The 2008-09 State Budget and Current Issues Sacramento City Unified School District Presentation by Sandra Vargas, Dale Shimasaki and Stephen Rhoads December 18, 2008 Stategic Education Services 1 Today’s Agenda 2008-09 Budget History 2008-09 September State Budget State’s Fiscal Condition Mid-Year Reductions Focus Other Issues Stategic Education Services 2 2008-09 Statutory COLA 5.7% $3.0 $3.1 billion for the Statutory COLA of 5.7% Stategic Education Services Billions of Dollars School Districts should have received 3 2008-09 Proposed Education Funding Levels Compared to 2007-08 Levels (negative numbers indicate an absolute reduction) $2.0 Conf. Committee +$1.1 Billion Enacted Budget +$244 million August September Maximum Mid Year Cut No Tax Revenue Increases -$4.1 Billion! November December $1.0 $0.0 January May July Billions of Dollars -$1.0 -$2.0 -$3.0 -$4.0 -$5.0 Proposed Reductions or Increases for 2008-09 (The statutory COLA would have provided an increase of $3.1 billion) Governor's January Proposal -$2.1Billion May Revision -$1.1 Billion Republican Proposal -$2.2 Billion Governor's Special Session Mid Year Cut -$2.2 Billion Stategic Education Services 4 2008-09 Budget History Governor’s January Proposal Cut 2007-08 Revenue Limits by $1 billion Cut Categorical Programs by $1 billion Stategic Education Services 5 2008-09 Budget History (continued) Governor’s May Revision Proposal Restored the cut to the 2007-08 Revenue Limit by $1 billion Maintained the $ 1 billion proposed cut to Categorical Programs Restored the Special Education cut, but decreased the cut to deferred maintenance by $277 million or -80% Stategic Education Services 6 2008-09 Budget History (continued) Democratic Legislature’s Conference Report Provided a 2% COLA for both the Revenue Limit and all the Categorical Programs. This is about $1 billion more than the 2007-08 K-12 spending level. Included Income Tax Increases Stategic Education Services 7 2008-09 Budget History (continued) Governor’s August Revision Restored the Revenue Limit and the Categorical Programs to their 2007-08 level of funding. No COLA. However, it was about $ 1 billion more than the May Revision. Included temporary three-year sales tax increase of 1 cent. Stategic Education Services 8 2008-09 Budget History (continued) Republican Budget Proposal Cut revenue limit by $ 1 billion and cut categorical programs by $ 1 billion. Impact very similar to Governor’s original January budget. Included no tax increases. Stategic Education Services 9 2008-09 September Budget Final 2008-09 Budget (page 1) Restored revenue limit and categorical funding to their 2007-08 funding levels. Provided 0.68% COLA for Revenue Limits $40 per ADA for unified districts. The cost of the COLA is about $244 million. No COLA for Categorical Programs. Included no tax increases. Stategic Education Services 10 2008-09 September Budget Final 2008-09 Budget (page 2) Budget Stabilization Initiative – 12% reserve Lottery Proposal Initiative Stategic Education Services 11 2008-09 September Budget Final 2008-09 Budget (page 3) Budget Reserve $1.7 billion Green Partnership Academies $12.5 million Student and Teacher Data Systems $11.3 million AVID Reduction 10% ($904,000 cut) Reading First Elimination for Cohort 1 schools -$ 1 million for Sacramento City Unified -$ 26.9 million for all the Cohort 1 schools. Stategic Education Services 12 Major Program Spending Increases Between Current and Budget Years K-12 Education Higher Education Legislature, Judicial, and Exec. Environmental Resources Health and Human Services Corrections Business, Transportation All Other Total State Expenditures Stategic Education Services -1.5% +2.5% -2.2% +10.0% -7.1% +4.7% +1.3% +8.4% -75% 0.1% 13 State’s Deteriorating Fiscal Condition 1. 