Post Election Update Understanding The State Budget Impact On Charter Schools V2

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Post Election Update Understanding The State Budget Impact On Charter Schools V2

  1. 1. UNDERSTANDING THE CA STATE BUDGET IMPACT ON CHARTER SCHOOLS POST-ELECTION UPDATE 12.19.12 Copyright © 2012 Charter School Capital
  2. 2. TODAY’S SPEAKERS Chas Cardall Branche Jones ORRICK, HERRINGTON CA LEGISLATIVE & SUTCLIFFE CONSULTANT John Helgeson CHARTER SCHOOL CAPITAL Copyright © 2012 Charter School Capital 2
  3. 3. AGENDAWhat We Will Cover Today •  Where We Stand •  What We Know •  Impact •  Solution •  Questions Copyright © 2012 Charter School Capital 3
  4. 4. WHERE WE STANDCalifornia State Budget•  Where we are today -  Prior to November election, significant concerns existed regarding public school funding levels and timing -  Passage of Prop 30 has clarified and strengthened the State budget situation -  While the pressure for education cuts has been alleviated, timing of payments remains uncertain Copyright © 2012 Charter School Capital 4
  5. 5. WHERE WE STANDProp 30 Passed•  Best scenario -  Current funding patterns continue -  Annual GPE funding doesn’t change•  Capital update -  Significant negotiations continue -  Some issues remain unresolved Copyright © 2012 Charter School Capital 5
  6. 6. WHAT WE KNOWEducation Protection Account•  Where do new taxes go? -  New taxes offset the State’s funding obligation but do not increase school funding -  Why? Part of larger budget plan -  How will tax collections actually work? -  New tax revenue goes into the Education Protection Account (EPA) for payment to schools in June and possibly July -  Withholding from monthly payments continues through May Copyright © 2012 Charter School Capital 6
  7. 7. WHAT WE KNOWEducation Protection Account•  Tax revenues less than $6.9 billion -  The EPA may not be fully funded in June -  Could lead to smaller than expected payments in June -  Schools will be made whole through a “true-up” payment on July 15 (meaning, paid by the State, not when you will get it). Copyright © 2012 Charter School Capital 7
  8. 8. WHAT WE KNOWEducation Protection Account•  Existing funding deferrals -  We see EPA as another kind deferral -  Current “deferrals” exceeds amount “deferred” LY -  July and August deferrals will be smaller -  Controller flexibility for in year payment delays o  January moved to December o  March to April Copyright © 2012 Charter School Capital 8
  9. 9. THE IMPACT 30%Percent of Annual Revenues Received Each Month 25% 20% 15% Base Line 2011-2012 10% Pass 5% 0% Fiscal Year 2012 - 2013 Copyright © 2012 Charter School Capital 9
  10. 10. THE IMPACT 120% 100%Cummulative Percent of State Aid Portion GPE 80% 60% Base Line 2011-2012 40% Pass 20% 0% Fiscal Year 2012 - 2013 Copyright © 2012 Charter School Capital 10
  11. 11. HOW IT WORKS Case Study •  Assumptions -  Fictitious school in LA Unified School District -  ADA = 400 -  Rate/ADA = $6,141/ADA (Grades 9-12) -  P-1 = P-2 (we are assuming attendance is level) -  In Lieu Rate = $1,360 -  Total GPE (GPBG+IL) = $2,456,000 Copyright © 2012 Charter School Capital 11
  12. 12. HOW IT WORKS Case Study •  Amount of Funding Withheld for EPA -  Total GPE (GPBG+IL) = $2,456,000 -  EPA from July through January = $286,000 -  EPA from Feb through May = $234,000 -  Total EPA = $521,000 = 21.2% of GPE Copyright © 2012 Charter School Capital 12
  13. 13. HOW IT WORKS Case Study •  How will CDE Incorporate EPA into P-1 Payments? February GPBG $&&&&&&&&&172,116 &&I&21.2%&of&GPE&&&&&&&&& EPA&Witholding $&&&&&&&&&& (58,585) I&34.0%&of&GPBG& Schedule&Before&Deferrals $&&&&&&&&&113,531 Deferral&Amount&(38%) $&&&&&&&&&& (43,142) EPA&Payment pd#in#June/Jul Payment&to&School $&&&&&&&&&&&70,389 Copyright © 2012 Charter School Capital 13
  14. 14. HOW IT WORKS Impact of Enrollment Changes at P-1 •  How will P-1 effect the EPA? -  Existing law is not clear -  $6.9B cap, we think… -  ADA goes up? -  ADA goes down? Copyright © 2012 Charter School Capital 14
  15. 15. THE SOLUTION What Should You Do? •  Educate yourself -  Understand the impacts to your school -  Ask questions -  Carefully analyze month-by-month payments to know what your cash flow will look like -  Visit CDE site http://www.cde.ca.gov/fg/aa/pa/iassf12adv.asp -  Plan, plan, plan Copyright © 2012 Charter School Capital 15
  16. 16. THE SOLUTION We’re Here To Help You •  Just ask -  Reach out with any questions you have -  We want you to succeed in bringing high quality education to your students -  Sign up for our blog to follow timely information at http://charterschoolcapital.org and click on the blog link •  Charter School Capital provides funding support to cover: -  21% EPA challenges -  Other payment deferrals and delays -  Growth Copyright © 2012 Charter School Capital 16
  17. 17. QUESTIONS?Charter School CapitalJohn Helgeson: jhelgeson@charterschoolcapital.org877.272.1001 charterschoolcapital.orgAll information in this presentation is provided for educational and/or informational purposes. It is not intended toprovide legal, accounting, or tax advice and should not be relied on for any such purpose. Please consult anattorney, accountant, or financial advisor to answer any financial or legal questions. Copyright © 2012 Charter School Capital

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