The document summarizes the Carlsbad Unified School District's second interim financial report. It notes that while the district can currently meet its financial obligations, it is projecting deficits of $5 million in 2012-2013 and $10.3 million in 2013-2014. Major changes include additional revenues but also expenditure reductions. The district remains in a qualified financial status and must resolve its deficit issues through collective bargaining negotiations over wages and benefits or other measures such as school closures or layoffs.

1. Devin Vodicka, EdD
Assistant Superintendent, Business Services
March 14, 2012
3/9/2012 1

2. Background Information

 First Interim presented in December 2011
 First Interim represented Financial Condition
through October 31, 2011
 Second Interim represents Financial Condition
through January 31, 2012
 Reflects updated estimates of revenues,
expenditures, and ending balance components for
current fiscal year.
3/9/2012 2

3. Current Information

 CUSD remains “qualified” as we are able to meet
current financial commitments for the remainder of
this fiscal year but not for the two subsequent years
 Projected deficits:
 2012-13: $5 million
 2013-14: $10.3 million
3/9/2012 3

4. Major Changes: Revenues

 Additional $367,000 in donations, 6th grade camp
funds, Lancer Jacks staff reimbursement
 Additional $95,000 in insurance claim
reimbursement
 Additional $651,000 in 2012-13 through NCCSE
Equalization and $1.3 million in 2013-14.
3/9/2012 4

5. Major Changes: Expenditures

 Reduction of $500,000 in site and department
operational budgets
 Reclassification of $400,000 of deferred maintenance
expenses to various Community Facility District and
State School Construction funds.
 Blue Shield “credits” applied, including reserve of
$370,799 for 2012-13
3/9/2012 5

6. Major Changes: Expenditures

 Notices to all management, confidential, and
supervisory employees of potential salary reductions
and/or work day reductions for 2012-13
 Layoff notices to over 100 teachers
3/9/2012 6

7. 2011-12

3/9/2012 7

8. 2012-13

3/9/2012 8

9. Important Assumptions

 Local Property Taxes: No change made to projection of
$60,683,436. Flat growth estimated for FY 2012-13 and 1%
growth estimated for FY 2013-14.
 Redevelopment Agency Funds: With successful passage
of ABX1 27, redevelopment agencies have been dissolved
and agency funds will now support local schools and
other agencies. Though the California Department of
Education (CDE) projects district will receive over
$900,000 in redevelopment funds this fiscal year, final
figures will not be known until outstanding debt against
these monies is reported by cities. Thus, district is not
recognizing these funds at this time.
3/9/2012 9

10. Additional Assumptions

 Basic Aid “Fair Share” Reduction: Implementation of SB 81
increased the Basic Aid “Fair Share” reduction by 0.65%, resulting
in a total cut of 9.57% projected for FY 2012-13.
 State Funding Proposals: The Governor’s Budget proposal for FY
2012-13 includes a new weighted student funding formula that
may negatively impact the District. As a Basic Aid District,
Carlsbad Unified is not on the list and thus, may lose most of its
State funding. Furthermore, it is projected that districts across the
state may lose up to $455/ADA if the November initiative
proposed by Governor in his budget does not pass. Consultants
from the California Department of Education have advised us that
Basic Aid districts are likely to be impacted by these adjustments in
FY 2013-14. Consequently, the District has reduced its State
funding budget for 2013-14 to only include lottery funds and the
constitutional requirement that state provide at least $120 per ADA
to each district.
3/9/2012 10

11. How Did We Get Here?

3/9/2012 11

12. CUSD Revenue, Expenditures,
and Reserves
$100,000,000.00

$90,000,000.00
$80,000,000.00
$70,000,000.00
$60,000,000.00
$50,000,000.00
$40,000,000.00
$30,000,000.00
$20,000,000.00
$10,000,000.00
$-
2006 2007 2008 2009 2010 2011 Mar-12 Proj 2013
Reserve $7,290,197. $9,709,801. $13,011,027 $18,462,237 $16,712,892 $15,047,689 $7,618,524. $3,449,089.
Revenue $71,585,198 $81,515,019 $86,090,419 $86,346,873 $85,934,756 $82,598,872 $73,881,246 $71,630,806
Expenditures $72,003,526 $78,516,236 $81,547,117 $83,895,662 $87,684,101 $84,264,075 $81,310,411 $75,800,241
3/9/2012 12

13. Revenues
$100,000,000.00

$90,000,000.00
$80,000,000.00
$70,000,000.00
$60,000,000.00
$50,000,000.00
$40,000,000.00
$30,000,000.00
$20,000,000.00
$10,000,000.00
$-
2013 2014
2006 2007 2008 2009 2010* 2011 Mar-12
Proj Proj
Transfers/Other $1,302,615 $- $28,420.00 $- $1,823,248 $2,416,917 $400,314.0 $-
Other Local $7,362,500 $7,858,977 $8,777,946 $9,004,226 $7,614,831 $6,570,459 $4,760,310 $4,335,612 $5,015,484
Other State $9,071,549 $14,134,27 $12,767,88 $10,164,26 $8,563,081 $7,270,847 $4,583,752 $3,272,094 $2,673,769
Federal Revenue $3,267,208 $2,974,965 $2,870,708 $4,147,599 $6,050,813 $4,963,121 $3,146,623 $3,033,005 $3,063,335
State Aid/Other Revenue Limit $4,908,043 $6,977,531 $606,970.0 $309,159.0 $246,497.0 $284,770.0 $306,811.0 $306,659.0 $321,520.0
Property Tax/Revenue Limit $46,975,89 $49,569,26 $61,066,91 $64,201,01 $63,156,89 $61,092,75 $60,683,43 $60,683,43 $61,290,26
3/9/2012 13

