Table of Contents Meeting 1 History of School Finance LAUSD LCFF LAUSD Rating Presentation May 6 Other Topics Meeting 2 Key Performance Indicators: From Promise to Payoff LAUSD KPI Report Actpoint KPI Charts LAUSD Data Tables – LAUSD Compared to Other CA Districts LAUSD Special Education Funding and Enrollment Trends Meeting 3 Local Control Accountability Plan (LCAP) June Budget Presentation Student Data Presentation Meeting 4 Pension Benefits Health Benefits LAUSD Staffing Meeting 5 Meeting 6 A BRIEF HISTORY OF SCHOOL FINANCE History and Evolution of K-12 School Finance • Pre-Serrano era, prior to 1971 • Post-Serrano era, 1971 to 1979 • Post-Proposition 13 era, 1979 to 2013 • The Local Control Funding Formula era, 2013 forward • Prospects for the Future 2 Pre-Serrano Era − Prior to 1971 • Schools were funded primarily by local property taxes, as they are in most other states • The state and federal governments played a minor role in school finance • Local school boards were the primary decision makers for public education – The state and federal governments played a supporting role 3 Pre-Serrano Era − Prior to 1971 • Local property taxes varied widely from district to district – Districts with high assessed valuation and low numbers of students had high resources – Districts with lower assessed valuation and/or high numbers of students had lower resources to spend on each student 4 Pre-Serrano Era − Prior to 1971 • These seemingly random differences in property taxes led to wide variations in per-student spending • There was a perception that student programs were not equal across the state, even though California was in the top five states in per-student spending 5 Post-Serrano Era − 1971 to 1979 • Beginning in 1970, a series of lawsuits were filed and collectively called the Serrano lawsuits • The court ruled that a funding system based upon property tax alone created inequities and that the state had an obligation to equalize funding • Senate Bill 90 of 1972 created a system of revenue limits and categorical programs – Districts were guaranteed a certain amount of base funding per student 6 Post-Serrano Era − 1971 to 1979 – If property taxes came up short, the state made up the difference – Categorical programs provided additional services for students with special needs and were strictly controlled by the state • The state’s subvention system caused the state to raise its share of the cost of public education to about 30% 7 Post-Proposition 13 Era − 1979 to 2013 • In 1978, faced with ever increasing local property taxes, Howard Jarvis and other taxpayer groups initiated Proposition 13, a measure to rollback local property taxes and to limit future increases – Proposition 13 was implemented in 1979 • This rollback of property taxes made the state the primary payer for the cost of public education, more than 70% of funding came from the state • Property taxes are much more stable than the sales and income taxes that fueled the state’s contribution 8 Post-Proposition 13 Era − 1979 to 2013 • The Rodda Act, which required collective bargaining as we now know it, was passed in 1974 • The combination of lower property taxes and reliance on volatile state budgets, caused California to fall to the bottom in per-student spending • Student achievement fell commensurately 9 The Local Control Funding Formula Era − 2013 Forward • The Local Control Funding Formula (LCFF) was included in the enacted state budget for fiscal year 2013-14 • The base revenue limit and categorical programs were eliminated • It provides that by 2021, an equal base grant would be provided for each student by grade level • In addition additional funding is provided for English learners and for high poverty students 10 The Local Control Funding Formula Era − 2013 Forward • The state no longer controlled the delivery of student programs – The state still specified which students would get additional services, but local boards determined what services based upon the Local Control Accountability Plan (LCAP) • The state plans to ramp up spending to achieve full implementation in 2021 • After 2021, all districts would receive only a cost of living adjustment annually 11 Prospects for the Future • Educators and politicians alike are hopeful that the LCFF will improve student achievement, especially for the state’s neediest students • But California is still last in the nation in per-student spending and will remain near the bottom even at full implementation of LCFF – Real gains will only come when per-student funding approaches the national average − California is now 30% below the average 12 Prospects for the Future • And the combination of the LCFF, Common Core State Standards for curriculum, and Smarter Balanced testing represents huge change • It will take time to assess the effectiveness of LCFF • And the system will be tested over time by recessions, legislative changes, and accountability for student performance • It will take patience, wisdom and courage to stay the course and give the new system a chance to improve education in California 13 California’s Education Spending Continues to Lag 14 14 Funding Per Average Daily Attendance (ADA) – Actual vs. Prior Statutory Level XYZ Unified School District $6,719 $6,700 $6,507 $6,389 $6,364 Loss of Cost-of-Living Adjustment (COLA) Dollars Per ADA $6,127 $5,798 $5,700 $5,798 $5,646 $5,221 $5,166 $5,223 $4,963 $4,700 2007-08 2008-09 2009-10 Projected Statutory COLA 2010-11 Flat Funding 2011-12 2012-13 Actual Funding 15 Proposition 30 – The Schools and Local Public Protection Act of 2012 16 Proposition 30, the Schools and Local Public Protection Act is sponsored by Governor Brown Education organizations that supported the measure include: California Teachers’ Association, California Federation of Teachers, California School Boards Association, and Association of California School Administrators Temporarily increases the state sales tax and personal income tax for high-income earners Sales tax increase of 0.25% would expire in 2016 Personal income tax increase would expire in 2018 Generates $6.8 billion to $8.5 billion in 2012-13 and $5.4 billion to $7.6 billion each year thereafter Revenues from tax increases would fund the Education Protection Account, which would offset state aid toward school district funding Would also make permanent the sales tax shift to fund county government realignment 16 California’s Education Spending Continues to Lag California’s K-12 Spending Per Student Lags Behind That of the Rest of the U.S. More Than at Any Time in 40 Years California’s Spending Per Student Minus Spending Per Student in the Rest of U.S. $600 National Average $200 -$200 -$600 -$1,000 -$1,400 -$1,800 -$2,200 -$2,600 -$2,856 (est.) per student loss in 2010-11 -$3,000 * 2010-11 data estimated Note: Rest of U.S. excludes the District of Columbia 17 Money Matters in Student Performance Test Scores vs. Dollars Per Student $23,000 Highest Performing States $22,000 Maine New Jersey Rhode Island Vermont Wyoming $16,000 Lowest Performing States $8,700 California Arizona Nevada Idaho $6,700 $0 18 Mississippi California’s Spending Lags the Nation California’s Schools Lag Behind Other States on a Number of Measures California Rank California Rest of U.S. K-12 Spending Per Student (2009-10)* 44 $8,826 $11,372 K-12 Spending as a Percentage of Personal Income (2008-09)* 46 3.28% 4.25% Number of K-12 Students Per Teacher (2009-10)* 50 21.3 13.8 Number of K-12 Students Per Administrator (2007-08) 46 358 216 Number of K-12 Students Per Guidance Counselor (2007-08) 49 809 440 Number of K-12 Students Per Librarian (2007-08) 50 5,038 809 *2008-09 and 2009-10 data are estimated. Note: “California Rank” and “Rest of U.S.” exclude the District of Columbia. Spending per student and number of students per teacher are based on average daily attendance (ADA). Number of students per administrator, guidance counselor, and librarian are based on statewide enrollment. Source: National Education Association, National Center for Education Statistics, and U.S. Bureau of Economic Analysis 19 Historical Federal Individuals with Disabilities Act Funding 40% Percent of Per- Pupil Expenditures Funded 35% 30% 25% 20% 15% 10% 5% % Unfunded % Funded Source: Digest of Education Statistics 2011, National Center for Education Statistics; U.S. Department of Education 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 0% 20 The Value of Education Education is critical to the economic success of individuals and our state as a whole Personal income accounts for more than half of state General Fund revenues Average Annual Earnings Educational attainment affects earnings $103,054 $20,241 No High School Diploma $30,627 High School Diploma $39,771 Associate Degree Source: U.S. Census Bureau Population Survey, 2009 $56,665 Bachelor's Degree 21 $73,738 Master's Degree Doctorate Los Angeles Unified School District Local Control Funding Formula May 6, 2015 Local Control Funding Formula Los Angles Unified School District May 6, 2015 Presented by Ron Bennett Chief Financial Officer LCFF – What it Does 1 © 2015 School Services of California, Inc. The Local Control Funding Formula (LCFF) makes fundamental changes to how we allocate state Proposition 98 revenues to schools There are direct parallels with how we have funded schools in the past The LCFF base grants are like revenue limits The LCFF base grant adjustments – Class-Size Reduction (CSR), CareerTechnical Education (CTE), supplemental grants, concentration grants – are like categorical programs At full implementation, the LCFF will fund every student at the same base rate Over time, most school district and charter school base grant funding will equalize to the same level The LCFF provides that each school district receive at least as much state aid in 2013-14 and future fiscal years as the district received in 2012-13 The LCFF continues the necessary small school funding adjustment for eligible school districts, per Education Code Section (E.C.) 42280 et seq. © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 Categorical Programs 2 © 2015 School Services of California, Inc. A partial list of the 40 categorical programs rolled into the Base Grant Adult Education CSR (K-3) Deferred Maintenance Economic Impact Aid Gifted and Talented Education Regional Occupational Centers/Programs Categorical Programs and the LCFF 3 © 2015 School Services of California, Inc. Over the years, a variety of programs and purposes were supported by categorical program funding Some were general purpose, such as instructional materials and deferred maintenance Some were intended to be targeted to meet the needs of specific students or circumstances, such as Economic Impact Aid and Home-toSchool Transportation The LCFF replaces most categorical programs with two weighting factors applied against the LCFF base grant 20% on behalf of each eligible student (down from 35% in the Governor’s proposal) An additional 50% for the eligible students exceeding 55% of total enrollment (up from 35% in the Governor’s proposal) The combination of the two factors still equals 70%, as in the May Revision © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 Documenting Eligibility 4 © 2015 School Services of California, Inc. Pupils eligible for free and reduced-price meals (FRPM) Participation in the federal program is not required Eligibility is not identical to federal requirements For federal “Provision 2 and 3” schools, districts must verify eligibility annually, using an alternative method chosen by the school district At this time, direct verification (good for a four-year period under federal law) is not deemed sufficient to document the count of FRPM-eligible students at Provision 2 and 3 schools for purposes of LCFF funding Accurate and documented verification of student status as an FRPM eligible, an English learner, or a foster youth is of high importance in the LCFF Base Grant Entitlement Calculation 5 © 2015 School Services of California, Inc. 2014-15 target entitlement calculation Grade span per-pupil grants are increased for the 0.85% statutory cost-of-living adjustment (COLA) – unchanged from the May Revision Factors 2013-14 Base Grant per ADA COLA @ 0.85% Base grants – 2014-15 K-3 4-6 7-8 9-12 $6,952 $7,056 $7,266 $8,419 $59 $60 $62 $72 $7,011 $7,116 $7,328 $8,491 © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 LCFF – K-3 CSR and CTE Adjustments 6 © 2015 School Services of California, Inc. 2013-14 target entitlement calculation K-3 CSR and 9-12 CTE adjustments are additions to the base grant CTE is unrestricted; CSR requires progress toward maximum site average of 24 students enrolled in each class Factors K-3 4-6 7-8 9-12 Base grants – 2013-14 $6,952 $7,056 $7,266 $8,419 Adjustment percentage 10.4% CSR - - 2.6% CTE Adjustment amount $723 - - $219 $7,675 $7,056 $7,266 $8,638 Adjusted grant per ADA Supplemental and Concentration Grants 7 © 2015 School Services of California, Inc. Supplemental and concentration grants are calculated based on the percentage of district enrollment accounted for by EL, FRPM program eligible students, and foster youth Factors K-3 4-6 7-8 9-12 Adjusted grant per ADA $7,740 $7,116 $7,328 $8,712 20% supplemental grant $1,548 $1,423 $1,466 $1,742 50% concentration grant (for eligible students exceeding 55% of enrollment) $3,870 $3,558 $3,664 $4,356 © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 XYZ USD Gap Funding Per ADA 8 © 2015 School Services of California, Inc. $10,715 $7,642 40 State Categorical Programs $342 Supplementation and Concentration Grants $20 Base $10,715 Target - $7,642 2012-13 $3,073 Gap $8,004 $362 $7,642 $7,812 2013-14 Funding 2013-14 Target $3,073 Gap x 11.78% $2.1 Billion $362 2013-14 Increase $5,453 Revenue Limit 2012-13 Supplemental and Concentration Grants Base Per ADA Funding for XYZ USD (SSC Projections) 9 © 2015 School Services of California, Inc. $8,004 $7,642 $342 $8,000 $7,500 $7,000 40 State Categorical Funds $6,500 $7,642 $20 $20 Revenue Limit $6,000 $5,500 $5,000 $4,500 $4,000 2012-13 Year-to-Year Increase = 4.74% Base Increase = 0.26% 2013-14 Supplemental/Concentration Increase = 4.48% © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 LCFF Funding Analysis – Los Angeles USD 10 © 2015 School Services of California, Inc. Base: $208 Supplemental/ Concentration (SC): $519 $12,000 Funding Gap $9,000 $2,515 $727 $863 $11,541 Target $9,281 Prior Year (PY) $2,260 Total Gap $2,260 Total Gap x 32.19% $4.0 Billion $727 2015-16 Growth $2,515 Total SC Gap - $903 PY SC Funded $1,612 Net Gap $6,000 $8,418 $9,281 $9,026 $3,000 $0 LCFF 2014-15 LCFF Floor LCFF 2015-16 Funded LCFF Growth LCFF 2015-16 Target Base Target $1,612 x 32.19% $519 Net gap Closure Net Gap $727 2015-16 Growth - $519 SC Growth $208 Base Growth Supplemental/Concentration Target Differential Risks – An Example 11 © 2015 School Services of California, Inc. $600 New Funding Per ADA $500 High LCFF Low Percent Eligible - 1% $400 Medium Percent Eligible - 60% High Percent Eligible - 100% $300 Medium LCFF $200 $100 Low LCFF $0 1st Year 2nd Year 3rd Year © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 Adopting and Updating the LCAP 12 © 2015 School Services of California, Inc. Consultation with: Teachers Employee associations Principals School Personnel Pupils Parents 1 Present for Review and Comment to: Parent advisory committee English learner parent advisory committee The superintendent must respond in writing to comments received 2 LCAP Opportunity for Pupil Input: Adopted concurrent with the LEA Submitted to COE for approval Posted on district website COE posts LCAP for each district/school or a link to the LCAP Adoption of the Plan: 4 Notice of the opportunity to submit written comment Public hearing to solicit public comment on proposed actions and expenditures 3 Negotiations Under the LCFF 13 © 2015 School Services of California, Inc. Revenue Limits LCFF Targeted Funds Categorical Programs Any increase was restricted and not generally available for negotiations Any increase used to fund LCAP strategies for targeted students Must negotiate issues within the scope of bargaining Base Revenue Limit Annual COLA always available for negotiations Base Grant Annual increase to base grant always available for negotiations © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 LCFF Funding Model – Two “Pots” of Money in One! 14 © 2015 School Services of California, Inc. BASE GRANT – (Unrestricted) LCFF FUNDING Supplemental and Concentration Grants (Targeted Funds) Supplemental and Concentration Grants 15 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 State Priorities 16 © 2015 School Services of California, Inc. Credentials/Materials Pupil Engagement Pupil Outcomes School Climate State Priorities Parental Involvement Adopt Standards Pupil achievement Course of Study Expulsion Coordination Foster Student Services (COE only) (COE only) To Act Differently We Must Think Differently 17 © 2015 School Services of California, Inc. Old System State of California New System Community Involvement Local Board Sets Policy Policy Funding Program Rules Local Board Implementation State Provides Funding Local Board Empowers Schools Results Reported to Public Board Revises Policy Focus on Students School Site Performance Audits and Compliance Reviews Student Achievement Compliance Model Empowerment Model © 2015 School Services of California, Inc. Los Angeles Unified School District Local Control Funding Formula May 6, 2015 Thank you! © 2015 School Services of California, Inc. Los Angeles Unified School District 2015 General Obligation Refunding Bonds, Series A Rating Agency Presentation April 22, 2015 Presentation Team District Megan Reilly, Chief Financial Officer (213) 241-7888 megan.reilly@lausd.net Luis Buendia, Controller (213) 241-2150 luis.buendia@lausd.net Amanda Vaughn, Acting Program & Policy (213) 241-4582 amanda.vaughn@lausd.net Timothy Rosnick, Deputy Controller (213) 241-7989 timothy.rosnick@lausd.net Saman Bravo-Karimi, Acting Director Capital (213) 241-1118 saman.bravo-karimi@lausd.net Michelle Issa, PRAG (310) 477-2786 missa@pragadvisors.com Ed Soong, PRAG (310) 477-1453 esoong@pragadvisors.com Development Advisor, Construction Program Fund Compliance Financial Advisor 1 Outline of Discussion I. Financial and Budget Update II. Capital Facilities Program III. Outstanding Debt and Tax Base IV. 2015 General Obligation Refunding Bonds V. Questions & Answers / Wrap-Up __________________ Appendix: Estimated Debt Service Refunding Schedule 2 Financial and Budget Update Institutionalized Financial Management Framework Three key financial policies: Budget & Finance, Debt Management, and Investment ─ Establishes minimum reserve levels, prudent use of bonded indebtedness and conservative investment strategy Strong State oversight ─ Per AB 1200, all California school districts are required to prepare two Interim Reports annually to track its finances with a multi-year forecast Must certify whether it expects to meet its financial obligations in current year and two subsequent fiscal years An additional “June Report” is required if the Second Interim report is certified as qualified or negative Ramon C. Cortines School of Visual and Performing Arts Maurice Sendak Elementary School 4 Fiscal Year 2014-15 Financial Reports Second Interim Report reflects modest continued improvement in the District’s ending balance for fiscal 2014-15 ─ Results mostly from lower than expected expenditures and a slight increase in revenues over the fiscal year ($ in millions)(1) Beginning Balance (2) Revenues Expenditures Operating Surplus (Deficit) Other Financing Sources/Uses Ending Balance Fiscal Year 2014-15 First Second District Final Interim Report Interim Report Adopted Budget (December 2014) (March 2015) $655.2 $700.3 $700.3 6,223.1 6,225.9 6,234.2 6,261.6 6,112.5 6,071.3 (38.6) 113.4 162.9 (127.3) (124.0) (117.1) $489.3 $689.6 $746.1 (1) Totals may not equal sum of component parts due to rounding. (2) Reflects a downward audit adjustment of approximately $45.1 million from the beginning balance set forth in the operating budget approved by the District Board. Includes anticipated settlements. Sources: Los Angeles Unified School District Fiscal Year 2014-15 District Final Adopted Budget, Fiscal Year 2014-15 First Interim Report , Fiscal Year 2014-15 Second Interim Report 5 Second Interim Self-Qualified District has been conservatively self-certifying its Interim Reports as “qualified” since fiscal 2008-09 District submitted a self-qualified certification to LACOE at First Interim this year due to anticipated deficits in 2015-16 and 2016-17 ─ Without corrective actions, the District forecasted deficits at First Interim of $326.0 million in 2015-16 and $462.8 million in 2016-17 ─ LACOE requested a Fiscal Stabilization Plan be submitted with Second Interim At Second Interim, District submitted a self-qualified certification, but forecast a deficit only in fiscal year 2016-17 ─ 2015-16 deficit of $158.3 million was eliminated by a Board-approved Fiscal Stabilization Plan Plan included a combination of ongoing solutions, program realignment and onetime sources of funds for a $19.7 million 2015-16 balance ─ Board also approved sending Reductions in Force notices to over 2,400 employees ─ Remaining 2016-17 deficit of $282.0 million needs be addressed later District is preparing a June Report 6 District Continues to Manage Through State Funding Cycles Operating Revenues vs. Operating Expenditures $ Millions $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Operating Revenues Operating Expenditures Sources: The District’s audits, with the exception of FY 2014-15 which is projected as of the Second Interim. 