1. education
2. school

BOARD OF EDUCATION
Attachment:
PALO ALTO UNIFIED SCHOOL DISTRICT
Date:
Public Hearing /
Discussion
7
06.09.15
TO:
Glenn “Max” McGee, Superintendent
FROM:
Cathy Mak, Chief Business Officer
SUBJECT:
Proposed PAUSD Budget for 2015-16;
Resolution 2014-15.14, Year End Budget Transfer Authorization;
Resolution 2014-15.15, Budget Transfer of Funds for the Fiscal Year 2015-16;
Resolution 2014-15.16, Interfund Borrowing Fiscal Year 2015-16;
STRATEGIC PLAN INITIATIVE
Budget Trends and Infrastructure
RECOMMENDATIONS
Pending discussion at this meeting, it will be recommended at the meeting of June 23, 2015, that
the Board of Education:
1. Adopt the 2015-16 budget as presented.
2. Adopt, as a separate action, the budget for Fund 21-210, the Property Fund, as presented.
(This separate approval is required by Board of Education policy.)
3. Approve the Resolution for Budget Transfer Authority for 2014-15 as presented.
4. Approve the Resolution for Budget Transfer Authority for 2015-16 as presented.
5. Approve the Resolution for Interfund Borrowing for 2015-16 as presented.
INTRODUCTION
The Education Code requires that school districts adopt a budget for 2015-16 by July 1, 2015. At
this time, key state and local budget information is still unknown. We will not have changes to the
state budget, property tax revenue, enrollment, and employee health benefit rates increases until
well past the July 1 deadline. This budget, however, is based on the best estimates that are
currently available.
SUMMARY
State Budget and Economic Outlook
The state’s economic outlook remains strong in 2015, with job growth better than anticipated and
the unemployment rate falling both at the national and state levels. With a strong economy, the
Governor’s May Revision included substantial increases to the education budget. The Governor
proposed $6.1 billion to further Local Control Funding Formula (LCFF), and $3.5 billion in
discretionary, one-time funds proposed for the implementation of Common Core State Standards
(CCSS). While PAUSD will not receive any additional ongoing revenue from the LCFF, PAUSD will
be eligible for the one-time funds. The estimate for PAUSD is $7.2 million. This revenue will be
reserved for textbook adoptions and one-time projects.
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On the local front, property tax growth continues to grow at a healthy level. In 2014-15, the latest
growth estimate is a 7.47% increase over last year. Staff is using the rate increases from the City
of Palo Alto of 5.24% for 2015-16 and 5.36% to 5.51% per year for the out years. We are
anticipating enrollment growth for 2015-16 and hence additional staffing is budgeted.
The voters have approved an annual tax of $758 per parcel per year (Measure A) for six years
from 2015-16 to 2020-21 replacing the previous 2010 tax measure. The new parcel generates an
additional $2.3 million per year.
While the budget situation for 2015-16 continues to improve by the recent positive property tax
data, the District still needs to be cautious as economy is cyclical, and we do not know when the
next downturn will hit. The significant increase of 14.3% of LCFF funding to state funded districts
may have potential challenge to labor contract negotiations next year.
Program Augmentations
Below are program augmentations included in this budget. $2,336,941 was approved by the Board
on the April 21, 2015, meeting. Since then, the voters of Palo Alto have approved a parcel tax
measure replacing the previous one. The new measure brings in additional revenue of $2,300,000.
$619,925 of the $2,336,941 program augmentations will be funded from the new tax measure. The
second table below shows the additional expenditures proposed to be funded by the new additional
revenues.
