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Second Interim Financial Report as of January 31, 2019

This report provides an update on the financial status of the organization as of January 31, 2019 and includes revenue and expenditure assumptions, multi-year projections, and general fund summaries. Presented to the Board of Trustees on March 4, 2019.

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Second Interim Financial Report as of January 31, 2019

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  1. Second Interim Financial Report as of January 31, 2019 Presented to the Board of Trustees March 4, 2019

  2. Second Interim Revenue Assumptions • Local Control Funding Formula (LCFF) • 2018/19 amount per ADA = $8,688 (average) • Includes COLA (3.70%) • Includes Supplemental Grant for English Learner, Socio-Economically Disadvantaged, Foster and Homeless enrollment of $1,981,491 • Estimated ADA: 3,055 (no ADA change from 2017/18) • Mandated Costs – Annual Block Grant of $95,000 budgeted and “one-time” mandate funds of $530,000

  3. 2018/19 Revenue

  4. MAJOR CHANGESRevenue – from First Interim(Greater than $100,000 per category) • LCFF – no significant change • Federal Revenue – no significant change • State Revenue – no significant change • Local Revenue – no significant change • School donations increased $44,890 

  5. Second Interim Expenditure Assumptions • Salary • Budgeted per Board approved salary schedules • Includes 0.5% pay raise effective March 1, 2019 • January 1 minimum wage increase to $12.00 for noon duty aides • Step, Column and Longevity: Actuals for 2018/19 • Health and Welfare: Max cap $21,242 per employee • STRS pension rate increase 1.85% from 14.43% to16.28% • PERS pension rate increase 2.531% from 15.531% to18.062%

  6. Second Interim Expenses

  7. MAJOR CHANGES(Greater than $100,000 per category)Expenditures –from First Interim • Certificated Salaries – no significant change • Classified Salaries – no significant change • Benefits – no significant change • Supplies – no significant change • Services and Other Operations – no significant change • Equipment – no significant change • Other Outgo – no significant change

  8. General Fund Reserve • Ending Balance is projected to be $5,944,000 - actual will be higher when school site and categorical carryovers are not spent and add to ending balance • Textbook adoption funds of $430,000 reserved in fund balance • LACOE “BEST” project fee of $178,000 for financial system conversion reserved until decision is made to change county oversight which would avoid this fee • Technology Chromebook Initiative funds of $875,000 reserved in fund balance to refresh chromebooks when their “useful life” expires

  9. Revenue - Multi-year ProjectionAssumptions(Subsequent Years) • Local Control Funding Formula Sources: • COLA • 3.46% in 2019/20 • 2.86% in 2020/21 • ADA • 0 ADA increase/decrease in 2019/20 • 0 ADA increase/decrease in 2020/21

  10. Revenue - Multi-year ProjectionAssumptions(Subsequent Years) • LCFF COLA increase in 19/20 is an overall increase of $949,000 • One-time 18/19 mandate funds ($530,000) don’t continue • Special ed COLA increase in 19/20 is $60,000 • LCFF COLA increase in 20/21 is an overall increase of $778,000 • Special Ed COLA increase in 20/21 is $52,000

  11. Expense - Multi-year Projection Assumptions 19/20 • Salaries and Employee Benefits Increased Annual Costs • 1.8% Certificated step and column costs • 2.0% Classified step and longevity costs • 0.8% Non-unit step and longevity costs • 6.0% Increase in employee health and welfare benefits • LJEA step/column costs assume savings from two teacher retirements ($50,000) • STRS pension increase 1.85% (from 16.28% to 18.13%) • PERS pension increase 2.74% (from 18.06% to 20.8%) • Classified Noon Duty Aide minimum wage increase to $13 per hour

  12. Expense - Multi-year Projection Assumptions 19/20 • No staffing increases • Legal and Board restricted carryover is fully spent in 18/19 • Supplies and services expense base increased by Consumer Price Index of 3.18% • Special education encroachment increase $100,000 • November 2018 general election costs removed from budget (bi-annual expense)

  13. Expense - Multi-year Projection Assumptions - 20/21 • Salaries and Employee Benefits Increased Annual Costs • 1.8% Certificated step and column costs • 2.0% Classified step and longevity costs • 0.8% Non-unit step and longevity costs • 6.0% Increase in employee health and welfare benefits • LJEA step/column costs assume savings from two teacher retirements ($50,000) • STRS pension increase of 0.97% from 18.13% to 19.10% • PERS pension increase of 2.7% from 20.8% to 23.5% • Classified noon duty aide minimum wage increase to $14 per hour • No staffing increases • Supplies and services expense base increased by Consumer Price Index of 3.05% • Special education encroachment increase $100,000

  14. Multi-yearGeneral Fund Summary

  15. Multi-yearGeneral Fund Summary-2020/21

  16. Deficit/Surplus Spending • Minor deficit spending is projected in 2018/19 based upon appropriations. However, school site carryover of $300,000 is usually experienced, so deficit spending will be less than budgeted. • District projected to have an operating surplus of $507,000 in 2019/20, and $217,000 in 2020/21 • 2019/20 and 2020/21 are the final years of large pension increases public agencies must absorb in addition to routine costs of step and column and health and welfare increases • District staff continues to seek ways to reduce expenditures and/or increase revenues to help balance revenue with expense

  17. MYP - General Fund Ending Balance • 2019/20 is projected to be $6,449,000 • 2020/21 is projected to be $6,666,000 • Board Policy requires a 5% reserve • Amounts reserved for Chromebook Initiative, Textbooks and LACOE “BEST” project of $1,549,000 are approximately 5% of reserves

  18. Measure LL Program • District plans to issue the first series of bonds to fund construction in June, 2019 • Similar to planning to apply for a mortgage loan, District financials are critical to minimizing the amount of property taxes paid by our community members for this support • Its important to keep this perspective in mind when making future financial decisions

  19. Facilities • Proposition 39 Energy Project of approximately $800,000 completed! • Project “relamped” lights district-wide with LED lights • Air conditioning replacement at El Portal • Electricity savings will be monitored • Planning for Measure LL projects is well underway! • Olita is being updated for DSA approval • Maybrook is being drawn for DSA approval to use as interim housing campus for school projects

  20. Looking ForwardFuture Considerations…. • All of the above assumes state funding as proposed in the Governor’s January Budget • Waiting for May Revise • Will additional ongoing or one-time funds be proposed? • Will the Governor’s proposed funding for STRS pension increases survive negotiations with the legislature? • Will there be changes to other proposals?

  21. Looking ForwardUnknowns • Future enrollment – decline like most districts? Currently projecting flat enrollment in future years • First month enrollment in 2019/20 will provide indication of likely ADA for the year

  22. Certification of Financial ConditionSecond Interim Financial Report Positive Certification • ‘As president of the governing board of this school district, I certify that this district will be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years.’ Qualified Certification • ‘As president of the governing board of this school district, I certify that this district may not meet its financial obligations for the current fiscal year and subsequent two fiscal years.’ • Negative Certification • ‘As president of the governing board of this school district, I certify that based upon current projections this district will be unable to meet its financial obligations for the remainder of the fiscal year or for the subsequent fiscal year.’

  23. Next Budget Projection • Adopted Budget, incorporating May Revise, (along with LCAP) will be presented to the Board of Trustees on June 10 for a public hearing • Adopted Budget (along with LCAP) will be presented to the Board of Trustees on June 24 for final Board approval • Final State Budget is anticipated by mid-late June 2019 – any changes will be incorporated at First Interim

  24. QUESTIONS?

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