No June Election – What’s Next for UUSD?

1. April 12, 2011 No June Election –What’s Next for UUSD? Gary Rutherford, Ed.D. Superintendent

2. The Governor’s Proposals for 2011-12 • Back in January, how did the Governor propose to dig the state out of a $26 billion state economic quagmire? • Cuts • Realignment • Continuation of taxes • Basically the Governor proposed two plans: • PLAN A: If taxes were extended, cuts would be as budgeted in January • Education would be “flat funded” for 2011-12 (-$19 per ADA) • PLAN B: If the taxes were not extended, an additional $9 billion in cuts would be needed, including large cuts to education (-$349 per ADA)

3. Proposition 98 and The Education Budget • The Governor’s Budget did not propose to suspend Proposition 98 • But if the temporary taxes are not extended, Proposition 98 drops by $2.3 billion – and that results in a $349 loss per ADA • And the Governor indicates he expects education to take that hit So, what is PLAN B – and what will it look like in the Upland Unified School District?

4. The Governor Signs . . . Something • On March 24, 2011, Governor Brown signed 13 trailer bills into law: • $11.2 billion in Budget solutions, including: • $2.1 billion deferral from 2011-12 to 2012-13 • $80 million augmentation for AB 3632 services in the current year • An ongoing 8.92% reduction to basic aid school districts • Two-year extension of the categorical flexibility provisions • $12.6 billion of either revenue or additional reductions are needed

5. The Unanswered, but Essential, Questions • Will it be an all cuts budget? (Loss of $825 per ADA) • Are both sides of the Legislature likely to tolerate more K-12 cuts? • It will take a two-thirds vote to suspend Proposition 98 • Will there be more deferrals? (cash flow?) • Will there be a special election in September or November? • What will the Governor include in his May Revision? • Will districts be provided with more flexibility options? • Will state revenue go up, down, or level out?

6. B-28 Projected vs. Actual Funding Per ADA

7. What is the PLAN B target for Upland USD? • A need to reduce spending by $2,200,000 was identified at First Interim as part of the district’s long-term fiscal response plan • The Governor’s proposal now includes an additional $349 per ADA in revenue losses. In UUSD, this equals $5,150,000 • With adjustments due to the statutory reserve formula, the combined impact means cuts totaling a whopping $6,585,785 • This does not eliminate the district’s structural deficit spending situation. Instead, it uses a combination of cuts, flexibility provisions and reserves to “buy time” to better determine the variables before making deeper cuts in programs and people

8. What is the PLAN B solution in UUSD? • Implement a blend of funding shifts and state flexibility provisions with more cuts to reduce the target by $2.6 million • Tier III Flexibility (2 more years) • Spend down of ending fund balance (one-time money) • Other ongoing cuts and reductions • Negotiate solutions to reduce costs by an additional $4 million. Potential factors and variables include: • 1% salary rollback = $520,000 • No increase in H&W benefits over 2010-11 = $500,000 • Reduce work year = $260,000 per day for all employees • Step & Column = $900,000

9. A UUSD Plan B Budget Adoption Timeline * • March Second Interim PLAN A budget submitted, earning a positive certification from the County – but including strong conditions and warnings • April 26 Preliminary Budget, General Fund 01 • May 10 Preliminary Budget, Other Funds • Mid May Governor’s May Revise • May 24 Tentative Budget – All Funds • June 14 Final Budget Approval – All Funds * All dates are tentative; special board meetings may be scheduled based on the progress of the State Budget and/or negotiations

10. What about UUSD’s budget certification? • A positive certification is assigned when the district will meet its financial obligations for the current and two subsequent years. • A qualified certification is assigned when the district may not meet its financial obligations for the current or two subsequent fiscal years. An fiscal expert is assigned as a consultant. • A negative certification is assigned when a district will be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year. A fiscal advisor, with unilateral authority, is appointed by the county/state.

11. What about UUSD’s budget certification? • As of the Second Interim Report in March, the district received a positive certification, including a strongly worded warning from the County Office • In the absence of finalized budget solutions that total $6.6 million when the district budget is adopted in June, the district must file a qualified or negative certificationdepending on the final adopted State budget • This must include ratification of negotiated solutions

12. Thomas G. Cassida, Jr.Business Services AdvisorSan Bernardino County Superintendent of Schools “Our office will support the board’s Positive Certification of the district’s financial condition and ability to meet its financial obligations on the condition that the district board continues to review the list of potential reductions discussed at the budget study sessions and takes the necessary actions prior to June 30, 2011 to implement the reductions needed to maintain fiscal solvency through 2013-14. Should the district not be able to negotiate or approve the necessary reductions before June 30, 2011, the district could face a Disapproved 2011-12 Budget.” April 8, 2011

13. QUESTIONS?