14. Expenditure Reductions: June 2011

 Increasing class size in grades 1-3 to approximately 32 students in
each class.
 Eliminating K-6 Home Study program.
 Eliminating one Director of Curriculum & Instruction position.
 Eliminating the Administrative Assistant—Language Assessment
Center position.
 Eliminating one English Language Development Resource Teacher.
 Leaving vacant two Instructional Aide—Computer Lab positions.
 Elimination of general education summer school (K-8) and
reduction of general education summer school (high school).
 Eliminating two part-time certificated librarians.
 Leaving vacant the position of Executive Assistant, Business
Services.
 Reducing deferred maintenance contributions.
3/9/2012 14

15. Expenditure Reductions: November 2011

 Reduce start-up spending in 2012-13 for Sage Creek High
School
 Reduce Administration/Management expenses
 Reduction in Travel and Conference budgets
 Reduction in Site/Department accounts
 Reduction in Special Education budget based on program
savings
 Elimination of Classified positions
 Reduction in Athletics budget
 Reduction or elimination of programs such as Cal-SAFE
and Add-Up
3/9/2012 15

16. Expenditure Reductions: February 2012
A

Reduce CVA by 3.0 Full-Time Equivalent (FTE) Teachers
B Increase staffing ratio at CHS to 38.5
C Increase staffing ratio in grades 4-8 to 36 in 2013-14
D Eliminate 1.0 Librarian
E Eliminate 1.0 Teacher On Special Assignment (TOSA)
F Eliminate 1.4 .4 FTE Psychologists
G Eliminate CHS Special Ed Teachers TBD
H Eliminate Guidance Technicians
I Reduce K-5 Library Technicians to .5 FTE
J Reduce Student Services Specialist to .5 FTE
K Eliminate 1.0 FTE Admin Assistant, Special Education
L Eliminate 1.0 FTE Office Assistant, Personnel Services
M Eliminate 1.0 FTE Executive Assistant, Business Services
N Eliminate 1.0 FTE Custodian
O Reduce Tier III Certificated Non-instructional Hourly
P Reduce Personnel Commission Discretionary Budget
Q Reduce School Resource Officer Contract
R Reduce Write4Fun Contractual by 50% 25%
S Eliminate Kontraband Contract
T Reduce Sage Creek Expenditures in 2013-14
3/9/2012 16
U Eliminate Instructional Assistants—Computer Lab and add 1.0 FTE Computer Tech Position

17. San Diego County:
Revenue Per Student Comparison

 Data from
http://www.ed-
data.k12.ca.us
 Most recent data
available is from
2009-10
3/9/2012 17

18. Average Daily Enrollment

11000
10800
10600
10400
10200
ADA
10000
9800
9600
9400
9200
9000
2009 2010 2011 Adopted 2012
3/9/2012 ADA 10317 10417 10593 10596 18

19. Sage Creek Expenses 2012-13

 This reflects projected expenses after implementation
of $5 million in expenditure reductions
Sage Creek,
$293,866.00
Other Expenditures,
$70,453,551
3/9/2012 19

20. Pie Chart Expenses 2011-12

CUSD Expenditures 2011-12
Second Interim 3-8-12
1%
0%
13%
3%
Certificated Salaries
Classified Salaries
Employee Benefits
48%
Books & Supplies
21%
Services/Other Oper. Expenditures
Capital Outlay
Other Outgo & Debt Service
14%
3/9/2012 20

21. Bubble Expenses 2012-13

3/9/2012 21

22. Treemap Expenses 2012-13

3/9/2012 22

23. Deficit Spending Problem

 Projected Revenue in 2012-13: $71.6 million
 Projected Expenditures in 2012-13 (after $5 million in necessary cuts): $75.8
million
 Why is the 2013-14 deficit projected at $10.3 million?
 Projected Deficit of $5 million in 2012-13
 Deficit Spending of $4.2 million in 2012-13 after necessary cuts are made
 Projected decline of $1.3 million in State Funding in 2013-14 due to November
Election “Trigger” and Weighted Student Funding model implementation
 Additional Sage Creek expenses of approximately $1.4 million
 Expenditure Reduction of approximately $930k due to approved increase in
class sizes in grades 4-8
 Additional NCCSE Revenue of $650k
 Implication: Ongoing, not one-time, solutions are necessary
3/9/2012 23

24. What Now?

 Resolve $5 million deficit for 2012-13
 Collective Bargaining
 Wages
 Benefits
 Retiree Benefits
 School Closures
 Revenue Enhancements
 “Safety Net” would require implementation of
teacher layoff notices and further increases in class
size
3/9/2012 24

25. Recommendation

 It is respectfully recommended that the Board of
Trustees approve submission of the Second Interim
Report with certification of “qualified” financial
condition, as presented.
3/9/2012 25