7 District has Consistently Met its 5% Reserve Policy General Fund Balances As a % of General Fund Revenues/Expenditures(1) $ Millions $1,000 16% $900 14% $800 12% $700 10% $600 $500 8% $400 6% $300 4% $200 2% $100 $0 0% FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 Ending General Fund Balance ($) FY 11 FY 12 FY 13 FY 14 FY 15 As % of General Fund Revenues/Expenditures (1) FY2001-13 - % of revenues and transfers-in; beginning in FY2013-14, the District’s reserve policy changed to be a % of expenditures and transfers-out. Sources: District’s Comprehensive Annual Financial Reports, with the exception of FY 2014-15 which is projected as of the Second Interim. 8 Labor Costs Last week, tentative agreements were reached on Health and Welfare benefits with all of the District’s unions and with the UTLA on its labor agreement Up until then, all units had settled their labor agreements except UTLA and portion of CSEA for approximately 6.5% salary increases over 3 years District has budgeted same amounts for UTLA Under the contracts, the out-year increases were contingent on available revenues Employee Bargaining Unit Associated Administrators of Los Angeles (Certificated)(1) Associated Administrators of Los Angeles (Unit J) Unit A (Los Angeles School Police Association) Unit B (Instructional Aides) Unit C (Operations – Support Services) Unit D (California School Employees Association) (1) Unit E (Skilled Crafts) Unit F (Teacher Assistants) Unit G (Playground Aides) Unit H (Sergeants and Lieutenants) Unit S (Classified Supervisors) (1) United Teachers of Los Angeles District Represented Employees Contract Expiration Date (June 30) 2017 2015 2017 2017 2017 2014 2017 2017 2017 2017 2017 2011 N/A Number of Members 2,330 234 421 11,851 7,806 4,200 1,334 4,387 10,833 63 3,064 32,368 577 (1) These units have “me-too” clauses. 9 Tentative UTLA Labor Agreement Costs On April 17, the ULTA approved a Tentative Agreement with LAUSD for a new two year contract ─ Follows a period of salary freezes and furlough days required by the recession and a contract that expired in 2011 UTLA was initially negotiating for a 17.6% pay raise 2014-17 agreement includes: ─ 10% on the scale salary increase over 2014-15 and 2015-16, with a salary reopener in 2016-17 ─ Phased in with a 4% retroactive increase effective 7/1/14, a 2% retroactive increase effective 1/1/15, a 2% increase effective 7/1/15, and a 2% increase effective 1/1/16 District's prior proposal of 6.5% over 3 years was estimated to cost $589.7 million for all employees ─ Estimated costs are now approximately $875.3 million (the $589.7 million plus the $254 million for UTLA plus the $31.6 million for bargaining units with “me too” clauses) Next steps: UTLA members must review and approve the tentative labor and health and welfare agreements 10 Health and Welfare Benefits Agreement On April 14, Board authorized the Superintendent to enter into a Tentative Agreement on health benefits for 2015-2017 calendar years ─ Maintains current level of benefits for active employees, pre-Medicare retired employees, and Medicare eligible retired employees ─ Cost will be covered in part by drawing down a portion of the Health & Welfare reserve, with the balance coming from other District funds Fiscal year General Fund impact of $21.6 million in 2015-16, $62.9 million in 201617 and about $100 million in 2017-18 Identified funding source for District’s General Fund share are the OPEB set-asides ─ Plan extension into 2018 contingent upon certain financial criteria $Millions $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $Calendar Year H&W Reserve Other District Funds Total Increase* 2015 $25.5 $25.5 $51.0 2016 $49.5 $68.5 $118.0 2017 $73.0 $113.0 $186.0 2018** $100.0 $156.9 $256.9 * Increase from 2014 contribution level ** 2018 Plan year contingent upon certain agreed-upon criteria 11 State Funding Update 2014-15 is the second year that the District has been operating under the Local Control Funding Formula (“LCFF”) and a Local Control Accountability Plan (“LCAP”), a significantly different State funding approach LCFF benefits LAUSD which has approximately 415,612 of its non-charter school students classified as Targeted Disadvantaged Students on an unduplicated count basis ─ LAUSD’s Unduplicated Pupil Percentage is currently 83.5% The LCAP is a district-wide plan that describes how districts are using state funds and supporting targeted youth ─ The LCAP must be updated annually ─ The LCAP must include: Stakeholder Engagement Goals and Progress Indicators Actions, Services, and Expenditures 12 Governor's January Budget is Favorable to K-12 Governor signaled his continued commitment to LCFF and LCAP in January Budget Highlights of the Governor’s K-12 proposals for 2015-16 include: ─ Current year Prop 98 guarantee revised up by $2.3 billion from enacted level ─ Budget fully funds the Proposition 98 minimum guarantee in 2015-16 2015-16 K-12 State revenues are $2.6 billion higher than the revised 2014-15 amount ─ $4.048 billion in additional Prop 98 revenues expected to fund the remaining LCFF funding gap in 2015-16 at 32.19%; up from 20.68% in December (First Interim) Overall LCFF funding increases by 9% ─ Eliminates all remaining cash deferrals ($992 million) by June 30, 2016 - schools will receive principal apportionments of State Aid on time (no TRANs issued since 2012-13) 13 LAO’s Outlook for the May Revise Next key budget checkpoint for the District is the State’s May Revise According to the LAO, revenue outlook is strong Outlook for schools is more favorable than for the rest of the State Budget due to Propositions 98 and 2 Increases in 2014-15 revenues over January Budget will increase the 2014-15 Minimum Guarantee nearly dollar for dollar Increases in 2015-16 revenues will further increase the 2015-16 Minimum Guarantee by approximately 50 cents on the dollar After 2015-16, State revenues projected to grow modestly as Prop 30 phases out ─ Increased revenue uncertainty 14 District Budget Calendar Expected June 16 ─ Presentation and LCFF-required public hearing for LCAP ─ Presentation and public hearing for Fiscal Year 2015-16 Budget ─ Public hearing on the District’s budgeted ending fund balance in excess of the minimum required ─ Costs of the new labor agreements will be incorporated into the upcoming budget Expected June 23 ─ Adoption of LCAP ─ Adoption of Fiscal Year 2015-16 Budget Robert F. Kennedy Community Schools Middle School 15 Other Updates My Integrated Student Information System (MiSiS), attendance, and Unduplicated Count Tablets Other liabilities District leadership 16 Focused on Long-Term Sustainability and Fiscal Health Superintendent recently established an Independent Financial Review panel to help review and make recommendations concerning the long-term financial sustainability and health of the District ─ Focused on addressing long-term structural challenges including declining enrollment, post-employment benefits, pension costs and special education General Fund Subsidy Panel members include: Maria Anguiano Vice Chancellor for Business & Finance at University of California, Riverside Delaine Eastin Former Superintendent of Public Instruction and Member of the California Assembly Bill Lockyer Former California Attorney General and State Treasurer Joel Montero Chief Executive Officer, Fiscal Crisis and Management Assistance Team Darline Robles Professor, Rossier School of Education, University of Southern California and former Superintendent of the Los Angeles County Office of Education Miguel Santana Chief Administrative Officer, City of Los Angeles Darrell Steinberg Former California State Senate President pro-Tempore Peter Taylor President of the ECMC Foundation and former Chief Financial Officer for the University of California Kent Wong Director, University of California, Los Angeles Labor Center Work will get underway early in Fiscal Year 2015-16 17 Declining Enrollment Enrollment has fallen by about 196,000 students since 2002-03 ─ About 100,000 have moved to about 185 independent charter schools in the District per the District’s reform initiatives ─ Demographics have changed (for example, birth rates) 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 Independent Charters 9,092 19,477 23,852 29,137 34,961 41,073 51,087 60,643 69,935 82,788 89,112 95,381 102,538 109,481 116,164 District Schools 737,739 727,133 718,238 698,092 673,500 653,215 637,051 617,798 601,713 581,445 566,604 556,115 541,899 525,995 511,777 18 Post-Employment Costs – CalSTRS Following passage of AB1469 in June 2014, CalSTRS’ pension costs began to increase significantly in 2014-15 ─ Rates may be revised for 2021-22 and after to stay on track to retire the CalSTRS UAAL by June 30, 2046 CalSTRS Pension Costs (As a % of Covered Payroll) Contribution Rates 25% 20% 15% 10% 5% 0% Employer Employee(1) State 14-15 8.88% 8.15% 5.95% 15-16 10.73% 9.20% 7.39% 16-17 12.58% 10.25% 8.83% 17-18 14.43% 10.25% 8.83% 18-19 16.28% 10.25% 8.83% 19-20 18.13% 10.25% 8.83% 20-21 19.10% 10.25% 8.83% (1) Applicable to employees who joined CALSTRS prior to PEPRA, for employees who joined after PEPRA, contribution will increase to 9.205% by 2016-17 19 Estimated Impact of CalSTRS and CalPERS Rate Increases General fund impact of CalSTRS’ rate increases effective 2014-15 and CalPERS projected rate increases as of June 2014 ─ Assumes ADA declines through 2015-16 and stabilizes thereafter; does not take into account parameters that will impact actual costs (e.g. enrollment or salary changes) ─ Based on the June 2014 Valuation, in April 2015, CalPERS rates are lower than their March 2014 projections: 2015-16: 11.85% vs. 12.60% and 2016-17:13.05% vs. 15.00% Estimated Impact of Increased CalSTRS Rates on LAUSD Employer Cost Estimated Impact of Increased PERS Rates on LAUSD Employer Cost (General Fund Only) (General Fund Only) CalSTRS Fiscal Employer Year Rate 2012-13 8.25% 2013-14 8.25% 2014-15 8.88% 2015-16 10.73% 2016-17 12.58% 2017-18 14.43% 2018-19 16.28% 2019-20 18.13% 2020-21 19.10% Estimated Total General Fund Certificated Salaries ($Millions)(1) $ 2,590 2,585 2,685 2,758 2,734 2,734 2,734 2,734 2,734 Estimated General Fund CalSTRS Cost ($Millions) $ 208 207 230 296 344 395 445 496 522 Fiscal Year(1) 2012-13 2013-14 2014-15 2015-16 2016-17 CalPERS CalPERS Employer Employer Rate Rate (Miscellaneous) (Safety)(2) 11.42% 33.23% 11.44% 31.82% 11.77% 30.85% (2) 11.85% (2) 13.05% Estimated Total General Fund Estimated Classified General Fund Salaries CalPERS Cost ($Millions)(1) ($Millions) $ 772 $ 98 800 99 860 113 910 116 919 129 (1) Actuals through 2013-14, the 2014-15 Second Interim Report for 2014-15 through 2016-17, projections based on no salary growth after 2016-17 (2) The CalPERS Employer Rate (Safety) beyond fiscal year 2014-15 are not yet available. In the above table, the District has assumed annual increases in the CalPERS Employer Rate (Safety) to be proportional to the annual increases in the CalPERS Employer Rate (Miscellaneous) for fiscal years subsequent to fiscal year 2014-15. 20 Post-Employment Costs - OPEBs OPEB liability as of July 1, 2013 was $10.9 billion, down from $11.2 billion in 2011 ─ Net decline was the result of a combination of factors such as lower health care cost increases, changes in mortality rates, changes in the cost of dependent coverage, and a change in the discount rate OPEB Trust administered by CalPERS established in May 2014; currently $90 million Annual Required Contributions and OPEB Costs(2) ($Millions) Fiscal Year Annual Required Contribution(1) Annual OPEB Cost(1) Actual Contribution(2) Annual OPEB Cost Contributed 2009-10 $1,006.8 $ 977.2 $237.3 24% 2010-11 1,050.6 1,022.0 240.1 23 2011-12 1,085.9 1,048.0 228.7 22 2012-13 1,085.9 1,038.2 245.4 24 2013-14 868.6 890.9 326.9 37 (1) Information for Fiscal Years 2009-10 through 2012-13 reflects results of actuarial studies prepared by Buck Consultants. Information for Fiscal Year 2013-14 reflects results of an actuarial study prepared by Aon Hewitt. (2) Figures represent actual contributions reports in the District’s Comprehensive Annual Financial Report for the respective fiscal years included in the table. Figure for Fiscal Year 2013-14 includes $60 million contributed to the OPEB Trust. Sources: 2013 Postemployment Valuation for FY 2009-10 through 2014-15; District’s Comprehensive Annual Financial Report for FY 2009-10 through 2013-14. 21 Special Education Special Education funding is based on K-12 ADA of all students, not just special education students, so funding has no relationship to actual expenditures ─ No additional funding for moderate to severe students ─ Overall District enrollment is declining, but share of Special Education students are increasing District General Fund Contribution to Special Education Per ADA is Increasing Amount per ADA $1,600 $1,200 $1,141 $868 $800 $961 $995 $982 07-08 08-09 09-10 Fiscal Year $1,246 $1,350 $987 $743 $400 $0 05-06 06-07 10-11 11-12 12-13 13-14 22 Capital Facilities Program Goals and Accomplishments Nearly $19 billion invested in constructing new schools and repairing and modernizing legacy schools ─ Completed approximately 20,000 repair & modernization projects ─ Implemented full day kindergarten District-wide ─ Completed approximately 600 new construction projects Two-semester neighborhood schools District-wide 130 of 131 new K-12 school projects completed – 131st under construction! 65 of 65 new K-12 addition projects completed No schools operating on a Concept 6 calendar Only 1 school operating on a multi-track calendar – 99% decrease over the last 10 years Playa Vista School Dr. Theodore T. Alexander Jr. Science Center School Olguin Campus at San Pedro HS 24 There’s Still More Work To Be Done In addition to addressing enrollment growth, the District's capital program is modernizing and repairing aging facilities Nearly 800 of the buildings were constructed more than 75 years ago and almost half of the District’s buildings were constructed at least 50 years ago Legacy school facilities do not meet current building codes or support current instructional vision Huntington Park High School Roosevelt High School Roosevelt High School 25 Today’s Focus – Modernizing and Repairing Primary focus of the School Upgrade Program is to upgrade legacy school facilities Prior phase of bond program focused on constructing new school facilities to eliminate use of multi-track calendars and involuntary busing Under the Program, the District will modernize, build and repair school facilities to improve student health, safety, and educational quality Board program goals: ─ Schools should be physically safe and secure ─ School building systems should be sound and efficient ─ School facilities should align with instructional requirements and vision Program currently valued at $7,852,900,000 18 categories of need/priorities with associated funding sources Program will continue to address any future needs for additional classroom capacity to maintain District’s commitment to two-semester neighborhood school operations District-wide ─ 3 classroom addition projects already anticipated 26 Commitment to Capital Fund Compliance Finance has added a Director of Capital Fund Compliance ─ Post-issuance compliance, as documented in the District’s Debt Management Policy Tax compliance Continuing Disclosure compliance ─ All uses of proceeds are subject to approval ─ Program staff and District leadership trained annually 27 Debt and Tax Base Overview of G.O. Bond Authorizations Bond Authorization Date Authorized by Voters Amount Authorized ($Billions) Amount Issued ($Billions) Amount Unissued ($Billions) Proposition BB April 8, 1997 $2.400 $2.400 - Measure K November 5, 2002 3.350 3.350 - Measure R March 2, 2004 3.870 3.710 0.160 Measure Y November 8, 2005 3.985 3.603 0.382 Measure Q November 4, 2008 7.000 - 7.000 Total $20.605 $13.063 $7.542 29 Debt Capacity Current Statutory Debt Limit (2.5% of AV) $13,323,355,180 Outstanding G. O Bonds $10,348,740,000 Available Capacity (as of April 1, 2015) $2,974,615,175 Estimated Available Capacity (as of July 1, 2015, assuming 5% AV Growth) $3,640,782,934 The District does not anticipate issuing any additional new money bonds in 2014-15 District regularly monitors AV growth to ensure that we are realistically planning for our capital program 30 Ad Valorem Property Taxes Spread Across Very Large Base The District’s 2014-15 total assessed valuation is $532.9 billion 5 and 10-year average annual AV growth rates are 2.44% and 4.64%, respectively ─ AV is currently at an all-time high ─ Dipped down only slightly for one year during recession LAUSD 10-Year Assessed Valuation History by Fiscal Year $ Billions $600 $500 $400 $300 $200 $100 $0 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 Fiscal Year LAUSD 10- Year Assessed Valuation History Fiscal Year AV Valuation ($ billions) FY Percentage Growth Rate 2014-15 $532.9 5.8% 2013-14 $503.7 4.9% 2012-13 480.1 2.3% 2011-12 469.1 1.1% 2010-11 463.8 -2.3% 2009-10 475.0 0.0% 2008-09 474.8 7.7% 2007-08 440.9 9.5% 2006-07 402.6 10.6% 2005-06 363.9 9.6% Ten-Year Average Growth 4.64% Five-Year Average Growth 2.44% 31 General Obligation Bond Tax Rates At the time each series of new-money bonds are issued under Prop 39, District must represent that the tax rate on all bonds issued under the related bond measure is expected to be at or below the $60 per $100,000 District’s tax rates for each bond measure are below $60 per $100,000 of AV District regularly monitors tax rate capacity to assure any new bond issuance complies with Proposition 39 requirements Property Tax Rates by Measure ($ per $100,000 AV) $60 $50 $40 $30 $20 $10 $0 2004-05 2005-06 2006-07 2007-08 Proposition BB 2008-09 2009-10 2010-11 Fiscal Year Measure K Measure R 2011-12 2012-13 2013-14 2014-15 Measure Y 32 Outstanding G.O. Bonds $10.3 billion outstanding G.O. bonds as of April 1, 2015 ─ All bonds are fixed rate, current interest bonds with no CABs or swaps ─ Outstanding principal is amortized annually through 2035 (i.e., over 20 years) ─ Typical new money issue amortized over 25 years ─ Capacity to layer in additional bonds without exceeding debt limit Outstanding General Obligation Bonds by Bond Measure by Fiscal Year (Includes Set-Asides for QSCBs) Millions $800 $700 $600 $500 $400 $300 $200 $100 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Fiscal Year Proposition BB Measure K Measure R Measure Y 33 Outstanding COPs Debt Service Relatively Small $296 million outstanding fixed-rate COPs including a $22 million private placement ─ No swaps or derivatives Debt burden is relatively low at 0.97% of general fund expenditures per last CAFR ─ Well below Debt Policy ceiling of 2.5% Certificates of Participation Debt Service (As of April 1, 2015) Millions $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Fiscal Year Paid from General Fund Paid from Developer Fees 34 2015 General Obligation Refunding Bonds 2015 General Obligation Refunding Bonds District expects to refund $402 million of G.O. Bonds for savings ─ $378 million of Proposition BB Bonds with a call date of July 1, 2015 ─ $24 million of Measure R Bonds with a call date of July 1, 2016 Estimated net present value savings: $78 million, or 19% of refunded par ─ Matched maturity amortization structure Principal Payment Date: July 1 Interest Payment Dates: January 1 and July 1 Amortization*: 2017-2031 *Preliminary and subject to change. Series 2005A-1 2005A-1 2005A-1 2005A-1 2005A-1 2005A-1 2005A-1 2005A-1 2005A-1 2005A-2 2005A-2 2005A-2 2005A-2 2005A-2 2005A-2 G (2006) G (2006) G (2006) Refunded Maturities* Meas./Prop Maturity BB 7/1/2017 BB 7/1/2019 BB 7/1/2020 BB 7/1/2021 BB 7/1/2022 BB 7/1/2023 BB 7/1/2024 BB 7/1/2024 BB 7/1/2025 BB 7/1/2019 BB 7/1/2020 BB 7/1/2021 BB 7/1/2022 BB 7/1/2023 BB 7/1/2024 R 7/1/2017 R 7/1/2029 R 7/1/2031 Total Principal 2,250,000 40,150,000 42,190,000 44,325,000 46,625,000 46,690,000 400,000 23,875,000 25,480,000 15,605,000 16,385,000 17,200,000 18,065,000 18,965,000 19,915,000 550,000 23,635,000 125,000 402,430,000 36 Schedule $350,000,000* 2015 General Obligation Refunding Bonds Ratings Due: April 29 POS Posting Date*: April 29 Sale Date*: May 6 Closing Date*: May 28 *Preliminary and Subject to Change Helen Bernstein High School Hollywood High School 37 Questions & Answers / Wrap-Up Appendix A Estimated Debt