Board Budget StudyBoard Budget Study

Bassett Unified School District

February 6, 2012

Bassett’s Overall Bassett’s Overall

Financial Condition Financial Condition

All FundsAll Funds

B A S S E T T U N I F I E D S C H O O L D I S T R I C T

2012- 13 PROJ ECTED BUDGET SUMMARY

G e n e r a l f u n dInternal Service

FundTotal

Description Unrestricted Restricted Combined

Adult Education

*

Child Develop.

Cafeteria Deferred

Maint.

Special Reserve - Other than

Capital

Building Capital

Facilities

County Schools

Facilities Fund

Special Reserve Capital Outlay

Self Insurance

**All Funds

Reference Form 01 Form 01 Form 01 Form 11 Form 12 Form 13 Form 14 Form 17 Form 21 Form 25 Form 35 Form 40 Form 67

Revenue 26,568,927 8,656,064 35,224,991 3,428,544 2,833,556 2,557,180 280,000 40 10,000 4,000 100 26,000 29,000 44,393,411

Expenditures (29,489,472) (13,788,691) (43,278,163) (3,428,544) (2,833,556) (2,557,180) (280,000) 0 (1,500,000) (200,000) 0 0 (350,000) (54,427,443)

Excess (deficiency) of revenues over expenditures (2,920,545) (5,132,627) (8,053,172) 0 0 0 0 40 (1,490,000) (196,000) 100 26,000 (321,000) (10,034,032)

Other sources/(uses) (4,432,627) 4,432,627 0 0 0 0 0 0 0 0 0 0 0 0

Net increase (decrease) in fund balance (7,353,172) (700,000) (8,053,172) 0 0 0 0 40 (1,490,000) (196,000) 100 26,000 (321,000) (10,034,032)

Beg. balance - July 1, 2011 3,509,110 770,214 4,279,324 0 0 629,675 213,915 2,058 2,200,000 400,000 10,000 2,600,000 2,600,000 12,934,972

Balance - June 30, 2012 (3,844,062) 70,214 (3,773,848) 0 0 629,675 213,915 2,098 710,000 204,000 10,100 2,626,000 2,279,000 2,900,940

Components of Ending Bal.

School reserves 0 0 0 0 0 0 0 0 0 0 0 0 0

Designated reserves 70,214 70,214 0 0 0 213,915 2,098 710,000 204,000 10,100 2,626,000 2,279,000 6,115,327

Stores & revolv. cash 300,000 0 300,000 0 0 100,000 0 0 0 0 0 0 0 400,000

Economic uncertainties (4,144,062) 0 (4,144,062) 0 0 529,675 0 0 0 0 0 0 0 (3,614,387)

Unappropriated amount 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Fund balance (3,844,062) 70,214 (3,773,848) 0 0 629,675 213,915 2,098 710,000 204,000 10,100 2,626,000 2,279,000 2,900,940

* Subject to Tier III Flexibility = $2.3 million

** Budgeted $350,000 to pay for tail claims, this is an offset in expenses from the Unrestricted General Fund; $500,000 has been set-aside to pay risk mitigation expenses.

Capital Projects FundSpecial Revenue Funds

The Unrestricted The Unrestricted

General FundGeneral Fund

Financial Financial Picture – Picture – Updated Updated Gov 12-13 Gov 12-13 BudgetBudget

Deficit = 7.3 million in 12-13 or 25% of budget

To stay solvent = minimum cut of $8 million + more in 13-14

2010-11

2013-14

Financial Summary For 2010-11 to 2013-14 Updated - No Reductions

26,128,072 25,089,006

22,136,30020,740,424

26,897,894

29,906,956 29,489,472 29,186,872

(769,822)

(4,817,950)

(7,353,172)(8,446,448)

8,047,060

3,509,110

(3,844,062)

(12,290,510)

6,953,473

(3,290,890)

(10,644,062)

(19,090,510)(20,000,000)(19,000,000)(18,000,000)(17,000,000)(16,000,000)(15,000,000)(14,000,000)(13,000,000)(12,000,000)(11,000,000)(10,000,000)

(9,000,000)(8,000,000)(7,000,000)(6,000,000)(5,000,000)(4,000,000)(3,000,000)(2,000,000)(1,000,000)

-1,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,00011,000,00012,000,00013,000,00014,000,00015,000,00016,000,00017,000,00018,000,00019,000,00020,000,00021,000,00022,000,00023,000,00024,000,00025,000,00026,000,00027,000,00028,000,00029,000,00030,000,000

2010-11 Actuals 2011-12 Proj. 2012-13 Proj. 2013-14 Proj.

Revenues

Expenses

On-goingDeficit

Reserves

CashBalance

2012-13

2010-11 2011-

12

2013-14

Assumptions:Assumptions:

Zero COLA for 2012-13, 2013-14Zero COLA for 2012-13, 2013-14 Trigger reductionsTrigger reductions

– $1.5 million or $370 per ADA$1.5 million or $370 per ADA– Elimination of transportation funding Elimination of transportation funding

$257,000$257,000

K-3 K-3 class sizes revert to 20:1, class sizes revert to 20:1, addadd $800,000 in deficit$800,000 in deficit if 4-12 class if 4-12 class sizes revert to 32:1 totaling to sizes revert to 32:1 totaling to $8.1$8.1 millionmillion

The following charts reflect the ratio of The following charts reflect the ratio of expenses by employee groups and expenses by employee groups and

other non-compensation expense to other non-compensation expense to total budgeted expense.total budgeted expense.

