Budget Adoption. June 25, 2009

Transcription

1 East Side Union High School District Budget Adoption June 25, 2009

2 East Side Union High School District Budget Adoption BOARD OF TRUSTEES Patricia MartinezRoach, President J. Manuel Herrera, Vice President Frank Biehl, Clerk Eddie Garcia, Member Lan Nguyen, Member ADMINISTRATION Bob Nuñez, Superintendent Alan Garofalo, Associate Superintendent of Student Services and Facilities Jerry Kurr, Associate Superintendent of Administration and Business Services Dan Moser, Associate Superintendent of Instruction and Human Resources

3 TABLE OF CONTENTS Page Superintendent s Message....1 Executive Summary.. 2 Significant Budget Characteristics Basis For Budgetary Data Budget Development Guidelines GENERAL FUND Assumptions for the 2009/10 Budget Development... 7 Budget Reductions and Adjustments, 2009/ General Fund Revenues, 2009/ General Fund Expenditures, 2009/ Restricted and Unrestricted Revenues and Expenses, 2009/ General Fund Revenues and Expenses, 2000/01 to 2009/ District Reserves and Net Ending Balance, 2000/01 to 2009/ Net Change in the Unrestricted Ending Balance, 2000/01 to 2009/10 14 Attendance History and Projections for 2009/ Lottery Income and Its History Special Education Program Costs, 2009/ District's Revenues and Expenses vs. Other Districts, 2007/ Dollar Change per ADA, Unrestricted Expenditures, to Certificated Salary Growth, 2005/06 to 2009/ Health and Welfare Benefit Expense, 2005/06 to 2009/

4 TABLE OF CONTENTS (Cont.) Page 2009/10 Budget Assumptions General Fund Revenues 2009/ General Fund Expenditures 2009/ /11 & 2011/12 Budget Assumptions General Fund Revenues 2010/11 & 2011/ General Fund Expenditures 2010 & 2011/ Flexibility Programs Used for General Fund Expenditures Tier III Programs.. 32 Reconciliation General Fund Reconciliation /09 Budget & Estimated Actual and 2009/10 Budget. 39 Revenues and Expenditure Summary 2008/09 to 2009/ Revenue Details 2008/09 to 2009/ Expenditure Details 2008/09 to 2009/ /11 Projection and 2011/12 Projection Revenues and Expenditure Summary 2010/11 to 2011/ Revenue Details 2010/11 to 2011/ Expenditure Details 2010/11 to 2011/ Categorical and Special Education Programs 2009/ Revenues and Expenditures Summary 2008/09 to 2009/ Revenue Details 2008/09 to 2009/ Expenditure Details 2008/09 to 2009/ Categorical and Special Education Programs 2010/10 & 2011/12 60 Revenues and Expenditures Summary 2010/11 to 2011/ Revenue Details 2010/11 to 2011/ Expenditure Details 2010/11 to 2011/

5 TABLE OF CONTENTS (Cont.) Page Special Revenue Funds Adult Education Fund Child Development Fund Deferred Maintenance Fund General Fund Reserve Fund Other PostEmployment Benefit (OPEB) Fund with Revocable Trust Fund Other PostEmployment Benefit (OPEB) Fund with Irrevocable Trust Fund Scholarship Fund Capital Projects Funds Measure G Fund 21 (Program 819) Measure A Fund 22 (Program 822) Measure E Fund 23 ( Program 823) Capital Facilities Fund State School Building LeasePurchase Fund School Facilities Fund Proprietary Funds Cafeteria Fund Self Insurance Property/Liability Fund Self Insurance Dental Fund

6 SUPERINTENDENT S MESSAGE The school year saw a continuing significant downturn in the State and National economy. There was even a midyear reduction in State revenues for local government agencies implemented with a special session of the State Legislature adopting a two year budget ( and ). This two year budget which is the basis for this District Budget significantly reduced state base revenues and categorical funds for both years. With California s economy continuing to head downward it is expected that the State will enact a new budget for which will again reduce revenues to the District. In the school year the East Side Union High School District will again see less financial support from the State level than it did in the school year. This being recognized in early spring caused the District to go through a significant reduction in workforce which is reflected in this budget. East Side Union High School District is an educational system; any reduction in services and resources harms that system. However, we have made every attempt to keep our inclassroom instruction robust to provide the best opportunity for our students to learn. Many of the steps we have taken are one time opportunities and will not sustain the District on an ongoing basis. A positive note is that Measure E modernization and expansion projects are being implemented starting in the school and continuing into the next few years. These projects will have the added benefit in part of stimulating the local economy. Our sole purpose in public education is to provide the best opportunity for students to learn. That is the continuing focus of our Board of Education, administrators, teachers and support staff. A special thanks to all of you who have supported us this last year. I look forward to working with you throughout the next year on achieving our purpose and remaining fiscally solvent. I am confident that together we will find the necessary solutions to keep us moving forward. Our district is a great one with many talented individuals working to make it even better! Thank you! Bob Nuñez, Superintendent 1

