Second Interim Budget Report 2011-12Activity through January 31, 2012

Presented March 12, 2012

Steven Lawrence, Ph.D., SuperintendentBryan Richards, Chief Financial Officer

A TALE OF SIX BUDGETS-CERTIFICATIONSTaxes Pass Certification UEB 6/30/13 UEB 6/30/14

Status Quo Positive 11,075,949 142,268

District’s LBF Qualified 6,141,944 -4,755,524

MDEA’s LBF Qualified 6,178,777 -4,764,916

Taxes Fail

Status Quo Negative -3,133,103 -28,441,570

District’s LBF Qualified 5,071,493 -20,408,627

MDEA’s LBF Negative -8,030,274 -33,348,752

HOW DID WE GO FROM A SIZABLE OPENING BALANCETO POTENTIALLY QUALIFIED OR NEGATIVE? Operating Deficit:

We are spending more than we bring in Plan to spend accumulated balance allowed us to

continue to operate programs until 2013-14 awaiting State recovery

New issues: Loss of Clayton Valley High School ($3.65M) If taxes fail, cut of $370/ADA plus transportation

revenue $74/ADA (or RL cut of $85/ADA). Total of $444-$455/ADA or ($13.55M - $13.89M)

Negotiations: No furlough days taken in 2011/12 Offer of 1.64% off-schedule payment in 2011/12 Offer of 1.36% off-schedule payment in 2012/13

(only if taxes pass)

2011-12: NO COLA + TRIGGER CUTS

2.24% COLA was fully offset by an addition to the deficit factor

The mid-year trigger cuts came in two forms: $12.85/ADA trigger cut $42.18/ADA in lieu of 50% transportation cut

Combined mid-year cut $55.03/ADA or ($1.79M)

WHAT DOES A 20.602% CUT LOOK LIKE? School year is 180 days 20.602% of school year is 37 days, leaving only 143

days funded To cut school by 20.602% we would have to close after

school ended on April 23rd

A 20.602% reduction of the school day would equal over 60-75 minutes less instruction daily (varies by grade level)

FUNDED REVENUE LIMIT 2010-11 VS. 2011-12 VS. 2012-13

Graph courtesy of School Services of California, Inc.

$5,206.08 $5,152.15

$4,753.16

$455.00

$1,139.94$1,281.84

$1,487.86

2010-11 2011-12 2012-13

Mt. Diablo Unified School District

$6,346.02 $6,489.02

Loss due to Deficit Factor

Loss due to expanding Deficit

Factor

Funded Revenue Limit

Funded Revenue Limit

Loss due to expanded Deficit

Factor

Funded Revenue Limit

$6,696.02

Funded if taxes pass

Mid-year cuts$55.03

11/12 REVENUE LIMIT CUT WIDENS TO $1,337/ADA

5,125

5,528

6,109

6,371 6,346 6,489

6,696

6,857

7,043

7,248

5,079

5,528

5,780

5,630

4,948

5,206 5,152 5,208 5,333

5,478 5,638

4,838 4,955

5,098 5,257

4,750

5,250

5,750

6,250

6,750

7,250

05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

Dol

lars

$ p

er A

DA

Year

MDUSD Revenue Limit Funding per ADA

Revenue Limit

If taxes pass

If taxes fail

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 Clayton Valley charter school conversion An additional decline of 1,777 ADA

MDUSD ADA IS STILL DECLINING!

27,000

28,000

29,000

30,000

31,000

32,000

33,000

34,000

35,000

P-2 ADA

P-2 ADA

HOW DOES REVENUE LIMIT FUNDING LOOK?

140,000,000

150,000,000

160,000,000

170,000,000

180,000,000

190,000,000

200,000,000

Rev Limit - TaxPass

*Includes reduction due to CVHS Charter beginning in 12/13

UNRESTRICTED GENERAL FUND REVENUE

Revenue Limit Sources $ 163,949,919 Federal Revenue 354,152Other State Revenue 31,764,118Other Local Revenue 2,538,521 Interfund Transfers In 0 Total Revenue 198,606,710 Less: Net Contrib. to RGF (41,274,703)Net Available Revenue $ 157,332,007

Revenue Limit59.2%

Revenue Limit Contributed to

Restricted23.3%

Federal Revenue0.2%

State Revenue16.0%

Local Revenue1.3%

Interfund Transfers In0.0%

Mt. Diablo Unified School DistrictUnrestricted General Fund Revenues Before Contributions

2011-12 Total = $198,606,710

Revenue Limit is 82.5% of unrestricted general fund revenue.

