Board Budget WorkshopPriority-based Budget Update

February 9, 2010

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Presentation Agenda

• Introduction Kowba• Priority-Based Budgeting Process Stover

– Methodology– Committee Overview

• PBB Recommendations Stover– Open Topics & Areas for Further study

• Budget Status Overview Masias– Updated budget deficit projections– Timeline update

• Board Discussion & Direction

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Priority-Based Budgeting:Steps to a Balanced Budget

1. Determine the Minimal Requirements for Operations

2. Determine Reasonable Funding Level for Priorities

3. Add Non-operational Expenses (reserves, cost increases)

4. Compare Total Expenses to Projected Revenues

5. Determine Revenue Gap

6. Recommendations for Budget Adjustments

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Priority-based Budgeting:Methodology Overview

• Three teams did extensive analysis of the resources needed to support the Board’s adopted six priorities– All six priorities are funded with a reasonable level of

resources

• Three teams did extensive analysis of the resources needed to support mandates and minimal level of services:– Minimal district operations– Minimal central office requirements– Mandates under which the district must operate

• Teams reviewed 125 departments and cost centers – Consolidating and reducing down to the very minimal

resources

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Priority-Based Budgeting: Broad Involvement and Broad Perspective

• More than 60 Team Members Participated– Broad range of academic and business departments

•  Extensive and Broad Range of Budget Evaluation– 123 Central Office Departments Examined– $1,107,750,000 in resources– $350,000,000 in school site allocations– $109,000,000 in class size maintenance funds

All BudgetsAll Resources

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Priority-Based BudgetTeam Decision Making – The Options

• Sustain – After much deliberation the teams believe that a given department is already at the minimal level of resources and/or has had significant cuts made in current and prior years.

• Reduce – A team or teams believe that a department or cost center is able to be effective in fulfilling its mission with fewer resources

• Consolidate – Teams decided that the district could save resources through consolidation of similar efforts

• Transfer – Used when financial resources are being moved from one department into another.

• Discontinue – Used when a department no longer has funding, or the services provided are redundant or not meeting their original purpose.

• Increase – Refers to a department receiving more resources in a significant way from the results of consolidation, or from actual increased service needs.

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Priority-Based Budget:Minimum Requirements Committees

Mandated Requirements Minimum Central Office Minimum Operations

Mark Bresee, co-leaderGrenita Lathan, co-leaderDebbie FosterMark CurtisTerry WalterRon RodeBrenda CampbellSusan Martinez

Sandra Huezo, co-leaderBernie Rhinerson, co-leaderBill HallaranDonata BarbourMary CannieJean MaddenSue WeirBarbara AllenBobbi Samilson

Sid Salazar, co-leaderDrew Rowlands, co-leaderGordon YorkeBich Ha GrollJennifer WhiteRobert GranoTed DoughtyDon BraunPat CrowderListy Gillingham

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Minimum Requirement Committees:Review Process

• Identified the Foundation of the PBB budget– Focused on “minimal” resource usage– Avoided focus on “what is.” Focused on “what can or should be” in

a financially restricted climate– Focused on reducing resources across many cost centers– Focused on consolidation – 24 different consolidation efforts

• Central Office Team – Reviewed the most departments – Made the widest range of recommendations

• Mandated Team– Focus was more narrow and very challenging– Separating the service from the hierarchy

• Minimal Operations Team – What is necessary to support staff and students– Emphasis was on moving resources to schools

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Priority-Based Budget:Board Priorities Committees

Class Size/21st Century Learning Environment

Safe & Supportive Environment, Diversity & Integration

Broad-based Curriculum & Raising the Achievement Level of All Students

Darryl LaGace, co-leaderBarbara Allen, co-leader Nellie Meyer, co-leaderShirley WilsonKarla LoriaTim AsfazadourArt HanbyGreg TaylorDavid LordenLilibeth PuentespinaChristiane Trout-McPheeLillie McMillan

Tony Burks, co-leaderStu Markey, co-leaderDianna CarberryLinda ZintzMitzi MerinoBeth GallagherLee Dulgeroff Melissa JanakCarolyn GoohsBernize GilJulie Martel

