Thursday, September 4, 2014

Dixie School Budget Memo reveals BIG BUDGET Problems in 2012

Editor's Note: The problem has gotten considerably worse since this 2012 memo.  New school funding formula signed into law by Governor Brown has directed resources away from the Dixie School District. The Board of Supervisors and the San Rafael City Council has concentrated nearly 1500 government subsidized housing units in our district. They will pay little or no taxes and add hundreds if not thousands of students into Dixie schools WITHOUT A TAX BASE to support them.  We are witnessing a fundamental transformation of our neighborhoods from a suburb with adequate funding to severely underfunded government services.   This is a cost that will be borne entirely upon our backs.  So much for "fair" housing.


Business Services Administration

Regular Meeting

December 11, 2012

TO: Thomas J. Lohwasser, Superintendent

SUBJECT: Approval of FY 2012-2013 First Interim Financial Report

Over the last several years the state has experienced a severe recession and economic downturn which has affected school districts throughout the state. School districts have seen cuts upwards of
22% of what the state owes to them. Dixie School District has also been impacted by the state
budget crisis with state funding cuts and with the Basic Aid Fair Share. Since 2009-10 we have
been cut over $3.2 million in state funding, with expected future cuts of $1.1 annually.
Revenues have been stagnant and for 2011-12 were below the level of funding we received in 2007-08. Within the same period of time expenditures have increased over $300,000. We received one-time funding from AARA and Federal Jobs Bill revenues and additional revenues from the passage of Measure A in 2011. These additional resources, along with use of the general fund reserve, one-time solutions and spending cuts have helped us weather the storm and maintain most of the outstanding programs that the district offers.

Over the last two years we have closed our books spending more money than we brought in. This
deficit spending has decreased our general fund reserve by more than $600,000. Our reserve level is at its lowest in last several years and with its highest level of deficit spending projected.

Since the district adopted our budget in late June we have received several additional hits which has
put us at a critical juncture with our finances:

Enrollment Increase: After years of relatively stable enrollment, this year we had the largest growth
in enrollment since 1991/92 with an additional 85 students enrolled. As a Basic Aid district we do
not receive additional revenue for these students. The additional students have impacted us in
several ways, including the need for additional teaching staff; additional instructional aid time;
supplies and furniture; classroom space; increase in free & reduced lunches, and special education

Additional expenditures: We have also incurred substantial and unexpected increases in special
education costs which increased over $143,000 this year, some related directly to the increase in
enrollment. Other increases include various personnel costs which increased over $140,000.

Property Taxes: The biggest hit recently occurred when our local property tax revenues estimates
came in over $253,000 less than projected. This is unprecedented and we have asked the County
Assessor for an analysis of our tax role to see what changed. As a Basic Aid district, property taxes
make up the bulk of our general fund revenues.

All the items listed above have negatively impacted our budget. As a result this interim report and
multi-year projections indicate that in order to meet the requirements of AB1200, the district will
need to make $362,000 in reductions starting in 2013-14. This report only identifies the level of
Dixie School District reductions. The specific areas of reduction will be identified at 2nd Interim.

The Governor’s January Budget Proposal is scheduled for release on January 10, 2013. Hopefully,
the overall news from the state will be favorable to school districts. We are also expecting the
proposal to include a new Weighted Student Formula. We are also waiting for more clarification on
the possibility of additional funding for Basic Aid districts from Prop 30.

1st Interim Report 2012-13 Fiscal Year:
Attached is the First Interim Report for the current fiscal year. Districts are required by Education
Code Section 42130 to submit an interim report, which covers their financial and budgetary status as
of October 31, 2012 to the Governing Board of the District. This report includes the following
 District Certification of Interim Report – states whether or not the District is able to meet its
financial obligations and must be signed by the Governing Board President. Our financial statements indicate we will have a positive certification.

 Revenues, Expenditures and Changes in Fund Balance – this is a summary of the General Fund Budget, including reports for unrestricted, restricted and combined General Fund. This form compares the Original Adopted Budget, the Board Approved Operating Budget and the Projected Year Budget along with detailing the current expenditures as of October 31, 2012.

