CHULA VISTA ELEMENTARY SCHOOL DISTRICT GOVERNING BOARD AGENDA ITEM ITEM TITLE: Prepared by: Business Services and Support (1) Approve Revisions to Fiscal Year 2016-17 Budget; (2) Approve First Interim Financial Report at October 31, 2016; and (3) Certif y District's Financial Status for Fiscal Year 2016-17 X Action _____ Information BACKGROUND INFORMATION: On June 8, 2016, the District adopted its 2016-17 budget based on the Governor's May Revise. On June 24, 2016, Governor Brown signed the 2016-17 State Budget Bill (Senate Bill 826) that included the following major items. • Local Control Funding Formula (LCFF)- The gap funding rate decreased from 54.84% to 54.18%. • One-Time Discretionary Funding - The one-time unrestricted discretionary funding decreased from $237 to $214 per average daily attendance (ADA). Attached is an analysis of the District's 2016-17 First Interim Budget Report. The First Interim Report is based on the 2016-17 State Budget Bill and financial data as of October 31, 2016, with projections through June 30, 2017. Discussion in this section reflects the General Fund unrestricted and restricted funds. All other funds of the District, including th e charter schools financial data, are included in Attachments Ill and IV. Following are the major items included in the First Interim Budget. • LCFF. o LCFF growth gap funding rate of 54.18%. o Unduplicated Eng li sh Learner (EL), free/reduced price meal eligible student (LI), and Foster Youth (FY) average pupil count of 59.65% for the Supplemental and Concentration Grants under the LCFF. o Cost-of- li ving adjustment (COLA) of 0%. • Local Control and Accountabi li ty Plan (LCAP). $22,240,230 is budgeted for the LCAP from the Supplemental and Concentration Grants. Page 1 of 73 Agenda Item 7 .A. December 14, 2016
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CHULA VISTA ELEMENTARY SCHOOL DISTRICT
GOVERNING BOARD AGENDA ITEM
ITEM TITLE:
Prepared by: Business Services and Support
(1) Approve Revisions to Fiscal Year 2016-17 Budget;
(2) Approve First Interim Financial Report at October 31, 2016; and
(3) Certify District's Financial Status for Fiscal Year 2016-17
X Action --~--·
_____ Information
BACKGROUND INFORMATION:
On June 8, 2016, the District adopted its 2016-17 budget based on the Governor's May Revise. On June 24, 2016, Governor Brown signed the 2016-17 State Budget Bill (Senate Bill 826) that included the following major items.
• Local Control Funding Formula (LCFF)- The gap funding rate decreased from 54.84% to 54.18%.
• One-Time Discretionary Funding - The one-time unrestricted discretionary funding decreased from $237 to $214 per average daily attendance (ADA).
Attached is an analysis of the District's 2016-17 First Interim Budget Report. The First Interim Report is based on the 2016-17 State Budget Bill and financial data as of October 31, 2016, with projections through June 30, 2017. Discussion in this section reflects the General Fund unrestricted and restricted funds. All other funds of the District, including the charter schools financial data, are included in Attachments Ill and IV.
Following are the major items included in the First Interim Budget.
• LCFF. o LCFF growth gap funding rate of 54.18%. o Unduplicated English Learner (EL), free/reduced price meal eligible student
(LI), and Foster Youth (FY) average pupil count of 59.65% for the Supplemental and Concentration Grants under the LCFF.
o Cost-of-living adjustment (COLA) of 0%.
• Local Control and Accountability Plan (LCAP). $22,240,230 is budgeted for the LCAP from the Supplemental and Concentration Grants.
Page 1 of 73 Agenda Item 7 .A. December 14, 2016
• On November 16, 2016, the Board of Education ratified the salary and health benefits settlement with the Chula Vista Classified Employees Organization (CVCEO) for the 2016-17 and 2017-18 school years, which included the following compensation changes.
o 6% salary schedule increase effective July 1, 2016. o $2,500 health benefits cap increase effective July 1, 2016. o 1.4% increase in total compensation with CVCEO determining the distribution
of the increase among salary schedule and the health benefits cap effective July 1, 2017.
• On November 16, 2016, the Board of Education approved a salary settlement for non-represented employees for the 2016-17 and 2017-18 school years as noted below.
o 6% salary schedule increase effective July 1, 2016. o 2.5% salary schedule increase effective July 1, 2017.
• On November 28, 2016, the Board of Education ratified the salary and health benefits settlement with the Chula Vista Educators (CVE) for the 2016-17 and 2017-18 school years, which included the following compensation changes.
o 6% salary schedule increase effective July 1, 2016. o $2,500 health benefits cap increase effective July 1, 2016. o 1.4% increase in total compensation with CVE determining the distribution of
the increase among salary schedule and the health benefits cap effective July 1, 2017.
