Proposed Budget2010-2011

June 14, 2010

Prepared by the Business Office

National Economy

The U.S. economy is no longer in decline, but is growing slowly

The recession began in December 2007, 29 months ago

U.S. Gross Domestic Product (GDP) grew 3.2% in the first quarter of 2010

162,000 jobs were added in March (unrevised survey)

But the unemployment rate has remained high

The April 2010 rate was 9.9%, up from 8.9% one year ago

U.S. Economic Outlook

Source: U.S. Bureau of Economic Analysis, April 2010

1-9

-2.7%

-5.4%-6.4%

-0.7%

2.2%

5.6%

3.2%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

3rdQuarter

4thQuarter

1stQuarter

2ndQuarter

3rdQuarter

4thQuarter

1stQuarter

U.S. GDP (Percent Change)

2008 2009 2010

California Economy

The state’s economy is recovering along with the nation’s

State personal income grew at 4.1% and taxable sales grew at 1.9% in the 4th quarter of 2009, according to the University of California Los Angeles (UCLA) Forecast

However, job growth remains a major drag on the economy

California added only 2,800 jobs in February and 4,200 jobs in March

If California had shared in the 162,000 U.S. jobs added in March, our proportionate gain would have been more than 16,000 jobs

The state’s unemployment rate, at 12.6%, is the third highest in the nation

1-10

California Employment

Employment(In thousands)

15,500

16,000

16,500

17,000

17,500

May Ju

n

Jul

Aug Se

p

Oct

Nov Dec Jan

Feb

Mar

Apr

May Ju

n

Jul

Aug

Sept

Oct

Nov Dec Jan

Feb

Mar

20102008 2009

1-14

Sources: Employment Development Department; Historical Civilian Labor Force, May 2010

California’s Unemployment Rate

10.2

%

10.6

%

11.0

%

11.3

%

11.6

%

11.8

%

12.0

%

12.1

%

12.2

%

12.3

%

12.3

%

12.5

%

12.5

%

6.6% 7.

0% 7.3% 7.

5% 7.8% 8.

2% 8.7%

9.2% 9.

7%

12.6

%

5%

6%

7%

8%

9%

10%

11%

12%

13%

May Jun

July

Aug Sep Oct

Nov

Dec Jan

Feb

Mar

Apr

May Jun

July

Aug

Sep

t

Oct

Nov

Dec Jan

Feb

Mar

20102008 2009

California’s Unemployment Rate vs. Other Hard-hit States

1-15

Source: U.S. Bureau of Labor Statistics, April 2010

National Average

9.7%

Highest State Unemployment Rate, March 2010

14.1%

13.4%

12.6% 12.6%12.3%

8%

9%

10%

11%

12%

13%

14%

15%

Michigan Nevada California Rhode Island Florida

Overview of the State Budget

Education fares better than the rest of the Budget The rest of the Budget is absorbing even heavier cuts in order to protect

education from deeper cuts But there is no “free ride” – the nearly $2.5 billion taken from

education in January remains unrestored Child care takes a huge cut Social and health programs that serve K-12 students and their families

are hit even harder California Work Opportunities and Responsibility to Kids (CalWORKs),

which is California’s main avenue to welfare payments, is on the chopping block

The Budget reflects two major unresolved problems: California’s finance system serves the state poorly in both good

and bad times The current economic woes remain unresolved

1-3

May Revision Features

For the most part, the May Revision contains no further cuts to K-12 education

Cuts proposed in January remain

Targeted proposed administrative cut is eliminated

Cuts to child care eliminate subsidized slots for 142,000 children

No new federal dollars

No new taxes are proposed

Major additional cuts to the noneducation portions of the Budget are proposed

We expect the Legislature to have great difficulty voting for the choices before them

Despite the Governor’s call for an on-time Budget, chances are slim

1-5

Comparing the Forecasts – Income

Personal Income(Annual % Change)

3.6%

2.4%

-2.8%

3.2%

4.5%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2009 2010 2011

January Budget 2010 May Revision 2010

Sources: 2010-11 Governor’s Budget, January 2010; 2010-11 May Revision, May 2010

1-11

Comparing the Forecasts – Jobs

Wage and Salary Employment(Annual % Change)

