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SEPTEMBER 23, 2015
BUDGET FORUM
Jeremy Meyers, SuperintendentRobbie Montalbano, Deputy Superintendent
2015-16 State Budget2
The National Economy3
The U.S. economy continues to add jobs 280,000 jobs added in May
On average, about 200,000 jobs per month have been added during the past year
Professional and business services, leisure and hospitality, and health care account for most of the gain
Unemployment is still a challenge
© 2015 School Services of California, Inc.
The California Economy4
The California economy continues to show strength Added 54,200 jobs in May, outperforming the U.S. average
If the state had added only its proportionate share of jobs based on population, it
would have gained 35,000 jobs
California’s unemployment rate in May was 6.3%, still above the U.S.
average One year ago, the State’s unemployment rate was 7.5%
The State’s housing market continues to strengthen The statewide median home price in April was $481,800, up 7.4% from April 2014
Residential building permits are up almost 21% for the first four months of 2015,
compared to the same period one year ago© 2015 School Services of California, Inc.
The California Economy5
It was a great year for the State’s highest income earners, whose income
and capital gains taxes make up a significant part of the growth in
General Fund revenues
Proposition 30 continues to be a strong and steady source of State
income $7 billion to $8 billion in combined sales and personal income taxes
Continued concerns The economic effect of the drought is still unknown
Rising gas prices could hinder domestic consumer spending
Job growth in the innermost California communities still lags way behind the
nation and other areas of the state © 2015 School Services of California, Inc.
The California Economy6
© 2015 School Services of California, Inc.
Highlights in the Education Budget
The budget includes Prop. 98 funding of $68.4 billion for 2015-16, an increase of $7.6 billion over the 2014-2015 budget
Since 2011-12, Prop. 98 funding for K-12 education has grown more than $18.6 billion
The Prop. 98 maintenance factor will be reduced to $772 million by the end of 2015-16
7
Highlights in the Education Budget
Funding for the LCFF of $5.994 billion, 2015-16 gap funding 51.52% Cost of Living Adjustment (COLA) of 1.02% to categorical programs
outside of LCFF $3.2 billion one-time to pay down past unpaid state mandates
The funding is unrestricted and may be used by LEAs to meet local needs as determined by their governing board Legislative intent is to prioritize funding for investments necessary to support
implementation of Common Core, English Language Development and Next Generation Science standards
8
Highlights in the Education Budget
Establishes the Career Technical Education (CTE) Incentive Grant Program Provides $900 million in one-time Prop. 98 funding over the
next three years to establish new or expanded high-quality CTE programs $400 million is provided in 2015-16 Competitive, matching grants
9
Highlights in the Education Budget
Adult Education funding of $500 million $375 million is provided to School Districts and County
Offices of Education for Adult Education Maintenance of Effort on the basis of the 2012-13 Maintenance of Effort certification
Preschool and Child Care received Prop. 98 and non-Prop. 98 funding totaling $2.851 billion.
10
Highlights in the Education Budget
$60.1 million directed to Special Education in response to recommendations from the statewide Special Education Task Force $50.1 million is on-going and $10 million is one-time Does not increase the amount of money allocated through the AB
602 process
Routine Restricted Maintenance Account (RRMA) now has extended flexibility delaying full implementation of the 3% requirement until 2019-20
11
2015-16 EDCOE Budget12
Local Control Funding Formula13
County Office LCFF
Funding
LCFF Funding for our organization includes sources/support for the following major programs:
Juvenile Hall/Court Schools Mandatorily expelled students Community Day Schools AB 1200 (fiscal oversight) activities and support
to school districts
Other Funded Student Programs14
Additional programs outside of the LCFF
Preschool
Head Start/Early Head Start
Special Education
Adult Education
Preschool15
COLA of 1.02% A 5% increase to the reimbursement rate for State
Preschool and other direct-contracted child care and development providers
Challenge – with the increase in minimum wage some families will no longer qualify for subsidized slots
Head Start/Early Head Start16
Year two of a five year grant Flat funded
Possibility of small COLA (less than 1%) if approved in federal budget in October
