2009 10 MAY REVISE Budget Basics newsletter by Mu1sKkV

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									                                                                                           June 29, 2009



                                                                               BASICS News
                                                                           San Bernardino County Superintendent of Schools
                                                                                     Business Advisory Services
                                                                                       1020 East Cooley Drive
                                                                                          Colton, CA 92324

 GOVERNORS’ PROPOSED REVISIONS TO THE 2009-10 ADOPTED STATE
 BUDGET INCLUDING ADDITIONAL BUDGET REVISIONS FOR 2008-09
OVERVIEW   OF    THE  MAY   REVISIONS                                MAJOR COMPONENTS INCLUDE:
PROPOSED BY THE GOVERNOR TO THE STATE                                Revenue Limits:
ADOPTED BUDGET:                                                      2008-09: The May revise further reduces the revenue limit by
On February 20, 2009, the Governor approved a 17 month state         $1,311.6 billion which increases the revenue limit deficit to
budget covering mid-year revisions to the 2008-09 State Budget       11.428% (.885720) for use in your revenue limit calculations.
and adoption of the 2009-10 budget. The Governor released his        2009-10: Projected COLA of 5.02% was revised to 4.25% and
May proposed revisions to the enacted budget on May 14 and           the deficit adjusted. The May Revise further reduced the
May 29, the highlights are as follows:                               revenue limit by $1,894 billion which increases the revenue
                                                                     limit deficit to 17.967% (.820330).
    Additional $21.3 billion in budget reductions are proposed      Each district’s actual change will depend on where the
     to offset the state revenue shortfall from the failure by the   district’s base revenue limit is in comparison to the statewide
     voters to approve the 6 propositions on the May 19, 2009        average.                                   Exhibits A, B, C, D
     special election ballot and the continuing decline in state
     revenues.                                                                                                             2009-10
                                                                                                                       Additional May
                                                                                                                      Revise estimated
    Proposition 98 additional spending reductions of $5.3
                                                                                                                      cuts per ADA of
     Billion. K-12 reductions are $1.4 Billion in 2008-09 and                                                         $200 for 2009-10
     $3.1 Billion in 2009-10. Colleges share in the reduction                                                        and $394 for 2008-
     for a total of $958 million spread between the two fiscal                                                       09 brings total loss
     years.                                                                                                            in state revenue
                                                                                                                       limit funding to
    Included in the K-12 additional reductions are:                                                                  $1,184 per ADA.

       • High Priority School Grants Eliminated
                                                                       Graph courtesy of School Services of Calif.
       • Home to School Transportation reduced by 65%                PERS, PERS Reduction, and PERS Reduction Buy back – The
       • Revenue Limit Reductions ($200 per ADA 09-10                estimated 2009-10 Public Employees Retirement system
            on top of $394 per ADA 08-09 for total                   (PERS) school employer contribution rate is at 9.709%. This
            reduction of $594 per ADA)                               makes the PERS reduction rate at 2.811% (13.020% - 9.709%).
       • Child Care funding reduced with Cal Works cut               The PERS reduction buyout is estimated at 15.09%.
       • School year reduced by 7 days (173 days)                    Supplemental - Hourly Programs – CDE has indicated
       • Defer $640.3 million of the 2009-10 State                   that hourly program dollars will no longer be funded based on
            Apportionment to 2010-11                                 program participation. The state has introduced clean up
                                                                     language to use 2007-08 amounts funded to each district as the
                                                                     base year funding. These deficited amounts will be reduced
    Federal Stimulus funding has now been calculated by the         further by 15.38% for 2008-09. Fiscal Year 2009-10 will be
     state and award letters provided to each districts for the      funded based on the 2007-08 level of funding less 19.84%.
     first distribution of funds. Quarterly expenditure and          (an additional 4.46% cut above 2008-09 levels)  Exhibit E
     activity reports are required. Funds must be legally            Program                     08-09                09-10
     obligated by September 30, 2011. See CDE web site:                                        Total Deficit         Total Deficit
     http://www.cde.ca.gov/ar/ , for the latest in ARRA              Core (capped)             25.63%                30.09%
     funding and regulations.                                        Grade 2-6 At Risk         40.54%                45.00%
                                                                     (capped)
                                                                     Grade 2-9                 43.98%                48.44%
    Build America Bonds –$ 1.98 billion has been received for       Retained/Recommended
     School Facility Program Projects                                Retention (uncapped)
                                                                     CAHSEE Grades 7-12        15.38%                19.84%
                                                                     (uncapped)