-0.7%

-5.6%

1.3%1.7%

-6.0%-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

2009 2010 2011

January Budget 2010 May Revision 2010

Sources: 2010-11 Governor’s Budget, January 2010; 2010-11 May Revision, May 2010

General Fund Revenues

The state economy drives General Fund revenues through three major taxes: personal income tax, sales tax, and corporation tax

The collapse of the state and national economies has driven state tax revenues down, but signs of recovery are emerging

Revenues outperformed admittedly low projections from December 2009 through March 2010

April 2010 collections fell short, but this was based largely on 2009 liabilities; revised revenues for 2009-10 are down $1.2 billion

Sales and corporate earnings are improving, bringing in more tax revenues than expected

The May Revision anticipates continuing improvement in revenues in 2010-11

The forecast adds $2.1 billion for 2010-11 from the January projection

1-17

General Fund Revenues

General Fund Revenues(in billions)

$82.7

$88.1$89.3

$82.7

$86.5

$91.5

$70.0

$75.0

$80.0

$85.0

$90.0

$95.0

2008-09 2009-10 2010-11

January Budget

May Revision

1-18

Source: 2010-11 May Revision, page 56

Risks to the Revised Budget Proposal In January, we noted several major risks to the Governor’s Budget

proposals:

Federal funds – no guarantee that $6.9 billion could be secured

Voter approval – required for fund shifts

Economy and revenues – the economy and revenues could underperform forecasts

Some of these risks have in fact materialized:

Only $3.4 billion in federal funds are expected to be received

Fund shifts requiring voter approval will not be placed on the ballot

Current-year revenues have fallen short by $1.6 billion

1-19

Risks to the Revised Budget Proposal

The May Revision, if enacted as proposed, contains other – but equally significant – risks

Court challenges – rebenching Proposition 98, elimination of CalWORKs, state worker pay cuts, health care reductions, and other cuts could face court challenges

Late Budget – a late Budget would delay implementation of program reductions, resulting in the loss of budgeted savings

Economic and revenue risks – the state and national economies face the possibility of a “double dip” recession, especially in light of the turmoil in overseas economies

These risks in turn could threaten California’s access to the capital markets, pushing borrowing costs even higher

General Fund Budget Summary

(Dollars in Millions)

2009-10 2010-11

Prior-Year Balance -$5,361 -$5,305

Revenues and Transfers 86,521 91,451

Total Resources 81,160 86,146

Total Expenditures 86,465 83,404

Fund Balance -$5,305 $2,742

Budget Reserve:

Reserve for Encumbrance 1,537 1,537

Reserve for Economic Uncertainties -6,842 1,205

Budget Stabilization Account 0 0

Total Available Reserve -$6,842 $1,205

One year ago, the proposed reserve for 2009-10 was +$4.5 billion, a swing of more than$11 billion

The reserve equals 1.3%of projected revenues in 2010-11

Revenues increase 5.7%in 2010-11, while expenditures drop 3.5%

The current-year fund balance deteriorated $1.4 billion since January

Source: State Budget 2010-11

California Per-Student Spending Falls Far Below Average

According to the National Education Association’s (NEA) Rankings of the States 2009, as of 2008-09, California was 44th in per-student spending, falling from 34th in 2007-08

1-26

$10,615$9,870

$10,736

$8,605

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2007-08 2008-09

California vs. National Average Per-Student Spending

National Average California

Source: Rankings of the States 2009 and Estimates of School Statistics 2010, National Education Association

Revenue Limit Deficit Factors

8.14

0%

11.0

10%

10.1

20%

8.80

1%

8.80

1%

8.80

1%

6.99

6%

0.00

0%

0.00

0%

0.00

0%

3.00

2%

2.14

3%

0.89

2%

0.00

0%

0.00

0%

7.84

4%

18.3

55%

18.3

55%

0.000%

2.000%

4.000%

6.000%

8.000%

10.000%

12.000%

14.000%

16.000%

18.000%

20.000%

2010-11 Deficit Applied and Cut

Apply the 2010-11 deficit of 18.355% to your undeficited revenue limit per ADA

Apply the 3.85% cut to the undeficited revenue limit per ADA

Example for Average Unified DistrictFunded revenue limit= $6,386 – ($6,386 x 0.18355 + $6,386 x 0.0385)= $6,386 – ($1,172 + $246)= $6,386 – $1,418= $4,968