2. September Budget Reserve $1.7 Billion November LAO Report: 2008-09 Deficit $8 billion 2008-09 Revenue Decline $11 billion Massive Problem in 2009-10 Another 7% Drop in Revenues $28 billion Hole for 2008-09 and 2009-10 Deficit is now projected at $40 Billion and growing! January Budget…Expect the Worse Stategic Education Services 14 3. 4. Long-Term Economic Problem State General Fund Revenues will not exceed the 2007-08 level until 2013-14 (FIVE FULL Years) Proposition 98 Revenues will recover in 2011-12 (THREE Years) Stategic Education Services 15 Short Term Crisis State will run out of cash in February or March State cannot sell its own bonds for transportation and school construction projects Failure to Act Means Bankruptcy Stategic Education Services 16 Mid-year Reductions Governor’s November Proposal K-12 Cuts of $2.2 billion to Revenue Limit Sacramento City Unified School District cut of $10 to $20 million Maximum Flexibility $4.7 billion revenue increase – 2008-09 $9.6 billion revenue increase – 2009-10 Because of new revenues, $1.7 billion of the $2.2 billion (77% of the cuts) would be restored in 2009-10. Stategic Education Services 17 Mid-year Reductions Legislative November Proposal (Page 1 of 5) K-12 Cuts of $2.4 billion Contained Revenue Increases Minimum Flexibility Specified Categorical Programs Cuts – see Table 1 of our November 26th Memo This proposal is the most likely to succeed. Stategic Education Services 18 Mid-year Reductions Legislative November Proposal (Page 2 of 5) All school districts need to do the following three steps: 1. Determine the District allocation for each of the 26 programs in Table 1. 2. Calculate how much the district has spent in each program. The district will have to redirect funds from the general fund or other programs to make up the difference. 3. Determine if the district should continuing spending funds in these programs. Our recommendation is to stop spending from these funds. Stategic Education Services 19 Mid-year Reductions Legislative November Proposal (Page 3 of 5) For example: 1. 2. 3. Instructional Materials – 100% cut Deferred Maintenance – 100% cut Professional Development Block Grant – 100% cut 4. Williams Emergency Facilities Repair Account – 100% cut ($100 M) SCUSD will lose the following projects ($4.3 million): Bleachers ($903,411) Gas ($19,128) Paving ($903,575) Roofing ($609,104) Pool ($553,178) Pool Equipment ($618,784) HVAC ($710,543) Stategic Education Services 20 Mid-year Reductions Legislative November Proposal (Page 4 of 5) Key Questions? Is this equitable? Does SCUSD suffer a bigger Cut? Stategic Education Services 21 Mid-year Reductions Legislative November Proposal (Page 5 of 5) Cannot use the Unexpended Balances in the following Programs: 1. 2. 3. 4. 5. 6. 7. Economic Impact Aid Targeted Instructional Improvement Grant Instructional Materials Special Education QEIA CAHSEE Intensive Intervention Program Home to School Transportation Stategic Education Services 22 Mid-year Reductions Republican December Proposal (Page 1 of 2) 1. K-14 $2.8 billion Cut 2. Deferred Maintenance Cut ($277 million) 3. Flexibility – Similar to the Governor’s Stategic Education Services 23 January 2009-10 Budget Republican December Proposal (Page 2 of 2) 1. K-14 10% Cut for 2009-10 Budget 2. Enhances Contracting Out Provisions 3. Changes layoff notifications for certificated employees to ONLY 45-days 4. Amends COLA Language – lower COLA for school districts Stategic Education Services 24 Final Predictions 1. Legislative Proposal will be passed within a week with majority vote fee increases. If there are no new tax revenues, the 2009-10 K-12 budget will be horrendous. There will be no COLA. Additional reductions will be required. The Governor’s Budget will say that 2008-09 and 2009-10 revenues will drop further. The Governor’s Proposed 2009-10 January Budget will be a CUTS ONLY Budget. CTA Sponsored Initiative… Stategic Education Services 25 2. 3. 4.