                                                                                                                           Page 1
Special Education and Mental Health Services –                        Charter Schools – The categorical block grant rate for
Funding remains the same; expect $65 million as a permanent           2009-10 is est. at $401 per ADA (AB 740), however could
increase to the AB 602 funding base effective 2009-10. Growth         be deficited. General Purpose Rates are based on statewide
is funded in the 2009-10 budget.                                      average revenue limits therefore estimated rates may
                                                                      fluctuate up or down by $20 per ADA. General Purpose
Contact your multi-agency SELPA for detailed estimates on how         Block Grant per ADA rates for fiscal year 2009-10 are
these rates will affect your district’s individual funding.           estimated to be: K-3 $5,048, Grades 4-6 $5,125, Grades 7-
                                                                      8 $5,273 and Grades 9-12 $6,119.
Deferred Maintenance - The state funds $235.8 million for
2008-09 and $234.4 million for 2009-10 and does not require a
local district match to receive funding. Amount after the             K-3 CSR Flexibility - Changes in class size caps and
15.389% categorical reduction funded at 70% of the state’s one        penalties are effective 2008-09 through 2012-13. Must have
half of one percent. Legislation has suspended the reporting          been participating by grade level in K-3 CSR by 12/10/08 to
requirement to the legislature. State funds will be unrestricted      benefit from penalty changes. Classes that average over
and deposited in the general fund from 2008-09 through 2012-13        20.44 students will be assessed a penalty based on the
in object 8590. These funds may be spent for any educational          average excess count. The penalty is imposed against the
purpose.                                                              eligible per classroom student count of 20 that is funded.
                                                                      Districts will retain from 95% down to 70% of the full
Restricted Routine Repair and Maintenance Account                     incentive funding of $1,071 for Option 1 and $535 for
                                                                      Option 2 based on graduated penalty imposed. Funding will
(RRMA) – The state reduced the district RRMA requirement
                                                                      not receive a COLA for 2009-10. If a school has a
from 3% to 1% for 2008-09 through 2012-13.
                                                                      classroom with 25 students, it would receive 70% of the
Mandated Costs – Only two mandates are funded                         funding for 20 of the students-not 25 students. Please note
Interdistrict/Intradistrict transfers & California High School Exit   legislation is still pending to relieve restrictions and fund
Exam. All others are funded at $1,000 per mandate.                    based on class enrollment vs grade level. All QEIA grant
                                                                      recipients must continue to meet the 20:1 requirement to
Districts are advised not to budget for ANY state mandate             meet the full implementation requirement.
dollars until actually received by the district. Additionally,
districts should consider establishing a mandated cost reserve for               Revised CSR Graduated Penalties
any mandated cost funds received until the State Controller’s                  Class Size           2008-09 to 2011-12
office has concluded the audits of mandate claims (up to 3 years              Up to 20.44               No penalty
from date of first payment received on actual claims filed not               20.45 to 21.44             5% penalty
estimated claims).                                                           21.45 to 22.44            10% penalty
                                                                             22.45 to 22.94            15% penalty
Child Nutrition – No additional funding reductions in 2008-09                22.95 to 24.94            20% penalty
or 2009-10 beyond shortfall in State meal dollars in adopted
                                                                             24.95 or more             30% penalty
budget. Funds are not part of categorical flexibility options.
                                                                      Cash Deferrals –
Instructional Materials/Textbooks – Ongoing funding for                $2.0 billion of the February 2009 principal apportionment
the Instructional Materials Realignment Fund RS 7156 is now             & $570 million of the K-3 CSR 50% February payment
unrestricted and will be based on 2008-09 levels less 15.38% for        are deferred to end of July 2009 (ongoing in 2009-10);
2008-09, and then reduced by an additional 4.46% for 2009-10.          $2.3 billion for the on-going June P-2 principal state aid
Districts are required to provide each student with a standards         apportionment.
aligned textbook, but the text is not required to be the newest        One tenth of the special purpose transportation
adopted until July 2010.                                                apportionment is no longer deferred to July.
                                                                       $1 billion from the July 2009 & $1.5 billion from the
While adoption requirements are put on hold, the Sufficiency of         August 2009 advance principal apportionments to end of
Textbooks Public Notice is still required: Education Code 60119         October 2009.
“sufficiency of textbook” public hearings must be completed by         New May Revise additional deferral of $640.3 million
the end of the eighth week of school (with 10 working day               from 2009-10 April/May to 2010-11 Sept. /Oct.
notice). Year round schools eighth week clock starts with first
track starting in August or later. Districts will have two months
                                                                      American Recovery Reinvestment Act (ARRA)
to remedy any insufficiencies or state will intervene and
expenditure purchasing. A waiver process is available for             Title I Part A Basic Grant Resource     RS 3011 OBJ 8290
districts facing suboptimal choices.” There are specific              SFSF Education State Grants             RS 3200 OBJ 8290
definitions for what constitutes sufficient pupil textbooks and       SFSF Education State Grants (CAT)       RS 3200 OBJ 8290
instructional materials.                                              IDEA Part B Basic Local Assistance      RS 3313 OBJ 8181

