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Tahoe Truckee Unified School District Board Presentation January 23, 2008 Presented by

Tahoe Truckee Unified School District Board Presentation January 23, 2008 Presented by. John Gray Vice President. Financial Trends. 1. Financial Trends. Characteristics of Financial Flexibility State Budget District Revenues District Expenditures AB 2756. 2.

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Tahoe Truckee Unified School District Board Presentation January 23, 2008 Presented by

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  1. Tahoe Truckee Unified School DistrictBoard PresentationJanuary 23, 2008Presented by John GrayVice President

  2. Financial Trends

  3. 1 Financial Trends • Characteristics of Financial Flexibility • State Budget • District Revenues • District Expenditures • AB 2756

  4. 2 The Housing Slump and Why It Matters • Weakness in the sub-prime market is depressing home prices in the mid- and high-price range, as well as for starter homes • Inventories have risen as buyers wait for further price declines • Weak housing market can spread more broadly throughout the economy – we are seeing that now • Construction and real estate employment has fallen • Home improvement retailers have seen big drops insales – The Home Depot expects 2007 earnings to drop 15% to 18% • Durable goods sales have softened • Foreclosure rates have increased • There is a broad slowing of economic activity

  5. 3 Mid-Year Actions Under Proposition 58 • The Governor has declared a “fiscal emergency” under Proposition 58, triggering the following: • The Legislature is now called into Special Session to deal with the Budget crisis • The Governor must submit a plan to address the Budget imbalance • The Legislature must adopt a plan to address the problem by March 15 (that is, within 45 days of the declaration) otherwise it may not act on any other legislation and it may not adjourn • The plan must be adopted by a two-thirds vote of the Legislature, allowing the savings to take effect immediately

  6. 4 Mid-Year Cuts to Education Programs • Governor proposes $360 million in unspecified reductions to categorical programs in 2007-08 • Represents an overall reduction of 2.5% to 2007-08 Budget Act level of funding for categorical programs • Cuts unlikely to be across the board; rather, they will be targeted • Our best guess is that the likely targets will be funds that have yet to be allocated and/or funds that have yet to be spent • And the rest of the cuts will be made in the P-2 apportionment • Input from the Legislature, Superintendent O’Connell, and education stakeholders will inform recommendations

  7. 5 Governor’s Approach to 2008-09 • Governor continues to deal with $14.5 billion problem • Across-the-board cuts in all areas of government • Suspension of Proposition 98 • Needed to make a $4+ billion cut to education • Dramatic cuts in all areas also have an impact on children and families • Social services • Health services • Prisons • Infrastructure

  8. 6 Governor’s Approach to 2008-09 • The effect of the suspension working from the revised2007-08 base revenue limit: • COLA is declared at 4.94%, but not funded • Revenue limit deficit is imposed at 6.99% of new base revenue limit • The overall reduction to revenue limits for 2008-09 is about 2.4% • The 2.4% revenue limit reduction is from the 2007-08 base before mid-year cuts • Most categorical programs have a net loss of about 6.5% from the 2007-08 pre-mid-year cuts base

  9. 7 Budget Summary • Compared with full funding for COLA and growth for programs in 2008-09, the Governor’s proposal cuts K-12 education by $4.4 billion • These cuts average about $740 per ADA from 2008-09 full funding levels Saying it another way . . . Governor’s proposal is for 2008-09 funding to be about $1.8 billion less than current year, equal to average cuts of: • $129 per ADA from Revenue Limits • $30 per ADA from Special Education • $146 per ADA from Categoricals  Total loss of about $305 per ADA from current year levels!

  10. 8 State Mandate Reimbursements • The Governor’s Proposed Budget defers funding for state mandates again • The 38 mandates still are required because of the $1,000 per mandate in the Budget Proposal • $38,000 in Budget as compared to an estimated$160 million in new claims projected in 2008-09 • The Budget also proposes $150 million for both 2007-08 and 2008-09 for deferred mandate claims • These funds are provided pursuant to the “Deal” on the 2004-05 Budget • This addresses Proposition 98 “settle up” requirements from 2002-03 and 2003-04

