board of education budget meeting

Board of EducationBudget Meeting

November 4, 2010

222

The Purpose:

– Review and Update

• Deficit and Deferral Realities

• Fund Availability

• Reduction Options

– Answer Board Questions from Previous Workshops

– Provide a Timeline for Board Actions

11-4-10 Workshop Overview

3

Review of the Realities

• Deficit Reality of $120m• Additional Deferrals May Necessitate Increased

Borrowing• It is Impossible to Keep Reductions Away from

Classroom• Board Must Approve Preliminary Reduction List by

November 16 and First Interim Report by December 2• HR Must Begin PKS Process for Certificated Layoffs

in December• School Site Allocation Formula Must Be Decided in

December

444

Update to the District Deficit

• State Budget Approved by Governor in September

– $30.1m Additional Revenue Limit– Restoration of Negative COLA and $252/ADA Reduction

– $ 3.5m Mandated Cost Claims Reimbursement

• District Received 90% or $19.0m of Federal Jobs Bill Fund

• District Received $9.0m for the 2009/10 SDA. Still Waiting for 2010/11 Remaining Amount of $9.0m

555

Update to the District Deficit

• Baseline Current Deficit $ (141.6)m**

• Federal Jobs Bill Fund (One-time Only) $ 21.0m

• Projected Deficit* $ (120.6)m**

• Potential Revenue Increases

• State Approved Budget $ 30.1m

• Final ARRA SFSF Funding $ 4.0m

• Mandates ($3.5m less

50% reimbursement to schools $ 1.7m

• Parcel Tax (Prop J) offset $ 42.2m

• Best Case Deficit $ (42.6)m**

*County is Requiring Districts to Provide Solutions Based on Projected Deficit

**Deficit is Subject to Change Based on Final Ending Balance for 2010/11 and New State Actions

666

Risks for State Budget Mid Year Cuts

• State Budget is Based on Very Optimistic Revenue Projections; Higher Than Projected at May Revise

– California July and August Revenues are Tracking to the May Revision Forecast, Not Exceeding It

• Assumes State Will Receive $5 Billion of Federal Funds

• Expenditure Cuts: $7.5 Billion Are Assumed

– However, One-third of the Fiscal Year Has Already Elapsed Without Reductions in Place

• Assumes Personal Income Growth of 3.2% in 2010 and 4.5% in 2011

– UCLA Forecasts Weaker Growth

777

Impact of Staffing/Enrollment to Ending Balance

• Over-budget - Certificated Staff (74.37) FTE $ (6.3)m– Excess Staff– Discipline Cases– Over-formula– Workers Compensation– Mainstreaming Impact

• Over-budget - Classified Staff (51.35) FTE $ (2.3)m– Excess Staff– Discipline Cases– Return to Work Program– Workers Compensation

• 4th Friday Adjustment ( 22.00) FTE $ (1.8)m

• Earned Enrollment Reserve ___________ $ 2.6m• Total (147.72) FTE $ (7.8)m

• Numbers Are As Of 11/2/2010 …. Will Change …. Moving Target

88

State Budget Brings More Deferrals

Delayed Funding For Schools

999

Fund Ending Balances Not Available to Solve the Deficit

Fund Projected Ending Description of Fund

Balance 6/30/11

13 Cafeteria Special Revenue Fund $ 5.75 Restricted for the District’s food services program (National School Lunch Program)

15 Pupil Transportation Equipment Fund $ 0.26 Pupil transportation equipment (buses) replacement fund. Funding comes from General Fund Unrestricted

20 Special reserve Post Employment Benefits $ 1.21 Defined Contribution Per Labor Contracts for Retiree Medical Premium

21 Building Fund $ 38.58 Building fund (Proposition S) for Specific Purposes Defined in Ballot Measure

25 Capital Facilities Fund $ 10.74 Restricted by Law for Capital Expenditures (Developers Fees and Redevelopment Agencies)

35 County School Facilities Fund $ 124.97 Restricted for Capital Expenditures (State School Facilities Fund)

51 Bond Interest & Redemption $ 24.75 Fund Controlled by County Treasurer for Bond Redemption

67 Self Insurance Fund $ 45.86 Required Reserves for Workers Compensation, Liability, Property and Vision Health Insurance Plans

Total Funds Not Available $ 252.12

101010

Fund Ending Balances Available To Solve the Deficit

2010-11 AvailableFund Projected Ending Funds Description of Fund

Balance

01 General Fund- Unrestricted 13.28$ -$

Used for General Operations. Accounted for In the Projected Deficit. Balance Includes Reserves.