Adult Education – No longer requires participation. Funding           The State has released estimated district specific ARRA
will be based on the amount received in 2007-08 and reduced by        award entitlements. Funds are restricted and any interest
the state’s categorical fund reduction of 15.38% for 2008-09 and      earned greater than $100 must be returned to CDE. Funds
an additional 4.46% estimated reduction in funding for 2009-10.       are available to expenditure from 2/17/2009 through
                                                                      9/30/2011 for Title I and IDEA. The SFSF grant period is
                                                                      4/17/2009 – 9/30/2011.                   Exhibits I1 - I3


                                                                                                                      Page 2
                            2009-10 Budget with applicable May Revise Adjustments
Revenue Limit Factors              Exhibits B, C & D  Tier III Programs (T-III)                                  Exhibit H1-3
   COLA 4.25%            Equalization 0.0%                    SBX3 4 provided flexibility to 40 categorical programs.
   Deficit 17.967%       (Funding Factor .82033)              Funds for these programs are apportioned to the LEA based
     Elementary       $ 250
                                                              on the same relative statewide proportion as the LEA
     High School      $ 300
     Unified          $ 261                                   received these funds in 2008-09. The basic revenue
                                                              formula is the 2008-09 base reduced by 15.38% plus the
                                                              additional 4.46% reduction for 2009-10. Funds may be
PERS employer rate 9.709%.                                    spent for any educational purpose. District must hold public
PERS Reduction Buyout est. 15.09%, Factor 84.91%              hearing regarding uses of these funds.
Payroll distribution rate 2.81137%
Maximum PERS Cafeteria wage exclusion $257,493                All T-III programs are now accounted for in the General
STRS employer rate at 8.25%                                   Fund with an unrestricted Resource 0XXX and receipted in
U/I remains at .3%                                            revenue object 8590. See BAS Bulletin No. 09-128 for
                                                              accounting detail.
After School Education and Safety             RS 6010         Summer School/Hourly Programs T-III 15.38% reduction in
No COLA, no cuts, no flexibility Application required.        2008-09. Funding for 2009-10 not based on hours but on 07-08
                                                              funding level for each district less 4.46%. Deficits continue for
                                                              2008-09 & 2009-10. See page 1 for est. deficits per program.
Class Size Reduction                               RS 1300    Grade 9 CSR T-III                                  RS 0000/(1200)
Option 1 full day $1,071           Option 2 half day $ 535    Base year 2007-08 funding reduced by 15.38% for 2008-09;
No change in funding per option, no reductions. See new       additional estimated 4.46% additional reduction in 2009-10 for
flexibility provisions on penalties                           total 19.84% reduction. Funds are unrestricted.
State Lottery                              Exhibits F1-F3     Secondary School Counseling T-III                 RS 0000/(7080)