$6,386 $6,386

2010-11 Revenue Limit Before Deficit

2010-11 Revenue Limit After Deficit and Cut

Deficit Factor

Reduction

2010-11 Revenue

Limit Funding

$1,172

$4,968

$246 (3.85%)reduction

(18.355%)

Special Education Issues

The mental health budget includes a proposal to suspend AB 3632 (Chapter 1747/1984), which mandates county mental health agencies to provide services to children with disabilities

The concern is that the fiscal burden will shift to school districts since they will continueto provide mental health services required by students’ Individualized Educational Programs

2-17

Pension Reform Legislation

SB 919 (Hollingsworth) would reform pensions for newly hired employees covered by the Public Employees’ Retirement System (PERS)

School members first employed on or after the date the bill takes effect would be subject to a 2%-at-65 retirement formula, rather than the current 2%-at-55 formula

The bill would also permit districts that contract with PERS for health benefits to collectively bargain a different employer contribution for employee and annuitant health benefits coverage for those hired on or after the effective date of a memorandum of understanding

SB 919 was heard in its first policy committee on May 10, but no vote was taken

2-19

STRS Contribution Rates

State Teachers’ Retirement System (STRS) had an unfunded actuarial obligation of $22.5 billion as of June 30, 2008

But this does not reflect the 25% investment loss in fiscal year 2008-09 or the partial recovery this year

Investment earnings alone, projected at today’s lower rates, cannot close the shortfall

Instead, an approximate 14% increase in contributions will be required to amortize the shortfall over 30 years

The contribution increase could come from employers, employees, and/or the state

If employers alone were tapped, the employer contribution rate would exceed 22% (additional $47 million in expense)

Increasing the employer contribution rate would require legislation and none has been introduced

2-21

Employer contribution rates are set by the PERS Board each May

The Board is expected to approve a rate of 10.707% on May 19

Based on PERS’ previously provided multiyear contribution rate estimates and the Board’s subsequent approval of new actuarial assumptions expected to further increase the school employer contribution rate by about 0.5% of payroll, we estimate:

Fiscal Year

Employer Contribution Rate

2009-10 9.709% (actual)

2010-11 10.707% (pending approval)

2011-12 12.107% (estimated)

2012-13 14.207% (estimated)

2013-14 14.507% (estimated)

PERS Contribution Rates 2-22

Flexibility Opportunities Continue

The flexibility options introduced in 2008-09 continue without changes

42 Tier III flexible categorical programs

Including suspension of deferred maintenance match requirements and instructional materials adoption timelines

Relaxation of K-3 Class-Size Reduction (CSR) funding penalties

Lowering of reserve for economic uncertainty requirements

Shorter school year

The May Revision proposes no changes to existing flexibility – nor does it offer answers to questions about the future of flexibility

Tier III flexibility continues through 2012-13

K-3 CSR funding penalties remain relaxed through 2011-12

3-1

The Legislative Analyst Office’s Report on Flexibility

The Legislative Analyst’s Office (LAO) offers some recommendations to continue and expand flexibility

These proposals are not reflected in the May Revision, but may become part of legislative budget hearings

The LAO conducted a survey of all school districts

231 school districts responded

Based on this survey, LAO concluded:

Flexibility helped districts develop and balance their budgets and focus scarce resources more strategically

Most decisions to shift funds were done to redirect funding from non-instructional to instructional areas

The majority reported that they would like to have additional programs added to the list of flexible programs

3-2

The Legislative Analyst Office’s Report on Flexibility

LAO’s recommendations:

Add K-3 CSR, Home-to-School Transportation, and After School Education and Safety to Tier III

Consolidate Economic Impact Aid (EIA) with English Language Acquisition Program

Consolidate Career Technical Education programs

Ease or remove state restrictions for:

Contracting out for noninstructional services

Hiring/pay rate for laid-off teachers serving as substitutes

Quality Education Investment Act (QEIA) requirements

The report can be found at www.lao.ca.gov

3-3

Other Federal Issues

Congress has proposed and the President is now supporting provisions that were in the “Keep Our Educators Working Act”

