2010/11 first interim report

2010/112010/11 FIRST INTERIM REPORT FIRST INTERIM REPORT

Board MeetingBoard Meeting

December 14, 2010December 14, 2010

LODI UNIFIED SCHOOL DISTRICTBusiness Services

Prepared by: Mr. Douglas Barge Mrs. Carrie Hargis Mrs. Maria Fong Mrs. Angel Murnan Y: \Business Services\Financial Reports\2010\1st Interim

Executive SummaryExecutive Summary Staff continues to be concerned about the State’s inability to adopt responsible budgets and Staff continues to be concerned about the State’s inability to adopt responsible budgets and

stay within those budget allocationsstay within those budget allocations

Staff has completed the report using existing law and County assumptions:Staff has completed the report using existing law and County assumptions: Negotiated concessions have been includedNegotiated concessions have been included Revenue Limit increases have been included even though they may not materialize with the State Revenue Limit increases have been included even though they may not materialize with the State

more than $6 Billion short for this yearmore than $6 Billion short for this year Mandated cost reimbursement income has not been included, nor has the final 10% SFSF funding as Mandated cost reimbursement income has not been included, nor has the final 10% SFSF funding as

these amount are not known at this timethese amount are not known at this time

On the down side:On the down side: The multi-year projections continue to show the need to reduce the budget, in future years, in the The multi-year projections continue to show the need to reduce the budget, in future years, in the

manner reported in the 2010/11 Adopted Budgetmanner reported in the 2010/11 Adopted Budget Staff continues to be concerned about cash and the management of cashStaff continues to be concerned about cash and the management of cash The District cannot continue taking the bulk of the budget cuts from the State and be expected to be The District cannot continue taking the bulk of the budget cuts from the State and be expected to be

the cash borrowing agent for the Statethe cash borrowing agent for the State

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IntroductionIntroduction If you add up all of the cuts that the State has made over the last five years If you add up all of the cuts that the State has made over the last five years

they would total more than the entire State budgetthey would total more than the entire State budget Clearly there is something wrongClearly there is something wrong Many State agencies continue to spend without regard to the budget and the Many State agencies continue to spend without regard to the budget and the

legislaturelegislature

Economic recovery is not likely until end of 2011/12Economic recovery is not likely until end of 2011/12– Impact on Education will be even further offImpact on Education will be even further off

LodiUnified School District

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New income is not coming ($1.5B - $1.7B)New income is not coming ($1.5B - $1.7B)

Cuts that could happen this year:Cuts that could happen this year: Statewide Statewide $6 Billion$6 Billion Education ShareEducation Share 3 Billion 3 Billion Balance RemainingBalance Remaining $3 Billion$3 Billion

Why does this problem keep coming back year after year?Why does this problem keep coming back year after year? State is budgeting cuts but not cutting spendingState is budgeting cuts but not cutting spending

Legislative Analyst OfficeLegislative Analyst Office If you think $25.4 Billion is a problem If you think $25.4 Billion is a problem (Get real!)(Get real!)

Add another $3 to $6 Billion onto that numberAdd another $3 to $6 Billion onto that number

Even without closing the funding gap, schools could lose Billions in Even without closing the funding gap, schools could lose Billions in programmatic reductions even if the State funded the minimum guarantee programmatic reductions even if the State funded the minimum guarantee under Prop 98under Prop 98

Major Causes of 2010/11 DeficitMajor Causes of 2010/11 Deficit Federal funding estimate not realisticFederal funding estimate not realistic Revenues downRevenues down Higher than expected expenditures (prisons, employees, Medi-Cal)Higher than expected expenditures (prisons, employees, Medi-Cal)

For 2011/12 For 2011/12 Temporary nature of 2010/11 budget solutionsTemporary nature of 2010/11 budget solutions Slow economic recoverySlow economic recovery Expiration of temporary tax increasesExpiration of temporary tax increases


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CashCash

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25% will be deferred from this year and paid next year25% will be deferred from this year and paid next year

Next year 33% will be deferred and paid the following yearNext year 33% will be deferred and paid the following year

The State will have no way to bring these dollars backThe State will have no way to bring these dollars back

They could turn into perminate actual cutsThey could turn into perminate actual cuts

With cash deferrals at these levels the District has the option of issuing With cash deferrals at these levels the District has the option of issuing taxable Tax Revenue Anticipation Notes (TRANs)taxable Tax Revenue Anticipation Notes (TRANs)

Report SummaryReport Summary The First Interim Financial Report includes a report of the General Fund and the The First Interim Financial Report includes a report of the General Fund and the

Charter School Fund (Joe Serna).Charter School Fund (Joe Serna).

