Budget Workshop

Board Report – December 16, 2009

212/16/2009

Presentations Changes: 12/16/09 Versionfrom 12/11/09 Version

The Presentation distributed on 12/11/09 was changedin this version as follows:1. General Fund Update – Old slide #13 replaced with new slide #132. Services and Other Operating Expenses – Old slide #16 replaced with new slide #163. Hiring/Spending Freeze – Old slide #20 deleted replaced with Projected 2010/11

Deficit new slide #204. Salary Rollback Savings – Old slide #21 replaced with new slide #235. One Day Furlough – Old slide #22 replaced with new slide #226. New slide #25 inserted – Unfilled vs. Vacancy Rates7. Potential Hiring Freeze Savings Old slide #25 replaced with new slide #268. New hires/rehires- old slide # 26 deleted9. Priority Based Budgeting – Old slide #39 replaced with new slides #39 & #4010. Timeline – Old slide # 43 replaced with new slide #44

312/16/2009

Agenda

• Opening Remarks• Legislative/Stakeholder Outreach Update• Financial Update• Human Resources Update• BRACE Update• Priority-Based Budgeting• Next Steps• Closing Remarks• Board Discussion

412/16/2009

Board Budget Workshop Opening Comments

• Continuing the November Budget Workshop Discussion• Legislative and Stakeholder Updates• Financial Update

– $220 Million– Cost Cutting Efforts – Savings Potential– Funding Cliffs – Revenue Challenges

• HR Update Focusing on Vacancies and Hiring Updates• Build a Bridge from Zero-Based Budgeting to Priority-Based

Budgeting Concept – Board Adoption and Approval to Proceed - Tonight

• Additional BRACE Feedback• Next Steps – Moving Toward Decisions

512/16/2009

Legislative/Stakeholder Outreach Update

612/16/2009

State Budget: Outlook Uncertain

• State Deficit = $21 Billion• Education gets cut in bad economic

times• Federal Maintenance of Effort and

Prop 98 can be manipulated, suspended and/or waived

• Prop 98 and Maintenance of Effort protect stable funding

• K-12 education is a top public priority • 2010 is an election year

712/16/2009

Budget Cut Impact Estimates

812/16/2009

Legislative Advocacy For K-12 Funding

912/16/2009

ESEA & Race to the Top (RTTP): Application Process

1012/16/2009

Engagement of Stakeholders

• Town Hall Meetings– 5 Town Halls Completed

• Average attendance of 200 citizens per meeting• Other Community Presentations

– Employee Groups– Board Committees– Cluster Groups – Community Organizations

• Budget Suggestion Cards– Available at all schools and community meetings– More than 100 comments to date

• Website Blog – More than 300 comments

1112/16/2009

Stakeholder Input – What We Heard

• Keep Cuts Away from Students/Classrooms– Preserve Class Size Reduction

• Send a UNITED Message to Sacramento– Lobby for Flexibility and Abolish Archaic Laws & Mandates– Mobilize Parent Involvement and Advocacy

• Right-size Management and Non-School Site Positions• Investigate New Revenue Sources

– Parcel Tax– Corporate Support– Parent Contributions– Advertising

• Reduce/Eliminate/Charge for Bus Transportation• Stop Non-Mandated Testing

Financial Update

1312/16/2009

Previous Budget Reductions Summary

• 2008/09 - $90.0 million – $53.1 million

• Central Office- $35.0 million• School Sites- $18.1 million

– $46.1 million mid-year• Shift custodian cost to Redevelopment Agency Fund• Reduced purchase services• Tier III Categorical Flexibility Revenue Transfer• Expenditure shift General Fund unrestricted to categorical

• 2009/10 - $93.1 million• K-3 class size increase• Cut school supply budgets 25%• SERP

