Background:
The Budget Timeline
The budget process of a school district requires the district to produce and adopt a budget by June 30 for the upcoming year. The Board is required to certify twice each year that the district is able to meet its financial obligations during the year. The two intermediary reports afford the district the opportunity to adjust the budget’s revenues and expenditures based on the current climate and events. The First Interim Report reflects activities for July 1 – October 31 and is adopted by December 15. The Second Interim Report covers July 1 – January 31 and is adopted by March 15. By September 15, the district publishes the Unaudited Actual based on July 1 – June 30 of the previous year.
Local Control Funding Formula Budget Overview for Parents
New for the 2019-20 budget year, the LCFF Budget Overview for Parents is a required 3-page budget summary on how LCFF funds are spent. The summary is included in the back up materials and will be available for parents at the budget adoption meeting.
Revenues
The Board reviewed the budget assumptions for the 2019-2020 Budget and Multi-Year Projection (MYP) at the May 16, 2019 board meeting. The assumptions included an estimate of the assessed valuation growth to be 6% in 2019-2020, and carried the assumption of 3.5% growth to years two and three of the MYP (2020-2021 and 2021-2022, respectively). The Governor’s May Revise Budget was positive for education. The increase in the 2019-2020 Cost of Living Adjustment (COLA), as well as changes in the COLA for the two out years, and the decrease in the STRS employer contribution rate (a savings), increased revenue for the multi-year projection (MYP).
Expenditures
Using our Estimated Actuals budget, the estimated ending balance for 2018-2019 is anticipated to be $22,855,996, unrestricted and restricted combined. The estimated ending balance of 2018-2019 is the beginning balance for the 2019-2020 budget adoption. The Board directed staff to add the expense of a Village Program at Castro provided by the Community Health Awareness Council (CHAC) at the May 30, 2019 Budget Hearing. The contract is on tonight's contract approval and the expense will be adjusted in the First Interim Budget Report.
Summary
The presented 2019-2020 Budget Adoption reflects the District’s priorities for the upcoming years. The District will be in a deficit spending position. With restraint on future expenditures, the Multi-Year Projection indicates that the unrestricted fund balance will stay above the Board Goal of 17%. The District should continue to monitor expenditures and be aware that an economic downturn is overdue which would result in lower property tax growth, the major source of increased revenue.
Fiscal Implication:
Fund 01 General Fund 2019-2020
Unrestricted Beginning Balance: $22,855,996
Total Revenues: $75,683,551
Total Expenditures: $78,680,662
Unrestricted Ending Balance: $19,858,885
Estimated Reserve: 24.3%
Recommended Action:
That the Board of Trustees approve the 2019-2020 Budget, as presented.