7 EXECUTIVE SUMMARY The school year saw a continuing downturn in the National and State economy. This Budget includes a % deficit which greatly offsets the cost of living adjustment and reduces the base funding formula for education again. This deficit of over $23 million equates to nearly $1,000 less per student average daily attendance than what the District should be receiving. This budget is based upon a State budget that was passed by the State Legislature and signed by the Governor in February of It is anticipated that there will be additional legislative action that will significantly change the District s funding for the school year. This budget does fully fund all currently known obligations of the District for the school year with the subsequent two years reflecting significant deficit spending and not having State required reserve levels. The anticipated student population is projected to decrease by 103 ADA (average daily attendance) for this next year decrease by 30 ADA for the subsequent years. Authorized in the State Budget was the ability to unrestrict certain former categorical program funds. The District did go through the process of a workforce reduction in all classifications of staff which resulted in over $10 million worth of salary and benefit cost reductions. No salary increases are provided for in the budget. A continuing concern is the growth in costs and underfunding of the Special Education and Transportation programs. The increasing cost of employee benefits continues to impact the District. It is estimated that health insurance premiums will increase by approximately a 10% average. This budget will change when the Legislature and Governor pass a second State Finance Bill. With the State economy having worsened in it is expected that education will be experiencing a decreased level of programs than it provided in the school year. 2

8 Significant Budget Characteristics 3

9 BASIS FOR BUDGETARY DATA The school district budget is an expression in dollars and cents of the educational program. The budget, which is an estimate of proposed revenues and expenditures for a stated period of time and for specified purposes, can serve many important functions, including the following: Describes the planned district educational program including all supportive services Outlines fiscal controls that the governing board of the district will employ in discharging its responsibility for district expenditures Informs the public of the educational program and the funds needed for program operation Makes available to the governing board, the staff, and the community, information that determines the resources needed to support the educational program This document reflects the proposed spending plan based on current information and assumptions. The major basic assumptions which comprise the District s budget are presented on the following pages. As these conditions change, amendments and augmentations will be presented to the Board for action. The Adopted budget was developed utilizing the best and most current information available for state, county, and local sources. The summarized data is presented by sources of revenue and types of expenditures. 4

10 BUDGET DEVELOPMENT GUIDELINES Establish enrollment projection Project ADA funding based on enrollment projection (by site) Project Revenue Limit based on projected ADA Project other revenues Establish staffing allocations given enrollment projections Project certificated salaries (staffing, step & column and COLA increases, if applicable) Project classified salaries (staffing, step & column, and COLA increases, if applicable) Project year end retroactive pay per contract formulas (if applicable) Project employee benefits expenses Project Utilities expenses Establish site budgets (projected ADA x $/ADA allocation) Establish district office/centralized budgets (staffing, etc) Project indirect cost (approved rate and projections in other funds) Project interfund transfers to Deferred Maintenance Fund and SelfInsurance Fund Consider budget augmentations/adjustments Calculate encroachment from other funds 5

11 General Fund 6

12 Assumptions for the Budget Development During the months of May and June each year, the District finalizes its budget for the coming year. In order to project the budget, a series of assumptions about the conditions of the District must be determined. These assumptions are then inserted into state and District formulas in order to determine the final budget for the next year. This year, the Governor's May Revision amends the adopted State Budget for the first time. The State Budget was adopted in February The accuracy of the District's budget projection for the next year is only as good as the assumptions that are used in developing the budget. If the assumptions are wrong, so too will be the budget. As a consequence, the assumptions at least the primary ones have to be carefully considered in evaluating the accuracy of next year's income and expense. Often, the assumptions for budget development are revised several times during a fiscal year. Since it is impossible to accurately predict all of the assumptions that are needed in budget development, East Side Union High School District updates its budget and the assumptions three times after the original budget is adopted. The assumptions are updated with a revision that occurs within 45 days after the adoption of the State Budget and with two interim reports that are delivered to the Board of Education in January and March of each fiscal year. Financial Assumptions for Budget Development % Total ADA percentage change over prior year, and estimated P2 ADA for Revenue Limit COLA adjustment by percentage and dollars COLA adjustment for state categorical programs Reduction in state revenue limit deficit ,799 District's estimated Unrestricted Beginning Balance $2,148,814 Certificated payroll increases due to the step and column movement 1.50 $1,245,291 Health and Welfare cost increase $1,624,053 Others: The District's budget projection is only as good as the assumptions that are used in developing the District's revenues and expenses Salary increases for employees are subject to negotiation and thus are not included in the proposed district budget. A one percent general salary increase for all employees, including statutorily required benefits, costs $1,650, Reflects information as of June 2009

13 Budget Reductions and Adjustments for California schools are highly dependent on funding from the state of California, and, as the state encounters increasing difficulty in balancing its own Budget, so does public education. The squeeze in revenues and the escalating costs in some District programs and employee costs have forced budget reductions and adjustments as part of the Districts's obligation to adopt a balanced budget. The budget reductions followed an indepth analysis of District expenditures and none of the major changes has been considered lightly. Some of the reductions will be permanent and others will be restored as quickly as possible, consistent with prudent District budgeting. The Superintendent went through a process to seek out input from the District staff on potential areas that would have the least negative impact on the operations of the District. This budget reflects the mid year State adopted Finance Bill passed by the special Legislative session that took place in February of To date this budget does not reflect additional Federal funds given to the District for economic relief. Budget Reductions and Adjustments for Today's budget reductions will compromise tomorrow's District services and support efforts Items Description: Fund 13 FTE Counselors Decrease 65 FTE Teachers Decrease 2.4 FTE Coordinators Decrease 1.0 FTE Student Advisor Decrease 10.1 FTE Administrators/Managers Decrease 70 FTE Classifed Positions Decrease 3.8 FTE Teachers for Student Decline Revenue Limit ADA Decrease Revenue Limit COLA Increase Revenue Limit Deficit Amount $1,500,000 4,800, , ,000 1,549,000 4,778, , ,347 8,412,275 23,192,000 8 Reflects information as of June 2009

