every student. every classroom. every day.

2008-09 Budget Update: Impact of Governor’s Budget

Proposal

Wednesday March 26, 2008

“Perfect Storm” of Financial Pressures

• State education funding budget reduction of $5 billion. For OUSD that means:

– $15.7 million reduction in General Purpose funds, and

– $7 million reduction in state categorical funds.

• State take back of all state categorical carryover funds for 2007-08

• High number of schools with very small enrollment– Financial impact being analyzed with Multi-Year Fiscal Sustainability Plan (MYFSP)

• Continued declining enrollment. For OUSD in 2008-09 that means:– $4 million reduction in general purpose funds,

– $2 million reduction in state categorical funds, and

– $1.3 million reduction in federal categorical funds.

• Reduction of Expect Success funding – $9 million 2007-08 budget reduced to $2 million for 2008-09 (categorical funds)

• Total Projected Funding Reduction for 2008-09– $19.7 million in General Purpose funds

– $17.3 million in Categorical funds

every student. every classroom. every day. 3

Protecting Our Investments

• Small schools/small learning communities• Small networks with focus on principal development & whole

school improvement– Focus on Results, Performance Fact, BayCES, Principal

Leadership Institute (PLI), Univ. of California - Berkeley• Strategic initiatives tied to our goals:

– Open Court; ELD/Academic English Development (AED)– Elementary math reform, expanding up to Algebra– Professional Learning Communities / Results-Based Inquiry (RBI)– Assessment system, including writing proficiency assessments– College and Career readiness audit; EdTrust West partnership– Family Engagement– Complementary Learning (Health/Wellness; Extended Learning)

Impact of Governor’s BudgetStrategies for 2008-09

OUSD has taken strategic steps to ensure these budget cuts are in the best interest of educating our children:

– Reducing Central Administration costs by at least 12%,

– Combining typical attrition with a staff restructuring plan,

– Continuing to implement a targeted hiring freeze, and

– Making a one-time withdrawal from the “designated for uncertainty” reserve while maintaining the 2% fund balance required by state law.

Impact of Governor’s Budget General Fund Reductions

UNRESTRICTED ONLY Central Office Schools Total

Certificated Staff 512,090 2,796,807 3,308,897

Classified Staff 1,787,467 2,231,498 4,018,965

Benefits 496,567 2,513,403 3,009,970

Books & Supplies 520,860 454,113 974,973

Services & Equip. 692,382 781,474 1,473,856

Subtotal 4,009,366 8,777,295

% Reduction from 2007-08 WB 12% 7.6%

Reserves for Uncertainty

2,746,515 2,746,515

Total 6,755,881 8,777,295 15,533,176

every student. every classroom. every day. 6

Impact of Governor’s BudgetK-12 Certificated Staff Changes

K-12 Certificated Staff Change (All Resources) Change in FTE

Assistant Principals (9.4)

Counselor (5.7)

Intervention Specialist (7.2)

Nurse (2.0)

Teacher EEIP (8.1)

Teacher, Instructional Facilitator (4.4)

Teacher on Special Assignment (TSA) (12.2)

Teacher STIP (15.5)

Subtotal – K-12 Certificated Staff (64.5)

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Impact of Governor’s BudgetK-12 Classroom Teacher Changes

K-12 Classroom Teacher Changes (All Resources) FTE

Consolidation requests 67.7

Vacancies created via employee status changes

- Retirement or resignations 26.2

- Release due to temporary contract/probation 33.4

Subtotal 59.6

K-12 Classroom Teacher variance 7.1

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Impact of Governor’s BudgetK-12 Classified Staff Changes

K-12 Classified Staff Change (All Resources) Change in FTE

Administrative Assistant (2.5)

Clerk (Attendance, Typist, etc.) (26.3)

Community Assistant/Coordinator (5.1)

Instructional Aide (7.5)

Noon Supervisor (7.4)

Outreach Consultant (3.1)

School Security Officer (6.2)

Secretary (3.0)

Subtotal – K-12 Classified Staff (61.1)

every student. every classroom. every day. 9

Impact of Governor’s BudgetCentral Office Staff Changes – GP Only

Central Office Staff Change (GP) FTE

Central Office Staff reductions 28.5

Central Office managers are in the process of making specific reductions to their 2008-09 budgets.

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Multi-Year Budget Projections:

Unrestricted, General Purpose Fund2007-08 2008-09 2009-10

Beginning Fund Balance 18,371,084 17,716,080 14,969,565

Total Revenues 257,428,600 243,916,982 247,815,242

Salary & Benefits 193,834,172 183,673,860 184,377,100

Books & Supplies 9,146,045 6,887,015 6,955,993

Services, Operating, & Outlay 30,670,083 28,004,581 27,709,707

Outgo & Transfers 24,433,304 28,098,041 28,404,382

Total Expenditures 258,083,604 246,663,497 247,447,182

Net Increase/(Decrease) (655,004) (2,746,515) 368,059

Ending Fund Balance 17,716,080 14,969,565 15,337,624

Current Financial Situation

– Utilization of the year-end closing documents (Unaudited Actuals) to complete state required financial reports,

– Balancing 2007-08 revenues and expenditures

– Producing a multi-year budget that meets the designated reserve for uncertainty requirements

– Separating on-going and one-time expenditures,

– Maximizing revenue enhancement opportunities, and

– Establishing a proactive relationship with the State Controller’s Office to resolve District’s historical financial situation.

Financial Situation Remedy

– 2004-05 audit completed January, 2007 by State Controllers Office (SCO). The 2005-06 audit is in the process of being completed. Various on-going financial deficiencies have been noted by the SCO. The Finance Department is working with the SCO to resolve all audit findings. Significant issues include the following:

• Cash account deficiencies; includes Warrant pass-through fund. Un-reconciled differences go back to at least 2002

• Payroll account deficiencies; includes payroll clearing account

• Self –insurance fund deficiencies; includes maintaining reserves at the required actuarial reserves

• Capital asset valuation report

• Associated student body and subsidiary funds– A strong working relationship has been forged between the District and the

State Controllers Office to reconcile the historical deficiencies noted in the SCO audits

– Our Finance Department has made significant strides in the last three months to reconcile and resolve financial issues that have been outstanding for the last few years