Service Schedule for 2015 General Obligation Bonds Los Angeles Unified School District Statewide Issues May 6, 2015 Statewide Issues Presented by: Ron Bennett Chief Executive Officer Health Benefits, Pensions, Other Postemployment Benefits © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Health Benefit Cost Increases 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2012 4.0% 5.7% 13.5% 9.5% 8.1% 3.0% 0.0% ( CA Premium Increases not yet available) 8.1% 2011 7.5% 8.3% 2010 5.5% 8.3% 2.0% 4.8% 4.0% 6.1% 6.0% 7.7% 8.7% 8.0% 9.2% 8.2% 10.0% California Premium Increases 11.2% 11.4% 12.0% 12.9% 13.4% 14.0% 13.9% 15.8% U.S. Premium Increases 16.0% 10.9% 10.0% Cost Increase (Family Premium) 18.0% 2013 Sources: California Health Care Foundation/National Opinion Research Center California Employer Health Benefits Survey: The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits: 2013 Annual Survey © 2015 School Services of California, Inc. Average Plan Cost Increases 3 Year Average Active Employee Total Plan Cost per Full-Time Equivalent (FTE) (Unified School District) Percentage Increase 2013-14 $14,320 5.1% 2012-13 $13,544 4.0% 2011-12 $13,023 6.3% 2010-11 $12,253 5.9% 2009-10 $11.569 8.3% 2008-09 $10,678 – Source: Teacher Salary and Benefit Report, J-90, for applicable years © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 School District Health and Welfare Benefits 4 Unified School District Average Health and Welfare Benefit Costs Health and Welfare Benefits All Benefits as a All Benefits as a Percent as a Percent of Payroll Percent of Payroll of General Fund Expense 2003-04 14.14% 2003-04 28.16% 2003-04 18.20% 2004-05 12.98% 2004-05 30.24% 2004-05 19.01% 2005-06 13.01% 2005-06 30.32% 2005-06 18.98% 2006-07 13.01% 2006-07 29.67% 2006-07 18.51% 2007-08 13.16% 2007-08 29.27% 2007-08 18.38% 2008-09 13.77% 2008-09 29.68% 2008-09 18.79% 2009-10 14.63% 2009-10 31.68% 2009-10 19.63% 2010-11 15.14% 2010-11 32.51% 2010-11 20.00% 2011-12 11.73% 2011-12 25.44% 2011-12 21.03% 2012-13 2013-14 11.76% 11.81% 2012-13 2013-14 25.35% 24.73% 2012-13 2013-14 21.22% 20.47% Source: CADIE Report, for applicable years © 2015 School Services of California, Inc. School District Health and Welfare Benefits 5 Both employer and employee costs continue to increase significantly – In 2002-03, school district employers paid 92% – And in 2013-14, school district employers still paid 84% Almost half of all school districts have no cap on the employer contribution to premiums* The absence of a cap on benefit plan contributions can equate to an automatic 1% to 2% across-the-board salary increase each year It is critical to manage total costs no matter who pays the premiums *Per 2013-14 Salary and Benefits Schedule for the Certificated Bargaining Unit (Form J-90) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Federal Health Care Reform 6 We are now five years into federal health care reform – House of Representatives (H.R.) 3590, The Patient Protection and Affordable Care Act (PPACA or ACA) – H.R. 4872,The Health Care and Education Affordability Reconciliation Act of 2010 Provisions are being phased in over a number of years The most significant changes are happening now and in the next few years © 2015 School Services of California, Inc. Pension Benefits 7 Because both of the California pension systems covering our employees are underfunded, contributions are increasing significantly for both systems Governmental Accounting Standards Board Statement No. 68 (GASB 68) requires LEAs to recognize their respective portions of these unfunded liabilities on their local financial statements – Starting with the 2014-15 fiscal year © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Pension Reform 8 The California Public Employees’ Pension Reform Act of 2013 (PEPRA) changes the pension benefits program for new members of the pension systems as of January 1, 2013 Any individual that is not a “new member” is classified by: – CalSTRS as a “2% at 60” member – CalPERS as a “classic” member New members must contribute at least 50% of normal costs of the plan – For 2014-15, the new member contribution rates are: • CalPERS: 6% (classic members pay 7%) • CalSTRS: 8.15% (same as 2% at 60 members, for now) New member contribution rates will be adjusted each year © 2015 School Services of California, Inc. Pension Reform 9 Employers are not allowed to pay any portion of a new member’s contribution – Unless the terms of a contract in existence as of January 1, 2013, would be abrogated • Once the contract is terminated, amended, extended, or renewed, new members will be required to begin paying 50% of normal costs © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Pension Reform 10 Are classic or 2% at 60 members required to pay at least 50% of normal costs? – In other words: can classic or 2% at 60 members still benefit from the employer paying all or part of the employee’s contribution? • It differs between CalSTRS and CalPERS © 2015 School Services of California, Inc. Pension Reform 11 For CalSTRS 2% at 60 members: – If a collective bargaining agreement or a written employment agreement is entered into or changed on or after January 1, 2014, employer payment of the employee’s contribution is no longer allowed – If the agreement was in effect before January 1, 2014, employers can continue to pay the member contribution until the contract expires or is renewed, amended, or extended in any way © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Pension Reform 12 For CalPERS classic members: – The employer can continue to pay any or all of the employee’s contribution because the employee was a member before January 1, 2013 © 2015 School Services of California, Inc. Pension Reform 13 PEPRA also revised many provisions of working after retirement Continues limiting the exemptions to the earnings limitation to retirees that meet these requirements Appointed by a COE or the state because of academic or financial issues in a local school agency (Education Code Section [E.C.] 24214[h]) All other members that retire on or after January 1, 2013, must wait 180 calendar days before returning to work or their retirement benefit will be reduced dollar for dollar © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Pension Reform 14 CalSTRS provides an exception to the 180-day waiting period if the retiree is of at least retirement age and if the appointment meets the requirements for an exception (E.C. 24214.5) – The retiree is still subject to the earnings limitation, which is $40,173 for 2014-15 and $40,321 for 2015-16 CalPERS provides an exception to the 180-day waiting period if the appointment meets certain conditions (Government Code Section [G.C.] 7522.44 and 7522.56) – The retiree is limited to 960 hours per year © 2015 School Services of California, Inc. Pension Reform 15 These provisions also apply to independent contractors and third-party employees who are retirees – So school employers are required to report the hours worked and/or earnings to CalPERS and CalSTRS © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Other Postemployment Benefits 16 OPEB includes all postemployment benefits other than pension Can include pharmaceutical costs, dental, vision, life insurance, long-term disability, and long-term care benefits Historically, a vast majority of districts funded obligations on a pay-as-you-go basis OPEB obligation amounts are rivaling pension obligations © 2015 School Services of California, Inc. What Is GASB 45? 17 How you fund your OPEB obligations can significantly impact your financial statements and reduce discretionary dollars that could be made available at the bargaining table GASB 45 requires that all districts offering nonpension post employment benefits • Quantify their liabilities by preparing actuarial valuations every 2-3 years • Account for and disclose OPEB liabilities on public financial statements • Implementation occurred from 2009-11 depending on district size © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Why This Matters Today 18 OPEB benefits – less funded and growing quicker than pensions – Workforce is aging and the Baby Boomer generation is phasing into retirement – Medical costs are anticipated to rise at a greater rate than inflation for the foreseeable future • Greater life expectancies are increasing obligations and long- term demand on employers © 2015 School Services of California, Inc. Charter Schools © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter School Facts 20 20 A charter school is an independently run public school that is allowed greater flexibility in its operations in exchange for greater performance based accountability The number of students attending charter schools has more than tripled in the last decade – Average rate of growth – 12% per year In 2013-14, 1,100 charter schools served 500,000 students statewide – Representing about 8% of the state’s student population Reference: Legislative Analyst’s Office (LAO) 2015-16 Proposition 98 Education Analysis © 2015 School Services of California, Inc. Charter School Growth Over Time 21 600,000 500,000 300,000 200,000 100,000 13-14 12-13 14-15 est. Year 11-12 10-11 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 00-01 99-00 98-99 97-98 96-97 95-96 94-95 0 93-94 Enrollment 400,000 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 State Laws 22 Charter schools are exempt from “the laws governing school districts,” except: – The Charter Schools Act (Education Code Section [E.C.] 47600 et. seq.) – All federal laws – All laws that are a condition of funding for a specific program in which the charter school participates – Specific provisions of law related to teachers’ retirement and employee relations – State pupil testing programs – Laws establishing minimum age for school attendance – Laws governing nonclassroom-based programs – The California Uniform Building Code is subject to narrow exceptions (E.C. 47610[d] and 47610.5) © 2015 School Services of California, Inc. State Laws 23 23 A charter school must also comply with: – All of the provisions of its charter – which may include references to specific provisions of the Education Code as well as local agreements – All state laws that apply to all public agencies or are of general application, such as: • California Division of Occupational Safety and Health (Cal-OSHA) • Open Meetings Act (Brown Act) • Public Records Act © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter Authorization 24 A charter can be authorized by: – School district – County office of education (COE) • A petition may be submitted directly to a county board of education (CBE) for charter schools “that will serve pupils for whom the COE would otherwise be responsible” (E.C. 47605.5) – Such as a county community school • Such a petition uses the same processes and timelines as for a school district petition © 2015 School Services of California, Inc. Charter Authorization 25 25 • Countywide Program – A CBE may also approve a petition for a countywide charter school that provides educational services not generally provided by a COE – but only if it cannot be operated by a charter school that operates in a single district (E.C. 47605.6) » Surprisingly, the standards for this process are not the same as for a district-approved charter » CBE can deny such a charter for any reason © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter Authorization 26 26 – State Board of Education (SBE) – Statewide Charter • A charter school may submit a petition directly to the SBE (E.C. 47605.8) – Such a petition needs to be for instructional services of statewide benefit that cannot be provided otherwise – If approved, such a charter school is exempt from any geographic and site limitations © 2015 School Services of California, Inc. Charter School Review Team 122 27 Recommendations: 1. Designate and train appropriate staff members before a proposal is received. 2. Depending on the district’s size and composition, consider including the superintendent and interested board members on this team. 3. One individual, a staff member or consultant, should review the entire charter school proposal for compliance with Board Policy, as well as the requirements of law. © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 The Petition Process 28 The petition process is the first step for the creation of a charter school Start-Up Charter Schools Conversion of an Existing Public School Districtwide Charter Schools A new school (including countywide or statewide charter schools) © 2015 School Services of California, Inc. The Petition Process – Timeline 29 29 School district must either grant or deny the charter* School district board must hold a public hearing Complete petition is submitted *Extension of up to 30 calendar days can be granted if both parties agree Reference: E.C. 47605(b) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Required Elements of the Petition 30 30 A charter school petition must contain: – Signatures of parents or legal guardians or teachers • Including a statement stating that the signatures show meaningful interest – Reasonably comprehensive descriptions of the “16 Required Elements (A-P elements)” • Including state priorities that apply for the grade levels serviced or nature of program operated by charter school – Affirmation of the “Four Conditions” – Proposed charter Reference: E.C. 47605(a)-(h) and (l) © 2015 School Services of California, Inc. Additional Required Information 31 31 Petitioners must provide information regarding the proposed operation and potential effects of the school, including, but not limited to: – The facilities to be used and their proposed location – The manner in which administrative services are to be provided – Potential civil liability effects upon the charter school and the district – Financial statements that include the proposed first-year operational budget, including startup costs, and cash flow and financial projections for the first three years of operation Reference: E.C. 47605(g) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 The Four Conditions 32 32 1. Shall be nonsectarian in their programs, admission policies, employment practices, and all other operations. – Teaching about religion in a neutral way is not prohibited – A charter school located in a church, mosque, or synagogue is not necessarily prohibited 2. Shall not charge tuition. – No charter school shall receive any public funds for a pupil if the pupil also attends a private school that charges the pupil’s family for tuition (E.C. 47602[b]) Reference: E.C. 47605(d) © 2015 School Services of California, Inc. The Four Conditions 33 33 3. Shall not discriminate against any pupil on the basis of ethnicity, national origin, gender, or disability. 4. Shall admit all students who reside in California who wish to attend (up to the school’s capacity based upon space, staff, or charter school policy). – If the number of applicants exceeds the school’s capacity, enrollment shall be determined by a random drawing – Conversion schools shall adopt a policy giving “admission preference to pupils who reside within former attendance area of that public school” Reference: E.C. 47605(d) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 The Four Conditions 34 34 – Preferences shall also be extended by the charter school to: • Pupils currently attending the charter school • Pupils who reside in the district – Preferences may be permitted by the chartering agency on an individual school basis, if consistent with the law © 2015 School Services of California, Inc. Three Prohibitions Prohibition 1 An employee of the school district cannot be required to be employed in a charter school (E.C. 47605[e]). Prohibition 2 A pupil enrolled in the school district cannot be required to attend a charter school (E.C. 47605[f]).* 35 35 Prohibition 3 No charter shall be granted that authorizes the conversion of any private school to a charter school (E.C. 47602[b]). *Districtwide charter schools must specify “alternative public school attendance arrangements for pupils residing within the school district who choose not to attend the charter schools” (E.C. 47606[a][2]) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Geographic Limitations 36 New and renewal charter schools must be located in chartering district (E.C. 47605[a] and [g]) A new petition must identify a single charter school that will operate within the geographic boundaries of the school district receiving the petition – The petition may propose multiple sites within the school district, as long as each location is identified in the charter school petition A petition must include a description of the facilities to be used and specify where the charter school intends to locate See Workshop Resources for exception if a charter school is unable to locate within the geographic boundaries of the chartering district © 2015 School Services of California, Inc. Geographic Limitations 37 37 Nonclassroom-Based Charter Schools – A resource center, meeting space, or other satellite facility may be located in a county adjacent to that in which the charter school is authorized if both: • The facility is used exclusively for the educational support of independent study pupils • The charter school is chartered in the county where a majority of students reside Reference: E.C. 47605.1(c) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Grade Level Restrictions 38 38 A school district cannot approve a charter school serving grades not served by the school district, unless the charter school proposes to serve all of the grade levels served by that school district (E.C. 47605[a][6]) – For example, a K-8 district may approve a K-12 charter school, but not a 7-12 or 9-12 charter school • A charter school may phase in additional grades over time © 2015 School Services of California, Inc. Governing Board Approval 39 Initial approval of a charter school may be granted for a period not to exceed five years (E.C. 47607[a][1]) A governing board may grant “conditional approval” – that is, approval of the charter school to open, but only after certain conditions are met, such as: – Finding an acceptable facility – Getting additional financing, such as a loan, implementation grant, or donations – Developing an acceptable memorandum of understanding (MOU) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 After Approval: Amendments or Revisions 40 Material Amendments/Revisions to the Charter – May be made only with the approval of the authority that granted the charter (E.C. 47607[a][1]) • School board policy should address the process by which the charter may be amended/revised • All material amendments/revisions must contain a “reasonably comprehensive description of any new requirement of charter schools enacted into law after the charter was originally granted or last renewed” (E.C. 47607[a][2]) © 2015 School Services of California, Inc. Renewal of Charter 41 To be renewed, a charter school must meet one of the following requirements (E.C. 47607[b]): – Attainment of the Academic Performance Index (API) growth target in the prior year or in two of the last three years both schoolwide and for all groups served – API (state) rank of four or above in the prior year or in two of the last three years – API (comparable schools) rank of four or above in the prior year or in two of the last three years – A positive determination by the chartering authority regarding the comparative academic performance of the charter school – Qualification by the charter school for an alternative accountability system (E.C. 52052) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Renewal of Charter 42 42 Upon renewal, additional terms shall be five years Renewals shall be governed by standards and criteria in E.C. 47605 – Thus, a chartering authority engages in the same evaluation on renewal as it does on granting an initial charter – based upon current law, not law in effect when charter was first granted – Renewals must include a description of any new legal requirements adopted since charter was granted (E.C. 47607[a][2]) © 2015 School Services of California, Inc. Renewal of Charter 43 43 If within 60 days of receiving the petition for renewal, the district has not made a written factual finding, then the absence of the writing shall be deemed an approval of the petition for renewal – 5 California Code of Regulations (CCR) 11966.4(c) A chartering authority that refuses to renew a charter for reasons that constitute grounds for revocation should pursue the revocation process © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter Petition Denial 44 Denial of a charter petition must cite facts that support at least one of the five reasons for denial provided in E.C. 47605(b): – The charter school presents an unsound educational program for the pupils to be enrolled in the charter school – The petitioners are demonstrably unlikely to successfully implement the program set forth in the petition – The petition does not contain