First Interim Budget

Transcription

1 First Interim Budget December 7, 2017 Presented by: Jason E. Vann Chief Financial Officer

2 Purpose of Presentation Summarize Budget Cycle Provide Cambrian School Districts Budget Update Discuss Next Steps Board Certify First Interim

3 ADOPTED BUDGET SUMMARY OF BUDGET CYCLE FIRST INTERIM SECOND INTERIM YEAR END

4 Budget Cycle Adopted Budget (June 2017) First Interim (December 2017) Second Interim (March 2018) Unaudited Actuals (September 2018) Audited Financials (December 2018)

5 Budget Cycle School Boards are required to certify projected year end and subsequent years financial condition twice a year: Using Interim Reports (Ed Code and 35035) Typically During December and March of each year This First Interim includes the multiple year projections for: The First Interim also includes a snapshot of the District s financial positions as of October 31, 2017

6 Why so many periods to report financial data? Assumptions are constantly changing. Administration utilizes the latest and greatest information available and continually monitors significant assumption changes, including but not limited to: Enrollment and ADA (Average Daily Attendance) Funding per ADA Staffing CalSTRS and CalPERS State Budget Updates Federal, State and Local funding amounts (LCFF, Lottery, Parcel Tax, Property Tax, Title I) Impact of negotiations Cash flow Strategic plan changes, carryover impact, spending trends, New laws impacting financials (Affordable Care Act, Family and Medical Leave Act)

7 Timeline of Information January 2017 Governor provides budget proposal for State s budget Mid May 2017 Governor provides May revision to budget ( May Revise ) June 15, 2017 Cambrian s Board adopts district budget for June 27, 2017 State enacts budget December 7, 2017 Administration applies changes due to: Changes from May revise to State s adopted budget Any carryover from prior year Significant changes in assumptions impacting the multi-year projection March 15, 2018 Second Interim Reporting based on Governor s budget proposal, actual results, trends, etc.

8 ADOPTED BUDGET FIRST INTERIM UPDATED BUDGET SECOND INTERIM YEAR END

9 General Fund Summary - First Interim MYP Multi-Year Projection (in dollars) Beginning Balance - July 1, 5,820,928 3,032,470 2,198,581 Revenue 35,296,384 35,387,650 36,213,719 Expenditures 38,084,842 36,221,539 37,235,756 Net Change (2,788,458) (833,889) (1,022,037) Ending Balance - June 30, 3,032,470 2,198,581 1,176,544 Reserve Percentage 7.14% 5.84% 3.16% Includes $1.5 million in ongoing expenditure reductions (Starting in ) that need to be identified by the Board and Administration

10 General Fund Summary - First Interim Revenue Projection, Total $35.3 Million $29,023,322 Property Tax is 62% of total LCFF Funding $903,342 $2,835,532 $2,534,188 LCFF & OTHER FEDERAL REVENUE OTHER STATE LOCAL & OTHER State Revenue Includes $770K in one-time dollars from mandated cost reimbursements and Prop 39 - Clean Energy Jobs Act dollars. Local & Other includes $113K in one-time dollars. All of these dollars are not expected to come back in and

11 Reason For The $649K Increase In The Revenue From Adopted To First Interim $503.5K - increase in one-time funding; previously budgeted in for $570K $220.0K new El Camino Grant covering nurse salary and behavioral support $ 73.2K non-cash increase due to the STRS on-behalf calculation $ 70.0K donations received $ 36.4K increase in lease revenue primarily due to Civic Permits $ 34.3K Title I funding increasing by $24.1K and carryover $ 15.0K increased grant dollars from Xilinx $ 4.5K Other smaller adjustments ($307.9K) - lost revenue due to ADA reduction of approximately 43 students

12 General Fund Summary - First Interim Expenditure Projection Total $38.1 Million $18,423,889 Expenditures Exceeds Revenue by $2.8 Million Total Salaries and Benefits: 81% of Total Expenditures $4,458,296 $8,050,231 $5,267,028 $1,353,302 $532,096 CERTIFICATED CLASSIFIED BENEFITS BOOKS AND SUPPLIES All staff expenses (i.e., Management included above) SERVICES AND OTHER TRANSFERS OUT

13 Reason For $1.5 Million Increase in Expenditures From Adopted To First Interim $1,021K increase in Special Education related costs $ 219K CSEA settlement $ 200K 2 additional teacher FTEs over initial budget $ 157K curriculum adoption expenditures incurred in and not $ 131K Salary adjustments based on Compensation Study $ 73K non-cash increase due to the STRS on-behalf calculation $ 70K increase in legal fee accrual based on trends $ 42K increase in nurse FTE from 0.6 FTE to 1 FTE $ 7K other smaller department adjustments (each less than $25K) ($ 40K) reduction in Ed Tech budget ($ 100K) approved site cuts ($ 266K) Not filling counselor, personnel technician and assistant to C.F.O. positions

