2012, & its Impact on San Leandro Unified School District

Transcription

1 State Budget for & , 2012, & its Impact on San Leandro Unified School District Presented by Song Chin-Bendib Assistant Superintendent, Business Services Board Meeting October 19, 2010 Excerpts from School Services of California (SSC) Workshop on October 11, 2010

2 Contents: 1 1. The Economy 2. Spending on Education 3. $19 Billion Shortfall 4. Proposition Impact of State Budget 6. Risks of State Budget 7. Cost Analyses 8. Overall Theme 9. Next Steps

3 The Economy 2 The economy is the key to financial recovery for the state as a whole and for public agencies Unemployment is key and remains higher than the rest of the nation U.S. unemployment is at 9.6% The state unemployment rate is 12.4%, among the highest in the country Predictions of an early recovery in the spring of 2010 proved to be overly optimistic Most projections are that the economy will remain sluggish until at least 2012 Home sales slowed in August, down 2.7% from July and down 14.0% from August 2009

4 The Economy 3 Still, not all the news is bad Things are not getting worse No double-dip recession at least not yet UCLA forecasts some improvement in 2011 Employment will rise 1.90% in 2010 after three years of decline Personal income is expected to increase 3.70% in 2011 But the unemployment rate will remain high at 11.0% in 2011

5 California s s Spending Lags the Nation 4 California s Schools Lag Behind Other States on a Number of Measures California Rank California Rest of U.S. K-12 Spending Per Student ( )* 44 $8,826 $11,372 K-12 Spending as a Percentage of Personal Income ( )* Number of K-12 Students Per Teacher ( )* Number of K-12 Students Per Administrator ( ) Number of K-12 Students Per Guidance Counselor ( ) Number of K-12 Students Per Librarian ( ) % 4.25% , * and data are estimated. Note: California Rank and Rest of U.S. exclude the District of Columbia. Spending per student and number of students per teacher are based on Average Daily Attendance (ADA). Number of students per administrator, guidance counselor, and librarian are based on statewide enrollment. Source: National Education Association, National Center for Education Statistics, and U.S. Bureau of Economic Analysis

6 The Value of Education 5 Education, especially K-12, is critical to the economic success of individuals and our state as a whole Personal income accounts for more than half of state General Fund revenues Educational attainment affects earnings Source: U.S. Census, Education Attainment in the United States, 2009

7 Unemployment Rate by Levels of Highest Education 6 All Education Levels 9.6% No High School Diploma High School Completed, No College Some College, No Degree Bachelor s or Higher Degree Source: U.S. Department of Labor, Bureau of Labor Statistics, Current Population Survey September 2010

8 $19 Billion State Budget Shortfall - What Happened To It? $1.4 B The Legislature added $1.4 billion, based on the LAO s more optimistic economic and revenue forecast; on top of the 5.7% revenue increase projected in the May Revision July and August revenues are tracking the May Revision forecast, not exceeding it $1.2 B Corporation tax reductions scheduled to go into effect in are deferred for two years, generating $1.2 billion annually However, other permanent tax breaks benefiting cable T.V. companies and software firms could cost about $300 million $1.2 B Eleven state properties are assumed sold in , adding $1.2 billion in one-time General Fund revenues $5.0 B Federal funds: $5 billion are assumed, which would offset General Fund expenditures, $1.6 billion more than the May Revision 7

9 $19 Billion State Budget Shortfall - What Happened To It? $7.5 B Expenditure cuts: $7.5 billion are assumed However, one-third of the fiscal year has already elapsed without these reductions $1.7 B Permanent deferral in the amount of $1.7 billion with timing proposed for April/May 2011 to July 2011 Total deferrals to $7 billion, that means in we are going to spend $7 billion of the revenues One-time deferral from October 2010 to November 2010 with the dollar amount to be determined $0.96 B Governor vetoed expenditures $19.0 B Total Others: Assumes personal income growth of 3.2% in 2010 and 4.5% in 2011 UCLA forecasts weaker growth: 1.9% in 2010 and 3.7% in