the number of signatures required – The petition does not contain an affirmation of each of the four conditions – The petition does not contain reasonably comprehensive descriptions of the required 16 elements A school district cannot use the fiscal impact on the district as a reason to deny, but knowing the impact is still important © 2015 School Services of California, Inc. Charter Petition Denial 45 45 If either CBE or SBE fail to act within 120 days, the district’s decision to deny is subject to judicial review Same review process as followed by the district Another District *Charters granted by the SBE on appeal shall first be submitted for renewal to the school district that initially denied the charter (E.C. 47605[k][3]) Reference: E.C. 47605(j) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Surrender of Charter 46 46 “Surrender” is the voluntary termination of charter school activities No external process is necessary – Notify California Department of Education (CDE) Chartering authority should pay attention to potential liability for claims made after the charter has been surrendered: disposition of assets and transfer of pupil records See Workshop Resources for school closure recommendations (also http://www.cde.ca.gov/sp/cs/lr/csclosurerules.asp) © 2015 School Services of California, Inc. Charter School ADA 47 Charter school average daily attendance (ADA) = number of days of pupil attendance divided by number of days taught (CCR, Title 5, Section 11960) However: – Minimum year for a charter school is 175 instructional days, not 180 • ADA is proportionally decreased if fewer than 175 days are taught • Charter school cannot claim more than one day’s attendance per calendar day (even for independent study) – The flexibility to allow for the reduction of up to five days of instruction without incurring penalties expires June 30, 2015 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter School ADA 48 ADA and Enrollment Rules – Attendance boundaries for a classroom-based charter school are the entire state • Cannot claim ADA for non-California residents (E.C. 47612[b]) • Cannot claim ADA for pupil who pays private school tuition (E.C. 47602[b]) – Charter schools are funded for current-year ADA only – All charter schools in their first year of operation must start school by September 30 (E.C. 47652) © 2015 School Services of California, Inc. Charter School ADA 49 There is no minimum day – ADA may be claimed as long as pupils are “engaged in educational activities required of them by their charter schools on days when school is actually taught” – But charter schools must meet minimum annual minute requirements Grade(s) Minimum Annual Minutes Kindergarten 36,000 1-3 50,400 4-8 54,000 9-12 64,800 References: E.C. 47612.5 and CCR, Title 5, Section 11960 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Charter School ADA 50 Charter schools must maintain “written contemporaneous records that document pupil attendance” – And make those records available for inspection and audit The CDE requires charter schools, chartering districts, and county superintendents to certify the accuracy of charter school ADA Charter school must separately track in-district classroom ADA if it is using district facilities under the provisions of Proposition 39 (2000) References: E.C. 47612.5 and CCR, Title 5, Section 11960 © 2015 School Services of California, Inc. Charter School ADA 51 Minimum/Maximum Age – Pupils must have 5th birthday on or before November 1 per Senate Bill (SB) 1381 (Chapter 705/2010) effective 2012-13 (Transitional Kindergarten) – Only adults who have been enrolled in public schools since age 19, have been continuously enrolled since then, and under the age of 22 may be claimed for charter school ADA (except for programs specified in E.C. 47612.1 or if SBE waiver is granted) References: E.C. 47612(b) and CCR, Title 5, Section 11960(c) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 ADA Shifts Between Charter Schools and Districts 52 State does not want to pay twice for the same student – Example: District had ten schools last year, one of which converted to a charter school this year State will not pay both: – District’s prior-year ADA for all ten schools – Charter school’s current-year ADA State law makes an adjustment to the district’s prior-year ADA – For all charter schools, not just new ones © 2015 School Services of California, Inc. ADA Shifts Between Charter Schools and Districts 53 The reduction to prior-year ADA is offset by the ADA of pupils who transfer from a district-sponsored charter school in the prior year to a district school in the current year – In no case can this result in an increase in the prior-year ADA There is no required reduction to prior-year ADA for a K-8 district for a pupil attending 9th grade in a charter school (or for a K-6 district for a pupil attending 7th grade in a charter school) Reference: E.C. 42238.051 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Calculating the Charter Adjustment 54 Step 1: 2014-15 Second Principal Apportionment (P-2) ADA for pupils attending a charter school sponsored by the district in 2014-15 who attended a noncharter school of the district in 2013-14 P-2 P-2 2013-14 ADA 2014-15 ADA Last Name First Name Regular K-12 Charter Lessor Sample Sally 0.97 0.86 0.86 © 2015 School Services of California, Inc. Calculating the Charter Adjustment 55 Step 2: 2013-14 P-2 ADA for pupils attending a noncharter school in 2014-15 who attended a charter school sponsored by the district in 2013-14 P-2 P-2 2013-14 ADA 14-2015 ADA Last Name First Name Charter Regular K-12 Lessor Sample Sam 0.85 0.17 0.17 Lessor of Step 1 – Lessor of Step 2 = Net Shift Net Shift in ADA = 0.86 - 0.17 = 0.69 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Special Education Know Your Funding Sources AB 602 57 Other State Sources Mental Health Services (Resource Code 6512), Workability (Resource Code 6520), etc. State aid through the AB 602 formula allocation (Resource Code 6500) $ Federal aid from the Individuals with Disabilities Education Act (IDEA) sources (Resource Codes 33xx) Local General Fund contribution (Object Code 8980) Local Federal © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Overview of Major Funding Sources 58 • AB 602 Funding • A blend of federal* and state funds • Rates vary by special education local plan area (SELPA) throughout the state • Funds are based on average daily attendance (ADA) • Out of Home Care – a component of AB 602 based on a rate per bed or per pupil as of April 1 (DDS provides data) • Infant Grants – no new participants allowed • Based on numbers of instructional personnel and classroom type *Federal funds are woefully inadequate – fewer than 20% of overall expenditures © 2015 School Services of California, Inc. Overview of Major Funding Sources 59 • Mental Health Services (State) • Supports Individualized Education Program (IEP) Driven Mental Health Services • Based on ADA • Extraordinary Cost Pool • Based on Excess Costs for Nonpublic School/Agency (NPS) Placements • Preschool (Federal) © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Local General Fund Contribution 60 Starting in 2013-14, Object Code 8091 – Revenue Limit Transfers – could no longer be used with Resource Code 6500 – According to the CDE: Because “. . . this ‘revenue limit’ transfer to Special Education is a holdover from before the AB 602 funding model was implemented. There is no part of the LCFF calculation that is tied to amounts that should be transferred for Special Education.” So there is no equivalent transfer of per-ADA or per-student funding generated by special education students from the LCFF – Which resulted in a compensating increase in the local General Fund contribution in Object Code 8980 starting in 2013-14 © 2015 School Services of California, Inc. IDEA Funding Sources (Federal) 61 The CDE receives funding under three provisions of the federal IDEA Part B, Sections 611 and 619 and Part C: • Local Assistance and Preschool Entitlements • Capacity Building • Federal Preschool Program • Capacity Building • Early Education Programs • Infant Programs California’s Legislature and Governor provide the guidelines for these funds through the annual Budget Act © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Federal Sources 62 Revenues from federal IDEA programs are treated as follows, using the appropriate Resource Code for each: Administrative Unit SELPA Member Funds passed through SELPA • AU records SELPA state revenues and pass-through payments to other SELPA members using Fund 10 Object Codes 8287 and 721x AU and SELPA members record revenues in Fund 01 Object Code 8181/8182 Direct recipient or single agency SELPA • AU not applicable Record revenues in Fund 01 Object Code 8181/8182 © 2015 School Services of California, Inc. 2014-15 Federal Preschool Funding 63 Federal preschool dollars may be retained by each SELPA as incentive to serve preschoolers – No offset to state aid, but still very little preschool funding – About 10% of the total federal special education funds are for preschool Note: For each SELPA, some of the AB 602 funding base originally came from 1997-98 state-funded J-50 units for preschoolers. Don’t expect to fund all of the preschool programs only from federal dollars – some AB 602 dollars will be needed, and probably a large local General Fund contribution as well! © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 2014-15 Federal Preschool Funding 64 SELPA receives both: – Section 611 funding (local assistance for preschool pupils who are ages 3 and 4) – Section 619 funding (preschool grant) For both allocations, receive: – SELPA’s 1999-00 base year amount, plus – Share of increase in federal aid, allocated: • 85% based on K-12 enrollment in public and private schools • 15% based on poverty (using free and reduced-price meal counts) Each SELPA receives funding as a percentage of statewide totals © 2015 School Services of California, Inc. Infant J-50 Funding – Highlights 65 State funding still uses J-50 unit rates/support ratios – The 2014-15 0.85% cost-of-living adjustment (COLA) applies for Infant unit rates, too • Last year’s $2 million augmentation has been absorbed into the overall base rate for total special education funding – it is not carved out for infants – In addition to the existing appropriation for infant programs mentioned above, the State Budget provides an additional $2.3 million state General Fund for infant programs with priority for special education students in sparsely populated areas Go to: www.cde.ca.gov/fg/fo/profile.asp?id=3461 for the infant apportionment exhibits © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Infant Funding Rates 2014-15 66 Statewide Average Special Day Class $58,318 Resource Specialist $61,486 Designated Instruction $57,595 Aide $23,681 © 2015 School Services of California, Inc. School-Based Medi-Cal Administrative Activities 67 On October 14, 2014, the Department of Health Care Services (DHCS) and the Centers for Medicare and Medicaid Services (CMS) agreed to a School-Based Medi-Cal Administrative Activities (SMAA) cost settlement that includes a cash payment for deferred claims while others will be subject to “back casting” Back casting is the process of applying new rules to old claims, which will result in reducing the claim amount © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Managing the Maintenance of Effort 68 There is an MOE requirement for IDEA Part B funds – Must be used to supplement and not supplant state and local funds* Must spend at least the same amount on special education as in the prior year – Based on either total or per-capita expenditures – And based on either state and local funds or local funds only Monitored by the CDE at the SELPA level – SELPAs monitor each member district, charter school, and County Office of Education (COE), although the CDE receives the data as well *CFR Title 34, Sections 300.203-300.205 (34 CFR 300.203-300.205) © 2015 School Services of California, Inc. Managing the Maintenance of Effort 69 The MOE is calculated and tested twice for each fiscal year – for 2014-15 this would be: – 2014-15 Adopted Budget compared with 2013-14 Unaudited Actuals (Standardized Account Code Structure [SACS] Form SEMB) – 2013-14 Unaudited Actuals compared with 2012-13 Unaudited Actuals (SACS Form SEMA) Budgeted and actual expenditure data for Forms SEMB and SEMA are automatically extracted from the Unaudited Actuals SACS file – Other data is manually entered* © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Managing the Maintenance of Effort 70 State and Local Sources Local Sources Only Total expenditures MOE met? MOE met? Per-capita expenditures MOE met? MOE met? If the MOE is not met for one or more of the above tests, there are two more tests: 1. Was the reduction in expenditures due to an increase in IDEA Part B funds? • Up to 50% of the increase can be used to supplant 2. Were there any transactions exempt from the MOE requirement? © 2015 School Services of California, Inc. Managing the Maintenance of Effort 71 Transactions exempt from the MOE requirement*: – Departure (voluntary or for just cause) of personnel replaced by lower-cost staff – Decrease in enrollment of students with disabilities (SWD) – Termination of high-cost, long-term expenditures, for example: • Equipment acquisition • Construction of school facilities *34 CFR 300.204 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Managing the Maintenance of Effort 72 – Termination of the local agency’s obligation for a high cost placement of an SWD that: • Has left the agency of residence, or • No longer needs the program, or • Has reached an age where the agency is no longer obligated to provide a Free and Appropriate Public Education (FAPE) © 2015 School Services of California, Inc. Managing the Maintenance of Effort 73 What about adjustments to the MOE for these situations? – Salary reductions for furlough days: Not allowable – One-time bonuses: Not allowable – Significant one-time legal expenses: Check with the CDE – Shift of external services to internal: Check with the CDE – Salary and benefit negotiations not yet settled: Check with the CDE The opportunity to reduce the MOE is rare – If you don’t meet the MOE requirement, be sure to analyze your expenditures for unusual circumstances that might be exempt from the calculation © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Overview of AB 602 Funding Model 74 Became the funding structure in 1997 Each SELPA’s computed entitlement is funded from: – Property taxes for special education • This is now the only “deduct” from the state perspective – The balance is state aid – Base rates range from $478.30 per ADA to $925.88 per ADA in 2014-15 • The statewide target is $527.30 © 2015 School Services of California, Inc. Overview of AB 602 Funding Model 75 Growth in ADA is funded at current-year statewide target – Calculation of growth in ADA is based on change in ADA for SELPA as a whole, not greater of current-year or prior-year ADA for each district Declining SELPA is funded for greater of current-year or prior-year SELPA total ADA – No loss in funding in first year of ADA decline – but loss in second year © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Overview of AB 602 Funding Model 76 For AB 602 calculations, a SELPA’s ADA includes all school district K-12 ADA plus: – COE ADA – special education, juvenile court school, community school, etc. – Charter school ADA for the SELPA where the charter school is a member LEA or, if not an LEA, where the chartering agency is located (which may be a different SELPA from where the charter school itself is located) For details of what categories of ADA are used, and whether the P-2 or annual count of ADA is used, please visit the downloadable materials. (Also available at: http://www.cde.ca.gov/fg/aa/se/ab602apptdat.asp) © 2015 School Services of California, Inc. Final Thoughts 77 Special education requires providing services that are necessary, yet there is no mechanism within the state funding formula to fund based on the same criteria or the level of need identified locally However, local discretion is often far greater than we choose to exercise – Our goal should be to provide a high quality, legally defensible program that is cost effective – With this in mind, it is important to know how revenue is generated • But it is also equally important to know where the money goes Go back to your district, have a candid conversation about where you are and where you want to go with special education © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Final Thoughts 78 Work together with your stakeholders on LCAP priorities for special education students Read the task force report Gather the data for the excess cost calculation and start looking at the numbers Compare your staffing and fiscal numbers with those we provided Remember, comparative data related to students served and special education program and transportation expenditures can illuminate problem areas – Pull back the data curtain – Conduct a self-study © 2015 School Services of California, Inc. Staffing/ Class Sizes © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Staffing Ratios Have an Enormous Cost Influence District San Francisco USD San Diego USD Oakland USD Fresno USD Los Angeles USD Students Per Employee 16.40 16.78 16.86 17.59 17.90 Percent State Average 117.44% 114.78% 114.23% 109.49% 107.60% 80 80 Services and staffing ratios can make or break a district Long Beach USD 18.42 104.56% Sacramento City USD 18.55 103.83% Clovis USD 18.77 102.61% Mt. Diablo USD 18.86 102.12% Big 20 District Average 19.03 101.21% Stockton USD 19.22 100.21% All Unified Districts 19.26 100.00% Elk Grove USD 19.44 99.07% San Juan USD 19.74 97.57% San Bernardino City USD 20.22 95.25% Corona-Norco USD 20.23 95.21% Santa Ana USD 20.39 94.46% Moreno Valley USD 20.81 92.55% Garden Grove USD 21.38 90.08% Fontana USD 21.50 89.58% Capistrano USD 21.53 89.46% Poway USD 21.61 89.13% Riverside USD 22.63 85.11% Source: 2007-08 State-Certified Reports: J-90, CBEDS, SACS © 2015 School Services of California, Inc. Staffing Ratios Have an Enormous Cost Influence District San Francisco USD San Diego USD Oakland USD Fresno USD Los Angeles USD Staff Required for 40,000 Students 2,391 2,328 2,322 2,210 2,167 *State Average $29,549,622.56 $25,429,319.64 $24,585,554.05 $17,249,740.02 $14,302,926.82 Long Beach USD 2,139 $9,597,033.91 Sacramento City USD 2,104 $8,461,784.81 Clovis USD 2,067 $6,576,418.04 Mt. Diablo USD 2,066 $5,817,809.20 Big 20 District Average 2,062 $4,404,458.95 Stockton USD 2,055 $2,854,419.39 All Unified Districts 2,043 $2,531,992.19 Elk Grove USD 2,023 $1,097,489.67 San Juan USD 2,020 -$1,235,212.00 San Bernardino City USD 1,972 -$4,823,557.82 Corona-Norco USD 1,893 -$4,896,504.30 Santa Ana USD 1,880 -$6,053,916.96 Moreno Valley USD 1,869 -$9,007,446.63 Garden Grove USD 1,869 -$12,830,201.30 Fontana USD 1,860 -$13,609,163.60 Capistrano USD 1,858 -$13,802,547.41 Poway USD 1,847 -$14,315,612.60 Riverside USD 1,782 -$20,539,220.22 Source: 2007-08 State-Certified Reports: J-90, CBEDS, SACS 81 81 Staff ratio costs yield high-cost differential Dollar amounts reflect cost above or (below) all unified average compensation *At average compensation $74,597 © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Staffing Ratios Have an Enormous Salary Influence 82 82 The richest-staffed districts have the lowest salary rankings Staffing Rank Salary Rank BA+60 Salary Rank Maximum San Diego USD 1 19 17 San Francisco USD 2 17 19 Oakland USD 3 22 23 Fresno USD 4 14 22 Sacramento City USD 5 23 11 District © 2015 School Services of California, Inc. Staffing Ratios Have an Enormous Salary Influence 83 83 The lowest-staffed districts have the highest salary rankings Staffing Rank Salary Rank BA+60 Salary Rank Maximum Moreno Valley USD 19 7 6 Santa Ana USD 20 3 4 Montebello USD 21 9 8 Capistrano USD 22 4 2 Riverside USD 23 10 7 District © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. Los Angeles Unified School District Statewide Issues May 6, 2015 Some Districts Have High Seniority, Forcing Lower Salaries Schedule A # of Employees 10 10 10 10 10 Total Salaries Average Salary Salary Level $34,000 $40,000 $46,000 $52,000 $58,000 Salary Cost $340,000 $400,000 $460,000 $520,000 $580,000 $2,300,000 $46,000 Schedule B – With 2.22% Higher Salaries # of Employees 12 10 10 10 8 Total Salaries Average Salary Salary Level $34,748 $40,880 $47,012 $53,144 $59,276 $46,030 Salary Cost $416,976 $408,000 $470,120 $531,440 $474,280 $2,301,280 84 84 Seniority or placement on schedule is the most significant determinant of salary expense Lower seniority can fund significantly higher salaries A move of just two full-time equivalencies (FTEs) from the top of the schedule to the bottom provides enough for a 2.22% salary increase – If four FTEs move, salary increase can be 4.6% © 2015 School Services of California, Inc. © 2015 School Services of