MODESTO CITY SCHOOLS TO: Arturo M. Flores, Superintendent Regular Meeting SUBJECT: Approval of Budget Assumptions for May 31, 2011 Initial Development of the 2011/12 Budget BACKGROUND Each year the Board of Education approves assumptions to be used in development of the subsequent year s budget. These assumptions are generally based on the Governor s proposals for the State budget, recommendations from School Services of California and the Stanislaus County Office of Education, and local conditions. These assumptions act as a guide for staff to ensure that development of the subsequent year s budget is in line with the Board s philosophy. Essentials #5 Shared Responsibility and Accountability ISSUE The Board approved the initial assumptions at the April 11, 2011 meeting. Since that time Governor Brown has announced the May Revision. Revised budget assumptions need to be adopted for the final budget development. PROPOSAL This District s position has always been to budget under the most conservative assumptions. With the recent proposals in the May revise, the initial assumptions approved on April 11, need to be amended. Most important to note is the various calculations that are being discussed for revenue limit funding based on whether or not tax extension revenues will arrive at the State.
Page 2 Initial 2011/12 Budget Assumptions April 2011 Revenue Revenue Limit Funded Average Daily Attendance (ADA) o Elementary 14,469.49 o High School 13,957.17 Revenue Limit COLA increased by 1.67% per ADA o Elementary - $102 per ADA or $1.4 million funding o High School - $123 per ADA or $1.7 million funding Deficit Factor 2011/12 thru 2013/14 of 19.608% o Elementary - <$17.6 million> deficit funded o High School - <$20.5 million> deficit funded On-going per ADA reductions o Elementary - <$330> per ADA or <$5.0 million> funding o High School - <$330> per ADA or <$4.9 million> funding Enrollment decline in 2011/12 and 2012/13 o Elementary 44 students each year o High School 150 students each year Federal Revenue No additional District Stimulus dollars anticipated State Revenue No additional State categorical programs will be added to the Tier III flexibility listing All State categorical programs will be funded at the 1.67% COLA State Lottery projections at $106 per 2010-11 Annual ADA for Unrestricted and $12.50 per 2010-11 Annual ADA for Proposition 20 funds K-3 Class Size Reduction (CSR) funded on a sliding penalty scale through June 30, 2014 Year Round Incentive funding through 2011/12 only Mandated cost revenue is not expected to be funded
Page 3 Other Local Revenue Interest rates are assumed to be stable due to low interest earnings and cash flow factors. Expenditures Salaries and Benefits Reduce staffing due to declining enrollment staffing formulas Staff according to approved plan for additional class Gregori High School, Fall 2011 2011/12 Positions that were formerly funded by State Fiscal Stabilization Funds will be funded by General Fund 2012/13 Elimination of negotiated 2009/10 and 2010/11 furlough agreements with all staff and unit members approximately $8.5 million per year 2012/13 Elimination of negotiated 2009/10 and 2010/11 salary reduction agreements with all staff and unit members approximately $4.5 million per year Books and Supplies Service and Other Operating Expenses Estimate additional utilities as a result of rate increases and Gregori High School usage, $300,000 Transfers Out Suspend vehicle replacement - $275,000 (5th consecutive year) Suspend print shop equipment replacement - $50,000 (5th consecutive year) Ending Balance Economic uncertainty reserve designation will retain minimum 3% of General Fund expenditures in 2011/12 Other Designated items will be addressed on a separate agenda at a future Governing Board meeting to ensure alignment with District Strategic Plan.
Page 4 Revised 2011/12 Budget Assumptions May 2011 Revenue Revenue Limit Funded Average Daily Attendance (ADA) o Elementary 14,510.44 (increase of 40.95 ADA) o High School 13,923.51 (decrease of 33.66 ADA) Revenue Limit COLA increased by 2.24% per ADA o Elementary - $137 per ADA or $1.9 million funding (increase of $.5million) o High School - $164 per ADA or $2.2 million funding (increase of $.5 million) Deficit Factor 2011/12 thru 2013/14 of 19.754% o Elementary - <$17.8 million> deficit funded (decrease of $.2 million) o High School - <$20.7 million> deficit funded (decrease of $.2 million) Federal Revenue Title I Decrease of approximately10% to apportionment or <$1 million> Title II, Part A Professional Development Decrease of approximately10% to apportionment <$200,000> Title II, Part D Enhancing Education Through Technology eliminated approximately <$100,000> State Revenue All State categorical programs will be funded at the 2.24% COLA, with a flat 2% decrease over 2010/11 funding Expenditures Salaries and Benefits Education Job Fund ARRA dollars to be obligated by federal deadline. 12/13 Modesto Teachers Association (MTA) settlement extended current furlough and salary concessions through June 30, 2014 approximately $10 million savings 12/13 Modesto Managers settlement extended current furlough and salary concessions through June 30, 2014 approximately $1.4 million savings 12/13 Classified State Employee Association (CSEA) has not settled current negotiations approximately $3.4 million in expenses California Public Employees Retirement System (CalPERS) employer contribution approved at 10.923% - increase over 2010/11 of.216% or approximately $100,000
Page 5 State Unemployment Insurance (SUI) employer contribution approved at 1.61% - increase over 2010/11 of.89% or approximately $1.5 million FISCAL IMPACT Not known at this time. RECOMMENDATION It is recommended that the Board of Education approve the revised budget assumptions for development of the 2011/12 budget. Recommended by: Approved for Recommendation to the Governing Board by: Julie A. Chapin Director, Business Services Arturo M. Flores Superintendent