Saugus Union School District Second Interim Report for FY Executive Summary. Board of Trustees

Transcription

1 Saugus Union School District Second Interim Report for FY Executive Summary Board of Trustees Douglas A. Bryce Paul De La Cerda Rose Koscielny Judy Egan Umeck Stephen S. Winkler Administration Joan M. Lucid, Ed.D., Superintendent Cynthia Shieh, Assistant Superintendent of Business Christine Hamlin, Assistant Superintendent of Instruction Vacant, Assistant Superintendent of Personnel 1

2 March 05, 2013 Executive Summary Introduction: The Executive Summary is an overview of the financial data reported in the SACS Second Interim Report. It is provided to assist the general public in understanding the financial information reported on the State required SACS forms. Education Code requires districts to submit reports to the County Office of Education (COE) twice a year. This report is referred to as Interim Report. The first interim financial report shall reflect changes to the budget through October 31; the second interim financial report shall reflect changes to the budget through January 31. For each interim report, the District must use multi-year projections to certify one of the following: Positive Certification: Districts WILL MEET their financial obligations for the current and two subsequent fiscal years. Qualified Certification: Districts MAY NOT MEET their financial obligations for the current or two subsequent years. Negative Certification: Districts WILL BE UNABLE TO MEET their financial obligations for the remainder of the current year or subsequent fiscal years based upon current projections (not meeting reserves in current year or negative fund balance in any year). 2

3 Budget Calendar FY June Board adopts FY Budget July Business Office Staff works on the Year-End Closing (FY ) August Business Office Staff works on the Year-End Closing; September release of prior years Unaudited Actuals (FY ); Board adopts revised budget based on final state budget (45 days after State Final Budget) to reflect any significant changes October First Interim cut-off (FY ) December January February March April May June Release of First Interim (FY ); Release of Auditor s Report for prior year (FY ) Governor releases State budget proposal for the next year (FY ); Second Interim cut-off School Board conducts budget study session (based on the Governor s budget proposal) Governing Board establishes priorities for the next year (FY ); District releases the Second Interim for the current year (FY ) P-2 ADA cut-off Release of Governor s May Revise (FY ); School Board conducts budget study session Board adopts FY budget 3

4 Financial Report Information: The district s Budget and Accounting format are based on the California School Accounting Manual (CSAM) and utilize the Standardized Account Code Structure (SACS). The District s financial records are organized and operated on a fund basis, based on Governmental Accounting Standards. A fund is defined as a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitation. In FY , there are fifteen funds in the District accounting system. The District s funds include: General Fund (Fund 01) Special Ed Pass Through Fund (Fund 10) Child Development Fund (Fund 12) Deferred Maintenance Fund (Fund 14) Special Reserve Fund Other Than Capital Outlay Projects (Fund 17) Special Reserve Fund for Postemployment Benefits (Fund 20) Building Fund (Fund 21) Capital Facilities Fund (Fund 25) County School Facilities Fund (Fund 35) Special Reserve Fund for Capital Outlay Projects (Fund 40) Capital Project Fund Blended Component Units (Fund49) Bond Interest and Redemption Fund (Fund 51) Debt Service Fund for Blended Component Units (Fund 52) Debt Service Fund for Lease Revenue Bond (Fund 56) Other Enterprise Fund (Fund 63) GENERAL FUND (Fund 01): This is the chief operating fund for the District. It is used to account for the ordinary operations of the District. All transactions except those required or permitted by law to be in another fund are accounted for in this fund. In the General Fund, there are General Fund Unrestricted and General Fund Restricted financial activities. 4

