Chico Unified School District State Budget Update History of School Finance

1. Chico Unified School DistrictState Budget Update& History of School Finance May 20, 2009 Jan Combes Assistant Superintendent Business

2. Going from Local to State Control1971 - 2008 1971 � Serrano Priest 1972 � Senate Bill 90 1974 � K-14 Collective Bargaining 1978 � Prop 13 1979 � Gann Limit 1983 � SB 813 1984 � State Lottery 1988 � Prop 98 1991 � AB 1200 1992 � 92/95 Economic Recession 1995 � Adoption of K3 CSR 1996 � 96/99 School Reforms 2000 � Prop 39 Restored Deficit Funding 2003 � Williams Settlement 2003 � Prop 98 Suspended 2004 � AB 2756 & AB 825 Categorical Reform 2008 � Another Suspension of Prop 98? 2

3. Major Events in California School Finance History � 1971 - 1983 Serrano vs. Priest ~ 1971 to 1983 Required that school funding be equalized so that areas of poverty had the same opportunity for education as areas of wealth SB 90/1972 Required that schools will be funded on dollar amounts per pupil � creating what we call Revenue Limit, allocated on the basis of pupil attendance (ADA) Proposition 13/1978 Imposed a property tax rate control (1%) and forced a shifting of school funding onto the state � from 40% state funded to more than 80% SB 813/1983 Established numerous program reforms, including $600 million added annual funding for extending student instructional time � longer day and longer year 3

4. Major Events in California School Finance History � 1988 - Present Proposition 98/1988 Established a constitutionally determined minimum allocation for K-14 education ~ schools are slated to receive about 45% of the state�s income, annually The recession years of 1992-93 through 1994-95 When the State Economy slows down, schools receive less funding The K-3 class-size reduction initiative, 1995-96 Provides the state�s second largest categorical � $1.5 billion The boom years: 1996-97 through 2000-01 When the State Economy picks up, schools receive more funding Significant equalization funding and funding of revenue limit deficits Positive attendance system (no more funding for excused absences) �Categorical Block Grants� = more programs, more services The crisis years: 2001-02 through 2003-04 and again beginning mid-year 2007-08 ~ with nothing on the horizon to indicate it will improve 4

5. State Has Reduced Spending by $15 Billion Due to Economic Downturn

6. February Budget Package This proposal is a two-year package: 2008-09 mid-year K-adult reductions and funding deferrals 2009-10 budget proposal (w/ additional reductions and deferrals) Proposition 98 funding levels: 2008-09 -- $50.7 2009-10 -- $54.9 Requires voter approval of a five, special election ballot proposals on May 19th Prop 1A: Spending Cap Prop 1B: Maintenance factor payment Prop 1C: Lottery Securitization Prop 1D: First 5 changes Prop 1E: Prop 63 mental health changes

7. 2008-09 Mid-year Reductions Reduces current year Proposition 98 funding by more than $7.4 billion � via mix of program reductions, deferrals, and re-designation of funds 2008-09 program reductions total is $1.9 billion Eliminates the 0.68% COLA (No COLA for 2008-09) Remaining reduction is split: 50% from revenue limits - $944 million overall, about $160 per ADA 50% from a 15% ($944 million overall) across-the-board cut to specified categorical programs

8. 2009-10 Budget Reductions Eliminates $2.5 billion in Proposition 98 funding from 5.02% statutory COLA for school districts and COEs Additional $530 million reduction to the Proposition 98 base � off of 2008-09 revised base $265 million reduction to revenue limit funding (school districts and COEs) � approx. $45 per ADA $265 million in additional across-the-board reductions (4.9%) to Tier 2 and 3 categorical programs reduced in 2008-09 $114.2 million savings from elimination of the High Priority School Grant Program

9. Categorical Cuts and Flexibility Categorical programs are divided into three tiers for purposes of protecting some and providing flexibility to others Tier I: No funding reduction, no program flexibility, no statutory requirements waived (w/ exception of CSR penalty provisions) Tier II: Funding reduction of approximately 15% from 2008-09 previously enacted levels, but no flexibility, and programs are to be operated according to the current requirements Tier III: Funding reduction of approximately 15% from 2008-09 levels, but with maximum flexibility to move funding for any educational purpose Changes are in effect for this fiscal year and until 2012-13

10. Challenges Ahead School Funding is at risk thru at least 2010-11 Expect Layoffs of certificated and classified personnel Proposition 98 no longer a reliable insurance policy Expectations are high at a time when resources will be at an all-time low

11. With Crisis, Comes Opportunity Stimulus dollars can help weather the storm Unprecedented categorical flexibility Crisis can drive change � requires leadership Our fundamental mission hasn�t changed

12. Understanding Education�s Dilemma

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15. State Unemployment

19. A Growing State Deficit

20. Legislative Analyst Office We forecast a 2009-10 revenue decline of roughly $8 billion. Turns a projected June 30, 2010 surplus of $2 billion into a deficit of $6 billion. Impact on CUSD is as yet unknown May-June Revise

21. Failure of the Propositions�Impact in the Out-Years

22. Long Term Forecast Virtually all sectors of the economy are shrinking: World economy will shrink by 1 � 2% Recession likely to last into 2010-11, or longer Post recession growth will be slow Fundamental realignment of our economic system

23. Governor�s May Revise Propositions 1A, 1B, 1C, 1D and 1E failed State is now $23.1 Billion Out of Balance Compared with February Projections Electorate has Sent a clear message to Sacramento: �reduce funding for programs and services!� What Is The Impact on School Funding ? $225 less per ADA 2008-09 = $2.8 M CUSD $245 less per ADA in 2009-10 = $3.0 M CUSD Multi Year Impact: $9-12 M (2008-09 to 2011-12)

24. American Recovery and Reinvestment Act Title I: $1.5 M for CUSD Eligible schools: Fair View, BJHS, CJHS, Chapman, Citrus, McManus, Neal Dow, LCC, Parkview and Rosedale Special Education: $2.5 M for CUSD Subject to MOE requirements Fiscal Stabilization 3.3 M � Will Hold Until We Develop Plan for May Revise Reductions