Post Election Day Fiscal Analysis & Preliminary First Interim LookNovember 27, 2012

2

Presentation Overview

• Opening Remarks• Proposition 30 Impacts• Budget Outlook – LAO Report• SDCOE Guidance for First Interim• Cash Flow Projection/Deferrals• Budget Solutions List – Before Governor’s Budget proposal

• Closing Remarks

3

Opening Remarks• Presentation Objectives:– Provide Post Election Fiscal Update to the Board– “Set the Table” for First Interim Report– Obtain Board Feedback/Concurrence for First Interim Strategy

• Uncertain Budget Setting…But Encouraging Way Ahead– Prop 30, Prop Z, LAO Report

• Reality…Still Have Deficits…and New Revenue• The Real Budget Development Begins with the Governors

Proposed Budget – January 2013• Focus: Must Stabilize District Operations and Advance

Collaboration and Communications

4

Proposition 30 Highlights

• Proposition 30 2012-13 Budget Impacts– Level Funding in current year 2012-13– No Mid Year 2012-13 reduction…No Shortened

School Year!• No $441 Revenue Limit/ADA or $47.2 M mid-year cut

– Deferral buy down by state will improve cash flow projections in 2013-14, but will not help current year• Anticipate deferral buy down in July and August 2013 for

2012-13 fiscal year

5

2013-14 Budget Outlook

• No Specific Budget Guidance Available Until Governor Releases Budget in Early January

• Early Indications Are Promising For Funding Improvements for K-12– COLA and Deficit Factor Changes

• November LAO Report Highlights Positive Signs– Manageable 2013-14 State Deficit– Prospects for budget surpluses in subsequent years

6

SDCOE First Interim Guidance

• San Diego County Office of Education (SDCOE) First Interim Guidance– Still urges caution– Will allow flexibility in solutions proposed pending

Prop 30 implementation in January Budget Proposal– Stresses need for adequate reserves to enhance

stability

7

Cash Flow Projections

• District Cash Flow Must Remain A Primary Short Term Budget Focus– State deferral schedule changes DO NOT help

2012-13 cash flow– District is at limit of TRANs borrowing– TRANs borrowing for 2013-14 will be constrained• By alternative liquidity limitations

8

2012-13 Cash Flow Projection With Prop 30

JUL AUG SEPT OCT NOV DEC 01-05

DEC 06-31

JAN 01-15

JAN 16-30

FEB MAR APR MAY JUN

Actual 82.41445787

97.96758679

38.56740786

57.93636699

NaN NaN NaN NaN NaN NaN NaN NaN NaN NaN

Pro-jected

NaN NaN NaN NaN 53.4198230308

49.3690838808

162.398826831

6

92.9359011516

87.1124896612

50.278495612

32.9597866528

11.8528796536

83.6141620344

23.5948127352

$12.5

$37.5

$62.5

$87.5

$112.5

$137.5

$162.5

Mill

ions

Low Cash Balance

9

Prop 30 Impact on 2013-14 Deficit

Amount Budget Adjustment

- $92 mil Original budget shortfall for GFU 2013-14

+ $47 mil Additional Prop 30 revenue for GFU 2013-14

- $33 mil Less loss of 14 day furlough savings for GFU 2013-14

- $2 mil Less impact of 1% raise for top of salary schedule (TA) for GFU 2013-14

- $80 mil Revised GFU Budget Shortfall for 2013-14(Projection at Adoption of Revised Budget July 2012 Post TA and Reaffirmed November 2012)

GFU Budget Shortfall for 2013-14

10

2013-14 Budget Solutions

• District Required to Submit Solutions List for 2013-14 in First Interim Report to SDCOE

• Solutions List Based on 2012-13 Budget Solutions List Approved by the Board in June 2012

• With Board Concurrence, First Interim Report (SACS) Will Include Solutions List– Superintendent will return to the board in January

with specific recommended adjustments to reflect Governor’s budget proposal

11

Budget Solutions List for First Interim Report

2013-14 Budget Solution Category * Reductions in $ Millions

Central Office Reductions:Program reductions, staffing reductions

$5.6 million

School Site Reductions:Adjust for declining enrollment, school realignments, staffing adjustments

$55 million

Other Solutions:Real estate revenues, TRANS savings, Prop Z savings and other funds

$20 million

Total Solutions $80.6 million

* Specific solutions and adjustments will be made based on January Governor’s proposed budget. Notional strategy supports First Interim report.

12

Budget Development Timeline

Step Task Date

1 Impact of Proposition 30 Passing to Budget Development - Update

November 27, 2012

2 Board Approval of First Interim Report- BOARD ACTION

December 11, 2012

3 Governors Proposed Budget Released Mid-January, 2013

4 Superintendent Report on 2013-14 Budget Solutions Adjustments

January 22, 2013

13

Closing Remarks

• Laser Focus on Stability, Trust, and Team Building• Maintain Solid Communications– Budget numbers will change based on First Interim

Report and Jan-June cycle– Jan proposed budget, Legislative engagement, May

Revision, state approved budget– Update all Stakeholders as Sacramento adjusts

direction• Deal with deficits in transparent, inclusive way• Proceed with First Interim report refinement/finalize