11 Adult Education Fund 0.01$ 0.01$

Funds the Adult Education Programs. Fund is Flexible Through 2012/13 (Tier III)

14 Deferred Maintenance Fund 0.00$ 0.00$

Fund is Used for Deferred Maintenance Program. Flexible Through 2012/13 (Tier III)

17 Spec. Reserve Fund for Other Than Capital Projects 0.00$ 0.00$

Special Reserve Fund for General Operating Purposes. Was Used for One-time Mandated Cost Reimbursement

40 Special Reserve Fund for Capital Outlay Projects 5.38$ 5.38$

Leases and Proceeds from Sale of Surplus Properties. Restricted for Capital Expenditures and One-time General Purpose Flexibility.

Total Funds Available 18.68$ 5.39$

111111

Available Unrestricted Funds for $120.6m Reductions

• $120.6m Represents 20% of Total Funds Available for Reduction

• 2010/11 General Fund Unrestricted $ 688.59m– Total Fixed Costs (i.e. utilities, interest, licenses) $ (42.62)m– Required Reserves $ (31.11)m

• Funds Available for Reduction $ 614.86m

School Sites Central Office

– Books and Misc Supplies $ 11.05m $ 2.85m– Other Non-personnel Budgets $ 10.40m $ 1.13m– Certificated Salaries & Benefits $ 442.86m $ 2.19m– Classified Salaries & Benefits $ 98.09m $ 46.29m

Total $ 562.40m $ 52.46m

92% 8%

1212

Breakdown of Fixed Costs - $(42.6)m

• Utilities- Includes Gas, Electric, Rubbish, Water, Sewer $(22.2)m

• Telephone- Data Network, Voice Communication $ (6.7)m

• Liability, Property Insurance Premiums $ (6.5)m

• Transfer to Adult ED Fund $ (.7)m

• Interest Expense (TRANS) $ (5.1)m

• Software Systems Licenses (PeopleSoft, Zangle) $ (4.7)m

• Transfers to Retiree Medical Funds $ (1.6)m

• Administration Cost Reimbursement $ 4.9 m

Total $ ( 42.6)m

131313

Breakdown of District Reserves Unrestricted General Fund $(31.1)m• Ending Balance Increase/Designated Reserve $ ( 6.0)m

– Designated Reserve Accounted for In the $120.6m Deficit Due to SDA Restoration

• Reserve for Economic Uncertainties (2%) $ (22.5)m

– State Require that Districts Set Aside 2% of Total General Fund Expenditures

• Revolving Cash $ ( .1)m

– Fixed Amount Reserved for Bank Accounts for Emergency Expenditures

• Stores Inventory $ ( 1.7)m

– Value of Instructional and Other Materials Held in Inventory

• Prepaid $ ( .8)m

– Reserve for Expenditures Paid in Advance Such As Travel and Postage

Total $ (31.1)m

1414

Criteria For Available Central Office Resources

Central Office– Books and Misc Supplies $ 2.85m– Other Non-personnel Budgets $ 1.13m– Certificated Salaries & Benefits $ 2.19m

• Superintendent

• Deputy Superintendent Academics

• Area Superintendents

– Classified Salaries & Benefits $ 46.29m• H/R, Payroll, Finance, Landscapers

• Police Service Officers

Total $ 52.46m• Unrestricted General Fund Only• Excludes Departments or Personnel Directly Serving Schools• Excludes Fixed Costs i.e. Software Licenses, Utilities, Interest

151515

Breakdown of the $52.5m Unrestricted General Fund in Central Offices

FTE

Division Description Budget FTE Non-Mgmt Mgmt

Board of Education Books & Supplies 8,000

Certificated 1,500

Classified 508,578 8

Non-Personnel 313,787

Board of Education Total 831,865 8 7 1

Deputy Superintendent of Academics Books & Supplies 293,056

Certificated 1,924,715 12

Classified 3,466,382 47


Deputy Superintendent of Academics Total 6,033,377 59 48 11

Deputy Superintendent of Business Books & Supplies 928,285

Certificated 16,870


Non-Personnel (2,600,980)

Deputy Superintendent of Business Total 13,444,503 207 195 12

District Relations Books & Supplies 363,556



District Relations Total 7,539,441 62 58 4

Financial Services Books & Supplies 211,788



Financial Services Total 9,690,377 97 90 7

161616

Breakdown of the $52.5m Unrestricted General Fund in Central Offices (cont’d.)

