CARPINTERIA UNIFIED SCHOOL DISTRICT Second Interim Report

2015-2016 March 8, 2016

Presented by: Cindy Abbott, Assistant Superintendent, Business Services

K-12 State Budget Themes for 2015-2016 – Local Control Funding Formula (LCFF) – Local Control and Accountability Plan (LCAP) – Increased contributions to retirement plans – 2015-16 state revenues exceed projections

– Extension of temporary taxes Prop 30 on November ballot – State facilities bond initiative on the November ballot

Local Control Funding Formula-(LCFF)  3rd year of implementation  Additional funding closes gap between benchmark year (2012-13) and funding target – 53% for 2015-16  Funding increases vary among districts because of additional funding directed towards unduplicated students

 30 districts receive no increase in funding; will receive an increase of 18% or more  The median increase for districts is 12%

 However, CUSD is “Basic Aid” ……..  Funding based on property taxes projected to increase by 5.5%  Under LCFF, $2.7 million attributed to unduplicated students

Local Control and Accountability Plan (LCAP)  LCAP process continues to evolve  Needs assessment is the foundation  LCAP goals should address most significant needs  CUSD has 68% unduplicated students  Minimum proportionality percentage – 17.47%  Minimum proportionality challenge: How to deliver additional/improved services to these students over those provided to all students without additional funding under LCFF formula

Increased contributions to retirement plans

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

STRS

10.73%

12.58%

14.43%

16.28%

18.13%

19.10%

PERS

11.85%

13.05%

16.60%

18.20%

19.90%

20.40%

Revenue Assumptions – LCFF Sources

– LCFF sources category now includes: – State aid – Education Protection Account (EPA) – Property taxes

– State aid includes: – District of Choice- $44,000 – 2012-13 categorical funding (previously restricted) guaranteed to “Basic Aid” districts - $1,205,011 – Education Protection Account (EPA) - $432,000

– Property tax increase of 5.5%

Revenue Assumptions Federal Funding - Restricted

– Most federal funding is related to “No Child Left Behind” – Title I, Title II and Title III – funding similar to 2014-15, but includes unspent funds from 2014-15 – Second year of federal grant for high school after school programs - $200,000

– Special education funding estimated at $353,000

2015-16 Revenue Assumptions State Funding – Unrestricted state revenues are: – Mandated Costs Block Grant - $79,702 – One-time appropriation for old mandated cost claims - $1,143,250 – Lottery @ $140 per ADA - $316,000

– Restricted revenues funded by state: – Special education – Restricted lottery at $41 per ADA - $92,000 – After school programs – Educator Effectiveness funding - $197,000 – State contribution to STRS – 539,400 – GASB #68 – Revenue offset by same amount of expense

2015-16 Revenue Assumptions – Local & Other – Unrestricted revenues consist of rents, leases, interest which are unchanged from 2014-15 – Restricted revenues consist mainly of grants from foundations and other funding provided to Carpinteria Children’s Project - $916,000 – Proceeds from capital leases of $322,188 is budgeted for the purchase of two new school buses

Expenditure Assumptions 2015-16 – Status quo on salaries, still to be negotiated – Step & column movement budgeted – Total statutory benefit rates: Certificated 14.6% Classified 21.9% – Health Insurance – – Fully paid health, dental and vision for families – full-time employees, pro rata for part-time employees - $17,555 – Plan revised to reduce premiums – Premium increases average 1.6% for all plans

– State contribution to STRS – 539,400 – GASB #68

Expenditure Assumptions 2015-2016 – Equipment purchases- 2 new school buses at $322,000 – Lease payment for buses - $50,400 – Transfers to other funds: – State Preschool – Deferred Maintenance – Cafeteria – Fund 63 ECE programs – Foundation funding for scholarships, staffing

$ 21,376 $100,000 $130,379 $372,000

2015-16 Operating Fund Unrestricted

2015-16 Restricted

TOTAL

$ 19,868,217 $ 118,106 $ 520,016 $ 481,138 $ 20,987,477

$ 20,851,436 $ 121,230 $ 1,544,216 $ 405,822 $ 22,922,704

$ $ $ $ $

428,775 1,151,390 1,064,743 1,117,458 3,762,366

$ 21,280,211 $ 1,272,620 $ 2,608,959 $ 1,523,280 $ 26,685,070

Expenditures Certificated Salaries Classified Salaries Benefits Books and Supplies

