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West Contra CostaUnified School District

December 17, 2014

2014-15First Interim Financial Report

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First Interim 2014-15

• Period Ending October 31, 2014• Updated Information on District Enrollment• Latest Information from the State• Utilizing the expenditure budget assumptions

described in the Executive Summary and the LCFF Calculator provided by the State

• Information for all funds

Changes since Budget Adoption

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• Enrollment decline– Charter Schools– Demographic Estimate Change

• State rate of funding change toward the 8 year target

• Emerging information on the Local Control Funding Formula and Special Education

• Shift in STRS rate of increase

EnrollmentDemographic Report

• New demographic study is incorporated in First Interim

• Previous report had growth of 1,348 students over the three year budget period of 2014-15 to 2016-17

• New report has growth of 208 students over that same period

• This growth is offset by Charter enrollment estimates

Charter School Estimate

• Three new charters entered the system after budget adoption and existing charter enrollment estimates were updated

• 2015-16 Enrollment decline estimate due to charters is 1,377 students

• 2016-17 Enrollment decline estimate due to charters 1,967 students

As enrollment declines are estimated the number of students qualified toward Supplemental/Concentration funding also declines.

Enrollment Drives Revenue

Enrollment 2015-16 2016-17 Enrollment Est. June 2014 29,920 30,300 Demographic Estimates (474) (764) Charter Schools (1,377) (1,967) New Enrollment Estimate 28,069 27,569

Unduplicated Count 2015-16 2016-17 Est. June 2014 22,069 22,069 First Interim 20,966 20,593 Difference (1,103) (1,476)

Comparison of Adopted Budget Assumption vs First Interim Report

Revenue Changes

• State Formulas impact revenue changes– The amount of funding as a % toward the 8 year

full funding target has changed– Budget Adoption 2015-16 assumed District would

receive 33.95% toward the target– First Interim 2015-16 assumes 20.68%

• Base year funding assumptions for LCFF related to former EIA grant shifts funding between Base and Supplemental Concentration

Revenue Changes

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Funding Adjustment Base 2015-16 2016-17 Est. June 2014 $203,902,448 $212,960,060 First Interim $195,751,681 $199,185.512 Difference ($8,150,767) ($13,774,548)

Funding Adjustment Supplemental/Concentration

2015-16 2016-17

Est. June 2014 $34,407,385 $39,248,761 First Interim $26,511,326 $33,260,477 Difference ($7,896,059) ($5,988,284)

Target Calculations: 2014-15West Contra Costa Unified

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Factors K-3 4-6 7-8 9-12

Base Grant $7,012 $7,116 $7,328 $8,491

Grade Span Adds $729 $221

Supplemental $1,156 $1,063 $1,095 $1,302

Concentration $762 $701 $722 $858

Targeted Goal $9,659 $8,880 $9,145 $10,872

These targets are dependent upon State action each year and are subject to change. Full implementation of target funding is anticipated in 2020-21 school year.

Funding Estimate: 2014-15West Contra Costa Unified

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• Target total for Base and Supplemental Concentration is $270,387,838

• ACTUAL Funding Estimate for Base and Supplemental Concentration is $211,530,354

• This year the District is estimated to receive 78% of the Targeted funding amount.

• The amount attributed between Base and Supplemental Concentration is a formula and not broken out by grade span.

Local Control Funding FormulaFirst Interim

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• 2014-15 target vs Phase in entitlement calculationSummary of Funding 2014-15 2015-16 2016-17Target 270,387,828$ 266,310,925$ 267,195,480$ Total Phase-In Entitlement 211,530,354$ 217,557,689$ 227,742,944$

Base 191,898,654$ 191,048,636$ 194,482,467$ Supplemental/Concentration 19,631,700$ 26,511,326$ 33,260,477$ Total Funding 211,530,354$ 217,559,962$ 227,742,944$ Estimated Percent toward Target 78% 82% 85%

This funding level assumes the State will fund the target “gap”2014-15 29.56% - 2015-16 20.68% - 2016-17 25.48%

How far away is our target?

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• The LCFF has an 8 year implementation plan• The 2014-15 Funding Target as of First Interim

is $270 million• The 2014-15 Estimated Funding $211 million

– The Funding “Gap” is $59 million• Each year the LCFF base grants are adjusted,

but not necessarily funded. That will be a decision of the State Legislature based upon funds available.

