This document presents information on the Carlsbad Unified School District's (CUSD) multi-year budget situation and projections. It notes that CUSD remains qualified but not positive due to projected deficits of $0 in 2012-13 and $10.4 million in 2013-14. Major changes include reductions in state and federal revenues, increases in retirement costs, and expenditure cuts through staff reductions and other measures. Charts show revenue, expenditures, and declining reserve levels over recent years contributing to the district's current financial challenges.

1. Devin Vodicka, EdD
Assistant Superintendent, Business Services
May 9, 2012
5/3/2012 1

2. California’s Education Spending
Continues to Lag
$600

California’s K-12 Spending Per Student Lags Behind
That of the Rest of the U.S. More Than at Any Time in 40 Years
National Average
California’s Spending Per Student Minus Spending
$200
-$200
Per Student in the Rest of U.S.
-$600
-$1,000
-$1,400
-$1,800
-$2,200
-$2,600
-$2,856 (est.) per student loss in 2010-
11
-$3,000
* 2010-11 data estimated
Note: Rest of U.S. excludes the District of Columbia
Source: National Education Association

3. Choices and Priorities Matter
 California demands and

deserves a “world-class” Bottom
education system Top Five
 The top five states, in terms
Five
of student performance, are
Vermont, Rhode Island, Per-student $16,000 – $6,700 –
Wyoming, New Jersey, and spending $22,000 $8,700
Maine
 The bottom five are Percent of state 4.2% – 3.2% –
California, Idaho,
Mississippi, Nevada, and resources 6.0% 3.9%
Arizona
 What’s different? 4th Grade NAEP* 32% – 44% 22% – 33%
 California has fallen from
number one to number 46 in 8th Grade NAEP* 34% – 47% 19% – 37%
per-ADA funding; and the *National Assessments of Educational Progress
results bear that out

4. San Diego County:
Revenue Per Student Comparison

 Data from
http://www.ed-
data.k12.ca.us
 Most recent data
available is from
2009-10
5/3/2012 4

5. Background Information

 First Interim presented in December 2011;
represented Financial Condition through October 31,
2011
 Second Interim presented in March 2012;
represented Financial Condition through January 31,
2012
 Reflected updated estimates of revenues,
expenditures, and ending balance components for
current fiscal year.
5/3/2012 5

6. 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
 As a result, the Third Interim report is required by the County
Office of Education.
 Reflects updated information through April 30, 2012.
 Projected deficits:
 2012-13: $0
 Includes layoff of required number of certificated personnel to make
up for CUTA “Fair Share” of projected deficit
 Includes layoff of additional certificated personnel to ensure financial
balance in the event of midyear cuts
 Includes savings from LIUNA Tentative Agreement and Management
Compensation Reductions.
 2013-14: $10.4 million
5/3/2012 6

7. Major Changes: Revenues

 Special Education Transportation – State Funding:
Revenue of $137,000/year cut by State action
effective 2013-14. Increased district contribution to
program operations to offset loss of funding.
 Federal Revenues: In FY 2011-12, recognized receipt
of one-time Federal Education Jobs funds totaling
$30,500; lowered Title II award for current year to
permit “carryover” of $35,000 to cover operations in
FY 2012-13.
5/3/2012 7

8. Major Changes: Revenue

 Local Income (Interest, facility use fees, District
rentals, miscellaneous income, etc.): Lowered
current and future projected interest earnings to
0.50%. Budget affected by ($75,000) per year.
 Other Local Income (donations, grade camp funds,
etc.): Since Second Interim, an additional $202,296
received to date in donations and other
reimbursements. For next two years, only $80,000
projected in donations each year from Educational
Foundation; all other donations are recognized upon
receipt.
5/3/2012 8