FTE
Program Augmentations - Board Approved 4/21/15
Elementary School Staffing Increase
Secondary School Staffing Increase
Middle School Administrative Support
Health Technicians *
High School Administrative Support - reclass PT Dean to FT Assistant
Principal
High School Classified Staffing
Advance Authentic Research Coordinator *
Bus Driver *
EL/Bilingual TOSA *
Student Services Secretary
Licensed Mental Helath Therapists *
High School Graduation Cost
Spectra Art Supplies
Professional Development Spectra Art
Music Instrument Repair
* Include in Parcel Tax Budget
2
4.9 $
3.0
2.8
0.75
Amount
600,000
358,864
363,156
100,332
1.0
157,905
2.0
1.0
1.0
0.5
0.5
2.0
133,253
142,862
66,920
59,811
34,902
250,000
30,000
28,000
3,936
7,000
2,336,941
(619,925)
TOTAL:
Parcel Tax
General Fund $
1,717,016
Parcel Tax Additional Expenditures - 2015 Tax Measure
FTE
Strategic Plan Initiatives
Amount
Health and Wellness
Mental Health Support Therapist *
2.0
Nurse - 8 hours for elementary (certificated)
1.0
Heath Technicians - middle school *
0.75
Psychologist or social worker
1.0
Asian American Counseling Services
Mindfulness Coach
0.5
Student Services (parent outreach, counseling, crisis intervention, interns, wellness screening)
SubTotal for Health and Wellness
B1, B3 $
B2
B2
B3
B3
B3
B1, B2, B3
250,000
127,450
100,332
136,000
50,000
63,725
173,850
901,357
Academics **
Equity Administrator
K-2 Reading Support -instructional aides
Bus Driver *
Intervention Specialist/ TOSA (K-5)
Expand Summer School
Comprehensive academic diagnostics (K-2)
EL/Bilingual TOSA *
Equity Training
Middle School Math Intervention classes
Sub Total for Academics
A2, A3 $
A2, A3
A3
A1, A2, A3
A3
A3, E2, A3
A1, A3
E2, C3, A3
B1
142,862
130,341
66,920
127,450
300,000
50,000
59,811
45,600
152,940
1,075,924
A1, E2, E3, E4 $
A1, E2, E3, E4
A1, E2, E3, E4
E4
142,862
50,980
10,000
127,450
331,292
$
2,308,573
1.0
1.0
1.0
0.5
1.2
S.T.E.A.M.
Advanced Authentic Research Coordinator *
AAR Teacher Liason (1 period at Gunn and Paly)
Research Program Supplies
Computer science curriculum - middle school
Sub Total for S.T.E.A.M.
1.0
0.4
1.0
Total New Expenditures
* approved on 4/21/15 - 2015-16 Additional Resource Allocations
** This area addresses the recommendations from the Minority Achievement and
Talent Development Advisory (MATD) committee.
Reserve Cap (pp. 21)
Starting with the 2015-16 budget adoption, school districts are required to provide a statement that
substantiates the need for the excess reserve. For PAUSD the reserve level is 3%, $6.2 million of
the total general fund expenditures. The table shows the amount over 3% and the reasons for the
excess. The district has a 10% reserve policy. Most of the other reasons are for budget reserves at
the schools and unspent funds from categorical programs and previously approved one-time
projects. New on the list is designation for a one-time cost for potential new schools. The estimated
startup costs are $1.6 million for a new elementary school and $4.5 million for a new middle school.
The remaining excess is placed in the “designation to mitigate future budget cuts.”
What does this budget include?
• Personnel
o Estimated increases for step and column movement on current salary schedules
o Current health benefit rates are used for July 1, 2015, through June 2016; any cost
increases beyond December 2015 are not included
o Additional staffing to accommodate enrollment growth based on current formulas
o Additional program augmentation of $1.7 million
o Additional Parcel Tax program expenses of $2.3 million
o Increase in CALSTRS and CALPERS employer’s contribution rates
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•
Other
o Estimated increase for utilities
o Estimated increase for non-public school and residential placement costs for
special education
o Routine Maintenance Fund based upon 3.0% of General Fund expenditures
What is not included in this budget?
• Increases to current salary schedules
• Increases in health benefit costs beyond December 2015
• Impact of final adopted 2015-16 State Budget
The revenue assumptions in this budget are based on an increase of 5.24% in property taxes
(secured, unsecured, homeowners’ exemption, and PAUSD share of county-wide roll corrections),
the state’s “hold harmless” categorical funding of $2.5 million, and a $2.3 million increase in parcel
taxes. Latest estimates are used for federal programs.
The budget adopted by the Board in June, while technically the official budget of the District, will be
modified during the 2015-16 budget year as follows:
September 2015
Budget Update
What we will know then:
Actual Property Tax Revenue for 2014-15
Ending Balance for 2014-15
State Budget for 2015-16
First County Update on 2015-16 Property Tax Collections
October 2015
Budget Study Session
November 2015
First Interim Financial Report
What we will know then:
Adjustments to PAUSD budget based on actual enrollment and staffing for
2015-16
Second County Update on 2015-16 Property Tax Collections
Revenue and expenditures from July 1, 2015 to October 31, 2015
Budget adjustments through October 31, 2015
February 2016
Second Interim Financial Report and Budget Study Session
What we will know then:
Third County Update on 2015-16 Property Tax Collections
Revenue and expenditures from July 1, 2015 to January 31, 2016
Budget adjustments through January 31, 2016
Budget allocation for 2016-17
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LOCAL REVENUE
Local revenue consists of property taxes, parcel taxes, lease income, interest income, donations,
reimbursements, and transfers from other funds.
Property tax revenue accounts for about 70% of the General Fund budget. Based on the latest
estimate received from the Santa Clara County Controller-Treasurer’s office, property tax revenue
for the current year is projected to increase 7.47% over 2013-14. For 2015-16, the County
Assessor’s office has yet to post Proposition 8 assessment adjustments or any reserve the County
needs to hold back in July for refunds. Allowing for Proposition 8 adjustments, a county-wide
reserve, and the volatility of the unsecured roll, staff is using the property growth rate from the
City of Palo Alto of 5.24% in the property tax revenue assumption for 2015-16.
