Since the Mt. Diablo school district never publicly noticed the meeting held Monday to discuss the possible impacts of a Clayton Valley High charter conversion, it’s unclear whether any minutes were taken or will be made public.
I videotaped portions of the meeting and am posting links to the clips below. Unfortunately, the meeting was held in a large multiuse room, so the sound quality on the video is not very good.
Also, the district has not posted the Powerpoint presentation on its website and it is not clearly visible in the video. So, I’ll post excerpts of it in my blog.
CFO Bryan Richards presented the Powerpoint entitled: “The budget, the multi-year projection, and the potential charter at Clayton Valley High”
The first portion of the Powerpoint (which I was unable to videotape) says:
“The state budget….
– Erased the 2.24 percent COLA (Cost of Living Adjustment) with increase in deficit factor
– Did not cut the additional $330 per ADA (Average Daily Attendance) that was believed to be at risk at May revise (and which the district budgeted in its “State Fiscal Uncertainty” reserve)
– Instead, created trigger cuts if state revenues come in below projections, cutting funding mid-year
— Revenue limit up to 4 percent
— Home-to-school and special education transportation approximately 50 percent
– If triggers activated, districts may negotiate up to seven additional furlough days that reduce the school calendar up to a total of 12 days” (from 180 to 168).
Next, Richards presented the district’s assumptions when the board adopted its budget, compared to the unaudited actuals. I have combined the information below, showing the estimates followed by the actuals.
Ending 10-11 fund balance: $33 million; Actual: $45.5 million
Undesignated balance: $23.2 million; Actual: $30.8 million
Projected 2011-12 deficit: ($2.2 million); Actual: same
State fiscal uncertainty ($330/ADA): ($10.7 million) (Reserve)
Unassigned balance 6/12: $10.3 million; Actual $17.9 million
Projected surplus 2012-13: $7.1 million; Actual: $7.1 million
Reduction of 2 percent reserve: ($0.5 million); (Actual same)
State fiscal uncertainty 2012-13: ($10.7 million); Actual same
Estimated unassigned 6/13: $7.2 million; Actual $14.8 million
Projected surplus 2013-14: $8.7 million; Actual $8.7 million
State fiscal uncertainty 2013-14: ($10.6 million); (Actual same)
Unassigned 6/14 balance: $5.3 million; Actual $12.9 million
Richards then explained why the actual ending balance was higher than anticipated with this slide:
“Artificial Ending Balance Inflation
– Full utilization of State Fiscal Stabilization Fund and Education Jobs Fund in 2010-11
– Tier 3 grants remain unrestricted
– Their unspent balances and site carryovers make up large part of ending balance.”
I started videotaping as he went into more detail about this: http://qik.com/video/46001371
Here are the slides he reviewed, with my notes in brackets:
“Fund balance is up $12.5 million. Why is undesignated only up $7.6 million?
– Tier 3 Program Carryovers: $3,178,903
– Site Carryovers: $1,786,820
– Inventory and Prepaid Adjustments: ($27,678)
– [Total] Fund Balance Designation Changes: $4,938,045
– Undesignated is up by $7.6 million due to one-time Special Disability Adjustment plus $2 million Mandated Cost Reimbursement plus $1.4 million, CSR plus $0.5 million, State Fiscal Statibilization Funds used for salaries plus $1.6 million and cost savings efforts”
“The 2011/12 Budget Year Revenue Limit and the Deficit
– Higher deficit factor in 2011-12 (increased from 17.964 percent to 19.754 percent to offset COLA)
– Base Revenue Limit = $6,489.01/ADA
– Deficited Revenue Limit = $5,207.18/ADA
– Deficit also applies to Meals for Needy and Beginning Teacher Salary Adjustment
– Total deficit factor for 2011-12 = $42,055,325
– Equivalent to eliminating 35.6 days’ instruction”
“The Mid-Year Cut Trigger
– State budget calls for graduated mid-year cuts if state revenues miss estimates. If it misses by $4 billion the following occurs:
– Reduction of Revenue Limit (including MFN and BTS) by an additional 4 percent = $261.73 per ADA or $8,515,797
– It will also reduce transportation funding by 50 percent = $1,129,707 or $34.72 per ADA
Total [worst case] trigger cuts $296.45 per ADA or $9,645,504”
“Other MDUSD Budget Adjustments
– Furlough Days: Budgeted at seven days, yet to be negotiated with MDEA [Mt. Diablo Education Association teachers’ union] ($6 million)
– $6 million x 3 years = $18 million
– This is greater than the remaining unassigned balance in the three-year term of the projection” [through 6/14 — however, that projection includes the worst-case trigger, which is $2.1 million more than the LAO projection]
Richards said that each furlough day would save the district more than $858,000.