California, Inc. The George W. Bush Institute’s Education Reform Initiative Presents The Productivity for Results Series Key Performance Indicators: From Promise to Payoff NO. 2 FE B 2 0 1 4 MICHAEL CASSERLY, Executive Director, Council of the Great City Schools MICHAEL EUGENE, Chief Operating Officer, Orange County Public Schools INTRODUCTION In 2005, when the Council of the Great City Schools and its member districts began developing a series of key performance indicators, we had little idea how useful they would prove to be. At the time, chief financial officers and chief operating officers in the nation’s major urban school systems realized that they lacked the tools to assess their performance or to compare themselves to one another…. What followed that realization was a unique project that involved senior staff from large-city school systems across the country. The members of that project came together over several years to design, pilot, and implement a performance management system (PMS) that is unique in public education and maybe in municipal and state government. From the outset, the goals of the project included: • Establishing a common set of key performance indicators (KPIs) in a range of big-city school operational areas; • Benchmarking and comparing the performance of the nation’s largest urban school systems on these key performance indicators; • Identifying and documenting effective management practices of the top-performing districts to help urban school districts nationwide improve their operations; • Automating the performance data in a way that would allow districts to improve resource deployment and decision making over time; and • Developing standards of excellence on each of the indicators, and eventually expanding the system to incorporate lead indicators in academic areas as well as operations. The work was carried out under the aegis of two Council task forces—one on leadership, governance, and management, and the other on finance. Both were led by urban school superintendents and school board members. Staff teams from the city school systems were set up in 2005 in four broad functional areas to design the performance management system to its last detail. (The four areas were business operations, budget and finances, human resources and information technology.) Potential key performance indicators were created, reviewed, debated, and included or excluded based on their value to Council-member school districts. For example, the key value of bus transportation to a school system is a function of safety, timeliness, and cost. So, measures were created around the degree to which those values were realized. Options for measuring the indicators were considered, variations were contemplated, and Six Sigma methodology was applied to make the measures comparable across cities. Formulas for turning the raw data into clear performance measures were written. Draft indicators were tested across cities and the entire process was repeated multiple times until the technical teams were convinced that an item was viable. An expanding set of KPIs was then tailored to the informational needs of staff at different levels of school district governance and decision-making. Power Indicators, for instance, were designed for school boards and superintendents; a category called the Essential Few indicators were developed for chief officers and department heads; and general Performance Indicators were incorporated for operational staff. (See exhibit 1 for a list of power indicators as of the end of 2013.) PA G E 1 Key Performance Indicators Exhibit 1. Power Indicators by Operating Area Function Operating Area Finance Accounts Payable Power Indicator Accounts payable per $100k revenue Accounts payable costs per invoice Days to process invoices Invoices processed per FTE per month Cash Management Cash flow—short-term loans per $100k revenue Investment earnings per $100k Compensation Paychecks processed per FTE per month Payroll costs per $100k spend Payroll costs per paycheck Financial Management Debt principal ratio to district revenue Debt servicing costs ratio to district revenue Fund balance ratio--unassigned Fund balance ratio—uncommitted Fund balance ratio—unrestricted Expenditure efficiency—final budget vs. actual spend Revenue efficiency—final budget vs. actual revenue Grants Management Grant funds as percent of total budget Grant-funded staff as percent of district FTEs Returned grant funds per $100k grant revenue Procurement Competitive procurements ratio Procurement cost per $100k spent Procurement cost per purchase order Procurement savings ratio Strategic sourcing ratio Risk Management Cost of risk per student Workers compensation cost per $100k payroll spend Workers compensation cost per employee Workers compensation lost work days per 1,000 FTE Operations Food Services Cost per meal Food cost per meal Fund balance as percent of revenue Total costs as percent of revenue Breakfast participation rate Lunch participation rate Supper participation rate PA G E 2 Key Performance Indicators Function Operating Area Maintenance & Operations Power Indicator Cost of custodial work per square foot Custodial workload Cost of routine maintenance per square foot Cost of major maintenance per student Cost of renovations per student Work-order completion time in days Safety & Security Assault/battery incidents per 1,000 students People incidents per 1,000 students Security expenditures per 1,000 students Security expenditures as percent of district budget Security staff per 1,000 students Training hours per security personnel Transportation Average age of bus fleet Cost per mile operated Cost per rider On-time performance Human Resources Substitute placement rate Teacher absences per teacher Teacher retention by year Teacher vacancies on first day of school Information Technology Average age of computers Computers per employee Computers per student IT spending per district FTE IT spending per student IT spending as percent of district budget Network bandwidth per 1,000 students Network bandwidth per 1,000 users As the ability to define the measures and collect comparable data on them grew, so did the possibilities of what one could do with such a system. We laid out some of those possibilities in a book chapter, “Managing for Results in America’s Great City Schools.” But in the last several years since that chapter was written, the performance management system has moved ever more convincingly from promise to payoff. PA G E 3 Key Performance Indicators The initiative is now managed under the aegis of the Council by its director of management services, Robert Carlson, and the chief operating officer from the Orange County Public Schools, Michael Eugene. The project has backing from Council staff and technical team support from school district executives around the country. The KPI system is now in use, at least in part, in the vast majority of the nation’s big-city school systems. It is beginning to produce efficiencies and savings in a number of these urban school districts, and is helping to identify best practices. Moreover, it has been evaluated by an independent third-party. It is expanding into the academic arena. And it is being rolled out for the use of other school systems across the nation. Still, there is much more potential to realize. The following chapter summarizes some of the ongoing work on the system, its results to date, and what we envision for its future. HOW THE PERFORMANCE MANAGEMENT SYSTEM WORKS: THE PROMISE The process of operating and maintaining the performance management system developed by the Council of the Great City Schools begins with annual data collection to ensure districts have the most current indicators available. District staff members provide raw data using an online survey that requests information on some 1,000 data elements, and these data are used to produce some 500 performance measures in four functional areas, including business operations (transportation, food services, facilities maintenance and operations, and safety and security), budget and finance, human resources, and information technology. Once the performance measures are calculated, the data are placed into a data dashboard that graphically benchmarks the performance of each individual urban school district against the performance of other big-city districts nationwide and the norm or median of all responding urban districts. Immediately, district executives have strategic data that can assist them in identifying where they lead or lag. They can identify top-performing districts in any function or activity on which a district would like to improve. From there a district can work through the Council of Great City Schools to connect to top-performing districts and identify practices that have produced statistically proven results in other city school systems. A key benefit of the data is this timeliness for strategic planning. While other comparative data exist from other sources, those data have often aged as much as three years before they are published. This lag undermines the relevance of data for planning purposes. In contrast, the Council’s KPI data is based on data from the most recent full fiscal year. This makes the information timely and relevant for a school district’s strategic planning process. Further, the use of the automated data-modeling tool in the online system allows districts with rapidly changing performance to update their information to enhance precision in planning. Finally, once districts have focused on where they need improvement, identified top-performing peers in a particular area, and inventoried practices that produce better results, the automated system and its data-modeling tool help districts identify what initiatives are needed to make improvements. This allows them to set targets, run calculations, and determine whether a contemplated improvement plan is likely to work and what the return-on-investment is likely to be. This is a significant change from the traditional method of incremental target-setting without a basis in business analytics. With this tool, district executives no longer face the dilemma of being “a mile wide and an inch deep,” as they can now prioritize a smaller set of areas on which to focus time and resources, while sustaining current performance in areas that are in good shape. Additionally, executives can move faster to implement effective practices and improve results knowing that they are backed by solid data and good research. PA G E 4 Key Performance Indicators E VA L U AT I O N A N D E M E R G I N G PAY O F F S O F T H E K P I S Y S T E M In 2010, with modest funding provided by the Hewlett Foundation—the only external funding that has supported the initiative—the Council of the Great City Schools commissioned an external evaluation of the KPI system. The work was done by the American Institutes for Research (AIR). The goal of the evaluation was to provide the Council with feedback on the use, usability, and perceived impact of the key performance indicators in improving urban school district performance. The evaluation involved both individual interviews and surveys to examine how familiar line administrators in city school systems were with the KPIs, how likely they were to look at them, whether they learned things from them, what changes were made as a result of usage, what impact the system had on districts, and whether data were shared and decisionmaking in districts was improved. An evaluation survey was administered to chief financial officers, chief operating officers, chief information officers, and human resource directors in the then-65 member districts of the Council. Of the 260 individuals who received the survey, 142 responded for a response rate of 55 percent. A sample of respondents was chosen for in-depth follow-up interviews. The results of the surveys and the interviews indicated that administrators in the Great City Schools were clearly aware of the key performance indicators. Some 91 percent of respondents knew about the system while only eight percent indicated they were not familiar with it. Most of those indicating they were not familiar were either human resource directors or individuals who had been on the job for less than a year — or both. In addition, about 85 percent of those who knew about the KPIs reported that they had used the system in the last 12 months, and 64 percent had used it in the last two months. Some 15 percent of those who were familiar with the KPIs did not use them. Those saying that they did not use the system cited not having the time, not knowing enough about the KPIs, not being in their current positions long enough to know how to use the system, or not being able to make the comparisons they wanted with the system. Each of the 65 districts had at least one registered user of the KPI system, and the average urban school system had 17 registered users. These users were typically senior line managers and program administrators. Also, the survey results found that 100 percent of administrators who knew of the KPI system reported that it was useful, and 15 percent indicated that it was essential to their jobs. An additional 37 percent reported that the system was very useful, and 48 percent responded that the system was somewhat useful. About 67 percent of respondents reported that they learned something useful from the KPIs that helped them in their jobs; about 20 percent reported that they learned a lot that helped them in their positions; about 10 percent indicated that they learned things but that they were not helpful in performing the job; and three percent reported that they either learned nothing or were unsure. When asked about what was useful in the KPI data, respondents indicated that the greatest utility rested in their ability to compare their performance with other districts. Others reported that the system was useful in helping to shape and drive district goal-setting and benchmarking efforts. Finally, respondents reported that the system was useful in spurring their internal discussions about school district performance and options for improvement. In terms of changes resulting from use of the KPI system, the evaluation results indicated that the KPIs mostly helped participating districts identify areas in need of improvement. Many districts reported acting on the information, many with tangible results. Some 45 percent of respondents indicated that they or their staff members had made changes to their operations based on the KPI data; 42 percent said they had not; and 13 percent were not sure if changes were made. Exhibit 2 below summarizes some of the major changes that respondents indicated they had made in their districts as a result of the KPI system and the results they had seen as of 2011. PA G E 5 Key Performance Indicators Exhibit 2. Summary of Survey Results on Reported Changes and Results from Use of the Key Performance Indicators Reported Changes Reported Results Business Operations • Optimized transportation • Reorganized maintenance and operations workflow, implemented a second shift • Reviewed warehouse utilization and deliveries • Improved food services operations • • • • • • Saved millions Improved warehouse operations Increased productivity, work orders are closed faster Reduced resource usage by approximately five percent Eliminated 100 buses Improved services, reduced cost across operations Finance • Improved resource allocation and budgeting • Used the “sunshine” from the KPIs on cost-per-student metrics to negotiate lower contract costs • Changed cash reserve balance target • Changed procedures: direct deposit, payment of invoices, risk management • Moving to online finance systems • Reorganized financial processes surrounding budget development and presentation • Saved at least $40,000 • Changed policy Human Resources • Incorporated KPIs into individual goals and performance reviews (e.g., teacher absenteeism) • Used the KPIs as a method to assess or validate staffing requirements • Saved $500,000 in labor • Saved $50,000 • Used data to “right size the organization” Information Technology • Looked to improve business processes where our district is performing below (e.g., the median) other districts • Changed IT policies and practices (e.g., on help desk processes and ticketing) • Gained better understanding of customer • Improved IT service delivered to the district PA G E 6 Key Performance Indicators U S I N G T H E K P I T O I M P R O V E O P E R AT I O N A L P E R F O R M A N C E A N D S AV E M O N E Y So how have districts used the KPI to improve operational performance? The AIR evaluation indicated that the KPI system has already helped urban school districts identify areas in need of improvement and maximize resources through cost savings, efficiencies, data collection and benchmarking, budgeting and decision-making, and identification of best practices. Examples of these uses are described briefly below. Cost Savings Districts have reported cost savings that have ranged from $25,000 to $12 million through their use of the KPIs. For example, as a result of the KPIs, Cincinnati changed labor practices and menus in its food services operations, altered staffing and supplies in custodial services, and increased training in maintenance staff and found that “cost savings have been substantial, in the range of $10 - 12 million per year.” In addition, Clark County (Las Vegas) reported that “We use the metrics for comparative performance assessment and to identify and target any weak areas,” which has led to “significant” gains in efficiency and savings in the “millions.” A particularly good example of how the KPI system has saved money for school systems is found in Orange County (Orlando). Orange County Public Schools (OCPS) has one of the larger district-owned bus fleets in the country. To save on transportation costs, initially, the district attempted to reduce costs by making adjustments to its bell schedule. But the changes resulted in significant push-back from parents and others, and created the need to come up with different cost-cutting strategies. To explore other options, OCPS retained a consulting group to conduct an audit of the district’s transportation operations. OCPS management used the KPIs provided by the Council’s performance management system to verify audit findings and vice versa. Further, OCPS management used the data-modeling tool in the Performance Management System to establish targets to implement savings initiatives and efficiencies. The external audit verified two years of data from the KPI system indicating that the district owned more buses than it needed to run routes for the nearly 73,000 students the school system transports each day. As a result, the district sold 280 buses at auction, generating one-time revenue of $1.7 million and saving an additional $90,000 in costs for mechanics to maintain the unneeded buses as well as untold amounts in fuel to run those buses. Further, the district was able to consolidate a number of routes with buses that were under utilized. The route improvements meant 44 routes were cut from the previous school year for a savings of about $1.9 million. The routing reductions also led to some staff cuts — two routing positions and two area managers — to eliminate redundancy, creating annual savings of an additional $178,000. In addition, the district removed 71 late-model buses from the fleet and redeployed staff to cover absenteeism, resulting in a savings of approximately $3.7 million in operating costs. Finally, the routing efficiencies ultimately resulted in a reduction in average daily student ride-time (morning and afternoon travel time combined) on the buses from 94 minutes in 2009-10 to 84 minutes in 2010-11, or 11 percent. The 2013-14 Winter Edition of “Florida School Bus” recently featured the OCPS transportation department’s use of the KPIs to drive sustainability initiatives while reducing costs. For example, through another KPI-driven initiative on anti-idling, OCPS eliminated 1,503 metric tons of emissions from the atmosphere, while saving $537,805. Other performance improvements driven by the KPIs include increased recycling, faster IT customer-service response times, shorter supplydelivery times to schools, increased savings through procurement, reduced false security system alarms, and more. PA G E 7 Key Performance Indicators The OCPS transportation team has continued to embed the use of KPIs into its leadership culture. OCPS Superintendent Dr. Barbara Jenkins expects decision-making to be based on data, and each of the eight departments in the operations division of the school system uses KPIs and benchmarks from the Council’s performance management system extensively in their work. KPIs are embedded in department scorecards to monitor progress on priorities in the strategic plan, and are then published in the annual “Service Efforts & Accomplishments” report of the district. Efficiencies The