1412/16/2009

General Fund - Remaining Funds Update

Certificated Salaries, $25.36 , 7% Classified Salaries, $22.64 , 6%

Employee Benefits, $16.27 , 5%

Books and Supplies,

$48.39 , 14%

Services and Other

Operating Expenditures, $80.47 , 23%

Interprogram & Interfund Services/Transfers, $(62.26), -

18%

Capital Outlay, $10.24 , 3%Other Outgo, $(1.63), 0%

Reserves, $82.04 , 24%

Total General Fund Remaining $221.53 Million

1512/16/2009

Books & Supplies

Total Books & Supplies $48.3 Million

1612/16/2009

Materials & Supplies

Total Materials & Supplies $34.1 Million (53% schools)

1712/16/2009

Services and Other Operating Expenditures

Contracted Services >$25K, $32.86 , 41%

Travel and Conferences, $2.88 ,

4%Dues & Memberships,

$0.29 , 0%

Insurance, $0.85 , 1%

Operation & Housekeeping

Services, $15.50 , 19%

Rentals Leases & Repairs, $2.95 , 4%

Other Services & Operating Expenses,

$17.69 , 22%

Communications, $7.44 , 9%

Total Services and Other Operating

Expenditures $80.4 Million

1812/16/2009

Capital Outlay

Total Capital Outlay $10.2 Million

1912/16/2009

ARRA Funding Cliff

$0.1

$42.5

$69.3

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

2009/10 2010/11 2011/12

Total ARRA Funding = $111 million

In M

illio

n’s

2012/16/2009

ARRA Funding Detail

Resource Number and Name Total Award Allocated* BalanceBudget FTE

3200X State Fiscal Stabilization Fund (SFSF) $52,080,865 $30,247,208 355.29 $21,833,657

*Certificated Positions

3011X Title I $31,817,241 $16,117,241 117.00 $15,700,000

*K-2 Class-Size Reduction (CSR), School Site Council Training, Grade 9 Student Mentoring/Leadership, Supplemental Education Services (SES)

3313X IDEA Basic Local Assistance $25,627,361 $21,209,043 276.28 $4,418,318

*Prof Dev, Instr. Behavior Interv and Assistive Tech, Expanded Certification Options, Transitional Supt and Parent Ed and Surveys, Research and On-going Consult. and Support

3324X IDEA Preschool LEA $1,395,907 $1,048,615 15.00 $347,292

*Prof Dev, Instructional Behavior Interventions, Parent Education and Surveys

3319X IDEA Part B Preschool $911,563 $647,765 9.03 $263,798

*Prof Dev, Instructional Behavior Interventions, Parent Education and Surreys

Grand Total $111,832,937 $69,269,872 772.60 $42,563,065

2112/16/2009

Projected 2010/11 Unrestricted General Fund Deficit –Incorporating Projected 2009/10 Ending Balance Surplus

2010 Reserve Surplus(from 1st Interim Report)

$11,320,899

Hiring Freeze/Vacancy Savings (70% of unrestricted 7 mo. savings)

$1,657,299

Spending Freeze savings $ 10,000,000

Additional BRACE savings $2,155,544New Projected 10/11 Beginning Balance(Available for deficit reduction)

$25,133,742

Projected 2010/11 Deficit(including $20M 2011/12 reduction)

($84,000,000)

Updated 2010/11 Deficit (With 09/10 savings)

($58,866,258)

Additional Projected State Cuts (mid-range)(TBD in Gov. Budget release 01/10)

($86,500,000)

Total Projected 2010/11 Deficit ($145,366,258)

2212/16/2009

Potential Hiring Freeze Savings

Union Code Vacant FTE 7 Months Vacant $ Vacant FTE 7 Months Vacant $ Vacant FTE 7 Months Vacant $ Vacant FTE 7 Months Vacant $Managers 5.20 327,050 5.05 111,142 11.97 600,800 22.22 1,038,992 Supervisors 3.91 116,023 9.80 429,873 11.29 419,674 25.00 965,570 SDEA * 15.02 577,173 22.64 997,033 22.31 687,957 59.97 2,262,164 OTBS 31.93 816,999 57.43 1,796,148 36.47 1,128,720 125.82 3,741,867 OSS (1.62) (7,804) 54.38 1,256,503 41.91 743,420 94.66 1,992,119 PARA 19.39 246,577 100.50 1,562,725 23.74 398,010 143.63 2,207,312 POA 10.00 291,551 10.00 291,551 Grand Total 83.82 2,367,570$ 249.79 6,153,423$ 147.69 3,978,581$ 481.30 12,499,574$

