Los Gatos Union School District Proposed Budget and Multi-year Projection. Narrative

Transcription

1 Los Gatos Union School District Proposed Budget and Multi-year Projection Public Hearing June 11, 2018 Adoption June 13, 2018 Revised Narrative to Proposed Budget (revisions in italics) Narrative MISSION STATEMENT Los Gatos Union School District educates all children to their unique potential by teaching, modeling, and supporting the skills and attitudes that contribute to their development as globally and socially responsible citizens. VISION STATEMENT All students know their individual learning styles and talents, think creatively and critically, act responsibly, communicate effectively, and apply knowledge in a diverse and ever-changing world. STRATEGIC INITIATIVES 1. Learning - Engage, Educate and Support the Whole Child 2. Teaching - Create a Culture of Collaboration and Continuous Improvement 3. Operations Ensure Effective and Efficient Operations Narrative Page 1 of 22

2 Los Gatos Union School District Budget Development/Planning Calendar January February March April May June July August September October November December Budget calendar presented to the Board of Trustees. End of 2 nd Interim reporting period. Governor s initial budget proposal for State is released. Budget Estimates reviewed internally with program managers. Budget meetings with all program managers. 2 nd Interim Report of fiscal solvency approved by the Board of Trustees. Staff develops preliminary budget and reviews for trade-offs to reflect priorities and changing statutory requirements. Draft budget revised according to Governor s May Revise budget. Preliminary audit fieldwork. Board adoption of District budget for the next fiscal year and estimate of multiyear projections for two additional years. Closing the books for the prior fiscal year. District budget amended to reflect the State budget within 45 days of the Governor s signing the State budget. Close for prior year complete. Unaudited actuals for the prior fiscal year presented to the Board of Trustees for approval. Final audit fieldwork. End of 1 st Interim reporting period. District audit complete. 1 st Interim Report of solvency presented to the Board of Trustees for approval. Audit report of prior fiscal year presented to the Board of Trustees. Narrative Page 2 of 22

3 Local Educational Agencies (LEAs) are required to adopt a budget prior to July 1 of each year in order to authorize the expenditure of funds. The proposed budget is only an initial blueprint for revenues and expenditures since the preparation of the adopted budget occurs before the state has enacted its budget, and before actual revenues and expenditures are known for the current year. In the event that material revisions are necessary, a revised budget will be presented to the Board no less than 45 days after the enacted state budget. REVENUE PROJECTIONS LCFF REVENUE (Property Taxes) Unrestricted 28,722,947 29,834,212 30,991,249 Restricted 775, , ,245 Total 29,498,192 30,609,457 31,765,494 The Local Control Funding Formula (LCFF) has been calculated and because the District s local property tax is greater than the LCFF calculation the District will retain its basic aid status. This one source of property tax revenue represents about 73% of general fund revenue. The property tax revenue growth rate is monitored monthly and staff attends quarterly meetings with the Santa Clara County Assessor. The District is projecting a 5.0% increase in FY 18/19, and a 4.0% increase in FY 19/20 and FY 20/21. FEDERAL REVENUE Unrestricted Restricted 652, , ,793 Total 652, , ,793 This represents about 2% of the total General Fund. It includes the Special Education Federal pass-through Grant and other Federal Grants including Title II-Teacher Quality Grant and Title III- Immigrant Education. STATE REVENUE Unrestricted 1,607, , ,025 Restricted 1,669,792 1,669,792 1,669,792 Total 3,276,817 2,228,817 2,228,817 K-12 One-Time and Block Grant Mandate Funding: The Governor s May Revise includes over $2 billion in one-time discretionary funds for Districts, which results in approximately $344 per ADA. This is a $50 increase per ADA from January s proposal. Narrative Page 3 of 22

4 The Governor plans to use these funds to directly offset any unreimbursed state mandate claims. Whether or not these dollars end up being included as additional LCFF funds or even in special education augmentation, they should be available for funding in To the extent the funds are redirected, the District s budget will be revised accordingly. State revenues account for about 8% of the total general fund budget. The only state revenue the District receives is Lottery, One-Time and Block Grant Mandate Funding. The District has included the $344 per ADA for one-time discretionary funds Additionally, because of GASB 68 there is a paper only entry for STRS on-behalf payments in the amount of $1.4M. For the GASB 68 transaction, no actual revenue was received or expended and an offsetting expenditure amount is also booked. OTHER LOCAL REVENUE Unrestricted 2,978,254 2,978,254 2,978,254 Restricted 3,799,400 3,799,400 3,799,400 Total 6,777,654 6,777,654 6,777,654 The local community continues to support the District in many ways and they play a tremendous role in the District s budget. Local revenue represents 17% of the total General Fund revenue and is the second largest source of revenue for the District. The parcel tax generates about $2.7M and the redevelopment agency adds another $2.3M for the District, which is now classified as restricted. Local revenue sources include The Los Gatos Education Foundation (LGEF), home and school clubs, special education local plan area allocations (SELPA), interest earnings, and rental income, which collectively generates about $1.7M for the district. CONTRIBUTIONS TO RESTRICTED PROGRAMS Unrestricted (3,232,985) (3,380,172) (3,532,204) Restricted 3,232,985 3,380,172 3,532,204 Total The District contributes funds from unrestricted resources to restricted resources. The main restricted program that require a contribution from unrestricted resources is Special Education. General Fund Revenue Components: The District receives funding for its general operations from various sources. Narrative Page 4 of 22