Similar forms for each district fund are also included.

 Please note that the SACS software combines Fund 40 and Fund 41 totals. SACS Form 40

shows a total combined ending balance of $793,680.69.

 The ending balance for Fund 41 is $193,679.82 and the ending balance for Fund 40 is

$600,000.87. For Fund 40, the $50,000 additional transfer to general fund which was

previously earmarked for Basic Aid Fair Share is already taken out of this balance. With

the additional transfer the estimated Fund 40 reserve level is below the recommended

level of $650,000.

 Average Daily Attendance (ADA) Report – shows a comparison of our estimated ADA from

Budget Adoption to current estimates. The estimated Revenue Limit ADA increased by 47.41

from Budget Adoption estimates. Budget adoption was based on enrollment projections and we

have now updated the ADA estimate based on current enrollment numbers

 Cash Flow Worksheet – reflects actual cash transactions through the month of November and

estimates for the remaining months of the fiscal year. The Cash Flow worksheet indicates that

the District will maintain a positive cash balance at the end of the fiscal year.

 Multiyear Projections – This form shows the unrestricted and restricted resources followed by

a summary report for current year and the subsequent two fiscal years. Similar forms for each

district fund are also included. This report indicates that the district will meet the requirements

Dixie School District 3

Approval of FY 2011-2012 First Interim Financial Report

December 11, 2012

of AB1200 in year three only by reducing expenditures by $362,000 starting in 2013/14. This

reduction is noted in the “Other Adjustments” section of MYP –Form 01

 Key budget assumptions include:

 Estimated 1.75% and 2.0% annual increase in property taxes for 2013-14 & 2014-15

 On-going Basic Aid Fair Share reductions of state revenues based on 9.57% in current

year and 8.92% reduction in 2013-14 and 2014-15. This is estimated to be a reduction in

state revenues of approximately $1,119,112, $1,118,297 and $1,114,109 respectively.

 Continued state revenue limit deficit reduction factor of 22.272% s in both years out.

 Included an estimated $100,000 for District of Choice state revenues in 2013-14 and


 This will be a new categorical for 2013-14.

 District has board approved resolution and is currently finalizing the process for

2013-14 implementation.

 Mandate Block Grant: $48,813 in 2013-14 and 2014-15

 K-3 Class Size Reduction and State Lottery budgeted flat for 2013-14 and 2014-15

 Step & Column increases for all contracted employees in 2013-14 and 2014-15

 2.0 Certificated FTE moved from unrestricted budgets to Parcel Tax

 This was short term strategy to free up unrestricted dollars to help mitigate the level

of necessary reductions.

 This will be reversed when unrestricted resources become available.

 CPI Index applied to current year adopted budget for 4000 and 5000 object code

categories with one time 2012-13 Special Education expenses excluded in 2013-14

 The district has identified the need to reduce expenditures of $362,000 starting in 2013-

14. This is listed on the “”Other Adjustments” section of the MYP Form 01

 This report only identifies the level of necessary cuts. Specific areas of reductions

will be provided at 2nd Interim

 A full list of the assumptions used for the General Fund projections is attached

 Revenue Limit Summary – compares the Revenue Limit calculation for the Original Budget

(Adopted) to the Board Approved Operating and Projected Year Budget. The District continues

to remain in Basic Aid status mainly due to the state deficit reduction factor.

 Criteria and Standards Summary Review – verifies the financial condition of the District by

Dixie School District 4

Approval of FY 2011-2012 First Interim Financial Report

December 11, 2012

analyzing areas of the budget and comparing them to historical and standard criteria.

Explanations must be provided for areas that are a deviation from the standards.

The Second Interim Financial Report will be prepared showing our financial condition as of January

31, 2013, and will be presented to the Board in March.

The First Interim Financial Report is provided as a separate document and approval is


Prepared by: Approved for Submission to the Governing Board


______________________ _______

Robert A. Marical Thomas J. Lohwasser, Ed.D.

Business Manager Superintendent

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