SAN DIEGO UNIFIED SCHOOL DISTRICT Update on Governors

SAN DIEGO UNIFIED SCHOOL DISTRICT Update on Governor’s 2016 -17 Budget Proposal and Superintendent’s Recommendations Board of Education January 26, 2016

Agenda § Governor’s 2016 -17 Budget Proposal Summary § 2016 -17 Potential Impact to the District Budget § Superintendent’s Instructional Priorities and Recommendations § Timeline 2

GOVERNOR’S 2016 -17 BUDGET PROPOSAL SUMMARY 3

Themes for the 2016 -17 Governor’s Budget § Continues to stabilize funding and programs in all areas § Completes repayment of the education Maintenance § § § 4 § Factor in 2015 -16, and increases funding for the non-Proposition 98 side of the state budget Economic growth is much stronger than in past years, but highlights the risk of recession Serious legislative and advocacy issues highlighted The Local Control and Accountability Plan (LCAP) continues to be a focus It is time to think about the potential for a slowdown

The Governor’s Investment in Education 5 Source: 2016 -17 Governor’s Budget Summary

K-14 Education Budget Proposal § Budget proposes cumulative increased investment of $5. 4 billion in K-14 education in both one-time and ongoing revenues § $71. 6 billion for K-14 in 2016 -17 § Increase of $24. 3 billion in five years § Calls for fiscal discipline and restraint to improve Rainy Day Fund address state’s long-term liabilities 6

Governor’s 2016 -17 Budget Proposal § Major Ongoing Expenditures § Local Control Funding Formula - $2. 8 billion (LCFF 95% funded) § COLA for remaining categorical programs - $22. 9 million § Major One-Time Expenditures § Early Education Block Grant - $1. 6 billion § Prop. 98 Discretionary Grants/Mandates - $1. 2 billion § Prop. 39 Energy Efficiency Grants - $365. 4 million § Career Technical Education (CTE) Incentive Grants - $300 million 7

Early Education Block Grant § Consolidates $1. 6 billion of existing funding for early education to better target services to low-income and at-risk children and their families § § § California State Preschool Program ($880 million) Transitional Kindergarten ($725 million) Preschool Quality Rating and Improvement System ($50 million) § Objectives: § § § 8 § Expand financial flexibility and streamline administrative processes Distribute any new funding based on local demographics and financial need Provide discretion to implement pre-kindergarten education programs that align funding with local priorities Integrate and align accountability within district’s current LCAP

Maintaining Fiscal Balance is an Ongoing Challenge 9 Source: 2016 -17 Governor’s Budget Summary

State Budget Timeline and Process § February to early May § Budget subcommittee hearings to review Governor’s proposed budget § By May 14 § Governor releases revised budget proposal (“May Revision”) § Mid-May to early June § State Assembly and Senate review the May Revision, legislative conference committee meets to resolve differences § By June 15 § Legislature must pass a balanced budget, and Governor signs budget package and may issue vetoes 10

2016 -17 POTENTIAL IMPACT TO THE DISTRICT BUDGET 11

Impact to the District Budget § Governor’s Budget Proposal has a net financial increase to the District of $30. 35 million* § LCFF gap funding percentage increased from 35. 55% to 49. 08% § Cost of living adjustment (COLA) decreased from 1. 60% to. 47% Revenue § One-time discretionary funding(in of millions) $214 estimated ADALCFF $8. 45 12 One-Time 21. 90 Total Change $30. 35 *Note: 1 st Interim projected a $47 million deficit in 2016

2016 -17 Local Control Funding Formula (LCFF) Funding Factors K-3 4 -6 7 -8 9 -12 2015 -16 Base Grant per ADA $7, 083 $7, 189 $7, 403 $8, 578 +. 47% COLA $33 $34 $35 $40 2016 -17 Base Grant per ADA $7, 116 $7, 223 $7, 438 $8, 618 $740 - - $224 $7, 856 $7, 223 $7, 438 $8, 842 12. 67% Supplemental Grant (20% x 63. 36%) $996 $915 $943 $1, 120 4. 18% Concentration Grant (50% x 8. 36%) $328 $302 $311 $370 $9, 180 $8, 440 $8, 692 $10, 332 + Grade Span Adjustment 2016 -17 Adjusted Grants Total Projected / ADA at Full Implementation 13