5 DESCRIPTION General Purpose (LCFF) Revenue Federal Revenue State Revenue Local Revenue Other Financial Sources TOTAL AMOUNT $29,498,192 $652,793 $3,276,817 $6,777,654 0 $40,205,456 A summary of the major funding sources is illustrated below: Total General Fund Revenues Adopted Budget Local Revenue 17% Other Financial Sources 0% State Revenue 8% Federal Revenue 2% General Purpose (LCFF) Revenue 73% Education Protection Account As approved by the voters on November 6, 2012, The Schools and Local Public Safety Protection Act of 2012 (Proposition 30) temporarily increased the State s sales tax rate and the personal income tax rates for taxpayers in high tax brackets. The creation of Proposition 30 provides that a portion of K-14 general purpose funds must be utilized for instructional purposes. Revenues generated from Proposition 30 are deposited into an account called the Education Protection Account (EPA). The District will receive funds from the EPA based on its proportionate share of statewide general purpose funds. While a corresponding reduction is made to state aid funds for LCFF funded districts, this is actually additional revenue for a community funded district. Narrative Page 5 of 22

6 K-14 local agencies have the sole authority to determine how the funds received from the EPA are spent, but with these provisions: The spending plan must be approved by the governing board during a public meeting EPA funds cannot be used for the salaries or benefits of administrators or any other administrative costs (as determined through the account code structure) Each year, the local agency must publish on its website an accounting of how much money was received from the EPA and how the funds were expended Further, the annual financial audit includes verification that the EPA funds were used as specified by Proposition 30. If EPA funds are not expended in accordance with the requirements of Proposition 30, civil or criminal penalties could be incurred. Illustrated below is how the District s EPA funds are appropriated for The amounts will be revised throughout the year based on information received from the State. Education Protection Account (EPA) Adopted Budget Fiscal Year Ending June 30, 2019 Actual EPA Revenues: Estimated EPA Funds $ 610,186 Actual EPA Expenditures: Certificated Instructional Salaries Certificated Instructional Benefits Total $ 512,450 $ 97,736 $ 610,186 EXPENDITURE PROJECTIONS CERTIFICATED SALARIES ,840,718 Unrestricted 2,723,951 Restricted Total 19,564, ,093,318 2,764,851 19,858, ,349,718 2,806,351 20,156,069 Certificated salaries represent 48% of the total General Fund budget. Teacher staffing is determined by established class size ratios. Enrollment projections from the demographic study completed in October of 2016 show declining enrollment. At this time the District has not reduced FTE in FY , and has increased 1.2 FTE in Math. The District has included 1.5% for step and column. Narrative Page 6 of 22

7 CLASSIFIED SALARIES Unrestricted 3,380,392 3,431,092 3,482,592 Restricted 1,359,920 1,380,320 1,401,020 Total 4,740,312 4,811,412 4,883,612 Classified salaries are salaries for positions that do not require a credential or permit issued by the Commission on Teacher Credentialing. Typical positions include instructional aides, administrative assistants, library aides, health clerks, computer specialists, District office staff, and maintenance and operations personnel. This represents 12% of the total General Fund expenditures. EMPLOYEE BENEFITS Unrestricted 6,481,132 6,958,032 7,293,532 Restricted 2,803,606 2,889,493 2,979,325 Total 9,284,738 9,847,525 10,272,857 The total employee benefits budget represents 23% of the total General Fund expenditures budget. It includes statutory benefits (such as STRS, PERS, FICA, Medicare, Workers Compensation, and State Unemployment Insurance) and the District s contribution towards health and welfare benefits. The total rate of certificated payroll burden is % for FY 18/19 and will grow to at least % by FY20/21. The total rate of classified payroll burden is % and will grow to % by FY 20/21. The District has included these additional anticipated costs in the projections. The payment of approximately $200,000 for 18 retirees benefits on a pay-as-yougo basis is included in this category. The GASB 68 paper only expenditure is included in this category. PERS On December 21, 2016, the California Public Employees Retirement System (CalPERS) Board took action to approve lowering what is known as the discount rate from 7.5% to 7.0% over three years beginning in This action effectively lowers what CalPERS projects will be the annual rate of return on its entire investment portfolio (i.e. investment return percentage). By reducing the current discount rate from 7.5% to 7.375% in , 7.25% in , and then 7.0% in , the CalPERS Board will be scheduling higher employer contribution rates that will significantly exceed last year s previous projected increases. Illustrated below are the actual rates through and projected rates through Narrative Page 7 of 22