  Unrestricted $109.50 per PY Annual ADA           RS 1100    15.38% reduction to 2008-09; additional estimated 4.46%
   Restricted $ 11.50 Per PY Annual ADA            RS 6300    reduction in 2009-10 for total 19.84% reduction.
Special Education - AB602                          RS 6500    Mentor Teacher Program T-III                       RS 0000/(7276)
No reduction, approx. $10.92 per 2008-09 P-2 ADA;             15.38% reduction to 2008-09; additional estimated 4.46%
growth funded                                                 reduction in 2009-10 for total 19.84% reduction
QEIA                                               RS 7400    CAHSEE Intensive Instruction and Serv. T-III RS 0000/(7055)
$500 per K-3; $900 per 4-8 & $1,000 per 9-12 student          15.38% reduction to 2008-09; additional estimated 4.46%
No funding reduction                                          reduction in 2009-10 for total 19.84% reduction
Pupil Transportation                         RS 7230/7240     AB 825 Block Grants T-III RS 0000/ (7390, 7392, 7393, 7394, 7395)
No COLA, 65% Reduction                           Exhibit G    15.38% reduction to 2008-09; additional estimated 4.46%
Special Transportation Funds withdrawn                        reduction in 2009-10 for total 19.84% reduction
Economic Impact Aid                          RS 7090/7091     School Safety T-III                               RS 0000/(6405)
NO COLA, no cuts, no flexibility                              15.38% reduction to 2008-09; additional estimated 4.46%
                                                              reduction in 2009-10 for total 19.84% reduction
Arts & Music Block Grant T-III               RS 0000/(6760)   Gifted and Talented Education        T-III       RS 0000/(7140)
15.38% reduction in 2008-09, additional estimated 4.46%       15.38% % reduction to 2008-09; additional estimated 4.46%
reduction in 2009-10 for total 19.84% reduction.              reduction in 2009-10 for total 19.84% reduction
Instructional Materials Funding Realignment T-III             ROC/P       T-III                                 RS 0000/(6350)
Base 08/09 funding less 15.38% reduction and additional        15.38% reduction to 2008-09; additional estimated 4.46%
est. 4.46% in 2009-10 for total 19.84% reduction.             reduction in 2009-10 for total 19.84% reduction
Flexibility on need to have NEW standards aligned text,
but still requires all students to have a standards aligned   Adult Education T-III                            RS 0000/(6390)
text and public hearing                      RS 0000/(7156)   15.38% reduction to 2008-09; additional estimated 4.46%
                                                              reduction in 2009-10 for total 19.84% reduction
Peer Assistance and Review T-III         RS 0000/(7271)       Community Day School (CDS) T-III                 RS 0000/(2430)
15.38% % reduction to 2008-09; additional estimated           CDS supplemental hours 2007-08 funding received less the
4.46% reduction in 2009-10 for total 19.84% reduction         15.38% reduction is estimated to be the base funding for 2008-09.
                                                              This base plus an additional reduction of 4.46% will be the
                                                              funding for 2009-10 No participation for funding is required..
                                                              Expect mandatorily expelled pupils will continue to be funded
                                                              within RS 2430 (not flexible) along with core ADA funding for
                                                              regular program.



