EL CENTRO ELEMENTARY SCHOOL DISTRICT

Transcription

1 EL CENTRO ELEMENTARY SCHOOL DISTRICT ESTIMATED ACTUALS AND ORIGINAL BUDGET REPORT OVERVIEW The following narrative provides administrative comments and notations for the El Centro Elementary School District s Estimated Actuals and Original Budget. The Estimated Actuals reports have been updated based on year-to-date analysis of expenditures and revenues; this is a projection of how we expect to close the year. The Original Budget has been built based on the Governor s May Revise and will be updated after the budget has been approved and signed into law. The District patiently awaited the release of the May revise as we received mixed projections of revenues from the Governor and Legislative Analyst Office. While we were disappointed in the overall budget proposal. The Governor did eliminate the proposed deferral and slightly increased his allocation to the Local Control Funding Formula. Additionally, the Governor allocated one billion dollars in one-time funds for mandate costs. Unfortunately, these funds will be allocated in May 2019 and only after the State completes final calculations on revenues. This calculation will determine if the funds were owed under the Prop 98 guarantee, the billion is not guaranteed at this point. Due to this uncertainty, we have not budgeted these revenues in our multi-year projections. There is much discussion over the legality of the Governor s Plan. We will keep abreast on this issue and make budget adjustments when it is determined. School Services of California s sums up the May Revise very accurately, regardless of any oneyear s budget decisions, California remains a very high-tax state but assigns a lower priority to education than other high-revenue states. The modest promise of the LCFF, restoration of the purchasing power level of , will not be met because much of the restoration funding will go to increased contributions for the California State Teachers System and CalPERS, not to educational programs. California is destined to remain lower than other states in funding for public education. The District is not alone in facing challenges with meeting the increased rates for retirement. Coupled with the demands of the Local Control Accountability Plan, funding provided through the LCFF is not sufficient. Another unknown and highly scrutinized topic is where California school s will stand with Federal funding under the new administration. Congress recently passed a federal spending package to complete fiscal year 2017 (through September 2017). Beyond that date, we are unsure on the amount of funding California will receive from the federal government. At this point we are unable to determine what impacts there will be. We have budgeted flat funding for Federal Programs and will adjust accordingly, as we receive further information. This budget s planned deficit spending over the next couple years represents the effects of the slowing economy. Salary increases have not been figured into these budget projections and will add to the deficit. The District has adequate reserves to maintain a deficit for the next four years. The District will continue to reassess at each budget period and look for cost cutting measures with the intent of continuing to be fiscally prudent.

2 This report includes two separate fiscal years, and , the focus will be the new budget. The Board will receive a full detailed report on during the Unaudited Actuals report in September, when all expenditures for the year have been closed out. Attached to this narrative are the SACS financial statements required by the California Department of Education. Included are the following: General Fund (Form 01) o District Certification of Budget (Form CB) o Workers Compensation Certification (Form CC) o Current Expense Formula (Form CEA/CEB) o Summary of Interfund Activities (Form SIAA/SIAB) o Average Daily Attendance (Form A) o Local Control Funding Formula Summary Sheet o Multiyear Projections (Form MYP) o Criteria and Standards (Form 01CS) o Technical Review Checks (Form TRC) o Cash Flow Spreadsheet & Charter School Fund (Form 09) Cafeteria Fund (Form 13) Deferred Maintenance Fund (Form 14) Building Fund (Form 21) Capital Facilities Fund (Form 25) Special Reserve for Capital Facilities (Form 40) CFD Victoria Ranch Fund (Form 49) Page 2

