WSD Board MeetingMarch 9, 2017

Tony Wold, Ed.D.Assistant Superintendent, Business Services

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Budgeting for a school district is a continuous, year-round process. Projections continually change based on new and changing information.

June 30, 2016 Adopted 2016 17 Budget September 2016 Unaudited Actuals December 15, 2016 1st Interim Budget (Data as of October) March 15, 2017 2nd Interim Budget (Data as of January) June 30, 2017 Adopted 2017 18 Budget

Other than the presentation of the actual financial information all other budget presentations are a combination of actuals and projections for the current and upcoming year

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Budget Cycle Governors January Budget Proposal Reserves 2017 2018 Budget Development Pension Cost Increases (STRS and PERS) Multi-Year Projection

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Decreased Gap Funding Projection for 2017-2018 (from 72.99% to 23.67%) Districts are still not back to the spending authority equal

to the high funding mark in 2007-08 Reduced Proposition 98 funding attributed to 2015-

2016 and 2016-2017 by almost $1 Billion Prior year repayment for past mandate claims (one-

time approximate $48/ADA) Introduces June 2017 deferral to reduce Proposition

98 funding in the current year by almost another $1 Billion

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The National Government Finance Officers Association (GFOA) published a Best Practice report in September 2015 Recommends at least 2 months of operational expenses

(at least 17%)

Westminster Reserves will be just above 6% at the end of 2016-17

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MOODYS rating improved to Aa2Standard & Poors rating of A+ with positive outlook

Ratings Narrative Positive general fund performance with strong available general fund balance; and

Sizable fund 40 balance (special reserve fund for capital outlay projects) of about $11 million, alleviating future Capital outlay pressure.

Consistent with observations in our last review in 2016, increased resources, effective expenditure control, and implementation of programs desired by the community are contributing to improvement in the district's financial position, which is the primary factor for the upgrade to Aa2.

The district's reserve level contributes to our view of its fiscal capacity to absorb unanticipated fiscal strain and, thus, to our rating.

Factors that Could Lead to a Downgrade If the law ultimately compels the district to spend down a significant portion of its

combined assigned and unassigned general fund balances, our view of the district's credit quality could change.

Material decline in reserve levels

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Enrollment Lower Birth Rates in Orange County District intention is to maintain low class sizes and

increase ratios based upon normal attrition

Increased Expenditures Pension Costs STRS and PERS Compensation Step and Column yearly increases

State Revenue Projections LCFF gap funding is close to 95% funded Proposition 55 impact not until 2019 2020 Revenue decline minimizes positive impact of

Proposition 55 in the out-years10

Declining Enrollment has impacted the District for several years For example in 4 years since

2013 the size of K classes has decreased from 1,042 to 869

Dual Immersion is having a positive impact on enrollment Over 40 Inter-district

enrollments in 2016-2017 This is expected to increase

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Grade 2013 2014 2015 2016 2017TransK 167 246 245 226 203

K 1042 961 945 890 8691 1012 1015 964 930 8672 1016 989 991 978 9213 1022 987 986 976 9594 992 1014 969 987 9625 981 971 1005 981 9776 1033 957 968 1022 9627 988 1009 973 1005 10258 1054 989 1015 998 1016

Subtotals: 9307 9138 9061 8993 8761Pct Chg: -1.8% -0.8% -0.8% -2.6%

SDC: 338 353 345 338 336Totals: 9645 9491 9406 9331 9097

Enrollment 2013 Draft 2017

Sheet1

Totals

Grade20132014201520162017

TransK167246245226203

K1042961945890869

110121015964930867

21016989991978921

31022987986976959

49921014969987962

59819711005981977

610339579681022962

7988100997310051025

8105498910159981016

Subtotals:93079138906189938761

Pct Chg:-1.8%-0.8%-0.8%-2.6%

SDC:338353345338336

Totals:96459491940693319097

Sheet2

Fremont: School district faces $23 million budget shortfall Montebello Unified plans for layoffs must cut $15 million amid

questions about its financial management approves cuts for 252 positions

Santa Rosa considers staff cuts to address $12 million deficit San Diego Unifieds Looming Budget Cuts Now Top $124 Million Oakland: School superintendent calls for $25.1 million in cuts,

orders hiring freeze Temecula schools face $14 million deficit LAUSD will be broke by 2020 unless drastic cuts are made California schools may face cuts amid skyrocketing pension costs Santa Ana, Anaheim school districts handing out layoff notices Azusa School District Blames Governors Budget For Teacher Layoffs

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Employer Rate Keeps increasing yearly

The STRS and PERS increases are greater than the LCFF revenue increases supplied by the State = $9,692,670 more per year by 2020!

