BUDGET UPDATE September 2009 Volume 1, Issue 1

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1 BUDGET UPDATE September 2009 Volume 1, Issue 1 Cobb County School District, Financial Services Division About the Budget Process The development of the Budget is a planned, orderly process, which prioritizes budget requests using available resources. The central focus of the Budget is student instruction and achievement in the classroom. UPCOMING DATES September 2009 October 2009 November 2009 Introduce Budget Update Newsletter Begin tracking actual revenues compared to budgeted revenues Introduce Budget Development Process for FY2011 The Budget process includes the estimation of revenues to fund the necessary operating expenditures of the District. Decisions on the appropriation of funds are made after input is received from individuals from inside and outside the school system. All technical aspects and tasks of budget development are assigned to responsible employees of the system to ensure that accounts, programs, and services are reviewed, analyzed and comply with Cobb s goals (Increase Student Achievement, Make Effective and Efficient Use of Resources, Increase Stakeholder Satisfaction). FY2010 Budget Revisions The Cobb County Board of Education voted during its July 23 meeting to use a portion of the District s reserve fund to avoid further employee furlough days mandated by the state. On June 21, Governor Sonny Perdue informed school systems across Georgia of an additional three percent cut in Quality Basic Education (QBE) funding and charged districts with three furlough days for employees, including teachers. These cuts resulted in an additional $19.8 million cut to Cobb s State funding. The Board confirmed its commitment to Cobb s teachers by authorizing the use of $10.4 million of its unreserved fund balance to avert further cuts to employee pay. On August 27, 2009, the Board approved the Superintendent s recommendation to modify the FY2010 Budget for the remaining deficit of $9.4 million, after the furlough days. The follow adjustments were made to the expenditure budget: Eliminate 56 Key Team Positions Reduce local funding for the Summer School CRCT program Reduce the general fund fuel budget Reduce the County Wide Building Fund Contingency Eliminate the 10% Supply Carryover for schools Reduce Charter School Payments because of Governor s reduction in QBE Reduce Telecommunications Wide Area Network The Superintendent s proposed modifications to the FY2010 budget will enable the school district to absorb the Georgia Department of Education funding reductions.

2 Budget Update Page 2 Our Numbers State Revenue FY2010 Monthly Revenue Analysis Compared with Prorated Budget 500,000, ,000, ,000, ,000, ,000,000 0 July Aug Sept Oct Nov Dec Jan Feb March April May June Cumulative Annualized Budget FY 2010 Cumulative Revenues State Revenue This section of the newsletter will track Cobb s prorated budget relative to the actual collections. Any variance between the prorated budget and the actual collections will be explained. No final FY2010 revenue numbers are available to present at this time. Local Revenue FY2010 Monthly Revenue Analysis Compared with Prorated Budget 500,000, ,000, ,000, ,000, ,000,000 July Aug Sept Oct Nov Dec Jan Feb March April May June Cumulative Annualized Budget FY 2010 Cumulative Revenues Local Revenue This section of the newsletter will track Cobb s prorated budget relative to the actual collections. Any variance between the prorated budget and the actual collections will be explained. No final FY2010 revenue numbers are available to present at this time.

3 Page 3 Budget Update Our Numbers (continued) Federal Revenue FY2010 Monthly Revenue Analysis Compared with Prorated Budget 40,000,000 30,000,000 20,000,000 10,000,000 July Aug Sept Oct Nov Dec Jan Feb March April May June Cumulative Annualized Budget FY 2010 Cumulative Revenues Federal Revenue This section of the newsletter will track Cobb s prorated budget relative to the actual collections. Any variance between the prorated budget and the actual collections will be explained. No final FY2010 revenue numbers are available to present at this time. What s Next? Future Challenges and Economic Outlook State Economy Governor Sonny Purdue announced that the net revenue collections for the month of July 2009 (FY2010) totaled $1,096,238,000 compared to $1,213,291,000 for July 2008 (FY2009), a decrease of $117,053,000 or 9.6 percent. According to an article in the Atlanta Journal Constitution dated August 11, 2009, the governor and state economists predict more bad economic news for the rest of this calendar year and ordered agencies to make cuts in anticipation of that. The graph below depicts the trends in State monthly revenue for the three most current fiscal years.

