Chico Unified School District State Budget Update

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Chico Unified School DistrictState Budget
Update History of School Finance
May 20, 2009

• Jan Combes
• Assistant Superintendent
• Business

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Going from Local to State Control1971 - 2008

• 1971 Serrano Priest
• 1972 Senate Bill 90
• 1974 K-14 Collective Bargaining
• 1978 Prop 13
• 1979 Gann Limit
• 1983 SB 813
• 1984 State Lottery
• 1988 Prop 98
• 1991 AB 1200
• 1992 92/95 Economic Recession

• 1995 Adoption of K3 CSR
• 1996 96/99 School Reforms
• 2000 Prop 39 Restored Deficit Funding
• 2003 Williams Settlement
• 2003 Prop 98 Suspended
• 2004 AB 2756 AB 825 Categorical
  Reform
• 2008 Another Suspension of Prop 98?
• 2

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Major Events in California School Finance History
1971 - 1983

• Serrano vs. Priest 1971 to 1983
• Required that school funding be equalized so that
  areas of poverty had the same opportunity for
  education as areas of wealth
• SB 90/1972
• Required that schools will be funded on dollar
  amounts per pupil creating what we call
  Revenue Limit, allocated on the basis of pupil
  attendance (ADA)
• Proposition 13/1978
• Imposed a property tax rate control (1) and
  forced a shifting of school funding onto the
  state from 40 state funded to more than 80
• SB 813/1983
• Established numerous program reforms, including
  600 million added annual funding for extending
  student instructional time longer day and
  longer year
• 3

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Major Events in California School Finance History
1988 - Present

• Proposition 98/1988
• Established a constitutionally determined minimum
  allocation for K-14 education schools are
  slated to receive about 45 of the states
  income, annually
• The recession years of 1992-93 through 1994-95
• When the State Economy slows down, schools
  receive less funding
• The K-3 class-size reduction initiative, 1995-96
• Provides the states second largest categorical
  1.5 billion
• The boom years 1996-97 through 2000-01
• When the State Economy picks up, schools receive
  more funding
• Significant equalization funding and funding of
  revenue limit deficits
• Positive attendance system (no more funding for
  excused absences)
• Categorical Block Grants more programs, more
  services
• The crisis years 2001-02 through 2003-04 and
  again beginning mid-year 2007-08 with nothing
  on the horizon to indicate it will improve 4

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State Has Reduced Spending by 15 Billion Due to
Economic Downturn
(In Billions)
Legislative Analyst Office -- Edsouce
presentation 2009
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February Budget Package

• This proposal is a two-year package
• 2008-09 mid-year K-adult reductions and funding
  deferrals
• 2009-10 budget proposal (w/ additional reductions
  and deferrals)
• Proposition 98 funding levels
• 2008-09 -- 50.7
• 2009-10 -- 54.9
• Requires voter approval of a five, special
  election ballot proposals on May 19th
• Prop 1A Spending Cap
• Prop 1B Maintenance factor payment
• Prop 1C Lottery Securitization
• Prop 1D First 5 changes
• Prop 1E Prop 63 mental health changes

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2008-09 Mid-year Reductions

• Reduces current year Proposition 98 funding by
  more than 7.4 billion via mix of program
  reductions, deferrals, and re-designation of
  funds
• 2008-09 program reductions total is 1.9 billion
• Eliminates the 0.68 COLA (No COLA for 2008-09)
• Remaining reduction is split
• 50 from revenue limits - 944 million overall,
  about 160 per ADA
• 50 from a 15 (944 million overall)
  across-the-board cut to specified categorical
  programs

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2009-10 Budget Reductions

• Eliminates 2.5 billion in Proposition 98 funding
  from 5.02 statutory COLA for school districts
  and COEs
• Additional 530 million reduction to the
  Proposition 98 base off of 2008-09 revised base
• 265 million reduction to revenue limit funding
  (school districts and COEs) approx. 45 per ADA
• 265 million in additional across-the-board
  reductions (4.9) to Tier 2 and 3 categorical
  programs reduced in 2008-09
• 114.2 million savings from elimination of the
  High Priority School Grant Program

