2007-2008Adopted Budget

Oakland Unified School District

Javetta Robinson, CFOTerrie Williams, Executive Officer of Finance

Board of Education MeetingJune 27, 2007

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Introduction• Although the District has stabilized its budget, the District is still in

fiscal recovery.• The District’s enrollment continues to decline; therefore, the District

revenues are declining at $5,700 per student.• In December 2006, a budget calendar and process were developed.• In January and February 2007, the Strategy Group established

budget priorities that aligned with the District goals. Network Officers provided input into the budget priorities.

• In February 2007, the budget priorities were shared with the Board for their input prior to implementation of the budget process.

• In February 2007, the Principals and Central Office staff received training on the results based budgeting (RBB) tool and process.

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Introduction Continued….On a positive note:

• First, Second and Third Interim Reports for fiscal year 2006-2007 were certified as “Qualified” (no longer “Negative”).

• In June 2007, our bond rating from Standard & Poor’s improved from BBB to BBB+. The raised rating reflects the continued progress and resolution of audit findings and full incorporation of improved financial controls.

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Budget Summary – Unrestricted General Fund

2006-2007 2007-2008 Estimated Actuals Adopted Budget Positive

Budget Budget (Negative)Total Revenues 266,104,896$ 250,058,616$ (16,046,280)$ (A)

Total Expenditures 241,788,008$ 228,477,217$ 13,310,791$ (B)

Transfers In 2,358,970$ 3,566,970$ 1,208,000$ Transfers Out (33,869,361) (1,052,545) 32,816,816 (C )Other Financing Sources 36,120,509 709,991 (35,410,518) (C )Total, Other Financing Sources/(Uses) 4,610,118 3,224,416 (1,385,702)

01 - GENERAL FUND - UNRESTRICTED

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Budget Summary – Unrestricted General Fund

2006-2007 2007-2008 Estimated Actuals Adopted Budget Positive

Budget Budget (Negative)Net Increase (Decrease) 2,398,931$ (1,446,885)$ 3,845,817$ (D)

Beginning Fund Balance 7,359,762$ 12,424,459$ 5,064,697$ Restatements 2,665,766 - (2,665,766) Adjusted Beginning Balance 10,025,528 12,424,459 2,398,931 Net Increase (Decrease) 2,398,931 (1,446,885) (3,845,817) Ending Fund Balance 12,424,459$ 10,977,574$ (1,446,886)$ Reserves for: Economic Uncertainties 8,202,398 6,755,512 (1,446,886) (E) Measure B - - - Designation for Measure E 2,000,000 2,000,000 - Reserve of Mandated Costs 1,022,061 1,022,061 - Audit Findings 1,200,000 1,200,000 -

01 - GENERAL FUND - UNRESTRICTED

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Explanation of Footnotes

(A) There was a decrease in revenues from fiscal year 2006-2007 to 2007-2008 of $16 million primarily due to the following:

• $11.5 million due to accounting change for recording property tax revenue for charter schools. In the past, it was recorded as revenue for charter schools and expenditures to charter schools. Now it is a revenue pass through (in and out).

• $3.4 million in mandated costs was received in 2006-2007 for prior years is not included in the 2007-2008 budget.

• $1 million due to reduction in square footage charge for facilities for charters schools under MOU agreements to prop 39 rate.

(B) There was a decrease in expenditures from fiscal year 2006-2007 to 2007-2008 of $13 million due to the following:

• $11.5 million due to accounting change for recording property tax revenue for charter schools. In the past, it was recorded as revenue for charter schools and expenditures to charter schools. Now it is a revenue pass through (in and out).

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Explanation of Footnotes Continued…

• Expenditures decreased by $2 million because fire costs will not be loaded in the budget until books are closed.

• Expenditures decreased by $.3 million due to reduction in total amount allocated to schools due to declining enrollment. However, the schools received more in their per pupil allocation over the previous year.

• Expenditures decreased by $1 million due to other budget reductions.

• Expenditures increased by $2.4 million due to the fact that indirect costs going into unrestricted general fund includes calculation on carryover and carryover has not yet been loaded in the budget for 2007-2008.

• Expenditures increased by $.9 million for police service start-up and operating costs over 06-07 budget.

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Explanation of Footnotes Continued…

(C) In 2006-2007, the District received the remaining $35 million line of credit from the state. All except for funds set aside for IFAS upgrade was transferred to special reserve fund.

(D) In 2007-2008, the District is projecting deficit spending in the amount of $1.4 million. The District’s budget does have enough reserves to cover this deficit. However, prior year reserves has been reduced to cover the deficit.

