LOS GATOS UNION SCHOOL DISTRICT

2015-16 ADOPTED BUDGET

Martin Fregoso, Assistant Superintendent-Business Services/CBO

Tom Gray, Director of Fiscal Services

Board of Trustees Meeting

June 25, 2015

Discussion Topics

• Budget Calendar

• May Revise/Budget Update

• Current Budget Assumptions/Per Pupil Spending Trends

• General Fund FY 15-16 Adopted Budget vs. FY 14-15 Estimated Actuals

– Special Revenue Funds

– Capital Project Funds

• Multi-Year Projections

– Unrestricted Ending Balance & SB 858 Requirements

– Reserve Percentage

• Future Considerations

Budget Calendar

• Unaudited Actuals: Due 09/15/15

• 1st Interim: 10/31/15; Due 12/15/15

• January – Governor’s January Revise Budget

• 2nd Interim: 1/31/16; Due 3/15/16

• May - Governor’s May Revise Budget

• June - Estimated Actuals for FY 15/16 & Budget

Adoption for FY 16/17

Governor’s May Revise Proposals

• LCFF funding increase of $1,000 on average

– Increase of $850 per ADA for LGUSD

– LCFF funding = $6,858 per ADA for LGUSD, this may move the district into LCFF status sooner

• One Time Funds - Governor proposes $580-$601 per ADA for 2015-16 (Unrestricted and Restricted)

1. Mandate Reimbursements - $1.6 M for LGUSD (Unrestricted) – Suggested use includes Common Core

2. Teacher Training - $265K for LGUSD (Restricted) – Must be used for new teacher training and professional development for teachers

FY 15-16 Budget Assumptions

• Property Taxes Growth

– FY 15-16 = 7.25%

– FY 16-17 = 4%

– FY 17-18 = 3%

• EPA Funds - $650K in property tax revenue base

– Final year in 2018-19

• 3 FTE - Certificated staff for enrollment growth & 7th

period at Fisher

– Allocated 3.0 FTE as of June 5

FY 15-16 Budget Assumptions

• No salary enhancements for future years included at this

time

• Step and Column of 1.5% is included (certificated and

classified)

• STRS and PERS increases included in projections

– STRS increases of 1.85% every year until FY 19-20

or $300-$400K of incremental costs every year

– PERS rates could increase by 1.2%-1.6% for the

next few years

FY 15-16 Budget Assumptions

• Contributions and Services increase at a 2% annual rate

• Common Core ELA Adoption (FY 16-17) $500K

• Basic Aid status secured for now

• Similar funding from LGEF and H&SC’s

• Note - District needs a minimum of 4.5% property tax

growth to maintain existing program, no salary increases

Per Pupil Spending Trends

Projected Projected Projected

($000's) FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17

Expenditures 27,329 26,680 26,981 28,241 30,426 31,508 30,807 31,951

Enrollment 2,914 3,027 3,137 3,210 3,280 3,345 3,385 3,433

State Funding 1,612 1,197 403 976 1,589 1,009 732 773

% of Expenditures 5.90% 4.50% 1.50% 3.46% 5.22% 3.20% 2.38% 2.42%

Per Pupil $ Dollars $9,379 $8,814 $8,601 $8,798 $9,276 $9,419 $9,227 $9,307Expenditures excludes transfers to other funds

