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FRUITVALE SCHOOL DISTRICT 7311 Rosedale Highway, Bakersfield, California 93308-5738 Telephone (661) 589-3830 • Facsimile (661) 589-3674

____________________________________________________________________________________ TO:

Board of Trustees, Fruitvale School District Dr. Carl F. Olsen, Superintendent

FROM:

Dr. Matt Torres, Chief Business Officer

DATE:

December 13, 2011

SUBJECT: 2011-12 First Interim Financial Report ____________________________________________________________________________________ AB 1200/AB 2756 requires that the District Administration report to the Governing Board twice during the fiscal year as to the financial condition of the District, as well as recommend to the Board a statement of certification as to whether or not the District will be able to meet its financial obligations for the remainder of the year and two subsequent fiscal years. This is the first report required for the 2011-12 fiscal year, and the purpose of the interim report is to advise the public, trustees and other interested agencies of the District’s current financial condition at periodic intervals during the fiscal year. Due to state revenue collections for the current year, language in the state budget regarding possible mid-year adjustments (cuts) to schools, and revisions made by the District, the First Interim Report includes significant changes from the time when the budget was adopted in June. Using the Financial Dartboard from School Services of California, recommendations from the County st Office of Education, and the actuals to date as of October 31 , we have initiated budget revisions for 2011-12 that are represented by Column D, “Projected Year Totals.” Below are the assumptions the District is using to project for the current year and the two subsequent years: 2011-12 Budget Assumptions The District is projecting a decrease in Revenues compared to the Adopted Budget of $450,808 or 2.07%. Below is an overview of aspects that affect the District’s General Fund Revenue compared to the Adopted Budget: Revenue Limit (Decrease of $319,059)  The District has seen a notable increase in enrollment to date. Using the current enrollment and historical trends, the District has increased ADA from 3137.62 to 3191.75 (+54).  Per the State Budget, schools were not allowed to assume potential reductions to the Revenue Limit despite “trigger” language indicating there would be mid-year cuts to districts provided state revenues do not meet specific estimates. To date, state revenues are 5.1% ($1.275 million) below projections, increasing the possibility that the trigger will be pulled. County Offices of Education are recommending that all Districts account for the mid-year cuts to be enacted and to reflect the loss of dollars in the Revenue Limit and Transportation.  A 2.24% Revenue Limit COLA remains with a deficit factor set at 19.754%. The recommended Trigger Cuts of 2.9% ($186/ADA) has been included equaling a loss of $592,620. Federal Revenue (Increase of $58,701)  Federal Revenue has increased due to a projection in more Medi-Cal Reimbursement. Other State Revenue (Decrease of $334,561)  Other State Revenue is projected to decrease due to additional penalties in Class Size Reduction funding.  Transportation funding has been cut 50% ($59,000; $18.49/ADA). Local Revenue (Increase of $144,112)  Local Revenue has increased due to the one-time school bus retrofit grant.


The Expenditures for the District are projected to decrease by $264,246 or 1.2%. Below are the assumptions used to determine the District’s General Fund Expenditures at First Interim: Certificated Salaries (Decrease of $633,315)  Certificated Salaries reflect two retirees since the adopted budget and the projected implementation of 7 furlough days per the collective bargaining agreement. Classified Salaries (Decrease of $32,173)  Classified Salaries reflect the projected implementation of 7 furlough days for non-CSEA positions only, as agreement with CSEA on furlough days has not been reached yet. Benefits (Decrease of $99,944)  Employee Statutory Benefits have decreased proportionally with salary changes that are mentioned above. Books and Supplies (Increase of $211,589)  Books and Supplies are projected to increase by 42% due to the adoption of new Language Arts and Math textbooks, and the carryover of 2010-11 Foundation Grant Funds. Services and Operating Expenses (Increase of $15,182)  Services and Other Operating Expenses are estimated to increase due to utility cost projections. Capital Outlay (Increase of $171,647)  Expenses for the bus retro-fit traps, previously projected to occur in 2010-11, have now been budgeted for 2011-12. Replacement servers for the technology department are also now budgeted in 2011-12. Other Outgo (Increase of $102,769)  An increase for special education bill-back charges is now projected due to revised estimates for students with special needs. Outgoing Transfer (No Change)  A transfer to the Cafeteria Fund of $30,000 remains per the original budget.

CASH FLOW Cash Flow projections indicate that 29% of revenue limit sources from the state will be deferred into 2012-13. This will cause the District to participate in two TRAN borrowings in 2011-12 (July and April).

Below is a summary of the 2011-12 First Interim General Fund revisions compared to the Adopted Budget. The change in fund balance and reserve for economic uncertainty is also included.