14 General Fund Revenues, General Fund Revenues, Other Local 5% 15% Other State Revenue Limit 6% 75% of the District's revenues are generated from the District's Revenue Limit Most of the District's General Fund revenue is generated from the District's Revenue Limit, which yields funds based on a statedetermined dollar amount multiplied by the average number of students who are in attendance throughout the school year. Public education unlike any other public agency receives most of its revenue based on the population it serves. Federal General Fund Sources (In Million) Revenue Limit Federal Other State Other Local 75% $ Total Revenues Beginning Balance 12.2 Total General Fund $216.8 Reflects information as of June The May Revision reflects a revised 4.25% statutory costoflivingadjsutment (COLA) for , but provides no funding for the COLA in either (5.66%) or in In addition to not providing COLAs for both and , the May Revision proposed further cuts to school district revenue limits in both years, which results in reductions averaging 6.4% and 3.5% for the current and budget years, respectively. Combined with the loss of the COLAs, according to the Governor's estimates, these cuts translate into deficits of % and 7.839% for districts and county offices of education (COEs), respectively, for and % and % for districts and COEs, respectively, for the budget year. The second biggest source of revenue is state categorical income, which must be spent for selected statedetermined programs. The largest categorical program is Special Education services. The Governor proposes a zero COLA and acrosstheboard reductions that amount to a 19.84% rollback from funded levels. Federal income is a small portion of the entire District income picture, but its importance grows as new federal commitments are added. Again, most of the federal income is restricted because it must be expended for purposes that are determined by the grantor not the local Board of Education.

15 General Fund Expenditures, % Benefits 4% It takes people to teach students and 90% of the District's total expenditures is committed to the employees of the District General Fund Expenditures, Capital/Other Operating 7% 0% Books & Supplies3% Management 12% Classified NonManagement Certificated NonManagement 50% Reflects information as of June 2009 Most of the expenditures of the District are committed to salaries and benefits for employees of the District. It takes people to teach students, and in East Side Union High School District, 90% of the District's budgeted expenditures are for the services of District employees. Employee salaries are divided into three separate line items certificated, management, and classified employees. Certificated employees include teachers, counselors, nurses, librarians, psychologists, and others who provide services that require credentials from the state of California. Management employees include principals, vice principals, instructional leaders, classified management personnel, and district superintendents. Classified employees include all of the support personnel in the District, including secretaries, accountants, bus drivers, mechanics, painters, and custodial personnel. The health and welfare benefits of the District represent an additional 26% of payroll for expenses in areas such as medical, dental and life insurance plans, retirement, and workers' compensation expenses. General Fund Expenditures (In Millions) Certificated NonManagement Salaries Classified NonManagement Salaries Management and Supervisor Salaries Employee Benefits Books and Supplies Operating Capital/Other Total Expenditures Ending Balance Total General Fund (Rounded) $ $

16 Restricted and Unrestricted District Revenues and Expenses, Transportation 1% Special Education Unrestricted and Restricted Revenues, % 19% 73% Unrestricted and Restricted Expenses, Special Education 14% Other Restricted Other Restricted Transportation 2% 11% Unrestricted 73% Unrestricted Reflects information as of June % of the District's income can be expended as determined by the local agency A significant portion of California school district income is restricted income and, as such, can only be expended for selected purposes as determined by the granting agency usually higher levels of government. The balance of the district income is called unrestricted since it can be expended as determined by the local agency for general educational priorities. On average, in , California school districts will receive about twothirds of their income as unrestricted. The biggest restricted programs in California are Special Education, K3 ClassSize Reduction, and HometoSchool Transportation. Local agencies are obligated, for each of these programs, to expend the income for selected program purposes, and, in some cases, for very micromanaged expenditures as determined by California or federal law. The Governor's May Revision is proposing a 65% reduction in funding for HometoSchool Transportation. For Special Education, East Side Union High School District expends $30,211,423 to meet program obligations and state and federal law. State and federal Special Education income is significantly less than the obligations of the program. Therefore, the District must use unrestricted or generalpurpose income to address the full obligations of Special Education. The difference between the restricted income and the expenditures in Special Education is described as "encroachment," indicating that the expenditures "encroach" on general purpose revenues. HometoSchool Transportation is another program encroaching on the District's general purpose revenues in the amount of $2,200,033, or about 49.34% of the entire District transportation expense. 11

17 12

18 District Reserves and Net Ending Balances, to Net Ending Balance (in Millions) District Reserves and Net Ending Balance $24.0 $20.0 $16.0 $12.0 $8.0 $4.0 $0.0 ($4.0) Unrestricted Net Ending Balance Components (In Thousands) (est) (proj) Revolving Cash Stores $3 202 $3 234 $3 234 Prepaid Expense Restricted Program Balances Reserve for Economic 10,297 7,089 10,026 7,298 10,012 7,518 Uncertainties Reserves Restricted by the Governing Board Unallocated Balance 9,561 2, Restricted Reflects information as of June 2009 A school district's Net Ending Balance is its reserve account to fund unforeseen events or pay for multiyear needs Revenues that have not been expended during a budget year are carried over into the subsequent year and identified as the District's "Net Ending Balance." In most cases, this is the only reserve account that a school district has for general operating purposes. The Net Ending Balance of one year becomes the Net Beginning Balance of the subsequent year. Included within the projected Net Ending Balance is a "Reserve for Economic Uncertainties," which is a minimum balance that the state of California requires to be retained to cover unforeseen shortfalls in revenues or higherthanexpected expenditures. The state's minimum "Reserve for Economic Uncertainties" for East Side Union High School District is 3% of the total General Fund expenditures. Many districts have reserves that are higher than the minimum state requirement due to the significant fluctuations in public education revenues and/or due to local circumstances and risk factors. The Budget Act requires that most restricted (Tier III) state categorical balances, as of June 30, 2008, be transferred to the unrestricted Ggeneral Fund. Also included in the Net Ending Balance are restricted carryover balances that originated from sources that can only be used for selected purposes. These revenues can only be expended for the purposes determined by the grantor, and the balances in these accounts carry the same restrictions as the originating income. Thus, a Net Ending Balance is composed of two types of accounts those that are "restricted" that can be used for selected purposes only and those that are "unrestricted" that can be expended by local agency determination. 13

