GOVERNOR’S PROPOSAL and District Response to 2011-12 STATE BUDGET

1. GOVERNOR’S PROPOSALand District Response to2011-12 STATE BUDGET Merced City School District February 1, 2011

2. Budget Gap - $26.7 billion • $6.9 billion in failed solutions • $3.6 billion assumed federal funds • $1.7 billion budgeted, but not realized savings • $1.6 billion Proposition 22 savings • $14.6 billion one-time solutions • $7.2 billion sunset of temporary taxes • $4.0 billion expiration of federal stimulus • $3.4 billion other one-time solutions • $5.2 billion Baseline adjustment • $3.1 billion revenue decline • $2.1 billion workload increase

3. Governor’s Proposal • $12.5 billion in cuts • Mostly to higher education and health and human services • Shift of government services to local level • Shifts how and by whom more than $10 billion in wide range of services are delivered • Requires 2/3 vote of Legislature along with tax extension • Extension of current temporary taxes • Required 2/3 vote in both houses to be placed on ballot; then • Must be approved by 2/3 majority of voters in June election

4. Governor’s Proposal (cont.) • K-12 Education “protected” in proposed budget • No mid-year cuts for 2010-11 • “Flat” funding for 2011-12 • Dependent on tax extension passing • Requires two Plans for 2011-12 budget: • Option 1 – flat funding – continues funding level contained in 2010-11 budget for 2011-12 • Option 2 - $2 billion reduction in funding – loss of approximately $330 per ADA for average district • Economic changes between now and budget adoption could result in revision – either up or down

5. Revenue Limit • COLA 1.67% - approximately $102 per ADA • Deficit increases from 17.963% to 19.608% • Results in loss of $19 per ADA • <$185,953>

6. Tax Extension Proposal • If extension passes – funding remains almost flat for 2011-12 • If extension fails – • Loss of $2 billion in funding - $330 per ADA or $3,229,710 • Reduces Proposition 98 funding level by another $2.3 billion

7. Categorical Funding • No growth or COLA • Extends flexibility options additional two years • Continues relaxed penalties for K-3 Class Size Reduction • Reduced contribution to Routine Maintenance (3% to 1%) • Eliminates Deferred Maintenance match requirement

8. District Response to Governor’s Proposed 2011-2012 Budget Proposal • Hold a series of Budget Workshop and Board meetings • Plan for Two Distinct Budgets: • … Plan A that calls for an additional $3.5 million dollar cut to the District’s budget • … Plan B which was the original budget being planned that would allow the District to maintain a similar staffing level

9. Issues to Consider and Resolve 9 Keep students and staff safe Improve student outcome with shrinking budget Cash remains a huge factor Maintain District Priorities with limited resources including: RtI, EDI, Staff Development Consider the work and recommendations of the Ad Hoc Committees Develop the District Plan that is sustainable given the expectation of a slow recovery To the extent possible, maintain services and staff Use of one-time is just that … one time Worse case scenario in Plan A … isn’t the worse case

10. Reductions Already Included in the Published Plan B Worksheet Reduce 17 IT/Coach positions Reduce 9 EL Core Teacher positions Reduce 2 Community Day School teacher positions Reduce 2 LMT positions Reduce 3 ERF TSA positions Reduce 1 ERF coordinator position Reduce 1 Preschool Even Start TSA Reduce 1 ERF clerk position Reduce 1 Community Day School Office Manager Reduce 1 Community Day School Instructional Assistant Reduce 1 Community Day School Safety Officer Not fill 1 maintenance worker position

11. Plan A: Hard Decisions • We are still short $2,296,766 • Not many Large Items choices and small won’t get us there • Furloughs or Class Size or combo • Budget Workshop February 10 from 5:00-7:00 at Reyes • Board Meeting on February 15 • Special Board Meeting on March 1