                                                                                                                      Page 3
         Tier 1 State Categoricals NOT affected by categorical reductions but may be affected by other factors
Special Education           (6500-6540) K3 CSR                             (1300) Economic Impact Aid (EIA) (7090,7091)
AVID                             (7340) QEIA                               (7400) CSIS (7220)
Home to School Transp.     (7230, 7240) After School Education and (6010)          Child Care & Devlp (6040-6080,6130-6150)
(Cut by 65% -PTA and MTA funding         Safety Programs (ASES)                    (effected by Cal Works Reductions of
removed.)                                                                          the May Revise)
School Bus Replacement           (7235) Lottery .                     (1100, 6300) Career Technical Ed          (6385,7810)
Emergency Repair-Williams         (6225) Tobacco Use Prevention (TUPE) (6660) Healthy Start (5 year grants)         (6240)
                                Child Nutrition Programs/Start up Grants (5320,5380,5310)
              (Funds are not cut but current appropriations are insufficient to fully fund current statewide meal participation.
    Expect similar reductions in 2009-10 meal funding.     July - April $0.2195. Reduction of $0.15 in May to approximately $0.0695).
        Tier 2 State Categoricals Reduced by 15.38% in 2008-09 and an additional estimated 4.46% in 2009-10.
                        No Flexibility allowed. Funding formulas no longer in place until 2013-14.
Adults in Correctional Facilities (6015) English Language Acquisition     (6286) Partnership Academies         (7220)
Apprenticeship Programs (6350, 6390)       FCMAT Oversight                (7810) Student Assessments      (0000-7810)
Agricultural Voc Ed               (7010) Foster Youth Services       (7365-7367) Year Round Schools            (0000)
Charter School Facility grants    (6030) K-12 High Speed Network          (7126)
Tier 3 State Categoricals Reduced by 15.38% in 2008-09 and additional estimated 4.46% in 2009-10. Funding formulas
     no longer in place through 2012-13. Full 100% flexibility to use funds for any educational purpose. Funds are
    Unrestricted. Must transfer any unexpended balances as of June 30, 2009 to unrestricted using object code 8998.
                    Budget must show funds in unrestricted resource. Budget requires public hearing.
AB 825 Targeted Instructional       (7394) Class-Size Reduction-9th Grade (1200) Peer Assistance and Review               (7271)
Improvement Block Grant
AB 825 Teacher Credentialing (7392)         Charter Schools Categorical          (0000) Physical Education Teacher        (6258)
Block Grant                                 Block Grant
AB 825 Professional Develop.        (7393)  Child Oral Health Assessments        (0000) American Indian Centers            (7210)
Block Grant
AB 825 Pupil Retention Block        (7390)  Community Based English             (6285) Readers for the Blind               (7295)
Grant                                       Tutoring (CBET)
AB 825 Sch Safety Competitive ( 7391) Community Day Schools                     (2430) Regional Occupational RS            (6350)
Grant (only grants awarded in 2008-09) (additional supplemental hours only )            Centers/Programs
AB 825 School and Library           (7395)  College Prep AP Fee Assistance (0000) SB 472 Professional          (7294, 7295, 7296)
Improvement Block Grant                                                                 Development
Adult Education                     ( 6390) Deferred Maintenance               (6205)   School Safety Consolidated App (6405)
Alternative Certification, CTC (6260-6263) Supplemental Counselors,             (7080) Specialized Secondary Programs (7370)
Pre-Internship, and Paraprofessional        Grades 7-12
Teacher Training
Arts and Music Block Grant           (6760) Educational Technology             (7110)   Student Organizations             (7360)
Bilingual Teacher Training          (7275)  Gifted and Talented Education       (7140)  Supplemental Hourly Programs (0000)
Calif. High School Exit Exam        (7055)  High Priority & SAIT          (7258, 7268) Teacher Dismissal Appmts             (0000)
(CAHSEE) Intervention                       (High Priority Eliminated in 2009-10)
California School Age          (6091-6093)  Instructional Materials              (7156) COE Oversight -Williams             (7385)
Families Educational Prgm (Cal-SAFE) Realignment Fund
Center for Civic Education          (7810)  International Baccalaureate         (7286) Administrator Training Prgm          (7325)
Certificated Staff Mentoring Prg. (7276)    National Board Certification        (6267) Principal Training AB75              (7325)
                                         2007-08 Ending Fund Balance Flexibility
Authorizes for 2008-09 and/or 2009-10, the use of restricted ending fund balances as of 6/30/2008 for any purpose up to
      the 2007-08 funding level, Requires board approval for use. Federal requirements override state flexibility.
Must transfer funds using object code 8997 for transfer to unrestricted resources. Restricted resources must be closed.
                                            2008-09 EXEMPT PROGRAMS:
CAHSEE Intensive Instruction (7055) Instructional Materials                 (7156) Targeted Instructional                (7394)
and Services                              Realignment Funding                      Improvement (TIIG)
Economic Impact Aid          (7090/7091)  QEIA                             (7400)  Restricted reserves committed for
(EIA)                                                                              capital outlay, bond funds, sinking
                                                                                   funds, and federal funds
Home to School Transp.      (7230 - 7240) Special Education          (6500 - 6540) Adult Ed                              (6390)
Afterschool Ed & Safety           (6010)  Deferred Maintenance              (6205) Child Care          (6040-6080), (6130-6150)