$23 billion to help states retain and hire teachers and other school staff members

Economic experts (including Nobel Laureate, Paul Krugman) have called for more investment in education

The reauthorization of the Elementary and Secondary Education Act (ESEA) continues to be overdue

In spite of expectations that RTTT and other ARRA-related measures signaled the future direction for ESEA, no legislation has been released

3-22

State’s Cash Problem Became Our Problem

On Wednesday, June 2, 2010 State Controller John Chiang sent a

letter and chart to the Governor and Legislative leaders, advising them

of his latest cash projections based on actual numbers through April

and the Governor’s May Revision budget proposal.

“The State’s ability to meet its payment obligations during the next

three months is entirely owed to two factors:

Legislation enacted earlier this spring that allowed the deferral of

approximately $4.7 billion of payments to K-12 education,

higher education, and local governments; and

The continued reliance on borrowing as much as $20 billion from

special funds.”

Cash Deferrals of 2009-2010 State Apportionment Impact to LBUSD

From To Amount Deferred

July 2009 December 2009 $ 11,540,724

August 2009 October 2009 19,518,878

November 2009 January 2010 17,566,990

February 2010 * July 2010 to

September 2010

14,124,274

18,514,258

April 2010 * August 2010 11,074,433

May 2010 * August 2010 16,319,266

June 2010 * July 2010 41,418,500

Total $ 150,077,323

Amount deferred within FY 2009-2010 = $ 48,626,592* Amount deferred to FY 2010-2011 = $101,450,731

Cash Deferrals of 2010-2011 State Apportionment Impact to LBUSD

From To Amount Deferred

July 2010 September 2010 $ 19,351,631

October 2010 January 2011 34,832,935

February 2011 * July 2011 32,897,772

March 2011 April 2011 34,832,935

April 2011 * August 2011 11,610,978

May 2011 * August 2011 17,416,468

June 2011 * July 2011 34,832,933

Total $ 185,775,652

Amount deferred within FY 2010-11 = $ 54,184,566* Amount deferred to FY 2011-12 = $131,591,086

Principal Apportionment Deferrals2009-10 to 2010-11

5-34

District Enrollment (without Charters)

95,584 96,296 96,61695,362

92,622

89,668

86,947 86,122

84,99683,855

76,000

78,000

80,000

82,000

84,000

86,000

88,000

90,000

92,000

94,000

96,000

98,000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Revenue Assumptions

Enrollment - Projections include declining enrollment at

1.4% for Fiscal Years 2010-11, 2011-12, and 2012-13

Revenue Limit - Includes: COLA at -0.39%, additional

adjustment at -3.85% (estimated at -$250 per ADA), and

a deficit of 18.355%

State Categoricals - COLA at -0.38% Lottery — $111

per ADA for unrestricted and $14.50 per ADA for

restricted for a total of $125.50 per ADA

Revenue Assumptions (Cont’d)

Programs that will be utilizing carry-over funds and have no

new 2010-11 funding include:

Description Resource No. Previous Funding Estimated Carryover

Reading First 3030 218,508 139,000

Title V (NCLB Transfer)* 4110 2,045,296 0

Connect Ed 9509 1,175,000 900,000

Safe and Drug Free 3710 599,151 240,000

History Grant 5828 986,640 20,000

PE for Progress 3702 261,201 40,000

TUPE* 6670 741,002 0

* No funding and no carryover in 2010-11

2010-11 Adopted Budget—Revenues

Revenue Limit Sources,

$406,723,970

Federal Revenue, $70,911,994

Other State Revenue,

$158,450,048

Other Local Revenue,

$9,334,779 Other Financing Sources,

63%11%

25%

1%

0%

$ 0

Revenue Limit Sources and State Revenues make up 88% of total revenues.