5 General Fund Unrestricted: Used to account for those projects and activities that are funded with unrestricted revenues. General Fund Restricted: Used to account for those projects and activities that are funded by external revenue sources that are legally restricted or restricted by the donor for specific purposes. The District has been part of the Special Education Local Plan Area (SELPA) and has been an Administrative Unit (AU) for the SELPA. It is the District s intention to have a true representation and meaningful financial data and picture for our general operation. Pass through Funds posted by the county office of education in the General fund are transferred to Fund 10 (SELPA Pass-thru). The funds are Federal IDEA and State AB602 revenues. General Fund Revenues: $72,789,587 (Unrestricted $58,099,288; Restricted $14,690,299) The following chart illustrates the funding source of the total General Fund revenues. Revenue Limit Source (Object ): $50,640,580 (Unrestricted $49,457,654; Restricted $1,182,926) This represented 69.6% of the total general fund revenues. It was the prime revenue component of the District s total revenue source. The unrestricted portions represented the Revenue Limit funding including the Principal Apportionment (ADA) and the Property Taxes. The restricted portion in the amount of $1,182,926 represented the Special Ed portion of revenue limit taxes to fund the Special Ed Programs. As the Special Education programs are not fully funded by State and Federal Revenues, we estimate a contribution of $3,747,212 from unrestricted resources to make up that funding shortfall. Federal Revenue (Object ): $3,797,019 (Unrestricted: $115,368; Restricted $3,681,651) This represented 5.2% of the total general fund revenues. The unrestricted amount of $115,368 represented the revenues for MAA funding. The restricted amount included funding for Special Ed in the amount of $2,146,581; No Child Left Behind (NCLB) in the amount of $1,198,979 including Title 1, Title 2, and Title 3 and $336,091 for Medi-Cal. Other State Revenue (Object ): $16,534,512 (Unrestricted $7,946,266; Restricted $8,588,246) This is the second largest revenue source for the District; it represents 22.7% of the total general fund revenues. To help offset the impact of Revenue Limit Funding reductions, the State provided temporary flexibility in some of the Other State Revenue, specifically the Tier III 5

6 programs which include Staff Development (SB472), Staff Development Buyout, Supplemental Grant, Staff Development ELL, Supplemental Hourly Programs, Peer Assistant and Review (PAR), GATE, Art and Music Block Grant, Instructional Materials, School and Library Improvement Block Grant, Class Size Reduction (K-3), PE Teacher Incentive Grant, Community Base Tutoring Grant (CBET), Teacher Credentialing Block Grant (BTSA) and Oral Health Exam. Unrestricted revenues include Unrestricted Lottery and Mandated Costs Block Grant. The restricted funding is referred to as Categorical Programs; they include Special Ed., Home-to- School Transportation, Economic Impact Aid (EIA), Restricted Lottery and After School Education and Safety Grant (ASES). The district has utilized the flexibility provisions and swept most of the Tier III funds to help backfill the budget gap. Other Local Revenue (Object ): $1,817,476 (Unrestricted $580,000; Restricted $1,237,476) This represented 2.5% of the total General Fund revenues. It was a small portion of the entire District s revenue source. The unrestricted portions include Interest Income, Use of Facilities fees and Food Service Revenue. The restricted portions include ASES (parent contributions) Special Education for Regionalize Autism Program, Henry Mayo grant, Drums Alive, and other miscellaneous gifts and donations. Transfer In (Object ): none General Fund Expenditures: $76,258,727 (Unrestricted $54,047,184; Restricted $22,211,543) 6

7 Certificated Salaries (Object ): $37,671,674 (Unrestricted: $30,433,437; Restricted $7,238,237) Certificated salaries are salaries for positions that require a credential or permit issued by the Commission on Teacher Credentialing. Certificated salaries make up 49.40% of the total budgeted general fund expenditures (including transfer out) % of the total certificated positions were funded by restricted funding, and the remaining 80.79% were being funded by unrestricted dollars. Classified Salaries (Object ): $13,462,369 (Unrestricted: $8,623,985; Restricted $4,838,384) This classification represents the salaries paid for the positions that do not require a credential or permit issued by the Commission on Teacher Credentialing. The positions in this classification are Office Manager, Administrative Clerk, Clerical Assistant, Receptionist/Secretary, Health Clerk, DO staff, Instructional Aide and Maintenance and Operations staff, Campus Supervisors and so on. Classified salaries are 17.65% of the total general fund expenditures % of the total classified positions were funded by restricted funding and 64.06% were funded by unrestricted dollars. Employee Benefits (Object ): $13,118,938 (Unrestricted: $10,324,808; Restricted $2,794,130) This classification is to account for employers contributions to retirement plans (State Teachers Retirement System, and Public Employees Retirement System), Alternative Retirement Plan, Early Retirement Incentive Programs, Health and Welfare benefits, and the payroll related statutory costs such as Workers Compensation, State Unemployment Insurance, FICA, and Medicare. Benefits are 17.20% of the total general fund expenditures. People are the District s biggest asset - and the largest expenditure for the District would be the Total Compensation (salary and benefits). In FY , Salary and Benefits represents 84.25% of our total expenditures. Books and Supplies (Object ): $4,356,633 (Unrestricted: $1,811,889; Restricted $2,544,744) This is to account for expenditures for books and supplies, other reference materials, and noncapitalized equipment. It is 5.71% of the total expenditures. Services and Other Operation Expenditures (Object ): $5,002,014 (Unrestricted $2,851,577; Restricted $2,150,437) 7

