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FREMONT UNIFIED S C H O O L D I S T R I C T

First Interim Budget Report

2019-2020

Division of Business Services

December 10, 2019

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Overview

• Education Code Section 42130 states that school

districts submit two reports to their governing board each

fiscal year– First Interim Report covers the financial and budgetary status of the

district for the period ending October 31

– Second Interim Report covers the period ending January 31

• Both reports shall be approved by the district governing

board no later than 45 days after the close of the period

being reported

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FY 2019-20 - Consolidated General Fund (in millions)

Adopted Budget

First Interim Budget

Increase/ (Decrease)

(a) (b) (c=b-a)

Revenues $386.3 $391.4 $5.1

Less: Expenditures 389.9 417.3 27.4

= Surplus/(Deficit) ($3.6) ($25.9) ($22.3)

Add: Beginning Fund Balance 20.7 36.5 15.8

=Ending Fund Balance $17.1 $10.5 ($6.6)

Less: Designations 4.0 2.0 (2.0)

=Reserve ($) $13.1 $8.6 ($4.5)

=Reserve (%) 3.35% 2.05% -1.30%

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FY 2019- 20 - General Fund Summary (in millions)

Unrestricted and Restricted General Fund

Unrestricted General Fund

Restricted General Fund

TotalFirst Interim

General Fund

(a) (b) (c=a+b)

Revenues $331.1 $60.3 $391.4

Add: Contributions [1] (64.1) 64.1 0.0

Less: Expenditures 279.7 137.6 417.3

= Surplus/(Deficit)[2] ($12.7) ($13.3) ($25.9)

Add: Beginning Fund Balance 23.0 13.5 36.5

=Ending Fund Balance $10.3 $0.2 $10.5

Less: Designations 1.8 0.2 2.0

=Reserve ($) $8.6 $0.0 $8.6

=Reserve (%) 2.05% 0.00% 2.05%

Notes:[1] Contribution to Special Education program is $50.1 million, Routine Restricted Maintenance is $11.7 million[2] The $7.1 million increase in unrestricted general fund deficit at first interim is primarily attributed to unrealized budget reductions, increase/decrease/movement of positions, vacancy savings, MAA prior year payment budget, unrestricted carryover, parcel tax election, legal expenditures, and categorical contributions. [2] The $13.0 million increase in restricted general fund deficit at first interim is primarily attributed to carry-over totaling $13.5 million and adjustments to restricted accounts.

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FY 2019 -20 First Interim - Ending Fund Balance Analysis(Unrestricted Only)

Adopted Budget with Unaudited

AdjustmentsFirst Interim

BudgetIncrease/

2.05%(Decrease)

(a) (b) (c=b-a)

= Ending Fund Balance $23,038,027 $10,323,092 ($12,714,935)

Less: DesignationsRevolving CashStores/Prepaid ExpendituresSalary Increase – “me too” CSEA One-time 1.5%Board Authorized Reserve Variance (0.5%)

$100,012$364,760

$1,300,000$1,947,804

$100,000$364,760

$1,300,000$0

$0$0$0

($1,947,804)

Reserves:State Mandated Reserve (2%)Board Designated Reserve (1%)Undesignated Reserve

$7,799,043$3,899,521$2,236,830

$8,346,425$211,907

$0

$547,382($3,687,614)($2,236,830)

= Reserve ($)= Reserve (%)

$13,935,3943.57%

$8,558,3322.05%

($5,377,062)-1.52%

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FY – 2019-20 Assumptions for Major Revenue Changes (Projected Revenues increased $5.1 Mil. at 1st Interim)

• Local Control Funding Formula (LCFF) Decreased by $5.5 million

– Due to enrollment decline

• Federal Revenues increased by $1.9 million

– Medi-Cal Administrative Activities (MAA) 2015-16 & 2016-17 payment - $1 million

– Title I prior year carryover $1 million

– Other categorical adjustments ($0.1) million

• State Revenues increased by $7.5 million

– Special Education Early Intervention Preschool Grant $2.0 million

– STRS and PERS On-Behalf - $5.1 million

– After School Education and Safety (ASES) - $0.4 million

– California Partnership Academies - $0.1 million

– Decrease in Lottery – ($0.1) million

• Local Revenues increased by $1.1 million

– Gifts/Donations and Interest Income

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FY 2019 – 20 Assumptions for Major Expenditure Changes(Projected Expenses Increased $27.4 Mil. at 1st Interim)