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Categorical Cuts and Flexibility

• Categorical programs are divided into three tiers
  for purposes of protecting some and providing
  flexibility to others
• Tier I
• No funding reduction, no program flexibility, no
  statutory requirements waived (w/ exception of
  CSR penalty provisions)
• Tier II
• Funding reduction of approximately 15 from
  2008-09 previously enacted levels, but no
  flexibility, and programs are to be operated
  according to the current requirements
• Tier III
• Funding reduction of approximately 15 from
  2008-09 levels, but with maximum flexibility to
  move funding for any educational purpose
• Changes are in effect for this fiscal year and
  until 2012-13

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Challenges Ahead

• School Funding is at risk thru at least 2010-11
• Expect Layoffs of certificated and classified
  personnel
• Proposition 98 no longer a reliable insurance
  policy
• Expectations are high at a time when resources
  will be at an all-time low

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With Crisis, Comes Opportunity

• Stimulus dollars can help weather the storm
• Unprecedented categorical flexibility
• Crisis can drive change requires leadership
• Our fundamental mission hasnt changed

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Understanding Educations Dilemma
California education funding is tied to economic
cycles
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Source Blattner and Associates, 2009
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Californias Economic Cycle
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Source Blattner and Associates, 2009
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Housing Market Meltdown
Homes
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Source UCSB Economic Forecast, 3/09
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State Unemployment
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Job Loss National and California
3.0
2.0
1.0
0.0
year-on-year percent change
-1.0
United States
-2.0
California
-3.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2003
2004
2005
2006
2007
2008
Source UCSB Economic Forecast, 3/09
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Resulting Loss in State Revenue
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Impact on Proposition 98
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A Growing State Deficit
Feb 2008
Nov 2007
Jan 2008
May 2008
Dec 2008
July 2007
(6.1)
(9.8)
(14.5)
(16.0)
(17.2)
(24.3)
In Billions
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Source Kern County Superintendent of Schools
Michael Hulsizer, 2009
(41.6)
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Legislative Analyst Office

• We forecast a 2009-10 revenue decline of roughly
  8 billion.
• Turns a projected June 30, 2010 surplus of 2
  billion into a deficit of 6 billion.
• Impact on CUSD is as yet unknown
• May-June Revise

Legislative Analyst Office -- Edsouce
presentation 2009
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Failure of the PropositionsImpact in the
Out-Years
General Fund (In Billions)
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Legislative Analyst Office -- Edsouce
presentation 2009
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Long Term Forecast

• Virtually all sectors of the economy are
  shrinking World economy will shrink by 1 2
• Recession likely to last into 2010-11, or longer
• Post recession growth will be slow
• Fundamental realignment of our economic system

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Governors May Revise

• Propositions 1A, 1B, 1C, 1D and 1E failed
• State is now 23.1 Billion Out of Balance
  Compared with February Projections
• Electorate has Sent a clear message to
  Sacramento reduce funding for programs and
  services!
• What Is The Impact on School Funding ?
• 225 less per ADA 2008-09 2.8 M CUSD
• 245 less per ADA in 2009-10 3.0 M CUSD
• Multi Year Impact 9-12 M (2008-09 to 2011-12)

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ONE TIME MONEY

• American Recovery and Reinvestment Act
• Title I 1.5 M for CUSD
• Eligible schools Fair View, BJHS, CJHS, Chapman,
  Citrus, McManus, Neal Dow, LCC, Parkview and
  Rosedale
• Special Education 2.5 M for CUSD
• Subject to MOE requirements
• Fiscal Stabilization
• 3.3 M Will Hold Until We Develop Plan for May
  Revise Reductions

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What we do today, right now, will have an
accumulated effect on all of our tomorrows
Alexander Stoddard
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