San Ysidro Elementary School DistrictFiscal Oversight Report

April 11, 2013

Lora Duzyk Assistant Superintendent, Business Services

Why are we here tonight?Discuss the District’s Second

Interim ReportAB1200 Fiscal Oversight – What is

a Negative Certification?County Superintendent

InterventionThe District’s Fiscal Recovery PlanNext Steps

2

Second Interim Report Letter to the Board President dated 3/20/2013

“The district will be unable to meet its financial obligations in the subsequent fiscal year, 2013-14 and beyond…”

Current Year 2012-13Projected deficit spending of ($2.44 million)2.7% Reserve for Economic UncertaintyUnable to qualify for County TRANS pool due to

inability to pay$1.5 million in internal borrowing to cover cash

shortfalls

3

Unrestricted Deficit SpendingRevenue & Contributions less Expenses

2009/10 2010/11 2011/12 2012/13 2013/14

$(4,500,000)

$(4,000,000)

$(3,500,000)

$(3,000,000)

$(2,500,000)

$(2,000,000)

$(1,500,000)

$(1,000,000)

$(500,000)

$-

$500,000 $206,892

$(415,004) $(2,274,220) $(2,436,267) $(4,080,817)

4

2009/10 2010/11 2011/12 2012/13 2013/14

$(4,000,000)

$(2,000,000)

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

-10%

-5%

0%

5%

10%

15%

20%

15.33%13.79%

8.63%

2.69%

-7.01%

Fund 01 Fund 17 % of Total Genral Fund

Unrestricted Reserve Trends 2009/10 thru 2013/14

5

Second Interim Report Multi-Year Projection (as of February 28,

2013)“The district needs to cut a total $9.5 million during the two year period of 2013-14 to 2014-15, representing a yearly average of 17.5% of unrestricted expenditures”Needed expenditure reductions

2013-14 = $4.2 million2014-15 = $ 5.3 million

6

Second Interim Report Cash

“The combination of internal borrowing and a Temporary Transfer of Funds from the County Treasury may be insufficient to cover district cash needs in fiscal year 2013-14 under the current budget projections.”

2013-14Out of cash in April/May 2014 Projected cash need in 2013-14 = $3.8 millionProjected cash payment from the state = $2.2 million

7

Cash Flow TrendsJu

ly

Aug

ust

Sep

tem

ber

Oct

ober

Nov

embe

r

Dec

embe

r

Janu

ary

Feb

ruar

y

Mar

ch

Apr

il

May

June

$(4,000,000)

$(2,000,000)

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

2010/11 2011/12 2012/13 2013/148

2012/13 General Fund Monthly Ending Cash Balance

July August September October November December January February March April May June

($4,000,000)

($2,000,000)

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$963,392.1 $140,241.5

($609,608.0)

($2,028,710.8)

($3,418,531.1)

($295,575.5)

$1,019,749.4

($360,073.8)($1,290,094.3)($1,028,097.2)

($2,519,539.4)

($110,724.5)

$5,005,047.1

$5,005,047.1 $5,000,000.0

$10,431,547.0 $9,971,286.6

$5,975,237.4

$3,913,740.6

$3,689,171.4 $3,243,217.7 $3,342,248.2 $3,342,248.2

$1,842,248.2

$5,968,439.2

$5,145,288.6

$4,390,392.0

$8,402,836.2

$6,552,755.5

$5,679,661.9 $4,933,490.0

$3,329,097.5

$1,953,123.4 $2,314,151.0

$822,708.8 $1,731,523.7

General Fund Ending Cash Balance without Borrowing Outstanding Balance of Borrowed Funds

Ending Balance with Borrowing

District was not eligible to participate in the

pooled TRAN

9

2013/14 General Fund Monthly Ending Cash Balance

July August September October November December January February March April May June

($6,000,000)

($4,000,000)

($2,000,000)

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$272,327.2

($1,604,545.1)($1,745,997.3)

($4,322,195.1)

($5,420,631.2)

($3,105,308.9)

($1,645,423.0)

($2,827,503.1)($2,736,858.2)($2,321,897.5)

($3,652,600.3)($4,897,856.9)

