2011-12 Preliminary Budget Superintendent’s Recommendation

February 10, 2011

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• Budget Overview Superintendent Kowba• Assumptions

• Budget Process

• Recommended Budget Ron Little, CFO• Assumptions

• Impacts

• Special Issue Areas Phil Stover, Dep. Supt.• Alternative Budget Ron Little

• Restoration items

• Summary Superintendent Kowba

Presentation Agenda

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Recommended Board Actions

1. Approve Superintendent’s Recommended Preliminary 2011-12 Budget

2. Approve Recommended Alternative Budget with Restorations

3. Direct HR Department to Proceed with Preparation of Staff Reduction (PKS) Resolution– Finalization of staff reduction numbers– Board approval on February 22

4. Direct Finance Department to Proceed with Completion of Second Interim Report for Submittal March 15 to SDCOE– Board approval on March 8

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Historical District Reductions

$-

$25.0

$50.0

$75.0

100.0

125.0

150.0

175.0

$53.1M

$90.0M $93.1M

$134.6M $120.6M

Total Budget Deficits over 5 years

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• Maintain Our Priority on the Classroom

• Realign Diminishing Resources

• Engage School Communities in Decision Making

• Take A Multi-Year Approach

Our Approach to a Balanced Budget

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Key Fiscal Goals

• Immediate Goals

• Meet March 15 Statutory Deadlines for Staffing and Second Interim Submission

• Achieve Positive Fiscal Certification

• Meet SDCOE Requirements

• Overall Goals

• Balance the 2011-12 Budget

• June 30 Budget Adoption

2011-12 Recommended Budget Ron Little, CFO

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Key Fiscal Requirements

• San Diego County Office of EducationMiddle of the Road Budget Assumptions:

• $350/ ADA of Reductions 2011-12• List of Specific Budget Solutions for 2011-12 to

balance budget• Evidence of Implementation of Solutions• March 15 Certificated Notice Deadline • Description of Budget Solutions from 2012-13• Maintain Legally Required Reserve Levels for

all three years of Multi Year Projections

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Long Term Considerations

• A Sound Fiscal Footing for the District Will Require Multi-Year View– Need for Strategic Solutions to Balance Budgets– Exponential Power of Decisive Action

• Long Term Solutions Needed for:– Closing the deficit gap in 2012-13– Ongoing GF Structural Deficit– Sustaining a Positive Cash Flow vis-a-vis deferrals– Restructure of PPO and Routine Maintenance

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Budget Factors Contributing to 2011-12 Deficit

• Continued & Increasing State Funding Reductions• Rising Costs

– Salaries & Benefits– Operations

• Loss of Federal Stimulus Funding (ARRA)– ARRA SFSF– ARRA IDEA

• Flat Federal Funding of Categoricals– Title I– Title II

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2010-11 Budget Snapshot:General Fund

• $480.5 Million Restricted Funds– $ 264 Million Special Education– $ 43 Million Title I– $ 22 Million EIA

• $688.6 Million Unrestricted Funds– $562.4 Million at School Sites – $ 52.5 Million Central Office – $ 42.6 Million Fixed Costs– $ 31.1 Million in Reserves

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2010-11 Total General Fund Budget

$1.14 Billion• $993 Million in Salaries &

Benefits– 87% of Total GF

Budget– 91% of GF

Unrestricted Budget• $52.5 Million Central

Office Admin– 8% of GF Unrestricted

Budget

Salaries & Benefits in Unrestricted General Fund

91% Salaries & benefits9 % Other Costs

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Budget Development Process

Path to a Balanced 2011-12 Budget1. Take Projected Deficit Off the Top2. Identify Minimal Central Office Service Levels3. Provide Base Allocation to Schools4. Localize Decision Making – Transparent & Inclusive

– Site Based Budgeting (SBB)

– “X” Factor Discretionary

– Community Meetings

– School Site Council (SSC) Input

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Recommended 2011-12 Budget:Preserves Basic School Needs

Superintendent’s Budget Recommendation:Preserves $512 Million of Educational Programs and Site Support (unrestricted funds)• Key Programs Preserved in Recommended Budget:

– A-G Curriculum– Full-Day Kindergarten– Information Technology Support– Police & Safety Services– Centralized Nursing– Athletics– Discretionary Site Funding (“X” Factor)

• Counseling• GATE• VAPA Teachers

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2011-12 Budget: More Central Office Reductions