Unrestricted Revenues

1. FY 14-15 property taxes includes $360K of one time RDA revenues

2014-15

Estimated

Actuals

2015-16

Adopted

Budget

Increase /

(Decrease)Percentage

BEGINNING FUND BALANCE $5,172,535 $4,849,677 ($322,858) -6.24%

REVENUE

LCFF Sources/Property Taxes 22,378,990 23,397,118 1,018,128 4.55%

Federal Revenues 0

Other State Revenue 736,393 512,000 -224,393 -30.47%

Other Local Revenue 4,826,439 4,796,211 -30,228 -0.63%

TOTAL REVENUE 27,941,822$ 28,705,329$ 763,507$ 2.73%

UNRESTRICTED

Unrestricted Expenditures

1. Certificated Salaries – increase reflects 3.0 FTE for enrollment growth and teacher leaders

2. Employee Benefits – STRS retirement increases and benefits for additional staff

2014-15

Estimated

Actuals

2015-16

Adopted

Budget

Increase /

(Decrease)Percentage

EXPENDITURES

Certificated Salaries 14,518,705 14,806,506 287,801 1.98%

Classified Salaries 2,701,937 2,777,615 75,678 2.80%

Employee Benefits 4,498,209 4,895,763 397,554 8.84%

Books and Supplies 448,120 503,681 55,561 12.40%

Services, Operating Expenses 1,942,612 2,030,096 87,484 4.50%

Other Outgo 54,000 54,000 0 0.00%

TOTAL EXPENDITURES 24,162,344$ 25,066,409$ 904,065$ 3.74%

UNRESTRICTED

Restricted Revenues

2014-15

Estimated

Actuals

2015-16

Adopted

Budget

Increase /

(Decrease)Percentage

BEGINNING FUND BALANCE $1,270,479 $919,703 -$350,776 -27.61%

REVENUE

LCFF Sources/Property Taxes $12,273 $0 -12,273 100.00%

Federal Revenues 613,275 602,725 -10,550 -1.72%

Other State Revenue 273,153 220,122 -53,031 -19.41%

Other Local Revenue 2,763,902 1,779,681 -984,221 -35.61%

TOTAL REVENUE $3,662,603 $2,602,528 -1,060,075 -28.94%

RESTRICTED

1. Other Local Revenue – This includes H&SC grants, this revenue is not booked until received

Restricted Expenditures

1. Books and Supplies – Textbook adoption in FY 14-15, approx $600K, H&SC supply grants, Associated Student

Body expenditures at Fisher (future revenue and expenses not booked until received)

2. Services – Study trips, H&SC grants, one time legal expense.

2014-15

Estimated

Actuals

2015-16

Adopted

Budget

Increase /

(Decrease)Percentage

EXPENDITURES

Certificated Salaries 2,079,372 2,027,073 -52,299 -2.52%

Classified Salaries 1,316,655 1,278,701 -37,954 -2.88%

Employee Benefits 897,812 918,655 20,843 2.32%

Books and Supplies 1,637,445 460,038 -1,177,407 -71.91%

Services, Operating Expenses 1,224,938 849,220 -375,718 -30.67%

Capital Outlay 65,034 65,000 -34 100.00%

Other Outgo 123,220 140,220 17,000 13.80%

TOTAL EXPENDITURES $7,345,715 $5,740,159 -1,605,556 -21.86%

RESTRICTED

FY 15-16

Other Funds

SPECIAL REVENUE FUNDS

CAFETERIA

FUND 13

DEFERRED

MAINTENANCE

FUND 14

BEGINNING FUND BALANCE $34,715 $382,767

REVENUE $575,100 $1,500

EXPENDITURES $620,100 $0

REVENUE OVER (Under) EXPENSES -$45,000 $1,500

Transfers In (Out) $45,000 $275,000

ENDING FUND BALANCE $34,715 $659,267

FY 15-16

Special Reserve for Non Capital Projects

1. Transfer in FY 16-17 ($400K) for STRS/PERS retirement increases, ELA adoption, and deficit spending.

2. Transfer in FY 17-18 ($300K) for STRS/PERS retirement increases and deficit spending.

SPECIAL RESERVE - NONCAPITAL FY 2015-16 FY 2016-17 FY 2017-18

BEGINNING FUND BALANCE $2,219,308 2,228,629$ 1,837,989$

REVENUE $9,321 $9,360 $7,720

EXPENDITURES $0 $0 $0

REVENUE OVER (Under) EXPENSES $9,321 $9,360 $7,720

Transfers In (Out) $0 -$400,000 -$300,000

ENDING FUND BALANCE $2,228,629 $1,837,989 $1,545,709

FY 15-16

Other Funds

CAPITAL

FACILITIES FUND

25

SPECIAL

RESERVE

CAPITAL OUTLAY

FUND 40

BEGINNING FUND BALANCE $1,658,741 $8,830,262

REVENUE $178,000 $30,000

EXPENDITURES $1,800,000 $8,168,500

REVENUE OVER (Under) EXPENSES -$1,622,000 -$8,138,500

Transfers In (Out)