  11. 9 Revenue Limits – Hourly Programs • Funding for the hourly programs is increased by the 4.94% COLA, but then cut by 10.9% • Resulting hourly rate is estimated to be $3.81 – down from $4.08 in 2007-08 • Plus – chronic shortfalls in funding forthe hourly programs are expected tocontinue, so plan on further deficits asfollows (all of which are the same asour current estimates of deficitsin 2007-08): • K-12 Core Academic Program – 12% • Grade 2-9 Remedial Program – 14% • Grade 2-6 Remedial Program – 28%

  12. 10 Program Improvement • As a Program Improvement (PI) Year 3 district, one of 98 in the state, the District is faced with being hit with State Board sanctions as required by NCLB • The District needs to ensure fiscal solvency, but also needs to show significant growth in closing the achievement gap

  13. 11 Categoricals Currently RequiringUnrestricted General Fund Support Source: District 2006-07 CAT Report

  14. 12 Categorical Program Reductions • Categorical programs are expected to share the pain in2008-09 • No COLA • No growth • And a rollback in funding of approximately 6.5% from 2007-08 Budget levels • Almost all categorical programs will be affected by proposed cuts • Proposed reductions total $1.7 billion, of which just over $700 million is attributable to COLA, which leaves around$1 billion in rollbacks • Average reduction of 6.5% from 2007-08 budgeted level • Some effort is made to soften the blow, but the hit will still hurt

  15. 13 Basic Aid • Tahoe Truckee Unified School District is a basic aid school district • The California Constitution required that the state provide a minimum level of state aid to every school district of $120 per ADA (since 1958) • Under attack in 2003-04, state law was amended to count state categoricals toward the basic aid guarantee, so no unrestricted $120 is now provided to basic aid school districts • During difficult financial times, legislators have viewed with envy the property tax allocation that is generated by basic aid school districts • There have been past proposals to recapture the additional income from basic aid districts and reallocate it to other nonbasic aid school districts

  16. 14 Property Tax Dependency CanLead to Difficult Financial Times • Growth in enrollment yields no extra dollars • The only safety net for a decline in property taxes is the revenue limit • Basic aid school districts need a larger safety cushion than revenue limit districts due to the volatility of basic aid revenue • A combination of declining enrollment and rising taxes is why Tahoe Truckee has become basic aid, but basic aid doesn’t mean continued growth

  17. 15 General Fund ExcludingOther Sources/Uses Tahoe Truckee Unified School District Revenue Expenditures

  18. 16 Percentage of District Enrollment of Free and Reduced Meals, English Learners, and Minority

  19. 17 Position Fundings • Certificated positions: • 251 funded from unrestricted General Fund • 48 funded from restricted funds • Classified positions: • 95 funded from unrestricted General Fund • 114 funded from restricted funds

  20. 18 Parcel Tax • “Parcel Tax” is the common term for a school district “qualified special tax” • Tahoe Truckee USD parcel tax totaling approximately$3.6 million annually has allowed the District to preserve academic programs • The parcel tax has allowed the District to do more for its stakeholders • The parcel tax is an essential component if the District is to maintain its current academic programs

  21. 19 Total Unrestricted General FundRevenues for 2005-06

  22. 20 Unrestricted Certificated Salaries for 2005-06

  23. 21 Comparative Analysis of Certificated Salaries2006-07 Salary Distribution FTE %

  24. 22 Student Enrollment per Classroom Teacher

  25. 23 Unrestricted Classified Salaries for 2005-06

  26. 24 Unrestricted Employee Benefit Expensefor 2005-06

  27. 25 Unrestricted Books and Supplies Expensefor 2005-06

  28. 26 Unrestricted Services and other Operating Expense for 2005-06

  29. 27 Unrestricted Capital OutlayExpense for 2005-06

  30. 28 Unrestricted Net Ending Balance for 2005-06

  31. 29 Multi-Year Projections:The Impact of AB 1200/1708/2756 • AB 1708 (Chapter 924/1993) clarified exactly what was meant by the term “multiyear” (ref. E.C. Section 42131) • For budget approval, must show solvency by meeting standards and criteria in budget year and next succeeding fiscal year • For positive interim report, must meet standards and criteria for budget year and two succeeding fiscal years • AB 2756 (Chapter 52/2004) added personal certification by Superintendent and CBO

  32. Thank you!

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