FTE

Division Description Budget FTE Non-Mgmt Mgmt

Integrated Technology Support Services Books & Supplies 978,592



Integrated Technology Support Services Total 11,146,468 100 96 4

Legal Services Books & Supplies 30,602



Legal Services Total 2,875,092 17 6 11

Office of Accountability Books & Supplies 22,572

Classified 56,371 1


Office of Accountability Total 121,743 1 1

Special Projects Books & Supplies 2,700



Special Projects Total 304,058 2 1 1

Superintendent Books & Supplies 2,000

Certificated 250,599 1



Superintendent Total 468,308 3 2 1

Grand Total 52,455,232 556 504 52

171717

• Contractual Ramifications– Employment Contracts Limit Outsourcing Potential

• Education Code Section 45103.1 Restrictions– Severely Limits Circumstances under which a District can Outsource

• Confidentiality Restrictions– SDUSD Must Maintain Strict Control Over Employee Records and Data

• Private Sector Agencies Must Pay Prevailing Wages – This Severely Limits Savings Potential

Legal Restraints to Outsourcing to the Private Sector

181818

• Loss of Flexibility to Conduct Ad Hoc Analysis

• Loss of Control Over Processes, Methods

• Minimal Control Over Employee Flexibility and Priorities

• Potential Systems/Technology Incompatibility

• Conflict With SDCOE Oversight Role– SDCOE Has Oversight Over SDUSD Budget and Financial Reporting.

• They Cannot Also Build the Budget (AB1200)

– SDCOE Pays Prevailing Wages; No Cost Savings

– SDUSD Scope is Too Large for SDCOE to Absorb

• Public Agencies Operate Under Different Priorities

Barriers Around Outsourcing to SDCOE or Other Public Agency

1 of 42 Districts

191919

Criteria for $137.3m Potential Solutions

• Solutions Must Help General Fund Unrestricted

• Solutions Must Be Ongoing in Nature

• Reductions to Other Funds Will Not Impact the Deficit

• Can Be Implemented Without Negotiations

• Given the Magnitude of the Deficit, It Is Impossible to Keep Cuts Away From the Classroom – 92% of the Potential Reduction Pool is Budgeted at Sites

202020

Options for Solutions to the $120.6m Deficit

Unrestricted Budget

Class Cert General Fund Alternate Book

FTE FTE (Millions) Options Page No.

Projected Reductions Required (120.60)$

Options

A. Revenue Generation

1 Increase ADA 1% 5.77$ C1

Total 5.77$

B. District wide Options1 Close Schools (10 @ $450K) TBD TBD 4.50$ C22 Restructure of K-8 schools back to Elementary school 11.00 0.93$ C33 Solar Energy Implementation 0.50$ C4

Total 0.00 11.00 5.93$

C. Central Office Options Evaluate/Eliminate/Reduce the Following Central Office Departments

1 5370-GATE District Administration 3.00 6.83 1.14$ C5

2 5390-GATE Advanced Placement 0.01$ C6

3 5409-American with Disabilities Act (504) 1.00 1.00 0.22$ C7

4 5440-Student Programs & Professional Learning 1.75 1.05 0.29$ C8

5 5532-Magnet Programs Office 1.00 1.00 0.31$ C9

6 5537-Reduce Utilities Management by 50% 4.00 0.28$ C10

7 5547-Teacher Prep and Student Support 0.50 0.08$ C11-C12

212121

Other Options for Solutions to the $120.6m Deficit (cont’d.)