The County Controller-Treasurer will provide their first estimate of the 2015-16 property tax
revenue in August. The property tax revenue assumption will be revised based on that estimate.
The parcel tax is funded at a level of $758 per parcel for the period from July 1, 2015, through
June 30, 2021, with an annual escalation adjustment of 2% per year. Total budget for 2015-16 is
$14.7 million.
Lease income from the four District owned properties leased to tenants is projected at $8.0 million
based upon current leases.
Funding from Palo Alto Partners in Education (PAPiE), $5.3 million for 2015-16, is received by
PAUSD each year for distribution to the schools for needed programs and staff.
A complete list of local revenue is displayed on page 18.
STATE REVENUE
As a Community Funded school district, PAUSD now receives only about 7.8% (excluding the
one-time discretionary Common Core funds of $7.2 million) of its General Fund revenue from the
state.
Local Control Funding Formula (LCFF) State Aid
Effective 2013-14, the State has rolled over 40 categorical programs and the traditional revenue
limit into a new distribution model called the Local Control Funding formula. For community funded
districts, the LCFF State Aid is the same amount “hold harmless” districts received back in
2012-13. For PAUSD, the amount is $2.5 million which is composed of $9.9 million of state
categorical programs less the $7.4 million State “fair share” reduction.
While the proposed 2015-16 state budget provides additional $6.1 billion for the
implementation of LCFF, there is no increase in funding to PAUSD due to this “hold
harmless” provision. The significant increase of 14.3% of LCFF funding to state funded
districts may have a potential challenge to labor contract negotiations next year.
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FEDERAL REVENUE
The 2015-16 federal funding is projected to be flat funding. It is important to note the federal
government uses a fiscal year beginning on October 1 and ending on September 30. Also, we will
not know the exact funding amounts until the fall. This is why most federal programs have a high
carryover as schools and managers plan and spend with what is certain.
EXPENDITURES
The bulk of the District’s expenditures, 82%, are in employee salaries and benefits. The remaining
18% of the budget funds are contracted services, supplies and materials, capital outlay, and other
expenses. Unified school districts are required by law to spend at least 55% of total expenditures
on classroom related expenses including teachers and teacher aides. The District maintains a
percentage well over 60%.
OUTLINE OF BUDGET DOCUMENT
This budget represents the PAUSD financial plan for the coming year, based on the financial
information available at this time. As further information is received, the budget will be revised to
reflect changes in projected income and expenditures.
The remainder of this document is divided into the following sections:
I.
Financial Status for 2014-15. There have been changes from the financial status reported
at Second Interim.
II.
Budget for 2015-16. The projections for the 2015-16 budget have changed since the
Second Interim Financial Report because of updated financial information. This section
outlines assumptions and presents the Superintendent’s recommended budget for 2015-16.
III.
Five-Year Financial Model. The five-year financial model is the focal point of prudent
budget decision making. Having a full understanding of the long-term implications of
decisions is a prerequisite to sound financial management. The model shows the
assumptions used. These assumptions will change over time, and this model will be updated
regularly.
IV.
Capital Funds. The budgets for capital funds for 2014-15 and a full five-year model for
Fund 14-140 (Deferred Maintenance), Fund 21-210 (Property Fund), Fund 21-211 (Building
Projects Fund), Fund 21-212 (Strong Schools Bond), Fund 21-216 (Planned Maintenance),
and Fund 25-250 (Capital Facilities) are included in the District budget package. As is
required by Board policy, the Board of Education is requested to adopt the budget for Fund
21-212 as a separate action.
V.
All Other Funds. Adult School, Child Development, Cafeteria, Basic Aid Reserve,
Self-Insured Dental, Workers Compensation, and Retiree Benefits are separate funds. All of
these funds are projected to be in a satisfactory financial position for 2015-16.
VI.
Certification, State Forms, and Criteria and Standards. The state forms and the related
criteria and standards are in the process of being completed. These forms will be presented
at the next meeting. This budget complies with state criteria and standards.
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VII.
Resolution for Budget Transfer Authority for 2014-15. This is a routine resolution
adopted by the school district to facilitate the activities at the close of the fiscal year.
VIII. Resolution for Budget Transfer Authority for 2015-16. This is a resolution adopted by the
school district to facilitate the payment of obligations in fiscal year 2015-16.
IX.
Resolution for Interfund Borrowing for 2015-16. A resolution required by the County
Office of Education to allow checks to be issued in funds which temporarily have negative
cash balances.