SSC Financial Projection Assumptions Factor 2015 -16 2017 -18 2018 -19 2019 -20 Statutory COLA 1. 02% 0. 47%* 2. 13% 2. 65% 2. 72% COLA on state and local share only of Special Education, Child Nutrition, Foster Youth, Preschool, American Indian Education Centers/American Indian Early Childhood Education 1. 02% 0. 47% 2. 13% 2. 65% 2. 72% California Consumer Price Index 1. 90% 2. 22% 2. 52% 2. 62% 2. 52% Base $140 $140 Proposition 20 $41 $41 $41 2. 21% 2. 40% 2. 75% 2. 80% 2. 70% Cal. PERS Employee Rate (projected) 11. 847% 13. 05% 16. 60% 18. 20% 19. 90% Cal. STRS (Employee Rate (statutory) 10. 73% 12. 58% 14. 43% 16. 28% 18. 13% California Lottery Interest Rate for Ten-Year Treasuries 14 2016 -17 *Note: First Interim projected a COLA of 1. 60% Source: SSC Conference for Governor’s Proposed Budget. January 14, 2016

LCFF Multi-Year Projection Target and Gap Implementation Target at Fiscal YR 2013 -14 2014 -15 2015 -16 2016 -17* 2017 -18 2018 -19 2019 -20 2020 -21 15 ADA Full Implementation 106, 08 1, 028, 678, 35 8 4 104, 64 1, 028, 607, 95 1 5 5 102, 51 1, 018, 825, 07 2 0 1 100, 65 1, 006, 124, 78 9 2 4 99, 12 1, 011, 160, 64 7 5 5 97, 64 1, 021, 154, 82 0 4 3 96, 17 1, 032, 317, 19 6 5 1 96, 17 1, 032, 317, 19 6 5 9 Gap Funding Annual LCFF Floor in Allocation Remaining Gap 736, 936, 86 35, 013, 92 (771, 950, 78 256, 727, 5 3 6 9) 65 763, 804, 73 79, 865, 07 (843, 669, 81 184, 938, 1 9 4) 41 830, 056, 63 98, 102, 95 (928, 159, 58 90, 665, 4 8 9) 81 914, 547, 85 44, 945, 95 (959, 493, 81 46, 630, 9 6 0) 72 947, 551, 18 28, 840, 52 (976, 391, 71 34, 768, 9 9 4) 31 964, 367, 56 3, 492, 41 (967, 859, 97 53, 294, 8 7 9) 45 955, 964, 29 26, 120, 32 (982, 084, 61 50, 232, 5 8 9) 76 982, 084, 61 50, 232, 57 (1, 032, 317, 19 6 5) - *First Interim projection: GAP Funding at 35. 55% GAP % 12. 00% 30. 16% 51. 97% 49. 08% 45. 34% 6. 15% 34. 21%

SUPERINTENDENT’S INSTRUCTIONAL PRIORITIES AND RECOMMENDATIONS 16

Three-Year Budget Plan Priorities § 1. Close structural deficit while honoring employee contracts and focusing on student achievement * § School Stabilization Fund will cover structural deficit until State revenues increase § 2. Build financial reserves § Allows District to avoid instability in future economic downturns § 3. Strategically analyze critically needed positions and programs § Will be based on alignment of goals in providing a broad and challenging curriculum in quality schools in every neighborhood § 4. Enhance programs and salaries § Broad and challenging curriculum will be enhanced and salaries will make San Diego Unified competitive with other school districts *This is a major focus of the Three§ 17 Achieved through the sale of $150 million in property

Local Control and Accountability (LCAP) Planning § 2015 -16 Monthly Board Reports: § Stakeholder Groups: § § § § 18 § Superintendent’s Goals Closing the Achievement Gap with High Expectations for All Access to Broad and Challenging Curriculum Positive School Environment, Climate and Culture Parent and Community Engagement Highly Regarded Neighborhood Schools Quality Leadership, Teaching and Learning Well-Orchestrated Districtwide Support Services and § § § AAAE ASB Bargaining Units Clusters DAC DELAC Gate DAC LCAP Planning Team PTA SPED CAC

2016 -17 Superintendent’s Priorities 19

Budget and LCAP Planning Timelines Step 20 Task Date 1 LCFF Cluster Workshops and Input Communication to Principals in December to Begin Engaging Staff and Community in Setting LCFF and Budget Priorities July 2015 - July 2016 2 Send Out Tentative Allocations to Schools Continue LCFF/LCAP Staff and Community Priority Process January 29, 2016 3 Schools Submit Staff and Community LCFF Budget Priorities February 22, 2016 4 Five District Forums to Engage Staff, Parents, and Community visioning process contributes to Setting Priorities and informing Three-Year LCAP Plan February – March 2016 5 Review Budget and School Priorities and Plans Feedback and Input on LCAP March – June 2016 6 LCAP and Budget Approval Engage Stakeholders in Implementation June 2016