3 GENERAL FUND Unrestricted Breakdown of Estimated Actuals versus Budget DESCRIPTION Estimated Actuals Budget Change Reason for Change BEGINNING BALANCE 12,910,815 11,775,003 REVENUES: LCFF Sources 46,030,340 47,774,110 1,743,770 GAP Funding 43.97% and COLA Increase 1.56% Federal Revenues None Loss of one-time Mandated funds received in District did not include proposed one-time funds for The Governor stated these State Revenues 1,862, ,029 (1,015,338) wouldn't be calculated until the close of based on state finances. Possibly $800k, but figure is highly volatile. Will budget when there is certainty of receipt. Local Revenues 778, ,576 Removed miscellaneous one-time reimbursements from SISC Workers Comp, SISC Safety (282,384) Reimbursement, Rebates, and refunds. Decreased projected interest earned in County Treasury. Indirect from Cafeteria Based on planned expenditures for Charter & 525, ,461 (24,665) & IVHSA Cafeteria. Indirect rate of 6.37% EXPENDITURES: Budgeted for two new teachers, included step and column increases.offset by attrition savings due Certificated Salaries 20,376,235 20,827, ,618 to retirements. This does not include current Tentative Agreement with ECTA this is an additional cost of $731,513. Classified Salaries 6,665,572 6,815,601 Budgeted for a new Custodial Operations 150,029 Supervisor, included step and column increases. Employee Benefits 8,958,860 9,602, ,872 Books & Supplies 2,763,151 2,148,378 (614,772) Services & Operating 3,591,088 3,174,068 (417,020) Capital Outlay 1,326, ,000 (1,206,335) Other Outgo 792,687 1,030, ,152 Based on salary changes above and the following increases: PERS (+1.643%) and STRS (+1.85%). It is difficult to compare these categories between the two-years. The budget is based on the needs of each department for the fiscal year. There are also many expenses from the LCAP that are included in this category that are one-time expenditures such as book adoption, parent center, facilities projects. This narrative will cover the top expenditures from these categories and the one-time expenditures. Transfers to Other Funds 549, , ,505 Transfer to Deferred Maintenance Fund and IVHSA for pending audit finding. Contributions to Restricted 5,309,534 5,583, ,332 NET CHANGE (1,135,812) (638,808) 497,004 ENDING BALANCE 11,775,003 11,136,194 Contributions for Special Education has increased. Page 3

4 Restricted Breakdown of Estimated Actuals versus Budget DESCRIPTION Estimated Actuals Budget Change Reason for Change BEGINNING BALANCE 1,368, ,366 REVENUES: Federal Revenues 4,812,867 4,238,705 Reduction is due to no carryover projected $240K, loss of SIP grant $81K, reduced Medical $109K, (574,162) reduction in SPED $91K State Revenues 3,566,477 3,620,458 53,981 Prop 39 funds increased from $176K to $229K Local Revenues 1,315,717 1,244,428 (71,289) Decrease in local grants (PRIME) & donations. Contributions 5,309,534 5,583, ,332 Increase in Special Ed & Routine Maintenance EXPENDITURES: Increase in salaries based on step & column and Certificated Salaries 4,922,679 4,948,510 25,831 savings due to attrition. Net effect of step & column and attrition savings. Classified Salaries 2,479,198 2,387,187 (92,011) includes vacation payout for retiree. Employee Benefits 4,215,528 4,381, ,695 Based on salary changes above and the following increases: PERS (+1.643%) and STRS (+1.85%). Books & Supplies 1,288,740 1,312,574 23,834 Based on available restricted funding; includes CPI increase. Reduction of one-time expenses including Prop 39 project of $960K, playground Services & Operating 2,602,083 1,045,392 (1,556,690) equipment $240K and available restricted funding. Increase due to planned purchase of skid steer Capital Outlay 102, ,000 77,830 and cafeteria tables for King & Sunflower. Other Outgo 163, ,478 2,469 Not significant. Indirect Cost 319, ,319 Based on planned expenditures. Indirect rate of (61,969) 6.37%. NET CHANGE (1,088,101) 9,774 1,097,875 ENDING BALANCE 280, , MAJOR BUDGET COMPONENTS Expenditure Categories % Certificated $ 35,701,363 62% Classified $ 13,261,742 23% Materials $ 3,460,952 6% Services $ 4,219,460 7% Capital Exp $ 300,000 1% Other Outgo $ 953,175 2% Total $ 57,896, % Salaries are 85% of general fund budget and include the following: Certificated Classified Unrepresented Substitute Teachers Mileage/Phone Stipends Extra Duties/Hourly Coaching Stipends FTE FTE 50.5 FTE Page 4