14 Funding CalSTRS Rate Increase $1 million Expense Increase Next 3 years (2018 to 2020) will have a 5.269% increase in employer contributions which increases expenses by almost $1M**** in Cambrian No additional State funds provided for this ongoing expenditure increase Under Education Code Section , once the statutory rates are achieved, the California State Teacher s Retirement System (CalSTRS)* will have the authority to marginally increase or decrease the employer and state contribution rate CalSTRS cannot increase rates by more than 1% in a year and cannot exceed 12% overall, until the remaining unfunded actuarial obligation is eliminated Year Employer Post- PEPRA*** Employees Pre- PEPRA** Employees 12.58% 10.25% 9.205% 14.43% 10.25% 9.205% 16.28% 10.25% 9.205% 18.13% 10.25% 9.205% 19.10% 10.25% 9.205% * California State Teachers Retirement System ** First hired on or before December 31, 2012 *** First hired on or after January 1, 2013 **** Excluding the impact of step and column and attrition

15 CalSTRS Employer Contribution Rate Increases 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% By , the Cambrian contribution to CalSTRS will have increased annually by $1 million dollars. Employer Employees (Pre PEPRA) Employees (Post PEPRA)

16 CalPERS Employer Rate Increases $100K in Expenditure Increases Next 3 years (2018 to 2020) is a 2.7% increase in employer contribution which increases operating costs by approximately $100K in Cambrian Adopted employer contribution rate for is almost 2% higher than the rate New projected rates are slightly lower than those previously released by CalPERS; Rates still squeeze employers budgets CalPERS Board also adopted the contribution rate for employees PEPRA members increase from 6% to 6.5% for Classic members continue to pay 7.0% Year Previously Released Employer Contribution Rates Employer Contribution Rate* % % % % % 18.1% % 20.8% % 23.8% % 25.2% % 26.1% % 26.8% N/A 27.3% *Actual for and

17 CalPERS Employer Contribution Rate Increases 20.00% 18.00% 16.00% 14.00% 12.00% Employer 10.00% 8.00% 6.00% Employee 4.00% 2.00% 0.00% State By , the Cambrian contribution to CalPERS will have increased annually by $100,00- dollars

18 General Fund Summary - First Interim Components of Ending Fund Balance Components of Ending Fund Balance June 30, 2018 Projected Deficit Spending / Cash Flow 1,576,544 Restricted Portion (Primarily Lottery) 313,381 Require Reserve for Economic Uncertainty (3%) 1,142,545 Ending Fund Balance - June 30, ,032,470 Reserve Percentage 7.14%

19 ADOPTED BUDGET NEXT STEPS FIRST INTERIM SECOND INTERIM YEAR END

20 Next Steps Second May Revise Unaudited Actuals; Audit Report Interim Governor Budget Board Approves Interim; Submit to County for review Proposal; Seek Revenue Enhancements Identify Budget Reductions Supplemental Retirement Plan Parcel Tax Resolution

21 ADOPTED BUDGET BOARD ACTION: CERTIFICATION FIRST INTERIM SECOND INTERIM YEAR END

22 Budget Certification Staff recommends Board approve First Interim with a Positive Certification Positive Certification means that based on the current assumptions and projections the District will meet its financial obligations and have the statutorily required reserve (3%) in the current fiscal year and the two subsequent fiscal years.

23 ANY ADDITIONAL QUESTIONS?

24 APPENDIX

25 COMPONENTS OF RESTRICTED ENDING FUND BALANCE

26 Components of Restricted Ending Fund Balance Projected Ending Balance - June 30, 2018 Amounts (in dollars) Ongoing & Major Maintenance Account $ 171 Lottery: Instructional Material $ 287,225 Educator Effectiveness $ 3 Special Ed Mental Health $ 5,304 Other Restricted Local Funding $ 20,678 Total $ 313,381

27 DETAIL OF OTHER FUNDS

28 Summary of Other Funds Fund Title Cafeteria Fund Building Fund (includes Measure I) Capital Facilities Funds Special Reserve - Capital Outlay Projects Bond Interest & Redemption Fund Number #13 #21 #25 #40 #51 (In Thousands) Beginning Balance - July 1, 2017 $6.7 $10,842.8 $164.6 $1,747.2 $1,890.4 Projected Revenue $911.6 $341.1 $63.1 $147.0 $2,969.9 Proj. Expenditures $918.3 $4,629.0 $35.7 $1,893.5 $3,216.2 Net Change ($6.7) ($4,287.9) $27.4 ($1,746.5) ($246.3) Ending Balance - June 30, 2018 $0.0 $6,554.9 $192.0 $0.7 $1,644.1

29 Purpose of Other Funds

30 OTHER BUDGET ASSUMPTIONS

31 Other items included in multi year projections Estimated Annual Impact + $1.0 Million + $0.8 Million +$0.3 Million +$0.2 Million - $0.1 Million Other assumptions included in multi-year projection Necessary reductions in annual spending districtwide (starting in ) Elimination of eight certificated positions due to enrollment and budget constraints (starting in ) Elimination of Positions Not Filled: Counselor, Assistant to CFO, and Personnel Technician (starting in ) Reduction in Site Budget, Ed Tech department s Budget, and Strategic Plan Budget (starting in ) Compensation Study adjustments increasing salary and longevity (starting in at $.1M and increasing to $.5M by ) + represents increases to bottom line - represents decreases to bottom line.