Unrestricted Budget



8 5606-Office of School Innovation 0.21$ C13

9 Chief Special Projects Officer 2.00 0.31$ C14

10 5343-JROTC Office 2.00 1.00 0.16$ C15

11 5451 College, Career & Tech Ed 2.33 1.30 0.45$ C16

12 5542 Community Relations 3.00 0.38$ C17

13 Adult Education 1.50 1.00 0.35$ C18

14 CBET 3.70 1.00 0.52$ C19

15 5638-Drop Out Prevention 3.00 0.80 0.38$ C20

16 5605-School Police Services (50% Reduction) 21.50 2.70$ C21-C22

17 5446-Visual and Performing Arts 1.00 5.00 0.73$ C23-C24

18 Area Superintendents (Reduction of 4 Area Supts) 4.00 3.00 1.15$ C25

19 5457-P.E and Health 1.50 2.00 0.38$ C26

20 5590-Athletics 0.21$ C27

21 10% Reduction Across all CO Depts-Alternative to Lines C1 through C20 5.20$ Total 56.78 24.98 10.26$ 5.20$

D. Centrally Managed Programs1 Eliminate/ Redesign the OCILE Program

(a) Balboa (0012) 6.25 2.30 0.66$ C28

(b) Old Town (0260) 7.75 2.30 0.73$ C29

(c) Palomar (0262) 17.00 5.80 2.58$ C302 Eliminate Transportation for Magnet and VEEP 201.00 9.30$ C31

Total 232.00 10.40 13.27$

222222


Unrestricted Budget



E. School Admin. Options (Part of Allocation Formula)1 Reduction in Kindergarten Program

(a) 1/2 day Kindergarten at 1:29 241.00 16.86$ C32

(b)Full Day Kindergarten at 1:29 72.72 FTE/ $4.46m C332 Split Principal Assignment Between Two Schools at Small Highs Schools 7.00 0.97$ C34

3 Reduce School Classified Staffing Allocation Formula

(a) Eliminate Health Technicians 90.88 3.80$ C35-C36

(b) Eliminate Library Technicians 54.50 2.80$ C37

(c ) Reduce School Clerk II by one at High Schools 14.00 0.71$ C38

(d) Eliminate Student Information System Site Tech II 45.00 2.34$ C39-C40

4 Eliminate Librarian 21.50 2.04$ C41

5 K-3 CSR Program (teacher ratio 29:1 from 24:1) 30% Revenue Penalty

(a) 1st Grade 71.00 6.09$ C42

(b) 2nd Grade 68.20 5.84$ C43

(c) 3rd Grade 64.00 5.52$ C44

6 Site Based Reductions-Alternative to Lines E2 through E5 30.00$

Total 204.38 472.70 46.97$ 30.00$

F. School Supplemental Allocations1 Suspend Supplemental Allocations for Magnet Programs 15.38 51.11 6.25$ C452 Change Prep time Allocation to Comply with Minimum Contract Requirements 12.70 1.13$ C46

Total 15.38 63.81 7.38$

G. Class Size Options1 Eliminate K-2 ARRA funded 16.5:1 138.00 12.23$ C47

Total 0.00 138.00 12.23$

H. Special Education1 Reduce Special Education local contribution- Specifics TBD TBD TBD 5.00$ C482 Eliminate Intersession and Second Session of Special Education 1.00$ C49

Total 0.00 0.00 6.00$

Total 508.54 720.89 107.79$ 35.20$

232323


Unrestricted Budget



Other OptionsI. District- wide Options

1 Eliminate Small School Model 5.00 0.80$ C50

Total 5.00 0.80$ J. Central Office Options

1 5533 Enrollment Options 7.13 0.66$ C51

Total 7.13 - 0.66$ K. Centrally Managed Programs

1 Elimination of Non-Classroom Resource Teachers TBD

2 Reduce Landscapers by 10 FTEs 10.00 0.59$ C52

3 Eliminate Science Kit refurbishments 5.00 0.29$ C53

Total 15.00 - 0.88$ L. School Admin. Options (Part of Allocation Formula)

1 Evaluate Allocation Model for Atypical Schools 1.00$ C54

2 Increase Class Size for Gate Seminar Program (Per School Formula) 20.00 1.70$ C55

3 Reduce Vice Principal allocation by 50% 40.00 4.48$ C56

4 Eliminate Nursing Program (Regular Ed) 57.4FTE/$5.15m 57.40 5.15$ C57-C58

(a) Centralize Nursing Services (50% Reduction) 28.6 FTE/2.6m

5 Eliminate District Counseling Program (Consultation- Regular Ed) 171.90 14.81$ C59

(a) Eliminate Elementary School Counseling Program -Centralize Services 28.4FTE/$2.4m

