2018-19 Tentative Budget

1. 2018-19 Tentative Budget Presented by: Mark Mathers, Chief Financial Officer Mike Schroeder, Budget Director April 10, 2018

2. Agenda for Tentative Budget • General Fund • Update on General Fund Structural Deficit (adjusted for certain base budget changes and other changes) • Action on Budget Recommendations • Review of General Fund Sources and Applications • Other District Funds 2

3. Action Items Needed Today for General Fund 1 • Take action on Recommended Reductions • Approve, approve as modified or not accept • Take action on the one item with No Recommendation (Internal Auditor) • Take action on Budget Additions • Approve, approve as modified or not accept • Confirm use of fund balance to cover deficit, or direct staff to seek additional reductions 2 3 4 3

4. 4 General Fund Deficit and Budget Recommendations

5. Structural Deficit FY19 5

6. Required Action • Base budget reductions have reduced the deficit to $9.2 million. • At that amount, without additional action by the Board, the District will: • Fail to comply with the new Board Policy to have a structurally balanced budget by FY21 • Deplete almost all of our fund balance by FY21. 6

7. Action Item #1 – Budget Reductions • Budget reductions were proposed by departments and represent management’s professional judgment on how to achieve savings with the least impact. • Reductions were then scored by Financial Review Committee with Leadership Team overview based on assessment of the degree of impact in relation to following criteria: • Alignment with District’s strategic plan • Degree of impact to direct instruction • Risk assessment • Fiscal impact • Availability of alternative delivery service • Perceived results of program 7

8. Where & How Do We Reduce Costs? 8 rev.

9. Addressing the Budget Deficit Budget Reductions Do NOT Equate to Service Level Reductions 9

10. Major Budget Recommendations • Total of $4.2 million of reductions identified, in addition to $9.2 million in base budget reductions and contra accounts • Deletion of Positions • 6.05 positions shifted from General Fund to other funds • 30.12 positions beginning in FY19 • 2.00 positions identified for FY20 • Reduce District travel budgets by 50% • Increase ES and MS walk zones by ¼ mile – reduction of 8-10 drivers • Further reductions of operating budgets 10

11. Transition Plan for Deleted Positions The preliminary budget identifies positions that are proposed to be eliminated by Fiscal Year 2020-21.  Some of these flagged positions are currently occupied by an employee(s).  For incumbents in these positions, below is a summary of the process that is recommended to the Board: Professional-Technical and Educational Support Professional Positions • For Pro-Tech and ESP employees in one of these flagged positions, if that position or a comparable positon becomes vacant prior to FY 2020-21, the position would be eliminated and negotiated agreements would be followed. • Human Resources and Labor Relations will assist employees to find other positions. • If there are no vacancies in a flagged position by FY2020-21, there would be a reduction in force in FY2020-21 following the negotiated agreements. 11

12. Transition Plan for Deleted Positions Certified Positions • Certified staff in one of these flagged positions would go through the regular transfer and overage process for open positions as outlined in the negotiated agreement. • Historically, the high turnover rates of certified positions for the District has allowed teachers to fill positions that have been vacated because of retirements and separations. 12

13. Changes to Feb. 28 Recommendations • Base Budget Adjustments • Upon further review, base budget adjustments in certain areas are not available and have been reversed (ROTC, Family School Partnerships, MTSS, Parent U., etc.) • In reviewing trends for energy prices, we reduced our base budget adjustment for fuel costs (gas) down from a reduction of $400,000 to only $50,000 • Recommendations for Budget Reductions • Removed proposal to reduce 4.5 FTE counselor positions (although this proposal would have maintained at least one counselor per ES) • 2% additional cuts to Board/Superintendent • Budget Additions • Added Fingerprint Technician position • Modified bond personnel cost 13

14. Updates to Revenue Projections • Property Taxes (District keeps 2/3 of 75-cent operating rate) • State’s Pro Forma Projection is higher than our projection in February • Results in $697,211 in greater revenues for FY19 • Government Services Tax • For FY18, currently tracking at 10+ % year-over-year growth • This increases the base for FY19, but we still assume +5% growth. • Adds $614,568 to revenue projection 14

15. Summary of Budget Recommendationsby Office 15

16. Reductions by Functional Area Figures shown do not include “contra” adjustments for salary savings. 16 rev.

17. Recommendations by Functional Area • Overall, Central Services/Administration is proposed to be cut 7.4%, the largest cut for any area. 16.2

