1 / 25

Annual Budget Proposal 2008-09

Annual Budget Proposal 2008-09. Chief Business Official Tim Zearley. Is This a Good State Budget?. If we had started the year with a January Budget that proposed no COLA and a 6.5% cut to categorical programs, we would say that was a terrible Budget

nico
Download Presentation

Annual Budget Proposal 2008-09

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Annual Budget Proposal2008-09 Chief Business Official Tim Zearley

  2. Is This a Good State Budget? If we had started the year with a January Budget that proposed no COLA and a 6.5% cut to categorical programs, we would say that was a terrible Budget But given the sad state of the economy and the proposals made in January, we now appreciate that this Budget proposal could have been much worse So is this a good budget for education? In a word, No. It will cause California to fall further behind other states It does not provide adequate funding consistent with expectations for student performance But given the circumstances, we recognize that: It could have been much worse It took a lot of joint effort by all facets of the education community to achieve the support of the Governor for the improvements in the May Revision

  3. May Revision Features No suspension of Proposition 98 The May Revision withdraws the January proposal to suspend Proposition 98 in 2008-09 by $4 billion, which would have provided only $55.7 billion of the $59.7 billion Proposition 98 guarantee Special education gains; deferred maintenance losses Cost-of-living adjustment (COLA) is up, but so is the deficit factor Lottery proposal stretches out resolution of the Budget problem

  4. January vs. May Proposals

  5. State Lottery Proposal Governor proposes borrowing $15 billion from Wall Street against future increased profits from State Lottery $10 billion of funding would go for a reserve to use during fiscal crisis $5.1 billion would be used for the 2008-09 Budget $1.2 billion currently for education continues, but is at risk Lottery revenue for up to 32 years would go to investors to repay loan Requires voter approval-most likely in November 2008

  6. Stand-By Sales Tax The Governor’s May Revision acknowledges the risks surrounding the Lottery proposal Voters may reject it It may be challenged in court Wall Street may not embrace it As a back-up plan, the Governor proposes a 1¢ increase in the sales tax, which would yield about $6 billion annually The Department of Finance would determine whether the sales tax trigger is pulled, based on balances available in the RSF

  7. Revenue Limits – COLA and Deficits The statutory COLA is 5.66% with a deficit of 5.357%, eliminating the proposed 2.4% reduction proposed in January The following includes the increases to the base revenue limit that are funded at zero:

  8. Revenue Limit Deficit Factor

  9. Categorical Programs January proposed cuts are restored for revenue limits and special education, but other categorical programs are not so fortunate May Revision continues to include, on average, 6.5% reduction to most state categorical programs with no COLA A few exceptions: High Priority Schools Grant Program – $400 per student at eligible schools After School Education and Safety Grants – same rate and maximums as approved in grant award letter Quality Education Investment Act – rates according to settlement agreement Federal programs are unaffected by state cuts, but expect some reductions

  10. Categorical Programs It is important to note that, included among the programs to be cut, there are many that may primarily support staff Economic Impact Aid Physical Education Teacher Incentive Grants K-3 and Morgan-Hart Class-Size Reduction Home-to-School Transportation AB 825 Block Grants

  11. Flexibility Options Many of the options are similar to those available in 2003-04, but a few are new or modified: Reduce set-aside requirements Designated for Economic Uncertainties Routine Restricted Maintenance Account Eliminate Deferred Maintenance match* Redirect categorical funds to unrestricted general fund Increase categorical flexibility Mega-Item AB 825 Block Grants* *New or modified for 2008-09

  12. Flexibility Options – Reducing Reserves Option to reduce minimum required amount Designated for Economic Uncertainties by one-half *SACS Criteria & Standards

  13. Flexibility Options – Reducing Reserves Keep in mind that the flexibility is short term, and, once it ends, the reserve must be replenished Since it only applies for 2008-09 and 2009-10, multiyear projections must show how funds will be restored by 2010-11 A 3% reserve is approximately enough to pay for one payroll period – a relatively small cushion by any measure