Data on the Fund reports include:Data on the Fund reports include: Board Approved Budget as of 7/1/10 (Adopted Budget)Board Approved Budget as of 7/1/10 (Adopted Budget) Board Operating Budgets as of 10/31/10Board Operating Budgets as of 10/31/10 Actuals to Date (Actual Activity as of 10/31/10)Actuals to Date (Actual Activity as of 10/31/10) Projected Year Totals (Adjusted Budget as of 11/16/10)Projected Year Totals (Adjusted Budget as of 11/16/10)

Standards & Criteria for the General FundStandards & Criteria for the General Fund Required by San Joaquin County Offices of Education and the California Department of Required by San Joaquin County Offices of Education and the California Department of

EducationEducation To develop, review & assess budgets, and interim financial reports of school districts in To develop, review & assess budgets, and interim financial reports of school districts in

CaliforniaCalifornia

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Report SummaryReport Summary Multi-Year Budget Projections are included for 2011/12 and 2012/13Multi-Year Budget Projections are included for 2011/12 and 2012/13

The current fiscal situation at the State level continues to negatively impact our The current fiscal situation at the State level continues to negatively impact our District budget District budget

To ensure a balanced budget and To ensure a balanced budget and positive certificationpositive certification, based on the assumptions , based on the assumptions used in this report, the Board will be required to make reductions in 2012/13 used in this report, the Board will be required to make reductions in 2012/13

Additional reductions may be necessary based upon the updated Budget model Additional reductions may be necessary based upon the updated Budget model for 2010/11 and actions from the State in regards to funding for K-12 educationfor 2010/11 and actions from the State in regards to funding for K-12 education

State & County AssumptionsState & County Assumptions Required by the San Joaquin County Office EducationRequired by the San Joaquin County Office Education Details the change from 2010/11 Adopted Budget to 2010/11 Current Budget (as Details the change from 2010/11 Adopted Budget to 2010/11 Current Budget (as

of 11/16/10)of 11/16/10)

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Potential Need for Potential Need for Further Budget CutsFurther Budget Cuts

DescriptionDescription BudgetBudget

A. ConfidentialA. Confidential

B. C.S.E.A.B. C.S.E.A.

D. L.P.P.A.D. L.P.P.A.

H. Total ProblemH. Total Problem

C. L.E.A.C. L.E.A.

F.T.EF.T.E BudgetBudget

317,428317,428

$5,954,414$5,954,414

3,721,2223,721,222

85.8485.84

59.7059.70

F.T.EF.T.E

2011/122011/12 2012/132012/13

$$ $ 40,411$ 40,411

751,288751,288

.55.55

15.1415.14

3.853.85

E. L.U.S.D.A.A.E. L.U.S.D.A.A. 651,224651,224 6.056.05

F. SupervisorsF. Supervisors 60,74160,741 .55.55

G. Other Reductions (*)G. Other Reductions (*) 412,100412,100

(*) Includes General Reserves, Supplies & (*) Includes General Reserves, Supplies & ServicesServices


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Staff is recommending approval of the 2010/11 First Interim Staff is recommending approval of the 2010/11 First Interim Financial Report for the Lodi Unified School DistrictFinancial Report for the Lodi Unified School District

Direct staff to research and bring forward a recommendation Direct staff to research and bring forward a recommendation regarding the issuance of taxable Tax Revenue Anticipation regarding the issuance of taxable Tax Revenue Anticipation Notes (TRANs)Notes (TRANs)

RecommendationRecommendation

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Required State Required State & County Reports& County Reports

*See Separate Attachments in Board Item*


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This This ConcludesConcludes Our Report Our Report

2010/11 first interim report

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