2020-21 Budget & Economic Update

May 26, 2020 1

VisionWe will work collaboratively and comprehensively with staff, parents, and the community to strengthen a learning environment focused on raising the achievement of all students and preparing them for success in college and career.

Mission

We assure well-rounded learning experiences, which prepare our students for success in college and career. We engage, inspire, and challenge all of our students to become productive citizens, ethical leaders, and positive contributors to our community, country and a global society. Maintain District stability, solvency,

and local control2

Background

3

2019-20 Second Interim Report• Positive Certification• $98 Million Projected

Ending Fund Balance• $42 Million ongoing

expenditure reduction from 2021-22

• Facilities Optimization

COVID-19 School Closure• School Closed• Distance Learning• Student Meal Serving• Planning for reopening

schools• Adverse Economic

Conditions

CARES ACT & SB 117• CARES (ESSER) Funding :

$14 Million for SAUSD• Child Nutrition Support• SB117 (California) Funding:

0.78 Million for SAUSD• FEMA Funding (TBD)

March 10, 2020 March 16, 2020 March 26, 2020March 10, 2020 March 16, 2020 March 26, 2020

School Community Reactions

CSBA (California School Boards Association)

ACSA (Association of California School Administrators) Sobering Budget

CASBO (California Association of School Business Officials)

Background

4

May 15, 2020

Background

55

School Community Reactions

CSBA (California School Boards Association)

ACSA (Association of California School Administrators) Sobering Budget

CASBO (California Association of School Business Officials)

Background

6

May 15, 2020

Summary

• Global Health Crisis (COVID-19) has triggered a Global Economic Crisis

• Appears COVID-19 curve flattened. Now - confronted with a steep and unprecedented economic crisis

• Problem cannot be solved by District/State alone. Need Federal relief

• The way out of crisis is uncertain and will be long and painful

7

U.S. Real GDP—Great Recession vs. COVID-19

Source: U.S. Bureau of Economic Statistics

0.9 2.3 2.2 2.5

-2.3

2.1

-2.1

-8.4-4.4

-0.6

1.54.5 2.5 3.5 2.9 1.1 3.1 2 2.1 2.1

-4.8

-42.8-50

-40

-30

-20

-10

0

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2007 2008 2009 2018 2019 2020

Great Recession COVID-19 Recession

Projected

8

Governor’s May Revise• Unemployment projected at 18% for 2020 (Peak 2021 at 24.5%)

• Personal Income Tax decline by 9% in 2020

• General Fund Revenue decrease $41 billion compared to January forecast

• Combined with increases in health & human services overall budget deficit is $54 billion (Projected $21 Billion Surplus on January Proposed Budget)

• Out Years structural deficits are increasing also (No COLA)9

May Revise Proposals (Education)• Cancels new initiatives proposed in the Governor’s January Budget (early

childhood, K-12 Education COLA increase, Teacher Credentialing, PD, support for lowest performing schools and mental health, boost nutrition funding)

• 10% cut to School Funding (LCFF – Local Control Funding Formula)

• Special Education Cuts (No COLA increases)

• Categorical Program Reductions – ASES, CTE

• Reductions in State Preschool slots, Child Care slots

• Apportionment Deferrals – Cash Flow Impacts

10

Cash Flow and Deferrals

The proposed deferrals in the May Revision are illustrated as follows:

$1.87 $1.87

$0.52

$2.38 $2.38

$5.28

Jun2020

July2020

Aug2020

Sep2020

Oct2020

Nov2020

Dec2020

Jan2021

Feb2021

Mar2021

Apr2021

May2021

June2021

Jul2021

In Billions

?