Total Revenues Total Expenditures Net Increase/(Decrease) Total Available Reserve Total Available Reserve %

2011-12 Adopted Budget $21,685,053 $22,080,530 ($395,477) $2,441,671 11.05%

2011-12 Revised Budget $21,234,245 $21,816,284 ($582,039) $2,287,820 10.49%

Percent Change -2.07% -1.2% -47% -6.3%


--------------------------------------------------------Multi-Year Projections---------------------------------------------------Multi-Year Projection assumptions for 2012-13 and 2013-14 are based on School Services of California’s “Dartboard” where applicable (copy included). However, due to the inability of the state to fund COLA in recent years, no COLA adjustments are included in the MYP’s. 2012-13 Budget Assumptions Revenues are expected to decrease by $205,154 (0.97%) over 2011-12. Below is an overview of aspects that affect the District’s General Fund Revenue compared to the prior year:       

Continued deficit factor of 19.754% applied to the Revenue Limit. ADA remains at 3191.75. The 2.9% cut to the Revenue Limit remains in effect. Federal Revenues remains status quo. Other State Revenues remains status quo. Other Local Income is projected to decrease by $205,154 (53.61%) due to the elimination of the one-time bus retro-fit grant received in 2011-12. Other financing sources are projected at zero.

The District’s Expenditures are expected to increase by 2.04 %, or $445,936, over 2011-12. Below is an overview of aspects that affect the District’s General Fund Expenditures compared to the prior year:        

Certificated Salaries reflect a 1.5% increase for steps and columns and a reduction of 2.0 FTE teachers through attrition. No salary COLA has been applied. 7 furlough days in 2011-12 restored in 2012-13 totaling $476,698. Classified Salaries reflect a 1.5% increase for steps. No change in FTE’s. No salary COLA. 7 furlough days in 2011-12 restored for non-CSEA members in 2012-13 totaling $26,682. Employee Statutory Benefits have changed proportionally with salary. Health and Welfare costs contributed by the District remain unchanged. Books and Supplies are increased by 2.8% in accordance with the Consumer Price Index per the Dartboard. $200,000 has been added to the budget for the 2011-12 textbook adoption. Services and Other Operating Expenses are increased by 2.8% in accordance with the Consumer Price Index per the Dartboard. Capital Outlay has been reduced to zero. Other Outgo consists entirely of the bill-back related to Fruitvale special education students educated by county programs in their facilities. This category is projected to decrease by 7.75% due to fewer student participants. Outgoing transfers remain at $30,000 in support to the Cafeteria Fund.

Expenditures exceed Revenue resulting in a deficit of $1,233,129 and a reserve of 5.06%. This reduces the reserve level by half in a single year. Fund 17 is not included in the total for the reserve for economic uncertainty.


2013/14 Budget Assumptions Revenues are expected to remain the same as in 2012-13. Below is an overview of aspects that affect the District’s General Fund Revenue compared to the prior year:       

A deficit factor of 19.754% is applied to the Revenue Limit. ADA remains at 3,191.75 - no change over 2012-13. The 2.9% cut to the Revenue Limit remains in effect. Federal Revenues remains at 2012-13 levels. Other State Revenues is projected to remain at 2012-13 levels. Other Local Income is expected to remain the same as in 2012-13. Other financing sources are projected at zero.

The District’s Expenditures are expected to increase by 0.72% over 2012-13. Below is an overview of aspects that affect the District’s General Fund Expenditures compared to the prior year:        

Certificated Salaries reflect a 1.5% increase for steps & columns and a reduction of 2 FTE teachers through attrition. No salary COLA has been applied. Classified Salaries reflect a 1.5% increase for steps. No change in FTE’s. No salary COLA has been applied. Employee Statutory Benefits have changed proportionally with salary. Health and Welfare costs contributed by the District remain unchanged. Books and Supplies increase by 3.0% in accordance with the Consumer Price Index per the Dartboard. $200,000 has been added to the budget for the 2011-12 textbook adoption. Services and Other Operating Expenses are increased by 3.0% in accordance with the Consumer Price Index per the Dartboard. Capital Outlay is at zero. Other Outgo consists entirely of the bill-back related to Fruitvale special education students educated by county programs in their facilities. This category remains at the same levels in 201213. Outgoing transfers remain at $30,000 in support to the Cafeteria Fund.

Expenditures exceed Revenue resulting in an unrestricted deficit of $1,393,824 and a reserve of ($206,129) or -1.2%. When the Special Reserve for Other Than Capital Outlay (Fund 17) is added to the General Fund Balance, the reserve percentage changes to 2.18% or $489,936.


