Current Year Budget Update andFY 2020 Budget Development Process

Budget and Business Services Committee01/08/20

Budget UpdateAgenda

● Review of Current Year Budget Findings

● Budget Trends

● Fiscal Year 2020-21 Budget Development Process

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SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Review of Current Year Budget

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FY 2019-20 Budget Outlook (UGF)$31.8M Budget Shortfall

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Category (in Millions)

(A)FY 2018-19 Unaudited

Actuals

(B)FY 2019-20 Approved

Budget

(C)FY 2019-20 Potential Shortfall

(D)FY 2020-21 Projected

Budget

(E)FY 2021-22 Projected

Budget

Total Revenues (mostly LCFF) $600.6 $599.3 $599.3 $615.0 $631.5

Total Expenditures -$610.2 -$622.3 -$653.9 -$675.2 -$686.8

Net Change in Fund Balance -$9.6 -$23.0 -$54.6 -$60.2 -$55.3

Beginning Fund Balance $50.4 $51.1 $40.8 $17.9 $18.3

Ending Fund Balance $40.8 $28.1 -$13.8 -$42.3 -$37.1

Required Reserve -$28.9 -$17.3 -$17.9 -$18.3 -$18.6

Undesignated Fund Balance $11.9 $10.8 -$31.8 -$60.5 -$55.6

The projected shortfall is driven by $42.5M total near-term pressures:

$10.3 Million decrease in available Fund Balance

$25.4M Potential Special Education Costs● $15.0M - Personnel ($7.6M Interim)● $9.6M - NPA/NPS ($7.2M Interim)● $0.8M - Translation Services for IEPs

$6.0M Leaves & Substitute Pool Projection

$0.2M Facilities Leasing and $0.6M Reserve Increase

Uncertainty related to Board Resolutions, e.g. VAPA (~$3.5M) and LatinX and Labor negotiations (all contracts are open for FY 2020-21)

FY 2019-20 Budget Outlook (UGF)$31.8M Budget Shortfall

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Assessment & Solutions

We Cannot Risk Miscalculating on FY 2019-20● Estimated Maximum risk is $31.8M, growing by $25-$30M annually ● Current year adjustments are required

Identify $32 Million Current Year Solutions

● Shift Unrestricted GF (UGF) expenses to restricted sources (e.g. PEEF)○ One-time sources buy time to identify longer-term solutions○ May require trade-offs with other District priorities

● Work with Central Services and School Sites to identify immediate ongoing/one-time solutions will help address out-year risk

● FY 2020-21 Budget will need to identify Ongoing solutions

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Assessment & Solutions$23.5M One-time Adjustments

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Assessment & Solutions$8.3M Remaining Shortfall

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Assessment & Solutions$8.3M Remaining Shortfall● Driving Principles

○ Immediate Action is Required

○ Minimize impact on services to students

● Path Forward

○ Work directly with Division Chiefs to identify individualized cuts

○ Not an across the board reduction → Aiming for targeted adjustments

○ Strive for ONGOING solutions that ease the burden for FY 2020-21

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SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Budget Trends

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Historical Budget Trends ($Ms)Spenddown of Fund Balance

❖ Fund Balanced has supported deficit spending since FY 2016-17

❖ Revenue growth has been limited due to:➢ Steady enrollment➢ Full implementation

of the State’s Local Control Funding Formula (LCFF)

❖ Expenditures have grown steadily

❖ Fund Balance is no longer available to cover costs

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FY 2020-21 & FY 2021-22 Budget Outlook (UGF)$60.5M & $55.6M Budget Shortfalls

❖ Revenue growth continues to be limited relative to Expenditures

❖ Expenditure Inflation Trends:

➢ 1% Salary Step/Column➢ 2% Ave. Benefits➢ 3% Non-personnel

❖ Other Key Assumptions:

➢ $15M SpEd Staffing➢ $10M SpEd NPA/NPS➢ $9M Leaves ➢ $18M Reserve

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FY 2020-21 & FY 2021-22 Budget Outlook (UGF)$60.5M & $55.6M Budget Shortfalls

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Category (in Millions)

(A)FY 2018-19 Unaudited

Actuals

(B)FY 2019-20 Approved

Budget

(C)FY 2019-20 1st Interim

Report

(D)FY 2020-21 Projected

Budget

(E)FY 2021-22 Projected

Budget

Total Revenues (mostly LCFF) $600.6 $599.3 $599.3 $615.0 $631.5

Total Expenditures -$610.2 -$622.3 -$653.9 -$675.2 -$686.8

Net Change in Fund Balance -$9.6 -$23.0 -$54.6 -$60.2 -$55.3

Beginning Fund Balance $50.4 $51.1 $40.8 $17.9 $18.3

Ending Fund Balance $40.8 $28.1 -$13.8 -$42.3 -$37.1

Required Reserve -$28.9 -$17.3 -$17.9 -$18.3 -$18.6

Undesignated Fund Balance $11.9 $10.8 -$31.8 -$60.5 -$55.6

Budget OutlookMajor Risks

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● Labor Negotiations

○ Press expenditures further beyond revenue capacity

● Lack of Ongoing solutions to realign expenditures with revenues

○ One-time adjustments require ongoing repairs

○ Risk Negative Certification and Receivership

Budget OutlookMajor Risks

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● LWEA Wages cost $40M annually and $120M over 3-years