$ 8,418,685 $ 3,104,957 $ 4,687,290 $ 797,479

$ 8,611,512 $ 3,076,321 $ 4,995,680 $ 974,760

$ 1,455,714 $ 1,792,677 $ 1,832,034 $ 545,494

$ 10,067,226 $ 4,868,998 $ 6,827,714 $ 1,520,254

Services, other operating expenditures

$ 1,638,647

$ 1,768,484

$

$ 2,353,859

Capital Outlay Indirect Costs/Other Outgo

$ 24,175 $ (59,679) $ 18,611,554

$ 342,697 $ (22,772) $ 19,746,682

$ $ 67,035 $ 6,278,329

$ 342,697 $ 44,263 $ 26,025,011

Excess (Deficiency) of revenues over expenditures before other sources and uses

$ 2,375,923

$ 3,176,022

$ (2,515,963)

$

660,059

Inter-fund transfers out Other sources - capital lease

$ $

$ $

(151,755) 322,188

$

(475,000)

$ $

(626,755) 322,188

Inter-fund transfers in

$

$

-

$

-

$

-

Contributions to restricted programs

$ (3,083,171)

$ (3,024,303)

$ 3,024,303

$

-

Net Increase (Decrease) in fund balance

$

$

322,152

$

33,340

$

Beginning Balance

$ 3,670,962

$ 2,726,301

$

666,962

$ 3,393,263

Ending Balance

$ 2,726,299

$ 3,048,453

$

700,302

$ 3,748,755

Description Revenues LCFF Sources Federal Revenues State Revenues Local Revenues

2014-15 Unrestricted

(237,415) -

(944,663)

585,375

355,492

Changes from Adopted Budget – Unrestricted Fund

Net Increase in Fund Balance - First Interim

$

14,716

$

17,918

Revenues Increased District of Choice MAA reimbursement - 2012-13

58,426

Reimbursement for bond election expense

13,898

Subtotal

72,324

Expenditures Increased certificated salaries

(74,269)

Decreased classified salaries

35,452

Increased benefits

(25,780)

Reduced instructional materials expenditures

88,558

Reduced bus lease payment

19,600

Decreased contribution to special education

188,262

Decreased transfer to cafeteria fund

23,307

Miscellaneous - i.e. utilities, contracts

(20,018)

Subtotal

235,112

Net Increase in Fund Balance -Second Interim

$

322,152

Fiscal Challenges in Future Years – Main source of revenues – property taxes dependent on economy and housing market – Fixed expenditures continue to increase – Health insurance costs – Contributions to retirement plans

– Continued implementation of Common Core State Standards, Next Generation Science Standards – Textbook adoptions – math, language arts, science – Prioritization of safety – Special education – Food services

– Continue to provide great programs to support student learning and… – Provide competitive compensation to staff

CUSD Has a Structural Deficit – Without One-time Revenues

Net Increase in Fund Balance

$

322,152

MAA revenues

$

(121,230)

State One-time Funding

$

(1,143,250)

On-going Deficit

$

(942,328)

Multi-Year Projections

– Multi-year projections are projections, not forecasts – Projections are based on a set of assumptions which can change Assumptions are based on historical experience, current conditions, or both

Forecasts are predictions of the future

History of Property Taxes

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 -2.00%

Multi-Year Projections Revenue Assumptions 2016-17 – State aid/LCFF: – No district of choice funding – 2012-13 categorical funding guaranteed to “Basic Aid” districts This amount is not anticipated to change in the future

– – – – –

Secured property tax increase – 5% Education protection account (EPA) remains at $200 per ADA Federal unrestricted revenue – MAA- is not ongoing Most other federal and state revenues remain flat $1,143,250 one-time mandated cost reimbursement received in 201516 is not reflected as revenue in 2016-17

Multi-Year Projections Expenditure Assumptions 2016-2017 – Certificated salaries: – Retirements – –