5 Selected Expenditures over $50,000 School Site Allocations $ 1,550,000 New Grounds Trucks (4) $ 120,000 Electricity $ 932, Classrooms Carpet Replacement $ 86,000 County Office Funds Transfer $ 512,599 Gargage $ 84,897 Water/Sewer $ 336,600 Campus Survillance Equipment $ 75,000 Chromebook Lease (3rd to 8th) $ 274,000 ICSIS Services $ 74,573 Property & Liability Insurance $ 225,000 City of El Centro Crossing Guards $ 71,900 Technology Upgrades Lease $ 217,229 STEM Kits $ 70,534 Parent Center Lease $ 140,231 Telecommunications $ 60,772 Exterior Painting - King $ 137,000 Asbestos Abatement $ 60,000 Lincoln Roofing $ 120,000 ICOE Demarcation $ 60,000 Replace Cafteria Tables (Sunflower & King) $ 120,000 Skid Steer Tractor $ 60,000 One-Time Expenditures District Office Bathroom Remodel $ 25, Technology Equipment (7 yr ) $ 217,729 Skid Steer $ 60, Chromebooks (3 yr ) $ 274,010 Grounds trucks (4) $ 120, Parent Center (5 yr ) $ 150,000 Lincoln Admin Roof Replacement $ 150, Total $ 641,739 Cafeteria tables at King & Sunflower $ 120, IVHSA one-time loan $ 603, Lincoln Student Restroom $ 15, Routine Restricted Maintenance $ 1,639,883 Total $ 1,093,647 Special Education $ 3,358,601 LCAP Expenditures Goal 1 $ 6,967,816 Goal 2 $ 2,784,626 MULTI-YEAR PROJECTIONS (FORM MYP) Capital Leases Contributions to Restricted Programs MAA/Medi-Cal $ 585,382 Total $ 5,583,866 General Fund Transfer to Other Funds Goal 3 $ 4,057,591 IVHSA $ 603,647 Goal 4 $ 522,940 Deferred Maintenance $ 350,000 Total $ 14,332,973 Total $ 953,647 GENERAL FUND MYP July 1, Beginning Balance $10,876,888 $14,279,282 $12,055,369 $11,426,335 $10,552,080 Estimated Revenues $57,171,156 $58,366,727 $58,221,306 $58,842,348 $60,125,408 Estimated Expenditures ($53,790,443) ($60,590,640) ($58,850,340) ($59,716,603) ($61,275,431) Surplus/(Deficit) $3,380,713 ($2,223,913) ($629,034) ($874,255) ($1,150,023) June 30, Ending Fund Balance $14,257,601 $12,055,369 $11,426,335 $10,552,080 $9,402,057 Reserve Amounts $ 10,532,354 $ 11,605,761 $ 11,177,613 $ 10,376,138 $ 9,226,116 Page 5

6 Assumptions Used for and Budgets - Unrestricted LCFF sources (COLA 2.15% and gap funding 39.03%), (COLA 2.35% and gap funding 41.51%). Projecting flat ADA for out-years. Federal revenues- no changes. State revenues- estimating flat funding. Local revenues- estimating flat funding. Contributions- estimating increase of $59,035 in and $563,296 in for increase in Special Ed expense and RRMA expense, all other restricted program expenditures are based on available funding. Certificated salaries- increase in step & column of $210,000 per year. Classified salaries- increase in step & column of $50,000 per year. Benefits- increase STRS rates 16.28% & 18.13%, PERS 18.1% & 20.8%. Small increase in H&W of 5% in each year. Materials & supplies- removed one-time expenditures and increased by 3.19% in and 2.86% in using consumer price index. Operating expenditures- used state consumer price index (CPI) to estimate increase to operating expenditures with exception of utilities, where a 5% annual increase is estimated. Capital outlay- No expense budgeted as of now. Other outgo other outgo is reduced compared to due to IVSHA possible finding, no change in Other adjustments include LCAP changes during the outyears. Assumptions Used for and Budgets - Restricted Federal revenues- projecting loss of Migrant Summer School, all else is flat funding. State revenues- reporting loss of Prop 39 funds received in 17-18, otherwise, flat funding. Local revenues- Loss of FACT Center Grant and other tax revenues in and Certificated salaries- increase in step & column of $50,000 per year. Classified salaries- increase in step & column of $20,000 per year. Benefits- STRS rates 16.28% & 18.13%, PERS 18.1% & 20.8%. Small increase in H&W of 5% each year. Materials & supplies- Expenditures increased by 3.19% in and 2.86% in using consumer price index. Operating expenditures- Used state consumer price index (CPI) to estimate increase which was offset by reducing expense based on available funding. Capital outlay- nothing to report. Other outgo- minimal adjustments. Page 6

