Budget Development Building Blocks

FY08/09

Communicating our budget and budget development process to our staff and our community

Alameda Unified School District

Purpose

1. To present basic information and an over-view of the AUSD’s budget development process

2. To inform the community about our district’s finances in a user-friendly format

This presentation was created with two goals in mind –

The Checkbook

What is a budget? A budget is a spending plan. School districts develop spending plans for every fiscal year (July 1 – June 30).

Our spending plan has components similar to your checkbook. It includes estimates of anticipated revenues and planned spending. 

The Checkbook AUSD Budget

Deposits/

Income

Revenue

Checks Written/ Expenses

Expenditures

Balance at End of Page

Ending Balance

Balance Brought Forward to New

Page

Beginning Balance

Our budget is our best guess of the income we will earn and the checks we will write. It changes just like the needs in a house-hold change.

The Checkbook

What is a multi-year projection? A multi-year projection is our best guess of the income we will earn and the checks we will write over an extended period of time (three years).

July 1, 2007 – June 30, 2008

July 1, 2008 – June 30, 2009

July 1, 2009 – June 30, 2010

July 1, 2010 – June 30, 2011

Deposits/

Income

Deposits/

Income

Deposits/

Income

Deposits/

Income

Checks Written/ Expenses

Checks Written/ Expenses

Checks Written/ Expenses

Checks Written/ Expenses

Balance at End of Page

Balance at End of Page

Balance at End of Page

Balance at End of Page

Balance Brought Forward

Balance Brought Forward

Balance Brought Forward

Balance Brought Forward

The Annual Budget Cycle

Budget

Adoption

Third

Interim

Unaudited

Actuals

Revised

Budget

First

Interim

Second

Interim

Audited

Actuals

At each period, we:

• Update budget

• Certify our financial condition

• Present summary to Board of Education

• Submit copies to County Office of Education and State

The Annual Budget Cycle

Period Finances as of Description

Adopted Budget

July 1 The Board of Education is required by law to adopt a budget by July 1.

Revised Budget

Signing of State Budget

Act

We are required by law to update our adopted budget within 45 days that the Budget is signed into law.

1st Interim October 31 Update budget and certify the state of our finances

2nd Interim January 31 Update budget and certify the state of our finances

3rd Interim April 30 Applies only to districts with Qualified or Negative Certifications

Unaudited Actuals

June 30 Includes all transactions processed during the fiscal year

Audited Actuals

June 30 An independent auditing firm audits the financials statements prepared by the district and issues an opinion regarding their accuracy.

Certification Status

At Interim Reporting Periods:

• Positive – District will be able to meet its financial obligations for the current and two subsequent years

• Qualified – District may not be able to meet its financial obligations for the current or two subsequent years

• Negative – District will be unable to meet its financial obligations for the current or subsequent year

Our District’s Funds

Other funds have very specific purposes and are very limited in use. Consequently, transfers between funds are subject to strict legal limitations and Board policy.

Most day-to-day financial

transactions are recorded in the General Fund

(Fund 01).

The district maintains a total of 12 different funds to record its financial transactions.

Each fund is a separate financial entity with its own set of financial records.

Our District’s Funds

OPERATING FUNDS CAPITAL FUNDS

Fund Description Fund Description

01 General Fund 14 Deferred Maintenance Fund

08 Regional Occupational Program

21 Building Fund

09 Charter School Fund (Alameda Community Learning Center)

25 Capital Facilities Fund

11 Adult Education Fund 35 County Schools Facilities Fund

12 Child Development Fund 40 Capital Reserve

13 Food & Nutrition Services Fund

51 Bond Interest & Redemption Fund

Fund 14 – Deferred Maintenance Fund

Districts must establish a Deferred Maintenance Fund to receive deferred maintenance dollars. This fund is used to account for the State’s apportionment and the District’s contributions.

Dollars are set aside in Fund 14 to

maintain school facilities. The State makes a dollar for

dollar match.

Districts that participate in certain school facility programs are required by state law to establish restricted funds or accounts for facility maintenance purposes.

New District Fund – Fund 17

Staff recommends transferring the Reserve for Economic Uncertainties to Fund 17. This transfer will clarify the portion of the General Fund ending balance that is available for other spending priorities and highlight the importance of maintaining our reserves.

Fund 17 – Special Reserve for Other

Than Capital Outlay Projects.

General Fund dollars can be accumulated in Fund 17 for various purposes. These dollars must be transferred into an appropriate fund before expenditures can be made.

New District Fund – Fund 17

What can $2.5M buy?

• Two month’s payroll?

• One month’s payroll?

• One-half month’s payroll?

How much is our Reserve for Economic

Uncertainties?