I. FINANCIAL STATUS FOR 2014-15 (pp.18-19)
The Board’s last full discussion on the status of the 2014-15 budget was at the time of the Second
Interim Financial Report. The status of the 2015-16 budget is important because it determines the
2014-15 ending fund balance (which is the 2015-16 beginning fund balance). Also, the 2014-15
budget establishes a baseline for the 2015-16 budget. This section reports on the changes that
have taken place since the Second Interim Report.
The table on pages 18-19 shows the comparison between the District’s general fund financials at
Second Interim (Column A) and the current estimated actuals (Column B). The difference between
the two columns is shown as Column C.
Fund Balance and Basic Aid Reserve Policy
There have been revenue and expenditure changes since the Second Interim Financial Report.
The unrestricted undesignated Fund Balance is estimated at $6,380,794, a decrease of $700,042
from the Second Interim. This decrease is due to transfer to the basic aid reserve policy of
$1.3 million coupled with an increase of property tax revenues of $509,856.
Revenue
1. State Aid (Decrease of $12,658). Slight decrease of Education Protection Account
revenue due to decrease of ADA at P-2 attendance reporting.
2. Property Taxes (Increase of $509,856). Property tax revenue comes from three sources:
the secured roll revenue, unsecured roll, and homeowners’ exemption. The increase is
primarily from the unsecured roll revenue. The final figures will not be known until July,
after the school year is over. When the final figures are received, the District's financials
will be adjusted accordingly.
3. Transfer of in-lieu Property Taxes (Decrease of $20,468). Amount transferred to charter
schools for Palo Alto resident students.
4. Mandated Cost (Decrease of $16,310). Reduction due to decrease in estimated ADA.
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Expenditures
5. Personnel Budgets (Decrease of $998,811). Personnel budgets show a decrease of
$998,811 which reflects budget savings, contract settlement costs, and approximately
$900,000 in budget realignments to the supplies and materials category.
6. Supplies and Materials and other Operating Expenses and Services (Increase of
$1,043,815). The increase is from budget realignments from the personnel budgets above
as well as increases in the local income budgets, offset by savings of $140,000 in the legal
services budget.
7. Transfer to Fund 17 (Increase of $1,320,326). Transfer of funds to Fund 17 to comply
with Board Policy Reserve.
II. GENERAL FUND BUDGET FOR 2015-16 (pp.18-19)
The 2014-15 estimated actuals are the baseline numbers for the 2015-16 budget. This section
reports on assumptions related to revenue and expenditures made to create the 2015-16 budget
from the estimated actuals.
The table on pages 18-19 shows the comparison between the District’s estimated actuals for
2014-15 (Column D) and the budget for 2015-15 (Column E). The difference between the two
columns is shown in Column F. The following are details on the changes and assumptions that are
the basis of the 2015-16 budget.
Revenue
Property Taxes ($144,075,513, Increase of $7,173,657). Property tax revenue comes from three
sources: the secured roll, the unsecured roll, and homeowners’ exemption/subventions (HOX). For
the 2015-16 budget, the secured taxes ($133.2 million), unsecured taxes ($10.2 million), and
homeowner’s exemptions ($756,095) have been increased by 5.24% over the 2014-15 estimated
revenue.
Parcel Tax ($14,669,244, Increase of $2.3 million). The residents of Palo Alto passed the
Measure A Parcel Tax in May 2015 for six years with an increase to $758 per parcel and with an
annual escalation of 2% per year through 2020-21.
Lease Revenue ($9,182,733, Decrease of $976,167). The District leases four of its properties to
outside organizations. The Cubberley site is leased to the City of Palo Alto, along with portable
buildings at several elementary schools for daycare for $5.5 million. The Fremont Hills site is
leased to the Pinewood School for $1.4 million and the Garland site is leased to the Stratford
School for $877,651. The District also leases the newly acquired 525 San Antonio site for $133,127
in a short term lease with the Athena Academy and receives 25% of all rental revenues generated
by the sites to cover the cost of rental. Lease revenues are projected based upon signed leases for
the four leased sites and historical trends at the site level.
8
Special Education, including Mental Health ($8,951,577, Decrease of $38,829). Special
education revenues are from these sources: County Office SELPA ($3.2 million), federal
($2.3 million), and state and local property taxes ($3.4 million). The projection for the District’s
special education revenue is provided by the local special education local plan area (SELPA).
Other State Revenue ($18,917,290, Increase of $7,885,570). Other state revenue includes State
Aid ($5.2 million), Education Protection Account ($2.4 million), lottery revenue ($2.1 million),
Proposition 39 Clean Energy ($435,966), Mandated Block Grant ($442,456), one time discretionary
funds ($7.2 million), Special Education Workability ($64,075), and Adult Education ($1.0 million).