11

May Revise Silver Linings• CARES Act funding to be used:

• Programs for schools that address catch up on lost learning and equity gaps $4.4 billion

• Reallocate $2.3 billion in funds previously dedicated to paying down schools’ long-term unfunded liability CalSTRS and CalPERS

• Increase Special Education Funding through SELPA ADA funding equalization

12

• K-12 Education Funding will reduce by $6.89 billion (12.6%)• SAUSD Impact -$51.68 Million (ongoing)

• $4.35 billion (one time) to address learning loss related to COVID-19 school closures

• SAUSD Impact +$30 Million (one-time)

• Categorical Funding Cuts• SAUSD Impact TBD (Increase in GF Contribution for ASES, CTE)

• Deferral of Apportionment• SAUSD Impact TBD (will have to issue TRANS/borrowing)

SAUSD Major Financial Impacts

13

Fiscal Outlook (2019-20 Second Interim) (Presented March 10, 2020)

2

$655.30

$674.07 $679.94

$640.09 $633.42

$620.81

$650.93 $644.30

$716.88

$664.48

$646.61 $646.37

$560.00

$580.00

$600.00

$620.00

$640.00

$660.00

$680.00

$700.00

$720.00

$740.00

2017-18 2018-19 2019-20* 2020-21* 2021-22* 2022-23*

SAUSD MULTI-YEAR REVENUES AND EXPENDITURES (WITH ADJUSTMENTS)

Total Revenues Total Expenditures (including Transfers)*Projections 14

$42 Million ongoing Reduction (TBD)

assumed

$ in Millions

2

$106.23

$83.90 $67.51

$56.92

$31.22

$28.78

$14.18

$6.17

$3.57

$3.72

$135.01

$98.07

$73.68

$60.49

$34.93

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

2018-19 2019-20* 2020-21* 2021-22* 2022-23*

SAUSD GENERAL FUND ENDING FUND BALANCE (WITH ADJUSTMENTS)

Restricted Fund Balance Unrestricted Fund Balance*Projections

$ in Millions

15

Fiscal Outlook (2019-20 Second Interim) (Presented March 10, 2020)

Future Outlook

1616

Future Outlook

1717

$679.94

$640.09 $633.42 $620.81

$661.62

$598.18

$546.36

$634.44

$400.00

$450.00

$500.00

$550.00

$600.00

$650.00

$700.00

2019-20 2020-21 2021-22 2022-23

SAUSD MYP General Fund Revenues(U Shaped Recovery)

Revenue (Second Interim) Revenue (Estimated Actuals)

$ in Millions

Future Outlook

18

$716.88

$664.48

$646.61 $646.37

$675.46

$659.83

$633.48 $638.21

$600.00

$620.00

$640.00

$660.00

$680.00

$700.00

$720.00

$740.00

2019-20 2020-21 2021-22 2022-23

SAUSD MYP General Fund Expenditures(U Shaped Recovery)

Expenditure (Second Interim) Expenditure (Estimated Actuals)18

$ in Millions

Future Outlook

19

$98.07 $73.68

$60.49

$34.93

$121.17

$59.52

$(27.61) $(31.38) $(40.00)

$(20.00)

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2019-20 2020-21 2021-22 2022-23

SAUSD MYP General Fund Ending Fund Balance(U Shaped Recovery)

Ending Fund Balance (Second Interim) Ending Fund Balance (Estimated Actuals)19

$ in Millions

Negative Certification

$98.07 $73.68

$60.49

$34.93

$121.17

$59.52

$(27.61)

$(167.82)

$(200.00)

$(150.00)

$(100.00)

$(50.00)

$-

$50.00

$100.00

$150.00

2019-20 2020-21 2021-22 2022-23

SAUSD MYP General Fund Ending Fund Balance(L Shaped Recovery)

Ending Fund Balance (Second Interim) Ending Fund Balance (Estimated Actuals) 20

Future Outlook

20

Negative Certification

$ in Millions

Future Outlook

2121

• Adopted Budget /Legislative Actions?

• Enrollment when School Reopens?

• Learning Methodology & Infrastructure when School Reopens?

• Afcd

• 123

?

22

QUESTIONS?

Slide Number 1Slide Number 2BackgroundBackgroundBackgroundBackgroundSummaryU.S. Real GDP—Great Recession vs. COVID-19Governor’s May ReviseMay Revise Proposals (Education)Cash Flow and DeferralsMay Revise Silver LiningsSAUSD Major Financial ImpactsFiscal Outlook (2019-20 Second Interim) (Presented March 10, 2020)Fiscal Outlook (2019-20 Second Interim) (Presented March 10, 2020)Future OutlookFuture OutlookFuture OutlookFuture OutlookFuture OutlookFuture OutlookSlide Number 22