Our Reserve for Economic Uncertainties is 3.0% of all General Fund expenditures and other financing uses, or $2.5M.

Our 3.0% Reserve for Economic Uncertainties

approximates 47% of the May 2008 payroll.

Building Our Budget

Our district’s budget is only as good as the assumptions

used in projecting revenues and

expenses.

Many of the items that impact the district’s budget are unknown until AFTER the district is required to adopt a budget. Thus, the district must use a series of assumptions about those items in order to develop the budget.

The accuracy of the proposed budget is only as good as the assumptions used in its development. If the assumptions are faulty, the budget will be inaccurate. Accordingly, the initial assumptions are carefully considered and revised throughout the year as more information becomes available.

Major Assumptions - Included

Assumption Expenditures Revenue

Enrollment

Average Daily Attendance (ADA)

Cost of Living Adjustment (COLA)

Step & Column

Negotiated Salary Increases

Mandatory Benefits

Major Assumptions - Included

Assumption Expenditures Revenue

Consumer Price Index (CPI)

Utilities

Property & Liability Insurance

Debt Service

Major Assumptions - Excluded

Assumption Expenditures Revenue

One-Time X X

Carryover X X

Growth in Contribution to Special Education Program

X

Unrestricted General Fund Expenditures

Operation/Housekeeping Services

42%

Insurance14%

Communications5%

Professional Services and Operations

22%

Books, Materials and Supplies

12%

Rentals, Leases, and Repairs

2%Non-Capitalized

Equipment1%

Professional Development/Dues

2%

Excludes ($0.4M) in Direct Cost Transfers

Unrestricted Non-Personnel

Expenditures $5.0M

All figures as of 3rd Interim

Unrestricted General Fund Expenditures

Personnel91%

Non-Personnnel9%Unrestricted Expenditures

Excludes ($0.7M) in Other Outgo and Support Costs Transfers

48.6M 4.6M

$53.2M

PersonnelNon-PersonnelTotal

All figures as of 3rd Interim

UtilitiesProfessional ServicesInsuranceSupplies/MaterialsCommunicationsProfessional DevelopmentEquipment/Rentals/RepairsTransfers of Direct CostsTotal

2.1M1.1M 0.7M0.6M0.2M 0.1M0.1M

(0.3M)$4.6M

Non-Personnel Expenditures

Unrestricted General Fund Expenditures – Professional Services

One-Time, $289,825 , 27%

Unavoidable, $728,151 , 69%

Discretionary, $39,845 , 4%

149K108K99K71K63K47K33K37K36K26K25K17K10K5K2K

$728K

LegalFinancial Information SystemHazardous Materials/SCParcel Tax Assessment & FeeMandate Cost ServicesAuditDebt ServiceHuman ResourcesSoftware LicensingAsset InventorySection 504 PlansAssessment DatabaseOPEB ValuationSelf InsuranceWASCTotal

155K46K45K17K7K

16K4K

$290K

Parcel Tax ElectionParcel Tax AnalysisDemographic StudyMaster Schedule CoachWoodstock MoveLegal SettlementWebmasterTotal

Enrollment & School Site Staffing

Enrollment projections prepared by Cabinet

and Principals are used as the basis for staffing

allocations.

School site staffing is comprised of two types –

1.) Administrative staffing

2.) Enrollment-based staffing

Administrative staffing consists of positions responsible for the operations of the site (e.g., management, clerical, and custodial staff).

Enrollment-based staffing consists of positions responsible for instructional and student support at the site (e.g., classroom teachers and clerical staff).

School Site Staffing

Principal Classroom Teacher

Vice Principal Other Clerical

Office Manager II Health Office Assistant

Media/Library

Custodial

Counselor

Administrative staffing Enrollment-based staffing

Mandatory and Employer-Provided Benefits

Benefit Item Rate

State Teacher Retirement System (STRS) 8.250%

Public Employee Retirement System (PERS) 9.306%

Federal Insurance Contributions Act (FICA) 6.200%

Medicare 1.450%

Health &Welfare (H&W) 7.171%

State Unemployment Insurance (SUI) 0.050%

Workers Compensation 1.850%

Public Employee Retirement System Reduction

(PERS Reduction)

3.714%

Mandatory and Employer-Provided Benefits

Public Employee Retirement System

(PERS)10%

Health & Welfare33%

Public Employee Retirement System (PERS) Reduction

3%

State Unemployment Insurance

0%

Workers' Compensation8%

Other Post Employment Benefits (OPEB)

4%

State Teacher Retirement System (STRS)

29%

Medicare13%

Enrollment & School Site Discretionary Funds

School site discretionary funds are

used to support site operations, such as classroom supplies, office supplies, and

copy costs.

Approximately $485K is budgeted annually.