32 Other items included in multi year projections Estimated Annual Impact Other assumptions included in multi-year projection -$0.6 Million Metzler Fire Alarm Project (Under Fund 40) -$0.1 Million Possible plumbing upgrades after water testing (Under Fund 40) -$0.1 Million Bagby Painting Project (Under Fund 40) - $0.2 Million Impact of CSEA Negotiations -$0.04 Million Increased contribution to Food Service over adopted budget amount + represents increases to bottom line - represents decreases to bottom line.

33 Other assumptions: P-2 ADA projection by School Site Actual / Projected ADA Bagby & Steindorf (included COE ADA) , , , , Total Fammatre Farnham Sartorette Price , , , , , , , , , ,511.93

34 Other assumptions: Unduplicated Percentages By Site Single Year Estimated Unduplicated Percentage Bagby / Steindorf 19.55% 19.45% 19.01% 19.45% 19.45% 19.45% Fammatre 27.73% 26.88% 26.88% 26.88% 26.88% 26.88% Farnham 33.27% 31.43% 31.43% 31.43% 31.43% 31.43% Sartorette 33.00% 37.17% 37.17% 37.17% 37.17% 37.17% Price 19.21% 23.11% 23.11% 23.11% 23.11% 23.11% Based on the percentage of unduplicated students (averaged over a 3 year period), a site generates supplemental revenue. Unduplicated students includes English Learners, those eligible for free & reduced meal plans, foster youth and homeless. Under LCFF, supplemental revenue must be used to provide additional services to unduplicated students. Districtwide single year average for is approximately 27.6%. It was 26.6% last year.

35 Other assumptions: School Service Dartboard Under LCFF, school districts and charter schools are funded based on dollars per ADA. The dollar amount changes based on grade span. The table above summarizes the funding levels per grade span once LCFF is fully implemented (expected to be fully implemented by ).

36 Other assumptions: School Service Dartboard Under LCFF, school districts and charter schools receive an annual increase in funding per ADA based on State approved Gap funding percentages. Unfortunately, these Gap funding percentages change throughout the fiscal year. Administration uses the latest Department of Finance Gap funding percentages to calculate LCFF funding level. As you can see in the table above, the Gap funding percentages decreased between the May Revise and the State s Adopted Budget in June. This results in less money per ADA.

37 Other assumptions: School Service Dartboard The following factors impact the annual changes in lease revenue, projected expenditures, lottery funding per ADA, employer contribution rates for CalPERS and CalSTRS and the estimated non-cash impact of the State s contribution to the District s employees CalSTRS plan.

38 Other assumptions: School Service Dartboard The State requires school districts to maintain a minimum reserve percentage over the 3 year multi-year projection based on the ADA of the school district. Our district is required to maintain a reserve of 3% based on our ADA level. Based on the assumptions utilized in the first interim we are able to maintain a reserve higher than 3% over the 3 year multi-year projection by assuming $1.5 million in annual expenditure reductions. The Board and Administration need to identify those reductions and pass resolutions (if needed) to support those reductions.

39 POTENTIAL STRATEGIC PLAN OPTIONS

40 Potential Strategic Plan Investments not included in multi year projections Estimated Annual Impact Other factors not included in multi-year projection + $0.7 Million New parcel tax revenue based on $84 per parcel with exemption for seniors + $0.2 Million Profit from extension programs [Revenue - $0.5 M; related expenditures - $0.3 Million] + $0.05 Million Teacher leaving after December $0.02 Million Elimination of food service position after December $0.7 Million - $0.7 Million - $$$ Million English Language Arts (ELA) curriculum adoption and related professional development (P.D.) Next Generation Social Sciences (NGSS) curriculum adoption and related professional development (P.D.) Standardization of Tech in all classroom; $10K per classroom plus costs to periodically refresh technology in the classroom and with staff + represents possible increases to bottom line - represents possible decreases to bottom line.

41 Potential Strategic Plan Investments not included in multi year projections Estimated Annual Impact Other factors not included in multi-year projection - $0.70 Million Social Science curriculum adoption and related professional development (P.D.) - $0.10 Million Periodic cost of board elections every 2 years - $$ Million Impact of Supplemental Retirement Plan, Parcel Tax - $$ Million Reduction in Professional Development days, Furloughs, Pay Freeze or Pay Rollback - $$ Million Impact of negotiations (estimated cost of 1% salary increase for all staff is $0.3 Million) - $$ Million No reserve for increased Special Education Services that are mandated - $$ Million No reserve for Health and Welfare Expenditures increasing after open enrollment - $$ Million No accrual for vacation to be paid under the Healthy Families Act + represents possible increases to bottom line - represents possible decreases to bottom line.

42 BUDGET CYCLE STAGES IN DETAIL

43 Complete Annual Budget Cycle