BUDGET STUDY COMMITTEE MEETING AGENDA

Transcription

1 BUDGET STUDY COMMITTEE MEETING January 24, :00-4:30 p.m. Campbell Conference Room 3 rd Floor, North Building I. Call to Order/Roll Call Mary Ann Dewan AGENDA II. Set the Agenda Mary Ann Dewan III. Review and Approval of December 16, 2016 Meeting Minutes Mary Ann Dewan IV. State Budget Update Laurie Book V. Budget Development Laurie Book VI. Next Meeting To Be Determined VII. Adjourn COMMITTEE MEMBERS Jon R. Gundry, Superintendent/Committee Chair Darcie Green, Board Member Grace Mah, Board Member Claudia Rossi, Board Member Peter Daniels, Chief Public Affairs Officer Mary Ann Dewan, Deputy Superintendent Philip Gordillo, Chief Human Resources Officer Ann Jones, Interim Chief Business Officer Steve Olmos, Chief Schools Officer Jeanette Rodriguez-Chien, Chief Academic Officer David Wu, Chief Technology Officer Roxanne Barnett, SEIU Sandra Fakaosi, SEIU Lisa Vieler, ACE/CTA Bobby Welch, ACE/CTA

2 BUDGET STUDY COMMITTEE UNAPPROVED MINUTES DECEMBER 16, 2016 I. Call to Order/Roll Call The meeting was called to order by Dr. Mary Ann Dewan, Deputy Superintendent, at 2:06 p.m. Members Present Rosemary Kamei, Board Member Grace Mah, Board Member Mary Ann Dewan, Deputy Superintendent Philip Gordillo, Chief Human Resources Officer Ann Jones, Interim Chief Business Officer Steve Olmos, Chief Schools Officer David Wu, Chief Technology Officer Roxanne Barnett, SEIU Sandra Fakaosi, SEIU Bobby Welch, ACE/CTA Others Present Don Bolce, Early Learning Services Laurie Book, Internal Business Services Antonio Fuentes, Head Start Theresa Martinez, Business Services (recorder) Pat Raceles, Internal Business Services Ana Trujillo, Head Start II. Set the Agenda Dr. Dewan reviewed the December 16, 2016 agenda. amendments to the agenda. There were no questions, changes or III. Head Start Grant 2017 Don Bolce, Director-Early Learning Services, shared that the Head Start grant application will go to the Head Start Policy Council for review and approval, as well as be presented to the Board of Education in January. The grant application will be submitted to the Head Start Regional Office by February 1, Mr. Bolce explained that Head Start has a five-year grant, with year-to-year funding. Head Start s fiscal year is May 1 through April 30. Mr. Bolce discussed challenges the Head Start/Early Head Start Program is facing and opportunities to maintain funding. Challenges - decrease to the number of Head Start eligible children - increase to personnel costs - new Head Start Performance Standards for Accountability & Quality Improvement Opportunities - negotiate no cost slot reduction to the number of children served - convert some Head Start (3-5 years) slots to Early Head Start (0-3 years) slots - respond to the new performance standards Mr. Bolce expressed that negotiating with the Regional Head Start office for a no cost reduction and explaining why we are doing it, would ensure current funding. Mr. Bolce reviewed increases to personnel costs in and future years assumptions, including PERS/STRS, OPED, and salary increases.