UNRESTRICTED GENERAL FUNDEXPENDITURES

Certificated Salaries $ 93,199,036Classified Salaries 19,690,453Employee Benefits 33,595,779Books & Supplies 4,714,011 Services & Operating 13,325,794Capital Outlay 224,535Other Outgo 0 Interfund Transfers Out 3,986,579 Total Expenditures 168,736,187

Certificated Salaries55.23%

Classified Salaries11.67%

Employee Benefits19.91%

Books and Supplies2.79%

Services & Operating

7.90%

Capital Outlay0.13%

Interfund Transfers Out

2.36%

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

2011-12 Total = $168,736,187

Salaries and Benefits make up 86.81% of expenditures & transfers out

UNRESTRICTED GENERAL FUND SUMMARY

Net Available Revenue $ 157,332,007 Net Expenditures 168,736,187 Net (decrease) fund bal. (11,404,180) Beginning Balance, July 1 45,543,431 Projected Ending Balance $ 34,139,251

COMPONENTS OF ENDING BALANCE

Revolving Cash $ 300,000 Stores Inventory 419,478 Economic Uncertainties (2%) 5,984,336 IRS Assessment Resolution 533,500 Tier 3 Balances & Site carryovers 4,870,743 Off-schedule offer (1.64%+1.36%)

(Unrestricted + Encroaching) 4,897,792 Undesignated* 17,133,402 Ending Balance $ 34,139,251

*Reservation needed to cover tax failure @ $455/ADA = $13,886,291

RESTRICTED GENERAL FUND REVENUE

Revenue Limit Sources $ 7,134,045Federal Revenue 29,184,174Other State Revenue 35,984,485Other Local Revenue 10,472,177 Interfund Transfers In 0Contribution from Unr. 46,319,956Total Revenue $129,094,837

Revenue Limit5.53% Federal Revenue

22.61%

State Revenue27.87%

Local Revenue8.11%

Contribution from Unrestricted

35.88%

Mt. Diablo Unified School DistrictRestricted General Fund Revenue

2011-12 Total = $129,094,837

RESTRICTED GENERAL FUND EXPENDITURES

Certificated Salaries $ 39,171,125Classified Salaries 20,348,787Employee Benefits 23,302,949Books & Supplies 13,877,805Services & Other Operating 32,067,304Capital Outlay 1,947,272Other Outgo 372,393 Indirect Costs 4,381,840 Interfund transfers out 56,350Total Expenditures $ 135,525,825

Certificated Salaries28.90%

Classified Salaries15.01%

Employee Benefits17.19%

Books & Supplies10.24%

Services & Other Operating

23.66%

Capital Outlay1.44%

Other outgo0.27%

Indirect Costs Xfr Out

3.23%

Mt. Diablo Unified School DistrictRestricted General Fund Expenditures

2011-12 Total = $135,525,825

RESTRICTED GENERAL FUND SUMMARY

Total Revenue $ 129,094,837 Total Expenditures 135,525,825 Net (decrease) in fund bal. ( 6,430,988) Beginning Balance, July 1 13,180,548 Projected Ending Balance $ 6,749,560

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 35I

Capital 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 Funds

Foundation Private-Purpose Trust Fund – Fund 73I

SUPPLEMENTAL INFORMATION

Form AI: Average Daily Attendance decrease of (201.15) in 11/12 will decrease funding for 12/13.

Form CASH: Cash Flow – Ending GF cash will be positive but projecting a decline of $17.7M

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

Criteria & Standards – POSITIVE or QUALIFIED Cert.

