2024-25
GOVERNOR’S PROPOSED BUDGET AND CLOVIS UNIFIED’S PRELIMINARY BUDGET

February 7 2024
GOVERNING BOARD,PRESENTATION

PROPOSED STATE BUDGET ANDLOCAL AGENCY IMPACTS

The StateBudgetand TheEconomy

• Headline inflation is down year over year and is expected to decline further through the budget year

• Leading economists anticipate a reduction to interest rates later in 2024

• The national and stateeconomies are in a slow growth pattern

• The Governor projects a $37.9billion budget deficit for 2024-25

• Budget-balancing measures include drawing down $13.1billion in reserves and $5.7 billion from the Public School System Stabilization Account (PSSSA), along with borrowing, funding reductions in non-Proposition 98 areas, funding delays,deferrals to payroll and University of California/California State University, and taxrevenue proposals

• A recession is no longer forecasted in 2024or 2025by most economists, but there are notable risks to the State Budget

3

U.S. Economic Outlook and
UCLA Anderson December Forecast

Inflationispredictedtocontinueits decline UCLAAnderson(Forecast)anticipates headlineinflationtofallto 2.7%

Slow economicgrowth TheForecastprojectedthree quartersof1.0% growth in2024, increasingto2.5% by2025 Aslowgrowtheconomyis especiallyvulnerabletorisk

A recessionisno longerforecasted forthenearfuture

Interestratecutsare projectedasearlyas 2024
TheForecastpredictsthe federalfundsratewill be 4.8% by2025

U.S. employmentandincome arepredictedtoremain strong
TheForecastprojects stableU.S. unemployment ratesthrough2025

Thenationaleconomyisdefyinghistorical recessionindicators
Invertedyieldcurve Annualinflationfallingfrom above5.0%
tobelow3.0%

4

Dow Jones	NASDAQ	S&P 500
5,000

36,000

S&P500
DJIAandNASDAQ
31,000	4,000 26,000

21,000	3,000 16,000
11,000	2,000 6,000
1,000		1,000 2019                         2020                         2021                         2022                         2023

Source: Federal Reserve Economic Data

•

The Stock Market     • •

•

Wall Street outperformedearlyexpectationsfor2023;all three major indexesshowed double-digit gainsfor the year

Interest ratesremainelevated, yet the market responded to easinginflationand the possibilityof 2024rate cuts

At closingon January 12, the DowJones wasat 37,593, the NASDAQwas at 14,972, and the S&P500 was at 4,783

At closingon February5th, the DowJones was at 38,380, the NASDAQwas at 15,597, and the S&P500 was at 4,943

5

(Inmillions)
Proposition98—Governor’sBudgetvs. LAO’s Outlook
$109,080
Chart Title

$29,778

$68,552

$29,742

$68,564

$31,543

$70,492

$30,953

$74,633

$32,867

$75,295

$32,185

$76,895

$100,000
$110,000	$98,330	$98,306	$102,035 $105,586	$108,162	▪There is a $4.5 billion difference in the minimum
$80,000
$90,000	 guarantee between the LAO’s Outlook and the Governor’s Budget for the current and
$70,000	budget year

$60,000

$50,000

• 2023-24: $3.6 billion

• 2024-25: $0.9 billion

$40,000

$30,000

$20,000

LAO's	2024-25 Outlook Governor's
Budget

2022-23

General Fund

LAO's	2024-25 Outlook Governor's
Budget

2023-24

Local propertytax

LAO's	2024-25 Outlook Governor's
Budget

2024-25

▪Again, the driver is a $15.3 billion difference in
state General Fund revenue assumptions

• The LAO assumes modestly higher local property taxes

6

What’sNotinthe EducationBudget?