Joe Fulcher, co-leaderKristi Dean, co-leaderShawn LoescherJeff OliveroRupi BoydGary PetillEllen TiffanyMarcia DiJiosiaYolanda CamachoBrad CallahanDeanne Rohde

PBB Committee SummariesFebruary 9, 2010

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Class Size & 21st Century Learning Environment Committee

• 21st Century Learning Priority– Focus

• Infrastructure and Support• Teaching & Learning• Professional Development• Leadership

– Recommendations• Equitable opportunities for students• Interactive, engaging learning environments• Tailored to individual student needs and learning styles

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Class Size & 21st Century Learning Environment Committee

• Maintain Class Sizes Priority– Recommendations

1. Maintain class size ratio adopted by the Board on 6/2/092. Increase in 1 CPU for K-8 schools3. Designate the expenditure for “over-formula” teachers in

the budget4. Reduce the number of over formula teachers

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Class Size & 21st Century Learning Environment Committee

Regular Education Cost for Class Size Allocation

2009-2010 Actual FTE Cost as of October 2009 1)2010-2011 Recommended Budget

FTE $84,675 per Teacher FTE $85,658 per Teacher

Base Formula Allocation 4,232.25 FTE $358,365,768 4,153 FTE $355,737,674

Adjust +1 to +2 for K-8 11 FTE $942,238

2) Over-Formula 64.8 FTE $5,486,940 2)35 FTE $2,998,030

3)ARRA K-2 CSR 116 FTE $9,822,300 3)116 FTE $9,936,328

4)SFSFState Fiscal Stabilization Fund

189 FTE $16,003,575 4)87 FTE $7,452,246

Savings calculated by subtracting the required 35 FTE projected over-formula and the additional 11 FTE for the K-8 schools in 2010-2011 school year from the 64.8 over-formula realized in the 2009-2010 school year

18.8 FTE ($1,610,370)(Unbudgeted savings that would

have negatively impacted the ending balance)

1) Based on 2010-2011 enrollment projections2) Outside the staffing allocation, this number reflects recommended reduction of over-formula teachers3) These additional 116 teachers are funded from ARRA and are not included in the base formula allocation. This one time funding ends June 2011.4) These teachers are funded with State Fiscal Stabilization Funds (SFSF) and are included in the base formula allocations. This one time funding ends June 2011.

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Safe & Supportive Environment &Diversity & Integration Committee

Safe and Supportive Environment Priority Area• Focus

– Safe and Supportive Environment for students and adults• Worked as two sub-teams:

– School Sites and Student Support Services – Facilities, School Police, Landscaping, and Custodial

Services• Reviewed 16 cost centers• Recommendations

– Maintain allocations for Principals, Vice Principals, Nurses, and Counselors

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Safe & Supportive Environment &Diversity & Integration Committee

• Diversity and Integration Priority Area– Focus

• To provide a socially-integrated learning and work environment that reflects the diversity of our community

– Worked as one sub-team to review 14 cost centers

– Recommendations• Explore Alternative Diversity Service Models • Identify redundancies and parallel work• Consolidate responsibilities with School

Improvement Officers

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Broad-Based Curriculum & Raising the Achievement Level of All Students Committee

• Broad-Based Curriculum Priority– Focus

• Foundation on which further acquisition of knowledge, training, and competence can be developed

• Content-rich and comprehensive• Caters to the different interests and needs of students• Critical Thinking; Arts/Humanities; Sciences and

Technology; Leadership; Community – Recommendations

• Reorganization/Consolidation/Reductions– OCILE– Magnet and Enrollment Options consolidation– Drop-out Prevention

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Broad-based Curriculum & Increase Student Achievement Level Committee

• Increase Student Achievement Priority– Focus

• Improving the achievement of students• Learning environment• Instructional practices, programs, and resources

– Process• Review of district resources

– Recommendations• Focus on practices not programs• Improving teacher capacity• Focused professional development• Sustain, consolidate, or reduce resources