10 Proposition 98 9 Proposition 98 was designed to establish a constitutional minimum funding guarantee for K-14 education Over the years, Proposition 98 has been subject to manipulation In , the Legislature and the Governor recaptured a $1.6 billion overappropriation of the minimum guarantee after the fiscal year had closed The Governor s May Revision for had proposed to rebench the guarantee downward by $1.45 billion related to his proposal to eliminate child care The Legislature rejected the child care cut

11 Proposition 98 Funding 10

12 Proposition $52.5 Additional Actual Spending Proposition 98 After Suspension

13 Proposition $2.8 Billion:- Appropriations that do not count toward Proposition 98, but will be available for expenditure include: $1.9 billion K-14 apportionment deferral $420 million from QEIA $300 million from Proposition 98 prior-year settle up $240 million in other one-time funds These one-time sources will have to be replaced in order to maintain program levels in

14 Final Budget vs Funding revenue limits were reduced by the % deficit and the $253 per-ada one-time reduction $6,411 $6,386 $6,386 $1,430 due to deficit factor & $253 per-ada one-time cut -$1,172 for % deficit $446 for the 3.85% reduction -$1,147 for % deficit Note: The $253 per-ada reduction was related to the recapture of the overappropriation of Proposition 98 $4,981 Funded Revenue Limit $4,968 Funded Revenue Limit $5,234 Funded Revenue Limit May Revision Final Budget

15 What Does the State Budget Offer? 14 Provisions of the new State Budget: Much improved from the many revisions Reverses negative cost-of-living adjustment COLA (-0.39%) $25 / ADA Reverses 3.85% ongoing cut $246 / ADA No supplanting with Federal Jobs Bill funding Several other positive surprises Reduces COLA from 2.1% to 1.7% (SSC projected 0% and ACOE will require school districts to apply 0% for First Interim report) Reverses 3.85% ongoing cuts

16 Impact of State Budget on San Leandro Unified School District 15

17 Risks of State Budget $1.4 billion on optimistic economic and revenue forecast Assumes personal income of 3.2% in 2010 and 4.5% in 2011 UCLA forecasts weaker growth: 1.9% in 2010 and 3.7% in 2011 Does the general public truly get to see an increase of 3.2% in their income? 2. $5.0 billion from Federal Funds. In the past, the highest we got was $1.35 billion, will the State get $5.0 billion this time? 3. The Legislative and the Governor can recapture over appropriations. A good example is $1.6 billion was recaptured after the fiscal year was closed 4. Minimum is the maximum. Minimum funding for Proposition 98 is $49.7 billion. Nothing can guarantee K-14 can get anything more than $49.7 billion 5. STRS and PERs rate increases

18 PERS Actuarial and Rate Outlook 17 The Schools Plan was 65% funded as of June 30, 2009, with an unfunded actuarial obligation of more than $18.3 billion Current law dictates that any cost over the % historical rate is backfilled by state aid

19 Cost of K-3 K 3 CSR: What is the estimated cost of going back to K-3 CSR 20:1 from 28:1 ( )? Or from 32:1 ( ) a. The estimate is $1.2 M from 28:1 to 20:1; without factoring in the increase in FTEs due to rounding of students b. The estimate is $2.1 M from 32:1 to 20:1; without factoring in the increase in FTEs due to rounding of students 2. What is the cost to stay at K-3 CSR 28:1 for (Board approved 32:1)? a. Estimated cost is $420,000 Note: The average cost for teachers is assumed at $76,000 for item 1 and $67,000 for item 2 because for item 1 the increase in FTEs is more than the laid off Temporary Teachers.

20 Cost of One Furlough Day 19

21 Overall Theme: 20 State Budget provides positive news for the first time in a number of years BUT All the experts question the sustainability of the State Budget

22 Next Steps: Finance Committee on Thursday, October 21, 2010, at 6:00 p.m. Recommend to apply money on paper to backfill deficit for the First Interim Report (to be approved by the Board on 12/14/2010) 2. Special Board Meeting on Tuesday, October 26, 2010, at 7:00 p.m.

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