2 @$81,000

Cost of new hires 2 @ $42,612 Retiree Health Insurance $17,555 per employee

– No decline in enrollment; no teaching positions eliminated – Step and column increases for all staff; – Status quo on salaries, except for increases related to cost-sharing of health insurance increases – Statutory benefits increasing for STRS and PERs – Certificated – 12.5% – Classified – 13.05%

– Health insurance – 6% increase, however…. – Half of the increase paid by employees – Half of the increase paid by the District – Increase paid by employees also added to salary schedule

– Books, supplies, operating expenses increase – 2.2%

2015-2016, 2016-2017 Projections Unrestricted Fund

2015-16

Revenues

$ 22,922,704

Expenditures

2016-2017

$ 22,964,299

(19,746,682)

Transfers/Other Financing

(19,961,982)

170,433

Contributions to Restricted Programs

(151,755)

(3,024,303)

Excess (Deficit) of Revenues over Expenditures

(3,090,838)

322,152

(240,276)

Beginning Fund Balance

$

2,726,301

$

3,048,453

Ending Fund Balance

$

3,048,453

$

2,808,177

$

316,392

$

316,392

Components of Ending Balance Reserved/assigned Minimum 3% Reserve Balance $

Reserve Balance %

799,553

808,241

1,932,508

1,683,544

3,048,453

10.25%

$

2,808,177

9.25%

Contributions to Restricted Programs

2015-2016 Description

Adjust-

2016-2017

ments

Adjust-

2017-2018

ments

Special Education Federal Special Education

$

429,951

$ 9,459

$

439,410

$11,073

$

450,483

State Special Education

$ 1,790,705

$39,396

$ 1,830,101

$46,119

$ 1,876,219

Subtotal

$ 2,220,656

$48,854

$ 2,269,510

$57,192

$ 2,326,702

Routine Restricted Maintenance

$

753,251

$16,572

$

769,823

$19,400

$

789,222

Other

$

50,396

$ 1,109

$

51,505

$ 1,298

$

52,803

$ 3,024,303

$66,535

$ 3,090,838

$77,889

$ 3,168,727

Other Programs:

Multi-Year Projections Revenue Assumptions 2017-2018

– State aid/LCFF includes : – Categorical funding guaranteed to “Basic Aid” districts – Secured property tax increase – 4% – Education Protection Account (EPA) remains at $200 per ADA – Most federal and state revenues remain flat – One-time mandated cost reimbursement of $462,000 not included for 2017-18

Multi-Year Projections Expenditure Assumptions 2017-2018 • Certificated salaries:

• Retirements • Cost of new hires

3@$81,000 3@ $42,612

• Retiree health insurance

$18,608

• Step and column increases for all staff • Status quo on staff salaries except for increases related to cost-sharing of health insurance increases

• Statutory benefits increasing for PERS and STRS • Certificated – 14.43% • Classified – 16.6% • Health insurance - 6% increase • Half of increase paid by employees

• Half of increase paid by District • Increase paid by employees also added to salary schedule • Books, supplies, operating expenses increase - 2.5%

2016-2017, 2017-2018 Projections

2016-2017 Revenues

$ 22,964,299

Expenditures Transfers/Other Financing Contributions to Restricted Programs Excess (Deficit) of Revenues over Expenditures

2017-2018 $ 23,269,029

(19,961,982)

(20,595,924)

(151,755)

(151,755)

(3,090,838)

(3,168,727)

(240,276)

(647,377)

Beginning Fund Balance

$

3,048,453

$

2,808,177

Ending Fund Balance

$

2,808,177

$

2,160,800

$

316,392

$

316,392

Components of Ending Balance Reserved/assigned Minimum 3% Reserve Balance $

Reserve Balance %

808,241

832,416

1,683,544

1,011,992

2,808,177

9.25%

$

2,160,800

6.65%

What’s Next?

• Governor’s budget proposal for 2016-17 • Continued increased funding of LCFF – close gap by 49% • One-time discretionary funding of $214 per ADA , offsetting mandated costs reimbursement •

Estimated at $462,000

• CUSD begins planning for next year

• District will need to consider and implement options for reducing the operating deficit as reserves continue to decline • Budget study session scheduled for Monday March 14 • Process for updating LCAP for 2016-17 and engaging stakeholders in progress