To: Members of the Board of Trustees - From: Linda Wagner, Superintendent - Date: June 20, 2005
Re: 2005-2006 Budget
Background As you know, the District has faced an historic trend of declining enrollment. As we prepare the 2005-2006 budget, we must adjust our spending accordingly. We have worked extensively with our representative from LACOE, and have calculated enrollment projections using two different methods recommended by LACOE. In both scenarios, we note a significant decline. Our 20052006 budget shows a decline of 31 students, which translates to $158,000 less in our general fund.
The 2% shift of State Teacher's Retirement System (STRS) from the State to the District has impacted our budget negatively, demonstrated by a $114,000 additional hit to the general fund.
One of the major difficulties our District faces is the fact that we lease all of the buildings on the Vasquez High Site. Our method to correct this issue is applauded; that is to pursue hardship funding in an attempt to construct a permanent high school and send the leased buildings back to the leasing agencies. The difficulty in the short term, however, is that we cannot count on developer fee funds to pay lease or debt payments. This causes a $225,000 shift of lease payments for VHS buildings and a $ 364,950 shift of C.O.P. payments from the developer fee account, where these were allocated in last year's budget, to the general fund. Additional lease payments of $73,000 are also directly impacting the general fund. That having been said, we continue to be encouraged to pursue hardship funding as a potential long term fix for the largest issue that faces the District: the lack of a permanent high school.
All of the above mentioned expenditures, when combined together, weigh heavily on the general fund. They cause a shift of $861,950 in expenses, resulting in a -$599,612 by the end of the fiscal year 2005-2006. In the following two outlying years, we anticipate the same scenario unless measures are taken to correct the shortfall. Impact:
Based on the above mentioned issues, the District faces an immediate risk of a disapproved budget. It is my understanding that we would therefore have several options: 1) To voluntarily enter into a dual budget cycle, sending in a second revised budget by September 8, 2005. 2) Send in one budget. If the budget is disapproved, as we anticipate it would be, LACOE would require that we send in a second budget by September 8, 2005.
Recommendations
The District took significant measures to surplus a school site; however we have not leased this site. The $165,000 anticipated annual revenue we had hoped to recoup from this site has not been realized. The ten portable buildings sitting on the Acton School campus are not being used, and are costing $40,000 per year to lease (10 @ $4,000 each per year). It is recommended that the Board complete consolidation and lease the Acton site. Any buildings the Board opts not to send to High Desert and Meadowlark should be returned to the State, to end the additional costs of these leases.
In order to combat a $599,612 shortfall, we will need to consider each expenditure, and determine areas in which additional cuts can be made. This review should include consideration of sports and sports transportation, stipends for extracurricular activities, and conferences. These areas are only a start; the cost cutting will need to be extensive. The county will be requesting a list of cuts we intend to make, in priority order. Once the budgetary outlook improves, we can add these items back to the budget as needed.