8 STRS Assembly Bill 1469(CalSTRS full-funding plan) increased the contribution rates that employers, employees and the State pay to support the California State Teachers Retirement System (CalSTRS). Similar to CalPERS, the CalSTRS Board lowered its assumed rate of return on its investment portfolio from 7.5% to 7.0% and adopted new demographic assumptions. Under Assembly Bill (AB) 1469 both state and employer contribution rates may be increased by the CalSTRS Board in order to maintain the goal of reaching full funding of the retirement system by Current law increases contribution rates to a maximum of 19.1% beginning July 1, Further, under Education Code Section , CalSTRs will have the authority to increase or decrease the employer and state contribution rates. However, the rates may not be increased by more than one percent in a year and cannot exceed 12% overall until the remaining unfunded actuarial obligation is eliminated. In addition, new CalSTRS members (hired after January 1, 2013) are required to pay at least half of the normal cost of the DB program; thus, these members contributions increased by 0.5% effective July 1, Employer Rates CalPERS Rate Comparison est est 11.85% 13.89% 15.53% 18.06% 20.80% 23.50% 24.60% 26.10% 26.80% 2.04% 1.64% 2.53% 2.74% 2.70% 1.10% 1.50% 0.70% Change CalSTRS Rate Comparison Employer Rates 10.73% 12.58% 14.43% 16.28% 18.13% 19.10% 19.10% 19.10% 19.10% 1.85% 1.85% 1.85% 1.85% 0.97% 0.00% 0.00% 0.00% Change Adjustments to benefits reflect the effects of salary changes noted above, program adjustments, and expected increases to employer pension costs. BOOKS AND SUPPLIES Unrestricted Restricted Total ,136, ,151 1,893, ,186, ,151 1,850, ,186, ,151 1,850,296 This category covers the cost of supplies and materials used throughout the District. The biggest change in expense is for the planned textbook adoption of approximately $700K in FY 18/19 and FY 19/20. Per direction from the Board, the District will also adopt textbooks in FY 20/21; therefore, $550K unrestricted has been added ($150K of restricted lottery was already budgeted). This is a total of $700K in textbook dollars in FY20/21. Narrative Page 8 of 22

9 SERVICES AND OTHER OPERATING EXPENSES Unrestricted 2,597,805 2,597,805 2,597,805 Restricted 1,619,639 1,797,156 1,540,156 Total 4,217,444 4,394,961 4,137,961 This category covers a wide variety of classifications including; conferences, memberships, insurance, repairs, utilities, professional services and communications. CAPITAL OUTLAY Unrestricted 10,000 10,000 10,000 Restricted Total 10,000 10,000 10,000 This accounts for equipment expenditures that meet the District capitalization threshold. OTHER OUTGO Unrestricted Restricted 208, , ,640 Total 208, , ,640 This accounts for costs paid to West Valley Transportation JPA for Special Education Transportation. TRANSFERS OUT Restricted- 550, , ,0000 Deferred Maintenance Unrestricted- 100, , ,000 Cafeteria Restricted Total 650, , ,000 The District will transfer funds from the General Fund to help support the Cafeteria Fund. In addition, the District will transfer funds from the now restricted RDA (Redevelopment Agencies) pass-through payments to help support Deferred Maintenance. Operating Expenditure Components The General Fund is used for the majority of the functions within the District. As illustrated below, salaries and benefits comprise approximately 87% of the District s unrestricted budget, and approximately 83% of the total General Fund budget. Narrative Page 9 of 22

10 DESCRIPTION UNRESTRICTED COMBINED Certificated Salaries 16,840,718 $19,564,669 Classified Salaries 3,380,392 $4,740,312 Benefits 6,481,132 $9,284,738 Books and Supplies 1,136,145 $1,893,296 Other Services & Oper. 2,597,805 $4,217,444 Capital Outlay 10,000 $10,000 Other Outgo/Transfer 0 $208,640 Transfers Out 100, ,000 TOTAL 30,546,192 $40,569,099 Following is a graphical representation of expenditures by percentage: Other Services & Oper. 10% Books and Supplies 5% Total General Fund Expenditures Adopted Budget Capital Transfers Outlay Out 0% 2% Benefits 23% Certificated Salaries 48% Classified Salaries 12% Narrative Page 10 of 22