19 Net Change in the Unrestricted Ending Balance, to Change Amount (in Millions) $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 ($2.0) ($4.0) ($6.0) ($8.0) Net change in the unrestricted balance over the course of years can provide an image of a District's fiscal strengths and/or weakness Net Change in the Unrestricted Ending Balance to Examining a school district's unrestricted Net Ending Balance over a series of years can provide a good overview of it's fiscal health and stability. While examining the current year's unrestricted balance is an essential part of good fiscal management, examining the balance over a course of years can provide an additional image of a district's fiscal strengths or weaknesses. The "unrestricted" Net Ending Balance the year end balance that reflects the income that can be expended as the local agency determines is the single mostwatched characteristic of a district's fiscal health. Districts are required to have minimum balances available to meet potential emergency needs. Assuring that adequate balances are available at the end of the year is an important part of district fiscal management. The chart reflects East Side Union High School District's net change in the Unrestricted Ending Balance. A positive number, one with the bar above the centerline in the graph, reflects that the District had more unrestricted income than expense in that particular fiscal year. A deficit amount, reflected with the bar below the centerline, indicates the District had more unrestricted expenditures than income in that particular fiscal year. Given the current State economy under the best circumstances this is a one year budget. The ending fund balance is projected to decrease by $1.9 million for the school year. Projecting a very slight increase in revenues for the following year with modest inflation results in the District not being able to meet it's obligations in school year. Reflects information as of June

20 Attendance History and Projections for The most significant characteristic for determining District income is the calculation of the average number of students who are in school and in attendance on a daily basis. This average daily attendance, or ADA, is multiplied by the District's revenue limit per ADA to determine the total Revenue Limit income for the District. East Side Union High School District has projected that the ADA for will be 23,799, which is multiplied by the District's Revenue Limit of $7, to generate the District's total Revenue Limit income in the new fiscal year. Since ADA is such an important part of the District's income base, the projection of ADA for this next fiscal year is an important part of projecting the District's income. Even small fluctuations in the District's ADA can mean a gain or loss of tens of thousands of dollars in income. District attendance records are monitored monthly and ADA is updated throughout the year to ensure that the projected revenue limit income matches the District's budgeted or revised projections. District revenues are generated based on actual attendance and not just the enrollment of students 23,950 23,900 23,850 23,800 ADA History and Projection 23,941 23,902 23,799 Public schools are the only agencies that receive income based on the population they serve. Cities or counties, as an example, do not have either increases or decreases in their revenue based on the number of citizens in their community. Public schools, however, receive most of their income based on attendance, and if, a student misses even one day in East Side Union High School District, the District loses approximately $55. The state does not pay the District for enrollment just attendance so all of the costs of setting up the instructional program will be a loss unless the student attends every day. ADA 23,750 23,700 23,650 23,600 23,550 23,500 23,547 23,543 23, Reflects information as of June

21 Lottery Income and its History The California State Lottery is projected to yield $2,605,991, or approximately 1%, of the District's income in While the income is welcome, it will yield only a small portion of the total income needed to support the District's educational program. The income in the budget year, as an example, would be sufficient to buy three textbooks per student, to buy four computers per classroom, or pay for the energy costs for one year. Lottery income is not a stable source of income for the istrict, but instead has ranged from a low of $77 per ADA in to a high of $156 per ADA in Since the income is not consistent, the expenditures have also varied widely. Since , school districts have been required to use 50% of the growth in Lottery allocations for the purchase of instructional materials. In , it is projected that California school districts will receive $ per ADA in unrestricted funds and $11.50 per ADA restricted for the instructional materials purchase. Lottery funds which amount to less than 3% of available funds are being used to meet modest general operational needs of the District. Lottery income is important, but it is only 1% of the District's total income Dollars per ADA Lottery Income History to Unrestricted Restricted Current and budgeted years are estimated and projected Reflects information as of June

22 Special Education Program Costs, Special education costs are greater than the dedicated income Special Education Costs, Special Education Expense Less: Funded Special Education Special Education Encroachment $30,211,423 $14,692,961 $15,518,462 Special Education as % of Total District Expense, School districts throughout the state face a continuing challenge in funding the costs for serving Special Education students. East Side Union High School District is proud of the Special Education support provided to our students, but the District is also faced with mounting increases in the difference between the federal and state governments' funding and the mandated costs for these vital student services. The Governor proposes no cut or COLA for Special Education. As part of the American Recovery and Reinvestment Act (ARRA), the Federal Government granted California apporximately $1.3 billion in IDEA funds. This is in additon to the current Special Education entitlement the District already receives. Unfortunately, the federal government has not provided the funding that was envisioned when the laws mandating programs for Special Education students were adopted. The nation's capital community committed to providing funding for 40% of the costs of Special Education, but has never been able to match much more than about a 17% funding level. The ARRA funds from the federal government are a onetime funding source. Total District Expense Special Ed. Encroachment 7% 7% 7% Funded Special Ed. 7% This shortfall in dedicated funding has led to very significant encroachment into the District's Unrestricted General Fund. Encroachment the difference between Special Education income and expense has forced the District into making cuts in other District programs in order to make up for the funding shortfall by federal and state governments. During , it is estimated that East Side Union High School District will contribute $15,518,462 from the District's Unrestricted General Fund to cover the encroachment costs for Special Education. 86% Reflects information as of June