*SDEA excludes teacher job codes 2000-2299

Unrestricted Restricted Other Funds Total

Budgeted Unfilled Positions

70% of unrestricted 7 mo. Savings = $1,657,299

2312/16/2009

One Percent Salary Rollback to General Fund

• Total savings to unrestricted $6.4 million

UNION Unrestricted Restricted Total General FundSDEA 4,217,157$ 1,607,819$ 5,824,976$ POA 45,792 17,459 63,251 Paraeducators 444,977 169,651 614,628 OTBS 568,887 216,892 785,779 OSS 544,309 207,521 751,830 AASD 363,156 138,456 501,611 Non-Represented 168,947 64,412 233,359 TOTALS 6,353,226$ 2,422,209$ 8,775,435$

GENERAL FUND

2412/16/2009

One Day Furlough – Estimated Savings

• $2.6 million unrestricted savings per day

Bargaining Unit Unrestricted Restricted Other Fund TotalSDEA 1,972,569$ 879,445$ 43,898$ 2,895,911$ OSS 108,686 148,010 95,082 351,779 OTBS 199,540 84,329 26,484 310,353 POA 19,311 - - 19,311 Paraeducator 46,877 205,065 35,226 287,167 AASD - Supv 32,963 13,785 14,805 61,553 AASD - CERT 176,545 21,664 3,028 201,238 AASD - CLASS 29,466 6,321 4,284 40,071 Confidential 9,529 - 298 9,827 Total 2,595,486$ 1,358,619$ 223,105$ 4,177,210$

1 DAY REDUCTION

Cabinet level included in AASD - Class

2512/16/2009

School Year Adjustments – Legal Perspective

• Various scenarios – subject to negotiations• work year reduction• school year reduction• combination of both

• Law typically requires 180 day school year to avoid fiscal penalties

• Temporary flexibility to reduce the school year to 175 days without penalty– For the current year and the next three years

• There are no feasible options below a 175 day school year

2612/16/2009

Budget Reduction Alternatives to Conserve Education (BRACE)

2712/16/2009

BRACE - The SDUSD Central OfficeFindings and Definitions

• Central Offices Exists to Support the Schools and Provide District-Wide Oversight and Services

• Central Office Data is Inconsistent– Definitions change yearly

• Certain Atypical Schools are Currently Considered Central Office– They should be considered as schools

• Many District Staff Working Exclusively at Schools are Currently Included in Central Office Cost Centers– School-Based Personnel should not be considered

Central Office

2812/16/2009

BRACE - SDUSD Central Office

SDUSD School Based FTEs Included in Central Office Cost Centers

1,164.53 7.9%

SDUSD Central Office Based FTEs 1,819.30 12.3%

Total FTEs in Central Office Cost Centers 2,983.83 20%

TOTAL District employees (as of 9/09) 14,815

The BRACE Team Recommends that SDUSD Use the Following Data as the Baseline for Identifying Central Office Staff:

2912/16/2009

BRACE – Principal’s CommitteePriorities and Recommendations

• Key Priorities Identified:– Maintenance of Class Size Reduction at 24 to 1 (K-3)– Retention of Vice Principals– Increased School Site Budget Flexibility– Nursing and Counseling Support (Not Health Techs)– Priority for School Security and Safety– Increase K-8 Allocation at the Grade 6-8 Level– Audit Special Education Paraprofessional Services– Review and Training for School Site Clerical Staff– Support for Technology Needs – Consider Closing Under-Enrolled Elementary Schools– Restoration of the Reduced 25% Supply/Materials Allocation