11 ENROLLMENT The chart below provides the enrollment and ADA for period 2 attendance and projections. A demographic study prepared in 2016 shows a declining enrollment trend. This will equate to a reduction in the amount of FTEs required to maintain current programs. However, the budget does not reflect reductions in FTE at this time. Total FTE is for current and subsequent years. However, the Board of Trustees will begin discussions regarding reductions in FTE in the future. Enrollment ADA % FY 17/18 P-2 FY 18/19 Projection FY 19/20 Projection FY 20/21 Projection MULTI-YEAR ASSUMPTIONS The accuracy of a District s budget projection is only as good as the assumptions that are used in developing next year s budget numbers. The key budget assumptions are shown below. Factor FY 18/19 FY 19/20 FY 20/21 Funding Status Basic Aid District Basic Aid District Basic Aid District Enrollment 3,144 3,100 3,056 Property Tax Increase 5.0% 4.0% 4.0% State (COLA) 3.00% 2.57% 2.67% California Lottery/ADA $ $ $ Mandated Block Grant $31.16 $31.16 $31.16 Mandated Claims One-Time $ $0 $0 Step & Column 1.5% 1.5% 1.5% CalPERS Employer Rate 18.06% 20.80% 23.50% CalSTRS Employer Rate 16.28% 18.13% 19.10% Staffing (FTEs) Parcel Tax- Measure B $290 $290 $290 (Expires June 2022) Narrative Page 11 of 22

12 RESERVE ANALYSIS FY 17/18 Estimated FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected TOTAL Revenue 38,917,836 40,205,456 40,268,721 41,424,758 TOTAL Expenditures 39,309,287 39,919,099 40,981,003 41,519,435 NET Transfers IN/OUT 715,218 (650,000) (660,000) (670,000) Surplus/(Deficit Spending) 323,767 (363,643) (1,372,282) (764,677) Ending Unrestricted Reserve Balance 6,575,064 6,105,278 4,711,370 3,668,067 % Reserve 16.7% 15.3% 11.5% 8.8% The District monitors its reserve balance closely to ensure it is meeting the State minimum required reserve for economic uncertainty of 3.0% of General Fund expenditures. In addition, every effort is made to maintain the balance at the 15.0% Board recommendation. The Board s goal is aligned with the recommendation from advisors that a Basic Aid District maintain a higher reserve balance than that which is required by statute due to the high risk involved in the funding model, specifically property tax volatility. Cash Flow The District is anticipating having positive monthly cash balances during the school year. Cash is always closely monitored in order to ensure the District is liquid to satisfy its obligations. OTHER FUNDS OF THE DISTRICT SPECIAL REVENUE FUNDS CAFETERIA FUND (FUND 13): This is used to account separately for federal, state and local resources to operate the food service program. The primary goal is to provide children with quality nutritious meals that meet or exceed regulatory standards. The current program continues to offer breakfast and lunch options. The projected revenue is $591,851 with expenses of $892,507. The projected ending balance for FY 18/19 is $14,543 Narrative Page 12 of 22

13 DEFERRED MAINTENANCE FUND (FUND 14): This is used to account separately for the District s contribution for deferred maintenance purposes. The state does not allocate any funds for this purpose. Therefore, we will transfer $550,000 to this fund from the general fund for deferred maintenance needs. In FY 18/19 the District is planning to replace the boiler at the Van Meter School; $60,000 has been allocated for this project. Additionally, the playground equipment will be replaced at the Van Meter school and $75,000 has been allocated for this project. The fund is anticipated to have an ending balance for FY 18/19 in the amount of $1,477,900 SPECIAL RESERVE FUND FOR OTHER THAN CAPITAL OUTLAY PROJECTS (FUND 17): This was used to offset past negotiated salary enhancements. Also, part of these reserves was earmarked for anticipated employer cost increases from the STRS and PERS retirement systems. The estimated balance to remain in the account in FY 17/18 is $812,996. The District transferred $810,218 in FY17/18 to the general fund for these retirement increases. The remaining balance in FY 18/19 is $2,778. CAPITAL PROJECT FUNDS CAPITAL FACILITIES FUND (FUND 25): This fund is used to account for money received from fees levied on developers. The anticipated revenue for FY 18/19 is $201,500. The projected ending balance for FY 18/19 is $444,249 SPECIAL RESERVE FUND FOR CAPITAL OUTLAY PROJECTS (FUND 40): This fund is used to account for resources from rentals, leases, and the sale of real property. The District is projecting to complete the R. J. Fisher Fields Project in the summer of $3.1M in expenditures was allocated for the project in FY The projected ending balance for FY 18/19 is $2.54M Fund Summaries Illustrated below is a summary of each Fund s fund balance and corresponding change. Fund Balance June 30, 2018 Net Budget Activity Fund Balance June 30, 2019 Fund Number and Description 01 General Fund $8,217,707 ($363,643) $7,854, Cafeteria Special Revenue Fund $15,199 ($656) $14, Deferred Maintenance Fund $1,015,900 $462,000 $1,477, Special Reserve for Other Than Capital Outlay $1,389 $1,389 $2, Capital Facilities Fund $242,749 $201,500 $444, Special Reserve Fund for Capital Outlay Projects $2,558,659 ($15,000) $2,543, Retiree Benefit Fund $1,673,353 $0 $1,673,353 Narrative Page 13 of 22

