STATE FISCAL CRISIS: UPDATED IMPACTS ON

K-12 AND RUSDAugust 16, 2012

2012-13 State BudgetIt Is All About November

Education was treated better than any other state-funded program in the June version of the 2012-13 State Budget.

K-12 received a very slight increase in revenue limit funding.

In the “final” budget, only one of four of the governor’s policy and reform initiatives was enacted by the legislature.

A semi-reasonable form of mandated cost reimbursement program reform promoted by RUSD was approved.

Not approved (for now) was Weighted Student Formula, elimination of Pupil Transportation funding, and making optional Transitional Kindergarten

2012-13 revenue levels assume the passage of the governor’s tax initiative on November 6.

Without Proposition 30 revenues, the state’s General Fund is $9 billion further in the hole. Education is set up to make up the largest portion of the balancing act.

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Despite the State Fiscal Environment

Source: SSC Governor's Proposed Budget, updated for impact of SB 81 in 2011-12

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Average Unified District

Loss of COLA

Loss of Baseline dollars

Loss due toMidyear cut

Actual vs. Statutory Funding Levels

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What if Proposition 30 Fails? – “Plan B”Mid-Year Automatic Triggers Cut Education Hard

Following the 2011-12 State Budget strategy, the proposed budget contains a new set of automatic trigger reductions linked to the failure of the governor’s proposed tax initiative (Proposition 30).

Education is the hardest hit – 98.4% of the mid-year trigger cuts.

“Plan B” impact to RUSD is estimated at -$18.4 million.

Programs Targeted for Trigger Cuts

Program Amount % Share

Proposition 98 $5,354M 90.0%

University of California $250M 4.2%

California State University

$250M 4.2%

Developmental Services

$50M 0.8%

All Other $49M 0.8%

Total $5,951 100%4

Source: LAO

Proposition 30 and Proposition 38The November Ballot Is Busy With Initiatives

Tax Initiatives That Help Schools

Proposition 30“Governor’s Tax Initiative”

Proposition 38“Munger/PTA Initiative”

Personal Income Tax and Sales Tax - $6 billion per year

Personal Income Tax - $10 billion per year

Revenues flow to State General Fund and are distributed with existing formulas (i.e., K-14 gets its Proposition 98 determined share)

Majority of revenues flow to a special account that is distributed to local schools. Other funds to early childhood and state debt service.

K-12 portion creates a “Part A” and “Part B” to the revenue limit with the new Part B tied to some restrictions.

Funds are restricted from being spent on existing staff.

No additional funding to K-14 over July 1 budget.

$1,000 per student in additional funds to schools; but $447 per student offset.

Most recent polling: 54%-56% favorable

Most recent polling: 38%-46% favorable

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RUSD Structural DeficitsRUSD Structural DeficitsRecurring Expenditures Are Greater Than Recurring Revenue

Prop 30 Passes

2012-13: $16.2M2013-14: $19.9M

Prop 30 Fails2012-13: $36.5M2013-14: $40.2M

Prop 30 passes

Prop 30 fails

Structural Deficit covered by one-time revenues and

resources

Structural Deficit covered by one-time resources

IncreasedStructural Deficit

Amounts shown are “structural deficits”, not total deficits.6

State’s Fiscal Crisis: Local ImplicationsRunning Out of Options

2012-13 2013-14

Deficit Spending

($27.5) ($36.1)

Fund Balance

$37.2 $0.5

Minimum Fund Balance Required

$18.8 $20.0

Shortfall in Fund Balance Components

$0 ($19.5)

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Dollars in Millions

State’s Fiscal Crisis: Local ImplicationsGeneral Fund: Fund Balance and Cash Dynamics Have Changed

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Dollars in Millions

2007-08 2008-09 2009-10 2010-112011-12(E)

2012-13(P)

Total Fund Balance

$56.9 $72.6 $71.0 $90.2 $85.9 $64.7

June 30 Cash Balance (% of Fund Balance)$47.3 $45.6 $39.7 $44.9 $14.7 ($8.3)

83.1% 62.8% 55.9% 45.4% 17.1% (12.8%)

Collective Bargaining StatusHealth and Welfare Is The Biggest Topic

Current Plan Year (Jan 1 – Dec 31, 2012)

Contingent second, one-time $250 increase in District contribution has been triggered by State Budget. (New one-time contribution level of $10,000.)

$700,000 impact to current year included in budget

Will be paid in equal installments Sept., Oct. and Nov.

Next Plan Year (Jan 1 – Dec 31, 2013)

Tentative Agreement with RCTA to continue $9,500 District contribution plus a one-time increase of $250 ($9,750) plus a second, one-time $250 increase contingent upon the passage of Proposition 30 in November.

$1.3 million impact not included in budget

Preliminary premium rate increase ranges: Kaiser: 6.4%, EPO: 16%, PPO: 20%

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Collective Bargaining StatusOther Collective Bargaining Items

All

No furloughs for 2012-13

$5.1 million impact to current year included in budget

RCTA

MOUs to provide 1) Staff Development Specialist flexible work year, and 2) $500 stipend for optional materials based professional development 80 hour practicum (both pending approval)

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