General Fund SummaryUnrestricted Restricted Total Unrestricted Restricted Total

RevenuesRevenue Limit Sources 392,553,020 21,478,619 414,031,639 385,489,933 21,234,037 406,723,970 Federal Revenue 1,846,977 106,525,295 108,372,272 2,156,100 68,755,894 70,911,994 Other State Revenue 85,316,475 88,259,383 173,575,858 78,495,319 79,954,729 158,450,048 Other Local Revenue 11,019,411 3,342,080 14,361,491 8,710,470 624,309 9,334,779

Total Revenues 490,735,883 219,605,377 710,341,260 474,851,822 170,568,969 645,420,791

ExpendituresCertificated Salaries 255,885,525 117,334,543 373,220,068 240,833,407 87,780,005 328,613,412 Classified Salaries 68,255,446 39,609,702 107,865,148 67,279,480 35,640,823 102,920,303 Employee Benefits 106,962,586 53,491,323 160,453,909 105,797,922 45,280,444 151,078,366 Books and Supplies 6,184,884 11,887,333 18,072,217 8,883,470 6,569,486 15,452,956 Services, Operating Exp 32,000,973 38,234,693 70,235,666 26,271,456 34,239,664 60,511,120 Capital Outlay 1,547,927 192,224 1,740,151 1,166,358 188,933 1,355,291 Other Outgo 6,976 154,944 161,920 157,733 157,733 Tranf-Indirect/Direct Suppt (11,121,693) 9,489,275 (1,632,418) (9,363,283) 7,828,789 (1,534,494)

Total Expenditures 459,722,624 270,394,037 730,116,661 440,868,810 217,685,877 658,554,687

Excess (Deficiency) of Revenue over Expenditures 31,013,259 (50,788,660) (19,775,401) 33,983,012 (47,116,908) (13,133,896)

Other Financing Sources/UsesInterfunds Transfers In 16,891,176 16,891,176 - Inferfunds Transfers Out 8,731,269 35,849 8,767,118 12,360,035 35,849 12,395,884 Other Sources - - Other Uses - - Contributions (33,312,957) 42,812,957 9,500,000 (47,219,784) 47,219,784 -

Total Oth Financing/Uses (25,153,050) 42,777,108 17,624,058 (59,579,819) 47,183,935 (12,395,884)

Net Increase (Decrease) 5,860,209 (8,011,552) (2,151,343) (25,596,807) 67,027 (25,529,780)

Fund BalanceBeginning Fund Balance

Unaudited Beg FB 55,482,805 49,128,384 104,611,189 56,167,259 32,526,506 88,693,765 Audit Adustments (5,175,755) (8,590,326) (13,766,081) - Other Restatements - - Adjusted Beg Balance 50,307,050 40,538,058 90,845,108 56,167,259 32,526,506 88,693,765

Ending Balance 56,167,259 32,526,506 88,693,765 30,570,452 32,593,533 63,163,985

to Fund Balance

2009-2010 2010-2011Estimated Actuals Adopted Budget

Federal Stimulus Summary

2008-09 Actual

2009-10 Projected

2010-11 Projected Total

Revenue31,731,984 28,227,560 25,452,875 85,412,419

Expenditures 0 41,542,433 43,869,986 85,412,419

Fiscal Year Total 31,731,984 - 13,314,873 - 18,417,111

Expenditure Assumptions

Salaries - No COLA projected. A 5-day furlough in FY 2010-11

projected for TALB and non-representative employees.

Step and Column Increases - Certificated @ 2.47% and

Classified @ 1%

Health & Welfare Benefits - 10% increase for FY 2010-11 and

15% for FY 2011-12 and 2012-13

Workers Compensation Rate - reduced from 3% to 2.75%

Unemployment Insurance Rate - increased from 0.3% to 0.72%

Expenditure Assumptions, cont’d

Supply allocations to school sites — remains the same in FY

2010-11 as prior year

Textbooks — Purchase of $10 million of Language Arts textbooks

is expected to take place in FY 2012-13 in preparation for FY

2013-14 adoption

Anticipated expenditure reductions include: $57 million for FY

2011-12 and $98 million for FY 2012-13 if reductions were one-

time. If reductions were made to on-going expenditures, a total

reduction of $98 million must be made in the two fiscal years.

2010-11 Adopted Budget—Expenditures

Certificated Salaries,

$328,613,412

Classified Salaries, $102,920,303

Employee Benefits, $151,078,366

Other Outgo & Transfers,

$11,019,123

Services, Operating Exp, $60,511,120

Capital Outlay, $1,355,291

Books and Supplies,

$15,452,956

Salaries and employee benefits make up 87% of total expenditures.