PBB Key Recommendations February 9, 2010

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Priority-Based Budgeting: Broad Involvement and Broad Perspective

• Budget Review Meetings With Stakeholder Groups – Parent stakeholder groups/committees invited– All labor groups invited– Principal Budget Committee members

• All recommendations were approved by:– A consensus of the PBB teams– Superintendent’s Cabinet– Executive Leadership Team– Superintendent

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PBB: Recommendations Summary

• Basic Funding Level for All Six Board priorities• $1,114,230,962 Operating Expense Budget

– Before adjusted costs– $755,766,458 unrestricted– $358,464,504 restricted

• Consolidation of 24 Departments– Many Departments sustained due to size and previous reductions and

Board approved reorganizations– $1,528,619 transferred back to school sites

• $38,958,369 Total Unfunded Resources– $21,723,475 in unrestricted funds– $17,234,894 in restricted funds

• 209.84 Total Unfunded FTE Staffing– 129.87 unrestricted FTE– 79.97 restricted FTE

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PBB Recommendations:Off-Campus Integrated Learning Experience (OCILE)

• Suspend the OCILE programs from 2010 to 2013– Reinstate when funding becomes available

• Re-evaluate effectiveness of current delivery model– Maintain emphasis an exemplary race-human relations

climate• Transfer essential responsibilities to appropriate

departments – Race/Human Relations and Advocacy, Counseling and

Guidance, Elementary School Improvement Officer and Secondary School Improvement Officer

• $5,738,238 total unrestricted savings• 61.8 FTE reduction

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PBB Recommendations:Transportation Savings

• Decreased Service Demand– OCILE program suspension– Learning Center closure

• No First Student contract• $1,524,294 unrestricted savings

– Decreases in staff hours and operation costs• Further study needed of department

administrative functions

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PBB Recommendations:Special Education Reductions

• Learning Centers Closure– Transfer services to school sites

• $2,527,811 total unrestricted savings• Additional transportation department savings• 40.75 FTE reduction

– 15.0 Certificated FTE– 24.75 Para FTE– 1.0 Clerical

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PBB Recommendations:Class Size Maintenance – School Allocation Formula

• Recommendations:1. Maintain class size ratio adopted by Board on 6/2/092. Increase in 1 CPU for K-8 schools3. Designate expenditure for over formula teachers within the

budget4. Reduce number of over formula teachers

• $1,610,370 unrestricted savings– Saving from unbudgeted impact on ending balance

• 18.8 certificated FTE reduction

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PBB Recommendations:Beginning Teacher Support

• Program will be phased out over 2 years– Can be restarted if funding available– Possible impact on teacher recruitment efforts

• Services maintained for those currently enrolled in program

• $1,175,991 unrestricted savings• 3.75 FTE reduced - certificated

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PBB Recommendations:GATE Consolidation

• No Loss of Program Services– Reduce and consolidate administrative functions– Program to be housed under Deputy

Superintendent• $396,869 Unrestricted savings• 4.0 FTE Reductions

– 3.0 FTE Unrestricted– 1.0 FTE Restricted

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PBB Recommendations:Suspension of Instructional Materials Center (IMC)

• Consolidation of 5 departments into 1 – Close Teacher Media Center– Suspend Selected Textbook Adoptions in 10/11– Maintain Williams Settlement and textbook

sufficiency functions• Limited Suspension of Services

– $238,600 unrestricted savings– Total 6 FTE reduced

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PBB Recommendations:SIO Offices – ISS Consolidation

• Consolidation of Instructional Support Services under the Deputy Superintendent

• Consolidate Chief Elementary and Chief Secondary School Improvement Offices under Superintendent

• Each SIO office would have a curriculum/ professional development department

• $517,321 savings• 49.5 Total FTE Reduced

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PBB RecommendationsParent Program Changes

• Decentralizing programs to school sites• Discontinue service provision at the Ballard

Center• Funds reallocated for services at school sites

– Site discretion on parent services such as on-site translations

• 8.5 FTE reduced

CFO Financial UpdateFebruary 9, 2010

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CFO Analysis of Priority Based Budgeting (PBB)

• CFO Analysis Goal was to confirm that the financial data in the PBB package was:

1. Complete2. Reconciled3. Contained the most accurate information possible

• Information analyzed included the following:– PBB spreadsheets– PBB binders– School Allocation Model– FTE Resources– PeopleSoft HCM – Health and Welfare Benefits– Step and Column– Revenue Projections– Expense Projections, etc.

