Devin Vodicka, EdD

Assistant Superintendent, Business Services

May 9, 2012

5/3/2012 1

California’s Education Spending Continues to Lag

-$3,000

-$2,600

-$2,200

-$1,800

-$1,400

-$1,000

-$600

-$200

$200

$600

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California’s K-12 Spending Per Student Lags BehindThat of the Rest of the U.S. More Than at Any Time in 40 Years

* 2010-11 data estimatedNote: Rest of U.S. excludes the District of Columbia

Source: National Education Association

-$2,856 (est.) per student loss in 2010-11

National Average

Choices and Priorities Matter

California demands and deserves a “world-class” education system

The top five states, in terms of student performance, are Vermont, Rhode Island, Wyoming, New Jersey, and Maine

The bottom five are California, Idaho, Mississippi, Nevada, and Arizona

What’s different?

California has fallen from number one to number 46 in per-ADA funding; and the results bear that out

Top Five Bottom

Five

Per-student spending

$16,000 – $22,000

$6,700 – $8,700

Percent of state resources

4.2% – 6.0%

3.2% – 3.9%

4th Grade NAEP* 32% – 44% 22% – 33%

8th Grade NAEP* 34% – 47% 19% – 37%

*National Assessments of Educational Progress

Data from

http://www.ed-data.k12.ca.us

Most recent data available is from 2009-10

San Diego County: Revenue Per Student Comparison

5/3/2012 4

First Interim presented in December 2011;

represented Financial Condition through October 31, 2011

Second Interim presented in March 2012; represented Financial Condition through January 31, 2012

Reflected updated estimates of revenues, expenditures, and ending balance components for current fiscal year.

Background Information

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CUSD remains “qualified” as we are able to meet current financial

commitments for the remainder of this fiscal year but not for the two subsequent years

As a result, the Third Interim report is required by the County Office of Education.

Reflects updated information through April 30, 2012. Projected deficits: 2012-13: $0 Includes layoff of required number of certificated personnel to make

up for CUTA “Fair Share” of projected deficit Includes layoff of additional certificated personnel to ensure financial

balance in the event of midyear cuts Includes savings from LIUNA Tentative Agreement and Management

Compensation Reductions.

2013-14: $10.4 million

Current Information

5/3/2012 6

Special Education Transportation – State Funding:

Revenue of $137,000/year cut by State action effective 2013-14. Increased district contribution to program operations to offset loss of funding.

Federal Revenues: In FY 2011-12, recognized receipt of one-time Federal Education Jobs funds totaling $30,500; lowered Title II award for current year to permit “carryover” of $35,000 to cover operations in FY 2012-13.

Major Changes: Revenues

5/3/2012 7

Local Income (Interest, facility use fees, District

rentals, miscellaneous income, etc.): Lowered current and future projected interest earnings to 0.50%. Budget affected by ($75,000) per year.

Other Local Income (donations, grade camp funds, etc.): Since Second Interim, an additional $202,296 received to date in donations and other reimbursements. For next two years, only $80,000 projected in donations each year from Educational Foundation; all other donations are recognized upon receipt.

5/3/2012 8

Major Changes: Revenue

PERS Increase: FY 2011-12 rate is 10.92303%. Due to

State economic conditions, the PERS investment portfolio has suffered significant losses. Latest CalPERS school employer contribution rate is projected to be 11.81% effective FY 2012-13 and beyond. CalPERS Board is expected to take action to adopt final rate for 2012-13 at its May 16, 2012 meeting.

Other Labor Related Cost Changes: Late March 2012, SDCOE JPA announced Worker’s Comp rate for district would be reduced from 1.74% to 1.62% for next year. In April 2012, SDCOE announced Unemployment Insurance Tax Rate would reduce from 1.61% to 1.10% effective FY 2012-13. Both changes are included herein.

Major Changes: Expenditures

5/3/2012 9

Retiree Benefits: Projected premium increases

effective January 1, 2012 based on current number of retirees. An additional 20 more retirees--qualifying for benefits until age 65 from all employee groups--are projected effective July 1, 2012. Cost for additional retirees is projected at $300,000 beginning FY 2012-13. OPEB liability is “pay-as-you-go”.

Major Changes: Expenditures

5/3/2012 10

Recent Expenditure Reductions: On April 18, 2012, the Board

of Trustees approved reorganizing site operations at Carlsbad Village Academy. Subsequently, the District settled compensation negotiations with LIUNA, the classified employee group. Savings from these actions are reflected herein.

Other Expenditure Reductions: Earlier this year, Board action included layoff notices to over 100 teachers. To balance budget for Third Interim purposes, the District has cut the budget by an appropriate number of teacher FTEs. Management, confidential, and supervisory employees were formally noticed of salary and/or work day reductions effective July 1, 2012. This budget cut is also incorporated herein.

5/3/2012 11

Major Changes: Expenditures

Contribution to Restricted Programs: Special

Education and Special Education Transportation: Due to dissolution of most NCCSE funded regional classes effective FY 2012-13, the district will lose reimbursement of $149,000 for one regional class. On March 28, 2012, the Board approved transportation bid reducing service costs by over $1M. Pending final student counts, gas prices, etc, the transportation budget was reduced by $920,000.

5/3/2012 12

Major Changes: Expenditures

2011-12

5/3/2012 13

2012-13

5/3/2012 14

How Did We Get Here?

5/3/2012 15

5/3/2012 16

CUSD Revenue, Expenditures, and Reserves

2006 2007 2008 2009 2010 2011 May-12 Proj 2013

Reserve $7,290,197. $9,709,801. $13,011,027 $18,462,237 $16,712,892 $15,047,689 $7,685,966. $3,605,436.