3 Mr. Bolce discussed increased expectations and accountability from the Federal Government and Head Start s increased requirements in data-utilization for quality service and positive school readiness outcomes. Ana Trujillo, Director-Head Start, reviewed the action plan to deal with under enrollment and the fiscal impact. Strategies include reducing Head Start Preschool by 13 double-session classrooms and increasing Early Head Start by 60 slots (five home-based sites). Ms. Trujillo noted the plan will be included in the grant application. Mr. Bolce summarized outcomes of the plan: - addresses under enrollment - addresses budget deficit - enhances capacity to meet new Head Start Quality & Accountability Performance Standards - increases services to underserved 0-3 year old population Mr. Bolce shared details of the Duration grant funding Head Start received separately. This funding will allow increases to class time for children by converting five double-session classrooms to 10 single-session, longer day programs (6 hours a day, 5 days a week). Dr. Dewan observed that if the team is successful in negotiating a no-cost slot reduction, the program can be preserved. Otherwise funding would be lost, resulting in continually reducing program and being forced to re-compete since enrollment criteria is not being met. Philip Gordillo, Chief Human Resources Officer, observed that we are redefining Early Learning services and moving to the model of serving younger age groups (0 to 3 year olds). Chief Gordillo recommended sharing the plan with employees after the grant is submitted so they understand why positions are being held, what the changes/impact will be, transfer opportunities, etc. Trustee Rosemary Kamei added that it would be good to share with the Board as well. Dr. Dewan thanked everyone for their collaboration and noted that the Head Start grant will be on the agenda for the January 18, 2017 Board meeting. IV. PPIC Report on Special Education Funding Dr. Dewan shared information from the Public Policy Institute of CA (PPIC) report regarding special education funding. The report includes the Institute s recommendation that the State Board of Education eliminate Special Education Local Planning Areas (SELPAs) and fund through LCFF with the local school districts. Dr. Dewan remarked that this may not be not likely since not all districts are LCFF funded (some are basic aid or community funded), and requirements under IDEA remain (SELPA has played a significant role in assisting districts in meeting compliance requirements). Alternatively, it may be beneficial to the districts: will have more ownership of their Special Education programs, and may receive some supplemental funding to provide additional services for students eligible for Special Education. Dr. Dewan anticipates that the Governor will address this issue in his budget. V. Next Meeting January 24, 2017 Agenda items include highlights of the Governor s budget and the next budget development cycle. VI. Adjournment Meeting adjourned at 3:16 p.m.

4 Budget Study Committee Meeting Internal Business Services Business Services Branch January 24, Governor s Proposals for the State Budget and K-12 Education Presented by Laurie Book Template provided by School Services of California 2 1

5 Overview of the State Budget and the State Economy 3 What s Not in the Budget? Given the Administration s conservative revenue estimates and the lean Education Budget due in large part to prior-year adjustments to Proposition 98, the Budget proposal provides no funding for critical programs and obligations, including: No funding to address the growing local obligations for the California State Teachers Retirement System (CalSTRS) and California Public Employees Retirement System (CalPERS) unfunded liability No cost-of-living adjustment (COLA) for Adult Education, Child Care, or State Preschool programs No new funding for Home-to-School Transportation programs No funding to close the LCFF gap No additional investments to deal with the state s teacher shortage 4 2

6 Risks to the State Budget The greatest uncertainty comes from state revenue collections Economic conditions continue to define options for the state Nevertheless, other factors could push the State Budget out of balance Federal funds for various state-administered programs could be cut given the new direction of the President-elect Funding for the Affordable Care Act (ACA)/Medicaid, implemented as Medi-Cal in California Funding for various education programs Property tax collections could fall short if higher interest rates depress new home sales, which in turn would increase the General Fund obligation under Proposition 98 5 Proposition 98 Proposition 98 still controls education funding Proposition 98 was adopted by state voters in 1988 as a constitutional minimum guarantee in funding for K-12 education and community colleges Proposition 98 is a complex formula that includes 3 tests to determine funding Test 1: would apply if state tax revenue would increase dramatically such that 41% of the state budget would be more than the Test 2 guarantee Test 2: same amount as previous years plus average daily attendance growth, population and COLA adjustment based on growth in the per capita personal income taxes Test 3: Per capita General Fund revenues plus one-half percent of the prior year s Prop. 98 spending amount Funding is based on Test 3 which is used in difficult economic years 6 3

7 Proposition 98 (continued) Due to it being a Test 3 year, the Governor s Budget notes that an additional $264 million in Maintenance Factor will be created The governor is projecting barely enough growth in the Proposition 98 guarantee to fund the meager 1.48% COLA estimated for This leaves no room for additional gap closure, so the funded level of the Local Control Funding Formula (LCFF) would remain 96% for The Accountability and Continuous Improvement System Evolves As we approach full implementation of the LCFF, the state continues to support local control The LCAP drives the budget, provides transparency, and promotes community engagement The revised LCAP template provides clear reporting of plans, spending, and progress toward goals The evaluation rubrics (aka California School Dashboard) take center stage in Used by local educational agencies (LEAs) in the development of the LCAP Used by oversight agencies to evaluate strengths and weaknesses of an LEA and to determine when to intervene But the real test is student achievement and the extent to which we are closing the achievement gap 8 4