23 District's Revenues and Expenses vs. Other Districts, Comparative review can be helpful in analyzing the district budget Californians value the ability to determine education delivery at the local level and, as a consequence, our state has approximately 1,000 individual school districts. PerADA revenues by local agency vary widely due to the differences in federal or state funding formulas and local community commitments. Additionally, the expenses of local agencies can also vary widely due to local needs, bargained contracts, and local customs. Despite the wide difference in local agency finances, however, comparative review can be helpful in analyzing the decisions of local education agencies. Local agency actual income and expense statistics are available for all school agencies for the fiscal year. The tables to the right compare East Side Union High School District on a perada average income and expense basis to Statewide High School. The statewide average information in fiscal year is the most recent available from the California Department of Education. Revenue Limit Source Federal Revenue Other State Revenue Local and Other Revenue Total (Rounded) Expenditure Comparison (Dollar per ADA and as %) Certificated NonMgt. Salaries Classified NonMgt. Salaries Management and Supvr. Salaries Employee Benefits Books and Supplies Operating Capital/Other Total Expense Ending Balance Total General Fund Revenue Comparison (Dollar per ADA and as %) District $6, ,641 1,641 District $4,470 1, , % of District Revenue % of District Expense Statewide High School $7, ,543 1, Statewide High School $4,061 1, , Comparative Districts % $10, $10, Comparative Districts % , , , $10, $11,

24 Dollar Change per ADA, Unrestricted Expenditures, to Comparing expenses per ADA by budget area shows the District's priorities The May Revision proposes no COLA and a deficit. This represents an approximate reduction in funding of 3.45% between and Categorical programs are proposed to receive a cummulative reduction of 19.84% from the original enacted budget level of funding. Therefore, the District may still need to cover any increase in costs over the prior year by drawing down its reserves, achieving greater efficiencies, or creating savings by reducing or eliminating selected programs. Certificated NonMgt. Salaries Classified NonMgt. Salaries Mgt. and Supvr. Salaries Employee Benefits Books and Supplies Operating Capital/Other Total Expense Ending Balance Dollar Expense per ADA Dollar Change $3, , ,331 $3, , ,347 $ The District, by necessity, has had to evaluate expenditure changes per ADA and then compare those costs to the change in income per ADA. This analysis has been especially important in the District's review of unrestricted expenditures those expenses that are determined by the Governing Board and not categorically regulated by higher levels of government. The graphical display is calculated by dividing the District's unrestricted expenditures for each of the primary object codes by ADA for each of the applicable years. The dollar difference in expense per ADA can then be compared to the District's unrestricted revenue per ADA. This graphical representation can be valuable in understanding District priorities and how the District is allocating its income in the budget year. Total General Fund $6,421 $6,357 $64 Dollar Change per ADA, Unrestricted Expenditures, to Dollar Change per ADA $500 $400 $300 $200 $100 $0 ($100) ($200) Reflects information as of June 2009 ($300) Cert. NonMgt. Salaries Clas. NonMgt. Salaries Management Salaries Emp. Benefit Books & Sup. Service & Op. Capital Outlay Ending Bal. 19

25 Certificated Salary Growth, to Dollars 49,500 49,000 48,500 48,000 47,500 47,000 Salary at BA+30*, Step 1 The District is proud of its teacher salaries and gives priority to funding salaries above the market 46,500 46,000 45,500 45, ,000 Maximum Salary MA +60 units, BA +65 units * If there is no BA+30 column, the next lowest column is used 98,000 Approximately 50% of the District's budget is expended for nonmanagement certificated salaries that is, the salaries for teachers, librarians, nurses, counselors, and other certificated support personnel. Salaries are paid based on two employee qualifications, number of years of service (steps) and number of graduate units completed after the bachelor's degree (column). Dollars 96,000 94,000 92,000 90,000 88,000 Salary at BA+60*, Step ,000 Dollars 79,000 78,000 77,000 76,000 75,000 74,000 The salary numbers shown reflect three commonly used benchmarks for measurement of teacher salaries exclusive of salaryrelated costs, such as retirement contributions and health and welfare benefits. The District and its unions have concluded negotiations on the salaries for , which includes a 0.% increase. 73,000 72, * If there is no BA+60 column, the next lowest column is used Reflects information as of June

26 Health and Welfare Benefit Expense, to The cost escalation of employee health benefits has become a major challenge Health & Welfare Benefit Expense per ADA 2,200 As part of an employee's compensation, the District contributes to the premium costs for health, dental, vision, and life insurance benefits for its employees. Employees must generally be in fulltime employment in order to receive the maximum District contribution, although parttime employees can participate in the plan with partial District support. The District's contribution toward this benefit has risen dramatically in this past year and is projected to increase again in the budget year. Public education is not immune to the highcost escalation of health benefits. Continuing to fund these benefits has become increasingly challenging. The cost increase per ADA for health benefits is projected to absorb a high percentage of the District's new revenues. The benefit plans and the dollar amounts that are contributed by the District per employee are determined by the collective bargaining agreement reached with the District's bargaining units. The District considers the health benefit plan to be part of an employee's total compensation, and, as the costs of districtfunded benefits increase the ability of the District to provide salary increases is squeezed. Dollars per ADA 2,000 1,800 1,600 1,400 1,200 1, The District has budgeted $25,798,116 for employee health and welfare benefits during the coming year, which is a 4.03% increase in cost per ADA. Reflects information as of June