Proposition98 Cuts

Despite the significant drop in theminimum guarantee from 2021-22 to 2022-23, the Governor’s Budget proposes no cuts in overall Proposition98 funding

Deferrals

Dueto theGovernor’sBudget revenueassumptionsand the Administration’streatment of theProposition 98minimum guarantee,thereis no need for thestateto defer paymentsto LEAs

Sweeps

Unlike last year,theGovernor’s Budgetdoes not include any proposals to sweep unallocated fundsfromprograms, such as the Community Schools Partnership Program, so LEAs planning for those fundscan breathea sigh of relief . ..for now

7

LCFF Overview

The Governor’s Budget once again relies onone-time funding to meet the ongoing obligation to the LocalControlFunding Formula (LCFF)

Of the proposed $5.7 billion PSSSAwithdrawals acrossthecurrent andbudget year, $5.0 billion is proposed to be allocated forthe purposesof supportingthe LCFF

2023-24Enacted Budget	2024-25Governor's Budget

$1.6 billion

2023-24

$2.8 billion

2023-24

$2.2 billion

2024-25

LCFF Equity Multiplier—Distribution of Funds

Additional fundsare allocated to LEAs,but eligibility is determined by schoolsites

•	Highschoolsservingatleast 85% ofstudentswhoare eligibleforfederalfreemeal program

•	Elementaryandmiddle schoolsservingat least 90% ofstudentswhoare eligibleforfederalfree

CUSD QualifyingSchools

•	Gateway -$480,960

mealprogram

•	CCDSElementary-$50,000

•	CCDSSecondary-$219,960

©2023 School Services of California Inc.	9

Historical Statutory COLAs

The statutory COLA for 2024-25feels anomalous relative to the last two years, but when looking back, COLA is beginning to normalize to historical trends—COLAs above 6% are the anomalies

10.00% 	COLA (Prop13-cannotcalculate)8.60% 8.50% 7.00% $11.90perADA(~0.60%)	

8.00%
8.22%
8.00%

6.02%
6.19%
5.92%
6.56%
6.00%

5.49%
4.10%
4.64%
4.76%
4.69%
3.95%
3.87%
4.23%
4.53%
5.66%
4.25%
1.57%
4.00%

2.54%
2.74%
1.92%
3.23%
2.73%
3.21%
2.65%
1.41%
3.17%
2.00%
1.86%
2.41%
2.24%
3.24%
0.85%
1.02%
0.00%
1.56%
2.71%
3.26%
2.31%
1.70%
0.76%
2.00%

0.00%

1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11-0.39%
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
-2.00%

10

2024-25 COLA Scenarios
based on % change in California Implicit Price Deflator

	2022	2022	2022	2023
Q2	Q3	Q4	Q1	Average

	125.482	126.005	126.858	126.855	126.300

	2023	2023	2023	2024
Q2	Q3	Q4	Q1	Average

					
	125.936	127.707
			127.207

Scenario
						COLA
	
Flat
	125.936	127.707	127.979	127.979	127.400
	0.871%

1%PerQ
	125.936	127.707	127.979	129.259	127.720
	1.124%

1.5%PerQ
	125.936	127.707	127.979	129.899	127.880
	1.251%

11

StateCategoricalPrograms Receiving COLA

The Governor’s Budget includes $65 million to fund the 0.76% COLA for the Equity Multiplier and the following programs:

ChildNutrition

$112K

MandateBlockGrant

$14.5K

ChildDevelopment

$-0-

SpecialEducation $271.6K

12

			4
	0,404
					
			4
	0,404

			40,1
	76
					
			40,1
	76

			40,077
						
				40,455

		39,462
						
					41,14
	5

			4
	0,353
					
						41,548

						41,560

						41,560
		
						41,560

Attendance Actual vs Funded

Pre-Pandemic:

• A District was funded on current year or prior-year ADA which ever was greater

During Pandemic:

• Districts were held harmless and funded on 2019-20ADA

• During 2021-22Districts were allowed to use the 2019-20attendance rate

Post Pandemic:

• Districts are funded on current year ADA, prior year ADA, or prior three-year average ADA (by grade span) whichever is greater

2025-26

2024-25

2023-24

2022-23

2021-22

2020-21

2019-20

38,000	38,500	39,000	39,500	40,000	40,500	41,000	41,500	42,000

Actual	Funded

13

CUSD Cumulative Attendance Rate Trends

14

1st Interim with 94% Attendance Rate

Description
	2023-24 1stInterim
	
2024-25
	
2025-26
	
2026-27
	
2027-28
	
2028-29

NetRevenue/Expenditure(Operating)
	
(8,296,487)
	