4 Budget Update Page 4 State Revenue Reductions State Austerity Reductions Local Fair Share The state of Georgia implemented a series of austerity reductions that have resulted in a cumulative state revenue reduction for CCSD of $184.8 million from FY2003 to FY2010. The reduction in FY2010 is $59,928,151. The state of Georgia requires that school districts levy 5 mills of local taxes prior to distribution of State QBE funding. It has been suggested that the State should cap the Local Fair Share at $100 million Cobb County School District QBE Mandated Local Five Mill Share $140,000,000 $130,000,000 $120,000,000 $110,000,000 $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000, Fiscal Year American Recovery and Reinvestment Act Federal funding The American Recovery and Reinvestment Act Federal funding (ARRA) has TWO sources of funding - Stabilization Funds and Stimulus Funds. Both of these ARRA funds were accounted for and included in the FY2010 Budget that the Board approved on June 10, The following rules and regulations regarding these funds represent our current understanding of ARRA funds but are subject to change.

5 Page 5 Budget Update Summary of ARRA Stabilization Funds (General Fund Only) Summary of ARRA Stimulus Funds (Title I and IDEA Grant Funds Only) Description Total Funds Stabilization Funds Allocated to Cobb County School District Stimulus funds are completely separate from Stabilization Funds and for Cobb, only affect the Title I and IDEA Cobb Grant funds only. Total Funds $1,032,638,855 Description Total State Stimulus Funds Stimulus Funds Allocated to Cobb County School District Funds allocated to school districts in FY2009 $157,931,185 $9,819,396 (A) Title I Grant $336,261,901 $13,616,294 (A) IDEA Grant $324,207,683 $20,236,741 (B) Funds allocated to school districts in FY2010 $413,145,926 $25,768,923 (B) (A) Total Title I Stimulus funds for the State of Georgia are $336,261,901. Cobb was allocated $13,616,294 to be spent during FY2010 and FY2011. Funds remaining to be allocated in FY2011 $461,561,744 To be Decided by the State (C) (A) For FY2009, the State distributed $157,931,185 to school districts in Georgia. Cobb's portion was $9,819,396 and was received by Cobb in May, 2009 (Austerity Offset) (B) Total IDEA Stimulus funds for the State of Georgia are $324,207,683. Cobb was allocated $20,236,741 to be spent during FY2010 and FY2011. (B) For FY2010, the State allocated $413,145,926 to school districts in Georgia. Cobb's portion is $25,768,923. Cobb will receive half of these funds ($12,884,462) in September, 2009 and the other half of these funds ($12,884,462) in October, Total Cobb Stabilization funds of $25,768,923 have already been included as part of the FY2010 Budget that was approved by the Board on June 10, (Austerity Offset) (C) For FY2011, the State has $461,561,744 in remaining funds to allocate to school districts in Georgia. We do not know yet what the allocation formula will be or how much Cobb will receive. We will let the Board know as soon as the information becomes available from the State of GA. (NOTE) - Stimulus funds for the Title I and IDEA grants will be received from the State of GA on a reimbursement basis as the grant funds are spent during FY2010 and FY2011.

6 Budget Update Page 6 Property Taxes Taxes levied on real and personal property, based on values assessed as of January 1 each year. FY2010 Property Tax revenue is based on a millage levy currently of mills. The following 2009 Metro Atlanta comparisons of millage rates, homestead exemptions and taxes on a $165,000 home: School Locality Standard Homestead General Fund Bond Millage Rate Taxes on a Exemption Millage Rate $165,000 Home Cobb $10, $1,058 Atlanta $15, $1,107 Fulton $2, $1,120 DeKalb $12, $1,225 Gwinnett $4, $1,279 How your School Taxes are calculated The following is an example of how FY2010 Cobb County School Taxes are calculated for a $165,000 home: General Fund Millage Items $165,000 House assessed at Fair Market Value X.40 40% Assessment Rate $ 66,000 Assessed Value for Tax Purposes $ (10,000) Home Stead Exemption $ 56,000 Tax Base for Property Tax X 18.9 mills Millage Rage $1,058 General Fund School Taxes Budget Website At the website you can view the following items: Popular Report Fiscal Year Tentative Budget FY2010 General Fund Overview FY2010 Proposed Budget Reduction Alternatives FY2010 General Fund Positions FY2010 Other Funds Overview Five Year Financial Forecast Board List of Exclusions as of May 13, 2009 Please visit the Budget website at