ENDING FUND BALANCE $36,741 $691,762

LGUSD - ADA Funding Comparison

Property Tax/State Funding Intersect

Multi-Year Projections

(Cash Flow Analysis)

1. Reserve Percentage calculation is different than the annual audit reserve calculation, excludes assigned balances.

2. Transfer in FY 16-17 ($400K) for STRS/PERS retirement increases, ELA adoption.

3. Transfer in FY 17-18 ($300K) for STRS/PERS retirement increases and deficit spending.

Los Gatos USD - Multi Year Projection

Unrestricted FY 14-15 FY 15-16 FY 16-17 FY 17-18

LCFF Sources/Property Tax $22,378,990 $23,397,118 $24,242,378 $24,904,100

Other State Revenues $736,393 $512,000 $514,000 $516,000

Other Local Revenues $4,826,439 $4,796,211 $4,872,297 $4,911,862

Transfers In $0 $0 $400,000 $300,000

Contributions -$3,332,336 -$3,191,259 -$3,274,267 -$3,340,252

Total Revenues $24,609,486 $25,514,070 $26,754,408 $27,291,710

Expenditures

Certificated Salaries 14,518,705 14,806,506 15,268,556 15,668,461

Classified Salaries 2,701,937 2,777,615 2,823,997 2,871,167

Employee Benefits 4,498,209 4,895,763 5,231,635 5,622,512

Books and Supplies 448,120 503,681 1,014,258 567,114

Services, Other Operating Expenses 1,942,612 2,030,096 2,072,758 2,104,546

Debt Service 54,000 54,000 65,000 65,000

Transfers Out 770,000 320,000 320,000 320,000

Total Expenditures $24,932,344 $25,386,409 $26,794,952 $27,217,548

Revenue Over (Under) Expenditures -$322,858 $127,661 -$40,544 $74,162

Beginning Fund Balance $5,172,535 $4,849,677 $4,977,338 $4,936,794

Ending Balance, June 30 $4,849,677 $4,977,338 $4,936,794 $5,010,956

Reserve Percentage 15.01% 15.99% 15.02% 15.05%

SB 858 Requirements

• SB 858 requires districts to explain ending fund

balances above the minimum reserve level.

• LGUSD has $6,253,349 above the 3% State minimum

requirement.

• Excess Reserves Needed for the following reasons:

– $3,735,188 (additional 12% minimum reserve per

Board policy, cash flow requirements)

– $1,875,000 (STRS/PERS retirement benefit

increases

– $643,211 (ELA textbook adoption in FY 17-18)

Next Steps

• Close Books for FY14-15

• Complete Financial Audit – October/November

• Negotiations for FY15-16

Future Considerations

• District will need to be cautious going forward

• LCFF funding gaps compared to our neighbors– Sustaining current programs will be challenging

• CalSTRS & CalPERS increased contributions

• Flat funding in LCFF transition year – AB 1290 (Sharing of RDA pass-thru revenue with State $900K), automatic loss of EPA funds in LCFF status– Extremely critical, need adequate reserves

• Future LCFF funding level growth may not be sufficient to cover current cost base, need a minimum of 4.5% growth

Conclusion

• Staff Recommends that the Board Approve the Estimated Actuals (FY14-15) and FY 15-16 Adopted Budget with a Positive Certification at the next scheduled BOT meeting.

Thank You

&

Questions