“How does the future look?
New dartboard: Loss of 2012-13 COLA:
– ($5.4 million) Lose 3.2 percent COLA for 12-13
– ($5.4 million) Loss of 12-13 COLA in 13-14
County Guidance: Loss of 13-14 COLA:
– ($4.7 million) Loss of 13-14 COLA
Clayton Valley Charter High School
– Loss of $11.4 million in revenue (less oversight $0.1 million, facilities use $0.2 million)
– School expenses $7 million if they leave SELPA” [Special Education Legal Plan Area]
Richards then outlined how all these estimated changes could affect the district’s three-year budget projections, projecting “worst-case” estimates (including no teacher furlough days and maximum trigger cuts).
In the slide below, I have noted in brackets possible lower estimates if teachers take furloughs and the district uses LAO trigger projections.
“How do changes affect the budget?
– Actual UGF (Unrestricted General Fund) ending balance: $45.5 million
– Actual undesignated balance 6/11: $30.8 million
– Projected deficit 2011-12: ($8.2 million) [$2.2 million if teachers take seven furlough days]
– Reduction of 2 percent reserve: $0.4 million
– Trigger cuts 11-12: ($9.6 million) [$7.5 million according to LAO]
– Estimated unassigned 6/12: $13.4 million [$21.5 million if teachers take seven furlough days and calculations use LAO trigger]
– Projected deficit 2012-13: ($10.1 million)[Previously estimated a projected surplus of $7.1 million, so this is a difference of -$17.1 million, based partially on $6 million for seven furlough days, $5.4 million for projected loss of COLA and $4.2 million for the maximum CVHS conversion loss]
– Reduction of 2 percent reserve: $0.2 million [previously estimated $0.5 million, so this is $0.3 million less based on a projected lower overall budget]
– Trigger cuts 12-13: $9.9 million [Unclear how this was calculated; Could be about $2 million less based on LAO’s 10-11 projection of $7.5 million instead of $9.6 million]
– Estimated unassigned 6/13: ($6.4 million) [Previously estimated $14.8 million, so this is a difference of -$21.2 million, based partially on higher estimated costs due to possible lack of furlough days, loss of COLA and CVHS conversion; could be $1.4 million if teachers take seven furlough days and LAO trigger estimate is used]
– Projected deficit 13-14: ($12.6 million)[Originally projected surplus of $8.7 million, so this is a change of -$21.3 million, based partially on $6 million if teachers don’t take seven furlough days, $10.1 million for a two-year loss of COLA and an estimated $4.2 million maximum CVHS conversion loss; could be -$6.6 million or more if teachers take seven furlough days]
– Trigger cuts 13-14: ($10 million) [Unclear how this was estimated; Could be at least $2 million less based on LAO’s 10-11 projected trigger cut of $7.5 million]
-Estimated unassigned 6/14: ($29 million)” [Previously estimated $12.9 million surplus, so this is a difference of -$41.9 million if teachers take no furlough days, there is no COLA, the district loses maximum estimate for CVHS conversion and uses higher trigger cut estimates than LAO; could be -$4.7 million or higher if teachers take seven furlough days each of three years and district uses LAO trigger projections]
Richards explained that the $29 million is a worst-case scenario, based on no furlough days, loss of COLA and the maximum charter conversion estimate of $4.2 million, according to the slide below [However, he did not mention that he was using a trigger cut estimate that was $2.1 million more than the LAO’s]:
“How from $12.9 million surplus to a $29 million deficit?
