August 29, 2007

OAKLAND UNIFIED SCHOOL DISTRICT

2007/08 Adoption Budget Update

Dr. Kimberly Statham, State Administrator

Leon Glaster, Interim Chief Financial Officer

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Business Office Team Leads

Terrie Williams, Executive Officer, Financial Services

Pauline Follansbee, Controller

Sandra Anderson-Knox, Financial Services Manager

Mary Burke, Director State and Federal Compliance

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Introduction

Our charge is to have financialstability, accountability and abalanced budget while providinghigh standards of instruction andlearning for every student in OUSD.

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In order to guarantee long-termfinancial stability we mustimmediately develop a balancedbudget process that will help us meetthis objective.

We must have absolute confidencein our data and establish an on-going budget plan that assures oursuccess.

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Specific directives to Interim CFO:

• Provide a detailed analysis of the recently submitted 2007/08 adoption budget.

• Establish a plan to correct our on-going structural deficit.

• Present a balanced budget by December, 2007.

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Adoption Budget InformationGeneral Fund – June 30, 2007

Budget Category

PreliminaryJune 5

ApprovedJune 30

Difference

Revenue 250,059,000 250,059,000 $0

Expenditure 254,359,000 251,505,000 ($2,854,000)

Deficit 4,300,000 1,446,000 (2,854,000)

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Review and Adjustments

The following information is the result of a

Systematic detailed review of the reported

data from the June 30 Adoption Budget.

(Changes represent recalculations and/or readjustments)

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Review and Adjustments cont’dCategory[major adjustments]

AdoptionBudget (6/30/07)

Budget Update(8/29/07)

Difference

Certificated. Salaries[teacher subs, $1.1m; additional teachers, $ .2m]

111,491,000 112,835,000 1,344,000

Classified Salaries[custodians .53m; classified subs .15m]

32,970,000 34,134,000 1,164,000

Benefits[health ins .26m]

49,495,000 49,810,000 325,000

Books & Supplies[materials, (1.1m); equipment .5m]

8,502,000 8,029,000 (473,000)

Services and Operating. [contractual services –technology .72m; OPD .1m]

21,418,000 22,405,000 987,000

Capital OutlayBuildings, equipment

623,000 576,000 47,000

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Review and Adjustments cont’d

Category [major adjustments]

AdoptionBudget (6/30/07)

Budget Update(8/29/07)

Difference

Other Outgo 12,057,000 12,057,000 0

Indirect Support (8,079,000) (8,085,000) (6,000)

Other Financing 23,028,000 23,028,000 0

TOTALS 251,505,000

254,789,000

3,284,000

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Adoption Budget Comparisons

Category Preliminary June 5

Approved (June 30)

Update(August 29)

Revenue 250,059,000

250,059,000

250,059,000

Expenditure 254,359,000

251,505,000

254,789,000

Deficit 4,300,000

1,446,000

4,730,000

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Balanced Budget Plan

The Balanced Budget Plan tobe developed by the StrategyTeam will serve as a roadmap that assures OUSD’slong-term financial stabilitywhile supporting studentachievement

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•The six District goals will continue to be the primary focus

•Budget reductions will be as far from the classroom as possible resulting in minimal negative impact.

•Continuous monitoring and measuring of progress in achieving our goals.

Guiding Principles :

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Develop a process to integrate our Results Based Budget (RBB) program with the IFAS financial system.

Establish a budget development time line which provides clear direction for the District to complete the objective of long-term financial stability.

Immediate Action Steps:

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Preliminary Budget Development Timeline:

Middle September – Present Unaudited Actual report. Information will provide final 2007/08 beginning fund balance numbers which will replace projected beginning fund balance. We will know how much money is in our savings account.

Late September – Update RBB program using final 07/08 enrollment numbers. Provide site and central office with final budget allocations for current fiscal year. Integrate information with IFAS financial system.

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Preliminary Budget Development Timeline Cont’d

Late October – Strategy Team presents recommended budget reductions to decrease the $ 4.7 million deficit identified in the Adoption Budget update. Essential to successfully eliminating the structural deficit is the reduction of on-going budget expenses in appropriate categories which upholds the integrity of the district’s goals.

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Preliminary Budget Development Timeline Cont’dEarly December – Provide a multi-year

Balanced Budget Plan in which expenditures do not exceed revenues. Information will be presented as a part of the 2007/08 1st Interim financial report.

Early February – Load RBB for 2008/09 budget; key components include enrollment and revenue projections. Site and central office receive preliminary budget allocations for 2008/09.

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Middle February - Conduct RBB training for site administrators and central office staff. Site administrators and central office develop specific budgets in RBB program based on allocations.

Middle March – 2008/09 preliminary RBB budget is finalized. Upload to IFAS financial system. Present as a part of the 2007/08 2nd Interim financial report.

Preliminary Budget Development Timeline Cont’d

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End May – re-load the RBB budget using Governor’s May revise. Update site and central office adjustments.

End May - provide site administrators and central office staff updated budget allocation for 2008/09 fiscal year. Integrate information with IFAS financial system. Present as a part of the 2007/08 3rd Interim financial report.

Preliminary Budget Development Timeline Cont’d

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Preliminary Budget Development Timeline Cont’d

Middle June – Present balanced preliminary 2008/09 Adoption Budget. Make final adjustments and balance RBB and IFAS financial systems.

Late June – Present final balanced 2008/09 multi-year budget for approval.

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On-going Challenges

Completion of 2005/06 audit from State Controller’s Office, review preliminary audit findings

•Resolution of prior years’ audit findings with State Controller’s Office

Neutralization of charter school enrollment loss. Create document for potential special regulation for Revenue Limit loss.

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Restoration of state-required 2% Reserve for Economic Uncertainties in the 2008/09 multi-year budget.

Reauthorization of the Measure E parcel-tax.

Review and analysis of small schools’ financial and programmatic impact on District.

On-going Challenges cont’d

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Revenue Enhancement Strategies

Increase ADA percentage. 1% increase provides $2 million in additional annual revenue. Current ADA percentage = 93.52%.

Expand MAA reimbursement program. Share revenue with school sites.

Transition SBC/AT&T phone system from Centrex to Cal Net or similar system.

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Revenue Enhancement Strategies

Increase cost center revenue – nutrition services and copy center

Procurement & purchasing expenditure controls

Increase grant revenues to supplement general fund budget