8 This is to account for expenditures for services, rentals, leases, maintenance contracts, dues, travel, insurance, utilities, legal and other operating expenditures. It is 6.56% of the total expenditures. Capital Outlay (Object ): $180,647 (Unrestricted: $22,725; Restricted $157,922) This is to record expenditures for equipment, capitalized intangible capital assets such as technology related expenses above $5,000. It represents.24% of the total expenditures. Transfer Out (Object ): $2,173,107. All Restricted. This represents special education tuition and excess costs to other agencies. It represents 2.85% of the total expenditures. Other Outgo (Object ): $293,345 (Unrestricted) This represents Mandated Costs Block Grant revenue transferred to fund It represents.38% of the total expenditures. General Fund Ending Balance: There are several key fiscal indicators to evaluate the District s fiscal health. One of the key fiscal indicators is the Unrestricted Fund Balance. The following illustrates the projected ending balance for the General Fund: FY Unrestricted Restricted Projected Ending Balance $6,215, 249 $0 Revolving Cash/Store $92,500 $0 Designated Amount for Economic Uncertainty $2,287,762 $0 Other Designated (Carryover) $0 $0 Projected Undesignated Amount $3,834,987 $0 Multiyear Projections: The Multi-Year Projection is a required component of interim reporting periods to demonstrate the requirement that the District will meet its financial obligations in the current and subsequent two years. The multi-year projection is also an indication of the District s ability to maintain the required reserve for economic uncertainties for the current and subsequent two years. The District in the two subsequent years is projected to meet the required reserves. The following are projections and assumptions: Multi-Year Assumptions: 8

9 The multi-year projection for the Second Interim Report utilizes the recommended assumptions published by School Services of California and Los Angeles County Office of Education for the development of revenue projections. The district, originally, took the conservative approach by budgeting possible mid-year cuts if the Governor s Proposition 30 Bill doesn t pass. The November 6 election and voting passed Proposition 30 so the District revised the Revenue Limit Revenues Budget to not include the trigger cut of $457 per ADA. Expenditure projections include estimated step and column increases for salaries, with the balance of expenditures at the same level as FY except for increases for staff added in and reductions identified later for Fiscal Year. For the current budget FY , assumptions include: Sweeping most of the Tier III Flex State Grants such as Oral Health, PE Teacher Incentive, CBET, Art & Music, GATE, SB472, PAR, Staff Development & Supplemental Grants. Giving back 1 day pay of the 6 furlough days as negotiated due to the passing of Prop. 30. Sweep $50,000 of BTSA funding. Charge direct costs (custodians 3.75 hours per day for each site for a total of $365,403) to Fund 63 (Child Development Program). The budget for the two subsequent years, FY and FY , assumptions include: Same sweeps as FY Charge direct costs (custodians) to Fund 63. Sweep $50,000 of BTSA funding. SIP Sweep $600,000. From SIP sweep, District will fund $140,000 in Library Specialists and increase Per Student Enrollment (PSE) from $50 per PSE to $76 PSE for a total increase in PSE in the amount of $270,564. The PSE allocation includes preschool students. New staffing: principal, office manager and custodian (for Emblem School in ) Increase Certificated Teachers by 9 (11 Regular Education and reduce 2 Special Education) in due to anticipated class size for TK, K and 1 to 27 in year and class size TK, K and 1 to 26 in year Reduce Certificated Teachers by 1 in due to anticipated overall decline in enrollment.

10 Transfer in from Fund 17.0 in in the amount of $1,372,000 to bring the reserves at 3%. MYP SECOND INTERIM ASSUMPTIONS Factor Statutory COLA (using SSC s proj.) 3.24% 1.65% 2.20% Revenue Limit Deficits %% % % Enrollment (CBEDs) Projected P2 ADA(funded) K-3 CSR Funding $2.86m $2.93m $2.93m (assume flex continues per county) Federal programs reduced 5.9% in year A balanced budget and fiscal solvency means we can meet all our expenditure commitments and reserve requirements. In order to maintain fiscal solvency, the District must make transfers in from Fund 17.0 in in the amount of $1,372,000. The district in the two subsequent years will continue the situation of deficit spending noted as follows: Unrestricted FY FY FY Total Revenue $72,789,587 $71,744,102 $74,324,349 Total Expenditures $76,258,727 $74,801,577 $75,135,163 Net -$3,469,140 -$3,057,475 -$810,814 Beginning Balance $9,684,389 $6,215,249 $3,157,774 Ending Balance $6,215,249 $3,157,774 $2,346,960 Required Reserve $2,287,762 $2,244,047 $2,254,055 10