(6,998,329)
	
(1,629,245)
	
5,719,907
	
13,400,927
	
14,268,904
	
GeneralReservePercentage* (Less10%forBP3100stabililization)
	
17.18%
	
17.38%
	
16.75%
	
17.32%
	
18.91%
	
20.70%

FundedADA
	
(672)
	
(280)
	
229
	
38
	
195
	
75

MethodUsed
	
3-YEARAVG
	
CYADA
	
CYADA
	
CYADA
	
CYADA
	
CYADA

COLA
	
8.22%
	
3.94%
	
3.29%
	
3.19%
	
3.16%
	
1.50%

Governor’s COLA with 94.5% Attendance Rate

Description
	2023-24 1stInterim
	
2024-25
	
2025-26
	
2026-27
	
2027-28
	
2028-29

NetRevenue/Expenditure(Operating)
	
(8,296,487)
	
(19,076,914)
	
(16,744,603)
	
(10,271,510)
	
(3,126,355)
	
(2,536,341)
		
GeneralReservePercentage*
(Less10%forBP3100stabililization)
	
17.18%
	
15.57%
	
12.73%
	
11.01%
	
10.35%
	
9.85%

FundedADA
	
(672)

MethodUsed
	
3-YEARAVG
	
CYADA
	
CYADA
	
CYADA
	
CYADA
	
CYADA

COLA
	
8.22%
	
0.76%
	
2.73%
	
3.11%
	
3.17%
	
1.50%

Governor’s COLA with 94% Attendance Rate	Governor’s COLA with 95% Attendance Rate

Description
	2023-24 1stInterim

2024-25

2025-26

2026-27

2027-28

2028-29

NetRevenue/Expenditure(Operating)
	
(8,296,487)
		
(21,396,520)
	
(19,140,554)
	
(12,745,394)
	
(5,691,817)
	
(5,145,609)
	
GeneralReservePercentage* (Less10%forBP3100stabililization)

17.18%

15.22%

12.03%

9.96%

8.94%

8.10%

FundedADA
	
(672)
		
(280)
	
229
	
38
	
195
	
75

MethodUsed
	
3-YEARAVG
		
CYADA
	
CYADA
	
CYADA
	
CYADA
	
CYADA

COLA
	
8.22%
						
1.50%

Description
	2023-24 1stInterim

2024-25

2025-26

2026-27

2027-28

2028-29
	
NetRevenue/Expenditure(Operating)
	(8,296,487)
	(16,695,951)
	(14,285,274)
	(7,732,186)
	(493,033)
	141,946
	
GeneralReservePercentage* (Less10%forBP3100stabililization)

17.18%

15.92%

13.45%

12.09%

11.78%

11.66%

FundedADA
	
(672)

MethodUsed
	
3-YEARAVG
	
CYADA
	
CYADA
	
CYADA
	
CYADA
	
CYADA

COLA
	
8.22%
	
0.76%
	
2.73%
	
3.11%
	
3.17%
	
1.50%
	
15

Keepingthe System Going

CUSD – Keepingthe System Going NewRevenues – 2024/25

LCFFAdditionalRevenues

State COLAof.76%
	
$ 3,230,360

SupplementalGrants
	
(296,200)

ADADecline 280 (funded)
	
(3,102,400)

TKAdjustment
	
619,170

TransportationLCFFAugmentation
	
20,000

Medi-Cal Ongoing(previously reportedas one time onannual basis)
	
1,000,000

Special Education
	
931,450

Mandate Block Grant
	
14,500

Total NewOngoingRevenues
	
$ 2,416,880

CUSD – Keepingthe System Going NewExpenditures – 2024/25

AllocatedPersonnel Units (APU), 2.8APUIncrease andTKImplementation
	
593,200

Step& Column
	
1,171,900

Special EducationProgramGrowth(Includes SpectrumMOU)
	
5,700,000

PERSContributionIncreases
	
978,100

ExpendituresFundedwithExpiringCOVIDReliefFunds
	
5,729,300

Hirayama Staffing/OperationCosts
	
826,000

TBECStaffing/OperationCosts
	
2,102,900

CUSD – Keepingthe System Going NewExpenditures – 2024/25

LCAPSupplemental
	
(296,000)