(E) The District is projected to end fiscal year 2007-2008 will a $6.7 million reserve which will not meet the District 2% state requirement of $8.2 million.

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• Revenue Limit Average daily attendance (ADA) is 37,122• Cost of living adjustment (COLA) is 4.53%• Base Revenue Limit is $5,790.16 per ADA• Estimated Property Tax Revenue is $70,552,842• Lottery Revenues

• $118 per ADA Unrestricted Revenue• $25 per ADA Proposition 20 (Restricted Textbooks)

Budgetary Assumptions For Fiscal Year 2007-08

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Budgetary Assumptions For Fiscal Year 2007-08 Continued…

Base Allocation per Pupil: (General fund)

Small School Support – Targeted Instructional Improvement Grant (TIIG)• Elementary (< 360 Students) - $461 / student • Middle (<300 Students) - $461 / student• High (< 400 Students) - $461 / student• K-12 (< 500 Students) - $461 / student

Per student rate Per student rate2006-2007 2007-2008 Difference

Elementary $3,653 $3,912 $259Middle $3,867 $4,219 $352High $3,914 $4,273 $359K-8 $3,758 $4,065 $3076-12 $3,889 $4,246 $357K-12 $3,810 $4,135 $325

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Budgetary Assumptions For Fiscal Year 2007-08 Continued…

School Lifecycle Adjustments (incubated schools):• Year-1 School (TIIG) - $300.00 /student (all students)• Year-2 School (TIIG) - $150.00 /student (all students)• Closing Schools (Expect Success Grant) -

$1,200.00/student (all students)

Class Size Reduction (CSR) funding • State-provided amounts ($1,024/student for K-3,

$204/student-hour for 9th)• $5 million in Measure E funds is used to supplement CSR

and prevents CSR encroachment on the general fund

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Budgetary Assumptions For Fiscal Year 2007-08 Continued…

07-08 Salary Increase Per Union Contract

AFSCME N/A

AFT Local 771 N/A

BTCA 2.25%

OEA 1.75%

SEIU Local 790 2.25%

UAOS 2.25%

Teamsters N/A

District Health Care Cost is expected to increase by 8%. Under current negotiated contracts, employees either contribute either .5 percent of salary or difference between lowest and highest cost health care provider.

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Enrollment and ADA over timeADA Projections

48,135 46,290 44,037 41,94238,675 37,122 35,438 33,755

36,094

41,355

47,233

51,439 49,866

44,925

39,69437,894

0

10,000

20,000

30,000

40,000

50,000

60,000

01-02 02-03 03-04 04-05 05-06 06-07P 07-08P 08-09P

Stu

de

nts

CBEDS

P2 - ADA

Of the estimated 1,800 student decline in enrollment, the District loses about 50% annually to charter schools.

Annual decline in CBEDS enrollment:

2,311 1,573 2,633 2,308 3,570 1,661 1,8001,800

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Charter Schools

Charter School Growth

0

1000

2000

3000

4000

5000

6000

7000

8000

# o

f S

tud

en

ts (

AD

A)

0

5

10

15

20

25

30

# o

f S

ch

oo

ls

# of Charter Students 1088 1145 1469 2088 2710 3917 6137 7161

# of Charter Schools 7 9 9 13 15 19 26 28

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

The District loses approximately $1,400 to $1,800 per ADA of the total revenue limit per ADA ($5,790.16) that would be used to support District’s educational and operation costs.

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Historical Summary of Adopted Budget- Unrestricted General Fund

2004-05 2005-06 2006-07 2007-08

Adopted Budget Adopted Budget Adopted BudgetAdopted Budget

Revenues 256,203,067$ 252,936,883$ 262,739,852$ 250,058,616$

Expenditures 236,167,841 227,468,390 237,303,215 228,477,217

Transfers In/(Out) (1,646,765) (1,012,008) (788,478) 2,514,425

Other Sources & Uses 2,571,351 - - 709,991

Contributions (26,767,497) (28,163,154) (26,210,652) (26,252,700)

Surplus (Deficit) (5,807,685)$ (3,706,669)$ (1,562,493)$ (1,446,886)$

01 - GENERAL FUND - UNRESTRICTED

At budget adoption, the District has improved its budgeted deficit from $5.8 million in 2004-2005 to $1.4 million projected for 2007-2008. However, since 2004-2005, the District has closed the books (actual revenues to expense) with a surplus.