CLAYTON VALLEY CONVERSION CHARTEREFFECT – UNRESTRICTED GENERAL FUND

Revenue Limit decrease $ (10,996,076) Rent on CVHS property 450,649 1% oversight fee 117,069 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 $ ( 3,647,940)

Based on 1,777 units of ADA

FORM MYPI: MULTI YEAR PROJECTIONTaxes Pass Status Quo Dist. LBF MDEA LBF

UEB @ 6/12 22,031,194 19,308,481 17,048,751

Op Deficit 2012/13 -13,135,070 -15,353,176 -13,145,085

Adjust reserves 2,179,825 2,186,639 2,275,111

UEB @ 6/13 11,075,949 6,141,944 6,178,777

Op Deficit 2013/14 -12,772,157 -12,780,146 -12,782,169

Adjust reserves 1,838,476 1,882,678 1,838,476

UEB @ 6/14 142,268 -4,755,524 -4,764,916

Certification Positive Qualified Qualified

FORM MYPI: MULTI YEAR PROJECTIONTaxes Fail Status Quo Dist. LBF MDEA LBF

UEB @ 6/12 22,031,194 19,308,481 17,048,751

Op Deficit 2012/13 -27,344,122 -16,681,247 -27,354,136

Adjust reserves 2,179,825 2,444,259 2,275,111

UEB @ 6/13 -3,133,103 5,071,493 -8,030,274

Op Deficit 2013/14 -27,146,943 -27,106,154 -27,156,954

Adjust reserves 1,838,476 1,626,034 1,838,476

UEB @ 6/14 -28,441,570 -20,408,627 -33,348,752

Certification Negative Qualified Negative

POSITIVE CERTIFICATION –WHAT DOES IT MEAN? The District projects that it will meet its financial

obligations for the current fiscal year and two subsequent fiscal years.

If necessary, we can issue a TRAN to deal with cash flow

Status Quo – Taxes Pass (no off-schedule payment of 1.64% to employees) we have enough fund balance to offset our current level of deficit spending for two additional years with no additional cuts. Between now and budget adoption we would have to identify cuts to end the deficit spending.

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 and next year

If necessary, we can issue a TRAN to deal with cash flow

We may be unable to meet obligations for the third year out based on current projections without additional cuts (District offer – taxes pass; District offer – taxes fail; MDEA offer – taxes pass)

If the taxes pass, the cuts are fairly small If the taxes fail, the cuts are huge Must identify by 3rd Interim Report – due June 1st

NEGATIVE CERTIFICATION –WHAT DOES IT MEAN? The District projects that it will not meet its financial

obligations for the current fiscal year or the next fiscal year

We will meet our obligations for this year We will not meet our obligations next year It is very difficult to issue a TRAN if a District is

negative County Office will assign AB1200 advisor who will

have stay or rescind authority on fiscal issues We would not be able to meet obligations next year if

the taxes fail and we do not have furlough days in place for 2012-13 or identify other significant cuts (MDEA offer – taxes fail or Status Quo – taxes fail)

LAO ISSUES BUDGET ASSESSMENT

The Legislative Analyst forecasts that 2011-12 and 2012-13 revenues will fall $6.5 billion below the Governor's January forecast, and as much as $8.5 billion below forecast if the Facebook-related revenues are omitted.

This assumes enactment of the Governor's tax initiative in November.

The LAO will be releasing updated estimates of Proposition 98 in the coming weeks.

TONIGHT’S BOARD DECISION

Issue Positive second interim report based on where we were at January 31 and taxes passing Recognize that District’s last best and final offer will

require identification of additional cuts once an agreement is reached with MDEA

OR Issue Qualified second interim report based on

the District’s last, best and final offer issued March 1 District must identify the additional cuts in time for

the third interim report due June 1st

WHAT ABOUT SOLAR $?

Solar has been going online across the District this winter and will continue through the spring and summer

Savings from COP payments being utilized to fund intervention teachers

Savings from electricity and CSI revenue helping to ease the deficit issues we see in the budget; +$6M each year for first five years

Without the solar program, the operational deficit would be $21M in 2012-13 with the District’s last, best & final offer if the taxes pass

WHAT NEXT?MORE FROM

SACRAMENTO

Legislative budget subcommittees are considering Proposition 98 budgets this weekGovernor Brown’s May Revise will be out by May 15th

His tax measure needs at least 807,615 signatures verified by June 18th (needs to be submitted for verification by late April)