Governor s Proposals for the Albany Unified School District Board Meeting

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Governor’s Proposals for the

2021–22

Albany Unified School District

Board Meeting

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Budget Process

•State Level:

• Legislative Budget

Subcommittee Meetings

• Governor’s May Revise

Budget Proposal

• Adoption of budget

by the State

•District Level:

• Review enrollment and

staffing ratios

• Review and discuss staffing

and programs

• Review and discuss

LCAP Plan and budget

• Adoption of budget

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2021–22 Governor’s Budget

• Across the proposed 2021–22 Budget, Governor Gavin Newsom targets state resources to

help the state and its residents recover from the health and economic crisis of COVID-19

• Investments to protect small business

• Jobs creation package

• Equitable access to housing, healthcare, and education for Californians

• While we have all been consumed by the pandemic, the state is still recovering from the

historic fires of the summer

• Rebuilding the state’s financial reserves and fiscal footing is a priority

• With revenue growth surpassing the original revenue expectations forecasted in the

early stages of the pandemic, Governor Newsom’s Budget proposal forecasts a significant restoration of funding

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Overview of the State Budget and the State Economy

• National Unemployment

• Long-term unemployment (27+ weeks) rose to 3.9 million or 37.1%

• Labor force participation is down to 61.5%, masking the true unemployment numbers

• December unemployment declined by 140,000

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Surplus and Shortfalls—California Budget

$22.0 $6.0 $15.0 ($7.5) _($8.5) ($11.0) ($20) ($15) ($10) ($5) $0 $5 $10 $15 $20 $25 2019–20 2020–21 2021–22 2022–23 2023–24 2024–25 Dollars in B ill ions

Budget Projects Surplus and Future Shortfalls1

1_{Budget shortfalls or surplus, measured by the annual Governor’s Budget}

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Proposition 98

$49.2 $51.7 $49.7 $47.3 $58.1 $59.0 $67.1 $69.1 $71.6 $75.6 $78.5 $79.5 $82.8 $85.8 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 $75.0 $80.0 $85.0 $90.0 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 2021–22 (in bill ions)

Proposition 98 Funding Over Time 2008–09 to Governor’s 2021–22 Estimate

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COLA—What a Difference a Year Makes

• The pandemic did not have the draconian financial impacts projected in June 2020,

but local educational agencies (LEAs) still have not been made whole

• The zero cost-of-living adjustment (COLA) in 2020–21 is likely a one-time loss for the Local Control Funding Formula (LCFF) and an ongoing loss for other categorical programs

Comparison of Statutory and Funded COLA 2020–21 and 2021–22

2020–21 2021–22 Applied to

Statutory COLA 2.31% 1.50% • 3.84% applied to LCFF

• 1.50% applied to special education and other

categorical programs (e.g., Mandate Block Grant)

Funded COLA 0.00 3.84%

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2021–22 LCFF Funding Factors

• The Governor’s Budget proposes a 3.84% compounded COLA for 2021–22,

which is applied to the LCFF base grants for each grade span

• Two grade span adjustments (GSAs) are applied as percentage increases to the base grants

• Grades K–3 receive a 10.4% increase for smaller average class sizes

• Grades 9–12 receive a 2.6% increase in recognition of the costs of career technical education coursework

Grade Span

2020–21 Base Grant per ADA

3.84%

Compounded COLA

2021–22 Base

Grant per ADA GSA

2021–22 Adjusted Base Grant per ADA

K–3 $7,702 $296 $7,998 $832 $8,830

4–6 $7,818 $300 $8,118 - $8,118

7–8 $8,050 $309 $8,359 - $8,359

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Multi Year Financial Projection

LCFF PLANNING FACTORS

Factor 2020–21 2021–22 2022–23 2023–24 2024-25

DOF Estimated Statutory COLA 2.31% 1.50% 2.98% 3.05% N/A

DOF Estimated Funded COLA 0.00% 3.84%* 2.98% 3.05% N/A

SSC Estimated Statutory COLA 0.00% 3.84%* 1.28% 1.61% 1.90%

*Calculated by compounding the unfunded COLA of 2.31% from 2020–21 and the estimated statutory COLA of 1.50% in 2021–22

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One-Time Funding: Proposed

• Safe Schools Incentive (Reopening for in-person learning) grant –

eligible to receive grant of $450 per ADA

• Expanded Instructional time grant – the Governor proposing additional funding

to make up lost instructional time for:

• summer school

• extended school year, or

• other approaches to mitigate learning loss.

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Other Programs

• Special Education – estimated statutory COLA of 1.5%, unfortunately,

not proposing to make up for the 0% COLA in the current year

• Cash Deferrals – The deferral of the payment of state apportionments this year will not be repaid

early, but will not be repeated next year, except for the June 2022 deferral to July 2022.

Therefore, districts will receive only about 64% of the state aid apportionment during this year.

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CalPERS/CalSTRS Employer Contribution Rates

• The Governor does not include any new funding towards the

California Public Employers’ Retirement System (CalPERS) for LEAs

• However, previous investments reduce the employer contribution rate for CalPERS from 24.9% to 23.00% in 2021–22

• Similar to CalPERS, the Governor does not include any new funding towards the

California State Teachers’ Retirement System (CalSTRS) for LEAs

• However, previous investments reduce the employer contribution rate for CalSTRS from 18.1% to 15.92%

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Statewide Average Reserve Levels

• The latest statewide data available on school district reserves is from 2018−19:

• Local school agencies were prepared coming into this recession

• Almost all school types were at the percentage of reserves recommended by the Government Finance Officers Association of 17%—or two months—of expenditures.

2018–19 Average Unrestricted General Fund, Plus Fund 17;

Net Ending Balances1

Unified School Districts 17.26%

Elementary School Districts 20.47%

High School Districts 15.64%

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Local Agency Reserves

• Reserves provide local school agency governance teams with the ability to be more strategic

in reducing expenditures when faced with a financial crisis

• Reserves protect students, employees, and the public

• Current state financial projections show a deficit beginning in 2022–23, and the Public School

System Stabilization Account balance will not last long

• Districts with higher reserves are better equipped to protect the community

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ADA Impacts

District have been “Held Harmless” for ADA drops during COVID-19, but this will end.

The end of the extended Hold Harmless will result in a precipitous drop in funding in FY 2022-23.

(With extended hold harmless) 2018-19 2019-20 2020-21 2021-22 2022-23

Actual ADA 3,552 3,484 3,385 3,484 3,385 3,385

Funded ADA 3,552 3,552 3,484 3,484 3,385

(Before COVID-19) 2018-19 2019-20 2020-21 2021-22 2022-23

Actual ADA 3,552 3,484 3,385 3,385 3,385

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What Cost of Living Adjustment (COLA) does Albany need?

FY 21-22 FY 22-23 FY 23-24 FY 24-25

Step and Column (1.8%) $ 583,725 $ 610,538 $ 622,621 $ 630,819

H&W Benefit Increase 334,000 236,000 246,000 256,000

STRS (31,571) 449,949 -

-PERS 137,412 200,707 61,915 31,515

Other-CPI 81,752 101,332 120,465 126,976

Total Increase in Expenditures $ 1,105,318 $ 1,598,526 $ 1,051,001 $ 1,045,310

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Next Steps

• Second Interim Budget Update for 2020-21 (March) • Audit Report for 2019-20 (March)

• May Revision (May)

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