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Historical Ending Balances - Unrestricted General Fund

2004-05 2005-06 2006-07 2007-08

Actuals Unaudited

Actuals Estimated

Actuals Adopted Budget

Beginning Fund Balance $ (3,971,506) $ 5,557,612

(A) $ 7,359,762 $ 12,424,459 Audit Adjustments/ Restatements 1,972,937 312,185 2,665,766 - Adjusted Beginning Fund Balance (1,998,569) 5,869,797 10,025,528 12,424,459 Surplus/(Deficit) 8,086,673 1,489,965 2,398,931 (1,446,886) Ending Fund Balance 6,088,104 7,359,762 12,424,459 10,977,574

Fund Balance Designations: Revolving Cash 167,359 150,000 - - Economic Uncertainties 2,676,698 3,196,914 8,202,398 6,755,512 Measure B 906,505 - - Measure E 1,033,098 4,012,848 2,000,000 2,000,000 Reserve of Mandated Costs 1,022,061 1,022,061 Audit Findings 1,200,000 1,200,000 Student Information System 1,304,445 - - - Ending Fund Balance 6,088,104$ (A) 7,359,762$ 12,424,459$ 10,977,573$

(A) The ending fund balance differs from the beginning fund balance because 2005-2006 unaudited actuals was completed in September 2006 and audit report which included audit adjustments was not received until March 2007.

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Analysis of historical trends• At budget adoption, the District has improved its budgeted deficit

from $5.8 million in 2004-2005 to $1.4 million projected for 2007-2008. (see slide #14)

• Although the District has budgeted a deficit at adoption, the District has closed the books with a surplus (see slide #15 - actual revenues exceed expenditures) due to the following:– One-time revenues (for example, mandated costs revenue)– Salary savings due to vacant positions

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Historical Ending Balances- Restricted General Fund

2004-05 2005-06 2006-07 2007-08

Actuals Unaudited

Actuals Estimated

Actuals Adopted Budget

Beginning Fund Balance $ 15,816,336 $ 16,145,047

(A) $ 18,736,383 $ 10,968,378 Audit Adjustments/ Restatements (4,215,287) 1,361,423 (1,044,764) - Adjusted Beginning Fund Balance 11,601,049 17,506,470 17,691,619 10,968,378 Surplus/(Deficit) 2,498,283 1,229,913 (6,723,241) 1,712,621 Ending Fund Balance 14,099,332 18,736,383 10,968,378 12,681,000

Fund Balance Designations: Legally Restricted Balance 14,099,332 18,736,383 10,968,378 12,681,000 Ending Fund Balance 14,099,332$ (A) 18,736,383$ 10,968,378$ 12,681,000$

The District still continues to carryover excess restricted resources. In 2006-2007, the District budgeted a deficit to expend prior year restricted reserve. However, based on past trends the District only builds on the reserve balance because carryover is not expended.

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Other Funds• The Cafeteria Fund is expected to have no surplus or deficit and a

projected fund balance of $ 0.2 million. In other words, the budget of revenues to expenditure balances to zero.

• The Adult Education Fund is expected to have no surplus or deficit and a projected fund balance of $4.1 million. The budget of revenues to expenditure balances to zero.

• The Child Development Fund is expected to have no surplus or deficit and a projected fund balance of $1.2 million. The budget of revenues to expenditure balances to zero.

• The Building Fund is expected to have a deficit of $127.6 million to expend prior year reserve remaining from sale of bond on modernization projects. The fund is projected to have a balance of $22.6 million.

• The Special Reserve Fund is expected to have a deficit of $2.1 million to transfer prior year reserves of $ 2 million for debt repayment and $1.2 million for IFAS upgrade. The fund is projected to have a balance of $29.9 million.

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Budgetary Concerns• The District continues to rely on Measure E and carryover funds for

ongoing costs. Therefore, the District has a structural deficit.• The District is still facing declining enrollment; therefore, the District

will have to downsize its operations to stay solvent.• $1.2 million has been reserved to address prior year audit findings

in the amount of $911,000 for 02-03 and an estimated $289,000 for 03-04. The actual penalty for the 03-04 audit findings is dependent upon outcome of our recent audit appeal of $8 million in findings.

• Although the District is moving toward meeting its reserve, the District has long term debt obligation as follows:

• State loan (new) $32,816,816• State loan (existing) $53,765,439• Certificate of Participation $21,915,000• Total $108,497,255

Remember, the District still has $29.9 million of the line of credit in a special reserve fund.

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Thank You

Any Questions?