June 8, 2011

Frank disclosure of fiscal conditions and assumptions.

Approval of these assumptions will expedite completion of budget for 2011-12 and multi-year projections for 2012-13 and 2013-14.

$82,471,812 $80,162,428

$65,865,990 $66,269,436 $66,905,516 $68,265,483

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

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Revenue Limit COLA: State statutory COLA of 2.24% was used for 2011-12; School Services of California’s (SSC) Dartboard (May 2011) projects COLA of 3.20% for 2012-13 and 2.70% for 2013-14;

Revenue Limit Deficit: Though higher COLA, it remained unfunded and deficit increased from 17.963% to 19.754%; per SSC, project higher deficit of 19.754% until further notice.

K–12 Enrollment Growth: Latest enrollment count reflects zero growth in current year; assumed flat growth for two subsequent years.

Average Daily Attendance (ADA): Projecting 10,611.49 per year (includes 3.05 County Pass-through ADA).

Local Property Taxes: $60,714,100 based on latest SDCOE figures, a reduction of $409,000 (or -0.65%) over current year tax projection. A 1% growth is estimated for fiscal year 2012-13 and 2013-14. Taxes will be closely monitored due to impact of refunds for lower assessed valuations countywide.

8.92% On-going reduction to Basic Aid Districts: As signed by Governor Brown on March 24, 2011, effective FY 2011-12, an 8.92% reduction to State categorical funding will be recognized by District on an on-going basis.

$330/ADA Funding Cut: SDCOE and SSC has recommended additional cuts of $330/ADA be made because State Budget and final funding impact is unknown.

Mandated Costs Revenues: Revenues will be recognized upon receipt; project $0 for subsequent years.

Lottery excluding Prop 20: Project $111/ADA for fiscal year 2011-12; $110 and $108.75 for subsequent years.

Class Size Reduction, Grades K-3: Due to relaxed penalties through 2013-14, funding to be reduced rather than eliminated when District staffs at higher than 20:1 in grades 1-3. Projected COLA increases to funding beginning FY 2012-13 and thereafter.

State Categoricals: Per SBX3 4, revenues now recognized as Unrestricted rather than Restricted funds and adjusted by projected COLA beginning FY 2012-13 (if funded). SB 70 extends all existing flexibility options by two additional years.

Lottery: Prop 20 Instructional Materials: Project $17.50/ADA for 2011-12; $17.20 for 2012-13 and 2013-14.

Instructional Materials Funding Realignment Program (IMFRP): Per SBX3 4, revenues now recognized as Unrestricted rather than Restricted funds and adjusted by projected COLA beginning FY 2012-13 (if funded).

Deferred Maintenance & Major Maintenance & Repair Contributions: Annual deferred maintenance match and 3% contribution to restricted maintenance program are no longer required through June 30, 2015 though District will continue to spend over $2M on these programs.

Special Education – State Funding: Projection assumes zero growth in K-12 ADA and funding for special education adjusted by projected COLA beginning FY 2012-13. Effective FY 2011-12, over $600,000 in DHH staff costs and offsetting revenue will have been transferred to NCCSE.

Special Education Transportation – State Funding: Revenue adjusted by projected COLA beginning FY 2012-13.

Mental Health Services: With passage of AB 3632, Districts are responsible for paying for services as well as room and board costs for students at year-round Residential Treatment Centers. Though funding is anticipated, none is recognized at this time.

Federal Revenues: Few Federal categorical budgets were projected with COLA funding and no “carryover” amounts are included.

Federal ARRA and Education Jobs Revenues: One-time funds received in current year are not included in subsequent years.

Local Income (Interest, facility use fees, District rentals, miscellaneous income, etc.): Projected interest earnings at less than 1% for each year and assumes participation in TRANs.

Local Income – NCCSE: Effective 2011-12, two Deaf and Hard of Hearing regional program unit costs will be transferred to NCCSE with offsetting revenue reduction of $330,000 in Special Education funds. With DHH program now being administered by NCCSE, the District will no longer receive $64,000 in maximization dollars to support coordination of program.

Other Local Income (donations, grade camp funds, etc.): $80,000 projected donations is included for each year from Educational Foundation; all other donations are recognized upon receipt.