Routine RestrictedMaintenance
State Req’d3%oftotal General FundExpenditures
	
449,100

Property &Liability Insurance
	
462,420

EmployeeComputerRefresh
	
400,000

Certificate ofParticipationDebtService
	
131,300

ContributionforTransportationCosts
AB181funds 60%ofHome toSchool Transportation
	
(3,000,000)

OtherExpenditures
	
170,925

Total NewOngoingExpenditures
	
$15,419,145

CUSD – Keepingthe System Going Summary – 2024/25

The following takes into consideration all additional ongoing revenues and ongoingexpenditures for the 2024-25 fiscal year:

Total additional ongoing revenues	$ 2.4M

Total additional ongoing expenditures

2024-25 Net Revenues/Expenditures

 15.4M

($13.0M)

Prior Year (2023-24) Operating Deficit	($ 8.4M)

2024-25 OperatingSurplus, Projected	($21.4M)

20

									

								
								
Ongoing SPED Revenues
	$	931,434
	$	-
	$	-
	$	-
	$	-

Discretionary Expenditure Assumptions
							
Percent on Schedule Adjustment
	TBD
	TBD
	TBD
	TBD
	TBD
		
Salary Schedule adjustments
	$	-
	$	-
	$	-
	$	-
	$	-
		
Classification Study
	TBD
	TBD
	TBD
	TBD
	TBD
		
Health Benefits
	TBD
	TBD
	TBD
	TBD
	TBD
		
Special Education
	$	5,700,000
	$	3,615,150
	$	3,730,473
	$	3,786,430
	$	3,786,430
		
Non-Formula Staffing needs - Capacity
	$	(41,228)
	$	-
	$	-
	$	-
	$	-
		
Textbooks (Current Budget $6.2 million)
	$	10,748
	$	25,054
	$	4,169
	$	21,382
	$	8,259
		
COVID Recovery of PY Reductions/Risk Mgr
	$	86,171
	$	-
	$	-
	$	-
	$	-
		
COVID Funded Nursing Positio+B1ns
	$	816,410
						
COVID Funded Special Ed Positions
	$	4,861,077
						
Non-Personnel Adjustments
	$	(12,000)
	$	-
	$	-
	$	-
	$	-
		
Liability Insurance
	$	462,421
	$	464,179
	$	555,080
	$	610,589
	$	559,284
		
STRS Employer Rate Increases
	$	-
	$	-
	$	-
	$	-
	$	-
		
PERS Employer Rate Increases
	$	978,139
	$	611,337
	$	349,335
	$	1,222,673
	$	562,309
		
COP Ongoing Debt Service
	$	131,344
	$	(32,000)
	$	(514,400)
	$	(2,000)
	$	(2,000)
		
New Secondary Schools
	$	2,102,853
	$	4,974,029
	$	2,638,533
	$	2,086,138
	$	752,093
		
New Elementary
	$	826,040
	$	-
	$	-
	$	-
	$	-

Does not include impact of future Salary Schedule Increases

22

What’s Not Includedin the MYP?

• Future Salary Schedule Increases • 1%= $3.7M

• OngoingImpact of Minimum Wage

• AnnuallyincreasesbyCPI%, Cap of3.5% • 2024minimumwage$16

• Health andWelfare Contribution Increases

• Other

• SpecialEdcost aboveprojections • ClassSize Reduction
• Implementationof CollectiveBargainingAgreements

23

Jan 10 – Governor's JanuaryProposal

Jan 29–LCAPParentNight

March27– LCAPParentNight

End of March– Employee Benefit Committee Recommendations

June 9 – Budget Copy Available forpublic review June 14 – LCAP Approved
June 14 – 2023-24BudgetAdopted byBoard

June 30 – Tentative State Budget Approval

Key Budget
January 30th – March 27th Site LCAP Community Meetings
Dates	February	May

January	March	June

Feb1 – PreliminaryBudgetPresentationto GoverningBoard

May 15– Governor's May ReviseProposal

End of May- Employee Compensation Committee FinalizeRecommendation

24

Financial Reports

https://www.cusd.com/FinancialReports.aspx                        25

Thank you!