– 2011-12 furlough days: $6 million
– 2012-13 furlough days: $6 million
– 2012-13 COLA loss: $5.4 million
– 2012-13 CVHS loss: $4.2 million
[TOTAL 12-13 -$15.6 million]
– 2013-14 Furlough days: $6 million
– 2013-14 COLA loss (2 years): $10.1 million
– 2013-14 CVHS loss: $4.2 million”
[TOTAL 13-13 -$20.3 million]
Richards broke down CVHS expenses as follows:
“How much spent at CVHS?
In 2010-11 the district spent $6.7 million unrestricted and $2.2 million restricted general fund dollars at CVHS
The site generated $9 million in unrestricted revenue limit funding
The site’s unrestricted budget is currently $7 million
The revenue the district must transfer to the charter school under the conversion scenario is $11.4 million
The district can negotiate rent and receives a 1 percent oversight fee calculated on certain revenues of the school”
Richards talked about how the state is falling short of revenue projections, then reviewed the latest LAO trigger projections as follows:
“Mid Year Cut Trigger LAO Update
LAO projects state revenues miss estimates by $3.7 billion. Under their projection the following occurs:
– Reduction of Revenue Limit by additional 2.9 percent +- $189 per ADA or $6,151,289 (less than the prorated percentage due to hitting Proposition 98 floor)
– It will also reduce transportation funding by 51.693 percent = $1,167,958 or $35.89 per ADA
– Transportation may be exchanged for revenue limit cut at statewide average of $42 per ADA or $1,366,953
– Total trigger cuts $231 per ADA or $7,518,242 [which is $99 per ADA or $2.1 million less than the district’s estimate of $9.6 million]
– The trigger cuts become ongoing”
Richards then explained how districts spread some costs to all schools in the district, as follows:
“Cost data vs. revenue data
– Why don’t costs track with revenue generated by site?
– Declining enrollment – funded on higher of current or prior year ADA districtwide (not by site)
– Expenditure data based on current year annual ADA
– General education programs support more costly programs such as
— Special Education
— Community Day School
— Continuing Education
— Home and Hospital”
Richards ended with School Accountability Report Card information, as follows:
– SARC collects data on expenditures, both unrestricted and restricted by site
– Not all unrestricted dollars are revenue limit, but most are
– Separate handout, you can see how much revenue limit was generated by each site versus expenditures [spreadsheet]
– Non site-based expenditures are apportioned out based on annual ADA
– Remaining funds contribute toward categorical programs such as special education and transportation”
Here’s a breakdown of high school revenues, costs and “contribution toward encroaching programs” from 2010-11, including direct and indirect central services expenditures per student, according to the SARC data. (Note: ADA calculation for revenues is slightly different from ADA for expenditures because they are taken from two different years.)
