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Ausd Budget Upadate Feb232010
 

Ausd Budget Upadate Feb232010

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2010 Budget Overview

2010 Budget Overview

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    Ausd Budget Upadate Feb232010 Ausd Budget Upadate Feb232010 Presentation Transcript

          • Azusa Unified School District
          • Budget Study Session
        • February 23, 2010
    • U.S. Economic Outlook
      • The broader national economy may be turning the corner
        • The rate of job loss has slowed considerably
          • Job growth, although likely weak, may begin soon
          • Since the recession began, the U.S. has lost 7.6 million jobs
        • Home sales are rising
        • Consumer spending is up 2.8% in the third quarter of 2009
        • The stock market is up 60% from its March 2009 low
        • Third quarter U.S. gross domestic product (GDP) increased 2.2% (revised), the best showing since the recession began
      1
    • U.S. Economic Outlook
      • Because of excess capacity in the labor and products market, UCLA forecasts low inflation in the near term of about 2% annually through 2011
      • Once the recovery is fully under way, inflationary pressures will mount as the federal government finances the debt
        • Interest costs could reach $800 billion annually, 40% of current receipts, according to UCLA
      Source: UCLA Anderson Forecast, September 2009 2
    • California’s Economy
      • While there are signs of recovery, California’s economy will continue to suffer from high unemployment
        • As of November 2009, the state’s unemployment rate is 12.3%, compared to 10.0% for the U.S. as a whole
        • The Department of Finance forecasts the unemployment rate to remain above 10% through 2011
      • Other factors that will impair the recovery include:
        • Very weak construction and manufacturing sectors
        • Continuing drought
        • Political gridlock in Sacramento
      3
    • Governor’s Budget 2010-11
      • For the current year, 2009-10, the Governor’s January Budget proposes no change in revenue limit funding, with the deficit factor remaining at 18.355%
      • In 2010-11, the statutory cost of living adjustment (COLA) is negative 0.38% and is fully “funded”
      • The deficit factor of 18.355% remains unchanged in the 2010-11 budget
      • In addition to the negative COLA and the continuation of the 18.355% deficit factor, the Governor’s Budget proposes an ongoing targeted cut of $1.5 billion in 2010-11 which approximates $201 per ADA
      4
    • Risks to the Budget Proposal
      • The Governor’s Budget assumes $6.9 billion in additional federal support to fund state/federal programs
        • The federal government is running a $1.5 trillion deficit
      • The Governor proposes funding shifts for various programs
      • A major change is the Administration’s proposal to eliminate the state tax on gasoline and substitute an increase in the excise tax on gasoline
        • This shift provides more flexibility in how the funds can be spent
        • However, it also reduces General Fund revenues by $1.6 billion which drives the calculation of the Proposition 98 minimum guarantee
      5
    • Risks to the Budget Proposal
      • Other shifts include:
        • $550 million from the California Children and Families Act of 1998 (Proposition 10) to children’s programs administered by the Departments of Developmental Services and Social Services
        • $452 million from the Mental Health Services Act (Proposition 63) to fund other mental health services
        • Both require voter approval, but last May, voters rejected all of the Governor’s special election Budget initiatives
      • The economic and revenue forecasts are vulnerable to downward revision, especially when the economic signals are mixed
      6
    • California Revenue Limit Deficit Factors 7
