Presented by Gary Rutherford, Ed.D. Superintendent TOWN HALL FORUM February 2009

1. UPLAND UNIFIED SCHOOL DISTRICT2008/09/10 Budget Update:Charting a Safe Course During a State Fiscal Crisis Presented by Gary Rutherford, Ed.D. Superintendent TOWN HALL FORUM February 2009

2. FIVE ESSENTIAL QUESTIONS • How did this happen? • How will California’s fiscal crisis affect public school funding? • How will it impact Upland USD’s funding? • What about… • Cash flow implications? • The Federal Stimulus Package? • The State Solution: Flexibility? • How will UUSD respond?

3. How did this happen? • Surges in state revenue in 1998-99 resulted in massive (and unsustainable) new spending commitments. Ditto: 2005-06 • The economics are different this time – this recession is severe and widespread. • There are more budget “lock-ins” than before. • California politics are deadlocked – legislative districts, political polarization, term limits, etc. • The state’s policy process can’t keep up with the enormous social, demographic and economic changes happening in California.

4. Last Year’s Bumpy Ride in UUSD • December 2007 - Staff identified more than $1.7 million in cuts to justify negotiated settlements with all employees. January 2008 – Governor of California declared a state fiscal crisis, proposing severe cuts. UUSD immediately imposed spending/hiring restrictions and a target of $5+ million in reductions was set for the 2008-09 budget.

5. The ‘Old’ Plan: 2007-2010 Restore a balanced budget using a deliberate and thoughtful approach to reduce spending by $5+ million over the next three years: • 2007-08 Implemented spending freeze to build and enhance the year’s ending balance • 2008-09 Identified and implemented reductions to address the majority of the necessary cuts; used ‘planned deficit spending’ as a one-time solution, pending additional cuts • 2009-10 Identify and implement the balance of cuts needed to restore a balanced budget

6. Adjust teaching assignments $787,900 Categorical reallocations/shifts $510,273 Eliminate administrator positions $415,559 Attendance Recovery Program $349,097 Eliminate classified positions $338,719 Elim. Food Services contribution $142,090 Reduce K-6 Library Tech hours $123,692 Reduce District/Site supply budgets $87,139 Eliminate .5 FTE District Nurse $53,238 Reduce transportation allocation $38,000 TOTAL FOR 2008-09 $2,846,707 (leaving$2.5 millionfor 2009-10...we thought) Summary of Actions in 2008-09

7. How will this fiscal crisis affect California’s public schools? Less than four months ago, and just weeks after the Legislature approved the latest budget in the State’s history, the Governor laid out his plan to make up a record $14.5 billion revenue shortfall by slashing $4.5 billion from next year’s education budget.

8. The Governor released his State Budget Proposal on December 31, 2008. He now estimates the potential deficit (without corrective action) to be $41.6 billion. His proposals for the K-12 Education Budget include both mid-year and 2009-10 reductions. Redefining the Problem

9. 5.02% COLA 5.66% COLA .68%COLA 4.56%CUT 2.5%CUT 2007/08 LEVEL 2009-10 REVENUE LIMIT FUNDING Nov. 20082008-09 $6,447 Jan. 20092008-09 $6,138 Cumulative loss from statutory level = 16.6% ($1,041 per ADA) $5,862 $5,544 $5,406

10. 2008-09 Mid Year Cuts Elimination of .68 COLA $429,000 4.5% Additional Cut $3,278,887 SUBTOTAL$3,708,316 2009-10 Proposed Budget Elimination of 5.02 COLA $3,564,661 2.5% Additional Cut $1,782,331 SUBTOTAL$5,346,992 TOTAL $9,055,308 Impact on UUSDSummary of Proposed State Cuts

11. From Bad to Worse “These cuts would be to a system that already ranks 46th out of 50 states, according to Education Week.” “The fact that California spends $1,900 less per pupil than the national average is shameful.” - Dr. Gary Thomas San Bernardino County Superintendent of Schools

12. Bringing the Problem Home • The District is grappling with the impossible task of increasing our target up to$8+ million in additional cuts to the district’s operating budget over the next two years, as identified in our Second Interim Report, while maintaining our district’s outstanding instructional offerings and support programs. This, following a crippling $4.5 million already slashed in 2007-2009.