KPIs are also demonstrating their value in improving efficiencies over and above saving money. As one district in the Midwest indicated during the AIR interviews, efficiency is the name of the game: “As we approach operational costs more efficiently, the district has more funds for instruction. With limited budgets, this is critical for teaching and learning for children.” Efficiencies reported by districts varied widely. A number of districts reported using the KPIs to help with the extensive downsizing of resources (five percent or more) that some districts are pursuing, including reducing personnel. Kansas City, for example, “has been able to save money on the operations side of the house that is then available for instruction. In printing, processing checks and invoices, facilities work orders, and in other areas, we have reduced our costs per transaction.” In some cases, the district was able to move transactions online to speed up services, resulting in thousands of dollars in savings. Indianapolis reported that as a result of the KPI system, the school system implemented an “Energy Conservation Program” to save on utility costs. It developed a maintenance cost budget and tracked expenses at each school building to reduce maintenance costs. Now “individual schools are much more aware of the cost of their maintenance requests.” The energy program is “projected to produce 10 percent savings in utility costs.” Another district in the Midwest changed its budget reserve-balance target, revised internal control manuals to reflect updated standards, and initiated reviews of warehouse utilization, all of which the district expects to result in gains in efficiency or productivity. Data Collection and Benchmarking Use of the KPIs has also led to district alignment of data and dashboard systems. In several districts, including CharlotteMecklenburg, Seattle, Anchorage, Kansas City, and Broward County, the boards of education and staff members are fully aware of the KPIs and have begun integrating the measures into required reporting procedures in their districts. In addition, the KPIs have spurred some districts to reconsider the types of data they collect and report. For example, one district reported that it began “collecting data on customer satisfaction that we did not collect previously.” Another reported “in-depth tracking of maintenance work” and yet another stated that it “established reports on these indicators to make it easier to pull data.” Kansas City indicated that, “KPIs are not institutionalized within our district but that is the goal.” Since the evaluation of the system, Kansas City has built movement on some KPIs into the superintendent’s evaluation. PA G E 8 Key Performance Indicators Other districts reported that they: • Use “KPIs as part of our budget reviews for operational areas with our school board.” –Southeastern district • “Expanded the data that we collect and track to better address the KPIs set forth in the survey so that we can more accurately benchmark ourselves to our counterparts in the Council.” – Boston • “Used KPIs to establish new and revise their previous KPIs.” – Midwestern district • “Began to think about ways to better measure our activities. We also adopted some of the KPIs as performance measures we [are] committed to achieving.” – Southwestern district Moreover, as intended, the KPI has become a benchmarking tool in many districts: • “We used the KPI data on the percent of teacher absenteeism as a benchmark.” – District on the East Coast • “[We] looked to improve business processes where our district is performing below the median of the other KPI responding districts.” – District in Midwest • “We look at ways to reduce costs in areas where we were (are) expending more funds than comparison districts.” – District in the Southeast • “We set benchmarks for our district to meet and/or exceed in order for the staff to manage their operations more efficiently and effectively.” – Another district in the Southeast Other districts pointed out that the KPIs serve as a way of validating and supporting functions and operations that are going well. For instance, Seattle reported that the KPIs proved useful as a way of “validating existing process strategies.” Another district noted that the KPIs helped validate some of the school system’s staffing patterns while questioning others. Palm Beach, meanwhile, compared its information technology (IT) spending per student and per employee to other urban districts of similar size and compared their strategies to the initiatives in other districts, and was able to demonstrate their efficiency to stakeholders inside and outside the school system (and build perceived value for the organization). PA G E 9 Key Performance Indicators Budgeting and Decision-Making More than half of district leaders surveyed reported that the KPIs have also improved decision making in their districts. Decisions regarding staffing, budgeting, and the development of benchmarks were just some of the areas in which districts used KPI data to inform their work. The use of the KPIs allows districts to put costs into understandable terms when discussing the budget as a whole. Transportation staff can debate costs per student, maintenance staff can consider costs per square foot, food services staff can confer on costs per meal, etc. The manner in which the KPIs “unitize” costs, and illustrate those costs over time, can help communicate the budget in terms more accessible to policy makers and the public. Five districts specifically cited budgeting as the place where KPIs helped decision making the most. For example, the chief financial officer of the Anchorage School District (ASD) reported that “ASD is using KPIs to make budgeting decisions.” Rochester City School District reported that it “reorganized financial processes surrounding budget development and presentation” based on the KPIs. Others reported using KPI data to identify potential cuts and determine the best places for reductions in force. Districts also pointed out that the KPIs serve to validate and support functions that are doing well. A southeastern district reported that they “use the KPIs as a method to validate staffing requirements.” Another district noted that it faced mounting pressure to eliminate central-office functions, and the KPIs helped to justify operational-staffing levels. The KPIs have also helped “in determining which areas we should target for improvement.” The KPI enable the testing of policy and practice choices, so districts can assess “budget value to see that we are making good decisions.” In other cases, the KPIs have resulted in decision-making that leads to additional investments in areas needing improvement. In Miami-Dade County, for example, “Data on computer-to-student ratios helped support our plans to meet students’ needs.” Boston noted that it was “able to use these benchmarks to advocate for additional resources.” Throughout the interviews conducted as part of the AIR evaluation, a repeated theme was voiced: “The data helps us assess our situation and often causes us to pause and ask questions about ‘why we do things the way we do.’” Most responses implicitly referred to the idea that managers in the Springfield schools articulated: The KPIs are the “development of an industry standard.” Orlando, again, has been a particularly active user of the KPI system to improve decision-making in part because its chief operating officer (COO) was one of the system’s key architects and advocates—and is a co-author of this paper. Using the KPIs, the COO and others in Orlando have determined that the district actually performs well compared with other cities in such areas as food service costs and fund balance, transportation safety, security system training and access control, information technology first-call resolution rates, and sole-sourcing procurement. However, one area in need of improvement in the Orange County Public Schools, according to the KPIs, involved elementary-school breakfast participation rates for its neediest students — an indicator that can affect overall student academic performance. The data in the system indicated that Orlando would have to increase its breakfast participation rate for needy students by some 46 percent or by about 1.7 million additional breakfasts just to reach the national average. This would require significant program and policy changes in the school system — something the district’s managers were determined to accomplish. PA G E 1 0 Key Performance Indicators The district used the data-modeling feature of the KPI performance management system to help determine the level of effort that would be needed to accomplish such a large goal on a year-by-year basis. The COO and others in the district started by looking at top-performing urban school systems in school breakfast rates and found that those with the best participation actually required and implemented breakfast programs in all schools, had active “breakfast in the classroom” programs, had implemented either Provision 2 or Universal Breakfast programming, and coordinated programming with their principals and teachers. District leaders took these examples of best practices, set goals, developed a plan, and had the school board consider and approve a wellness policy that requires a breakfast program in every school. The board instituted a universal breakfast program and a breakfast-in-the-classroom program, and administrators changed bus arrival times so children would have sufficient time to eat before classes started. As part of the implementation, the district also tracked factors that might influence the new policies, programs, and their implementation: the willingness of school-based staff to change practices to allow students to eat breakfast in classrooms, program effects on instructional time, meal production capacity at the district and school levels, and the like. While more changes in the plan to reach the national average are now moving into action, simply using the Council’s KPIs, benchmarks, and data-modeling tools, OCPS has already increased participation in its breakfast program for its neediest students by 139 percent (from 16.2 percent of needy students to 38.9 percent) in just two years. OCPS still has much work to do, as the Council’s KPI system continues to show, given the fact that top-performing districts still far outpace Orlando in breakfast rates for needy students. However, the district has made significant gains, and has shown the capacity of the performance management system to deliver key strategic data quickly to decision makers to show where a district was strong, average or in need of improvement; to set empirically-based improvement targets; and to connect top performers in operational areas to spread the best practices at the root of the indicators. In addition, OCPS is pursuing ways to rapidly increase its student participation rates in the broader meal program. While the district has built its strategic plan based on the KPI system and best practices of top performing school districts, one distinguishing characteristic comes up when OCPS compares itself to other school districts. In the vast majority of cases, districts with higher participation rates have a higher concentration of students in poverty. In fact, the KPIs reveal that even accounting for participation among students that are not eligible for free/reduced price meals, districts with higher poverty rates tend to have higher school-meal participation rates. This probably points to a greater acceptance of the program and less feeling of stigmatization in the districts with greater concentrations of poverty. To address this common characteristic, OCPS is examining the need to address program appeal through marketing strategies such as chef partnerships, food shows, customer-designed menus, social media, and the purchasing of a food truck to connect to students through pop culture. OCPS is also proactively pursuing strategies that do not stigmatize students, such as replacing the meal application with the name “Club Lunch,” and increasing the numbers of schools in Provision 2 and Community Eligibility programs where application forms can be eliminated. In cases like these, the KPIs serve as the basis for asking broader questions about why a school district’s performance looks like it does compared with other districts and what might be done to improve it. Further, using KPIs to assess the effectiveness of a district’s approach allows executives to quickly distinguish strategies and practices that produce efforts without outcomes, versus those that produce results. PA G E 1 1 Key Performance Indicators Identification of Best Practices Another way in which the key performance indicators are beginning to pay off is in their ability to identify best practices. This is done by identifying consistently top-performing districts using the indicators and then determining the procedures underlying both Power Indicators and the Essential Few—those practices that lead these districts to high performance. This is the type of information districts often spend thousands of dollars getting from high-priced management consulting firms. Now districts have immediate access to this information and the confidence of knowing it is backed up with statistically proven performance outcomes. Further, the Council’s KPI program assists districts in identifying best practices much faster, which is particularly beneficial when the demand for improvements is immediate. By calling management services staff at the Council, districts can be immediately connected to top-performing districts. A specific example is in the area of accounts payable. Using the most recently collected data in this area, the KPI team determined that eight Great City School districts consistently scored in the top quartile in this area: the Wichita Public Schools, Portland Public Schools, the School District of Palm Beach County, Los Angeles Unified School District, Denver Public Schools, Minneapolis Public Schools, Charlotte-Mecklenburg Public Schools, and the Austin Independent School District. Once the team identified districts that scored in the top rungs among other major city school districts in accounts payable, it devised a “best practices” survey that allowed chief financial officers and their staffs in these districts to describe the management and operational practices that lead their districts to produce high-quality outcomes. Questions on the survey were derived from best practice recommendations and industry standards promulgated by the Government Finance Officers Association (GFOA), the National Institute of Government Purchasing (NIGP), and the International Accounts Payable Professionals Association (IAPP). Results from the surveys were analyzed by the project team, which then conducted follow-up phone interviews to clarify responses and obtain needed details. Three indicators proved critical to determining which districts actually performed well in the accounts payable arena: 1) the number of days it took to process a vendor payment; 2) the number of non-purchase order invoices processed per FTE per month; and 3) the number of voided checks as a percent of total checks. The median number of days that it took the Great City School districts to process payments was 21 days. However, the number of days to process payments among seven of the eight top-performing districts was between two and 15 days. (The range among all districts was from two to 75 days.) In the area of non-purchase order invoices, the median Great City Schools district processed 328 invoices per employee a month while the numbers of such invoices processed in six of the eight top-performing districts ranged from 417 to 1,118 invoices per employee per month. Additionally, in the area of voided checks, the Great City School districts ranged from having to void between 1.05 and 3.24 percent of their checks per year. However, the top-performing eight districts ranged from having to void between 0.06 percent and 0.88 percent of their checks per year. The surveys of the top eight districts determined that three critical practices undergirded the high accounts-payable indicators in the area of vendor processing: the use of electronic payments to vendors instead of traditional check writing, the ability to use automation to decrease invoice-processing time and costs, and the presence of written policies and procedures to govern financial practices. PA G E 1 2 Key Performance Indicators For instance, the top-performing districts often made payments in the form of electronic funds transfers that allowed a vendor to collect recurring payments electronically. Denver, for example, uses system flags in its Enterprise Resource Planning (ERP) system to make direct payments to specified vendors for certain invoiced goods and services. Eighty percent of the top-performing districts also use “purchase cards” or P-cards for small purchases to speed up payments to vendors. Austin reports that its use of P-cards reduced the number of purchase orders processed by two-thirds. In addition, 60 percent of top-performing districts use electronic fund and wire transfers directly from district bank accounts to third-party administrators for such things as employee health insurance. Moreover, 40 percent of these districts also used “ghost payment” cards that allowed preferred vendors with detailed controls to charge the district automatically when it makes purchases. The use of automation to decrease invoice-processing time and costs were also found to be common elements among the eight top-performing city school districts. Los Angeles, for instance, used an automated three-way matching system for invoice-receiving reports-purchase order documentation that is linked to the district’s financial system, accelerating invoiceprocessing time. Other similar practices included the automation of routine business transactions, the processing of early-pay discounts, and electronic data interchanges (EDI). Palm Beach County uses both EDI and spreadsheets to load hundreds of food service, non-purchase order vendor invoices at one time into its ERP system and can transmit the data between other internal systems or to the systems of outside agencies and organizations. According to survey results from the top-performing cities, districts with the most favorable indicators also had in place specific policies to govern their accounts payable processes. These policies often included: 1) prompt-payment discounts in contract negotiations with vendors; 2) expedited payments of selected transactions that meet specified policy criteria or thresholds; 3) “piggyback” arrangements on previously negotiated master-service agreements to take advantage of discounts on purchases over certain levels; and 4) strict deadlines for reimbursing employee expenses. Survey data also indicated that districts with top-scoring indicators used such practices as cross-training among their accountspayable staff, staff-retention initiatives, standardized communications protocols, the consolidation of vendor billing, the regular review of productivity opportunities, invoice-resolution teams, and the regular review of invoice “aging” reports. Moreover, the data on accounts-payable indicators relating to the number of non-purchase order invoices processed and the number of voided checks identified best practices that drove performance in the eight top-performing districts. In brief, these practices included: use of automation; management oversight of the accounts payable process; the use of formal written policy and procedures manuals; and strong internal-control and monitoring systems. The KPI teams also identified top-performing districts in the areas of compensation, grants management, cash management, financial management, risk management, and procurement — and is working on identifying best financial practices in each of these areas, something that would have been impossible without the key performance indicators and the data collected and reported in the performance management system. PA G E 1 3 Key Performance Indicators AREAS OF NEEDED IMPROVEMENT IN THE KPI SYSTEM Although districts have found the KPI to be useful, there were also aspects of the tool that users would like to see improved: 1) better and more consistent data definitions; 2) additional contextual data; 3) reduced data-collection burden; and 4) more best practices information. The most prominent issue that urban districts indicated needed additional work involved data definitions and the ability to “compare apples to apples.” Districts are not always fully confident that all the districts are defining the KPI measures the same or the right way. Districts also want greater ability to make comparisons based on — or that at least account for — certain district characteristics such as student demographics or district size. For example, one district indicated that “There is too much variation in the