7 BUDGET RESERVES AND ENDING FUND BALANCES Unrestricted: As of June 30, 2017, the District is projecting an unrestricted ending fund balance of $11,775,003; $5,453,158 is designated for economic uncertainties per the Board directed reserve of 9%, $5,000 revolving cash, $29,644 for stores, and projecting a total reserve level percentage of 19.38%. The District is planning to have a deficit of $638,808 for the year. This is not a structural deficit as we have $1,093,647 in one-time expenses. The projected reserve level percentage for is 18.86%, is 17.61% and is 15.29%. These percentages will decrease after the District settles negotiations with its bargaining units. In accordance with the new requirements of SB 858, beginning with the school year, the District must disclose a statement of reasons that substantiates the need reserve level higher than the State mandated 3%. The District has the following reasons; State Prop 98 funding is highly unpredictable. There have been years with deferrals and mid-year trigger cuts. The District wants to protect its students and employees by having a moderate reserve to endure bad economic times. A 3% reserve would only cover about two weeks of District expenses, which would be highly risky and irresponsible. For a District to be considered Positively Certified, they must have 3% reserve for three fiscal years. There have been many years where we have received flat funding or cuts. Therefore, if our District had a 3% reserve in year one of the three years, we would be negative based on uncontrollable growth of expenditures, such as step and column, STRS rates, workers compensation rates and utilities. Restricted: As of June 30, 2017, the District is projecting an ending fund balance of $280,365; projecting a deficit of $1,088,102 The deficit is projected due to spending down prior year carryover. The District is planning to carryover funds for the Educator Effectiveness Grant and Special Ed Mental Health for expenditures in We will update the carryover during the Unaudited Actuals revision. IMPERIAL VALLEY HOME SCHOOL ACADEMY CHARTER SCHOOL FUND (FORM 09) IVHSA FUND July 1, Beginning Balance $396,319 0 $250,280 0 Estimated Revenues $604,837 ($128,028) General Fund Loan $0 $603,647 Estimated Expenditures ($750,875) ($715,843) Surplus/(Deficit) ($146,039) 0 ($240,224) 0 June 30, Ending Fund Balance $250,280 $10,057 The Charter School Fund is for the District s only self-operated charter school, the Imperial Valley Home School Academy (IVHSA). IVHSA opened its doors in the school year with nine students and has grown in to ninety-nine students. During the preliminary audit, there was a finding regarding IVHSA Master Student Agreements. These student agreements are Page 7

8 the foundation on which we receive funding from the State for attendance. Unfortunately, this finding has the potential to cost the charter school fund $717,000. Unfortunately, the charter does not have sufficient funds for this repayment and needs a loan from the general fund. The District filed an appeal on April 27, 2017 with the Education Audit Appeals Panel. The District was told it can take up to two months before we would receive a determination. Until the District resolves this finding, we will continue to budget the payback of the funds. We will keep the Board informed of developments as they occur. The multiyear assumptions are that attendance will remain steady at 70. We used School Services of California s Gap funding percentages. We included step costs, STRS and PERS increases, and removed one-time expenditures. We increased materials, supplies and operations costs by the Consumer Price Index. There is the potential increase in costs in the out years due to new material adoptions. CAFETERIA FUND (FORM 13) Cafeteria Fund July 1, Beginning Balance $921,700 0 $745,657 0 Estimated Revenues $3,503,273 $3,381,686 Estimated Expenditures ($3,679,316) ($3,720,711) Surplus/(Deficit) ($176,043) 0 ($339,025) 0 June 30, Ending Fund Balance $745,657 $406,632 The revenues are based on the latest trends for cafeteria sales. The Cafeteria was awarded two grants in , the smarter school lunch movement and a CDE equipment grant. These have been removed in the school year. The board approved going out to bid for new outdoor refrigerators and dry storage, projected costs of $400,000. The portion of the project was $200k and another $200k for the remainder in The District has one time purchases planned for the year which are creating a deficit. The Child Nutrition Department was under review in and received accolades for its breakfast cart program at Desert Gardens. As part of the review we had three minor findings that have been resolved. DEFERRED MAINTENANCE FUND (FORM 14) Deferred Maintenance Fund July 1, Beginning Balance $0 $0 Estimated Revenues $499,142 $350,000 Estimated Expenditures ($499,142) ($350,000) Surplus/(Deficit) $0 0 $0 0 June 30, Ending Fund Balance $0 $0 Page 8