11 Reserve % 8% 4% 3% Available Reserve/Meet Reserves Standard Yes Yes Yes FINAL NOTES: It is imperative that the Board and the staff continue to seek and fully implement the cost containment programs and reductions and investigate all possible revenue enhancements. California s current school finance system is overly complex, administratively costly, and inequitably distributed. Governor Brown rolled out his much anticipated January Budget Proposal on January 10, The Governor proposes a transition to a new state funding formula for education: Implementation of a new Local Control Funding Formula (LCFF) previously known as Weighted Student Funding. There are currently insufficient details to allow school districts to determine its funding under implementation of the LCFF for , or for any year thereafter. The Legislature must enact this measure as a change to current school finance statutes. The District followed recommendation from School Services and Los Angeles County Office of Education and planned for Revenue Limit Cost of Living Adjustment and continuation of flexibility in categorical programs. More details will be available at May Revise. Cash Flow Assumptions: Districts are required to provide cash flows for and with their Second Interim Report. Due to the deferral schedules of revenues, the District experiences cash flow shortages throughout the year. In June 2012, the District borrowed $5,000,000 from Fund 25.0 and $5,500,000 from Fund In year , the District will pay back $5,000,000 to Fund 25.0 in February and $5,500,000 to Fund 49.1 in March. Due to deferrals, we will need to borrow $5,000,000 again from Fund 25.0 in April 2013 and repaying in June of 2013 when the District receives $10,701,879 in Education Protection Account (EPA) funds. In year , the District will anticipate cash shortages based on the deferral schedules that will require the District to continue internal borrowing between funds at certain points throughout the year. With quarterly payments of the Education Protection Account (EPA) funds, the District does not anticipate the need to borrow from Fund 25.0 until January of 2014 at which time we will borrow $5,000,000 and repay in May /13 Cash Flow Projection 11

12 *Pay back $5m to Fund 25.0 in Feb. Pay back $5.5m to Fund 49.1 in March. Borrow from Fund 25.0 in April $5m and pay back $5m in June. OTHER FUNDS (attachment 1) SPECIAL ED PASS THROUGH FUND (Fund 10): This fund is used to account for Special Education funds transferred to the districts within the SELPA. Total budgeted revenues are $28,835,390. Total budgeted expenditures are $29,386,108 including a carry-over amount of $550,718 from unused Mental Health funds. The projected ending balance is $6,756. CHILD DEVELOPMENT FUND (Fund 12): This fund is used to account separately for federal, state, and local resources to operate Child Development Programs. The programs include State Preschools and LA Universal Preschools. All monies received by the District are covered under the Child Care and Development Act. Budgeted revenues for the Child Development Programs are $445,764, which includes Deferred revenue from prior year. The total budgeted expenditures are 445,764. The projected ending balance is $15,343. DEFERRED MAINTENANCE FUND (Fund 14): This fund is used to account for state apportionments and the District s contribution for deferred maintenance purposes. The total budgeted revenues are $20,000 interest income and $378,429 state apportionment. The total expenditures are $67,220. The projected ending balance is $2,732,419. SPECIAL RESERVE FOR OTHER THAN CAPITAL OUTLAY PROJECTS (Fund 17): This fund is used primarily to provide for the accumulation of general fund moneys for general operating purposes other than for capital outlay. The majority of the funds came from Mandated Cost Reimbursement & Santa Clarita Valley Food Services Rebates. The projected ending balance is $1,408,037. SPECIAL RESERVE FUND FOR POSTEMPLOYMENT BENEFITS (FUND 20): It was known as GASB 45, OPEB money. This fund may be used pursuant to Education Code Section to account for amounts the District has earmarked for the future cost of postemployment benefits but has not contributed irrevocably to a separate trust for the postemployment benefit plan. The $50,000 annual contribution from the General Fund is suspended for this year and the next two years. The projected ending balance is $770,540. BUILDING FUND (Fund 21): It is known as G.O. Bond Fund. This fund exists primarily to account for proceeds from the sale of bonds and may not be used for any purposes other than those for which the bonds were issues. This represents 1993, 2002, 2005 (refunding) &