14 CONCLUSION Despite future projected deficit spending, the projected budget and multi-year projections support that the District is projecting to be able to meet its financial obligations for the current and subsequent two years. There is significant deficit spending in due to specific one-time expenditures such as textbooks, maintenance and safety projects, and technology backbone upgrade. In addition, the budget will likely need to be revised once the final State budget is enacted. Administration is confident that the District will be able to maintain prudent operating reserves, and have the necessary cash in order to ensure that the District remains fiscally solvent. Narrative Page 14 of 22

15 Los Gatos Union School District Adopted Budget General Fund General Fund Description Unrestricted Restricted Total REVENUES General Purpose (LCFF) Revenues: State Aid & EPA 731, ,681 Property Taxes & Misc. Local 27,991, ,245 28,766,511 Total General Purpose 28,722, ,245 29,498,192 Federal Revenues - 652, ,793 Other State Revenues 1,607,025 1,669,792 3,276,817 Other Local Revenues 2,978,254 3,799,400 6,777,654 TOTAL - REVENUES 33,308,226 6,897,230 40,205,456 EXPENDITURES Certificated Salaries 16,840,718 2,723,951 19,564,669 Classified Salaries 3,380,392 1,359,920 4,740,312 Employee Benefits (All) 6,481,132 2,803,606 9,284,738 Books & Supplies 1,136, ,151 1,893,296 Other Operating Expenses (Services) 2,597,805 1,619,639 4,217,444 Capital Outlay 10,000-10,000 Other Outgo - 208, ,640 Direct Support/Indirect Costs (1,165) 1,165 - TOTAL - EXPENDITURES 30,445,027 9,474,072 39,919,099 EXCESS (DEFICIENCY) 2,863,199 (2,576,842) 286,357 OTHER SOURCES/USES Transfers In - - Transfers (Out) Net Other Sources (Uses) (100,000) (550,000) (650,000) Contributions (to Restricted Programs) (3,232,985) 3,232,985 - TOTAL - OTHER SOURCES/USES (3,332,985) 2,682,985 (650,000) FUND BALANCE INCREASE (DECREASE) FUND BALANCE (469,786) 106,143 (363,643) Beginning Fund Balance 6,577,864 1,639,843 8,217,707 Ending Balance, June 30 6,108,078 1,745,986 7,854,064 6/12/ Adopted Budget Statement General Fund Narrative Page 15 of 22