9. Major Changes: Expenditures

 PERS Increase: FY 2011-12 rate is 10.92303%. Due to
State economic conditions, the PERS investment portfolio
has suffered significant losses. Latest CalPERS school
employer contribution rate is projected to be 11.81%
effective FY 2012-13 and beyond. CalPERS Board is
expected to take action to adopt final rate for 2012-13 at its
May 16, 2012 meeting.
 Other Labor Related Cost Changes: Late March 2012,
SDCOE JPA announced Worker’s Comp rate for district
would be reduced from 1.74% to 1.62% for next year. In
April 2012, SDCOE announced Unemployment Insurance
Tax Rate would reduce from 1.61% to 1.10% effective FY
2012-13. Both changes are included herein.
5/3/2012 9

10. Major Changes: Expenditures

 Retiree Benefits: Projected premium increases
effective January 1, 2012 based on current number of
retirees. An additional 20 more retirees--qualifying
for benefits until age 65 from all employee groups--
are projected effective July 1, 2012. Cost for
additional retirees is projected at $300,000 beginning
FY 2012-13. OPEB liability is “pay-as-you-go”.
5/3/2012 10

11. Major Changes: Expenditures

 Recent Expenditure Reductions: On April 18, 2012, the Board
of Trustees approved reorganizing site operations at Carlsbad
Village Academy. Subsequently, the District settled
compensation negotiations with LIUNA, the classified
employee group. Savings from these actions are reflected
herein.
 Other Expenditure Reductions: Earlier this year, Board action
included layoff notices to over 100 teachers. To balance budget
for Third Interim purposes, the District has cut the budget by
an appropriate number of teacher FTEs. Management,
confidential, and supervisory employees were formally noticed
of salary and/or work day reductions effective July 1, 2012.
This budget cut is also incorporated herein.
5/3/2012 11

12. Major Changes: Expenditures

 Contribution to Restricted Programs: Special
Education and Special Education Transportation:
Due to dissolution of most NCCSE funded regional
classes effective FY 2012-13, the district will lose
reimbursement of $149,000 for one regional class.
On March 28, 2012, the Board approved
transportation bid reducing service costs by over
$1M. Pending final student counts, gas prices, etc,
the transportation budget was reduced by $920,000.
5/3/2012 12

13. 2011-12

5/3/2012 13

14. 2012-13

5/3/2012 14

15. How Did We Get Here?

5/3/2012 15

16. 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 May-12 Proj 2013
Reserve $7,290,197. $9,709,801. $13,011,027 $18,462,237 $16,712,892 $15,047,689 $7,685,966. $3,605,436.
Revenue $71,585,198 $81,515,019 $86,118,839 $87,826,266 $85,934,756 $82,598,872 $74,284,010 $72,940,275
Expenditures $72,003,526 $78,516,236 $82,817,613 $83,895,662 $87,684,101 $84,264,075 $81,645,733 $77,020,805
5/3/2012 16

17. Average Daily Enrollment

11000
10800
10600
10400
10200
ADA
10000
9800
9600
9400
9200
9000
2009 2010 2011 Adopted 2012
5/3/2012 ADA 10317 10417 10593 10596 17

18. Revenue Increases One-Time Ongoing Expenditure
Expenditure Reductions
Reductions
• “Fair Share” Recalculation (subject to • Reducing deferred maintenance • Increasing class size in grades 1-3 to
change) contributions. approximately 32 students in each class.