8 The Education Budget and Challenges Ahead 9 Major K-12 Proposals The Governor s Budget proposal includes: $422.9 million for the K-12 portion of Proposition 39 (2012) Clean Energy Jobs Act $287 million for discretionary one-time uses $200 million for the Career Technical Education Incentive Grant (CTEIG) Program $93 million to support projected charter school ADA growth $58.1 million for categorical programs COLA (1.48%) $8.5 million for the Mandate Block Grant (MBG) to reflect the addition of the Training for School Employee Mandated Reporters program 10 5

9 Proposition 55: California Extension of the Proposition 30 Income Tax Increase Proposition 55 was approved by voters in November 2016 Proposition 55 extends the temporary personal income tax increase first enacted by Proposition 30 While the higher tax rates for high-income earners will be extended for an additional 12 years (through 2030), the sales tax increase expired at the end of 2016 Passage of Proposition 55 maintains, but does not increase, education funding above the Proposition 30 level Proposition 55 is a replacement for Proposition 30, not an addition to it 11 Proposition 51: California Public School Facility Bonds Initiative Approved by the voters in November 2016 Proposition 51 is a $9.1 billion state-wide bond for school facilities Proposition 51 affords all county offices and K-14 local agencies an opportunity to participate There is money for new construction, modernization, hardship, emergency and other programs specified in the current School Facility Program 12 6

10 Proposition 39 (2012): The California Clean Energy Job Act Proposition 39 The California Clean Energy Jobs Act provides funding for K-12 and community colleges for energy efficiency projects The last date to submit Energy Expenditure Plans is August 1, 2017 This is to ensure that all funds are encumbered by the statutory deadline of June 30, 2018 All projects must be completed by June 30, 2020 Estimated funding for SCCOE is $547, One-Time Discretionary Funds The Governor s Budget proposes $287 million in one-time funds for school districts, COEs, and charter schools in This equates to approximately $48 per ADA Expenditure of these funds is determined by the local governing board and can be used for any one-time purpose Like prior years, these funds will offset LEAs outstanding mandate reimbursement claims on a dollar-for-dollar basis Because all LEAs receive these one-time discretionary funds, regardless of their outstanding mandate claims, in our view these funds should not be counted as meeting this state constitutional obligation 14 7

11 State Mandated Cost Program (SMCP) Enacted as a voter initiated constitutional amendment in 1979, the SMCP is an nuanced part of the California School District Budget State Mandated Cost protect schools against legislation that is passed without appropriate funding Examples of Mandated Cost: Preparation of the LCAP Mandated child-abuse reporting Criminal background check Uniform complaint procedures Collective bargaining COE fiscal accountability reporting 15 Sources of One-Time Funding The Administration has consistently provided one-time funding to repay outstanding mandates, and is no different The chart below shows the historical one-time discretionary funding per ADA The estimate for SCCOE is $75,686 based on P-2 ADA 16 8

12 Career Technical Education Incentive Grant $200 million for the CTEIG Provide pupils with quality career exploration and guidance This is the final installment of funding for the three-year program that began in 2015 SCCOE Allocation: $240K, $187K, ? LCAPs need to meet college and career readiness as a priority Schools will be responsible for maintaining the programs from their LCFF funding going forward COE LCFF Funding Model LCFF implementation for COEs is quite different unlike school districts and charter schools, the LCFF was fully implemented for COEs in Simplifies funding formula calculations, but... COEs have seen minimal increases in LCFF revenues since in There are two LCFF funding calculations: County LCFF Target Entitlement County LCFF Transition Calculation The SCCOE is funded on the higher amount of the two funding calculations 18 9