16 Los Gatos Union School District Revised Adopted Budget and MYP Projection Estimated Actuals Adopted Projection Unrestricted Restricted Combined Unrestricted Restricted Combined Unrestricted Restricted Combined Unrestricted Restricted Combined Revenue General Purpose 26,947, ,515 27,699,954 28,722, ,245 29,498, ,834, ,245 30,609,457 30,990, ,245 31,765,494 Federal Revenue 0 636, , , , , , , ,793 State Revenue 1,068,793 2,232,124 3,300,917 1,607,025 1,669,792 3,276, ,025 1,669,792 2,228, ,025 1,669,792 2,228,817 Local Revenue 5,291,254 1,989,436 7,280,690 2,978,254 3,799,400 6,777, ,978,254 3,799,400 6,777,654 2,978,254 3,799,400 6,777,654 Total Revenue 33,307,486 5,610,350 38,917,836 33,308,226 6,897,230 40,205,456 33,371,491 6,897,230 40,268,721 34,527,528 6,897,230 41,424,758 Expenditures Certificated Salaries 16,830,608 2,512,016 19,342,624 16,840,718 2,723,951 19,564, ,093,318 2,764,851 19,858,169 17,349,718 2,806,351 20,156,069 Classified Salaries 3,177,952 1,411,047 4,588,999 3,380,392 1,359,920 4,740, ,431,092 1,380,320 4,811,412 3,482,592 1,401,020 4,883,612 Benefits 5,861,541 2,651,635 8,513,176 6,481,132 2,803,606 9,284, ,958,032 2,889,493 9,847,525 7,293,532 2,979,325 10,272,857 Books and Supplies 632,206 1,339,365 1,971,571 1,136, ,151 1,893, ,186, ,151 1,850,296 1,186, ,151 1,850,296 Other Services & Oper. Expenses 2,799,486 1,837,791 4,637,277 2,597,805 1,619,639 4,217, ,597,805 1,797,156 4,394,961 2,597,805 1,540,156 4,137,961 Capital Outlay 10,000 37,000 47,000 10, ,000 10, ,000 10, ,000 Other Outgo 7xxx 0 208, , , , , , , ,640 Transfer of Indirect 73xx (1,165) 1,165 0 (1,165) 1,165 0 (1,165) 1,165 0 (1,165) 1,165 0 Total Expenditures 29,310,628 9,998,659 39,309,287 30,445,027 9,474,072 39,919,099 31,275,227 9,705,776 40,981,003 31,918,627 9,600,808 41,519,435 Deficit/Surplus 3,996,858 (4,388,309) (391,451) 2,863,199 (2,576,842) 286,357 2,096,264 (2,808,546) (712,282) 2,608,901 (2,703,578) (94,677) Other Sources/(uses) 810, , Transfers in/(out) (95,000) (95,000) (100,000) (550,000) (650,000) 9 (110,000) (550,000) (660,000) (120,000) (550,000) (670,000) Contributions to Restricted (4,556,692) 4,556,692 0 (3,232,985) 3,232, (3,380,172) 3,380,172 0 (3,532,204) 3,532,204 0 Net increase (decrease) in Fund Balance 155, , ,767 (469,786) 106,143 (363,643) (1,393,908) 21,626 (1,372,282) (1,043,303) 278,626 (764,677) Narrative Page 16 of 22 Beginning Balance 6,422,480 1,471,460 7,893,940 6,577,864 1,639,843 8,217,707 6,108,078 1,745,986 7,854,064 4,714,170 1,767,612 6,481,782 Ending Balance 6,577,864 1,639,843 8,217,707 6,108,078 1,745,986 7,854,064 4,714,170 1,767,612 6,481,782 3,670,867 2,046,238 5,717,105 Revolving/Stores/Prepaids 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 Restricted Programs 1,639,843 1,639,843 1,745,986 1,745,986 1,767,612 1,767,612 2,046,238 2,046,238 Reserve for Econ Uncertainty (15%) 5,910,700 5,910,700 6,085,400 6,085,400 6,246,200 6,246,200 6,328,500 6,328,500 Unappropriated Fund Balance 664, ,364 19, ,878 (1,534,830) 0 (1,534,830) (2,660,433) 0 (2,660,433) Reserve Percent 16.7% 15.3% 11.5% 8.8% 6/12/ Revised Adopted Budget and MYP

17 Los Gatos Union School District Revised Adopted Budget and MYP Notes: District is expected to continue to receive basic aid general purpose funding since property taxes are expected to be greater than what the District would receive from state aid. District expects property taxes to increase by approximately 5% in FY18 19 and 4% in FY19 20 and FY District added in unrestricted one time mandated cost funds of $1,048,000; proposed in the Governor's Budget. These are not ongoing revenues and it is advised to LEAs to ensure that the spending plan is flexible, scalable and adjustable as the rate may change when the State adopts the State budget. The one time funds are removed from subsequent years. Additionally, in FY18 19 the District removed the $534K of restricted revenue for California Clean Energy Jobs Act (Prop 39) that was received in FY These funds have also been removed from the subsequent years. 2 $2.3M was shifted from unrestricted to restricted revenue. Per the SCCOE, RDA (Redevelopment Agencies) pass through payments must be shifted to restricted. It is the County Office's interpretation that all of the RDA pass through funds are restricted for the upkeep and maintenance of facilities. Therefore, the District has partially offset the impact by making a $1.4M transfer to the Routine Restricted Maintenance Account out of those restricted dollars, as well as general fund contribution to deferred maintenance of $550K. 3 Projections include step and column movement of 1.5% certificated. In addition, the District added 1.20 FTE for Math Specialists. 4 Projections include step and column movement of 1.5% classified. 5 Projections include estimated increases in state pension percentages for both STRS & PERS, as well as statutory benefits for step and other salary changes. 6 7 Narrative Page 17 of 22 Budget includes $700K for textbook adoption in current year ($500K unrestricted and $200K restricted), plus the same amount is budgeted in FY19 20 for textbooks ($550K unrestricted and $150K restricted lottery). Per Board direction to revised budget, an additional $700K for textbooks has been added to FY Additional costs include $100K in the current and subsequent years for Technology Backbone Upgrade, per Board approved Sustainability Plan. Budget includes increases in restricted other services and operating expenses for projected costs in Prop 39 California Energy Jobs Act. $300K is included in FY18 19 and $200K in FY These projected expenditures are removed in FY In addition, $130K has been added for ongoing routine maintenance cost; approximately $60K is for facilities safety. These projected expenditures are removed in the two subsequent years. 8 Budget includes a transfer from General Fund of $100K into Cafeteria Fund. It increases by $10K each subsequent year. In addition, a transfer is budgeted for deferred maintenance of $550K from the RDA pass through funds. The same amount is budgeted in subsequent years. 9 Additional contributions primarily relate to the increase of Special Education contracted services and legal fees. 10 6/12/ Revised Adopted Budget and MYP