$0.0

$10,560,408.4 $10,402,396.5 $10,227,585.4 $9,816,227.3

$5,862,125.2

$4,144,931.9 $3,939,190.8 $3,502,661.5

$2,672,512.4 $2,277,129.2 $2,277,129.2

$272,327.2

$8,955,863.4 $8,656,399.2

$5,905,390.3

$4,395,596.1

$2,756,816.3 $2,499,508.8

$1,111,687.7

$765,803.3 $350,614.8

($1,375,471.1)($2,620,727.7)

General Fund Ending Cash Balance without Borrowing Outstanding Balance of Borrowed Funds

Ending Balance with Borrowing

District is projected to run out of cash in April/

May

10

AB 1200 Fiscal OversightEffective January 1, 1992

Expanded authority for the County Superintendent to intervene in financially troubled school districts

Revised and standardized the budget development and interim reporting processes

Addressed other issues related to fiscal accountability such as emergency apportionments, actuarial studies, approval of debt issuance and more

Created the Fiscal Crisis and Management Assistance Team (FCMAT)

11

Interim Report CertificationsPositive – the district will meet its

financial obligations for the current and two subsequent fiscal years

Qualified – The district may not meet its financial obligations for the current or next two fiscal years

Negative – The district will be unable to meet its financial obligations for the current or next fiscal year.

12

Qualified/Negative Certifications“3rd Interim” for period ending April 30;

file with the County Superintendent, Superintendent of Public Instruction and State Controller’s Office by June 1st

Limitations on debt issuancePossible downgrade by rating agencies

resulting in higher borrowing costsPrior review and approval of collective

bargaining agreements by the County Superintendent is required

13

Qualified/Negative Certifications

Qualified status: the Board retains authority but may have compensation withheld for failure to provide information

Negative status: County Superintendent appoints a fiscal advisor with stay and rescind authority over Board actions

14

County Superintendent The County Superintendent shall impose

one or more of the following - EC 42127.6(e):Impose a budget on a districtStay or rescind any action that is

determined to be inconsistent with the school districts ability to meet its obligations for the current or subsequent fiscal years

Assist in developing a financial plan to enable the district to meet its obligations

15

County Superintendent The County Superintendent shall …

(cont’d)Assist in developing a budget for the

following yearAssign a fiscal advisor to perform any of

the above on behalfNote that the school district would be

required to pay 75% and the COE 25% of the expenses incurred for the fiscal advisor

And all actions that are necessary to ensure that the district meets its financial obligations

16

County Superintendent All districts issuing Certificates of Participation

(COPs) or revenue bonds must provide the County Superintendent with evidence of their ability to repay

Districts with qualified or negative certifications may not issue these debt instruments without the County Superintendent first determining that the repayment of that debt is probable. The District will not be able to borrow when it can’t pay the funds back (projected April/May 2014).

17

CountySuperintendentAll districts must disclose the costs of an

agreement with an exclusive representative at a public meeting

Districts with qualified or negative certifications are required to give the County Superintendent 10 days to comment on the agreement

Negative - Fiscal Advisor may “Stay/Rescind” Board action on the agreement

18

Role of a Fiscal AdvisorThe Fiscal Advisor:

May be COE staff or an External ConsultantIs the Advisor to the County

Superintendent, not to the school districtHas “Stay and Rescind” authority over

board actionsDoes not initiate board actionsWill sit on closed board sessionsCannot abrogate existing labor contracts

19

Road Map to SolutionsFiscal Recovery Plan. The plan may include but not be limited to:Communication- All stakeholders! (Board, Leadership, Labor, Staff, Community – including parents, Policy makers, Legislators – anyone who will listen!)

20

Road Map to SolutionsFiscal Recovery Plan, (cont’d.)

Increase RevenuesIncrease ADAState Revenues/ LCFFDonationsGrants

21

Road Map to SolutionsFiscal Recovery Plan, (cont’d.)Decrease Expenditures

Prepare for the worst/ hope for the best!

Sooner vs. LaterSpending and Hiring Freeze

On-going vs. One-time85% of total Unrestricted Expenditures

are people and related costs 22