27 2009/10 Budget Assumptions 22

28 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Revenues Revenue Limit COLA 5.02% or $355 / ADA $8,412,275 Deficit % ($23,192,303) Project P2 ADA 23,799 Decrease of ADA ($688,347) Lottery Revenue $ / ADA $3,005,974 Hourly Remedial & Core based on 80.14% of 2007/08 $2,724,274 Class Size Reduction $273,698 Other State Revenues $200,341 Tier III Flexibility 80.14% of 2007/08:in Unrestricted Resource TIIG $8,032,304 CalSafe $642,138 National Board Cert $12,021 English Tutoring Program (CBET) $114,959 ROC/P $2,870,569 School Safety $753,109 Arts & Music Block Grant $358,023 Supplemental Counseling (AB 1802) $1,387,866 GATE $176,263 Peer Assistance & Review (PAR) $114,842 Cert Mentor Program $94,984 IB Program $9,813 Math & Reading Training $14,025 Reader Svc for Blind Teacher $10,062 Pupil Retention (Continuation Ed) $383,809 10th Grade Counseling (SB 813) $107,976 TAAPProf Dev Block Grant $399,914 Professional Block Grant $331,392 Library Block Grant $69,148 School Improvement Block Grant $424,767 Tier III Flexibility Transfer 6/16/

29 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Revenues Instructional Materials $1,404,869 Deferred Maintenance $897,822 Cal Health Science Capacity Grant (carryover) $26,000 Interest Income $400,000 Lease, Use of Facilities & Other Local Income $1,069,658 Reduce Nonreoccurence Insurance Premium Refunds ($809,936) Transfer to Restricted Routine Maintenance ($3,000,000) Contribute to Special Ed ($15,518,462) Contribute to Special Ed Transportation ($2,200,033) Transfer to Athletic Program ($800,000) 6/16/

30 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Expenditures /16/2009 COLA Increase 0.00% Mandatory Benefits Rates: STRS 8.250% PERS 9.709% PERS Reduction 3.311% OASDI 6.200% MMC 1.450% Retiree Benefit % Workers' Comp % U.I % Step & Column Adjustments Certificated 1.5% $1,245,291 Classified 2% $279,386 Increase Class Size by 3: Decrease teachers due to enrollment changes by 3.8 FTEs ($279,682) Savings from Reduction of Teachers FTEs ($4,798,749) Savings from Reorganizing Satellite Prog 3.0 FTEs ($220,801) Expenditures for Tier III Flex Programs Teachers $8,988,468 Counselors $1,506,460 Teachers on Sp Assignment $933,430 Coordinators $164,013 Classified $609,977 Supplies & Services $291,464 PassThru Transfer Out to ROC/P $2,870,569 Reduce Student Advisor 1.0 FTE ($119,940) Reduce General Fd Teacher on Sp Assignments 3.0 FTEs ($347,887) Reduce Administrators 9.10 FTEs ($1,441,832) Savings from 2 furlough days for 3 Assoc Superintendent ($5,567) Reduce Accounting Manager 1.0 FTE ($107,649) Reduce Science Lab Aide.75 FTE ($47,022) 25

31 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Expenditures Reduce Classified Operation Workers 6.95 FTEs ($409,978) Reduce Classified Clericals & Others FTEs ($4,080,622) Reduce Dept SecretaryConfidential 1.0 FTE ($70,009) Reduce School Community Liaisons 3.0 FTEs ($218,207) Transfer to Restricted Athletic Program: Hourly Coaches ($1,314,312) Athletic Directors 4.0 FTEs ($453,432) Fees & Licenses ($132,000) Reduce Athletic Transportation ($440,000) H & W Rate Increase 10% $1,624,053 Reduce Site Discretionary Budget ($373,000) Utilities Cost $4,986,088 Project Conservation of Utilities Savings ($1,000,000) Reduce Election Cost for Board of Trustees ($287,677) Reduce Energy Ed Contract ($440,400) Proj Savings from the Superintendent's Budget ($40,000) Project Stop Loss Insurance Premium $100,000 Indirect Cost Projection ($3,914,347) Transfer to SelfInsurance Fund $200,000 OPEB Debt Repayment $1,832,593 Project Child Nutrition Service Contribution $0 6/16/

32 2010/11 & 2011/12 Budget Assumptions 27

33 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Revenues /16/2009 Revenue Limit COLA 0.70% 2.30% $52 / ADA $172 / ADA $1,234,435 $4,077,970 Deficit % ($23,324,996) ($23,830,288) Project P2 ADA 23,769 23,739 Decrease of ADA (30) (30) ($221,049) ($219,011) Project Lottery Revenue $109.50/ADA $109.50/ADA $3,004,955 $3,001,670 Hourly Remedial & Core $2,724,274 $2,724,274 Class Size Reduction $273,698 $273,698 Other State Revenues $200,341 $200,341 Tier III Flexibility Revenues :in Unrestricted Resource TIIG $8,032,304 $8,032,304 CalSafe $642,138 $642,138 National Board Cert $12,021 $12,021 English Tutoring Program (CBET) $114,959 $114,959 ROC/P $2,870,569 $2,870,569 School Safety $753,109 $753,109 Arts & Music Block Grant $358,023 $358,023 Supplemental Counseling (AB 1802) $1,387,866 $1,387,866 GATE $176,263 $176,263 Peer Assistance & Review (PAR) $114,842 $114,842 Cert Mentor Program $94,984 $94,984 IB Program $9,813 $9,813 Math & Reading Training $14,025 $14,025 28