Unrestricted Resources• Business Services Cut 39%• District Relations Division Cut 32% • Finance Services Cut 13%• Information Technology Services Cut 10%• Academics Cut 9%

• Central Office represents only 8% of GF Unrestricted• This is in Addition to 18% of Central Office Cuts

and 619 FTE Reductions since 2007/08

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• Significant Reductions/ Eliminations:• Increased Class Sizes (K-3)• Suspension of Magnet School Supplemental

Allocations• Arts & Music Program Reductions• Special Education Reductions• Suspension of OCILE• Reduced Central Office Services• Eliminate Non-Critical Vacancies

2011-12 Budget: School and Program Reductions

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2011-12 Budget Solutions SummaryMillions

Projected Reductions Required (Based on Current Financial Assumptions at First Interim) $ 120.60 ($141.6 Million - $21 Million)

A. Revenue Generation1 Increase ADA 3/4 % $ 4.30 2 Mandated Claims Reimbursement $ 1.50

Sub-Total $ 5.80 B. Central Office Options

1 5370-Reduce GATE District Administration- retain 1 FTE SME + 1 Admin $ 0.77 2 Eliminate GATE Discretionary Funding $ 0.65 3 5409-Eliminate American with Disabilities Act (504)-(task into Accountability) $ 0.22 4 5440-Restructure Student Programs & Prof Learning (Resource Teachers to Restricted funding) $ 0.38 5 5532-Magnet Programs Office Transfer to Restricted MSAP Grant $ 0.31 6 5537-Eliminate Utilities Management Program $ 0.60 7 5547-Teacher Prep and Student Support (Eliminate Unrestricted Support) $ 0.08 8 5606-Office of School Innovation Elimination $ 0.22 9 5596-Chief Special Projects Office Elimination $ 0.31 10 5343-JROTC Office (Eliminate Centralized Oversight) $ -11 5451-College, Career & Tech Ed-Transfer to Restricted; Eliminate Open PARS $ 0.36 12 5542-Community Relations Department Elimination $ 0.37 13 Adult Education (Eliminate GFU Support of Centralized Oversight) $ 0.35 14 CBET (Elimination of Program) $ 0.52 15 5638-Drop Out Prevention Realignment $ 0.38 16 Area Superintendents (Elimination of Current Area Supt Vacancy + support staff) $ 0.29 17 5457-Reduce P.E and Health (Resource Teacher to Title II) $ 0.16 18 14% Additional Reduction to Central Office (FTE Estimated)

Academics / Student Services $ 0.87 Business/ Auxiliary Services, Instructional Facilities, & Strategic Sourcing $ 2.27 Business/ Human Resources $ 0.62 District Relations $ 0.28 Finance $ 1.23 IT SS $ 1.40 Legal $ 0.33 Office of Accountability $ 0.42

19 5533-Enrollment Options-Consolidate with Magnet Office Reduce by 30%; others to Restr $ 0.32 20 Eliminate Transportation for Magnet and VEEP $ 3.75 21 5605-School Police Services (Reduce 12.5%) $ 0.67 22 5446-Visual & Performing Arts (Retain 1 SME + Admin ; Resource teachers to "X") $ 2.80 23 Area Superintendents Budget Reductions & Restructure $ 1.73 24 Eliminate Supplemental Secondary Counselors (to "X") $ 2.15 25 Reduce Visiting Teachers Budget due to reduced Professional Development $ 0.50 26 Race & Relations Department (50% costs moved to Title I) $ 0.38

Sub-Total $ 25.67

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2011-12 Budget Solutions SummaryC. Centrally Managed Programs

1 Eliminate/Suspend OCILE Program(a) Balboa $ 0.66 (b) Old Town $ 0.73 (c) Palomar $ 2.58 (d) OCILE Transportation $ 0.60

2 Eliminate RELI Program $ 0.13 3 Reduce Landscapers by 10 FTEs-10% $ 0.59

Sub-Total $ 5.28 D. School Admin. Options (Part of Allocation Formula)

1 K-3 CSR Program - Increased Class Sizes 29:1/ Contract Maximum (Net of Revenue Penalties)(a) Kindergarten $ 6.73 (b) 1st Grade $ 6.81 (c) 2nd Grade $ 6.29 (d) 3rd Grade $ 6.38