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Year STRSRate

PERSRate

CalSTRS$

Increase

CalPERS$

Increase

Total$

Increase

Cumulative $

Increase2015-2016 10.73% 11.847% $1,252,211 $207,853 $1,460,064

2016-2017 12.58% 13.888% $1,251,475 $544,268 $1,795,743 $3,255,807

2017-2018 14.43% 15.8% $1,091,600 $395,053 $1,486,653 $4,742,460

2018-2019 16.28% 18.7% $1,132,695 $593,445 $1,726,140 $6,468,600

2019-2020 18.13% 21.6% $1,174,998 $610,585 $1,785,583 $8,254,183

2020-2021 19.10% 24.9% $732,337 $706,150 $1,438,487 $9,962,670

2016 -2017 2017 -2018 2018-2019

LCFF Gap Rate Projection 55.28% 23.67% 18.00%

Projected COLA (DOF) 0.00% 1.48% 2.40%

Step & Column cost $1,055,770 $1,296,602 $1,321,155

STRS (increased rate) $1,251,475 $1,091,600 $1,132,695

PERS (increased rate) $544,268 $395,053 $593,445

Restricted Maintenance (3% contribution)

$40,737 $0 $33,925

Reserve for Economic Uncertainties (increase)

$1,516,446 $1,018,753 $79,158

Declining Enrollment (loss of revenue) $1,063,695 $607,964 $2,089,038*

Reduction of COLA (loss of revenue) $458,695 ??? ???

Special Education Contribution (SELPA) $177,579 $320,00 $320,000

Insurance (increased rate) $55,687 ??? ???

TOTAL New Expenditures $6,164,352 $4,729,972 $5,569,416

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*Estimate

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2016-17 2017-18 2018-19Revenue $105,654,908 $103,102,438 $103,081,193Expenses $106,170,330 $104,155,340 $106,152,924Difference ($515,422) ($1,052,902) ($3,071,731)Beginning Balance $25,819,321 $25,303,899 $24,250,997Ending Balance $25,303,899 $24,250,997 $21,179,266

Components of Ending Fund BalanceReserve for Economic Uncertainties $6,370,220 $7,290,874 $7,430,705Stores $20,000 $20,000 $20,000Textbook Adoptions $2,484,742 $1,461,295 $0ACA/AB1522 $350,000 $250,000 $0Revolving Cash $100,000 $100,000 $100,000Restricted Designation $9,153,299 $9,003,805 $8,892,777Facilities $247,990 $0 $0Technology $152,000 $152,000 $0Future STRS/PERS $6,425,648 $5,973,023 $4,735,784

Data as of 2016-2017 Second Interim Report

Sheet1

2016-172017-182018-19

Revenue$105,654,908$103,102,438$103,081,193

Expenses$106,170,330$104,155,340$106,152,924

Difference($515,422)($1,052,902)($3,071,731)

Beginning Balance$25,819,321$25,303,899$24,250,997

Ending Balance$25,303,899$24,250,997$21,179,266

Components of Ending Fund Balance

Reserve for Economic Uncertainties$6,370,220$7,290,874$7,430,705

Stores$20,000$20,000$20,000

Textbook Adoptions$2,484,742$1,461,295$0

ACA/AB1522$350,000$250,000$0

Revolving Cash$100,000$100,000$100,000

Restricted Designation$9,153,299$9,003,805$8,892,777

Facilities$247,990$0$0

Technology$152,000$152,000$0

Future STRS/PERS$6,425,648$5,973,023$4,735,784

Sheet2

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There is a clear economic slowdown in CA The need for higher reserves is clear

Federal Funding to California is volatile based on the current political climate

The current Governors January Proposal reduces the funding that will be received by WSD in 2017-2018

The Governors May Revise will be the catalyst for revenue projections that will drive the State adopted budget leaving most school districts in a waiting game

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Positive = A school district that, based on current projections, will be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years. Superintendents is recommending that the Board

approve the 2016 2017 Second Interim Budget Report with a Positive Certification

Qualified = A school district that, based on current projections, may not meet its financial obligations for the current fiscal year or subsequent two fiscal years.

Negative = A school district that, based on current projections, will be unable to meet its financial obligations for the current fiscal year or for subsequent two fiscal years.

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Second Interim Budget2016-2017 2016-2017 Budget CalendarSecond Interim Budget TopicsGOVERNORS JANUARY BUDGET PROPOSALReduction in Proposition 98 FundingState Revenue Trends DecliningState Reserves Continue to IncreaseCurrent Average ReservesWSD ReservesRating Agency ReportsBudget Development TrendsEnrollment TrendsBudget Headlines From Jan-Feb 2017Impact of CalSTRS and CalPERSMajor Expenditure Assumptions Out Years(At Governors January 2017 Proposal)Multiyear Projections - CombinedNext StepsCertification Definition