13 COE LCFF Target Funding Model Operations Grant The Operations Grant combines three components that reflect funding needs based on county office responsibilities, the number of districts within the county, and the countywide ADA (includes COLA of 1.48%) COE LCFF Target Alternative Education Grants - Calculation The Alternative Education Grant calculation is based on the following factors: A base grant amount of $11,598 per ADA (includes COLA of 1.48% on rate) The Unduplicated Pupil Percentage (UPP) of students enrolled in county office programs meeting the eligibility criteria for a supplemental or concentration grant All students in juvenile court schools are deemed to be eligible a 100% UPP for those schools A supplemental grant for the percentage of eligible pupils equal to 35% of the base grant $4,059 per eligible pupil in A concentration grant for the percentage of eligible pupils exceeding 50%, which equates to 17.50% of the base grant $2,030 per eligible pupil in

14 COE LCFF Target Funding Model Add-Ons Targeted Instructional Improvement Block Grant $13,184 Home-to-School Transportation $977,663 Both add-ons based on fiscal year Add-on amounts remain static, COLA is not applied To summarize, the LCFF Target calculation includes the Operation Grant, Alternative Education Grant and the Add-Ons Components of the County LCFF Transition Calculation County Revenue Limit (held constant) $19,532,160 Rate per ADA (held constant) $8, Alternative Education ADA Categorical Programs (held constant) $5,168, Local Revenue for Regional Occupational Centers/Programs (held constant) $5,386,110 SCCOE s LCFF is funded with our own property taxes COLA does not apply to the Transition calculation SCCOE is funded on the higher amount between the LCFF Target and LCFF Transition calculations SCCOE is funded on the LCFF Transition calculation 22 11

15 Special Education The Governor s Budget includes no new funding for special education programs beyond the 1.48% COLA Estimated at $7.88 per ADA Assembly Bill (AB) 602 statewide target rate increases to $ per ADA Special Education costs increase as overall funding declines No mechanism in place to increase funding based on student needs SCCOE s Special Education costs are recovered through a rebenching process and agreements with the school districts 23 Local Agency Operations and the Budget 24 12

16 Managing Volatile Projections Multiyear financial planning is a sound business practice However, it is very challenging to prepare meaningful MYPs in this environment Multiyear projections (MYPs) continue to show that most LEAs will be making budget cuts to balance budgets in the out years Build reserves for the lean times The enacted State Budget often differs significantly from what was planned in an LEA s budget LEAs need to build the MYP based on the best information available And then be flexible and revise often 25 Multiyear Projections CalSTRS and CalPERS employer contributions are still increasing No specific funds are provided for this cost increase Health and welfare contributions are increasing Contributions to restricted programs continue to increase Declining enrollment will continue to make it difficult to balance the budget Expectations are for COLA-only years after the LCFF target is reached The SCCOE is not funded on LCFF target, so the COLA does not apply 26 13

17 Revenues Now Flatten Out State revenues, and Proposition 98 revenues, are now forecast to flatten out Even with the addition of the Proposition 55 taxes in the out years, education funding is now projected to be below earlier forecasts Erosion in the state s revenue forecasts consume all of the gains from Proposition 55 The state continues to meet the minimum Proposition 98 guarantee and nothing more Collective bargaining settlements that left the district with a positive certification at First Interim may come up short at the Second Interim 27 Budget Certifications Positive Certification: COE will meet its financial obligations for the current fiscal year and two subsequent fiscal years Qualified Certification: COE may not meet its financial obligations for the current fiscal year or two subsequent fiscal years Qualified certifications are on the rise as historically large funding increases taper off Expectation is the list will continue to grow at Second Interim as a result of significant decrease in gap closure percentage for school districts Negative Certification: COE will not meet its financial obligations for the remainder of the current fiscal year or for the subsequent fiscal year 28 14

18 Educator Effectiveness Expenditure Report The State Budget provided funding for Educator Effectiveness to school districts, COEs, charter schools, and state special schools with certificated staff The funds may be used to support the professional development of certificated teachers, administrators, and paraprofessional educators As a condition of apportionment, LEAs must submit a Final Expenditure Report by July 1, 2018 The CDE released the Final Expenditure Report template online, which shows the data elements to be collected, but the final report submission will be done through an online tool the CDE is developing The template can be found at: 29 Educator Effectiveness The SCCOE s grant award is $552,739, and is allocated to the following programs: Alternative Ed, $40,847 Early Learning Services, $85,840 Early Start / Part C, $30,682 Foster Youth and Homeless, $10,226 Inclusion Collaborative, $15,310 Migrant Education, $25,536 Special Education, $310,581 Environmental Education, $33,