• Additional Input from Other Stakeholder Groups will be Solicited

3012/16/2009

BRACE - Special Education Overview

• SDUSD Special Education Facts:– 16,000 students with IEPs– $265,825,972 of the $1.2 Billion SDUSD Budget (22%

of total)– $85,000,000 Local Contribution in 2009/10 (Inclusive of

ARRA funds, without ARRA $97,000,000)– 387 students (2.4%) Out-of-District Placements– Special Education has Cut Positions and Reorganized

Service Delivery Model

3112/16/2009

BRACE - Special Education Recommendations

• Complete a Full Review of Special Education Revenues and Expenses to Determine:

– Impacts of reduction in transportation costs resulting from student assignment to General Ed classes

– Determine what revenues are not Included in its income, potentially inflating the local contribution amount

• Assign Fiscal Management Staff to Oversee Both SPED Revenues and Expenditures

• Determine that Special Education Students are being Fully and Accurately Identified for ADA Claims

Priority-Based Budgeting

3312/16/2009

Priority-Based Budgeting

• Priority-Based Budgeting Model – Most Viable Option for an Educational Context

• Unique Factors In Public Education Budgeting– Fixed Costs– Complex Programs– State & Federal Mandates– Minimal Operational Requirements

• Priority-Based Budgeting is Predicated on Establishing Spending Priorities– Not on What Should be Cut

3412/16/2009

Priority-Based Budgeting Components

3512/16/2009

Priority-Based Budgeting Process

• Priority-Based Budgeting Does Not Begin At Zero– Sets Basic Education and Central Office Priorities– Incorporates Mandates and Operational

Requirements• It Creates a Cornerstone/Foundation

– For the Entire Budget• Serves to Unify Rather than Divide the

Organization• Minimizes Conflict

3612/16/2009

Priority-Based Budgeting Process

3712/16/2009

Priority-Based Budgeting -Sample Mandated Functions

• Mandates are Requirements Placed upon the District – Federal, State, Local or Private (Grants) Agencies– Tied to Funding, Programs or Services

• Sample Mandates Include: – Transportation (Special Education, Program Improvement)– Monitoring and Reporting Requirements Related to Categorical

Funding - No Child Left Behind (NCLB), Title I, etc– USDA Reporting Requirements for Free and Reduced Funding– Financial Audit Capacity to Remain Fiscally Independent– California Standardized Testing and Reporting Program– Williams Case Implementation

3812/16/2009

Priority-Based Budgeting –Sample Board Priorities

• A Focus on English Language Learners– English Learner Support Teacher (ELST) at all Schools K-12 – English Language Development (ELD) – Training for Teachers and Principals –QTEL/Systematic ELD– Strengthening and Offering PD for Bi-Literacy Opportunities– New Arrival Centers

• Creating a 21st Century Learning Environment– I-21 Continuation Training for Teachers and Principals– Virtual/Online Learning for High School Students– Positive Behavioral Interventions/Supports– Class Size K-3, 20:1

• Every Child Achieving One Year’s Learning Growth in One Year– Assessments – Data Director and Benchmark Assessments for all Levels– Maintain or reduce class size in K-3

• Reducing the Achievement Gap– Tutoring/Credit Recovery for all Students– Differentiated Instruction PD for Teachers and Principals– Response to Intervention (RTI) Model– Pay Fees for AP Course Exams and PSAT – Summer School– Fund Springboard for all Middle Schools for English Language Arts (ELA)– High School Graduation Coaches

• Valuing Diversity and Integration– Off-Campus Integrated Learning Experiences (OCILE)– Equity Training for all District Employees

3912/16/2009

Priority-Based Budgeting –Sample Board Priorities

• Excellence in Employee Compensation and Benefits– Higher than County-Average Wages– Ensuring a Positive Climate in Which to Work– Equity and Fairness in Hiring and Promotional Opportunities