  14. Flexibility – Deferred Maintenance The May Revision significantly reduces funding of Deferred Maintenance in 2008-09 Decreases funding by $222.6 million Only $39.6 million remains to fund hardship projects Because of no state contribution for regular deferred maintenance projects, LEAs have flexibility No local match requirement for 2008-09

  15. Flexibility – Routine Restricted Maintenance Account (RRMA) Districts’ required set-aside for Routine Restricted Maintenance Account in 2008-09 is lowered from 3% to 2% Exercising the flexibility option may provide relief for some districts May require more classified staff layoffs or reductions Application of flexibility to county offices of education may be somewhat different because of differences in existing rules Stay tuned for updates once legislation is available for analysis

  16. Flexibility Options – Redirect Categorical Funding Similar to 2003-04, the May Revision proposes to allow school agencies to redirect funding from categorical programs to the unrestricted General Fund However, this is on top of proposed categorical program reductions, so districts will need to weigh tradeoffs between maintaining categorically funded activities and increasing discretionary funding Two types of flexibility in this area are proposed: Redirect restricted carryover balances to the unrestricted General Fund Redirect a portion of 2008-09 restricted resources to add up to 2% to funding available for revenue limit purposes Will have clarification once legislation is available for analysis

  17. Flexibility Options – Redirect Categorical Funding Allows redirection of an unlimited amount of restricted General Fund and Cafeteria Fund balances as of June 30, 2008, to the unrestricted General Fund This includes all funds unless otherwise excluded by law: Funds committed for capital outlay, bonds, or sinking funds Federal funds Balances in specific programs, including High Priority Schools Grant, Targeted Instructional Improvement Grant, Economic Impact Aid, Instructional Materials, and Special Education Note that districts participating in federal food programs may have limited flexibility to move funds from the Cafeteria Fund

  18. Is This a Balanced Proposal? These new proposals have received a hostile reception in the Legislature Democrats are sharply critical of the additional cuts to health and social services programs Republicans are strongly opposed to the sales tax increase This is a budget beneath a governor of this great state. It’s telling our citizens: This is it. Our best years are behind us. Under this plan, schools will lay off teachers and increase class sizes, and we will abandon children and the elderly. It’s shameful.” (May 15, 2008) – President pro tem Don Perata “I applaud the Governor for fully funding education at the minimum guarantee. However, the time for borrowing and questionable budget schemes is long behind us. Let me be clear – Assembly Republicans will not support tax increases, period.” (May 15, 2008) – Assembly Republican Leader Mike Villines

  19. Historical CBEDS Enrollment

  20. Enrollment and Attendance The district loses approximately $46/day for each student absent

  21. Combined General Fund Revenues • 0% COLA for 2008-09 • 5.66% COLA not funded = -$840,000 loss in revenue limit funding • -6.5% Reduction to most state funded categorical programs • -$75,000 loss in unrestricted state funds • -$200,000 loss in restricted state funds • Federal programs unaffected by state budget cuts

  22. Combined General Fund Expenditures • It takes people to teach people • 84% of district’s budget – 296 general fund positions • 143 teaching/teaching support positions • 19 certificated unrepresented positions • 118 classified support positions • 16 classified unrepresented positions

  23. Adopted General Fund History • 2008-09 projected deficit spending -$165,199 • Potential for $1 million more in cuts and revenue limit deficit • Budget shows the district’s commitment to students and staff • 3.5% On-going increase to salary and benefits to all staff • Built in 2.5% increase for step and column adjustments • Increase in fuel and energy costs • Maintains reserve percentage • Fund district’s full portion of Deferred Maintenance and Restricted Maintenance

  24. General Fund Ending Balance History • 2008-09 budget is balanced with reserves and spending cuts • No teachers were laid off • Eliminated 8 classified positions and 1 Certificated Management position • State’s fiscal crisis leaves districts in limbo • School year will start without knowing exactly what our revenue will be from the state

  25. Approve the Budget? • Do we have adequate reserves?Yes • Are we deficit spending?Yes • If so, is it planned? Yes • It is a budget. Are our estimates reasonable?Yes • Can we sustain in MYP?Yes • If so, then you can confidently approve this budget.

More Related