34 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Revenues Reader Svc for Blind Teacher $10,062 $10,062 Pupil Retention (Continuation Ed) $383,809 $383,809 10th Grade Counseling (SB 813) $107,976 $107,976 TAAPProf Dev Block Grant $399,914 $399,914 Professional Block Grant $331,392 $331,392 Library Block Grant $69,148 $69,148 School Improvement Block Grant $424,767 $424,767 Tier III Flexibility Transfer Deferred Maintenance $897,822 $897,822 Interest Income $400,000 $400,000 Lease, Use of Facilities & Other Local Income $1,069,658 $1,069,658 Transfer from General Reserve $1,300,000 Transfer to Restricted Routine Maintenance ($2,000,000) ($3,000,000) Contribute to Special Ed ($15,609,631) ($15,955,425) Contribute to Special Ed Transportation ($1,600,000) ($1,600,000) 6/16/

35 East Side Union High School District Adopted Budget Assumption For 2009 / 10 General Fund Unrestricted Expenditures COLA Increase 0.00% 0.00% Mandatory Benefits Rates: STRS 8.250% 8.250% PERS 9.709% 9.709% PERS Reduction 3.311% 3.311% OASDI 6.200% 6.200% MMC 1.450% 1.450% Retiree Benefit % 2.700% Workers' Comp % 3.062% U.I % 0.300% Step & Column Adjustments Certificated 1.5% $1,333,995 $1,353,225 Classified 2% $294,871 $300,768 Decrease teachers due to enrollment changes: (1.00 fte) (1.00 fte) ($74,271) ($74,974) Project Staffing same as 2009/10 Project H & W Rate Increase 5% $909,541 $954,314 Project Retirees Medical Benefit Rate Increase 5% $128,970 $135,419 Utilities Cost $5,185,392 $5,344,662 Project Conservation of Utilities Savings ($2,000,000) ($2,000,000) Indirect Cost Projection ($3,661,247) ($3,661,247) Transfer to SelfInsurance Fund $200,000 $200,000 OPEB Debt Repayment $1,865,341 $1,906,017 Project Supplies, Services & Other Cost same as 2009/10 6/16/

36 Flexibility Programs Used for General Fund Expenditures 31

37 East Side Union High School District Adopted Budget Assumption For 2009/10 Tier III Programs Flexible Programs Resource Program # Program Description National Board Certification $12, CommunityBased English Tutoring Program $114, Arts & Music Block Grant $358, GATE $98, Certificated Staff Mentoring Prog $94, Staff Development: Math & Reading $14, Pupil Retention Blk GrantSB813 Counseling $50, Professional Development Block Grant $200, Library School Improvement Block Grant (Library) $29, Library School Improvement Block Grant (SIP) $125,373 Used for General Fund Expenditures $1,097,140 Resource Program # Program Description Prior Year Fund Balance Transfer Transfer Cal Health Science Capacity Building Project $26, Instructional Material Realignment $1,404,869 F Deferred Maintenance $897,822 Total Flexibility Transfer $26,000 $2,302,691 6/15/

38 Reconciliation 33

39 East Side Union High School District Adopted Budget Reconciliation For 2009 / 10 General Fund Unrestricted Revenues 2008/ / / /12 Est Actual Adopted Budget Projection Projection Project P2 ADA 23,902 23,799 23,769 23,739 Increase/ (Decrease) in ADA (7.50) (102.58) (30.00) (30.00) ($52,990) ($688,347) ($221,049) ($219,011) Revenue Limit COLA 5.66% or $379/ADA 5.02% or $355/ADA 0.70% or $52/ADA 2.30% or $172/ADA $8,412,275 $1,234,435 $4,077,970 Revenue Limit Deficit 7.844% % % % Increase/(Decrease) from prior projection $5,884 ($9,906,296) ($132,693) ($505,292) Misc. Adjustments Prior Year Revenue Limit Adjustment $152,076 ($152,076) Beginning Teacher Incentive ($417) $19,725 Increase / (Decrease) in Unemployment Insurance ($98,085) $68,065 (Increase)/Decrease COE Sp Ed ADA Transfer $45,512 $24,466 ($11,728) ($38,803) (Increase)/Decrease District Sp Ed ADA Transfer ($5,730) $266,856 ($48,495) ($160,405) Total Revenue Limit Increase / (Decrease) $46,250 ($1,955,332) $820,470 $3,154,459 Lottery $109.50/ADA $109.50/ADA $109.50/ADA $109.50/ADA Increase / (Decrease) $292,754 ($29,396) ($1,019) ($3,285) Class Size Reduction $0 $122,936 State Mandated Cost Reimbursement ($10,000) Remedial and Core Summer Programs ($573,397) ($150,895) TIIG Tier III Flex State Revenues $8,032,304 Other Tier III Flex State Revenues $8,275,680 Other State Revenues ($7,763) Interest Income $0 ($8,673) Safety Credit $68,022 Community Redevelopment $0 ($27,710) Not Rebudget Insurance Proceeds Refund ($809,936) All Other Local Income $21,300 ($433,870) Transfer from General Reserve $1,300,000 ($1,300,000) (Increase)/Decrease contribution to Restir Athletic Program ($800,000) $800,000 (Increase)/Decrease contribution to Special Ed $224,736 ($1,946,744) ($91,169) ($345,794) (Increase)/Decrease contribution to Restricted Routine Maint ($100,000) ($900,000) $1,000,000 ($1,000,000) (Increase)/Decrease contribution to Transportation ($67,432) ($344,107) $600,033 Transfer from Cal Health & Science Prog Flexibility Sweep $26,000 ($26,000) 34 6/16/2009