    • SSC Financial Dartboard 8 Factor 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Statutory COLA (use for K-12 and COE Revenue Limit) 4.25% (0.38%) 1.80% 2.40% 2.80% 3.10% K-12 Revenue Limit Deficit 18.355% 18.355% 18.355% 18.355% 18.355% 18.355% Net Revenue Limit Change (7.64%) (0.38%) 1.80% 2.40% 2.80% 3.10% Other Revenue Limit Adjustments ($252.83) per ADA ($191) ESD ($231) HSD ($201) USD ($191) ESD ($231) HSD ($201) USD ($191) ESD ($231) HSD ($201) USD ($191) ESD ($231) HSD ($201) USD ($191) ESD ($231) HSD ($201) USD Special Education COLA (on state and local share only) 0.00% (0.38%) 1.80% 2.405 2.80% 3.10% State Categorical COLA (including adult education and ROC/P; Tier I In addition to prior year Tier II reduction of 15.38%) Tier III 0.00% (4.46%) (4.46%) N/A (0.38%) (0.38%) 1.80% 1.80% 1.80% 2.40% 2.40% 2.40% 2.80% 2.80% 2.80% 3.10% 3.10% 3.10% California CPI 0.80% 2.00% 2.60% 2.90% 3.20% 3.40% California Lottery Base $110.00 $110.00 $110.00 $110.00 $110.00 $110.00 Prop 20 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 Interest Rate for Ten-Year Treasuries 3.50% 3.90% 4.30% 4.70% 5.00% 5.20%
    • Azusa USD 2008-09 K-12 Revenue Limit *0.92156 = 1.0 – 7.844% (deficit factor) 9 Average Unified District for 2008-09 Base Revenue Limit per ADA (A) Proration Factor (B) Funded Base Revenue Limit (C) = (A) x (B) 1. 2007-08 Base Revenue Limit $5,789.44 1.00000 $5,789.44 2. 2008-09 COLA per ADA 329.00 – – 3. 2008-09 Base Revenue Limit 6,118.44 0.92156* 5,638.51 4. 2008-09 One-Time Reduction – – 0.00 5. Net 2008-09 Funding (C3 minus C4) $ 5,638.51 6. Dollar Change (Line 5, Column C minus Line 1, Column C) <$150.93> 7. Percentage Change (Line 6, Column C divided by Line 1, Column C) <2.61%>
    • Azusa USD 2009-10 K-12 Revenue Limits *0.81645 = 1.0 – 18.355% (deficit factor) 10 Average Unified District for 2009-10 Base Revenue Limit per ADA (A) Proration Factor (B) Funded Base Revenue Limit (C) = (A) x (B) 1. 2008-09 Base Revenue Limit $6,118.44 0.92156 $5,638.51 2. 2009-10 COLA per ADA 261.00 – – 3. 2009-10 Base Revenue Limit 6,379.44 0.81645* 5,208.49 4. 2009-10 One-Time Reduction – – <252.83> 5. Net 2009-10 Funding (C3 minus C4) $4,955.66 6. Dollar Change (Line 5, Column C minus Line 1, Column C) <$682.85> 7. Percentage Change (Line 6, Column C divided by Line 1, Column C) <12.11%>
    • Azusa USD 2010-11 K-12 Revenue Limits *0.81645 = 1.0 – 18.355% (deficit factor) 11 Average Unified District for 2010-11 Base Revenue Limit per ADA (A) Proration Factor (B) Funded Base Revenue Limit (C) = (A) x (B) 1. 2009-10 Base Revenue Limit $6,379.44 0.81645 $5,208.49 2. 2010-11 COLA per ADA (0.38%) <24.00> – – 3. 2010-11 Base Revenue Limit 6,355.44 0.81645* 5,188.90 4. 2010-11 Proposed Ongoing per Student Reduction <201.00> – <201.00> 5. Net 2010-11 Funding (C3 minus C4) $4,987.90 6. Net 2009-10 Funded Revenue Limit (Slide TK Line 5, Column C) 4,955.66 7. Dollar Change (Line 5, Column C Minus Line 6, Column C) $32.24 8. Percentage Change (Line 7, Column C Divided by Line 1, Column C) 0.65%
    • Azusa USD Declining Average Daily Attendance (P2) 12
    • Azusa USD Revenue Limit Funding Reductions 13 State Funding Reductions Declining Enrollment Cumulative Effect 1. 2008-09 Year $5,171,543 $737,855 $5,909,398 2. 2009-10 Year $15,319,102 $79,340 $15,398,442 3. 2010-11 Year $14,220,832 $1,800,226 $16,021,058 4. Total $34,711,477 $2,617,421 $37,328,898
    • ARRA Funding Cliff
      • ARRA funds have provided LEAs with a welcomed level of relief – and, depending on how the funding was used, either alleviated or created budget challenges
      • Districts need to be prepared for the loss of ARRA funding
        • Tough choices will need to be made – positions, services, and supplies funded with ARRA dollars will need to be eliminated, reduced, or shifted to another source of funding
      • Don’t include competitive ARRA funding in your 2010-11 budget
        • These funds are not a sure thing
      • MYPs need to acknowledge the loss of ARRA funding
      14
    • AUSD ARRA Funding- Estimated Allocations 15
    • 2008-09 Azusa USD General Fund Revenues 16
    • 2008-09 Azusa USD General Fund Expenditures 17
    • 2008-09 Azusa USD Salaries and Benefits by Classification - All Funds 18
    • Azusa USD General Fund Revenues (in thousands) as of January 31, 2010 19
      • Over a quarter of districts, representing approximately 38% of the state’s ADA, responded to an SSC survey regarding class size and contract/school year length
      • Not surprising . . .
        • Class sizes are increasing across all grade levels
        • School years are getting shorter
        • And many districts have made or are contemplating work-year reductions
      Flexibility Changes to Staffing Practices 20
    • 2009-10 Estimated Second Interim Report 21
    • 2009-10 Estimated Second Interim Report, cont. 22
    • Previous Reductions - Never Reinstated 23
    • Current Budget Reduction Measures 24
    • Potential Reductions 25
    • Potential Reductions, Cont. 26
          • The End