13. What about….cash flow? • Without corrective action, the state will run out of cash this month. • Apportionments to school districts in April will be deferred until July. In UUSD, this includes: • CSR $3,110,255 • Revenue Limit $4,216,708 • Estimated Total: $7,326,963 • If the State fails to act on mid-year cuts: • State will issue IOUs in March • How will districts and other public agencies meet payroll??? • In UUSD, cash reserves ensure we can meet our obligations for the year – but what comes next?

14. What about the….Federal Stimulus Package? • Approved by the House; under debate in Senate • Goal is to approve by Feb. 16th (Presidents’ Day) • If passed into law, the “American Recovery and Reinvestment Act of 2009” could generate: • Title 1 increase of $620,200 • IDEA (special ed) increase of $1.4 million • School construction funds • FOR TWO YEARS ONLY • As always – the “devil’s in the details”

15. What about….The State Solution: FLEXIBILITY? • There are two types of revenue: • Unrestricted = General Fund, Base Rev. Limit • Restricted = Supplemental funds (state or fed.) There are 51 state categorical funds • Proposes 100% flexibility for 90% of programs • Permanent and ongoing block granting • Can be used for any general fund purpose • Can use prior years carry-over balances • Requires public input and board action • This will seriously impact schools & programs

16. Examples of State Categoricals • School Improvement Funds (SI) • Instructional Materials Fund (textbooks) • Arts, Music & PE Block Grants • Gifted & Talented Education (GATE) • Instructional Materials portion of Lottery (10%) • School Counselor Grant • Peer Assistance & Review Funds • English Learner support (EIA:LEP) Additional Flexibility • K-3 & Gr. 9 Class Size Reduction (20:1) • Shorter school year • Reduce statutory reserve fund (3 to 1.5%) • Deferred and routine maintenance changes

17. How will Upland USD respond? • Enhance the bottom line by implementing a spending and hiring freeze (1 time $$) • Conservative, planned deficit spending using supplemental reserves, again a temporary ‘fix’ • Identify additional cuts in spending • Identify additional revenue sources • Exercise maximum flexibility provisions for restricted funds (pending emergency state action) • Hope for the best; plan for the worst • Communicate and stay focused • Advocate, advocate, advocate

18. Charge fees for home-school transportation Expand Attendance Recovery Program Offer a Supplemental Early Retirement Program Continue to return County special education classes to the district Renegotiate all contracts with vendors for services (utilities, waste management, legal fees, etc.) Aggressively expand energy conservation efforts and solar energy installations Measure K program will not be impacted Revenue Enhancing Considerations

19. Eliminate additional classified unit positions Eliminate additional management positions Eliminate additional teaching positions due to increased class size and/or cuts to supplemental programs (elem. PE, Music) Reduce number of counselor positions Close the Instructional Media Center (IMC) Reduce home-school transportation program Further reduce all supply/equipment budgets Suspend all junior high athletics Reduce # of teacher stipends for extra-curricular Freeze step/column increases for all employees Study school consolidation Solvency Scenario Considerations

20. Across-the-board unpaid furlough days Across-the-board salary rollbacks Reduce health and welfare benefit costs Increase average class size in grades 4-12 Reduce the school year from 180 student days to as few as 175 (pending legislative action) Considerations Subject to Negotiations

21. Jan- - Budget meetings with all sites/depts early Feb. - District publications, press releases - Update employee seniority lists - Monitor legislative process/advocacy - Town Hall Forums - UJHS 2/3, 7 p.m. - PJHS 2/9, 7 p.m. Feb. 10 - Budget recommendations to Board 7 p.m. - Demographic Study report to Board Feb. 24 - Board Action on budget proposal 7 p.m. - Reduction-in-Force resolution By June Adopt 2009-10 Budget Ongoing Monitor & adjust lay-off actions TENTATIVE TIMELINE

22. budget@upland.k12.ca.us