The District's 2016-17 ending fund balance is expected to be $53,798,607, a decrease of $6,656,375 from the Adopted Budget. The major reason for the decrease was primarily the salary and health benefits cap settlement for CVE, CVCEO and the related impact for the non-represented employees group. Based on enrollment data as of the First Interim Budget, projected 2016-17 ADA is being decreased by 1 00 ADA from the Adopted Budget for the District less charter schools. No growth in ADA is included in the District's multiyear projection.
Unrestricted Revenues
General Fund unrestricted revenue changes since the District's Adopted Budget total <$1 ,321 ,537> as shown on Attachment I. Following are the major areas of change affecting revenues.
1. LCFF $ <221 '183>
The major reasons for this change are the decrease in the LCFF gap funding rate from 54.84% to 54.18% approved with the 2016-17 state budget, and the decrease in Unduplicated count for Low income, English learner and Foster youth from 59.91 % to 59.65%.
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2. Federal Revenues $ 101,126
The projected increase in Federal Impact funds account for the majority of the increase in this category.
3. Other State Revenues $ <703,950>
This decrease is primarily caused by the $527,007 reduction in the one-time unrestricted discretionary funding from $237 to $214 per ADA and the decrease of $161 ,163 in unrestricted lottery revenues.
4. Local Revenues $ <497,530>
A <$713,602> decrease in charter school chargebacks revenue accounts for the majority of this change. The decrease was partially offset by an increase of approximately $200,000 in unrestricted Universal Service School and Libraries program revenues.
Restricted Revenues
Attachment II is a summary of restricted program funds that the District estimates to receive in 2016-17 at the First Interim Report, as compared with the amount anticipated in the Adopted Budget. There is an increase of $1,804,435 in grants and entitlements from the Adopted Budget to this report. Carryover from the prior year(s) and year-end deferred revenue are also reflected as expenditures in 2016-17. Except for special education and routine maintenance restricted resources, other restricted program revenues and expenditures are budgeted as revenue and expenditure neutral, therefore having no impact on the District's ending balance. All amounts in the Designated Ending Balance that pertain to restricted program funds are also expended in this report. Following is a list of the largest increases and decreases in restricted funds.
Federal
Title I Com pen sa tory Federal Preschool Local Entitlement All Other Federal
Total Federal
State
Active Transportation Program Williams Emergency Repair Program All Other State
Total State
Local
University of California/DODEA
$
$
134,872 17,098 15 732
167,702
$ 210,168 174,642 <36 081>
$ 348,729
$ 285,014 Page 3 of 73 Agenda Item 7 .A. December 14, 2016
Family Resource Center Support University of California/CREATE Project Cal-Well Eastlake Educational Foundation First 5 Live Well San Diego Microsoft CA Government Entities Settlement Headstart Preschool All Other Local
Changes to the unrestricted General Fund contribution to restricted special education and restricted routine maintenance are noted in the Unrestricted Other Financing Sources/Uses section on the following page.
Unrestricted Expenditures
Changes in budgeted unrestricted expenditures for 2016-17 from the Adopted Budget to the First Interim Report total $7,351 ,746. Following is a summary by the major object of expenditure of the most significant of these total changes.
1. Certificated Salaries $ 4,673,413
The increase in certificated salaries was mainly due to the salary settlement with CVE and non-represented employees projected to cost $5,471,136. This increase was partially offset by unfilled vacancies and additional retiree savings.
2. Classified Salaries $ 984,524
The increase in classified salaries was due primarily to the salary settlement with CVCEO and non-represented employees projected to cost $1,173,037.
3. Employee Benefits $ 2,020,291
The increased cost in employee benefits is directly related to the increases in salaries and health benefits caps based on the salary compensation settlement.
4. Services and Other Operating Expenses $ <561 ,844>
The majority of the change in this category is due to a $717,500 decrease in utilities and communications expenses. The decrease was partially offset by an increase for additional insurance deductible and other operating costs.
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Unrestricted Other Financing Sources/Uses
1. Contribution $ 902,689
A $902,689 increase in contribution from the unrestricted General Fund to the restricted Special Education and Routine Restricted Maintenance Account (RRMA) is primarily caused by the increase of $2,197,832 in special education program funding due to the 2016-17 salary settlements of all employee groups. The increase was partially offset by the decrease in the unrestricted contribution to RRMA from 3% to 2.5% of general fund expenditures.