CLAYTON VALLEY: Total budget: $13,749,565.25 ($7,839.78/ADA)
Total unrestricted revenues generated: $9,053,648.90 ($5,261.50/ADA)
Total deducted for contributions to other programs: $900,896.52 or $523.55/ADA (about 10 percent)
Unrestricted school budget: $8,152,757.39 ($4,648.57/ADA)
Direct unrestricted costs: $6,703,622.65 ($3,822.30/ADA)
Unrestricted central services: $1,449,129.74 ($826.27/ADA)
Contribution to other programs: $900,896.52 or $523.55/ADA
Total unrestricted central services/other programs: $2,350,026.26 (approx. $1,349.82/ADA)
Total Restricted: $5,596,812.86 ($3,191.21/ADA)
Direct restricted costs: $2,199,586.91 ($1,254.17/ADA)
Restricted central services: $3,397,225.95 ($1,937.04/ADA)
Total direct costs: $8,903,209.56 ($5,076.36/ADA or 65 percent of school budget)
Central services costs: $4,846,355.69 ($2,763.32/ADA or 35 percent of school budget; not including contribution to other programs)
COLLEGE PARK: Total budget: $13,888,043.58 ($7,549.24/ADA)
Total unrestricted revenues generated: $9,764,639.60 ($5,261.50/ADA)
Total deducted for contributions to other programs: $1,442,341.58 or $777.18/ADA
(nearly 15 percent)
Unrestricted school budget: $8,322,336.02 ($4,523.84/ADA)
Direct unrestricted costs: $6,802,279.22 ($3,697.57/ADA)
Unrestricted central services: $1,520,056.80 ($826.27/ADA)
Contributions to other programs: $1,442,341.58 ($777.18/ADA)
Total unrestricted central services/other programs: $2,962,398.38(approx. $1,603.45/ADA)
Total Restricted: $5,565,707.56 ($3,025.40/ADA)
Direct restricted: $2,002,205.78 ($1,088.36/ADA)
Restricted central services: $3,563,501.88 ($1,937.04/ADA)
Total direct costs: $8,804,484.90($4,785.93/ADA or 64 percent of school budget)
Total central services costs: $5,083,558.68($2,763.32/ADA or 36 percent of school budget)
CONCORD: Total budget: $12,133,551.14 ($8,400.82/ADA)
Total unrestricted revenues generated: $7,402,848.17($5,261.51/ADA)
Total deducted for contributions to other programs: $1,132,773.06 or $805.10/ADA(about 15 percent)
Unrestricted school budget: $6,270,075.11 ($4,341.17/ADA)
Direct unrestricted: $5,076,667.83 ($3,514.89/ADA)
Unrestricted central services: $1,193,407.38 ($826.27/ADA)
Contributions to other programs: $1,132,773.06 or $805.10/ADA
Total unrestricted central services/other programs: $2,326,180.34(approx. $1,631.37/ADA)
Total Restricted: $5,863,476.03 ($4,059.65/ADA)
Direct restricted: $3,065,745.73 ($2,122.60/ADA)
Restricted central services: $2,797,730.30 ($1,937.05/ADA)
Direct school costs: $8,142,413.56($5,637.50/ADA or 67 percent of school budget)
Total central services costs: $3,991,137.68($2,763.32/ADA or 33 percent of school budget)
MT. DIABLO: Total budget: $14,098,055.42 ($10,252.39/ADA)
Total unrestricted revenues generated: $7,222,799.08($5,261.51/ADA)
Total deducted for contributions to other programs: $535,889.19 or $390.37/ADA(about 7 percent)
Unrestricted school budget: $6,686,909.89 ($4,862.85/ADA)
Direct unrestricted: $5,550,705.32($4,036.58/ADA)
Unrestricted central services: $1,136,204.50($826.27/ADA)
Contributions to other programs: $535,889.19 or $390.37/ADA
Total unrestricted central services/other programs: $1,672,093.69(approx. $1,216.64/ADA)
Total Restricted: $7,411,145.53($5,389.53/ADA)
Direct restricted: $4,747,516.76($3,452.48/ADA)
Restricted central services: $2,663,361.88 ($1,936.85/ADA)
Direct school costs: $10,298,222($7,489.07/ADA or 73 percent of school budget)
Central services school costs: $3,799,566.38($2,763.12/ADA or 27 percent of school budget)
NORTHGATE: Total budget: $11,436,253.68 ($8,043.11/ADA)
Total unrestricted revenues generated: $7,374,278.14($5,261.51/ADA)
Total deducted for contributions to other programs: $402,005.87 or $286.82/ADA(about 5 percent)
Unrestricted school budget: $6,972,272.27($4,903.59/ADA)
Direct unrestricted: $5,797,423.03($4,077.32/ADA)
Unrestricted central services: $1,174,849.25($826.27/ADA)
Contributions to other programs: $402,005.87 or $286.82/ADA
Total unrestricted central services/other programs: $1,576,855(approx. $1,113.09/ADA)
Total Restricted: $4,463,981.40($3,139.51/ADA)
Direct restricted: $1,709,757.10($1,202.47/ADA)
Restricted central services: $2,754,224.30($1,937.04/ADA)
Direct school costs: $7,507,180.13($5,279.79/ADA or 66 percent of school budget)
Central services school costs: $3,929,073.55($2,763.12/ADA or 34 percent of school budget)
YGNACIO VALLEY: Total budget: $10,221,560.38 ($8,661.39/ADA)
