First Interim Budget Report 2011-12

Activity through October 31, 2011Presented December 13, 2011

Steven Lawrence, Ph.D., Superintendent

Bryan Richards, Chief Financial Officer

WHY IS THE ENDING BALANCE HIGHER THAN PROJECTED LAST YEAR?Revenue 2nd Int Est Act Actuals

Revenue Limit

164,735,676

166,281,005

164,298,896

Federal

337,272

337,273

575,246

State

31,194,239

31,199,245

34,034,994

Local

2,535,869

3,162,628

4,145,444

Interfund

1,572,413

1,572,413

1,572,413

Total Revenue

200,375,469

202,552,564

204,626,993

WHY IS THE ENDING BALANCE HIGHER THAN PROJECTED LAST YEAR?

Expenditures 2nd Int Est Act Actuals

Cert Sal

87,399,211

87,367,899

85,303,132

Clsf Sal

19,807,654

20,241,703

19,756,243

Benefits

31,778,504

31,086,101

29,970,211

Bks/Supp

7,447,827

4,752,810

3,160,474

Svc/Othr

14,860,512

15,614,258

11,173,754

Capital

112,424 92,425

189,526

Interfund

2,925,484

3,425,484

3,475,778

Net Contrib

31,393,058

31,773,090

30,845,512

Total Exps

195,724,674

194,353,770

183,874,630

WHY IS THE OPENING BALANCE HIGH?

Cash Flow & State Deferrals: Deferrals increased by $8.55M Need higher fund balance to maintain positive

cash Programmatic & site budget carryovers $7.5M Late one time revenue payments

2009-10 SDA Adjustment $2M Prior year mandated costs $1.4M State Fiscal Stabilization supplement $1.6M

Held off spending anticipating an across the board cut of $330/ADA, now pending as “trigger cuts”

WHY DO WE NEED A HIGH BALANCE?

The state faces another severe deficit and even steeper reductions in spending on core services, particularly education at all levels. - Contra Costa Times, December 13, 2011

To deal with declining enrollment To deal with cuts to state funding To equip us to keep programs going as long

as we can until the State’s situation turns around

To strive not to have more layoffs

2011-12: NO COLA + TRIGGER CUTS

The 2.24% COLA has been fully offset by an addition to the deficit factor

The county advises planning for no COLA in the next two years as well

County advises planning on mid-year trigger cuts being ongoing

FUNDED REVENUE LIMIT 2011-12 VS. 2010-11

Graph courtesy of School Services of California, Inc.

Mt. Diablo Unified School District

2010-11 2011-12

$6,346.02 $6,489.02

$5,206.08 $5,207.18

Loss due to Deficit Factor

Loss due to Remaining Deficit Factor

Funded Revenue Limit Funded Revenue Limit

$1,281.84

$1,139.94

WHAT DOES A 19.754% CUT LOOK LIKE?

School year is 180 days 19.754% of school year is 35.56 days To cut school by 19.754% we would have to close

after school ended on April 25th A 19.754% reduction of the school day would

equal over 1 hour less instruction daily

10/11 REVENUE LIMIT CUT WIDENS TO $1,282/ADA

5,125

5,528

6,109

6,371 6,346

6,489

6,691

6,879

5,079

5,528

5,780

5,630

4,948

5,206 5,207 5,207 5,207

4,750

5,250

5,750

6,250

6,750

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

Do

lla

rs $

pe

r A

DA

Year

MDUSD Revenue Limit Funding per ADA

Revenue Limit

Actual 11-12 Budget

DECLINING ENROLLMENT

We are still in declining enrollment funding model

We are projecting a decline of 201.15 ADA in 2011/12 from 2010/11

This does not include effect of potential charter school conversion since district will still have to report their ADA

MDUSD ADA IS STILL DECLINING!

30,000

30,500

31,000

31,500

32,000

32,500

33,000

33,500

34,000

34,500

35,000

P-2 ADA

P-2 ADA

HOW DOES REVENUE LIMIT FUNDING LOOK?

