BUDGET INFORMATION

State of the State

The 2011-12 Adopted Budget Act

  • On December 15, 2011 the projected increases in state revenue were not met which resulted in funding reduction to all school Districts for the 2011-2012 year
  • For EMUHSD this resulted in a Revenue Limit (see definition below) reduction of $147,996. In addition, Transportation funding was cut 50 %, resulting in a reduction of $109,642.

Governors Proposed 2012-2013 Budget

  • On January 5, 2012 the Governor released his 2012-2013 Budget proposal
    • The budget includes a $6.9 billion tax initiative that will be placed before voters in November 2012, five months after the start of the new fiscal year
    • Should the voters approve the tax increase K-12 education will be flat funded, (with the exception of the elimination of the transportation program)
    • However, if the initiative fails K-12 districts would face a $2.2 billion mid year cut beginning in January 2013
  • The Legislative Analyst Office (LAO) warns that school districts will likely assume that the Governor's tax proposals will not be enacted and thus build their 2012-2013 budgets conservatively, anticipating a significant cut
  • In addition, the Cost of Living Adjustment (COLA) is not funded for the 2012-2013 and 2013-2014 fiscal years

 

State of the District

  • The 2011-2012 Multi-Year Projection (see definition below) using the current assumptions for the 2011-12 school year indicates that the District will be deficit spending by an estimated $ 8 million dollars
  • Based upon this information the ending fund balance for 2011-2012 is estimated to be $10 million dollars 
  • The District will be deficit spending in the 2012-2013 Fiscal Year by the same amount if there are no reductions
  • The District needs to remain fiscally solvent to ensure that it can withstand the potential midyear reductions which may be passed down by the State
  • The spending gap must be closed in an effort to balance the budget
  • The District has established a Budget Advisory Committee (BAC) comprised of employees, students, parents, community members, and District staff to address this issue (see the attached links below for the BAC meeting minutes and presentations).
  • The District is currently in Program Improvement, as such the District receives assistance from the Los Angeles County of Education (LACOE) District Assistance and Intervention Team (DAIT team)
    • The DAIT teams initial analysis of our fiscal operations made the following recommendations:
      • Transparency in both the budget development and financial reporting processed
      • Development of a user-friendly budget and budget presentation format
      • Implementation of an Attendance Improvement strategy
      • A review of all Tier III Categorical Programs for increased utilization and effectiveness
      • The creation/implementation of a robust financial reporting to key fiscal stakeholders
      • Optimize the use of categorical funding
      • Institute program improvements and options for Sped students
      • Instituting uniform district-wide internal control processes
      • Utilization of sound business practices to address ongoing state/district fiscal crisis


State Deferrals, Cash Flow and How It Impacts the District

Due to State Deferrals adopted by the State Legislature, $ 20 million of current year revenue will be shifted to the next fiscal year.  Based on the Cash Flow statement in the First Interim report the District will experience a shortage in the months of May 2012 and June 2012. The District will use a combination of interfund borrowing and Mid-Year TRANS (Tax Revenue Anticipation Notes) in order to address the cash flow shortage.

 

Budget Advisory Committee (BAC)

Meeting Presentations

  • Presentation of January 12, 2012 (.pdf)

Meeting Minutes

  • Minutes of January 12, 2012 (.pdf)
  • Minutes of January 26, 2012 (.pdf)
  • Minutes of February 2, 2012 (.pdf)
  • Minutes of February 8, 2012 (.pdf)
  • Minutes of February 21, 2012 (.pdf)

Small Group Suggested Cuts

  • Suggested Cuts, First List (.pdf)

Budget Survey with Directions (.pdf)

Budget Facts for Our School District (.pdf)

Fiscal Stabilization Plan 12-15 -Board Apvd. (.pdf)

Second Interim Board Presentation (.pdf)

 

Budget FAQS


Q: What do all of these financial terms mean?

