Presentation Agenda

2. Presentation Agenda • Opening Remarks • Implications of State Budget • Fiscal Realities • Superintendent’s Recommended Budget • Multi-Year Assumptions & Budget Uncertainties • TRANs Loan Implications • Closing Remarks/Next Steps

3. Implications of State Budget • The Proposed District Budget is Based on the Governor’s May Revised Budget • Reduction of $441 Per ADA in State Funding Must Be Planned for 2012/13 Assuming the Governor’s Tax Initiative Fails • SDCOE Strongly Recommends No COLA for 2012/13 or 2013/14 years or District to Set Aside a Contingency Reserve

4. Serious Fiscal Realities • First Reading : • Update Budget Assumptions/ Fiscal Realities • Highlight Multi-year Risks • One-Time Solutions Create Multi-Year Problems • Significant Deficits Projected for 2013/14 • Limited Options to Solve the Budget Gap • More Reductions will be Necessary in 2013/14 • Budget Must be Submitted to the SDCOE byJuly 10, 2012 2012/13 - 5th Straight Year of Funding Reductions

5. General Fund Deficit 2009/10 to 2014/15 Total Budget Reductions Over 5Years Is $555.5 Million -If 2013/14 Solutions are all on-going then the District would need to reduce only $27.5 Mil in 2014/15

6. Superintendent’s Recommended Budget • The Superintendent’s Recommended Budget Accomplishes the Following Important Goals • Supports Successful TRANs Issuance in Early July • Manages Multi-Year Deficits • Maintains State Required 2% Minimum Reserve Level

7. Total All Funds 2012/13 Compared To 2011/12 -Current Proposed Budget Reflects 9% Reduction Across All Funds -General Fund Unrestricted Budget Includes One-time Transfers From Other Funds of $41Mil

8. Total General Fund 2012/13 Compared To 2011/12 -2012/13 Proposed Total General Fund Budget is $1,077.57 Mil -2011/12 Adopted Total General Fund Budget is $1,165.07 Mil

9. Total General Fund Unrestricted 2012/13 Compared To 2011/12 -2012/13 Proposed Total General Fund Unrestricted Budget is $624.15 Mil -2011/12 Adopted Total General Fund Unrestricted Budget is $729.00 Mil

10. Total General Fund Restricted 2012/13 Compared To 2011/12 -2012/13 Proposed Total General Fund Restricted Budget is $453.42 Mil -2011/12 Adopted Total General Fund Restricted Budget is $436.07 Mil

11. Other Restricted Funds - 2012/13 Budget

12. County Office of Education: Budget Development Requirements • SDCOE Recommendations: • Assume the Trigger Reduction of $441 Per ADA • Unfunded COLA in 2012/13 and 2013/14 or Set Up a Contingency Plan/Reserve

13. Multi-Year Assumptions – Revenues

14. Multi-Year Assumptions – Expenditures

15. Multi-Year Assumptions – Expenditures (cont’d.) ** Assuming 2013/14 Reductions Are All Ongoing

16. Multi-Year Assumptions & Reserves Requirements

17. Multi-Year Assumptions - Uncertainties • Governor’s Budget Veto – Uncertainty on Timing and Direction of State Budget • November Tax Initiative Election Result • Enrollment Decline • Pre- Kindergarten Implementation of Legal Requirements and State Funding

18. 2012/13 Budget – Superintendent’s RecommendationMulti-Year Projections- General Fund Unrestricted 2013/14 Shortfall $98.3Mil 2014/15 Shortfall $27.5Mil

19. 2012/13 Budget Solutions List

20. Potential Budget Solutions for FY 2013/14$98 Mil Projected Balanced Budget Shortfall Far Fewer Realistic Options Available to Cover Deficits * Further Actions Are Needed To Identify Additional $18.4 Mil

21. 2012/13 General Fund Projected Cash FlowsWith TRANs Borrowing TRANs Borrowing $227 Mil

22. Closing Remarks • Superintendent’s Recommended Budget is the BEST Course for the District • Addresses Long-Term Fiscal Solvency • Enables Successful TRANs to Meet Payroll • Manages Multi-Year Deficits • Balances Uncertainty of the Moment

23. Next Steps • June 22 First Reading of 2012/13 Budget • June 29 Board Budget Adoption • June 30 Submission of Budget to SDCOE • July 1 Implementation of 2012/13 Budget

24. Questions?