LAUSD BUDGET UPDATE AS OF 2/18/09

Subject to change based on updates from the State

from the office of superintendent Ramón C. Cortines

OVERVIEW

1. Based on current projections from the State, our projected district shortfall is between $600 and $700 million and the prospects do not look any brighter for future years. We also do not know if we will have class size or categorical flexibility, so we must prepare for the worst case scenario.

2. My philosophy for moving forward will be the same as the 2000 Plan adopted by the Board

a) Central offices are to be right-sized and to focus on core operations, monitoring and oversight

b) The local districts are to provide support and service to schools

c) The schools are the heart of our District and are where teaching and learning takes place

3. Federal Stimulus money will provide some temporary relief, since the money is for one time expenses (spread over two years). Flexibility and use of this money still has not been determined.

a) Although the stimulus money has yet to be finalized, I will recommend that the majority of any unrestricted resources to be set aside to protect the schools.

CENTRAL – RIGHT-SIZED

We will be streamlining the central office to ensure the majority of our resources are at the school site.

1. I have recommended a 30% reduction in most central offices. We are in the process of reviewing the budgets and discussing how to implement our decentralized governance model.

2. Further, I am considering a recommendation to reduce the work year for most non-school based employees. Besides providing substantial savings, it will emphasize that our highest priority is support of the local school.

3. We are also reviewing outside contractors with the goal of substantially reducing costs and administered accounts.

LOCAL DISTRICT OFFICES SUPPORT AND SERVICE TO SCHOOLS

Via the decentralization of the central office, the local district offices will be responsible for working with their schools to ensure each school receives the service and support they need.

1. However, I am recommending that local district offices be cut up to 50%. I will expect my leaders in the local districts to work smarter to target services to the schools that need the most support.

2. While we have benefited from many ancillary programs that support our student population, we must now cut some of these programs to focus our limited resources on our core instructional program.

LOCAL SCHOOLS – WHERE TEACHING AND LEARNING TAKES PLACE

My approach is to build a school district from the classroom out, so that we can minimize the impact on teachers. The percentage of cuts will be the lowest at the school level, but given the cumulative size of our school budgets, the dollar amount will be large.

1. Since we don't have all of the necessary budget information from the State, we must be conservative by noticing a potentially larger number of certificated employees on March 15^th

a. All certificated administrators will be notified

b. Since central and local district certificated employees have rights to the classroom, we will need to notify some permanent teachers.

c. To ease the impact on our novice teachers, we have implemented an aggressive early retirement incentive program (ERIP)

NEXT STEPS

February 26^th: 2009-10 Budget Development process with recommendation for March 15^th letters

March –June: Hold public reviews of the budget to ensure we all agree on our priorities

Council of Great City Schools – Update on Stimulus Package 2/17/09

Disclaimer – details have not been finalized on how and when the funds will be allocated to LAUSD, especially the State Fiscal Stabilization funds

Overview of Federal Stimulus Package - Jeff Simmering

Five major types of aid to be expended over a 2 yr period (potential for flexibility to spread over 3 yrs)

1. Non Categorical Aid – State Fiscal Stabilization: $40B for education (broadly defined)
   1. Proportionally allocated based on split b/w K-12 and higher education state reductions
   2. Distribution of funds will vary state by state, but can be used to backfill state cuts
   3. Distributed on per capita basis
   4. Use of funds are based on ESEA, IDEA, Perkins, School modernization or repair
2. Categorical IDEA: $12.2 B ($11.3B traditional part B, $400M early Childhood, $500M infant and toddler)
   1. 50% of funds can be used to offset Spec Ed use of General Funds
3. Categorical Title I: $13B ($10B Regular, $3B School Improvement)
   1. Allocated by targeted and equity formulas
   2. 95% will be passed through to LEAs
   3. 1% used for State Administration
   4. 4% school improvement activities
4. Secretary Bonus or Incentive: states that have made good progress will be awarded $5B ($2.5 allocated on basis of Title I)
   1. Progress defined as states that are increasing equitable distribution of teachers, improved data systems, and improved assessments
5. School Construction Bonds - $22B tax subsidizes or bonding authority
   1. After you sell your bonds the interest that you pay will be given a tax credit
   2. Can be used as new construction and land acquisition

Council of Great City Schools estimate of stimulus for LAUSD (over two years)

- Title I: $398M

- IDEA: $168M

- Ed-Tech: $9.7M

- State Stabilization has not been determined

Key Takeaways for LAUSD

1. We will need to be flexible in our projections until we receive the final allocations from the State

2. We need to be conservative with our projected use of our funds, because we do not know the magnitude of the cuts that from the State

3. Stimulus funds are one time funds, so we can not rely on using them to cover ongoing expenses

4. Depending on the cuts from the State, we will use the majority of the funds to help schools offset some of their reductions