Total unrestricted revenues generated: $6,141,083.95($5,261.51/ADA)
Total deducted for contributions to other programs: $234,628.75 or $201.02/ADA(about 4 percent)
Unrestricted school budget: $5,906,455.20($5,004.92/ADA)
Direct unrestricted: $4,931,348.59($4,178.64/ADA)
Unrestricted central services: $975,106.70($826.27/ADA)
Contributions to other programs: $234,628.75 or $201.02/ADA
Total unrestricted central services/other programs: $1,209,735.54(approx. $1,027.29/ADA)
Total Restricted: $4,315,105.18($3,656,47/ADA)
Direct restricted: $2,029,141.82($1,719.42/ADA)
Restricted central services: $2,285,963.35($1,937.04/ADA)
Direct school costs: $6,960,490.31($5,898.07/ADA or 68 percent of school budget)
Central services school costs: $3,261,070($2,763.12/ADA or 32 percent of school budget)
The above calculations show that the district is consistent in charging $826.27/ADA for high school unrestricted central services costs and about $1,937.04/ADA in restricted central services costs, for a total of about $2,763.12/ADA going toward central services costs.
However, there is great inconsistency between high schools related to the amount that the district skims off the top of the unrestricted revenues generated by students at each school for other programs, from a low of $201.02/ADA or 4 percent from Ygnacio Valley to a high of $805.10/ADA or about 15 percent from Concord High.
Since these figures are not spelled out in the spreadsheet (I had to calculate them myself), they were not apparent when Richards referenced the SARC numbers during his presentation.
Richards, Lawrence and Debi Deal from FCMAT answered several questions from the audience. When Clayton Mayor David Shuey asked about the district’s latest estimate for the financial impact of a Clayton Valley charter, Richards said it would depend on many variables, including special education: http://qik.com/video/46018247.
Richards said he estimated the charter would cost about $4.4 million in lost revenues and lost contributions to central services and other programs. But, the district could receive about $100,000 as an oversight fee and about $200,000 for facilities use, according to his PowerPoint.
This would bring the total cost down to $4.1 million [which is $0.1 million less than the $4.2 million estimate Richards used in all of his projections].
He said the range would likely be between $2 and $4.4 million.
“At this point,” he said, “we don’t have enough data.”
Lawrence said the $1.8 million calculation was based on the $941 per student difference in revenue, plus the additional $127/ADA in block grant money the district must transfer to the charter. He and Lawrence said the special education number could vary by about $1.5 million.
Lawrence said that after the end of the first year, the district would know the actual impact. He said the $900,000 in “encroachment” costs that CVHS now contributes to other programs would have to be spread out to other schools.
Deal said a more indepth FCMAT review would take six to eight weeks and cost about $12,000-$15,000.
“The difference is that we start with the district’s numbers and agree those are correct,” Deal said, referring to the letter FCMAT provided to the district.
She said FCMAT verified the district’s assumptions and agreed the impact could be more than $1.8 million, based on the intense special education programs at CVHS. This is partially because CVHS students were generating more revenue than the district was spending to operate the campus and the additional money (about $900,000) was helping to pay for other programs districtwide.
Richards said the district currently spends $7 million to operate the school. He said the charter organizers are still negotiating the facilities fee with the district.
CVHS teacher Neil McChesney pointed out that the facilities fee could range between $520,000-$840,000 not including utilities. [This is $320,000-$640,000 more than the $200,000 the district estimated in its $4.2 million calculation and could reduce the total impact to about $3.5-$3.8 million].
Deal said it would be “mixing apples and oranges” to compare average salaries [yet, this is what Lawrence has done to justify lower expenditures at CVHS and some other high schools than at some elementary schools]. She said it is costing the district less to educate CVHS students than the district receives in CVHS student revenues from the state.