School site discretionary funds are determined by grade-level enrollment projections and grade-level per pupil allocations.

Per Pupil Allocations

K-5 $24.76

6-8 $45.77

9-12 $81.73

Enrollment & School Site Custodial Funds

While custodial supplies are budgeted by site, the dollars

are managed by Maintenance, Operations and Facilities.

Approximately $203K is budgeted annually.

School sites are allocated funds for custodial supplies based on use, facility square footage and grade-level enrollment projections.

Per Pupil Allocations

K-5 $8.00

6-8 $9. 00

9-12 $10. 00

Additional Allocations…

$59K Summer Cleaning

$16K Emergency Supply Stock

$40K Contingency

General Fund Revenues

Revenue Limit64%

Federal7%

Other State23%

Local6%

Figures reflect adjustments to Local Revenue of ($5.2M) and to State Revenue of +$5.2M to reflect source of funds.

All figures as of 3rd Interim

General Fund Revenue$86.7M

Our BRL is a specific dollar amount the state gives us based on the number of days students attend school.

Our income is based on our average daily attendance (ADA) - not the number of students enrolled.

Our primary source of revenue is the Base Revenue

Limit (BRL).

AUSD Base Revenue Limit – County Comparison

4,500 5,000 5,500 6,000 6,500 7,000

Dublin

Emery

Mountain House

Pleasanton

Sunol Glen

Berkeley

Piedmont

Hayward

San Leandro

San Lorenzo

Castro Valley

Newark

Albany

New Haven

Oakland

Fremont

Livermore

Alameda

County AverageAUSD receives $221 less in per ADA revenue than the County

average.

If AUSD received the County average, we would receive an

additional $2.1M per year.

AUSD receives $61 less in per ADA revenue than Piedmont.

If AUSD received Piedmont's BRL, we would receive an additional $580K per year.

Base Revenue Limit and ADA

10,49810,400

10,354

10,183

9,952 9,912

10,203

10,0829,982 10,024

9,756

9,4719,516

9,954

10,382

9,607

8,800

9,000

9,200

9,400

9,600

9,800

10,000

10,200

10,400

10,600

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Enrollment at CBEDS P2 ADA

Difference between Enrollment and ADA results in a loss in revenue.

Example for FY07/08(347) ADA X $5777 BRL = ($2.0M)

Loss of 347 ADA

Unrestricted General Fund Revenues

Local7%

Federal0%

Other State8%

Revenue Limit85%

Unrestricted Revenue$63.4M

All figures as of 3rd Interim

Our primary source of unrestricted revenue is the

Base Revenue Limit (BRL).

Revenue Limit

Revenue Limit Sources $54.0M

Federal

Impact Aid $0.1M

Other State

Lottery $1.3M

Class Size Reduction - Gr K-3 $3.0M

Class Size Reduction - Gr 9 $0.3M

Supplemental Instruction $0.3M

Local

Parcel Tax $3.3M

Interest $0.4M

Loss of Federal Impact Aid

-

500

1,000

1,500

2,000

2,500

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Revenue (1000s)

Fiscal Year

55,289

2,191,637

Variability of Interest Income

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Sep03

Dec03

Mar04

Jun04

Sep04

Dec04

Mar05

Jun05

Sep05

Dec05

Mar06

Jun06

Sep06

Dec06

Mar07

Jun07

Sep07

Dec07

Mar08

Jun08

(est)

Restricted General Fund Revenues

Local3%

Federal25%

Other State62%

Revenue Limit10%Restricted

Revenue$23.3M

All figures as of 3rd InterimFigures reflect adjustments to Local Revenue of ($5.2M) and to State Revenue of +$5.2M to reflect source of funds.

Our primary source of restricted revenue (i.e., categorical funds) is the State. These funds have

restrictions on their use.

Revenue Limit

Revenue Limit Sources $2.2M

Federal

Title I $1.4M

Special Education $1.7M

Other State

Gifted and Talented $0.1M

Lottery $0.2M

Instructional Materials $0.7M

School/Library Improvement $0.8M

Special Education $5.5M

Local

Donations $0.4M

Contributions to Restricted Programs

Special Education Revenue, $9.9 , 62%

Contributions to Special Education, $6.0 , 38%

Special Education Expenditures $15.9M

All figures as of 3rd Interim

Restricted programs are like mini-funds and should be self-sustaining – expenditures should match revenues.

When expenditures exceed revenues, a contribution is made to the restricted program.

Additional Information

• Need additional information? Have suggestions about improving this presentation? Please share your thoughts.

Luz T. CázaresChief Financial Officer

510-337-7067lcazares@alameda.k12.ca.us

• Need prior presentations or budget information? Our budget documents are posted on our website.