                                                                                                                                 Page 4
SCHOOL SERVICES OF CALIFORNIA FINANCIAL PROJECTION DARTBOARD – SELECTED FACTORS
Factor                                                     2008-09                2009-10             2010-11              2011-12
Statutory COLA &                                           5.66%                    4.25%              .90%                 2.40%
K-12 RL Deficit %                                         11.428%                 17.967%            17.967%               17.967%
  PRORATION FACTOR                                         .88572                  .82033             .82033                .82033
State Categorical COLA                                       0%                      0%                 .9%                 2.40%
State Categorical Deficit Tier II & Tier III              -15.38%                  -4.46%              .90%                 2.40%
Special Ed COLA on state/local share only                   0.0%                    0%%                 .7%                 2.30%
California Lottery*
Non-Prop 20 (RS 1100)                                      $109.50                $109.50             $109.50              $109.50
Prop 20 Restricted (RS 6300)                               $ 11.50                $ 11.50             $ 11.50               $11.50
California CPI                                              1.40%                   .90%               1.70%                2.10%
Interest Rate for 10 yr treasury                            3.00%                  3.40%               3.70%                4.00%

*Lottery funding is based on prior year annual ADA times the historic statewide average excused absence factor of 1.04446.

Exhibits to be available on SBCSS website:
    Exhibit A      2008-09 Revenue Limit (using 08-09 P-2)               Exhibit F2     Lottery Estimated Funding ROP/C
    Exhibit B      2009-10 Revenue Limit Calculation                     Exhibit F3     Lottery Estimated Funding Charter
    Exhibit C1     Revenue Limit Comparison 08-09 to 09-10               Exhibit G      Pupil Transportation Estimated Funding
    Exhibit C2     Revenue Limit Comparison 08-09 before                 Exhibit H1     Tier III Categorical 2008-09 Est. Funding
                    and after May Revise                                 Exhibit H2     Tier III Categorical 2009-10 Est. Funding
    Exhibit C3     Revenue Limit Comparison 09-10 before                 Exhibit H3     Tier III Categorical Detail Calculation
                    and after May Revise                                                Resource by Resource
    Exhibit D      Historical Analysis of COLA                           Exhibit I1     ARRA Title I Funding
    Exhibit E      Supplemental Hourly Programs                          Exhibit I2     ARRA IDEA Funding
    Exhibit F1     Lottery Estimated Funding District                    Exhibit I3     ARRA SFSF Funding

                             Link to SBCSS website/Business Advisory Services:
                              http://www.sbcss.k12.ca.us/busServe/bas_0910budget.php
                       2009-2010 & 2008-09 State Budget May Revise Projections




                                                         May 21, 2009 Overview of the 2009-10 May Revision - Legislative Analyst’s Office Report


For more information, please contact Fiscal Management and Advisory Services staff at the following numbers:
Director – Teri Kelly                       (909)777-0761 Account Technicians-
Administrative Secretary- Vangie Tabije (909) 777-0761     Sally Leialoha                            (909) 777-0767
Business Services Advisors-                                Ginger Sanchez                            (909) 777-0766
 Jean Aldrete                              (909) 777-0744  Tamika Marshall                           (909) 777-0765
 Cynna Hinkle                             (909) 777-0745   Cecilia Jiron                             (909) 777-0751
 Vacant                                   (909) 777-0752  Office Specialist III-
Fiscal Analysts                                            Lupe Saldivar                             (909) 777-0747
 Jesus Holguin (Interim Advisor)          (909) 777-0749  Accountant-
 Patty Trevino                            (909) 777-0746   Belinda Washington                        (909) 777-0768




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