18 Los Gatos Union School District Adopted Budget Adopted Budget General Fund Budget Description Unrestricted Restricted Total Total Revenues 33,308,226 6,897,230 40,205,456 Total Expenditures 30,445,027 9,474,072 39,919,099 Excess/(Deficiency) 2,863,199 (2,576,842) 286,357 Other Sources/Uses (3,332,985) 2,682,985 (650,000) Net Increase/(Decrease) (469,786) 106,143 (363,643) Add: Beginning Fund Balance 6,577,864 1,639,843 8,217,707 Ending Fund Balance 6,108,078 1,745,986 7,854,064 6/12/ Adopted Budget General Fund Unrestricted and Restricted Narrative Page 18 of 22

19 Los Gatos Union School District Adopted Budget Multi Year Projection (Total GF) Description Adopted Budget Projected Projected Total Revenues 40,205,456 40,268,721 41,424,758 Total Expenditures 39,919,099 40,981,003 41,519,435 Excess/(Deficiency) 286,357 (712,282) (94,677) Other Sources/Uses (650,000) (660,000) (670,000) Net Increase/(Decrease) (363,643) (1,372,282) (764,677) Add: Beginning Fund Balance 8,217,707 7,854,064 6,481,782 Ending Fund Balance 7,854,064 6,481,782 5,717,105 6/12/ Multi Year Projection (Total GF) Narrative Page 19 of 22

20 LCFF Calculator Universal Assumptions Los Gatos Union Elementary (69526) Adopted Budget /31/2018 Summary of Funding Target Components: Base Grant 23,011,101 23,281,007 23,570,817 24,033,390 Grade Span Adjustment 837, , , ,136 Supplemental Grant 325, , , ,572 Concentration Grant Add-ons 148, , , ,460 Total Target 24,323,206 24,617,067 24,894,262 25,371,558 Transition Components: Target $ 24,323,206 $ 24,617,067 $ 24,894,262 $ 25,371,558 Funded Based on Target Formula (based on prior year P 2 certification) FALSE TRUE TRUE TRUE Floor 22,851,473 23,990,599 23,657,431 23,324,262 Remaining Need after Gap (informational only) Current Year Gap Funding 1,471,733 Miscellaneous Adjustments Economic Recovery Target Additional State Aid Total LCFF Entitlement $ 24,323,206 $ 24,617,067 $ 24,894,262 $ 25,371,558 Components of LCFF By Object Code State Aid $ 1,906,635 $ 1,906,635 $ 1,906,635 $ 1,906, Fair Share (1,785,140) (1,785,140) (1,785,140) (1,785,140) 8311 & Categoricals EPA (for LCFF Calculation purposes) 610, , , ,000 Local Revenue Sources: 8021 to Property Taxes 27,991,266 29,110,917 30,275,354 31,486, In-Lieu of Property Taxes Property Taxes net of in-lieu 27,991,266 29,110,917 30,275,354 31,486,368 TOTAL FUNDING $ 28,722,947 $ 29,834,212 $ 30,990,249 $ 32,192,863 Basic Aid Status Basic Aid Basic Aid Basic Aid Basic Aid Less: Excess Taxes $ 3,789,555 $ 4,615,345 $ 5,502,587 $ 6,236,305 Less: EPA in Excess to LCFF Funding $ 610,186 $ 601,800 $ 593,400 $ 585,000 Total Phase-In Entitlement $ 24,323,206 $ 24,617,067 $ 24,894,262 $ 25,371, EPA Receipts (for budget & cashflow) $ 610,186 $ 601,800 $ 593,400 $ 585,000 6/7/ MYP Adopted Budget LCFF Narrative Page 20 of 22