6 Eliminate RELI Program 0.60 0.13$ C60

Total - 289.90 27.27$

Total Other Options 22.13 294.90 29.60$

Total All Solutions 530.67 1,015.79 137.39$ 35.20$

242424

Impact of $30m Site Based Reductions

• School Allocations Will Be Reduced by an Equitable Percentage Formula That Takes Into Consideration Factors Such As:

– Grade Level– Enrollment– Number of Free and Reduced Eligible Students– Number of ELL Students

• Sites Will Have the Discretion to Implement Reductions Where Least Impactful to Their Programs

• Schools will be Required to Maintain Class Sizes According to Contracts

2525

Impact of 10% Cut to Central OfficeAuxiliary Services

Value of 10% Reduction $ .58mImpacts:

Reductions to Auxiliary Services will impact the management, leadership and bargaining unit interface affecting the operational, human resources and financial resources of one of the district’s largest groups of service providers

Strictly “reactive” capabilities, no “pro-active” actions supported, focus reduced strictly to safety and security items

Landscaping, custodial, maintenance, warehouse and distribution will all be negatively impacted

2626

Impact of 10% Cut to Central OfficeBoard of Education


• Memberships or other Board activities will have to be reduced accordingly.

• Contracted services will be reduced accordingly

Cumulative Prior Years’ Reduction: $ Only -27%; FTE Only -27%

2727

Impact of 10% Cut to Central OfficeDeputy Superintendent-Academics


• Program oversight reduction or elimination may jeopardize program quality and funding compliance (Home/Hospital, Licensed Children’s Institute, Williams Legislation and McKinney Vento Education Assistance Act)

• Increasing staff workload may result in student safety concerns, compliance issues, audit findings, funding reduction in the upcoming fiscal year, reduction of students served, impact to families, schools and community

• Eliminate process for facilitating the evaluation and recommendation to BOE of newly adopted instructional materials. Jeopardize compliance with Education Code 60119, 60420-60422, AB 831 and SB 550

2828

Impact of 10% Cut to Central OfficeDeputy Superintendent-Business (Other)

Value of 10% Reduction $ .22m

Impacts:

• Reduction of services from Strategic Sourcing. Increased time for response to schools and employees seeking services. Longer response times for RFPs, bids and purchase orders

• Instructional Facilities will not be able to provide the level of Ad Hoc analyses currently provided to the Board and administration

2929

Impact of 10% Cut to Central OfficeDistrict Relations


• Reduction of event management, board meeting broadcasts, e-newsletters and/or publications

• Decreased capacity to deliver services directly to schools (e.g. student service learning) Reduction in required annual mandatory site volunteer and coordinator training

• Less assistance with fiscal and policy matters and issues that may impact the district

• Reduction in translation services to schools and departments during a trend in increased demand

• Legal repercussions for reduction of mandated translation services

Cumulative Prior Years’ Increase/Reduction: $ Only 14%; FTE Only -22%

3030

Impact of 10% Cut to Central OfficeFinancial ServicesValue of 10% Reduction $ .97mImpacts:

• Scale down annual Budget Book and District Profile (print and web versions) to basic report

• Eliminate monthly financial reporting results and ad-hoc requests to the Board and Senior Leadership resort to reporting only at 1st and 2nd Interims

• Delays in payment process may result in delays or lack of procurement of needed classroom materials

• Compliance related reporting would be delayed


3131

Impact of 10% Cut to Central OfficeHuman Resources


• The department will not be able to carry out human resources functions and meet the operational expectations set by the Board

• Personnel actions will require increased time – reclassifications, employee concerns, enrollment impacts on allocations, etc will all be delayed

• Hiring and all other job-related tasks will take longer

• Ad hoc analyses will be impossible


323232

Impact of 10% Cut to Central OfficeIntegrated Technology Support ServicesValue of 10% Reduction $ 1.11mImpacts:

• Significantly impacts the support, implementation, and training for the i21 program