Unrestricted General Unrestricted General Fund Fund

Expenditure AnalysisExpenditure Analysis

Confidential, 258,393.72 , 1%

Certificated, 16,280,518.95 , 55%

Management, 2,836,198.41 , 10%

Other Expenses (Non-salary), 4,549,483 , 15%

Classified, 4,794,414.45 , 16%

Unrepresented, 770,463.47 , 3%

Classified

Confidential

Certificated

Management

Unrepresented

Other Expenses (Non-salary)

15%

Salaries and Benefits = 85%Other Expenses = 15%Total = $29.5 million

Ratio of 2012-13 Budget By Expense Category

Unrestricted General Fund Budget 2012-13

Certificated, 4,471,840 , 55%

Management, 779,031 , 10%

Confidential, 70,974 , 1%Unrepresented, 211,627 ,

3%

Classified, 1,316,902 , 16%

Other Expenses (Non-salary), 1,249,626 , 15%

Classified

Confidential

Certificated

Management

Unrepresented

Other Expenses (Non-salary)

Deficit Applied Using Expenditure Ratio - Taxes Not Passing

Salaries and Benefits = 85%Other Expenses = 15%Total = $8.1 million

$8.1 Million Applied to Each Expense Category

Classified, 1,073,032 , 16%

Confidential, 57,831 , 1%

Certificated, 3,643,722 , 55%

Management, 634,766 , 10%

Unrepresented, 172,436 , 3%

Other Expenses (Non-salary), 1,018,214 , 15%

Classified

Confidential

Certificated

Management

Unrepresented

Other Expenses (Non-salary)

Deficit Applied Using Expenditure Ratio - Taxes Passing

Salaries and Benefits = 85%Other Expenses = 15%Total = $6.6 million

$6.6 Million Applied to Each Expense Category

Possible Solutions:Possible Solutions:

1. Unrestricted General Fund

• Furlough = $ 102,000 per day

• 1% Salary rollback = $212,000

• Reduction in force

• Health benefit reduction

2. Other Funds

• Adult Education – Tier III flexibility

• Worker’s comp fund

• Special reserve for capital outlay

To Sell or Lease Surplus PropertyTo Sell or Lease Surplus Property 17455. The governing board may sell any 17455. The governing board may sell any

real property belonging to the school district real property belonging to the school district or may lease for a term not exceeding 99 or may lease for a term not exceeding 99 years. years.

17462. (a) The funds derived from the sale of surplus propertyshall be used for capital outlay or for costs of maintenance of school district property that the governing board of the school district determines will not recur within a five-year period. Proceeds from a lease of school district property may be deposited into a restricted fund for the routine repair of district facilities.17464. Except as provided for in Article 2 (commencing with Section17230) of Chapter 1, the sale or lease with an option to purchase ofreal property by a school district shall be in accordance with the following priorities: (a) First, park or recreational purposes (b) Second, the property shall be offered for sale or lease with an option to purchase, at fair market value in several different ways subject to the terms stated in the article.

Helpful InformationHelpful Information

Market analysis Market analysis – Employee salaries and benefitsEmployee salaries and benefits– Other expensesOther expenses

Enrollment dataEnrollment data– Class sizesClass sizes

On-going vs. One-time On-going vs. One-time SolutionsSolutions

On-going solutions = less cuts the On-going solutions = less cuts the following year; less interest to following year; less interest to pay short term borrowingpay short term borrowing

One-time solutions = deeper cuts One-time solutions = deeper cuts in the out years; additional cost to in the out years; additional cost to pay interestpay interest

Why Maintain Fiscal Solvency? Why Maintain Fiscal Solvency?

When a district reaches the point where they can When a district reaches the point where they can no longer meet their financial obligations they no longer meet their financial obligations they must apply for a state loan, otherwise known as must apply for a state loan, otherwise known as receivership. receivership.

Once a state loan is received the state takes Once a state loan is received the state takes over control of the district over control of the district – District pays for the cost of the compensation package for the State District pays for the cost of the compensation package for the State

Administrator (E.C. 41326[(b)][(8)] Administrator (E.C. 41326[(b)][(8)] – The cost of additional staffing as determined by the State The cost of additional staffing as determined by the State

Administrator to be necessary for ensuring fiscal recovery (E.C. Administrator to be necessary for ensuring fiscal recovery (E.C. 41326[(b)][(9)] 41326[(b)][(9)]

– The cost of management reviews and developing a recovery plan, The cost of management reviews and developing a recovery plan, including the cost of the initial comprehensive review and follow-up including the cost of the initial comprehensive review and follow-up reviews every six monthsreviews every six months

Why Avoid State Loan or Why Avoid State Loan or Receivership?Receivership?

If the district and the Board, while it has the power, do If the district and the Board, while it has the power, do not take the necessary actions locally to restore fiscal not take the necessary actions locally to restore fiscal solvency, the same actions and more will be imposed solvency, the same actions and more will be imposed by the state. The typical state loan is established to be by the state. The typical state loan is established to be a 20-year payback. The district remains under some a 20-year payback. The district remains under some level of state control until that payback is complete. level of state control until that payback is complete. Generally, recovery costs more and takes longer if a Generally, recovery costs more and takes longer if a state loan is required.state loan is required.

In the long term, taking the necessary actions locally In the long term, taking the necessary actions locally and avoiding a state loan will result in greater local and avoiding a state loan will result in greater local control, less outside intervention, and better long-control, less outside intervention, and better long-term outcomes for students, employees, and the term outcomes for students, employees, and the community. community.

What’s Next?What’s Next?

1. Negotiate with employee groups

2. Work with Budget Advisory Committee (BAC)

3. BAC recommends to Superintendent

4. Staff/Community meetings

5. Superintendent recommends to the Board of Education

6. Board adopts solutions

7. Implementation