9 This fund was established in to account for our Deferred Maintenance Projects. The revenues are a transfer from the General Fund, as there are no revenue sources from the State. The District is choosing to use this fund to distinguish these expenditures from the General Fund. All the projects paid from these funds are part of the LCAP. BUILDING FUND (FORM 21) This fund is where we record our Maintenance and Assessment Bonds. The only activities in this fund are debt service payments. The funds have already been encumbered and are sitting in this account to make remaining loan payments. The estimated balance for the end of is $170,167. CAPITAL FACILITIES FUND (FORM 25) Developer Fee Fund July 1, Beginning Balance $3,506,311 $3,815,457 Estimated Revenues $487,126 $224,000 Estimated Expenditures ($177,980) ($177,980) Surplus/(Deficit) $309,146 $46,020 June 30, Ending Fund Balance $3,815,457 $3,861,477 This fund is also known as the developer fee fund, as this is where the funds collected from construction projects are deposited. We have seen an increase in the revenues collected in this fund in , homes are being built due to the growing economy. We have a conservative estimate of revenues for this fund, since it is highly unpredictable. This fund has many restrictions on how monies can be expended therefore there are few expenditures from this fund. In we plan on paying for our School Facilities Needs Analysis, IVHSA/District Conference Center lease payment and use towards new construction. SPECIAL RESERVE FOR CAPITAL PROJECTS (FORM 40) Special Reserve for Capital Projects Fund July 1, Beginning Balance $1,001,708 $211,988 Estimated Revenues $0 $0 Estimated Expenditures ($789,720) ($140,231) Surplus/(Deficit) ($789,720) ($140,231) June 30, Ending Fund Balance $211,988 $71,757 This fund was established in by the Board, to set money aside for capital projects. In a transfer was made for $1 million for the Parent Education Center. The expenses for the center have been $789,720. The District has entered into a five-year lease with an annual payment of $140,231. The first event was held on May 31, 2017 and was a great success. We look forward to many more events for our parents and community with this facility. Page 9

10 CAPTIAL PROJECT VICTORIA RANCH CFD (FORM 49) Capital Project (CFD) Fund July 1, Beginning Balance $1,280,478 $1,673,194 Estimated Revenues $402,716 $208,000 Estimated Expenditures ($10,000) ($10,000) Surplus/(Deficit) $392,716 $198,000 June 30, Ending Fund Balance $1,673,194 $1,871,194 This fund records revenues and expenditures related to the Victoria Ranch CFD. The CFD was established to collect monies from property owners to help contribute to the costs of building a new school in the property area. In , the budget includes revenues for property taxes collected and interested earned. There is also an expenditure for NBS. NBS calculates the tax assessments placed on the properties and reports them to the Imperial County. The projected year-end balance for this fund is $1,871,194. CLOSING NOTES Based on our latest information, California is slowing in economic growth and thus we are not receiving the level of revenue increases we have become accustomed. The rising costs of STRS, PERS, Special Education, and LCAP supplemental dollars are depleting much of the new dollars. Tentative salary agreements have not been factored into the and will be part of the next budget revision. Reserve levels maintained by the District are adequate to allow for short-term deficit spending. As reflected in this report, the District is planning on running a deficit for the next three years. While is due to one-time expenditures, we project running a structural deficit during the fiscal year. Since both State and Federal revenues are very unpredictable in future years, the District feels it is to early to address the deficit. We will closely monitor the State and Federal budget for the next year and remain hopeful revenues will come in higher than projected and lead to a better outcome for If the revenues do not come to fruition, the District will create a plan to address the budget shortfalls. Fiscal solvency is a priority at the District, while continuing to focus on meeting the needs of our students. Page 10

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