49%

15%

23%

2%

9% 0%

2%

Multi-Year ProjectionsGeneral Fund

Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted TotalRevenue Limit Sources 385,489,933 21,234,037 406,723,970 388,035,023 21,451,862 409,486,885 391,553,910 21,968,593 413,522,503 Federal Revenues 2,156,100 68,755,894 70,911,994 2,156,100 70,031,935 72,188,035 2,156,100 71,311,197 73,467,297 Other State Revenues 78,495,319 79,954,729 158,450,048 78,480,800 79,983,475 158,464,275 81,760,770 80,015,630 161,776,400 Other Local Revenues 8,710,470 624,309 9,334,779 8,314,950 638,476 8,953,426 8,318,880 668,249 8,987,129

Total Revenues 474,851,822 170,568,969 645,420,791 476,986,873 172,105,748 649,092,621 483,789,660 173,963,669 657,753,329

Certificated Salaries 240,833,407 87,780,005 328,613,412 266,640,669 89,948,171 356,588,840 272,201,647 91,669,491 363,871,138 Classified Salaries 67,279,480 35,640,823 102,920,303 68,602,275 35,997,231 104,599,506 69,288,297 36,350,203 105,638,500 Employee Benefits 105,797,922 45,280,444 151,078,366 121,821,314 50,148,833 171,970,147 135,279,675 55,608,974 190,888,649 Books and Supplies 8,883,470 6,569,486 15,452,956 7,883,470 6,514,560 14,398,030 16,883,470 6,490,253 23,373,723 Services, Other Operating Expenses 26,271,456 34,239,664 60,511,120 26,835,338 33,513,328 60,348,666 26,199,286 33,393,980 59,593,266 Capital Outlay 1,166,358 188,933 1,355,291 1,166,358 188,933 1,355,291 1,166,358 188,933 1,355,291 Other Outgo 157,733 157,733 157,733 157,733 157,733 157,733 Transfers - Indirect and Direct Costs (9,363,283) 7,828,789 (1,534,494) (8,221,283) 8,990,680 769,397 (8,221,283) 9,298,137 1,076,854 Other Adjustments - (57,000,000) (57,000,000) (98,000,000) (98,000,000)

Total Expenditures 440,868,810 217,685,877 658,554,687 427,728,141 225,459,469 653,187,610 414,797,450 233,157,704 647,955,154

Excess (Deficiency) of Rev over Exp 33,983,012 (47,116,908) (13,133,896) 49,258,732 (53,353,721) (4,094,989) 68,992,210 (59,194,035) 9,798,175

Other Financing Sources/UsesInterfund Transfers In - - - Interfund Transfers Out 12,360,035 35,849 12,395,884 12,360,035 32,141 12,392,176 12,360,035 32,141 12,392,176 Other Sources - - - Other Uses - - - Contributions (47,219,784) 47,219,784 - (51,993,608) 51,993,608 - (56,743,935) 56,743,935 -

Total Other Financing/Uses (59,579,819) 47,183,935 (12,395,884) (64,353,643) 51,961,467 (12,392,176) (69,103,970) 56,711,794 (12,392,176)

Net Increase/(Decrease) to Fund (25,596,807) 67,027 (25,529,780) (15,094,911) (1,392,254) (16,487,165) (111,760) (2,482,241) (2,594,001) Balance

Fund BalanceBeginning Fund Balance

Unaudited Beginning Balance 56,167,259 32,526,506 88,693,765 30,570,452 32,593,533 63,163,985 15,475,541 31,201,279 46,676,820 Audit Adjustments - - - Other Restatements - - - Adjusted Beginning Balance 56,167,259 32,526,506 88,693,765 30,570,452 32,593,533 63,163,985 15,475,541 31,201,279 46,676,820

Ending Balance 30,570,452 32,593,533 63,163,985 15,475,541 31,201,279 46,676,820 15,363,781 28,719,038 44,082,819

2010-2011 2011-2012 2012-2013Adopted Budget Projection Projection

Combined General Fund Projections Without ARRA Revenues

2008-09 2009-10 2010-11 2011-12 2012-13

Revenues without ARRA 744,852,590 692,325,356 645,420,791 649,092,621 657,753,329

