The KSD Board of Directors passed a resolution to reduce the district's educational programs and staffing for the 2010-2011 school year due to a $9.5 million budget shortfall. They will address this through eliminating 1 support staff per elementary school, implementing a list of budget reductions, and using $2.5 million of the fund balance. As a result, certificated staff layoffs and position reductions will occur following the terms of the collective bargaining agreement, with letters to be distributed by May 15.

1. KSD Educational Program ReductionsKSD Board of Directors’ ResolutionApril 21, 2010

2. KSD Educational Program ReductionsDue to overall financial support being significantly reduced for the 2010-2011 school year, on April 21, the KSD Board of Directors determined it was necessary to reduce educational programs, services, and staff to the level of reasonably anticipated revenues.

3. KSD Educational Program ReductionsAs a result, the Board passed Resolution No. 1349, 2010-2011 Reduced Educational Program, which will make reductions in educational programs, as well as certificated, classified, and administrative positions for the 2010-2011 school year.In accordance with the KEA collective bargaining agreement and statutory requirements, certificated staff members who will be laid off or whose positions will be reduced, must be notified on or before May 15, 2010.

4. KSD Budget ReductionsThe Board determined that the $9.5 million budget gap will be addressed through three steps: I. Elementary Option A $ 2.07 MII. Budget Reduction Priority List 4.93 M III. 1.0% Fund Balance Reduction 2.50 M Total $ 9.50 MNote: At the April 21 meeting, the board directed the Superintendent to look into the potential use of an additional 0.25% of the fund balance.

5. KSD Budget ReductionsStep I – Elementary Option A:Equivalent to 1.0 full-time certificated support staff per elementary building (above class size staffing formula).

6. Information provided by each principal as to the position(s) impacted by this 1.0 reduction.

7. Human Resources will comply with the terms of the KEA contract to determine impact on staff.KSD Budget ReductionsStepII –Budget Reduction Priority List:Itemized list of reductions based on community input, board priorities, and budget reduction criteria as established by the KSD Board of Directors.KSD Budget ReductionsStep III – 1.0% Fund Balance Reduction:The Board provided direction to the Superintendent that a portion of the undesignated/unreserved fund balance be utilized. This results in using approximately $2.5 million of the fund balance.KSD Budget ReductionsExplanation of Fund BalanceFund balance is comprised of the following:Total ending fund balance from the previous year less the following designated reserves: Insurance

8. Inventory

9. Carryover

10. Other ItemsKSD Budget ReductionsReserve Category Explanations: Inventory – The dollar value of inventory, primarily food service items. ($303,994)

11. Insurance – Because the district is self-insured for workers’ compensation and unemployment claims, a reserve amount must be set aside for unexpected costs that arise over the course of the year. ($1,335,000)KSD Budget ReductionsReserve Category Explanations: Carryover – Money carried from one year to the next to address commitments and anticipated needs. ($7,591,121)

12. Examples:

13. Funds reserved for items or services ordered in one year but paid for after the beginning of the next school year.

14. A school or department’s unspent budget capacity that may be carried over to the next year. For example, when a school saves over time for a copy machine or other big ticket item, this is where those dollars are held.

15. Grant funds, for specific purposes, that are allowed to be carried over from one year to the next. KSD Budget ReductionsReserve Category Explanations: Other items – ($650,000)

16. Examples:

17. Allocations for large-ticket items, such as a new textbook adoption or pension cost increases.

18. Specific allocations such as the $300,000 that was reserved this year for potential expenditures if flooding had occurred in the Kent valley. A similar amount will be allocated for the 2010-2011 school year for the same purpose.KSD Budget ReductionsFund Balance Reserves – as of 8/31/2009Total Ending Fund Balance: $ 22,648,337 Less Reserves: Inventory $ 303,994 Insurance 1,335,000 Carryovers 7,591,121 Other Items 650,000Total Reserves $ 9,880,115 Undesignated/Unreserved Ending Fund Balance $ 12,768,222

19. KSD Budget ReductionsComputation of 5% test:Undesignated/Unreserved Fund Balance: $ 12,768,222 Net General Fund 09-10 Appropriation: $ 254,732,555 x 5% = Fund Balance Test: $ 12,736,628 Amount Over Requirement: $ 31,594