Revenue $71,585,198 $81,515,019 $86,118,839 $87,826,266 $85,934,756 $82,598,872 $74,284,010 $72,940,275

Expenditures $72,003,526 $78,516,236 $82,817,613 $83,895,662 $87,684,101 $84,264,075 $81,645,733 $77,020,805

$-

$10,000,000.00

$20,000,000.00

$30,000,000.00

$40,000,000.00

$50,000,000.00

$60,000,000.00

$70,000,000.00

$80,000,000.00

$90,000,000.00

$100,000,000.00

Average Daily Enrollment

2009 2010 2011 Adopted 2012

ADA 10317 10417 10593 10596

9000

9200

9400

9600

9800

10000

10200

10400

10600

10800

11000

AD

A

5/3/2012 17

Revenue Increases One-Time Expenditure Reductions

Ongoing Expenditure Reductions

• “Fair Share” Recalculation (subject to change)

• NCCSE Equalization • Donations

• Reducing deferred maintenance contributions.

• Reduce start-up spending in 2012-13 for Sage Creek High School

• Reduce Sage Creek Expenditures in 2013-14 • Reduction in Travel and Conference

budgets • Reduction in Site/Department accounts • Reduction in Special Education budget

based on program savings • Reduce Tier III Certificated Non-

instructional Hourly • Reduce Personnel Commission

Discretionary Budget • Reclassification of maintenance expenses • LIUNA Fair Share Benefit/Salary

Reductions • Management Compensation Reductions • Teacher layoffs necessary to cover CUTA

“Fair Share” portion of projected deficit • Blue Shield Credits

• Increasing class size in grades 1-3 to approximately 32 students in each class.

• Eliminating K-6 Home Study program. • Eliminating one Director of Curriculum &

Instruction position. • Eliminating the Administrative Assistant—

Language Assessment Center position. • Eliminating one English Language

Development Resource Teacher. • Elimination of general education summer

school (K-8) and reduction of general education summer school (high school).

• Eliminating two part-time certificated librarians.

• Elimination of Admin Assistant to AP • Elimination of Accompanist • Reduction in Athletics budget • Reduction or elimination of programs such

as Cal-SAFE and Add-Up • Reduce CVA by 2.0 Full-Time Equivalent

(FTE) Teachers • Increase staffing ratio at CHS to 38.5 • Eliminate 1.0 Librarian • Eliminate .4 FTE Psychologists • Eliminate 1.0 FTE Executive Assistant,

Business Services • Eliminate 1.0 FTE Custodian • Reorganization of CVA/CSA • Reduce Administration/Management

expenses • Eliminate Kontraband Contract • Reduce School Resource Officer Contract • Reduce Write4Fun Contractual by 25% • Leaving vacant two Instructional Aide—

Computer Lab positions. • Transportation savings

5/3/2012 18

Kindergarten (Half-Day CSR)

1st-3rd Grade

4th-5th Grade

6th-8th Grade

9th-12th Grade

2009-10 32 20 32 33 34

2010-11 32 22 32 33 34

2011-12 32 32 32 33 34

2012-13 (projected)

33 32 32 33 38.5

2013-14 (projected)

33 32 36 36 38.5

5/3/2012 19

Class Sizes

5/3/2012 20

Consideration for Reduction Expenditure Category Outcome

Group 1: Strong Sage Creek Delay Budget compressed for 2012-13 and 2013-

14

Reduce/Eliminate Admin/Management

Done

Reduce/Eliminate Stipends Done

Employee Compensation Reductions

CUTA Negotiations in process

LIUNA TA Completed

Management Notices Completed

Reduce/Eliminate Travel & Conference

Done

Reduce/Eliminate Site and Department Accounts

Done

Reduce Special Ed Done

Reduce Textbook Expenses Not feasible—we spend only $20 per

student per year

Group 2: Moderate Closing School(s) Reorganization of CVA/CSA

Reduce/Eliminate Classified Positions

Done

Reduce/Eliminate Athletics Done

Reduce/Eliminate Contractual Done

Reduce/Eliminate Programs Done

Reduce Instructional Days CUTA Negotiations in Process

Group 3: Low Increase Class Size—Elementary Grades 4-5 increase to 36 in 2013-14

Increase Class Size—Middle Increase to 36 in 2013-14

Increase Class Size—High School Increase to 38.5 in 2012-13

Reduce/Eliminate Guidance Reduce 1.0 Counselor (CVA/CSA)

5/3/2012 21

Deficit Spending Problem

2010 2011 May-12 Proj 2013

Deficit Spending $(1,749,345.00) $(1,665,203.00) $(7,361,723.00) $(4,080,530.00)

Cumulative Deficit Spending $(1,749,345.00) $(3,414,548.00) $(10,776,271.00) $(14,856,801.00)

$(16,000,000.00)

$(14,000,000.00)

$(12,000,000.00)

$(10,000,000.00)

$(8,000,000.00)

$(6,000,000.00)

$(4,000,000.00)

$(2,000,000.00)

$-

Conclude CUTA Negotiations Path A: Agree on furlough days with contingency language

and rescind layoff notices Path B: Continue with layoffs until negotiated agreement is

reached Implement LIUNA Benefit Restructuring Revenue Enhancements

Aggressive fiscal conservation Anticipate new round of expenditure reductions next year Approximately $5 million if Governor’s November tax

initiative passes Over $10 million if Governor’s November tax initiative fails

What Now?

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5/3/2012 24

It is respectfully recommended that the Board of

Trustees approve submission of the Third Interim Report with certification of “qualified” financial condition, as presented.

Recommendation

5/3/2012 25