size of member districts. Information needs to be bracketed based on district enrollment or some other demographic.” This kind of information would ensure that districts were comparing their performance against those with similar characteristics. This kind of information is now being built into next generation systems, but the Council continues to caution districts not to compare themselves solely to similar districts for fear that it would lead them to rationalize their results and fail to stretch beyond their immediate peer group. Challenges with the data collection process were also noted (e.g., users reported that the process was time consuming, and that some questions are “confusing or ambiguous”), and a few districts want the Council to “eliminate data collection that does not support KPI calculations.” Finally, districts were hungry for improvement ideas. One district cited wanting much more “information regarding best performing districts and what they are doing to achieve the results they have,” while another said that one “can’t tell what best practice from the metric is or what is being recommended.” Districts indicated that they wanted guidance from the Council on target levels and help with supporting a “dialogue with other districts to learn what they are doing.” PA G E 1 4 Key Performance Indicators Districts also provided more detailed responses to the question about what still needs to be done to improve the system. Sample responses included: • “It would be nice to have a webinar to discuss EACH operational area section of the survey so that respondents could ask questions of one another.” • “Establishing protocols for exporting data from commonly used ERPs would be helpful (e.g., PeopleSoft, Lawson, etc.)” • “I’d like to have a consensus method for counting custodial and grounds productivity and overhead. The difficulty lies in the use of school-based staff in a manner that would not be available under outsourcing, and in how supervisory positions are credited for direct production versus overhead work, as well as differences amongst schools as to usage of teaching staff or students for any such duties.” • “I think we need to revisit the IT KPIs and definitions to modify where necessary, and to include a teaching and learning focus. I also think that we need to have districts document the sources of their data to ensure that we are using consistent data points to truly be able to use the KPI survey as a benchmarking tool.” • “Reduce the number of purchasing-related KPIs. There is an over-abundance of those when compared to other areas. Give more details on how the KPIs are calculated — sources of the data.” • “It would be good to be able to see live data from other districts and what they are doing or changing to influence their measurements.” • “It would be good to survey the members regarding which KPIs they use: monthly/quarterly/annually/never.” • “Better metrics are needed for Human Resources than are currently specified. Metrics should measure results not inputs.” • “Council member districts need to be ‘all in’ for the data set to be as complete and robust as possible for comparability measures to be worthwhile.” • “Identify only four employee groups: Teachers, Support Employees, Principals and Assistant Principals, Central Office (district Level) Administrators and Professional Technical. While it is useful to know the total number of staff in HR, the probability of those staff members having multiple assignments makes the calculation of a sum difficult and maybe misleading. It might be more practical to ask “Is worker’s compensation (or professional development, risk management, payroll, employee benefits, or others) under the supervision of the human resources department or someone else?” I suggest the definition of general fund is appropriate, and that we really only need to know for these purposes how much money is available from the general fund, the building fund (capital projects funds), and federal programs funds. I think what we want to know is the amount of money available to spend per student (or per employee).” • “We may need more assistance from Council personnel in completing our reporting requirements.” Since the AIR evaluation results were released, the Council has made a major push to improve the comparability of data. Every survey question has been revisited and most have been tightened to improve how districts interpreted and answered the questions. The data published by the organization in 2013 reflected new and improved definitions of most variables and greater confidence that the results were more comparable across school districts. Still, more work lies ahead in all areas. PA G E 1 5 Key Performance Indicators A U T O M AT I O N A N D C O M M E R C I A L I Z AT I O N O F T H E K P I S Y S T E M The KPIs have now been fully automated by the Council and its partner TransACT Communications, Inc. into a performance management system that is capable of collecting and analyzing operational data, comparing results from one city to another, and better reporting results. At present, the automated performance management system allows districts to enter their raw data on each of the four major functional areas using a detailed set of electronic surveys, see a district’s overall performance relative to the norm using an automated “EKG” system, and compare a district’s performance with other major city school systems participating in the project. (See exhibit 3.) Once data are entered into the system, it is converted automatically into benchmark graphs and dashboards using a series of complex equations. The system also provides brief narratives that describe each indicator, list factors that are likely to influence each indicator’s value, and discuss why the indicator has value. A district can also filter out other school systems to look only at those with similar enrollments, poverty levels, geographic region, state laws, or labor status (union or right to work). This work was a direct response to district needs to compare themselves to others with similar characteristics. In addition, a district is able to determine with the automated system whether its performance is improving over time and to compare trends against a peer group’s trends. Moreover, the upgraded system allows school systems to download data onto PDAs and other hand-held devices, to conduct more sophisticated data analysis, and to make more complex and tailored comparisons. Finally, the automated system provides school districts immediate feedback on the results of various policy and practice changes and allows districts to answer various “what/if” questions without permanently changing their data. Now, the system has been packaged for commercial availability to school systems of all sizes and types across the country. Some 60 non-Council school systems across the country have now purchased the system through TransAct Communications, the Council’s sole licensing agent, since the fall of 2012. Over time, the new business arrangement should provide both the Council of the Great City Schools, which owns the KPIs, and TransACT, which owns the software to run it, sufficient revenue to sustain and expand the effort. PA G E 1 6 Key Performance Indicators Exhibit 3. Sample Screen on Procurement Costs (in dollars) per Purchase Order in the Great City Schools PA G E 1 7 Key Performance Indicators FUTURE PRIORITIES AND NEXT STEPS A considerable amount of work has gone into the performance management system since it was first launched some nine years ago. The system has more and better indicators than was originally planned, and its automation goes beyond what was initially thought possible. Still, there is much more that is envisioned for this unique tool. First, the Council of the Great City Schools expects to expand the key performance indicators into the academic arena and is working on those indicators now. Over a decade ago, the organization initiated the Trial Urban District Assessment of the National Assessment of Educational Progress (NAEP). This project currently allows 21 major urban school systems — about one-third of the Council’s membership—to be oversampled to allow comparable cross-state results on student achievement. The outcome measures have been instrumental in driving the reforms of urban education nationally over the last decade. However, what is missing is a set of comparable formative academic or instructional indicators that could be used to predict graduation rates, college and career readiness, and achievement levels. These academic indicators are being designed as predictors of summative or end-results, and may include preschool participation rates, third- and fourth-grade reading proficiency rates, attendance rates in the late elementary grades and middle grades, attendance, promotion and retention rates, instructional minutes per day or year, core-course participation and success rates in ninth grade, numbers of teachers teaching out-of-field, teacher turnover rates, and other similar predictors. In addition, the Council is currently developing a series of academic cost indicators at the activity level that will help district administrators make better decisions about where to place their scarce instructional dollars. These may include such indicators as average cost per teacher of induction programs; average cost per student for credit-recovery programs; average cost of assessments used to identify students for English as a Second Language programs; and average cost of initial special education evaluations. Technical teams are also exploring the feasibility of creating rudimentary return-on-investment indicators for instructional activities that have a clear academic outcome. Council teams have already developed scores of these potential academic indicators and will be pilot-testing these measures later in 2014 for possible inclusion in the broader KPI system in 2015. Together with the operational KPIs and TUDA outcome measures, the predictive and cost-related academic data would provide urban school systems with a comparable 360 degree look at their overall status and progress. And while others might be capable of building such a system, only the Council can collect the data on the academic indicators and compare the results across major city school systems. Second, the system still needs indicators that allow districts to compare spending by functional area and staffing levels by major personnel categories. Some of this already exists in the National Center for Educational Statistics’ (NCES) common core of data. But the spending categories are too broad to be very helpful to school systems, and there are continuing complaints about the accuracy of the state-submitted data. For instance, there is no way to tell from the NCES system how much school systems spend on such broad functional areas as professional development, special education, or textbooks. These comparisons would be enormously helpful to districts as they face additional challenges with right-sizing their operations, staffing, and spending. PA G E 1 8 Key Performance Indicators Third, the current key performance indicator system allows urban school systems to compare and contrast themselves with other similarly sized districts and to the median of all reporting districts. As we indicated earlier, the Council cautions districts not to compare themselves solely to others that are exactly like them. There is a risk of not setting stretch goals if peer districts uniformly perform poorly. Still, there may be regional “tolerance” levels of performance that need to be considered. For example, the potential for significant cost reductions in transportation is dependent, in part, on geographic region and weather, and will present administrators with trade-offs in service levels and customer experience. In other words, regional differences may inform differences in how districts set ideal performance levels and how they compare themselves from region to region. At a minimum, the KPIs should facilitate a deliberate and transparent dialogue with the school board, who represents parents and the community, and with executives, who are accountable for results, to determine the performance levels they expect for their district. Fourth, what the KPI system cannot do yet is to allow school systems to compare themselves against an industry standard. At present, it is difficult to know whether the median of all urban school systems on a particular measure is actually a desirable state or whether the median of all urban school systems is below where it should be. There are a number of operating standards available from various niche organizations that specialize in procurement operations, for instance, but there is no bundle of such indicators that might be applied across large, multi-faceted organizations like urban public schools. The need to build such a system and integrate it with the current system remains a strong priority of the Council and its member school districts, and is on the drawing board for development. We anticipate some of the KPI work will actually inform those standards being used in other sectors. Fifth, the Council is just beginning to realize the potential of the analytics that may be possible with the system. The possibilities appear to be particularly strong in two areas: cross-indicator analytics and trends. For instance, in the first area, the Council has begun exploring the relationship between voided payments and invoices past due since these two indicators should be minimized simultaneously but are sometimes not. In addition, the relationship between such indicators as payroll cost per $100,000 and payroll cost per paycheck provides another measure of the overall cost-efficiency of a district’s payroll operations, and in combination with enrollment size will tell a district whether or not it is taking advantage of its scale to maximize payroll efficiency. (See exhibit 4) Another example involves the relationship between custodial workload and maintenance costs per square foot. Preliminary results of these analytics show that a number of districts have been able to reduce costs through efficiencies other than personnel cuts—a finding that would not be obvious without cross-referencing the indicators with one another. PA G E 1 9 Key Performance Indicators Exhibit 4. Payroll Cost per $100k Spend vs. Payroll Cost per Paycheck by District Enrollment In addition to the cross-indicator analytics, the data on over 100 indicators have been defined and measured consistently enough that creating trend lines are now possible for both individual districts and the Council median. For instance, Exhibit 5 shows the trend across Council districts in average transportation costs per rider in 2009-10, 2010-11, and 2011-12. The results show that average costs have dropped from $1,093 per pupil to $887 per pupil over the period. Some 64 percent of the districts showed a decrease in costs while 36 percent showed an increase. This development means that the organization and its members can begin determining whether operations have improved or not; identifying which districts show improvements and which do not; and determining what changes in practices explain the improvements or lack thereof. PA G E 2 0 Key Performance Indicators Exhibit 5. Trends in Average Transportation Costs per Rider in the Great City Schools Sixth, having a comprehensive system that includes both management and academic data suggests the possibility of establishing systems by which one could better align these two halves of school system operations. At present, it is very difficult to build budgets or define staffing levels around district instructional goals and priorities because the academic and management systems are not convincingly linked. A seamless system would allow school districts to start thinking about resource alignment in ways that have never happened before. In fact, the alignment of resources with strategic priorities is just as important a priority as the ability to squeeze operational efficiencies out of program administration. Finally, the KPI system raises the possibility of designing the system in a way that could enhance accountability for results at the local level, the possibility of assessing and enhancing equity measures to ensure that all students have equal access to school system resources, and the potential that return-on-investment calculations could be produced and economies of scale could be achieved. It is clear that a considerable amount of program architecture has been built around the original notion of the key performance indicators, but that much remains to be done. Moreover, the nation’s weak economic conditions have spurred fresh questions about how school districts use their resources. These questions now involve public education’s organization, funding, infrastructure, human capital, academic, programming, technology, and other features. But before critics assume that the enterprise of urban public education is not capable of innovation, of learning from others, or of capitalizing on ideas and practices from other sectors, they should consider this effort by the nation’s urban public schools to create a whole new mechanism — through both the urban NAEP on the instructional side and the KPIs on the non-instructional side — by which they can analyze their performance, assess their efficiencies, streamline their operations, save precious dollars, and improve results. These new tools are not fully developed yet, but their promise is beginning to payoff. And the payoff is resulting in stronger public education in our nation’s major cities. PA G E 2 1 Key Performance Indicators RE S O U RCE S Hess, F. and E. Osberg (2010). Stretching the School Dollar: How Schools and Districts Can Save Money While Serving Students Best. Cambridge, MA: Harvard Education Press. Pane, Natalia. Council of the Great City Schools Key Performance Indicators Evaluation. American Institutes for Research, December 2011. Boston, Atlanta, Minneapolis, St. Paul, Clark County, Broward County, Norfolk, Milwaukee, Miami-Dade County, and Jefferson County. Memphis, Miami-Dade County, Norfolk, Columbus, and Boston. Chicago, Broward County, Atlanta, St. Paul, East Baton Rouge, and Miami-Dade County. Austin, Pittsburgh, East Baton Rouge, Houston, and Omaha. Charlotte-Mecklenburg, Little Rock, East Baton Rouge, Anchorage, Clark County, Albuquerque, and Orange County (FL). Charlotte-Mecklenburg, Norfolk, Houston, Clark County, and Denver. George W. Bush Institute at the George W. Bush Presidential Center 2943 SMU Boulevard Dallas, Texas 75205 214.200.4300 www.bushcenter.org educationreform@bushcenter.org Measure Report: LAUSD Report Los Angeles Unified School District CGCS KPI Report - LAUSD Report Created 6/3/15 Page 1 of 41 2013-2014 Pay Checks - Percent Off-Cycle ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Pay Checks - Percent Off-Cycle Total number of off-cycle pay checks issued, divided by the total number of pay checks issued. Why This Measure Is Important Off-cycle pay checks tend to take more staff time, and are therefore less efficient than regular-cycle checks. Factors That Influence This Measure Page 2 of 41 2013-2014 Pay Checks - Percent Off-Cycle 2013-2014 - Pay Checks - Percent Off-Cycle Page 3 of 41 2013-2014 Pay Checks Processed Per FTE per Month ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Pay Checks Processed Per FTE per Month Total number of pay checks processed by Payroll department, divided by total number of Payroll staff (FTEs), divided by 12 months. Why This Measure Is Important This measure is a driver of a payroll department's costs. Lower processing rates may result from a low level of automation, high pay check error rates, or high rates of off-cycle pay checks that must be manually processed. Higher processing rates may be the result of increased automation and highly competent staff. Factors That Influence This Measure Page 4 of 41 2013-2014 Pay Checks Processed Per FTE per Month 2013-2014 - Pay Checks Processed Per FTE per Month Page 5 of 41 2013-2014 Payroll Cost Per $100K Spend ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Payroll Cost Per $100K Spend Total Payroll personnel costs plus total payroll non-personnel costs, divided by total district payroll spend over 100,000. Why This Measure Is Important This measures the efficiency of the payroll operation. A higher cost could indicate an opportunity to realize efficiencies in payroll operation while a lower cost indicates a leaner, more efficient operation. Factors That Influence This Measure Number of employees processing the payroll Skill level of the employees processing payroll Types of software/hardware used to process the payroll Processes and procedures in place to collect payroll data Number of employees being paid Number of contracts requiring compliance Frequency of payrolls Complexity of state/local reporting requirements Page 6 of 41 2013-2014 Payroll Cost Per Spend 2013-2014 - Payroll Cost Per Spend ISEI 2EIEI 2'30 EDD 3'30 32 551.25 5'5 550.33 13 5303.1 9 SEALED SE 3 SIDELES 4] 510455 ID 5105.93 45 5105.53 13 5109.43 511025 39 5111132 53 512455 T1 512524 5140?? 