is equal to $1,406,223. • This program has not encroached on the general fund in the last 4 years. • Given proposed reductions for Class Size Reduction, the District projects $40,000 of encroachment for 2008-2009.

11. Special Education (State) • In addition to receiving no COLA for 2008-2009, the proposal reduces funding by 6.5% below this years level. • This equals approximately $90,000 of less funding. • Federal law mandates that special education services cannot be reduced by school districts. Thus, the District general fund will need to make up the difference. In the current year the general fund is projected to contribute $1.8M for special education services.

12. Mandated Cost Reimbursements • Further deferrals for reimbursements of mandated cost claims. Mandated cost funding reimburses school districts for collective bargaining with employee groups and other mandated services such as physical performance testing which school districts are required to provide to students. • The annual reimbursement is approximately $58,287.

13. Mandated Cost Report for Pacifica School District

14. State & Federal Proposed Cuts to the Pacifica School District Restricted General Fund for 2008-2009 • $101,403 -- State Funded Programs • $ 33,000 -- Supplemental Instruction • $ 82,257 -- Federal Programs TOTAL = $216,660

15. No COLA for state funded programs and a 6.5% reduction. No program is exempt from these cuts. Total for Pacifica School District = $101,403.(Highlighted items represent programs where services cannot be reduced)

16. Instructional Materials: Current and Upcoming Adoptions • Districts will have two very expensive back-to-back adoptions (Math 2008 and Reading, Language & Arts 2009). • The California Department of Education estimates that math adoptions will cost approximately $78 per pupil ($289,000) and reading adoptions will be approximately $125 per pupil ($463,000). • Projected funding for 2008-2009 is $57.97 per pupil ($178,000)

17. Supplemental Instruction • The summer school and after school tutoring programs reimbursement rates will be reduced from $4.08 to $2.00 per student per hour. • For 2007-2008, the district received $66,197 in State funding. • This reduction would equal $33,000, which will not make it possible to provide summer school or after school tutoring programs. • This directly impacts students who are struggling academically.

18. Reduction in Federal Funding In addition to the above State proposed reductions, it is expected that the Federal funding levels will be lower for 2008-2009. The total decrease for Pacifica School District is estimated to be $82,257.

19. Child Nutrition Program • The food service program will get a $.02 reduction per meal for the Free and Reduced Program. • This is equal to $5,800, which will cause a further increase in lunch prices for students.

20. May 2007 Budget Session Items Not Cut • $ 5,000 - - Utilize GATE to fund a portion of a principal to coordinate services. • $15,325 -- Reduce the site supply allocations $5 per student. $2 was reduced in 2007-2008 leaving $9,325. • $21,000 -- Eliminate Summer Work Crew - ($3,000 was cut during 2007- 2008 leaving a balance of $18,000). • $58,650 -- Field Maintenance (One groundskeeper). Total amount left to cut equals $90,975

21. Savings in Utilities for 2007-2008 The District recycling program has been very successful, saving $44,000 in garbage costs this year. By dimming lights and changing to energy efficient lighting the district will save $61,000 in electricity this year.

22. Memberships and Dues:

23. To have a balanced budget for 2008-2009 the District would have to cut $872,000 from unrestricted expenditures and $217,000 from restricted expenditures. Following is a list of unrestricted options for the board to consider: • $210,000 -- Freeze salaries at the January 2008 levels. • $ 69,648 -- Stop watering fields. • $ 58,650 -- Eliminate one groundskeeper. • $ 9,325 -- Further reduce site supply allocations ($3 per student). • $ 18,000 -- Eliminate summer work crew. • $ 20,000 -- Band Program. $385,623 Total Items that require negotiations: • $ 40,000 -- Class size. • $200,000 – Benefits. • $120,000 -- Prep Periods. • TBD -- Retirement Incentive. $360,000 Total Total possible Reductions = $745,623

24. Possible Revenue Enhancements: • Parcel Tax • Increase Lease Income from vacant school sites • Investments in infrastructure that would save money?

25. Summary of Revenue Reductions • Total Unrestricted State Cuts $553,925 • Total Restricted State and Federal Cuts $216,660 • Total estimated cost of rolling over the current year budget with no increase in salaries or programs $318,415 Total amount of reductions necessary to balance the Pacifica School District budget $1,089,000

26. 3% Reserve Required by the State • Districts are still required to have a 3% reserve in their ending fund balance. The State has not given any indication that it would provide flexibility for school districts. The State requires that Districts submit a multi-year budget that meets the 3% reserve requirement for the current year and two additional years. • 3% for Pacifica School District is equal to $720,000. • School Services of California publishes a Projection Dartboard based on the Governor’s Proposal and economic forecasts. Their most recent projection indicates that the 6.99% revenue limit deficit factor will continue through 2012-2013. • The District could apply funds from the Special Reserve (Fund 17) to partially offset budget reductions in 2008-2009. Any use of one-time funds to meet 2008-2009 reserve requirements is only a temporary solution.