All state revenue is based on funding letters received by the state or projected based upon rates
provided by School Services of California (SSC). The increase is primarily due to the one-time
common core discretionary funds of $7.2 million and a $463,000 increase in State aid for the
Voluntary Transfer program.
Other Federal Income ($1,040,899, Decrease of $326,847). Other federal income consists
primarily of No Child Left Behind (NCLB) revenue for professional development, low income and
English leaner students ($596,041), and a grant from the Department of Rehabilitation ($407,432).
Projections are based upon current 2014-15 awards and information from SSC regarding federal
funding. This decrease results from the carryover balances being removed.
Palo Alto Partners in Education (PAPiE) ($5,300,000, Increase of $300,000). The District has
been given a commitment of $5.3 million for the 2015-16 school year from PAPiE which is
allocated to schools for target areas reflecting school district needs and priorities deemed most
impactful by principals and parents as revealed in annual meetings, surveys, and focus groups.
The increase represents the additional generosity of the community through their tireless efforts.
Other Local Revenue ($5,015,789, Decrease of $727,389). Other local revenue is primarily funds
received at the site level, including PTA donations, athletic boosters, site rentals, and departmental
income. These revenues are budgeted based on historical levels, although the funds are not
available to spend until they are collected by the sites. The reduction is due to a decrease in ROP
revenue of $189,742. In addition, school donations are adjusted throughout the year as actual
donations are received.
Interfund Transfers in ($101,000, Increase of $9,000). Interfund transfers of $21,000 is the
transfer from the Capital Facilities Fund. $80,000 is from the Retirees Benefits Fund.
EXPENDITURES
Certificated Salaries ($97,664,373, Increase of $5,132,488). Certificated salaries include
classroom teachers, counselors, psychologists, administrators, and other certificated staff. The
salary budget increases current staffing, projected increases in staffing due enrollment growth,
projected cost of additional step/column increases, and additional staffing allocations. The increase
is due an increase of about 37 FTE positions, an extra work day on the teacher’s contract
($480,000), expanding the summer program ($300,000), and an offset by a one-time 0.5% bonus
in 2014-15.
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Classified Salaries ($32,281,808, Increase of $1,051,631). Classified salaries include classroom
aides, secretaries, custodians, bus drivers, maintenance workers, food service employees, and all
other non-certificated staff. The projected cost of additional step increases, as well as an increase
of 2 mental health therapists, 2 custodians due to increasing square footage at facilities, an
increase in hours and reclassification for middle school health technicians, an increase in
administrative staff, coupled with a decrease of special education aides. The increase is offset by a
one-time 0.5% bonus in 2014-15.
Benefit Costs ($39,513,291, Increase of $3,625,346). Benefits include statutory, retirement, and
health and welfare costs. Statutory costs include Medicare (1.45%), Social Security (6.2% for
classified employees only), unemployment insurance (0.05%), and worker’s compensation
(2.4635%, up from 2.209% in 2014-15). Retirement benefits include STRS (10.73%, up from
8.88% in 2014-15 for certificated employees) and PERS (11.847%, up from 11.771% in 2014-15
for classified employees). Health and welfare benefits are based on a contractual $13,070 per FTE
contribution from the District. The increase is in direct correlation with the increase in salaries and
primarily due to the increase in CALSTRS ($1.6 million), CALPERS ($190,706), workers
compensation rate ($547,993), and an increase of health and welfare benefits to additional staffing.
Supplies and Materials ($17,299,313, Increase of $7,425,946). Supplies and materials include
textbooks, library books, instructions materials, other classroom supplies, technology purchases
(computers, tablet devices, printers, etc), furniture, and other non-instructional materials. The
growth is due to an increase in one-time common core discretionary funds of $7.2 million reserved
for textbook adoption and one-time projects.
Other Operating Expenses and Services ($18,670,889, Decrease of $1,645,051). Other
operating expenses and services include services, rentals, leases, maintenance contracts, travel,
insurance, utilities, legal, and other operating expenditures. Utilities ($3.6 million), special
education non-public schools ($3.0 million), and mental health residential placements ($1.5 million)
are the three largest expenditures in this area.
Capital Outlay ($355,500, Decrease of $1,500). Capital outlay includes vehicle and large
technology purchases, including servers.
Interfund Charges ($116,837, Increase of $20,681). Interfund charges include all indirect charges
charged to the various funds.
Interfund Transfers Out ($1,505,700, decrease of $870,326). Interfund transfers out is the
transfer to the Adult Education Fund of $1.0 million and to the Deferred Maintenance Fund of
$450,000.
III. FIVE-YEAR FINANCIAL MODEL (p. 20)
Staff has prepared a five-year model of projected revenue and expenses, extending through the
year 2020-21.