150,000,000

155,000,000

160,000,000

165,000,000

170,000,000

175,000,000

180,000,000

185,000,000

190,000,000

195,000,000

200,000,000

Revenue Limit

Revenue Limit

*Includes $11M reduction due to CVHS Charter

UNRESTRICTED GENERAL FUND REVENUE

Revenue Limit Sources $ 165,734,968 Federal Revenue 347,273 Other State Revenue 31,848,432 Other Local Revenue 1,893,298 Interfund Transfers In 0 Total Revenue

199,823,972 Less: Net Contrib. to RGF

(40,719,672) Net Available Revenue $

159,104,300

Revenue Limit62.6%

Revenue Limit Contributed to

Restricted20.4%

Federal Revenue0.2%

State Revenue15.9%

Local Revenue0.9%

Interfund Transfers In0.0%

Mt. Diablo Unified School DistrictUnrestricted General Fund Revenues Before Contributions

2011-12 Total = $199,823,971

Revenue Limit is 83% of unrestricted general fund revenue.

UNRESTRICTED GENERAL FUND EXPENDITURES

Certificated Salaries $ 92,623,130 Classified Salaries 19,414,849 Employee Benefits 33,487,888 Books & Supplies 5,538,316 Services & Operating 12,584,907 Capital Outlay 179,420 Other Outgo 0 Interfund Transfers Out 3,904,687 Total Expenditures 167,733,197

Certificated Salaries55.22%

Classified Salaries11.57%

Employee Benefits19.96%

Books and Supplies3.30%

Services & Operating

7.50%

Capital Outlay0.11%

Interfund Transfers Out

2.33%

Mt. Diablo Unified School DistrictUnrestricted General Fund Expenditures and Transfers Out

2011-12 Total = $167,733,197

Salaries and Benefits make up 86.75% of expenditures & transfers out

UNRESTRICTED GENERAL FUND SUMMARY

Net Available Revenue $ 159,104,300

Net Expenditures 167,733,197 Net (decrease) fund bal.

(8,628,897) Beginning Balance, July 1

45,543,430 Projected Ending Balance $

36,914,533

COMPONENTS OF ENDING BALANCE

Revolving Cash $ 300,000 Stores Inventory 419,478 Economic Uncertainties (2%) 5,857,997 IRS Assessment Resolution 533,500 Tier 3 Balances & Site carryovers 6,851,032 State trigger cuts 9,686,366 Undesignated 13,266,160 Ending Balance $ 36,914,533

RESTRICTED GENERAL FUND REVENUE

Revenue Limit Sources $ 7,134,045 Federal Revenue 26,528,680 Other State Revenue 40,072,781 Other Local Revenue 10,130,583 Interfund Transfers In 0 Contribution from Unr. 45,275,298 Total Revenue $129,141,387

Revenue Limit5.52% Federal Revenue

20.54%

State Revenue31.03%

Local Revenue7.84%

Contribution from Unrestricted

35.06%

Mt. Diablo Unified School DistrictRestricted General Fund Revenue

2011-12 Total = $129,141,387

RESTRICTED GENERAL FUND EXPENDITURES

Certificated Salaries $ 37,464,789 Classified Salaries 19,991,549 Employee Benefits 23,038,613 Books & Supplies 14,427,980 Services & Other Operating 27,908,185 Capital Outlay 1,798,331 Other Outgo 1,215,293 Indirect Costs 3,877,515 Total Expenditures $ 129,722,255

Certificated Salaries28.88%

Classified Salaries15.41%

Employee Benefits17.76%

Books & Supplies11.12%

Services & Other Operating

21.51%

Capital Outlay1.39%

Other outgo0.94%

Indirect Costs Xfr Out

2.99%

Mt. Diablo Unified School DistrictRestricted General Fund Expenditures

2011-12 Total = $129,722,255

RESTRICTED GENERAL FUND SUMMARY

Total Revenue $ 129,141,387

Total Expenditures 129,722,255

Net (decrease) in fund bal. ( 580,868)

Beginning Balance, July 1 13,180,547

Projected Ending Balance $ 12,599,679

OTHER FUNDS OF THE DISTRICT

Funds for special purposes excluded from the General Fund

Special Revenue Funds Charter School – Form 09I Adult Education – Form 11I Cafeteria – Form 13I Deferred Maintenance – Form 14I