40 East Side Union High School District Adopted Budget Reconciliation For 2009 / 10 General Fund Unrestricted 2008/ / / /12 Est Actual Adopted Budget Projection Projection Transfer from Restr Instr Mat'l Flexibility Sweep $1,404,869 ($1,404,869) Transfer from Deferred Maint. Flexibility Sweep $897,822 Transfer from Categorical Flexibility Sweep ($3,174) ($4,766,826) Total Increase/(Decrease) Income ($176,726) $6,654,144 $2,997,446 $505,380 6/16/

41 East Side Union High School District Adopted Budget Reconciliation For 2009 / 10 General Fund Unrestricted Expenditures 2008/ / / /12 Est Actual Adopted Budget Projection Projection Step & Column Adjustments Certificated 1.5% $1,245,291 $1,333,995 $1,353,225 Classified 2% $279,386 $294,871 $300,768 Mandatory Benefits Rates: STRS 8.250% 8.250% 8.250% 8.250% PERS 9.428% 9.709% 9.709% 9.709% PERS Reduction 3.592% 3.311% 3.311% 3.311% OASDI 6.200% 6.200% 6.200% 6.200% MMC 1.450% 1.450% 1.450% 1.450% Retiree Benefit % 2.700% 2.700% 2.700% Workers' Comp % 3.062% 3.062% 3.062% U.I % 0.300% 0.300% 0.300% COLA Increase 0.00% 0.00% 0.00% 0.00% Increase/(Decrease) from prior projection $0 $0 $0 Increase/(Decrease) teachers due to enrollment changes (3.80 fte) (1.00 fte) (1.00 fte) ($279,682) ($74,271) ($74,974) (Increase)/Decrease transfer to TIIG Adjust Counselor to Restr Progr 1.0 FTE Savings from trfr EL Teachers to Restr Progr 5.40 FTEs Savings from Reduction of Teachers FTEs ($4,798,749) Savings from Reorganizing Satellite Prog 3.0 FTEs ($220,801) Adjust Teachers from TIIG & Other Tier III Flex State Resource $8,988,468 Adjust Counselors from Tier III Flex State Resource $1,506,460 Transfer Athletic Directors 4.0 FTEs to Restr Athletic Progr ($453,432) Reduce Student Advior 1.0 FTE ($119,940) Reduce General Fd Teacher on Sp Assignments 3.0 FTEs ($347,887) Adjust Teachers on Sp Assign from Tier III Flex State Resource $933,430 Adjust Coordinators from Tier III Flex State Resource $164,013 Reduce Administrators 9.10 FTEs ($1,441,832) Miscel Certificated Salaries Adjustment ($205,090) Savings from 2 furlough days for 3 Assoc Superintendent ($5,567) Reduce Accounting Manager 1.0 FTE ($107,649) Trfr CNS Director from CNS Fd 0.15 FTE $23,367 6/16/

42 East Side Union High School District Adopted Budget Reconciliation For 2009 / 10 General Fund Unrestricted 2008/ / / /12 Est Actual Adopted Budget Projection Projection Adjust Classified Mgt from Tier III Flex State Resource $51,979 Adjust Paraeducator to Special Ed Proj Savings from Open Position for Classified Savings from trfr Classified Mgr to Restr Progr Savings from trfr Classified to Restr Progr Reduce Science Lab Aide.75 FTE ($47,022) Reduce Classified Operation Workers 6.95 FTEs ($409,978) Reduce Classified Clericals & Others FTEs ($4,080,622) Trfr CNS Secretary from CNS Fd 0.25 FTE $20,038 Reduce Dept SecretaryConfidential 1.0 FTE ($70,009) Transfer Staff Secretary to Confidentail $39,800 Reduce School Community Liaisons 3.0 FTEs ($218,207) Transfer Athletic Hourly Coaches to Restr Athletic Progr ($1,314,312) Adjust Classified from Tier III Flex State Resource $609,977 Miscel Classified Salaries Adjustment ($37,624) Adjust H & W to Restricted Resource ($231,549) Other Benefits Adjustment ($181,527) $153,311 $245,827 Project H & W Rate Increase 10% / 5% $1,624,053 $909,541 $954,314 Project Retirees Medical Benefit Rate Increase 5% $128,970 $135,419 Transfer Instructional Materials to Restr Lottery Resource ($180,000) Transfer Other Supplies & NonCapitalized Equip to Restr Fd ($59,890) Reduce Budget for Noncapital Equipments Reduce Budget for Travel & conference Reduce Budget for Dues & Membership Increase Budget for Utilities Cost Reduce Budget for Consulting. Svc & Operating Exp Adjust Supplies & Svc from Tier III Flex State Resource $291,464 Reduce Site Discretionary Budget ($373,000) Transfer Athletic Fees & Licenses to Athletic Restr Progr ($132,000) Project Conservation of Utilities Savings ($1,000,000) ($1,000,000) Project Utilities Rate Increase by 5% $243,108 $199,304 $159,270 Projected Site Carryover $327,035 Reduce Athletic Transportation ($440,000) Reduce Election Cost for Board of Trustees ($287,677) 6/16/