• NCCSE Equalization • Reduce start-up spending in 2012-13 for • Eliminating K-6 Home Study program.
• Donations Sage Creek High School • Eliminating one Director of Curriculum &
• Reduce Sage Creek Expenditures in 2013-14 Instruction position.
• Reduction in Travel and Conference • Eliminating the Administrative Assistant—
budgets Language Assessment Center position.
• Reduction in Site/Department accounts • Eliminating one English Language
• Reduction in Special Education budget Development Resource Teacher.
based on program savings • Elimination of general education summer
• Reduce Tier III Certificated Non- school (K-8) and reduction of general
instructional Hourly education summer school (high school).
• Reduce Personnel Commission • Eliminating two part-time certificated
Discretionary Budget librarians.
• Reclassification of maintenance expenses • Elimination of Admin Assistant to AP
• LIUNA Fair Share Benefit/Salary • Elimination of Accompanist
Reductions • Reduction in Athletics budget
• Management Compensation Reductions • Reduction or elimination of programs such
• Teacher layoffs necessary to cover CUTA as Cal-SAFE and Add-Up
“Fair Share” portion of projected deficit • Reduce CVA by 2.0 Full-Time Equivalent
• Blue Shield Credits (FTE) Teachers
• Increase staffing ratio at CHS to 38.5
• Eliminate 1.0 Librarian
• Eliminate .4 FTE Psychologists
• Eliminate 1.0 FTE Executive Assistant,
Business Services
• Eliminate 1.0 FTE Custodian
• Reorganization of CVA/CSA
• Reduce Administration/Management
expenses
• Eliminate Kontraband Contract
• Reduce School Resource Officer Contract
• Reduce Write4Fun Contractual by 25%
• Leaving vacant two Instructional Aide—
Computer Lab positions.
• Transportation savings
5/3/2012 18

19. Class Sizes

Kindergarten 1st-3rd 4th-5th 6th-8th 9th-12th
(Half-Day Grade Grade Grade Grade
CSR)
2009-10 32 20 32 33 34
2010-11 32 22 32 33 34
2011-12 32 32 32 33 34
2012-13 33 32 32 33 38.5
(projected)
2013-14 33 32 36 36 38.5
(projected)
5/3/2012 19

20. Consideration for Reduction Expenditure Category Outcome
Group 1: Strong Sage Creek Delay Budget compressed for 2012-13 and 2013-
14
Reduce/Eliminate Done
Admin/Management

Reduce/Eliminate Stipends Done
Employee Compensation CUTA Negotiations in process
Reductions LIUNA TA Completed
Management Notices Completed
Reduce/Eliminate Travel & Done
Conference
Reduce/Eliminate Site and Done
Department Accounts
Reduce Special Ed Done
Reduce Textbook Expenses Not feasible—we spend only $20 per
student per year
Group 2: Moderate Closing School(s) Reorganization of CVA/CSA
Reduce/Eliminate Classified Done
Positions
Reduce/Eliminate Athletics Done
Reduce/Eliminate Contractual Done
Reduce/Eliminate Programs Done
Reduce Instructional Days CUTA Negotiations in Process
Group 3: Low Increase Class Size—Elementary Grades 4-5 increase to 36 in 2013-14
Increase Class Size—Middle Increase to 36 in 2013-14
Increase Class Size—High School Increase to 38.5 in 2012-13
Reduce/Eliminate Guidance Reduce 1.0 Counselor (CVA/CSA)
5/3/2012 20

21. Deficit Spending Problem
$-

$(2,000,000.00)
$(4,000,000.00)
$(6,000,000.00)
$(8,000,000.00)
$(10,000,000.00)
$(12,000,000.00)
$(14,000,000.00)
$(16,000,000.00)
2010 2011 May-12 Proj 2013
Deficit Spending $(1,749,345.00) $(1,665,203.00) $(7,361,723.00) $(4,080,530.00)
5/3/2012 Cumulative Deficit Spending $(1,749,345.00) $(3,414,548.00) $(10,776,271.00) $(14,856,801.00) 21

22. What Now?

 Conclude CUTA Negotiations
 Path A: Agree on furlough days with contingency language
and rescind layoff notices
 Path B: Continue with layoffs until negotiated agreement is
reached
 Implement LIUNA Benefit Restructuring
 Revenue Enhancements
 Aggressive fiscal conservation
 Anticipate new round of expenditure reductions next year
 Approximately $5 million if Governor’s November tax
initiative passes
 Over $10 million if Governor’s November tax initiative fails
5/3/2012 22

23. 
5/3/2012 23

24. 
5/3/2012 24

25. Recommendation

 It is respectfully recommended that the Board of
Trustees approve submission of the Third Interim
Report with certification of “qualified” financial
condition, as presented.
5/3/2012 25