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This model is dependent on the assumptions used and the variables available in the model. The
assumptions will change as time passes and the District continues to reassess the assumptions in
the current model. While the model provides for additional teachers and site allocation funds for
enrollment growth, it does not provide for any percentage driven increases in numbers of support
staff. It also does not provide for increases in employee salaries and contributions to employee
benefit costs.
The revenue projections are a function of individual projections of local, state, and federal revenue
sources.
Revenue Projections
Enrollment. The District is using the December 2014 enrollment projection. The moderate
projection is used for this projection.
Voluntary Transfer Program Revenue. The District receives 70% of the sending district’s LCFF
base grant amount for voluntary transfer students. COLA adjustments have been applied to this
revenue stream. The source of these COLA estimates is School Services of California (SSC).
Property Taxes. This item includes revenue from the secured roll, unsecured roll, and
homeowners’ exemptions. Absent additional information, this budget model uses a property tax
growth rate from the City of Palo Alto which ranges from 5.36% to 5.51% for 2016-17 to 2020-21.
These projections will be revisited as additional information is received.
Parcel Tax. Measure A passed in May 2015 for six years with an increase to $758 per parcel with
an annual escalation of 2% per year through 2020-21.
Special Education Revenue. The projected increases are based on COLA adjustments. The
source of these COLA estimates is School Services of California (SSC).
Lottery Income. An increase in lottery income has been projected due to enrollment growth and
estimated changes in the rate. The source of these rate estimates is School Services of California
(SSC).
Increases in Lease Income. The leases at Garland and Fremont Hills have a minimum increase
of 3% annually. The lease with the City of Palo Alto has a 3% adjustment annually. The source of
these estimates is School Services of California (SSC). The Garland lease expires on June 30,
2016, and therefore, the rental income for the Garland site has been removed for 2016-17.
Expenditure Projections
Additional Classroom Teachers for Enrollment Growth. Based on “moderate” projections of
enrollment growth at the elementary, middle, and high schools, a calculation has been made of the
number of additional teachers required.
Additional Special Education Teachers and Aides. The District needs to plan for the additional
special education teachers and aides anticipated as enrollment increases.
Certificated Step/Column and Attrition/Retirement Savings. This estimate has been revised
with updated data from Human Resources.
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Classified Step/Column and Attrition/Retirement Savings. This estimate has been revised with
updated data from Human Resources.
Health Benefit Costs. The health benefit costs are based on the rates effective January 1, 2015,
through December 31, 2015. No increase is included in the model after December 2015.
STRS Rate. The employer STRS rate continues to increase by1.65% per year until it reaches
19.1% by 2020-21. We have included this increase in the projections.
PERS Rate. There is a potential CalPERS rate increases each year. The rate projections are:
2015-16 (12.6%), 2016-17 (15%), 2017-18 (16.6%), 2018-19 (18.2%), and 2019-20 (19.9%) We
have included the increases in the projections.
Workers’ Compensation Costs. The rate for 2014-15 is estimated at 2.4635% of overall salary,
and future budget estimates will be updated when new data is available from our provider.
Routine Maintenance. The transfer to Routine Maintenance is 3% for the out years.
Increase in School Discretionary Budgets. This category has been increased to correspond to
the projected enrollment increase. It has been adjusted to reflect the District’s allocation for the
startup costs of each new elementary classroom.
Increase in Utilities Expense. It is projected the costs will increase by 5% each year.
Increase in Special Education Non-Public School Tuition and Transportation Costs. It is
projected the costs of these line items will increase by 5% each year.
Additional Maintenance Costs. The increase shown each year reflects the increase in the routine
maintenance budget as a result of an increase in the overall general fund budget.
Costs for the 13th Elementary School. This projection assumes implementation costs for the
thirteenth elementary school will begin in 2018-19. The estimated cost for the planning is about
$210,000 from the general fund. This model assumes the new school will be open in 2019-20, and
the estimated ongoing operating cost for this will be about $1.5 million. This assumption can
change pending a board decision in the fall.
Costs for the Potential 4th Middle School. This projection does not include the costs of opening
the fourth middle school. The estimated ongoing operating cost for a middle school is $4.5 million.
This assumption can change pending board decision in the fall.
Surpluses shown on line 38. Based on the revenue and enrollment assumptions listed above,
surpluses are projected in the multi-year projection. Surpluses are shown on this line as available
for program enhancements and employee compensation.
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IV. CAPITAL FUNDS (p. 22)
Capital funds are funds whose uses are restricted to capital purposes. It is useful to devote budget
attention to these funds and to think of them as a group. This is true because, as capital projects
and tasks are identified, it is often the case there are options within the group for funding and
trade-offs or combinations of funds can accomplish the purpose while remaining within the legal
requirements of the funds.