• Delay in computer support and repairs

• Reduction in support to the growing educational and business technologies at schools and central office

• Impacts all departments ability to do work when systems are down

• Reduction of SARB related services

• Delay in SARB cases referred to court

Cumulative Prior Years’ Increase: $ Only 11%; FTE Only 4%

3333

Impact of 10% Cut to Central OfficeLegal Services


• It is not impossible to make reductions without reducing staff

• Increased need for outside counsel at a higher cost

• Smaller law library and reductions in professional growth and continuing legal education

• Additional burden on Legal Services support staff

• Lengthened response time on legal issues and inquiries

• Focus on urgent audit issues instead of routine district-wide audits

Cumulative Prior Years’ Increase: $ Only 0%; FTE Only 18%

3434

Impact of 10% Cut to Central OfficeOffice of Accountability


• Some district assessments may need to be eliminated

• Mandated reporting deadlines at risk leading to sanctions or loss of funding for programs

• Delays in DataDirector support

• Program evaluations not conducted in a timely manner

• Delays in responses to data requests

• Delayed efforts/processes to improve data accuracy, completeness and innovation

3535

Impact of 10% Cut to Central OfficeSchool Police


• Mandated and BOE policy programs will become a site based responsibility

• Support of Community Based Organizations (CBO’s) related to school and child safety (Safe Routes to School, Project Safe Way, City Heights Collaborative, STAR/PAL, Crime Stoppers, etc) may be eliminated

• All fire, intrusion, and camera monitoring/dispatching will be outsourced

• All telephone calls requiring an actual police response will be directed to SDPD

• All 3,000 annual criminal investigations and 850 criminal arrests will be directed to SDPD. NOTE: According to SDPD, failure to pass City proposition “D” will result in the elimination of all “juvenile service offices


3636

Impact of Elimination of Central Office - Special ProjectsValue of 10% Reduction $ .03mImpacts:

• The Special Projects Office is on the list for elimination

• If that occurs, it will not be possible to reduce a further 10%

• If the office is sustained, a 10% reduction creates a department with minimal non-staff resources to maintain its services to senior administration and the Board

3737

Impact of 10% Cut to Central OfficeSuperintendent


Impacts:

• It is not possible to make this reduction without reducing or eliminating staff

• This would adversely impact the ability of the Superintendent to fulfill his obligations to all stakeholders


3838

Impact of 10% Cut to Central OfficeStudent Services


Impacts:• Delayed or outsourced responses to ADA investigations• Additional staff may need to be trained to meet the

routine and emergency health needs of students • Crisis team response could be negatively impacted and/or

delayed• Suicide risk assessments could be negatively impacted• Proactive guidance groups could be limited• Career and college planning sessions with students could

be limited• Instructional services/time to Home/Hospital and Foster

Youth could be restricted

Cumulative Prior Years’ Reduction/Increase: $ Only -43%; FTE Only 4%

393939

School Closure Update

• Schools Recommended for Closure Will Not Be Identified Solely By Enrollment– Other Factors

• Enrollment • Capacity of Schools• Cost Per Pupil• Academic Achievement

• The Impact of Eliminating Magnet and VEEP Transportation is Also a Contributing Factor

• Two Committees are Developing the List of Closure Candidates and Other Impacts

• Notification Per Procedure is Due in November

404040

November – January Budget Timeline

• November 4 Special Budget Meeting (No Action)

• November 9 Regular Board Meeting (Agenda Item)

• November 16 Special Board Meeting (Action)

• December 2 Special Board Meeting (Action 1st Interim)

• December 15 Final Day to Submit to County

• January School Allocations Distributed to Sites Based on 1st Interim Reductions and State Budget

414141

Conclusion-Review of the Realities

• Deficit Reality of $120m• Additional Deferrals May Necessitate Increased

Borrowing• It is Impossible to Keep Reductions Away from

Classroom• Board Must Approve Preliminary Reduction List by

November 16 and First Interim Report by December 2• HR Must Begin PKS Process for Certificated Layoffs

in December• School Site Allocation Formula Must Be Decided in

December

board of education budget meeting

Documents

capital facilities fund

cafeteria special revenue

general fund unrestricted

district deficitstate

building fund proposition

mprojected deficit

itassumes state

mbest case deficit