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Presentation Agenda

Presentation Agenda. Opening Remarks Implications of the Governor’s May Revision State Legislature Approved 2014-15 Budget Multi-Year Assumptions & Budget Uncertainties Superintendent’s Recommended Budget Cash Flow Schedule Tax Revenue Anticipation Notes (TRANs) Loan Implications

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Presentation Agenda

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  1. Presentation Agenda • Opening Remarks • Implications of the Governor’s May Revision • State Legislature Approved 2014-15 Budget • Multi-Year Assumptions & Budget Uncertainties • Superintendent’s Recommended Budget • Cash Flow Schedule • Tax Revenue Anticipation Notes (TRANs) Loan Implications • Next Steps

  2. Implications of the Governor’s May Revision • Governor maintains Local Control Funding Formula (LCFF) as proposed in January 2014 • No additional programmatic funding • Stakeholders assume CalSTRS unfunded liability immediately effective July 1, 2014 • Establish a Rainy Day Fund • Continues to buy down “wall of debt”

  3. State Legislature Approved 2014-15 Budget • Mandates • $400.5 million towards funding of prior mandate claims on per average daily attendance basis • Can be used for one-time purposes with legislative intent that funds be dedicated to implementation of Common Core, English Language Development (ELD) Standards, Next Generation Science • Increased Ongoing LCFF Funding • $250 million towards implementation of LCFF above Governor’s proposed $4.5 billion • Awaiting gap funding percentage from Department of Finance expected at 29% from 28% at May Revise • CalSTRS • Governor’s proposed employer contribution rate of 1.25% reduced to 0.63%. Employer contribution rates increased in 2014-15 from 8.25% to 8.88%

  4. State Legislature Approved 2014-15 Budget • Local Reserves • New transparency requirements on assigned and unassigned fund balances starting with the 2015-16 budget adoption • Local district fund balances maximum provisions subject to the voter-approved Rainy Day Fund • Local reserve caps would only go into affect in years when the state actually puts money into the new State Proposition 98 reserve (Note: There are strict preconditions at the state that would have to be met to trigger the cap on the district reserves) • CTE Career Pathways Trust Fund • $250 million in one-time funds for this competitive grant program • Early Childhood Program • $155 million in Proposition 98 and $100 million in non-Proposition 98 additional funding for preschool and general slots, elimination of part-day preschool family fees, and quality improvement competitive grants • Revised qualifications and levels of experience for lead teachers placed in TK classrooms after July 1, 2015 • Proposition 39 Energy Efficiency Grant Funds • Reduction of $28 million, bringing statewide total for K-12 grants for 2014-15 to $279 million

  5. San Diego County Office of Education • San Diego County Office of Education (SDCOE) guidance letter dated June 5, 2014, recommends Department of Finance LCFF gap funding percentages • Pending Governor’s budget approval • California Legislature approved budget on June 15, 2014 • Governor scheduled to sign budget in San Diego on June 20, 2014 • Budget must be submitted to SDCOE by July 1, 2014 • The district is required to revise the adopted budget and submit to SDCOE within 45 days of state budget adoption,if there are significant changes

  6. Multi-Year Assumptions – Revenues

  7. Multi-Year Assumptions – Expenditures

  8. Multi-Year Assumptions and Reserves Requirements

  9. Superintendent’s Recommended Budget • The Superintendent’s recommended budget accomplishes the following important goals • Provide for a balanced budget • Manages multi-year deficits • Supports successful TRANs issuance in mid-July • Maintains state-required 2% minimum reserve level and board fund balance policy • Aligns with guidance provided by SDCOE memo dated June 5, 2014 • Supports Superintendent’s vision for quality schools in every neighborhood

  10. 2014-15 Budget –Multi-Year Projections General Fund Unrestricted

  11. 2014-15 Budget Solutions

  12. Other Restricted Funds – 2013-14 Estimated Actuals * June 10, 2014 Board meeting- slide was presented with “2014/15 Proposed Budget’ header, this has been revised to “2013/14 Estimated Actuals”

  13. Other Restricted Funds – 2014-15 Proposed Budget

  14. Other Fund Challenges • Cafeteria Fund 13 • Pending State Audit findings • Property Management Fund 40 • Loss of lease revenues due to property sales • State School Facilities Fund 35 • Limited resources to sustain ongoing expenditures (Routine Restricted Maintenance (RMM) $16 million starting in 2014-15)

  15. CalSTRS Pension Unfunded Liability Proposal • Impact to San Diego Unified General Fund Unrestricted

  16. 2014-15 Cash FlowBased on Estimated $200 million TRANs

  17. 2014-15 Tax Revenue Anticipation Notes • Estimated at $200 million or less • Resolution to Board on June 24, 2014 • Subject to EPA and LCFF entitlement adjustmentat P-2 certification, anticipated in July • Credit rating presentation in July • Early August close

  18. Next Steps • June 30 Submission of Budget to SDCOE • July 1 Implementation of 2014-15 Budget • Mid-July TRANs Issuance • July 29 Report to Board on Amended 2014-15 Budget, as a result of State Budget Adoption

  19. Questions?

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