FY 2012/13 Second Interim Financial Report & Overall Budget Planning

1. Grossmont Union High School District FY 2012/13 Second Interim Financial Report & Overall Budget Planning March 7, 2013

2. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Agenda • Quick Review: Prop 30 and 2012/13 • Governor’s Proposal: Local Control Funding Formula for 2013/14 • FY 2012/13 Second Interim Summary • District Reserves Planning Update • District Budget Planning Strategy • Conclusion POSITIVE Certification 1

3. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Quick Review Prop 30 and FY 2012/13 2

4. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Proposition 30 Passage What it Means • Flat Funding—Avoids Revenue Cut in 2012/13 • Would have been <$507/ADA> <$9M> to GUHSD • Avoids up to Six Furlough Days and a Shortened School Year • “Buys Out” a Portion of Inter-Year Cash Deferrals to Improve District Cash Flow 3

5. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Proposition 30 Passage What itDoesn’tMean • More Funding • Happy Days are Here Again • We Have Solved our Underlying Structural Deficit (Will still spend reserves this year) 4

6. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Grossmont Union High School DistrictProjected vs. Actual Funding Per ADA The Alligator Chart Total GUHSD Loss $39.7M 5-a

7. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Grossmont Union High School DistrictProjected vs. Actual Funding Per ADA The Alligator Chart Total GUHSD Loss $30.3M 5-b

8. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Governor’s Proposal for 2013/14 Local Control Funding Formula 6

9. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Local Control Funding Formula (LCFF) • Rolls virtually all Categorical Funds into a per student amount (Transportation, Targeted Instructional Improvement Grant, Special Education, Child Nutrition, and Federal Programs are “Outside.”) • Categoricals lose their identity, will have no state “Presence” and will be district choice as to whether to continue • Formula determines current funding level for each district, called “Hold Harmless” amount, which is the floor for next year. 7

10. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Local Control Funding Formula (LCFF) Continued • Determines amount each district should get when fully funded called the “Target Entitlement” amount. • Measures the distance between the two and dedicates new dollars to move each district toward its Target on a proportional basis. • Estimate for 13/14 is 10% movement toward Target. 8

11. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Local Control Funding Formula (LCFF) Continued • Components of the formula: • Base Grant Amount in $/ADA • Supplemental Grant Amount equal to 35% of Base for each Free & Reduced Lunch student and each English Learner Student (unduplicated). • Concentration Grant Amount equal to 35% of Base for each Free & Reduced Lunch and English Learner Student over 50% (GUHSD < 50%) 9

12. FY 2012/13 Second Interim Financial Report & Overall Budget Planning FY 2012/13 Second Interim Summary 10

13. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Background • LCFF is major policy and funding change proposal • Seems to have a chance this time • Appears to indicate higher funding level for 13/14 than “current law.” • SDCOE believes there are “too many uncertainties surrounding the LCFF calculation” and is recommending 13/14 projections be based on current law at this time. • GUHSD has developed Second Interim out years based on current law—probably worst case scenario. 11

14. FY 2012/13 Second Interim Financial Report & Overall Budget Planning FY 2012/13 Key Assumptions • Flat Funding (Proposition 30) • Full School/Work Year • Employer Paid Health & Welfare Increase .5% in 2013 (District “Picked Up” Employee increase in 2012) • Mandated Cost Block Grant $521K 12

15. FY 2012/13 Second Interim Financial Report & Overall Budget Planning FY 2013/14 Key Assumptions • 1.65% COLA is Funded • No Deficit Reduction Funding (Remains at 22.272%) • Mandated Costs Block Grant Continues and Grows by 68% (Adds Graduation Requirements and Behavioral Intervention) • Enrollment Decline of 4.8% (879 students) • Full School/Work Year • Continues all Flexibility Transfers at Current Level • Health & Welfare Benefits Increase 9.25% in 2014 • Special Education Costs Increase by 2% 13

16. FY 2012/13 Second Interim Financial Report & Overall Budget Planning General Fund Summary Projections($M) 2014/15 $165.4 180.8 <$ 15.4> -- <$ 15.4> 2012/13 $171.6 178.2 <$ 6.6> $ 1.5 <$ 5.1> 2013/14 $168.5 178.1 <$ 9.6> -- <$ 9.6> Revenue - Expenditures = <Deficit> Less Restricted Reserve and Carryover Spend Down = Unrestricted <Deficit> 14

17. FY 2012/13 Second Interim Financial Report & Overall Budget Planning General Fund Summary 190.8 $ in Millions Revenue Expenditures 2014/15 2012/13 2013/14 15

18. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Current Law vs. LCCF 2013-14 Revenue Expenditures Revenue Expenditures LCFF Enroll HH 16

19. FY 2012/13 Second Interim Financial Report & Overall Budget Planning District Reserves Planning Update 178

20. FY 2012/13 First Interim Financial Report—December 13, 2012 District Reserves Planning Update $ M Available at June 30, 2012 $12.6 (Above the 4.5% Minimum) Adjust to Higher Budget Amount < .4> Less Amount Allocated to FY 12/13 < 5.1> Projected Available at June 30, 2013 $ 7.1 *Excluding Carryovers (Open Purchase Orders, Site Owned $) and Prepaid/Stores/Revolving Cash 18

21. FY 2012/13 Second Interim Financial Report & Overall Budget Planning District Budget Planning Strategy 19

22. FY 2012/13 Second Interim Financial Report & Overall Budget Planning District Budget Planning Strategy • Develop 2013/14 budget based on current law until better indication of LCFF adoption and funding levels. • Do not issue March 15 Certificated layoff notices. (May result in lower class sizes given reduced enrollment forecast.) • Use combination of General Fund reserves, Adult Education and ROP Program Funds, and revenue received above “Current Law” level, if any, to offset additional cost of no certificated layoff. 20

23. FY 2012/13 Second Interim Financial Report & Overall Budget Planning Conclusion 21

24. FY 2012/13 First Interim Financial Report—December 13, 2012 Conclusion • FY 12/13 projected to spend down reserves by $5.1M and end with a 9.7% reserve. • FY 13/14, based on Current Law, will spend remaining reserves of $7.1M and end up with 4.5% Reserve. Will access Adult Ed and ROP Program dollars in an amount up to $3.3M. • FY 14/15 and beyond will need to be addressed by additional funding (e.g. LCFF) and/or significant budget adjustments. 22

25. FY 2012/13 First Interim Financial Report—December 13, 2012 Conclusion CertificationMeans 1. Positive: District Will Meet its Financial Obligations for Current Year Plus Two 2. Qualified: District MayNot Meet its Financial Obligations for Current Year Plus Two 3. Negative: District WillNotMeet its Financial Obligations for Current Year Plus Two RECOMMEND 23