Expenditues and Other Adj 751,129,023 743,164,371 714,339,252 665,579,786 660,347,330

Net Increase (Decrease) to Fund Balance (6,276,433) (50,839,015) (68,918,461) (16,487,165) (2,594,001)

Beginning Fund Balance 79,155,639 72,879,206 22,040,191 (46,878,270) (63,365,435)

Ending Fund Balance Without ARRA $ 72,879,206 22,040,191 (46,878,270) (63,365,435) (65,959,436)

Major One-Time Funding & Flexibility

Description Amount Duration

Budgeted

Fiscal Years Ends

Reserves 16,891,176 1 Year 2009-10 2009-10

Federal ARRA $ 83,718,063 2 Years * 2008-09 thru

2010-11

Sept. 2011

Class Size Reduction (CSR) Reduced Penalty

Varies 4 Years 2008-09 thru 2011-12

FY 2011-12

State Flexibility Varies 5 Years 2008-09 thru 2012-13

2012-13

* Revenues are projected for 3 years, and appropriation for 2 years.

Solutions

Sweep of 07-08 State Categorical Balances

Use of Reserves

Use of Tier 3 Program Flexibility

Use of One-Time Federal ARRA Funds

Expenditure Reductions

Other

Ending Balance

(60,000,000)

(40,000,000)

(20,000,000)

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

The blue bars show the estimated ending balances with expenditure reductions for FY 2011-12 and 2012-13. The purple bars show what the estimated ending balances would have been without expenditure reductions. For Fiscal Years 2006-07 through 2010-11, both bars are the same.

Summary of Recent Budget Reductions

Phase Board Action Date

Approved Amount Estimated Savings Budgeted

I 12-15-2009 $ 17,700,000 $ 17,820,087

II 1-27-2010 &

2-9-2010

38,180,634 33,891,991

III 3-2-2010 1,922,000 1,922,000

IV 6-8-2010 3,600,000 3,700,000

Total $ 61,402,634 $ 57,334,078

Status of Budget Reduction Savings

Board

Date Description Approved

Estimated Savings

BudgetedChange

12-15-09 Grades 4 & 5 staffing ratio 1,300,000 1,384,839 84,839

Transportation 1,600,000 1,635,248 35,248

1-27-10 Grades 6 to 12 staffing ratio 2,644,083 2,600,000 (44,083)

Grades K-3 CSR staffing ratio 11,088,560 6,500,000 (4,588,560)

Transportation Aides 369,280 210,000 (159,280)

Evening High School 670,000 685,084 15,084

Millikan Pathways 618,360 629,306 10,946

Status of Budget Reduction Savings (continued)

Board

Date Description Approved

Estimated Savings

BudgetedChange

1-27-10 Cal-Safe Funding (Pregnant Minors)

400,000 0 (400,000)

Supplemental Services – items 12-24b

6,549,750 7,000,000 450,250

Central Office 10,000,000 10,427,000 427,000

6-8-10 Contract with LBPD (100,000) 0 100,000

Total $ (4,068,556)

THE END

Thanks to:Erica Cisneros

Betty NgSusan Ginder

Tess Mendoza, Renee Arkus, Shawn Bartschi,

Exhibits

The following slides are detail listings of

Board-approved budget reductions.

Budget Reductions—Phase IDecember 5, 2009

Description

On-Going **

One-Time

Estimates

a Utilize authorized flexibility/balance sweep for School and Library Improvement Block Grant (SLIBG) *

$ 2,100,000 $ 2,100,000

b Utilize authorized flexibility/balance sweep for Deferred Maintenance *

$ 6,500,000 6,500,000

c Utilize authorized flexibility/balance sweep for IMFRP Instructional Materials *