13 (refunding) outstanding General Obligation Bonds. The following is the breakdown for the total budgeted revenues and the total budgeted expenditures. Total Revenues: $25,000 (interest income only) Total Expenditures: $590,438. These expenditures are for Deferred Maintenance projects and salaries for the Director of Facilities and clerical staff. The projected ending balance is $2,100,861. CAPITAL FACILITY FUND (Fund 25): It is known as Developer Fees money. This fund is used to account for monies received from fees levied on developers or other agencies as a condition of approving a development. The Interest earned in this fund is restricted to this fund. The expenditures in this fund are restricted to the purposes specified in agreements with the developer or specified in Government Code. The total budgeted revenues in the amount of $80,500. The total budget expenditures are $269,500 which includes material & supplies, services and other operations and capital outlay. The projected ending balance is $7,144,674. Due to cash flow the General Fund has borrowed $5,000,000 from this fund. COUNTY SCHOOL FACILITIES FUND (Fund 35): This fund is used primarily to account separately for state apportionments for the State School Facilities Fund. There were no other activities other than the interest income for the fund. Interest income budgeted at $2,000. $50,000 is budgeted for materials and supplies for West Creek. The projected ending balance is $119,976. SPECIAL RESERVE FUND FOR CAPITAL OUTLAY PROJECTS (Fund 40): This fund originally existed only to provide for the accumulation of general fund monies for capital outlay purposes and had a beginning balance of $114,538 in 2012/13. Resource # has just been added this year to account for the district s Lease Revenue Bond transactions (Replacing funds 21 & 56). This resource # will be used to account for the accumulation of resources and payment of principal and interest on long term debt. The District will fund this debt from CFD s, Childcare and Construction Funds. Resource Projected Ending Balance is $5,134,608 Resource Lease Revenue Bond s Projected Ending Balance is $19,592,527 CAPITAL PROJECT FUND FOR BLENDED COMPONENT UNITS (Fund 49): This fund is used to account for capital projects financed by Mello-Roos Community Facilities Districts. The Mello-Roos Community Facilities Act of 1982 allows the District to establish a CFD upon approval of 2/3 of the voters in the District. A CFD is for the purpose of selling tax- 13

14 exempt bonds to finance public improvements and services. Revenue budgeted $66,900 for interest and $37,000 for other sources. Expenditures budgeted $121,900 for services and other operating expenditures, capital outlay and transfers out of $37,000. Due to cash flow issues, the District borrowed $5,500,000 from The ending balance is $7,562,588 (after audit adjustments). The CFDs are as follows: 49.1 CFD (Saugus/ Hart Facilities Financing Authority) $7,342, CFD (Tesoro Area) $10, CFD (Plum Canyon/Skyblue Area) $ CFD (Tesoro Area) $ CFD (West Creek Area) $145, CFD (River Village) $64,485 BOND INTEREST AND REDEMPTION FUND (Fund 51): This is used for the repayment of bonds issued for the District. The total budgeted revenues of $5,751,340 included State subventions for homeowner s exemptions, secured and unsecured taxes, prior years taxes and interest income. The total budgeted expenditures $5,365,325 are limited to bond interest, redemption, and related costs. According to Education Code Section 15234, any money remaining in this fund after the payment of all bonds and coupons payable from the fund, or any money in excess of an amount sufficient to pay all unpaid bonds and coupons payable from the fund, shall be transferred to the general fund upon order of the county auditor. The projected ending balance is $4,782,264. DEBT SERVICE FUND FOR BLENDED COMPONENT UNITS (Fund 52): This fund is used to account for the accumulation of resources for the payment of principal and interest on bonds issued by Mello-Roos Community Facility District. The total budgeted revenues $5,750,511 are from taxes and interest income. The total budgeted expenditures are $5,197,417 representing debt services payments. The projected ending balance is $16,053,990 (after audit adjustments) CFD (Saugus/ Hart Facilities Financing Authority) $2,486, CFD (Tesoro Area) $3,342, CFD (Plum Canyon/Skyblue Area) $2,628, CFD (Tesoro Area) $826, CFD (West Creek Area) $4,063,577

15 52.6 CFD (River Village) $2,707,378 DEBT SERVICE FUND FOR LEASE REVENUE BOND (Fund 56): This fund is used to account for the accumulation of resources and payment of principal and interest on long term debt. The projected ending balance is $0. OTHER ENTERPRISE FUND (Fund 63): This fund is used to account for any activity for which a fee is charged to external users for goods or services. The Child Care Programs have been treated as an Enterprise Fund, since the programs are not subsidized by state or federal funds and are operated with the intent of recovering the costs of the program through parent fees. Budgeted total revenues are $5,101,545, which included interest income in the amount of $40,000, and fees collected in the amount of $5,061,545. The total budgeted expenditures are $5,636,667. It takes people to teach people; therefore, the largest budgeted expenditures are total compensation including certificated salaries, classified salaries, and employee benefits in the amount of $4,080,430. The other budgeted expenditures in the amount of $1,556,237 include material and supplies, services, custodians in the amount of $365,403, and other operating expenditures, and long-term debt service payment for new portable and modernization for Rosedell and West Creek Childcare building. The projected ending net assets are $6,768,