BUDGET UPDATE. Budget Considerations. Budget Update Newsletter UPCOMING DATES. Comments on FY2010 Budget. Comments on FY2011 Budget

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1 BUDGET UPDATE November 2009 Volume 1, Issue 3 Cobb County School District, Financial Services Division Mike Addison Chief Financial Officer Brad Johnson Deputy Chief Financial Officer Budget Considerations Comments on FY2010 Budget UPCOMING DATES November 2009 December 2009 Continue to track actual revenues and legislative priorities No Newsletter At the current time, Financial Services is unable to predict if there will be additional FY2010 State Budget reductions. We are anticipating direction from the General Assembly and the Governor in January. At that time we will be able to determine if there will be any revenue reduction that will impact the District. January 2010 Continue to track actual revenues and legislative priorities Comments on FY2011 Budget Predictions as to the anticipated revenue for the FY2011 school year cannot be determined at this time. Once the General Assembly begins meeting in January, Financial Services will begin monitoring the impact of the bills on education as they are introduced. We hope that at that time, the Governor and the General Assembly will establish a direction for FY2011. Newsletter New issues of the Newsletter will not be presented in December. In the month of December, Financial Services will be presenting the Quarterly Report for the first quarter of FY2010, which ended September 30, 2009.

2 Page 2 Our Numbers State Revenue Cobb s prorated budget relative to the actual collections of State Revenue is on track. Monthly revenue collections appear to be in line with CCSD s FY2010 Budget at this time. Revenue sources include Quality Basic Education (QBE) Funding, Miscellaneous State Grants, and other State funding. Local Revenue Cobb s prorated budget relative to the actual collections of Local Revenue is on track. Monthly revenue collections appear to be in line with CCSD s FY2010 Budget at this time. Revenue sources include Property Tax, Tag Tax, Interest on Delinquent Property Taxes, Interest Income, and other Local income.

3 Page 3 Our Numbers (continued) Federal Revenue Monthly revenue collections took a jump in the month of September due to the receipt of the $12.8 million in Stabilization funds. Since revenue is tracked based on the history of collections and Stabilization funds are new, the tracking is skewed. After the September and October Stabilization funds are received, revenue patterns should be steady for the remainder of the year. What s Next? Future Challenges and Economic Outlook State Economy Governor Sonny Purdue announced that the net revenue collections for the month of September 2009 (FY10) totaled $1,371,956,000 compared to $1,632,334,000 for August 2008 (FY09), a decrease of $260,378,000 or 16.0 percent. The percentage decrease year-to-date for FY10 compared to FY09 is 14.2 percent.

4 Page 4 American Recovery and Reinvestment Act Federal (ARRA) State Fiscal Stabilization Funds Stabilization funding is given to State governments to distribute in order to offset the decline in State Revenues starting in FY2009. For FY2009, the State distributed $157,931,185 to school districts in Georgia. Cobb s portion of $9,819,396, received in May 2009, was offset by a mid year increase in austerity cuts. For FY2010, the State distributed $413,145,926 to school districts in Georgia. Cobb s portion of $25,768,923, received in September and October of 2009, was offset by an increase in austerity cuts. For FY2011, the State has $461,561,744 in remaining funds to allocate to school districts in Georgia. We do not know yet what the allocation formula will be, or how much Cobb will receive. We will let the Board know as soon as the information becomes available. ARRA Stabilization funds are required to be used on instructional payroll in May 2009, September 2009, and October All ARRA Stabilization funds will be used to retain jobs. A job retained is an existing position that would not have been continued to be filled were it not for ARRA funding. At this time, the estimated cumulative number of jobs saved is teacher positions. The table below summarizes all data for State Fiscal Stabilization Funds (SFSF). Description Total State Fiscal SFSF Budgeted for SFSF Received by Estimated Cobb Stabilization Funds Cobb County Cobb County School County Schools (SFSF) to State School District District Jobs Retained (1) Total SFSF $1,032,638,855 SFSF Allocated to School Districts in FY2009 $157,931,185 $9,819,396 $9,819,396 received in May SFSF Allocated to Districts in FY2010 $413,145,926 $25,768,923 $25,768,923 received in Sept/Oct SFSF Remaining to be $461,561,774 To be Decided by To be Decided by To be Decided Allocated in FY2010 the State the State by the State (1) Number of jobs retained is calculated based on the FY2010 average teacher salary of $71,912. The calculations for FY2009 and FY2010 are as follows: a. FY2009: $9,819,396/$71,912 = teacher positions b. FY2010: $25,768,923/ $71,912 = teacher positions

5 Page 5 American Recovery And Reinvestment Act (ARRA) Stimulus Stimulus funds are completely separate from State Fiscal Stabilization funds. For Cobb, Stimulus funds affect the Title I and IDEA categorical grants. The total amount of Title I Stimulus funds for the State of Georgia are $336,261,901. Cobb Was allocated $13,616,294 to be spent during FY2010 and FY2011. The total IDEA Stimulus funds for the State of Georgia are $324,207,683. Cobb was allocated $20,236,741 to be spent during FY2010 and FY2011. Stimulus funds for the Title I and IDEA grant will be received from the State of Georgia on a reimbursement basis as the grant funds are spent during FY2010 and FY2011. The funds can be used to retain jobs which would have been lost due to a decline in Local revenues or create jobs to build capacity in schools. A job created is a new position created and filled or an existing unfilled position that is filled as a result of ARRA funding. A job retained is an existing position that would not have been continued to be filled were it not for ARRA funding. Note that unlike SFSF, all Stimulus jobs created and retained are actual positions. These positions will have to be moved to another funding source, or eliminated when the Stimulus funding ends in FY2012. Below is a summary of the Stimulus data. Description Total State Stimulus Stimulus Funds Stimulus Jobs Stimulus Jobs Funds Allocated to Cobb Created Retained County School District Title I Grant $336,261,901 $13,616, IDEA Grant $324,207,683 $20,236,

6 Page 6 Question & Answer How do the exemptions offered by Cobb and the State of Georgia impact the District s revenue? Exemption Type Exemption Description Cobb Exemption Revenue Loss State Exemption Revenue Loss Total Exemption Revenue Loss Regular Homestead Exemption Age 62 or Older Exemption State Disabled Veteran Homeowners who meet the regular Homestead Exemption requirements are entitled to a $10,000 exemption in the county general and school general tax categories. Homeowners who are 62 years of age on or before January 1 are entitled to a full exemption in the school general and school bond tax categories Homeowners who are disabled veterans as defined by OCGA section are entitled to a $50,000 exemption $17,543,067 $4,385,767 $21,928,834 $63,786,653 $63,786,653 $133,838 $133,838 Cobb County Disability Homeowners who are disabled on or before January 1, and whose annual net income does not exceed $12,000 for the immediately preceding year are entitled to a $22,000 exemption $154,161 $154,161 Surviving Spouse Exemption Exemption for un-remarried surviving spouse of firefighter or peace officer killed in line of duty $2,863 $2,863 Conservation Exemption Environmentally Sensitive Property Favorable tax treatment designed to protect property owners from being pressured to convert their land from agricultural use to residential or commercial use Exemption for property that is considered to be environmentally sensitive $1,546,267 $1,546,267 $4,305 $4,305 Freeport Exemption Tax exemption for wholesale distributors who ship their goods out of the State and also for warehouses that store materials for out of state wholesale distributors $21,765,900 $21,765,900 Personal Property Returns < $500 Exemption of tangible personal property < $7,500 subject to specific requirements $155,754 $155,754 Total Exemptions $103,249,781 $6,228,794 $109,478,575