The following is a listing of Palo Alto Unified School District’s capital funds, a description of
permitted uses, a current status report, a discussion of recommended uses, and a financial model.
Fund 14-140, Deferred Maintenance Fund
This fund records the revenue and expenditures from the state deferred maintenance
apportionment and District-matching contribution. Formerly, there was a 50-50 state match on a
capped amount of local revenue deposited in the fund. This is no longer the case. The state
income has now, in accordance with state flexibility allowance, been directed to the General Fund.
The following table shows a projected five-year model for this fund.
Fund 14-140, Deferred Maintenance Fund
2015-16
2016-17
2017-18
2018-19
2019-20
$1,125,288
$680,577
$233,639
$234,691
$235,747
Transfer from Other Fund
$450,000
$450,000
$450,000
$450,000
$450,000
Interest Income @ 0.47%
$5,289
$3,063
$1,051
$1,056
$1,061
$455,289
$453,063
$451,051
$451,056
$451,061
Deferred Maintenance Projects
$900,000
$900,000
$450,000
$450,000
$450,000
Total Expense
$900,000
$900,000
$450,000
$450,000
$450,000
Ending Balance
$680,577
$233,639
$234,691
$235,747
$236,808
Beginning Balance
Income
Total Income
Expense
Fund 21-210, Property Fund
This fund records the revenue and expenditures resulting from sale of real property or
lease-with-option-to-purchase real property. The projected balance of this fund as of June 30,
2016, is $1,851,105. Expenditures in the Property Fund are restricted to capital outlay. The
following table shows a projected five-year model for this fund.
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Fund 21-210, Property Fund
2015-16
$1,809,205
2016-17
$1,851,105
2017-18
$1,893,202
2018-19
$1,935,498
2019-20
$1,977,990
Income
Childcare Portables
Interest income @ 0.47%
Total Other local Income
121,101
8,503
129,604
121,101
8,700
129,801
121,101
8,898
129,999
121,101
9,097
130,198
121,101
9,297
130,398
Expense
Equipment
Total Expense
87,704
87,704
87,704
87,704
87,704
87,704
87,704
87,705
87,704
87,704
$1,851,105
$1,893,202
$1,935,498
$1,977,990
$2,020,684
Beginning Balance
Ending Balance
Fund 21-211, Building Projects Fund
The beginning fund balance for this fund is $3,350,241, almost all of that total came from State
matching grants received in 2012-13. No commitments have been made for this funding, and no
additional budgeted expenditures have been proposed for 2015-16. The following table shows a
projected five-year model for this fund.
Fund 21-211, Building Projects Fund
2015-16
Beginning Balance
3,350,241
2016-17
3,365,987
2017-18
2018-19
2019-20
3,381,807
3,397,702
3,413,671
Income
Interest Income @ 0.47%
15,746
15,820
Total Other local Income
15,746
15,820
15,894
15,894
15,969
15,969
16,044
16,044
-
-
-
-
-
3,365,987
3,381,807
3,397,702
3,413,671
3,429,715
Expense
Capital Outlay
Total Expense
Ending Balance
Fund 21-212, Measure A Strong Schools Bond
This fund records the revenue and expenditures resulting from the $378 million bond issue
approved by the voters on June 3, 2008. These funds are available for repairs, improvements, and
renovations of and additions to school buildings and grounds including classrooms, science and
other laboratories, libraries, safety and seismic upgrades, roofs, plumbing, sewer, lighting, and
electrical and mechanical systems. Including interest income, the State Career Technical
Education grant, and the funding for bond issuing costs, the current anticipated revenue for this
program is $390,047,530 as adopted by the Board and modified with Board approved
amendments.
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Fund 21-215/6, Planned Maintenance Fund
The amount of $17,000,000 in General Obligation Bonds authorized by the voters in 1995 was
issued in July 2000 to fund planned maintenance over a period of years. As of the end of 2013-14,
the estimated balance in this fund is close to $0. The Strong Schools Bond provided for a
continuation of the planned maintenance program. In 2013-14, an additional amount of
$17,758,557 was appropriated from the Measure A Strong Schools Bond and was approved for
continuation over a period years. The projected balance of this fund as of June 30, 2016, is
$11,407,060.
Fund 21-216, Planned Maintenance Fund (Strong Schools Bond)
2015-16
Beginning Balance
13,803,247
2016-17
11,407,060
2017-18
2018-19
2018-19
9,334,945
7,249,828
5,151,552
Income
Interest Income @ 0.47%
64,875
53,613
Total Other local Income
64,875
53,613
43,874
43,874
34,074
24,212
34,074
24,212
Expense
Salary and Benefits
Planned Maintenance Work
Total Expense
Ending Balance
105,562
108,729
111,991
115,350
118,811
2,355,500
2,461,062
2,017,000
2,125,729
2,017,000
2,128,991
2,017,000
2,132,350
2,017,000
2,135,811
11,407,060
9,334,945
7,249,828
5,151,552
3,039,953
Fund 25-250, Capital Facilities Fund
This fund records the revenue and expenditures resulting from the collection of fees levied on
residential and commercial development. These fees are currently at $3.36 per square foot for
residential development and $0.54 for commercial development.