• Certificated Salaries – Increased by $2.2 million– Increase due to unrealized budget reductions $ 1.7

– Net Reduction of 4.0 FTE Teachers/Psychologist/Assistive Technology Specialist FTEs $0.3 million

– Increase due to other budgetary changes, budget transfers, vacancy savings $0.8 million

• Classified Salaries – Decreased by $1 million– Adjustments due to budgetary changes, budget transfers,

vacancy savings

• Employee Benefits – Increased by $4.5 million– STRS and PERS On-Behalf - $5.1 million

– Decrease due to changes in employee benefits related with changes in certificated and classified salaries $0.4 million

• Supplies and Other Operating Services Increased by

$14.7 million– Categorical prior year carryover and current year allocation

adjustment - $6.3 million

– Routine Restricted Maintenance prior year carryover - $1.4

million

– Special Education prior year carryover and NPS adjustment -

$2.8 million

– Increase due to Medi-Cal Administrative Activities (MAA) 2015-

16 & 2016-17 payment - $0.4 million

– Increase due to prior year Mandated Cost site allocation

carryover $0.3 million

– Increase due to unrealized budget reductions - $1.4 million

– Other adjustments due to budgetary changes, budget transfers

$2.1 million• Capital Outlay and Other Outgo – Increased by $7

million– Proposition 39 prior year carryover - $3.9 million

– Bay Area Air Quality Management District prior year carryover -

$2.3 million

– After School Education and Safety (ASES) - $0.4 million

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Multi-Year Budget Projection Assumptions

(FY 2020-21 through FY 2021-22)These assumptions apply to 2020-21 and 2021-22

• Local Control Funding Formula (LCFF)– Enrollment is projected at 34,844 and 34,669,

respectively

– Average Daily Attendance (ADA) is projected at 33,712 and 33,541 of enrollment

– Unduplicated Pupil Percentage is projected at 27.02% and 26.76% - 3 year rolling average

– COLA is projected at *3.00% and 2.80%

• Federal Revenues– Medi-Cal Administrative Activities (MAA) revenue

is not included (the State has not confirmed when school districts will receive the funds)

– Special Education funding is projected with no increase

• State Revenues– Mandated Cost Block Grant is budgeted at about

$1.4 million each year

– Lottery Funds are estimated at $207 per student

– No projection for One-Time Discretionary Fund

– Other one-time grants are not included

– Special Education funding is projected with COLA of *3.00% and 2.80%

• Local Revenues– Parcel tax (Measure I) is estimated at $4.3 million

– Other local donations remain the same as in the current year - $2.5 million

Note: *The recently released Legislative Analyst Outlook (LAO) Report projects a 1.79% COLA for FY 2020-21

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• Salaries and Benefits– Class size for grades TK-6

projected as listed below:

– Secondary class ratio is

projected at 27.5:1

– Step and column increases are projected for all eligible employees at an average of 1.5% each year

– Pension contribution rates are as follows:

– Administration and support staff for Lila BringhurstElementary Schools are included in 2020-21

• 5 FTEs (Principal, Custodians, Office Assistant, Secretary, Library Media Technician)

– Additional administration and support staff for Horner Middle School for 2020-21

• 4.3 FTEs (Assistant Principal, Office Assistant 1. Campus Supervisor, Custodian/Supply Clerk, Counselor)

TK/K 1 2 3 4 5 6

2019-20 24 28 28 28 30 30 30

2020-21 24 28 28 28 30 30 30

2021-22 24 28 28 28 30 30 30

STRS Change PERS Change

2019-20 17.10% 0.82% 19.721% 1.659%

2020-21 18.40% 1.30% 22.70% 2.979%

2021-22 18.10% -0.30% 24.60% 1.90%

Multi-Year Budget Projection Assumptions(FY 2020-21 through FY 2021-22)

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• Supplies, Services, Capital Outlay, and Other Outgo– Transfer of funds to Mission Valley ROP is projected at the same level

as the current year - $4.4 million

– *Contribution to Special Education program is projected at $50.2 million

and $50.7 million, respectively

Note: *Special Education Program Projected Out-year Budgets will be updated at Second Interim to reflect actual 2019-20 expenses and historic trend of the past 3 years.

