Budget

What are the effects in dollars of budget reductions?

The State has reduced the K-12 Education Budget $14.2 billion dollars since the 2007-08 school year. For Sulphur Springs this translates into a loss of approximately $4.8 million. Due to the improving economy, the budget for FY11-12 will be funded at current-year levels. Revenue limits provide about two-thirds of school districts' revenues and they are the largest source of unrestricted funds. For the 2011-12 year, no change is proposed in total revenue limit funding.

65% of the District's revenue is generated from the District's Revenue Limit

Most of the District's General Fund revenue is generated from the District's Revenue Limit, which yields funds based on a state-determined dollar amount multiplied by the average number of students who are in attendance throughout the school year. Public education—unlike any other public agency—receives most of its revenue based on the population it serves.

The State Budget reflects an unfunded 2.24% statutory Cost-of-living-adjustment (COLA) for 2011-12, but provides no funding for the COLA in either 2009-10 (4.25%) or in 2010-11 (.39%). In addition the State Budget results in deficits of 19.754% and 20.041% for districts and county offices of education (COEs), respectively, for 2011-12.

The second biggest source of revenue is state categorical income, which must be spent for selected state determined programs. The largest categorical program is Special Education services. The State Budget does not fund the COLA of 2.24% for the budget year.

Federal income is a small portion of the entire District income picture, but its importance grows as new federal commitments are added. Again, most of the federal income is restricted because it must be expended for purposes that are determined by the grantor—not the local Board of Education.

It takes people to teach students and 87% of the District's total expenditures is committed to the employees of the District.

General Fund Expenditures
(In Millions)

Certificated Non-Management Salaries	$18.5
Classified Non-Management Salaries	6.6
Management & Supervisor Salaries	2.5
Employee Benefits	9.5
Books & Supplies	1.2
Operating	4.0
Capital/Other	0.4
Total Expenditures	42.6
Ending Balance	4.4
Total General Fund	$47.0

Reflects information as of June 2011

Most of the expenditures of the District are committed to salaries and benefits for employees of the District. It takes people to teach students, and in SULPHUR SPRINGS UNION SCHOOL DISTRICT, 87% of the District's budgeted expenditures are for the services of District employees.

Employee salaries are divided into three separate line items—certificated, management, and classified employees. Certificated employees include teachers, nurses, psychologists, and others who provide services that require credentials from the state of California. Management employees include principals, assistant  principals, instructional leaders, classified management personnel, and district superintendents.

Classified employees include all of the support personnel in the District, including secretaries, accountants, library technicians, bus drivers, mechanics, maintenance and custodial personnel.

The health and welfare benefits of the District represent an additional 26% of payroll for expenses in areas such as medical, dental and vision care insurance plans, retirement, and workers' compensation expenses.

A significant portion of California school district income is restricted income and, as such, can only be expended for selected purposes as determined by the granting agency—usually higher levels of government. The balance of the district income is called unrestricted since it can be expended as determined by the local agency for general educational priorities. On average, in 2011-12, California school districts will receive about two-thirds of their income as unrestricted.

The biggest restricted programs in California are Special Education, K-3 Class-Size Reduction, and Home-to-School Transportation. Local agencies are obligated, for each of these programs, to expend the income for selected program purposes, and, in some cases, for very micro-managed expenditures as determined by California or federal law. The State Budget applies no reduction in funding for Home-to-School Transportation and does not fund the COLA of 2.24%.

For Special Education, SULPHUR SPRINGS UNION SCHOOL DISTRICT expends $9,121,262 to meet program obligations and state and federal law. State and federal Special Education income is significantly less than the obligations of the program. Therefore, the District must use unrestricted or general-purpose income to address the full obligations of Special Education. The difference between the restricted income and the expenditures in Special Education is described as "encroachment," indicating that the expenditures "encroach" on general purpose revenues.

Home-to-School Transportation is another program encroaching on the District's general purpose revenues in the amount of $342,482, or about 41.64% of the entire District transportation expense.

This chart illustrates the significant loss of revenue limit income per ADA in our adopted budget since the 2007-08 fiscal year. In the 2008-09 and 2009-10 fiscal years the revenue limit per ADA was revised at least twice each year by the State and LACOE after budgets were adopted. FY09-10 a one-time per ADA reduction was imposed in the amount of $252.83 per ADA.

During the months of May and June each year, the District finalizes its budget for the coming year. In order to project the budget, a series of assumptions about the conditions of the District must be determined. These assumptions are then inserted into state and District formulas in order to determine the final budget for the next year.

The accuracy of the District's budget projection for the next year is only as good as the assumptions that are used in developing the budget. If the assumptions are wrong, so too will be the budget. As a consequence, the assumptions—at least the primary ones—have to be carefully considered in evaluating the accuracy of next year's income and expense. Often, the assumptions for budget development are revised several times during a fiscal year.

Since it is impossible to accurately predict all of the assumptions that are needed in budget development, SULPHUR SPRINGS UNION SCHOOL DISTRICT updates its budget—and the assumptions—three times after the original budget is adopted. The assumptions are updated with a revision that occurs within 45 days after the adoption of the State Budget and with two interim reports that are delivered to the Board of Education in January and March of each fiscal year.

The most significant characteristic for determining District income is the calculation of the average number of students who are in school and in attendance on a daily basis. This average daily attendance, or ADA, is multiplied by the District's revenue limit per ADA to determine the total Revenue Limit income for the District. SULPHUR SPRINGS UNION SCHOOL DISTRICT has projected that the ADA for 2011-12 will be 5,444, which is multiplied by the District's Revenue Limit of $6,228.56 to generate the District's total Revenue Limit income in the new fiscal year.

Since ADA is such an important part of the District's income base, the projection of ADA for this next fiscal year is an important part of projecting the District's income. Even small fluctuations in the District's ADA can mean a gain or loss of tens of thousands of dollars in income. District attendance records are monitored monthly and ADA is updated throughout the year to ensure that the projected revenue limit income matches the District's budgeted or revised projections.

Public schools are the only agencies that receive income based on the population they serve. Cities or counties, as an example, do not have either increases or decreases in their revenue based on the number of citizens in their community.
Public schools, however, receive most of their income based on attendance, and if, a student misses even one day in SULPHUR SPRINGS UNION SCHOOL DISTRICT, the District loses approximately $46. The state does not pay the District for enrollment—just attendance—so all of the costs of setting up the instructional program will be a loss unless the student attends every day.