Fund 25-250, School Capital Facilities Fund
2015-16
$4,016,219
2016-17
$4,495,887
2017-18
$4,977,762
2018-19
$5,461,901
2019-20
$5,948,316
Income
Facilities Impact Fees
Interest Income @ 0.47%
Total Income
$700,000
$18,924
$718,924
$700,000
$21,131
$721,131
$700,000
$23,395
$723,395
$700,000
$25,671
$725,671
$700,000
$27,957
$727,957
Expense
Modular Classrooms (Lease)
Administrative Cost @ 3% of fees
Total Expense
$218,256
$21,000
$239,256
$218,256
$21,000
$239,256
$218,256
$21,000
$239,256
$218,256
$21,000
$239,256
$218,256
$21,000
$239,256
$4,495,887
$4,977,762
$5,461,901
$5,948,316
$6,437,017
Beginning Balance
Ending Balance
V. ALL OTHER FUNDS (p. 23)
Fund 11-110, Adult School Fund. Adult Education is primarily supported by state revenue,
student fees for classes not supported by the state, and very limited categorical funds. The
program is not projected to encroach on the General Fund.
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Fund 12-120, Child Development Fund. This program is supported by state revenue and parent
fees. Child care services are provided by Palo Alto Community Child Care (PACCC) as a
sub-contractor to the District. The program is not projected to encroach on the General Fund.
Fund 13-130, Cafeteria Fund. The District receives federal and state funds for the Cafeteria
Program and also receives revenue from food sales. There is no contribution from the General
Fund as the program is now self-sufficient.
Fund 17-170, Special Reserve Fund. With the highly volatile nature of Community Funded
districts and the constant threat from the State to redistribute property tax collections in excess of
the revenue limit entitlements, Community Funded districts must maintain a higher level of reserve.
The targeted reserve amount is equal to 10% of general fund budgeted expenditures.
The June 30, 2015, ending fund balance is projected to be $14,375,748.
Fund 20-200, Retiree Benefits Fund. The Retiree Benefits Fund has been shifted from Fund 710
to Fund 200 in compliance with GASB 54, Fund Balance Reporting and Governmental Fund Type
Definitions, as the funds are not in an irrevocable trust.
This fund was established in June 2006 to prepare for the compliance with GASB 45 and the
funding of retiree benefits. GASB 45 requires public agencies to report costs and obligations for
post-employment benefits. New employees hired after July 1, 2009, are not entitled to this benefit.
With this change, the retiree benefit liability will cease over time. The District plans to spend down
the balance in this fund over 30 years. The fund is estimated to have a balance of $2,273,464 by
June 30, 2015.
Fund 67-670, Self-Insurance, Dental Fund. The District is self-insured for its dental insurance
program. The income source is premiums paid by the District on behalf of employees, and
expenditures are for claims incurred.
VI. CERTIFICATION, STATE FORM AND CRITERIA AND STANDARDS (pp 24-25)
The state forms and the related criteria and standards are in the process of being completed.
These forms will be presented at the next meeting. This budget complies with state criteria and
standards.
VII. RESOLUTION FOR BUDGET TRANSFER AUTHORITY IN 2014-15 (p. 26)
Each year, it is necessary to transfer budgets from one account to another in order to properly
close the books for the fiscal year and to comply with the statutory requirement that no major
budget category can be overspent when bills are paid. This activity takes place in the summer and
on a short timeline. Routinely, this Board of Education, like other boards in the State, adopts a
resolution delegating the authority to the Chief Business Officer to make these transfers. The
attached resolution will continue the practice.
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VIII. RESOLUTION FOR BUDGET TRANSFER AUTHORITY IN 2015-16 (p. 27)
Staff requests the Board of Education also extend this delegation of budget transfer authority to the
Chief Business Officer in Fiscal Year 2015-16. A separate resolution for 2015-16 is attached.
IX. RESOLUTION FOR INTERFUND BORROWING (p. 28)
Beginning in 2010-11, the County Office of Education added a requirement for districts related to
interfund borrowing. In the past, if an individual fund was temporarily negative, the County Office of
Education would still issue accounts payable and payroll checks as long as the district had
sufficient money in its combined funds. Now, the County Office of Education is requiring an
Interfund Borrowing resolution in order for them to issue checks out of a temporarily negative fund.
In order to fulfill this requirement, we have presented a resolution for Interfund Borrowing for review
and approval.
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