51%

13%

21%

3%

11%

1% 0%

Certificated Salaries

Classified Salaries

Fringe Benefits

Books & Supplies

Contract, Other Services

Capital Outlay

Other Outgo

Note: Data reflects expenses through May 2011

Salary Schedule Increase: 0% salary schedule increase is budgeted.

Step and Column Increase: Projected net cost increase of step and column per year of 1.00% for certificated employees and 0.50% for classified and management employees.

Health & Welfare Increase with no reduction in benefit levels: Health and Welfare benefit costs continue to increase. Budget provides for overall premium increases of 10% effective January 1, 2012 and for each subsequent years; District covers 75% of that increased cost.

Staff Reductions: Continuous review of vacant positions has resulted in elimination of 1.10 FTEs Music, .60 FTE Literacy Specialist, 1.20 FTEs net reduction of librarians, reduction of BTSA support, 1.00 FTE Director of Curriculum and Instruction, two computer lab assistants, 1.00 FTE payroll technician, .50 FTE custodian. District has also eliminated 1.00 FTE from Carlsbad Seaside Academy, 1.00 Administrative Assistant (Language Assessment Center) still pending Board approval. District will continue to recognize savings from attrition.

$330/ADA Cut: Under “Other Adjustments” in Expenditure Section of the multi-year report, we have included the figure of -$3,501,792 to account for needed employee salary and benefit concessions IF potential $330/ADA cut materializes in FY 2011-12.

PERS Increase: Fiscal year 2011-12 increased rate is 10.923% (was 10.707% in 2010-11). Further rate increases are projected for subsequent years.

Unemployment Increase: Rate will more than double to 1.61% from current rate of 0.72% effective FY 2011-12. In addition, some employers will see an increase in their local experience charge due to layoffs over the last several years.

Retiree Benefits: Projected premium increases effective January 1, 2012 based on current number of retirees. OPEB liability is “pay-as-you-go”.

Teacher to Student Ratios (Regular Education): Grades 1-3 will be staffed at 32:1 effective FY 2011-12.

School Site allocations: Reduction of 5% to per-student allocations for unrestricted instructional supplies and custodial supplies and reduction of 20% for site flex budgets effective FY 2011-12.

Utility Costs including Telephone Service: Projected increases to service accounts for 2011-12 and 5% for subsequent years, except for gas and electric costs, which could be flat due to District energy conservation program.

Contribution to Restricted Programs: Special Education and Special Education Transportation: Increased contribution to both programs due to flat or declining funding and other unavoidable cost increases. For 2011-12, increased contribution to special education transportation by 7% over prior year; 5% increase thereafter.

Contribution to Food Services Operations: $0 contribution is projected. Deferred Maintenance: Under SB 70, District match not required until after June 30, 2015. Routine Restricted Maintenance Account: Funded at level needed to cover personnel and on-

going operational costs. Other: Except as noted above, all items are “rolled forward” at the level in prior year. Cultural Arts Center (CAC) Operational Costs: CAC operational budget totals over $242,000 for

staff and utility increased costs; in 2012-13 reserve will be exhausted unless outside facility usage increases greatly.

Summer School: Per SBX3 4 flexibility, summer school is eliminated effective 2011-12 with exceptions of Special Education Extended School Year (ESY) and Language Academy for English Learners.

Insert admin visuals

$16,266,401

$13,215,702

$2,842,452 $2,560,051 $2,595,253 $2,587,671

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

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All fund balance components/reserves are one-time resources and are best not used to fund recurring costs. Unfortunately, due to recent State action eliminating close to $6M from Basic Aid Districts effective FY 2011-12, many one-time resources will be used to support on-going costs. Thereafter, significant employee salary and benefit concessions and many other budget reductions will be needed if State fiscal condition does not improve by FY 2012-13.

State required 3% reserve for economic uncertainties is currently met and must be restored if used.

Required reserves for Stores (non-cash inventory), Revolving Cash fund, and Prepaid Expenditures cannot be used for other purposes and thus, are considered non-spendable by State.

Categorical (or Special Project) funds are considered restricted by the State and thus, are held in a Legally Restricted Balance account.

Undesignated/Unappropriated amounts are available for future use and may include donor/grantor specified designations (e.g. Donations, Cultural Arts Center, Filming of Board meetings).

It is respectfully recommended that the Board of Trustees accept the Budget Assumptions as presented.

For more information on District budget process: http://www.edsource.org/pub_budgetguide1-04.html

http://www.edsource.org/iss_fin_districtbud.html