Fund Balance
The total projected ending balance is now estimated at $53,798,607. The Reserve for Economic Uncertainties amount is $47 ,863,607, which provides a 17.93% reserve and meets the state's recommended minimum of 3% for the District. The reserve funds embedded in the projected ending balance are held in order for the District to meet its required minimum reserves over a three-year period; to offset potential negative impacts from local, state, or federal economic uncertainties; and to protect from projected flat District ADA growth in 2017-18 and 2018-19.
Also included in the ending balance are accounts for the following items.
1. Revolving Cash Fund $ 35,000
Current maximum amount available in local banks for issuance of reimbursement checks or advances.
2. Stores $ 700,000
Estimated cash value of warehouse inventory at June 30, 2017.
3. School Gift/United Way Accounts $ 200,000
Designated for School Gift/United Way accounts that can only be spent by the school site.
4. Designated for English Language Arts Adoption $ 5,000,000
Projected cost to purchase English Language Arts Adoption materials.
Negotiations
Fiscal negotiations have been completed with CVE and CVCEO for 2016-17 and 2017-18.
Charter schools negotiate employee salaries separate from the District's negotiations, and the cost of their salary increases is not included in any of the General Fund amounts.
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Cash Position
The cash flow analyses (Attachment V) indicate a positive cash position during the remainder of fiscal year 2016-17 and for fiscal year 2017-18. For the subsequent fiscal years, appropriate steps will be taken to maintain a positive cash position.
Multiyear Projections
The Board must certify that the District will have the necessary resources to meet its financial obligations for the current year as well as two subsequent years. Using 2016-17 as the base year, following are the major assumptions for revenues and expenditures utilized in this analysis.
1. Enrollment growth.
• 2017-18 0 (ADA 0) • 2018-19 0 (ADA 0)
2. Estimated LCFF growth gap funding rate and state-funded COLAs are based on the School Services of California Financial Projection Dartboard for the 2016-17 adopted state budget.
3. Estimated average unduplicated EL, Ll, and FY pupil counts for the LCFF Supplemental and Concentration Grants.
• 2017-18 59.53% • 2018-19 59.26%
4. Class/step costs for certificated and classified employees are based on an average of 2.00% and 1.75% for respective employee groups. Savings for 15 teacher retirees are also included.
5. Staffing for one new school in 2017-18.
6. Routine restricted maintenance funded at 2.5% of expenditures in 2017-18 and in 2018-19.
7. California State Teachers' Retirement System rates and increased costs.
• 2017-18 14.43% • 2018-19 16.28%
$2,283,291 $2,372,899
Page 6 of 73 Agenda Item 7 .A. December 14, 2016
8. California Public Employees' Retirement System rates and increased costs.
• 2017-18 15.5% • 2018-19 17.1%
$ 655,676 $ 673,519
9. Midyear salary adjustments are booked as savings when an employee retires. End-of-year retirements are factored as an adjustment to the following year's Adopted Budget. Savings depend on the experience and education of each retiree and each replacement new hire.
The estimated revenues, expenditures, and ending balances are summarized on the following page and on the attached state multiyear projections form.
2017-18 2018-19
1. ADA 22,952 22,952
2. Revenues/Sources $253,923,432 $ 258,204,495
3. Expenditures/Uses 270,964,453 278.206.938
Net lncrease/<Decrease> $<17,041,021 > $ <20,002,443>
4. Beginning Balance $ 53,798,607 $ 36,757,586
5. Ending Balance $ 36,757.586 $ 16.755.143
6. Less: Designations 5,935,000 5,935,000
7. Reserve for Economic Uncertainties $ 30.822.586 $ 10.820.143
3% Criteria and Standards Minimum Reserve $ 8,128,934 $ 8,346,208
ADDITIONAL DATA:
Attached are various District and state reports with revised 2016-17 budgets as of October 31, 2016.
Attachment I - Total General Fund Summary of Revenues, Expenditures, and Changes in Fund Balance; General Fund Unrestricted Programs Summary of Revenues, Expenditures, and Changes in Fund Balance; Summary of Unrestricted Revenues; and Summary of Unrestricted Expenditures by Object Code
Attachment II - Summary: General Fund Restricted Programs
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Attachment Ill - Other Funds Narrative at October 31, 2016 Attachment IV - Other Funds at First Interim Attachment V - 2016-17 and 2017-18 Cash Flow Analyses
Form Cl - District Certification of Interim Report Form AI - Attendance Detail
Form 01 CSI - Criteria and Standards Form 011 - General Fund Summary Form 091 - Charter Schools Special Revenue Fund