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Governor’s Proposed/Priority Based Budgeting

JAN PROPOSED PRIORITY BASEDLINE DESCRIPTION PROJECTION BUDGETING

-1- -2- -3-1 Beginning Balance 37,023,036$ 44,646,848$

2 Revenues 735,041,623 735,041,623

3 Expenditures (707,804,823) (700,790,028)

4 Other Sources / Uses5 Special Ed Contributions (118,112,230) (115,600,909) 6 Community Day (1,748,185) (1,748,185) 7 Tuition Assistance (10,000) (10,000) 8 Transfer In/(Out) (4,654,970) (4,654,970) 9 Total Other Sources / Uses (124,525,385) (122,014,064)

10 Ending Balance (60,265,549) (43,115,622)

11 Required Reserves12 Economic Uncertainties 24,000,000 24,000,000 13 Restricted Grant Carryover - - 14 Stores 1,674,228 1,674,228 15 Prepaid Expenses 850,000 850,000 16 Revolving Cash 57,800 57,800

17 Total Required Reserve 26,582,028 26,582,028

18 Reserve (shortfall) / Surplus (86,847,577) (69,697,650)

2010/11

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PBB Reconciliation

Proposed PBB Unrestricted Budget 641,069,942$

Additional ExpensesSchool Site Athletics Allocation 3,000,000$ Consumer Price Index ( 2% CPI) 1,000,000$ Health and Welfare 8.36% increase 6,706,033$ Prep Time Teacher Allocation 13,390,050$ Contractual Salary Protection/Star Rating TBDStep and Column (1.19% Class and 2.99% Cert Avg) 11,507,480$ School Site Telecommunications 2,000,000$ Utilities Increase (9.34%) 2,000,000$ GATE Teacher Allocation 7,749,636$ Magnet Allocation/IB Allocation 6,017,868$ Adjusting Class Size Maintenance PBB budgeted amt 1,610,370$ Overformula Teacher (34 FTE) 2,975,000$ Custodial Supplies 1,763,650$

Total Additional Expenses 59,720,086$

Total Expenses 700,790,028$

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2010 PBB Budget – Next Steps

• Continue refining the financial and programmatic information after the Board workshop– Additional analysis for restricted resources– Additional analysis with the projected enrollment

and impacts to school allocations• Update the financial schedules

• Total• Unrestricted• Restricted

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Second Interim Report

• Due to the Board of Education by March 9, 2010– Certification options

• Positive – will be able to meet financial obligations• Qualified – may not be able to meet its financial obligations• Negative – will be unable to meet its financial obligations

• Due to the SDCOE by March 15, 2010– July 1, 2009 – January 31, 2010 YTD Expenses– February 1, 2010 – June 30, 2010 Projections

• Requirements:– 2009/10 remains balanced; revenue matches expenses– Multi-Year Projections are Balanced

• 2010/11• 2011/12

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Closing Remarks & Considerations• Ongoing $201 ADA revenue limit reduction could move to

$250– Approximately $6 million less in revenue for the district

• State Controller projects that, as of March 30, the state will need to tap emergency cash reserves

• Tighter Spending Controls– Immediately implement a spending approval hierarchy district-

wide– Sweep all remaining balances and manage via exception only – All purchases need CFO approval – Prior to submission all expenditures must be scrutinized by

their chain of command, i.e. Principal, SIO, etc– Reduce the people who have purchase order access-

requestors

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Next Steps

• Staff Refinement of PBB Budget Items• Follow-up Board Budget Meetings

– February 23 – Board Workshop– March 9 – Action Items

• Second Interim Report• Resolution on the March 15 Certificated Notice