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2014-15 2015-16 2016-17Revenues $224,141 $228,512 $238,825 Expenses 231,974 237,342 243,875Deficit Spending ($7,833) ($8,830) ($5,050)Use of Special Reserve Transfer - 4,292 5,238 Beginning Fund Balance 21,992 14,159 9,621Use of Fund Balance (7,833) (4,538) 188 Ending Fund Balance 14,159 9,621 9,809Required Reserve 9,729 9,321 9,509

Stores & Revolving Cash 300 300 300Balance $4,130 $0 $0

Multi Year ProjectionFirst Interim Report

Unrestricted General Fund

Chart in Thousands

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Multi Year Projection

• 2014-15– Will meet 6% reserve with a combination of

General and Special Reserve Funds• 2015-16

– Will meet 3% reserve in General Fund and 2.4% in Special Reserve Fund

• 2016-17– Will meet 3% reserve in General Fund and .70% in

Special Reserve Fund

• Assumptions Used for Multi-Year Projections

• Maintains….– Programs currently in place– Exception of Grad Tutors – to be reconsidered in 2015-16 LCAP

• Increases– Driven costs on formulary such as step and column– LCAP costs by $3.2 million in 2015-16– LCAP costs by $6.7 million in 2016-17– Maintenance funding $4.8 million in accordance with State requirement beginning

in 2015-16

• Decreases– 34 Teaching staff based on estimated decline in enrollment in 2015-16– 16 Teaching staff based on estimated decline in enrollment in 2016-17

Multi-Year Projection

Future Funding Estimates

• There is a higher level of volatility and risk in this funding model– Student Demographic Changes– Legislative Support must continue over time– Economic Stability and Growth

Expense Planning

• The District is deficit spending by an estimated $7.8 million as of First Interim

• Salary and Benefit Increases will be requested through bargaining

• Because of low funding over several years, demand is higher than the increased funding

• District must plan to reduce deficit spending

STRS Multi Year Rates

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$10,858,534 11,687,731

$12,714,545

$14,906,708

$17,098,871

$19,291,034

$21,483,197 $22,632,602

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

8.25% 8.88% 10.73% 12.58% 14.43% 16.28% 18.13% 19.10%

2014-15 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

STRS Rates

Retirement System Costs

• The increased cost to fund retirement system contributions will be escalating between $2.5 and $3 million per year

• This is roughly equivalent to a 2% raise for all employees

• The District pays for over 2300 retiree health care plans for those employees who were in a vesting status and/or retired prior to 2010 the annual cost is $18 million, which rises based upon health care premium rates

Structural Deficit• Defined as having ongoing programs and

financial commitments for a given year that exceed that particular year’s revenue

• Ending Fund Balance or Special Reserve Funds can be used to address the deficit

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• The Board needs to be aware of the use of one-time funds and prepare plans for reducing commitments as one-time funds are depleted

• 2014-15 the District has planned use of ending fund balance in the amount of $7.8 million

• 2015-16 the District has planned use of ending fund balance of $4.5 million plus Special Reserve of $4.3 million = $8.8 million

• 2016-17 the District has planned use of Special Reserve of $5.2 million

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Structural Deficit

Reserves• 3% Reserve for Economic Uncertainty is the standard for a

District our size• Due to the risk of volatility in funding the Board adopted a 6%

reserve target with 3% in the General Fund and 3% in the Special Reserve fund

• With current revenue and expense assumptions that target will not be met in 2015-16 and 2016-17

• By way of comparison a monthly payroll cost this school year can be as much as $12.2 million

• A 3% reserve is $9.7 million

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Special Reserve Summary

Special Reserve Fund – 17

First Interim

Balance June 30, 2014 $ 11,705,168

2015-16 use of Special Reserve $ (4,292,207)

2016-17 use of Special Reserve $ (5,238,619)

Special Reserve Fund Balance Projection June 2017$ 2,174,342

 

Fund Review

• Review of Budget Fund Schedules– Schedule 2

• Adult Ed, Child Development, Deferred Maintenance, Special Reserve

– Schedule 3• Building, Capital Facility, County School Facility, Special

Reserve for Capital Outlay

– All funds are estimated to have positive ending fund and cash balances for 14-15, moving in to the 2015-16 budget year

Next Steps

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• December 2014 First Interim Budget Report

2015• January Governor’s January Budget• January Budget Study Session• February Governor’s Budget Review• February Budget Study Session• March Second Interim Budget Report• March District Local Control Accountability Plan (DLCAP) committee Meeting• April DLCAP Committee Meeting• May Governor’s May Revised Budget• May Public Hearing for LCAP• June Adopt 2015-16 Budget and LCAP

Financial reports available on the webhttp://www.wccusd.net/