21 California Dept of Education SACS Financial Reporting Software File: cashi (Rev 06/17/2014) Page 1 of 2 Printed: 6/12/2018 4:40 PM Narrative Page 21 of 22 Los Gatos Union Elementary Santa Clara County July 1 Budget Budget Cashflow Worksheet - Budget Year (1) Form CASH Beginning Object Balances (Ref. Only) July August September October November December January February ESTIMATES THROUGH THE MONTH OF JUNE A. BEGINNING CASH 7,240, ,353, ,828, ,778, , ,385, ,702, ,764, B. RECEIPTS LCFF/Revenue Limit Sources Principal Apportionment , , , , , , Property Taxes , ,750, ,600, ,200, ,100, Miscellaneous Funds , Federal Revenue , , , , , Other State Revenue , , , , , , , Other Local Revenue , , , , , , ,540, , Interfund Transfers In All Other Financing Sources TOTAL RECEIPTS 187, , , ,947, ,328, ,678, ,818, , C. DISBURSEMENTS Certificated Salaries , , ,910, ,910, ,910, ,910, ,910, ,910, Classified Salaries , , , , , , , , Employee Benefits , , , , , , , , Books and Supplies , , , , , , , , Services , , , , , , , , Capital Outlay , Other Outgo , , , , Interfund Transfers Out , All Other Financing Uses TOTAL DISBURSEMENTS 939, ,578, ,391, ,643, ,370, ,361, ,756, ,246, D. BALANCE SHEET ITEMS Assets and Deferred Outflows Cash Not In Treasury Accounts Receivable , , , Due From Other Funds 9310 Stores 9320 Prepaid Expenditures 9330 Other Current Assets 9340 Deferred Outflows of Resources 9490 SUBTOTAL , , , Liabilities and Deferred Inflows Accounts Payable , , Due To Other Funds 9610 Current Loans 9640 Unearned Revenues 9650 Deferred Inflows of Resources 9690 SUBTOTAL , , Nonoperating Suspense Clearing TOTAL BALANCE SHEET ITEMS 0.00 (135,000.00) (100,000.00) , , E. NET INCREASE/DECREASE (B - C + D) (886,850.00) (1,525,000.00) (3,050,100.00) (1,351,000.00) 958, ,317, ,062, (2,635,000.00) F. ENDING CASH (A + E) 6,353, ,828, ,778, , ,385, ,702, ,764, ,129, G. ENDING CASH, PLUS CASH ACCRUALS AND ADJUSTMENTS

22 Form CASH California Dept of Education SACS Financial Reporting Software File: cashi (Rev 06/17/2014) Page 2 of 2 Printed: 6/12/2018 4:40 PM Los Gatos Union Elementary Santa Clara County July 1 Budget Budget Cashflow Worksheet - Budget Year (1) Narrative Page 22 of 22 Object ESTIMATES THROUGH THE MONTH OF JUNE A. BEGINNING CASH B. RECEIPTS LCFF/Revenue Limit Sources Principal Apportionment Property Taxes Miscellaneous Funds Federal Revenue Other State Revenue Other Local Revenue Interfund Transfers In All Other Financing Sources TOTAL RECEIPTS C. DISBURSEMENTS Certificated Salaries Classified Salaries Employee Benefits Books and Supplies Services Capital Outlay Other Outgo Interfund Transfers Out All Other Financing Uses TOTAL DISBURSEMENTS D. BALANCE SHEET ITEMS Assets and Deferred Outflows Cash Not In Treasury Accounts Receivable Due From Other Funds 9310 Stores 9320 Prepaid Expenditures 9330 Other Current Assets 9340 Deferred Outflows of Resources 9490 SUBTOTAL Liabilities and Deferred Inflows Accounts Payable Due To Other Funds 9610 Current Loans 9640 Unearned Revenues 9650 Deferred Inflows of Resources 9690 SUBTOTAL Nonoperating Suspense Clearing 9910 TOTAL BALANCE SHEET ITEMS E. NET INCREASE/DECREASE (B - C + D) F. ENDING CASH (A + E) G. ENDING CASH, PLUS CASH ACCRUALS AND ADJUSTMENTS March April May June Accruals Adjustments TOTAL BUDGET 7,129, ,058, ,971, ,255, , , , , , , ,300, ,000, , ,832, ,991, ,991, , , , , , , , , , , , , , , , , ,276, ,276, , , ,673, ,777, ,777, ,370, ,539, , ,885, , ,205, ,205, ,910, , , ,910, ,910, ,932, ,564, ,564, , , , , ,740, ,740, , , , ,434, ,284, ,284, , , , , , ,893, ,893, , , , , , ,217, ,217, , , , , , , , ,441, ,626, ,639, ,374, , ,569, ,569, , , , , , (71,000.00) 1,913, (2,716,000.00) 511, , (238,643.00) (363,643.00) 7,058, ,971, ,255, ,766, ,001,738.00