• Meeting the Learning Needs of Each Individual Student– Learning Contracts for all Students– Web-Based Math and Reading Interventions– Intersession for Far Below Basic and Basic Students– Math Modules for Grades K-5 Teachers – Units of Study for K-8 Teachers– Expand Units of Study for Core High School Courses (ELA and Math)

• Providing a Well-Rounded Educational Experience for Every Student– A Safe and Secure Environment– Arts and Athletics– College, Career and Technical Education

• Supportive Central Office Support for Curriculum and Instruction– A-G Default Curriculum – Gifted and Talented Education (GATE) Certification for all Teachers– Trainer of Trainers to Build In-House Expertise and Increase Capacity of all District Resource Teachers (100

Total)– School Improvement Officers– Strengthen Instructional Leadership Capacity of Instructional Leadership Teams

• Efficient and Effective Business Operations– Accurate and Timely Financial Results– Integrated Systems Providing Consistent Data– Increased Managerial Accountability at all Levels

4012/16/2009

Priority-Based Budgeting –Sample Minimum Central Office Functions

• Governance– Board of Education– Superintendent– Legal Services – Audit Services– Stakeholder Communications

• Business Operations– Finance, Budgeting & Procurement– Human Resources– Information Technology & Demographics

• District /Charter Schools Oversight– School Site Supervision– Special Education – Mandated Programs– Assessment/Research and Reporting– Instructional Materials Management

4112/16/2009

Priority-Based Budgeting –Sample Minimum Operational Requirements

• Physical Plant Operations – Custodial, Landscaping and Maintenance

• Food Services

• Facilities Planning and Construction

• Utilities Management

• Technology Management

• School Allocations – Staff, Materials and Supplies

Next Steps

4312/16/2009

Budget Actions Timeline

Month/Date Decision /Action

December - Board Approves Priority Based Budgeting Methodology

January - Weekly Board Workshops – Priorities Approved- Governor’s Budget Release- Staff Calculates Costs and Operational Requirements- Board sets Title I and other program allocations

February 9 - Board Completes Decisions on Funding Priorities and Staffing- Budget Allocations Distributed to Schools

March 15 - Deadline - Precautionary Lay-Off Notices to Certificated Staff- Second Financial Interim Report

April 13 - Board Decision on Classified Staff Lay-Offs- 45 Day Notice Required

May 14 - Notices to Certificated Staff- Governor’s May Revised Budget

June - Final Budget Adoption

4412/16/2009

Closing Comments

• Board Approves Priority Based Budgeting as Method – Tonight

• Board Adoption of Core Priorities - Mid-January

• Continued Financial/ Budget Updates– Fund Core Priorities, Mandates and Minimal Operational

Requirements– Continuing to Calculate Impact of Hiring and Spending Freezes

on Ending Balance– Governor’s Budget - January 8-10

• Stakeholder Outreach Will Continue

• Continue Advocacy Efforts in Sacramento

• Board Direction and Decisions– Late January - February

4512/16/2009

Projected 2010/11 Unrestricted General Fund Deficit –Incorporating Projected 2009/10 Ending Balance Surplus

2010 Reserve Surplus(from 1st Interim Report)

$11,320,899

Hiring Freeze/Vacancy Savings (70% of unrestricted 7 mo. savings)

$1,657,299

Spending Freeze savings $ 10,000,000

Additional BRACE savings $2,155,544New Projected 10/11 Beginning Balance(Available for deficit reduction)

$25,133,742

Projected 2010/11 Deficit(including $20M 2011/12 reduction)

($84,000,000)

Updated 2010/11 Deficit (With 09/10 savings)

($58,866,258)

Additional Projected State Cuts (mid-range)(TBD in Gov. Budget release 01/10)

($86,500,000)

Total Projected 2010/11 Deficit ($145,366,258)

4612/16/2009

San Diego Unified Students