A: California school district revenues and expenditures are subject to constant change. School district budgets are not static documents, but instead are constantly being revised to respond to decisions at the state and federal level, as well as to the expenditure needs of the District. With each report the District is asked to project the general fund financial status through year-end, June 30.

Below are the most commonly used terms:

  • Adopted Budget – Represents the budget plan for the next fiscal year. This plan is approved by the Districts Board in June before the start of the new year. The adopted budget is an “estimate” of what the District anticipates to receive and what it anticipates it will spend in the next year.
  • Unaudited Actuals – The final figures after all of the books have been closed for the prior fiscal year; this reflects what the district actually received and what it actually spent.
  • First Interim – Budgets are not static and constantly changing, the First Interim revises the budget as of October 31. The District measures it against the budget that was adopted in June and incorporates any new state budget assumptions for the remainder of the year.
  • Second Interim – Is from Nov 1 to Jan 31 and is  a snapshot of the current budget to see what has happened since First Interim. The District measures it against the budget that was revised in October and incorporates any new state budget assumptions for the remainder of the year.

Q: What is a Multi Year Projection (MYP)?
A: A MYP projects what the District will spend and how much money it will receive in the next two fiscal years. MYP’s are based on current spending and revenue estimates. The State requires all districts to complete MYP to determine if the District will be financially solvent for the next two subsequent years.


Q: What is Revenue?
A: Money coming in! Revenues represent the amount of money that the District entitled to receive from various.


Q: What is the Revenue Limit?
A: Revenue Limit funding is the primary source of unrestricted revenue in every school Districts budget. There are a number of data elements used in the revenue limit calculation as well as adjustments (such as the deficit factor). In its simplest format the Revenue Limit is the Base Revenue Limit multiplied by Average Daily Attendance (ADA). 
(Example: Net Funded Revenue Limit $ 6,072.86 x ADA 9,737.06 = $ 59 Million)


Q: Where does the District get its revenue from?
A: 52% comes from the Revenue Limit; 7% Federal Funds, 20% State funds (52% is Adult School Fund passed thru), and 6% Other Local Funds.


Q: What are Expenditures?
A: Money going out!


Q: What does the District spend its money on?
A: 80% of the funds are used to pay salaries and benefits, 5% Books and Supplies 14% Services and 1% Capital Outlay.


Q: What is a Cash Deferral?
A: The State pushes payment or defers payments of revenue to later months.
Districts are entitled to revenue, however how that revenue is paid out is determined by the State. For example, if the Districts Revenue Limit is $49 million, the State spreads out the payment over the course of the year. In some months the District receives no cash and this year $20 million has been shifted until next fiscal year.


Q: What is Cash Flow?
A: Cash flow is the amount of actual cash that comes in and goes out in any given month. Cash flow projections are crucial since they represent how much cash you are expected to have…so that you don’t run out!


Q: What is Deficit spending?
A: Deficit spending occurs when you spend more money than you receive.


Q: What is an REU?
A: Reserve for Economic Uncertainty. The State requires that the District maintain a reserve in its ending fund balance to heath economic uncertainties. The current REU is 3% of total expenditures. Districts must maintain their required REU, District that do not are at risk for becoming fiscally insolvent (bankrupt).


Q: What is a COLA?
A: Cola stands for Cost of Living Adjustment. Legislation enacted  provides for cost-of-living adjustments, or COLAs in order to keep pace with inflation.  According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics.


Q: What is a TRANS (Tax Revenue Anticipation Notes)
A: The TRANS is a Pooled Financing Program with the Los Angeles County Office of Education (LACOE), which provides bridge financing to Districts.

 
Q: What is a Fiscal Year?
A: A fiscal year is different from a calendar year. The calendar year is Jan 1 to Dec 31. The Fiscal year is July 1 to Jun 30. The Fiscal Year represents the dates that the accounting books are opened and closed.

If you have any questions or comments, please contact the District Business Office at (626) 444-9005.