Lawrence said teachers are allocated the same way to all schools, but costs vary because of the difference in salaries. Currently, he said, elementary teachers have higher average salaries than high school teachers.
The district used to have ratios of administrative and support staff on campuses based on ADA, but it has moved away from that due to budget cuts, Lawrence said. So now, staffing is similar at all high schools, even though ADA varies from a low of 1,375.1 at Mt. Diablo High to a high of 1,839.66 at College Park High.
A CVHS parent said the district’s allocation of about $826 per ADA for unrestricted central services is twice as high as what the Los Angeles Unified District spends for those services.
Deal clarified that FCMAT looked at the unrestricted costs and revenues in making its calculations. She said restricted dollars are generated by the campus through a variety of sources, based primarily on the number of students who receive free and reduced lunches.
The district receives $5,207 per student from the state, no matter their grade level, Deal said. Charter high schools receive $6,148 per student, she said.
Lawrence said he would recommend waiting until after the governor releases his January budget, before making cuts. If the governor restores the COLA, the district would have $10.8 million more than it now projects in its three-year budget.
He recommended establishing a committee of principals and parents — similar to a group that met a few times last year — to come up with budget cut and revenue-generating ideas. Last year, he said the group suggested a parcel tax and a shared sales tax with cities.
Lawrence said the district would submit its second interim budget report to the county in March. If it is qualified or negative (meaning the district might not be able to pay all of its bills through June, 2014), the district would have to submit a third interim budget report in May.
He also pointed out that the district has the lowest ratio of administrators to 100 teachers in the county, at 4.52 per 100 teachers. The next highest is Pittsburg, with 5.18 per 100 teachers, he said. Legally, districts can have as many as eight administrators per 100 teachers, including site administrators, he said.
McChesney asked how much per student the district spends on Dent Center central services. Lawrence said he didn’t have that number at his fingertips.
However, the spreadsheet shows the district incurred about $12.1 million in unrestricted costs at the Dent Center in 2010-11, or $371.92/ADA. So, of the $826.27/ADA in unrestricted central services costs at the six comprehensive high schools, about 45 percent pays for Dent Center services and 65 percent goes toward other programs. This doesn’t include the “contribution toward encroaching programs” that the district does not include in the school budgets.
Richards said central services costs also include floating P.E., music and special education teachers, as well as those at Sunrise, Shadelands and the Shearer preschool at Gregory Gardens Elementary. He said many other districts code these positions to school sites, so their “central services” costs appear to be lower.
Costs for substitute teachers are also spread across the district, instead of coded to individual schools. If the district added these costs to the CVHS budget instead of lumping them into central services, the school’s budget would be larger and the estimated financial impact would be reduced.
Lawrence said “Sacramento wrote a bad law,” when it required unified school districts to pay high school rates to charters that convert.
“It’s a shame that in many ways,” he said, “Sacramento has created a system that is pitting program against program.”
Lawrence said he has asked State Superintendent of Public Instruction Tom Torlakson and Assemblywoman Susan Bonilla if they would try to change the funding formula.
If the financial impact is $2.4 million, that would be about $74 per student, he said. If the district didn’t have to worry about this, he said it could concentrate on the beneficial aspects of the charter.
“We have to go back and work with Sacramento and relook at these laws and change these laws,” he said. “Ms. Bonilla wasn’t aware of this. Tom Torlakson wasn’t aware of this.”
Lawrence estimated the district would need to cut about $20 million from its budget, based on Richards’ financial projections.
He said the district is saving $7-$8 million a year from Measure C, including more than $5 million a year in solar savings, in addition to paying of Certificates of Participation and covering deferred maintenance.
Shuey said the FCMAT analysis was not an independent review. Lawrence invited the charter committee to share in paying for a more thorough analysis of the fiscal impact of the charter.
He estimated the financial impact would be $2-$4.4 million, depending on special education costs and the facilities rental agreement.
“When we put our numbers out to the community,” he said, “we wanted to be as conservative as possible.”
Are you satisfied with the FCMAT review and the district’s budget estimates?