*Special Education audit report will be received by January 2020 with recommendations for budget adjustments.

Multi-Year Budget Projection Assumptions(FY 2019-20 through FY 2021-22)

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Multi Year Budget Projection – without Reductions(FY 2019-20 through FY 2021-22) (in millions)

Unaudited Actual

2018-19

FirstInterim Budget 2019-20

Projected Budget 2020-21

Projected Budget2021-22

Qualified Certification

Revenues $403.5 $391.4 $396.3 $404.6

Less: Expenditures 397.3 417.3 411.3 418.2

Revenue Enhancement/Expenditure Reduction 0 0 0 0

=Surplus/(Deficit) $6.3 ($26.0) ($15.0) ($13.7)

Add: Beginning Fund Balance 30.3 36.6 10.6 (4.4)

=Ending Fund Balance $36.6 $10.6 ($4.4) ($18.1)

Less: Designation 16.0 2.0 3.8 3.9

=Reserve ($) $20.6 $8.6 ($8.2) ($21.9)

=Reserve (%) 5.19% 2.05% -2.00% -5.24%

In the absence of necessary reductions, the district will be facing a projected qualified or negative budget for FY 2020-21 budget development. Staff recommends the Board support reductions totaling $19.9 million beginning in FY 2020-21 to maintain a positive budget certification.

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Multi Year Budget Projection – with ReductionsFY 2019-20 through FY 2021-22 (in millions)

Unaudited Actual

2018-19

FirstInterim Budget 2019-20

Projected Budget 2020-21

Projected Budget2021-22

PositiveCertification

Revenues $403.5 $391.4 $396.3 $404.6

Less: Expenditures 397.3 417.3 411.3 418.2

Revenue Enhancement/Expenditure Reduction

0 0 (19.9) (19.9)

=Surplus/(Deficit) $6.3 ($26.0) $4.9 $6.2

Add: Beginning Fund Balance 30.3 36.6 10.6 15.5

=Ending Fund Balance $36.6 $10.6 $15.5 $21.6

Less: Designation 16.0 2.0 3.7 9.7

=Reserve ($) $20.6 $8.6 $11.7 $12.0

=Reserve (%) 5.19% 2.05% 3.00% 3.00%

For First Interim, staff recommends a Positive Certification, which certifies that based upon current projections, the district would be able to meet its financial projections for the current year and subsequent two fiscal years, and the Board’s minimum 3% reserve contingent upon FUSD implementing $19.9 million in reductions beginning in FY 2020-21

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Other Funds – All Restricted (in millions)

Beginning Fund

Balance Revenues Expenditures

Ending Fund

Balance

Special Education Pass-Through $0 $12.3 $12.3 $0.0

Adult Education (Fund 11) $2.1 $5.0 $5.3 $1.8

Child Development (Fund 12) $0.5 $1.8 [1] $2.4 $0.0

Cafeteria (Fund 13) $0.1 $7.2 [2] $7.2 $0.1

Building (Measure E) (Fund 21) $185.3 $3.0 $188.3 $0.0

Capital Facilities (Developer Fees) (Fund 25) $33.9 $3.5 $9.7 $27.6

Special Reserve (Sale of Site Fund) (Fund 40) $15.8 $0.9 $7.4 $9.4

Bond Interest and Redemption (Fund 51) $39.2 $14.4 $38.5 $15.0

Self-Insurance (Fund 67) $0.0 $0.4 $0.4 $0.0

[1] Includes $0.1 million contribution[2] Includes $0.5 million contribution

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Next Steps

• Review Governor’s Budget Release January 2020

• Update 1st Interim Deficit Projections based on the Governor’s

Budget Release January 2020

• Initiate Meetings of the Superintendent’s Budget Taskforce in

January 2020

• Present Initial 2020 – 21 Budget Reductions to the Governing Board

at February 12 Board Meeting

• Present Second interim Budget March 2020