Capital Projects Funds Building (Proceeds of local bonds for

construction) – Form 21I Capital Facilities (a.k.a. Developer Fees) – Form

25I

OTHER FUNDS OF THE DISTRICT (CONT’D)

Capital Project Funds (continued)County School Facilities Fund (Developer

Fees) – Fund 35ICapital Project Fund for Blended Component

Units (Mello-Roos Measure A) – Fund 49I Debt Service Funds

Bond Interest & Redemption Fund (Measure C) – Fund 51I

Debt Service Fund for Blended Component Units (Measure A) – Fund 52I

Trust FundsFoundation Private-Purpose Trust Fund –

Fund 73I

SUPPLEMENTAL INFORMATION

Form AI: Average Daily Attendance decrease of (201.15) in 11/12 will decrease funding for 10/11.

Form CASH: Cash Flow – Ending GF cash will be positive but projecting a decline of $9.2M

Form RLI: Revenue Limit Calculations Form 01CSI: Criteria & Standards Form CI: Certification to sign summarizes

Criteria & Standards – QUALIFIED Cert.

CLAYTON VALLEY CONVERSION CHARTER EFFECT – UNRESTRICTED GENERAL FUND

Revenue Limit decrease $ (10,924,996)

Rent on CVHS property 450,649 1% oversight fee 116,536 Certificated Salary decrease 4,591,659 Classified Salary decrease 510,091 Benefits decrease 1,525,846 Books & supplies decrease 71,152 Services & operating decrease 307,349 Tier 3 pass through ($127/ADA) (225,679) Net effect annually $ ( 3,577,393)

Based on 1,777 units of ADA

FORM MYPI: MULTI YEAR PROJECTION Undesignated @ 6/12 $ 13,266,160 Operating Deficit 2012/13 ( 8,657,649) Trigger cut ongoing 12/13 ( 9,626,491) Adjustment in 2% reserve 273,974 Unappropriated Balance 6/13 ( 4,744,006) Operating Deficit 2013/14 (10,793,323) Trigger cut ongoing 13/14 ( 9,465,376) Adjustment in 2% reserve 1,973 Unappropriated Balance 6/13 $ (25,000,732)

Based upon first interim guidance, not today’s DOF numbers

QUALIFIED CERTIFICATION – WHAT DOES IT MEAN? The District projects that it may not meet its

financial obligations for the current fiscal year or two subsequent fiscal years.

We will meet our obligations for this year If necessary, we can issue a TRAN to deal with

cash flow Department of Finance report came out too late to

be included at first interim We may be unable to meet obligations for next

year based on current projections (depending on what form the additional cuts in the Governor’s January budget take, whether Clayton Valley converts to charter status and settlement of outstanding negotiations)

LAO ISSUES BUDGET ASSESSMENT

State Revenues tracking $3.7 Billion below projections

Projected $13 billion problem by June 2013 Projects all Tier 1 and about ¾ of Tier 2 trigger

cuts needed to take place

GOVERNOR & DEPARTMENT OF FINANCE REPORT

State revenues tracking $2.2 Billion below projections

Agrees with LAO on size of cumulative problem over two years

Projects full transportation cut and about 5-7% of the additional Tier 2 cut to the revenue limit

Kicks can to next year for balance of the two year $13B problem

Estimated Revenue Limit decrease of $13/ADA Estimated Transportation decrease of

$35.94/ADA Estimated cut of about $1.6M

WHAT ABOUT SOLAR $?

Solar expected to go online in late Spring 2012

Savings from COP payments being utilized to fund intervention teachers

Savings from electricity helping to ease the deficit issues we see coming in the budget

WHAT NEXT?MORE FROM

SACRAMENTO

Governor Brown’s budget will be announced in JanuaryWill include $7B in new taxes proposed in his measureWill include trigger cuts to re-balance the budget if measure fails

GOVERNOR BROWN: THERE WILL BE MORE CUTS NEXT YEAR

From today’s press conference: “There will be more cuts in the January budget for 2012-13, but not for between January and June of 2012.”

$13B hole; taxes cover $7B; need to cut $6B; will try to protect K-12 on its share of the $6B

“I would like to avoid doubling the cuts which will be the effect if the tax measure fails.”

DOF Mantosantos: “All cuts are ongoing.”