18. Proposed Reductions in Instruction • EL Program • Total of 136.5 EL teachers in FY18 budget • Benchmarking results to CCSD • $1,237 per student vs. $223 per student • New Service Delivery Model • Site Facilitators + training of general ed teachers • Ultimately shift from strict staffing ratio model to needs based • Staffing may increase based on actual EL enrollments in 2018-19 16.3

19. Proposed Reductions in Instruction • GT Program • Total of 52 GT teachers • Reduction of 2 FTE equates to a 4% reduction • 1 FTE is a GT coordinator • 1 FTE based on reduced enrollment in SWAS • Depending on GT enrollment and based on adjusted State staffing guidelines, total GT staffing may increase or be flat in 2018-19. 16.4

20. Structural Budget Deficit FY19 (in millions) 17

21. General Fund Budget with Recommendations General Fund Budget with Recommendations 18

22. Future Years • Additional reductions will be necessary in FY20 and FY21 to reach a structurally balanced budget by FY21. • Without these additional reductions, we will draw down our fund balance to below $9 million. 19

23. Addressing the Budget Deficit • In order to meet the Board’s target of a structurally balanced budget by FY21, future reductions will be necessary. 20

24. Future Structural Deficits 21

25. Action Item #2 – Take action on the one item with No Recommendation (Internal Auditor) 22

26. Action Item #2Internal Audit Position • The Internal Audit Function reports directly to the Board. • An internal auditor position is currently vacant and a decision to keep or eliminate the position is necessary as part of the budget process. • The position is utilized to perform risk based audits to ensure cost efficiency and effective management for District operations and student activities by offering solution based recommendations. Through 2015 the department has made recommendations to save the District $3 million. • Internal auditor positions were reduced from 4 to 3 positions in FY18. 23

27. Action Item #3 – Take action on Budget Additions Approve, approve as modified or not accept 24

28. Additional Budget RequestsAction Item #3 25

29. Action Item #4 – Confirm use of fund balance to cover deficit, or direct staff to pursue additional reductions 26

30. General Fund Summary Information (Does not include budget reductions other than Base Budget changes) 27

31. FY 18-19 General Fund Revenues ($463.4 Million) 28

32. FY 18-19 DSA Per Pupil Funding ($5,737) 29

33. Enrollment History 30

34. FY 18-19 General Fund Expenditures ($472.6 Million) 31

35. General Fund Expenditures • The preceding slide reflects that 71.29% of our expenditures are going to schools in the following categories: • Regular, Special, Vocational, Other and Co-Curricular Instruction • Student Support and Instructional Staff Support • $42.3M of the $46.5M Transfers goes to Special Education. • Student Transportation 3.52% is for buses, fuel and bus drivers/staff for students. • Operations and Maintenance 10.14% is for Utilities, Custodians, School Police for primarily our schools. • School Administration 7.50% is for Principals, Assistant Principals and staff in the schools. Each school requires leadership and support staff for teachers & parents. • Central Support 5.13% is for Fiscal, HR, IT, Purchasing, Printing, Risk Management, Accountability, Internal Audit, Mail Services to again support the schools • General Administration represents 1.35% of the budget for the Board, Superintendent, Deputy Supt, Area Supts, Chief of Staff, Legal, Ombudsman and Community Relations. 32

36. FY 18-19 General Fund Expenditures by Type ($472.6 Million) 33

37. General Fund FTE Data 34

38. General Fund FY18-19 FTEs 35

39. General and Other Funds FTE Data 36

40. Other Funds 37

41. Building & Sites Fund 38

42. Capital Projects (Bond) Funds 39

43. Special Education Fund 40

44. Class Size Reduction Fund 41

45. Special Revenue Funds (Grants) 42

46. Debt Service Fund 43

47. Internal Service Funds 44

48. Enterprise (Nutrition Services) Fund 45

49. All District Funds Summary 46

50. Department of Taxation Pro Forma Ad Valorem Projections File Tentative and Final Budgets Continued Budget Review, Alignment with Priorities and Initiatives, Ongoing Review and Prioritization of Budget Offsets FY18-19 Budget Timeline March thru June, 2018 Public Hearing on Tentative Budget 47