19 Classified School Employees Teacher Credentialing Program The State Budget included $20 million to promote classified school employees to become teachers SCCOE was awarded $200,000 for the period of December 2016 through June 30, Home-to-School Transportation Maintenance of Effort SCCOE continues to meet the MOE requirements MOE LEAs are subject to a maintenance of effort (MOE) requirement to expend no less for those [HTS] programs than the amount of funds the school district expended... in the fiscal year Budgetary Advice Continue to budget and expend on an ongoing basis the minimum amount required by law 16

20 Routine Restricted Maintenance Account Note that COEs calculate their Routine Restricted Maintenance Account (RRMA) contribution based on the General Fund, less any restricted accounts The SCCOE estimated RRMA is $1,449, SCCOE Budget Development Assumptions Incorporate salary settlements for and for multiyear projection Back out prior year one-time funding requests Increase CalPERS and CalSTRS rates Adjust Other Post Employment Benefit (OPEB) to Actuarial Study Adjust indirect rates Some program rates may be different from the preliminary proposed ICR of 10.76% for SCCOE due to Grant agency restrictions that limit the indirect cost rate to a level less than the SCCOE preliminary proposed ICR, or based on Superintendent s approval Lottery revenues will be budgeted at $144 per ADA for Unrestricted and $45 per ADA for Restricted 34 17

21 The Road Ahead 35 Outlook for California s Schools At the top level, California s public education system relies on a healthy economy and increasing tax revenues How these funds are distributed is determined by the State Constitution and state laws Proposition 98, LCFF, etc. With the enactment of the LCFF in , it appears that there will be no further major changes in how revenues will be distributed 36 18

22 The Next Recession No one knows when the next downturn will occur The current recovery is now the third longest on record, about 7½ years old The longest recovery lasted 10 years, beginning in April 1991 Governor Brown has managed the state s finances as if a recession is just around the corner and so should you Maintain or build your reserves Develop realistic MYPs Adjust expenditures in line with realistic revenue assumptions 37 SCCOE Assumptions for Budget Development by Branch 38 19

23 Office of the Superintendent Media and Communication: Implement communications consulting services for school districts Crisis Communications School Bond Campaigns Communication Audits and Planning School Operations Communications Support (Budget, Boundary Changes, School Closures) Market digital media, graphics, and translation/interpretation (Spanish) services for school districts and other non-profits Seek grant opportunities to support regional communications campaigns 39 Business Services Branch Reviewing costs for all general services Analyzing for potential cost reduction opportunities in leases, etc. Review vacant positions as they come open 40 20

24 Educational Services Branch Possibility of increasing fees for services. We would maintain sliding scale approach based on size of district Review and decide upon further funding of One-Time funded programs Reduce travel costs by coordinating team member attendance No staff reductions are anticipated based on current and future projects/workload Branch team members will continue to seek out grant opportunities 41 Human Resources Review the fee structures for our credentialing programs (Leaders in Educational Administration Program and Education Preparation for Inclusive Classrooms) to ensure these programs remain cost recovery 42 21

25 Student Services Branch Alternative Education (AED) currently conducting an internal staffing and program study, reviewing staffing ratios, existing contracts and other funding sources such and Title I, potential impact on staffing Special Education (SpEd) - in the rebenching process Opportunity Youth Academy - increase enrollment and attendance, open additional sites Migrant Education - monitoring district expenditures and will recapture unspent funds Walden West - planning to raise fees, expand summer programs, start migrant summer program, expand facility lease for weekend weddings and events Inclusion Collaborative - exploring a fee for service model, looking at working collaboratively with AED and SpEd on projects/staffing 43 Student Services Branch Early Start working on expanding current SARC contract and exploring rebenching block money as well as medi-cal funds Headstart and State Pre-School (HS/SPS) working on closing some classes and giving up some slots. This will have an impact on staffing Educare review staffing and combining resources from HS and SPS 44 22

26 Technology Services Branch 45 Next Steps SCCOE Budget Development Workshops February 15 and 23, 2017 May Revision Workshop by School Services of California May 19, 2017 Public Hearing for the Proposed Budget and LCAP June 14, Budget and LCAP Adoption June 21,