3,700,000 3,700,000

d Reduce Summer School offerings * 1,000,000 1,000,000

e Shift High School Counselors * 1,500,000 1,500,000

f Increase budget staffing ratio by 2 for Grades 4 & 5 1,300,000 1,300,000

g Transportation changes 1,600,000

1,600,000

Total Estimated Savings

$ 7,500,000 $ 10,200,000 $ 17,700,000

Budget Reductions—Phase IIJanuary 27 and February 9, 2010

Description

Estimates

1. For grades 6 – 12, increase staffing ratio by 1 from 31 to 32 $ 2,644,083

2. For grades K – 3, increase staffing ratio from 20:1 to 30:1 11,088,560

3. Science Itinerant Program, K-5 405,135

4. Displaced Physical Education teachers 750,866

5. Transportation Aides 369,280 6. Reduce Regional Occupational Program budget 700,000 7. Reduce School for Adults budget 700,000 8. Reduce late bus for sports — K-8, Middle and High Schools 180,000 9. High School sports 1,200,000

10. Terminate contracts with City of LB Police Dept and replace with LBUSD Safety Resource Officers who will be at the schools Monday through Friday

150,000

11. Eliminate Evening High School 670,000 12-24b

Reduce services—itinerant music teachers, librarians, library media assistants, nurses, counselors, recreation aides and leaders, assistant principals, social workers, psychologists, AVID program, and teachers on special assignment

6,549,750

Budget Reductions—Phase IIJanuary 27 and February 9, 2010 (Continued)

Description

Estimates

25a Additional Quota staffing at Millikan Pathways 618,360 25b. Additional Quota staffing at Wilson Classical High School 539,600 25c. Additional Quota staffing for Lakewood Merit Scholars

95,000

26. Close Two Harbors classroom 120,000

27. Reduce the number of school calendars. Waivers will not be approved. TBD

28. Identify positions for possible calendar reductions TBD

29. Review all contracts funded by unrestricted and restricted resources TBD

30. Reevaluate funding for Cal-Safe (Pregnant Minors) Program 400,000 31. Central Office / Central Services, including Special Education 10,000,000 32. Continue classified hiring freeze. Classified positions vacated by retirements or

resignations will not be replaced. 1,000,000

Total Estimated Savings 38,180,634

Budget Reductions—Phase IIJanuary 27 and February 9, 2010 (Continued)

Certificated ClassifiedAmount FTE FTE

Reductions to Elementary/Recreation Office 71,000 - 1.0 Reductions to Middle School/K-8 Office 96,463 - - Reductions to High School Office 1,184,969 12.0 - Reductions to Office of Research, Testing and Evaluation 67,000 - - Reductions to Curriculum Services and Deputy Superintendent 476,425 1.0 2.0 Reductions to Office of the Superintendent 987,481 - 8.4 Reductions to Special Education 2,239,516 1.5 5.0 Reductions to Business Services 2,370,760 - 31.0 Reductions to Financial Services 1,844,668 - 6.0 Other Reductions:Implement Worker's Compensation rate reduction from 3% to 2.75% 1,200,000

Total Savings from Central Office and Special Education Resources 10,538,282 14.5 53.4

Deferred Maintenance - one year savings only 3,000,000

Item no. 31 Details for Central Office

Budget Reductions—Phase IIIMarch 2, 2010

Description

On-Going

One-Time

Estimates

1. Closure of DeMille Middle School $1,500,000 $1,500,000

2. High School Sports: a. Keep high school sports within the regular school

day. Modifications will be made at Millikan and Wilson High Schools.

b. Eliminate high school summer sports clinics

$470,000 $470,000

3. Three furlough days for non-representative employees

$1,200,000 $1,200,000

4. Two-Harbors Classroom $72,000 $72,000

Total Estimated Savings *

$722,000 $1,200,000 $1,922,000

* Total estimated savings include the original board actions and March 2 changes.

Budget Reductions—Phase IVJune 8, 2010

   

No.

Description Previously Approved

Change or New Savings for the

Budget

Revised Estimated

Savings for Fiscal Year 2010-2011

1Contract with the City of Long Beach Police Department. This item was previously approved on January 27, 2010, item no. 10.

$ 150,000 $ (100,000) $ 50,000

2Deferred Maintenance -- additional sweep of ending balance

  $ 3,000,000 $ 3,000,000

3All Non-Representative employees take five furlough days in Fiscal Year 2010-2011. The Board previously approved a three-day furlough on March 2, 2010.

$ 1,200,000 $ 700,000 $ 1,900,000

    Total $ 1,350,000 $ 3,600,000 $ 4,950,000