First Interim Financial Report December 13, 2011

Fruitvale School District

Page  1


Changes Since the Adopted Budget  Negotiated Agreement with the Fruitvale Teachers Association o Trigger Pulled = Furlough Days

 Adoption of Textbooks o Payments spread across 3 years

 Enrollment is Up! o ADA changed from 3137.62 to 3191.75

 Additional $275K in CSR Penalties  KCSOS recommending school districts budget for mid-year cuts  State Revenues Falling Short ($1.275 billion to date)

Page  2

1st Interim Financial Report - December 13, 2011


State Revenues to Date

2011-12 Comparison of Actual and Forecast Agency General Fund Revenues (Dollars in Millions)

Month

Forecast

Actual

Difference

Percent Change

July

$5,867

$5,326

-$541

-9.2%

August

$6,232

$6,167

-$65

-1.0%

September

$7,291

$7229

-$62

-0.9%

October

$5,774

$5,166

-$608

-10.5%

Year-to-Date

$25,164

$23,889

-$1,275

-5.1%

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1st Interim Financial Report - December 13, 2011


Additional Assumptions  A 2.9% cut ($592,620) has been applied to the Revenue Limit pending trigger being pulled o 2.9% is reflected as an ongoing cut

 A 2.24% Revenue Limit COLA with a deficit factor set at 19.754% o Revenue Limit COLA not included in MYP’s

 Transportation is cut 50% due to triggers  Furlough Days only negotiated for 2011-12 o Approx. $500,000 added back to expenses in 2012-13

 Operating Expenses will continue to rise o 2.8% (2012-13) and 3.0% (2013-14)

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1st Interim Financial Report - December 13, 2011


Adopted Budget vs First Interim (Revenues)

Revenues Revenue Limit Federal Revenue Other State Revenue Local Revenue

TOTAL REVENUES

Page  5

2011-12 Adopted Budget

2011-12 Revised Budget

Percent Change

$16,368,148

$16,049,089

(1.9%)

$911,708

$970,409

6.4%

$4,166,662

$3,832,101

(8.0%)

$238,535

$382,647

60.4%

$21,685,053

$21,234,245

(2.1%)

1st Interim Financial Report - December 13, 2011


General Fund Revenue Percentage Other Local Revenue 2% Other State Revenue 18%

Revenue Limit Sources

Federal Revenue 4%

Federal Revenue Other State Revenue Other Local Revenue Revenue Limit Sources 76%

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1st Interim Financial Report - December 13, 2011


Adopted Budget vs First Interim (Expenditures)

2011-12 Adopted Budget

2011-12 Revised Budget

Percent Change

Certificated Salaries

$11,891,905

$11,258,590

5.3%

Classified Salaries

$2,766,480

$2,734,307

1.2%

Employee Benefits

$4,688,800

$4,588,856

2.1%

$501,275

$712,864

(42.2%)

$1,844,157

$1,859,339

(0.8%)

$0

$171,647

New

Other Outgo

$357,913

$460,682

(28.7%)

Outgoing Transfers

$30,000

$30,000

0.0%

$22,080,530

$21,816,284

1.2%

Expenses

Books and Supplies Services and Operating Expenses Capital Outlay

TOTAL EXPENDITURES

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1st Interim Financial Report - December 13, 2011


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1st Interim Financial Report - December 13, 2011


Multi-Year Projections

2011-12

2012-13

2013-14

Revenues

$21,234,245

$21,029,091

$21,029,091

Expenses

$21,816,284

$22,262,220

$22,422,915

Net Increase/(Decrease)

($582,039)

($1,233,129)

($1,393,824)

Beginning Fund Balance

$3,002,863

$2,420,824

$1,187,695

Ending Fund Balance

$2,420,824

$1,187,695

($206,129)

Nonspendable and Restricted Balance

($133,005)

($60,644)

($60,644)

Not Included

Not Included

$756,709

$2,287,820

$1,127,052

$489,936

10.49%

5.06%

2.18%

Fund 17 Total Available Reserves Total Available Reserve %

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1st Interim Financial Report - December 13, 2011


K-14 Education Spending and the State Budget Comparison of State GF Revenue and Expenditure Increases in K-14 (Prop. 98) Guarantee

2004-05 Through 2011-12 (Dollars in Billions)

% Increase

Page  10

General Fund Revenues

14.4%

K-14 (Prop. 98) Expenditures

3.6%

Non K-14 (General Fund) Expenditures

16.9%

1st Interim Financial Report - December 13, 2011


Ongoing Risks  Poor Economy Continues o Funding for schools is a reflection of the State’s Economic Health

 Enrollment?  Continued Deferrals

Less Cash

More TRANs

 Increased Class Sizes o Not absorbing positions saves $, but does mean more CSR penalties

 Deferred Maintenance

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1st Interim Financial Report - December 13, 2011


Ongoing Risks (continued)  Expiration of Categorical Flexibility (2014-15)  Student Achievement  Federal Deficit of $1.5 trillion

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1st Interim Financial Report - December 13, 2011


Questions

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1st Interim Financial Report - December 13, 2011


First Interim Report  

2011-12 2nd Interim Report

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