2 Reduce Kindergarten to 1/2 Day at 29:1 (168.3 FTE) (Net of Revenue Penalty)3 Split Principal Assignment Between Small High Schools $ 1.22 4 Reduce Allocation Model for Alternative and Atypical Schools (8 schools) $ 1.00 5 Increase Class Size for Gate Seminar Program (Per School Formula)6 Reduction to Unrestricted Allocation Model- Site Based Decisions (FTE Estimated): $ 25.96

Options for Sites to Consider Include, but are Not Limited to:(a) Librarians (Allocation = 21.50 FTE)(b) Library Technicians (Allocation = 54.50 FTE )(c) Vice Principals (Allocation = 80 FTE)(d) Nurses (Allocation = 57.4FTE)(e) Student Information System Site Tech II (Allocation = 45 FTE)(f) School Clerk II Reduced by One at Each High Schools (Reduction = 14 FTE)(g) Health Technicians (Allocation = 90.88 FTE)(h) School Counselors (Allocation = 171.90 FTE)

Sub-Total $ 54.39 E. District wide Options

1 Close Schools (@ $450K per) TBD 2 K-8 Schools - Reduction of 1 CPU $ 0.93 3 Solar Energy Implementation Savings $ 0.50 4 Eliminate additional unrestricted vacancies (not already included in B18 above) $ 1.80

Sub-Total $ 3.23 F. School Supplemental Allocations

1 Suspend Supplemental Allocations for Magnet Programs $ 6.40 2 Change Prep time Allocation to Comply with Minimum Contract Requirements3 Eliminate 4 Operation Specialists $ 0.35

Sub-Total $ 6.75 G. Federal Stimulus Funded Program (ARRA Title I Funding Expires)

1 Eliminate K-2 ARRA Positions CSR 16.5:1 (29 Schools) 12.23 Sub-Total $ 12.23

H. Special Education1 Reduce Special Education local contribution- Program & Transportation Reductions $ 6.25 2 Eliminate Intersession and Second Session of Special Education $ 1.00

Sub-Total $ 7.25

Total Deficit Reduction Solutions (with estimated FTE impacts) $ 120.60

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Operationalizing Budget Solutions

• Recommended Budget Is Based on a Set of Assumptions– Variances could occur– Zero-Sum Game

• Options for Possible Shortfalls in Deficit Solutions– Second Interim Adjustments– Use of Reserves for Economic Uncertainties– Increase in Deficit Projection for 2012/13– Explore Other Budget Solutions

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Preliminary Estimates of Staffing Impacts

General Fund Unrestricted Estimated FTE Reductions

Certificated Classified Total

Central Office 68 215 283

Schools(Classroom

Teachers)

756(535)

273 1,029

Total 824 488 1,312

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Site Discretionary Fund Staffing Results“X” Factor FTE Purchases (preliminary estimates)

FTE Purchased FTE Not Purchased

Counselors 199.53 46.15Nurses 40.75 40.90Librarians 12.60 13.40Health Tech 49.7 16.74GATE Seminar 17.60 29.90Vice Principals 92.60 20.40

Network Support 18.87 2.63

Campus Security Asst. 61.05 24.14

Library Assistants 32.78 26.91

Office Support 320.22 105.29

Overview of Special Budget IssuesPhil Stover, Deputy Superintendent Business

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2011-12 Transportation Reduction Impact

• Impact of Reductions equal 20% of Transportation $39.2M Budget:

–Magnet & VEEP Reduction $3.75M–Special Education Reduction $3.00M–OCILE Transportation $0.60M–Central Office Reduction $0.50M

Total Reduction $7.85 Million

• Magnet Busing is not Eliminated • Complete redesign of routing patterns for 2011/12

• Routes will be streamlined• Goal is to mitigate student impact

• Mandated Programs (PI & Special Ed.) will be the new foundation• Minimum of 65 staff impacted

• Including bus drivers and office

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2011-12 Transportation Reduction Impacts

• Board Adoption of Budget Recommendation Will Include:• Elimination of bus stops within 5 mi. radius of school• Increase ridership rule to 25 per bus

• Buses Will be Utilized To Maximize Capacity• Centralized pick-up points will be used

• 43 Schools Impacted• A maximum of 20% of transported students will be

impacted at any one school• Some percentage of those students will continue to

ride or find alternative transportation• Surveys will be conducted to determine impact on

enrollment

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2011-12 Transportation Reduction Impacts

• 3,623 General Education Students Impacted• Only 3% of SDUSD’s non-charter population

• Additional Special Education students will be impacted• Exact number unknown at this time• Special Education ridership will be limited to students

qualifying for transportation as a related service in their IEP

• 84 Routes Eliminated affecting 1,464 students• 138 Routes modified/consolidated affecting 2,159

students• Longer walk to bus stop, longer bus ride etc.