○ The City has committed $52M

○ The District has agreed to cover balance of RDR

● Ongoing delay of LWEA implementation will eliminate SFUSD’s Rainy Day Reserve

○ Lowers credit ratings/ higher cost of capital/ less for modernization

○ Reduces recessionary cushion

SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Fiscal Year 2020-21Budget Development

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Budget Process & Timelines● January

○ Meet with Senior Leadership to identify priorities and options for change○ Update LCAP Task Force on budget outlook○ Attend Governor’s Budget Update to understand State funding levels

● February

○ Committee of the Whole (Feb 4th) to share Budget Instructions, share initial District Staff prioritizations, and receive feedback from Commissioners & Public

● March

○ 2nd Interim Report, FY 2019-20

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Flexibility

Budget Prioritization ProcessConsiderations & Stakeholders

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School Site Staffing

Curriculum & Instruction

Student & Family Supports

Student & Family Supports

EquityStability Transparency

Central Services to Schools

LCAP Task Force

School Sites

District Leadership

Board of Education

SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Sep 4 Oct 2 Nov 6 Dec 4 Jan 8

● Equity Studies Resolution● Update on Transportation Services● Planning for Budget and Business

Services Committee 2019-2020

● KIPP Bayview Renewal Petition● KIPP SF Bay Charter Renewal

Petition● Budget and Business Services

Committee Calendar● Update on Student Nutrition

Services● Update on Family Communication

via Website/ParentVUE● Unaudited Actuals for FY 2018-19● PEEF and ERAF update + City

Controller’s update● Update on Fall Budget Revise

● One Purpose Charter Renewal● Latinx Achievement Resolution● FY 2019-20 Budget and Business

Services Calendar ● Parent Communications System

update ● PEEF Update ● Hold Harmless Buffer, Enrollment

Capacity and Enrollment Changes

● First Interim Update● Update on Weighted Student

Formula, MTSS and Central Office Allocations

● PEEF Update● Drupal Website Rollout Update

● Gateway Middle School Charter Renewal

● Budget Outlook● Update on Weighted Student

Formula, MTSS and Central Office Allocations

Feb 5 Mar 4 Apr 1 May 6 June 3

● Governor’s January Budget● Budget and LCAP Development

Update and Timelines

● Second Interim Update● School Site Allocations Overview● PEEF Expenditure Plan

● LCAP Presentation and Taskforce Update

● LCAP and Budget Development Update

● LCAP and Budget First Reading preview with BBS Committee

● Update on Final PEEF estimate from City Controller’s Office

Action items in bold fontOngoing business:

● Charter Renewal presentations and renewal petitions● Board Resolution Fiscal Impact Analysis as needed

19Agendas subject to change

Budget and Business Services Meeting Agendas

SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Site Planning & LCAP Stakeholder Engagement

Month Sep Oct Nov Dec Jan Feb Mar Apr May June

BBS Date Sep 4 Oct 2 Nov 6 Dec 4 Jan 8 Feb 5 Mar 4 Apr 1 May 6 June 3

SFU

SD/S

FCO

E LC

AP

SFU

SD

Bu

dge

t D

ev.

WSF & MTSS Allocations

School & Central Office Budgeting

FY 2021 Targets EstablishedBudget

Compilation & Analysis

BOE Readings and Adoption

BBS Review

Fall Final Revision for School Sites

Prepare 2020-21 LCAP

Sel

ect

BO

E M

eeti

ngs

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FY 2019-20 Budget & Business Services Calendar

2nd ReadingLCAP & Adopted

BudgetJune 23

1st ReadingLCAP & Recommended Budget

June 9

District & COE 1st Interim Report

Dec 10

District & COE2nd Interim Report

Mar 10

2nd ReadingPEEF Expenditure Plan

Mar 10

PAC, DELAC, AAPAC, SAC present Recs to BOE

Respond to Stakeholder

Recs

LCAP Task Force Data Review

District Strategic Plan Refresh

Preliminary Selection of LCAP Goals & Activities

Site Planning SummitMarch 7

1st ReadingPEEF Expenditure Plan

Feb 25

Timeline subject to change

SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Fiscal Year 2020-21Budget Development

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Conclusion

● SFUSD is facing significant Budget Shortfalls

○ Fiscal Staff is working with Senior Leadership to identify priorities for funding

○ $8M potential reductions are still required for FY 2019-20

○ $60M reductions are anticipated for FY 2020-21 and ongoing

● In February Fiscal Staff will present a clearer path forward

○ Confirm Budget Outlook and Instructions

○ Share Initial Thoughts on Priorities and Budget Adjustments

○ Work with Stakeholders to Hone in on Priorities → What is most Essential?

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SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Thank You

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SAN FRANCISCO UNIFIED SCHOOL DISTRICT

Appendix

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Assessment & Solutions$12.0M PEEF-ERAF

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Assessment & Solutions

~~~

$12.0M PEEF-ERAF:Potential Uses*

*subject to change pending further analysis.

SLAM$7,000,000

Librarians$800,000

Physical Education Teachers$1,000,000

Arts/Music Teachers$5,200,000

OGU$5,000,000

Translation and Interpretation $800,000

Behavioral Programs$800,000

Wellness Programs$3,200,000

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❖ All uses of funds must be eligible for PEEF

❖ FY 2019-20 Expenditure Plan programming will not be affected

❖ FY 2020-21 Revenue outlook allows for growth in current programming without one-time ERAF funding