Challenge – with the increase in minimum wage some families will no longer qualify
Special Education17
SELPA revenues continue to decline as enrollmentdeclines
Costs are not declining Deficit factor in 2015-16 of 0.9707
Deficits each year since 2012-13 So far, all have eventually been restored when final property tax
allocations came in If this does not occur, the deficit will be funded out of special
needs pool for 2015-16
Adult Education18
The Governor’s 2015-16 budget proposal calls for $500 million in ongoing Prop. 98 funding for a new Adult Education Block Grant supporting activities such as:
$350 million for ongoing maintenance of effort of programs Elementary and secondary basic skills Citizenship, English as a second language, and Workforce
Preparation for immigrants Education for adults with disabilities Career Technical Education and Apprenticeships
Adult Education Block Grant19
From the $500 million appropriation, LEAs will directly receive an amount equal to the amount they spent in 2012-13
$53,838 for EDCOE After those allocations have been made, any remainder of the
$500 million will be allocated to the Adult Education consortia
Career Technical Education (CTE)20
The Governor’s Budget Proposal includes $250 million for each of the next three years for a Career Technical Education (CTE) Incentive Grant
The grant is established as a State Education and Workforce Development Initiative with the goal of providing pupils in kindergarten through grade 12 with the knowledge and skills necessary to transition to employment and postsecondary education
School districts, County Offices and Charter Schools interested in this program will need to complete an application for this competitive grant program
The grant requires a dollar for dollar match and priority for these State funds will be given to LEAs applying in partnership with other LEAs
CalPERS
■The employer contribution to CalPERS is increasing from 11.771% in 2014-15 to 11.847% in 2015-16
■Estimates of the resulting future contribution rate increases for school employers are as follows:
21
Actual Projected
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
11.847% 13.05% 16.6%* 18.2%* 19.9%* 20.4%*
*CalPERS provided these estimates in 2014 and has not yet issued revised estimates
CalSTRS22
■ Consistent increases up to final implementation
■ Once the statutory rates are achieved, CalSTRS will have the authority to increase or decrease the employer and state contribution rates
Year Employer
Pre-PEPRA*
Employees
Post-PEPRA*
Employees
2015-16 10.73% 9.20% 8.56%
2016-17 12.58% 10.25% 9.205%
2017-18 14.43% 10.25% 9.205%
2018-19 16.28% 10.25% 9.205%
2019-20 18.13% 10.25% 9.205%
2020-21 19.10% 10.25% 9.205%
Other Factors23
■ Additional Factors■ Affordable Care Act■ Increase in Minimum Wage■ AB 1522 – Healthy Workplace Healthy Families Act ■ Declining enrollment
% of % of % of % of % of % of
2009 change 2010 change 2011 change 2012 change 2013 change 2014 change
from PY from PY from PY from PY from PY from PY
EDCOE 1,077 3.5% 1,122 4.2% 1,079 -3.8% 1,029 -4.6% 1,001 -2.6% 985 -1.6%
SELPA 28,408 -1.2% 28,060 -1.2% 27,639 -1.5% 27,232 -1.5% 27,099 -2.0% 26,960 -0.5%
2015-16 Net Position24
NET POSITION
2014-2015 2nd Interim
Budget
2014-2015 Current Budget
2015-2016 Proposed
Budget
Change
Income $ 43,243,511 $ 43,218,596 $ 43,824,357 $ 605,761
Expenditures $ 44,313,066 $ 45,103,540 $ 45,401,099 $ 297,559
Income Less Expenditures (see note 1) $ (1,069,555) $ (1,884,944) $ (1,576,742) $ 308,202
Beginning Balance $ 14,216,868 $ 14,216,868 $ 12,331,924 $ (1,884,944)
Ending Balance $ 13,147,313 $ 12,331,924 $ 10,755,182 $ (1,576,742)
25
2014-2015 2nd Interim
Budget
2014-2015 Current Budget
2015-2016 Proposed
Budget
Change
Income $ 43,243,511 $ 43,218,596 $ 43,824,357 $ 605,761
Adjust for targeted or restricted revenue set aside in ending balance reserves
(1,481,463) (699,130) (429,222) 269,908
Other Adjustments for one-time income funding on-going expenses
(23,516) (67,348) (67,348) -
Adjusted Income $ 41,738,532 $ 42,452,118 $ 43,327,787 $ 875,669
Expenditures $ 44,313,066 $ 45,103,540 $ 45,401,099 $ 297,559
Adjust by one-time expenditures funded by beginning balance reserves
(807,512) (500,388) (517,784) (17,396)
Other adjustments for one-time expenditures
- (740,121) (12,504) 727,617
Adjusted Expenditures $ 43,505,554 $ 43,863,031 $ 44,870,811 $ 1,007,780
Adjusted Income/Expenditure Variance $ (1,767,022) $ (1,410,913) $ (1,543,024) $ (132,111)
Adjustments for One-Time
Revenues and
Expenses
Final Thoughts26
Many factors impact our budget US economy, California economy State budget Enrollment Increasing costs Negotiated settlements