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2010-11 Police Services Reduction

• Reduce Police Services Staffing by 12.5% (8 FTE’s) for a Savings of $ .67M– 4 Campus Police Officers– 3 Community Service Officers– 1 School Police Clerk

• Impacted Campuses– La Jolla High, Scripps Ranch High, – Wilson Middle, Mann Middle, – Euclid, Edison and Sherman Elementary

• Business Office Reduced Hours of Service– Closed two hours per day

(or an entire day if remaining clerk is off)

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School Realignment Committee

The School Realignment Committee• Composed of 16 staff members representing all geographies, grade

levels and major academic, HR and finance services (complete list in backup materials)

• Focus on realignment of schools rather than on the closing of small elementaries

• Values the work of previous school closing committees

The School Realignment Committee Recommends:• The district pursue a year-long holistic and thorough review of a

comprehensive plan for school realignment, including :– Grade level alignment– School size and configuration– Attendance boundaries– Choice/community school priorities

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School Realignment: Initial Considerations

Items for Continued Study:• Examination of high cost per student, non-mandated atypicals for

closure or movement to a district school site• Reduction of one elementary school in the Mission Bay Cluster and

Clairemont cluster• Reduction of one elementary school in the Taft feeder pattern of the

Kearny cluster• Revisit grade configuration, reduce one elementary school and

review need for two middle schools in Point Loma Cluster• Development of a long term strategy for the consolidation and

alignment of the Logan/Memorial campuses• Creation of a school marketing strategy and training for site

administrators for competitive purposes• The negative impact on school enrollment of premature discussions

related to specific school closure• The need for middle schools to be the focus of a district-wide right-

sizing and realignment• Potential for consolidating district staff on fewer sites

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Special Education – Key Reductions• $7.25 million Total Special Education Reduction

– From $264 million budget (3% cut)• Non-Special Education Personnel

– Human Resources Support– Finance Support

• Resource Teachers (Cluster Support Teachers)• Certificated Staff

– Education Specialists• Classified Staff• Transportation

(reduce overall special education costs)• Reduce Special Education Summer School program

Alternative Budget RecommendationRon Little, CFO

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Alternative Budget Recommendation

• June Special Election Impact• Potential Restoration of $57 million

• Alternative Budget Can Only Be Implemented After Passage Of State Ballot Measure

• Superintendent Recommended Alternative Budget Includes:• Restoration of K-3 Class Size to 24:1• Set Aside Reserve for 2012-13 Deficit• Allocate Funds to Site Discretionary “X” Factor• Partial Restoration of Magnet, Gate and VAPA Funds• Other restorations

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Restoration Plan - $57 Million

List of 2011-12 RestorationsK-3 Class Size Reduction Program 24:1

• Kindergarten $6.7 Million•1st Grade $6.8 Million•2nd Grade $6.3 Million•3rd Grade $6.4 Million

Supplemental Allocations for Magnet $4.5 MillionVAPA/Other Resource Teachers $1.9 MillionPolice & Safety Services $0.3 MillionLandscapers $0.6 MillionIncrease “X” Factor to Schools $11.5 MillionContingency for Multi-year Deficits $12.0 Million

Summary CommentsBill Kowba

Superintendent

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• Feb. 10 – Recommended Budget Action• Feb. 22 - PKS Resolution & Vacancies

Elimination • March 8 - Second Interim Approval• March 15 - Submit Second Interim• March 15 - Certificated Notices Deadline

Next Steps and Timeline

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Recommended Board Actions

1. Approve Superintendent’s Recommended Preliminary 2011-12 Budget

2. Approve Recommended Alternative Budget with Restorations

3. Direct HR Department to Proceed with Preparation of Staff Reduction (PKS) Resolution– Finalization of staff reduction numbers– Board approval on February 22

4. Direct Finance Department to Proceed with Completion of Second Interim Report for Submittal March 15 to SDCOE– Board approval on March 8

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Board Discussion and Questions

• Questions?

• Backup Materials:– Transportation Impact spreadsheet– School Realignment memo– Central Office Reduction spreadsheet 2011-12– School Site Allocations list for 2011-12– Special Education Reductions list