14 5150.59 43 515253 44 513015] 1] 520555 IE 523553 SE 5293.25 ?r'uur DiatriLL 1! DiatriLLa I Median Page 7 of 41 2013-2014 Payroll Cost Per Pay Check ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Payroll Cost Per Pay Check Total Payroll personnel costs plus total payroll non-personnel costs, divided by total number of payroll checks. Why This Measure Is Important This measures the efficiency of the payroll operation. A higher cost could indicate an opportunity to realize efficiencies in payroll operation while a lower cost indicates a leaner, more efficient operation. Factors That Influence This Measure Number of employees processing the payroll Skill level of the employees processing payroll Types of software/hardware used to process the payroll Processes and procedures in place to collect payroll data Number of employees being paid Number of contracts requiring compliance Frequency of payrolls Complexity of state/local reporting requirements Page 8 of 41 2013-2014 Payroll Cost Per Pay Check 2013-2014 - Payroll Cost Per Pay Check 32 5]_12 13 5.1.15 53 5134 5.135 4? 52.10 14 52.13 39 52.15 13 52.21 5.23] 45 5.243 53 5.133 41 53.15 53.1? 44 SEED 43 5159 SE 5532 SEED IE 55.34 "r'uur DistriLL 1! DiatriLLa I Median Page 9 of 41 2013-2014 Pay Checks - Direct Deposits ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Pay Checks - Direct Deposits Total number of pay checks paid through direct deposit, divided by the total number of pay checks issued. Why This Measure Is Important Use of direct deposit can increase the levels of automation and decrease costs. Factors That Influence This Measure Payment systems Pay check policy Page 10 of 41 2013-2014 Pay Checks - Direct Deposits 2013-2014 - Pay Checks - Direct Deposits DE U4 DE US 1 L2 993-55 32 53 SSESE 43 99355 14 931%; 13 933355 3 9304-55 44 95.3995 95.3% 39 9555 53 94.2?95 4? El?n 4] 9235-55 13 92.255 9 35.5356 415 33-455 IE 35525; SE 355556 333555 11 31.3255 ?r'uur DiatriLt 1! DiatriLta I Median Page 11 of 41 2013-2014 Time To Fill Vacancies - Teachers ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Time To Fill Vacancies - Teachers Average time to fill vacancies for teachers. Why This Measure Is Important This measure reflects the instructional loss when there is not continuity in the classroom and in instructional support. Factors That Influence This Measure Culture of community Leadership of the school Funding Page 12 of 41 2013-2014 Time To Fill Vacancies - Teachers 2013-2014 - Time To Fill Vacancies - Teachers Page 13 of 41 2013-2014 Employee Relations - Discrimination Complaints Per 1,000 Employees ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Employee Relations - Discrimination Complaints Per 1,000 Employees Number of discrimination complaints, divided by total number of district employees (FTEs) over 10,000. Why This Measure Is Important 1. 2. 3. 4. 5. 6. State and local laws defining discrimination will impact Board Policy and organizational protocol for resolution Organizational climate Quality and level of supervisory training Quality and level of EEO Awareness training for all employees Indicator as to the effectiveness of supervisors and managers Factors That Influence This Measure Number of Equal Employment Opportunity (EEO) charges filed by employees divided by total number of employees Page 14 of 41 2013-2014 Employee Relations - Discrimination Complaints Per 1,000 Employees 2013-2014 - Employee Relations - Discrimination Complaints Per 1,000 Employees Page 15 of 41 2013-2014 Devices Per Student ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Devices Per Student Total number of desktops, laptops and tablets that are for student-only use or mixed-use, divided by total student enrollment. Why This Measure Is Important This tracks the movement toward a one-to-one ratio of students to devices. Factors That Influence This Measure Page 16 of 41 2013-2014 Devices Per Student 2013-2014 - Devices Per Student 051.42 11 0.5552 32 0.5323 4] 05310 SE 0,5233 05005 21 0.495 9 0.4943 43 0 04.559 4? 04524 44 0.45]? 13 0.4311 45 0.425 40 0.425? 53 DETEE 0310] IE 1'r"unur DiatriLt 1r DiatriLta I Median .l Page 17 of 41 2013-2014 Support - Help Desk Call Abandonment Rate ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Support - Help Desk Call Abandonment Rate Number of abandoned calls to the Help Desk, divided by total number of calls to the Help Desk. Why This Measure Is Important This measure assesses the percentage of telephone contacts that are not answered by the service desk staff before the caller disconnects. CAR is an indicator of the staffing level of the service desk relative to the demand for service. The CAR can be used as a management indicator to determine staffing levels to support seasonal needs or during times of system issues (application or network problems). On an annual basis, it is a measurement of the effectiveness of resource management. This measure should be used as a tool to help guide quality improvement processes. Factors That Influence This Measure The Call Abandonment Rate will be influenced by effective supervision to ensure that service desk team members are online to take calls A high percentage could indicate low availability caused by inadequate staffing, long call handling times and/or insufficient processes Length of time the caller is on hold Capacity of the organization to respond to customer support requests Proper staffing when implementing district-wide applications, which significantly increase calls Automation tools like password reset can reduce number of calls to the help desk and reduce overall call volume Increased training of help desk can reduce long handling time freeing up staff to take more calls Page 18 of 41 2013-2014 Support - Help Desk Call Abandonment Rate 2013-2014 - Support - Help Desk Call Abandonment Rate Page 19 of 41 2013-2014 IT Spending Per Student ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - IT Spending Per Student Total IT staffing costs plus total IT hardware, systems and services costs, divided by total student enrollment. Why This Measure Is Important The measure provides a tool for districts to compare their IT spending per student with other districts. Because each district defines IT slightly differently, it is important to define what is included in the IT budget calculation regardless of the department in which the budget resides. Keeping IT costs as low as possible and maintaining proper support of academic and operational needs of the district is important in all educational institutions. This measure must be viewed in relationship to other KPIs to strike the correct balance between the district’s efficiency and its effective use of technology. If other KPIs such as customer satisfaction, security practices, and ticket resolution are not performing at high levels, low costs associated with IT Spending per Student may indicate an under-resourced operation. Factors That Influence This Measure Budget development and staffing IT expenditures can be impacted by new enterprise implementations The commitment of community for support technology investments in education IT Department standards and support model Age of technology and application portfolio IT maturity of district Page 20 of 41 2013-2014 IT Spending Per Student 2013-2014 - IT Spending Per Student El Hill545032 5419.35 41 5223]} 1] 522654 5215]] 45 5190.22 4D SITEJD 32 5150.53 5159.0? 13 51515] 55 515142 43 51513] IE 5141]] 3 51215] 44 ganja 59534 SE 594.52 IIZI 551.55 It DiatriLt 1r DiatriLta I Median Page 21 of 41 2013-2014 Support - First Contact Resolution Rate ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Support - First Contact Resolution Rate Number of tickets/incidents resolved on first contact, divided by the total number of tickets/incidents. Why This Measure Is Important This measure calculates the percentage of user initiated contacts to the help desk which generates a ticket which is resolved without escalation to the next support level. FCRR is an indicator of the number of exception contacts that a support center is receiving. It can be used as a management indicator to devise strategies to lower cost, improve operational ability and workflow, and improve customer satisfaction. It is more cost effective for the organization to resolve calls on first contact because the customer is returned to productive work more quickly. Private industry has recognized the cost-benefit of expecting that 85% of trouble calls are to resolved on first contact. This measure can also be used as a tool to help guide quality improvement processes. Factors That Influence This Measure Software and systems that can collect contact information at the help desk Automation tools for common help desk issues like password reset can improve performance and reduce costs – these numbers should be included in data collection Knowledge and training of help desk staff in enterprise applications Knowledge and training of end user of enterprise applications used New implementations will cause increase in service calls Permissions that are set for the help desk staff. If permissions are restricted, help desk staff will be able to resolve fewer types of problem calls. Capacity of the organization to respond to customer support requests Ability of help desk ticket application to track work tickets Tactical assignment of responsibilities may be different in each organization. The responsibilities of the help desk may vary from simply opening tickets to complete troubleshooting and problem resolution. Page 22 of 41 2013-2014 Support - First Contact Resolution Rate 2013-2014 - Support - First Contact Resolution Rate Page 23 of 41 2013-2014 Workers' Compensation Cost Per $100K Payroll Spend ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Workers' Compensation Cost Per $100K Payroll Spend Total workers' compensation premium costs plus workers' compensation claims costs incurred plus total workers' compensation claims administration costs for the fiscal year, divided by total payroll outlays over 100,000. Why This Measure Is Important This is a metric that can be used to measure success of programs or initiatives aimed at reducing workers' compensation costs. Factors That Influence This Measure Medical management programs Quality of medical care Litigation Timely provision of benefits Page 24 of 41 2013-2014 Workers' Compensation Cost Per $100K Payroll Spend 2013-2014 - Workers' Compensation Cost Per $100K Payroll Spend Page 25 of 41 2013-2014 Workers' Compensation Claims - Percent Litigated ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Workers' Compensation Claims - Percent Litigated Number of workers' compensation claims that were litigated, divided by total number of workers' compensation claims filed in the fiscal year. Why This Measure Is Important This is an important metric as litigation is expensive and increases the cost of the claim. Factors That Influence This Measure Severity of injuries Settlement rate Motivation of plaintiff Page 26 of 41 2013-2014 Workers' Compensation Claims - Percent Litigated 2013-2014 - Workers' Compensation Claims - Percent Litigated Page 27 of 41 2013-2014 Workers' Compensation Cost Per Employee ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Workers' Compensation Cost Per Employee Total workers' compensation premium costs plus workers' compensation claims costs incurred plus total workers' compensation claims administration costs for the fiscal year, divided by total number of district of district employees (number of W-2's issued) Why This Measure Is Important This metric would most likely be used for the same purpose as the average cost per workers’ compensation claim – to measure success of programs and initiatives. It can also be a way to measure trends over time or to bench mark against other employers. Factors That Influence This Measure Medical management programs Quality of medical care Litigation Timely provision of benefits Page 28 of 41 2013-2014 Workers' Compensation Cost Per Employee 2013-2014 - Workers' Compensation Cost Per Employee Page 29 of 41 2013-2014 Workers' Compensation Lost Work Days Per 1,000 Employees ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Workers' Compensation Lost Work Days Per 1,000 Employees Total number of lost work days for all workers' compensation claims filed during the fiscal year, divided by total number of employees (W-2's) over 1,000. Why This Measure Is Important This metric could be used to track the effectiveness of medical treatment and a Return to Work program, but since this metric is using all employees in the equation instead of just the number of injured employees, a drastic change in the number of employees (reduction in force etc) would impact this metric without any actual change in the items being tracked. Factors That Influence This Measure Quality of medical care (Medical Provider Networks) Type of injury Use of nurse case managers Litigation Availability of modified or alternative work on both a temporary and permanent basis Page 30 of 41 2013-2014 Workers' Compensation Lost Work Days Per 1,000 Employees 2013-2014 - Workers' Compensation Lost Work Days Per 1,000 Employees Page 31 of 41 2013-2014 Workplace Incidents Per 1,000 Employees ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Workplace Incidents Per 1,000 Employees Total number of employee workplace accidents/incidents reported during the fiscal year. Why This Measure Is Important This metric would be used to measure the success of programs and initiatives aimed at reducing workplace injuries/incidents. Factors That Influence This Measure Disciplinary actions RIF notices Management support Effectiveness of safety programs Safety training Injury investigations used to determine cause of injury Maintenance of facilities Established safety protocols/guidelines/Employer policies Page 32 of 41 2013-2014 Workplace Incidents Per 1,000 Employees 2013-2014 - Workplace Incidents Per 1,000 Employees Page 33 of 41 2013-2014 Bus Usage - Daily Runs Per Bus ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Bus Usage - Daily Runs Per Bus Total number of daily bus runs, divided by the total number of buses used for daily yellow bus service (contractor and district). Why This Measure Is Important There is a positive correlation between the number of daily runs a bus makes and operating costs. Efficiencies are gained when one bus is used multiple times in the morning and again in the afternoon. Using one bus to do the work of two buses saves dollars. Factors That Influence This Measure District-managed or contractor transportation Tiered school bell times Transportation department input in proposed bell schedule changes Bus capacities District guidelines on maximum ride time District geography Minimum/shortened/staff development day scheduling Effectiveness of the routing plan Types of transported programs served Page 34 of 41 2013-2014 Bus Usage - Daily Runs Per Bus 2013-2014 - Bus Usage - Daily Runs Per Bus Page 35 of 41 2013-2014 Bus Fleet - Average Age Of Fleet ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Bus Fleet - Average Age Of Fleet Average age of bus fleet. Why This Measure Is Important Fleet replacement plans drive capital expenditures and on-going maintenance costs Younger fleets require greater capital expenditures but reduced maintenance costs A younger fleet will result in greater reliability and service levels. An older fleet requires more maintenance expenditure but reduces capital expenses. Factors That Influence This Measure Formal district-wide capital replacement budgets and standards Some districts may operate climates that reduce bus longevity Some districts may be required to purchase cleaner burning or expensive alternative-fueled buses Availability of state or local bond funding for school bus replacement Page 36 of 41 2013-2014 Bus Fleet - Average Age Of Fleet 2013-2014 - Bus Fleet - Average Age Of Fleet Page 37 of 41 2013-2014 Bus Usage - Live Miles Per Deadhead Mile ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Bus Usage - Live Miles Per Deadhead Mile Total number of live miles, divided by the difference between total miles and live miles (i.e. the number of deadhead miles) for both district and contractor buses. Why This Measure Is Important This measure is essentially an efficiency indicator for transportation services. The lower the amount of deadhead a district experiences could indicate a well run operation. Reducing deadhead miles reduces fuel consumption, vehicle maintenance and other costs of operation. Factors That Influence This Measure Routing system Types of transportation programs served Size of service area District-labor agreements Location of bus depots Page 38 of 41 2013-2014 Bus Usage - Live Miles Per Deadhead Mile 2013-2014 - Bus Usage - Live Miles Per Deadhead Mile Page 39 of 41 2013-2014 Cost Per Rider ActPoint KPI Measure Report Los Angeles Unified School District 2013-2014 - Cost Per Rider Total direct cost plus total indirect cost plus total contractor cost of bus services, divided by number of riders. Why This Measure Is Important This is a basic measurement of the cost efficiency of a pupil transportation program. It allows a baseline comparison across districts that will inevitably lead to further analysis based on a district’s placement. Factors That Influence This Measure Driver wage and benefit structure; labor contracts Cost of the fleet, including fleet replacement plan, facilities, fuel, insurance and maintenance also play a role in the basic cost Effectiveness of the routing plan Ability to use each bus for more than one route or run each morning and each afternoon Bell schedule Transportation department input in proposed bell schedule changes Maximum riding time allowed and earliest pickup time allowed Type of programs served will influence costs Page 40 of 41 2013-2014 Cost Per Rider 2013-2014 - Cost Per Rider 1.500 2.000 2.500 3.5m] 14 5454.1? 55 5504.?4 13 5532.3? 5505.26 3 552039 13 5533.35 4? 5599.99 STELST 593529 9 5.132.433 51.05324 44 51114.1] 43 41? 45 51.23535 39 IE 525015? 1] SE 54 5.1313]; 53 53.19124 II "r'uur DiatriLL 1! DiatriLLa I Median LL Page 41 of 41 Values by Year 100 90 80 70 60 50 40 2008-2009 62.82 49.71 2009-2010 62.7 50.21 Your District 2010-2011 93.08 63.97 58.54 52.21 2012-2013 Median Year-to-Year History Workplace Incidents www.actpoint.com 2013-2014 57.3 52.39 Values by Year 1000 900 800 700 600 500 400 300 200 100 0 2008-2009 $513.91 $199.34 2009-2010 $489.70 $169.02 District 2010-2011 $681.24 $215.53 Median 2011-2012 $861.02 $471.27 Year-to-Year History 2012-13 $323.33 $317.57 www.actpoint.com 2013-14 $814.56 $357.14 Workers’ Compensation Costs Values by Year 0.5 0.4 0.3 0.2 0.1 0 -0.1 2008-2009 5.80% 2% 2009-2010 43.47% 3% Your District 2010-2011 8.52% 3% Median 2011-2012 9.46% 4% Year-to-Year History 2012-13 18.14% 3% 3% www.actpoint.com 2013-14 17.75% Workers’ Compensation Claims Values by Year 500 750 1000 1250 1500 1750 2010-2011 931.89 1,533.19 2011-2012 727.69 1,266.43 Your District 744.98 1,368.74 Median 2012-2013 Year-to-Year History www.actpoint.com 2013-2014 817.24 1,451.47 Pay Checks Processed Per FTE Per Month Values by Year 0.2 0.15 0.1 0.05 0 2008-2009 8.28% 1% 2009-2010 7.62% 1% Your District 2010-2011 10.96% 1% Median 2011-2012 11.33% 1% Year-to-Year History 2013-14 16.43% 1% www.actpoint.com 2012-13 14.83% 1% Pay Checks % Off Cycle Cost Per Rider $- $1,000 $2,000 $3,000 $4,000 14 23 37 55 18 10 8 13 3 25 47 7 71 320 28 57 5 49 52 2 20 30 12 9 35 M 1 44 48 74 63 45 41 34 67 6 46 39 21 19 117 4 66 469 16 56 54 11 58 43 101 62 Your District District Median www.actpoint.com $5,000 District Clovis Unified Poway Unified Fremont Unified Corona-Norco Unified San Francisco Unified Elk Grove Unified Riverside Unified Santa Ana Unified Fontana Unified Comparative Group All Unified Districts Garden Grove Unified Capistrano Unified Fresno Unified San Bernardino City Unified Oakland Unified San Juan Unified Moreno Valley Unified San Diego Unified Stockton Unified Sacramento City Unified Long Beach Unified Los Angeles Unified Source: State-certified data Includes charter school ADA 2009 36,218 32,684 31,137 50,605 48,973 59,053 40,386 52,287 39,042 983,453 4,001,176 46,527 49,717 67,878 48,583 36,368 39,651 34,411 111,279 34,290 42,287 82,076 582,935 2010 36,933 33,147 31,452 50,725 49,228 59,196 40,301 51,982 39,159 980,552 3,969,008 46,803 49,398 66,946 48,296 36,621 39,191 34,464 110,765 33,297 41,888 80,761 567,507 2011 37,412 33,450 31,611 51,322 49,207 58,794 40,217 51,771 39,034 973,752 3,964,299 46,629 48,704 66,563 47,914 36,011 38,640 33,710 109,211 32,667 41,383 79,501 550,798 Total ADA Total ADA by Fiscal Year with Percentage Change % Change in ADA from 2009-10 to 2013-14 7.43% 5.41% 5.06% 2.26% 1.17% 0.55% -0.10% -0.99% -1.19% -1.70% -1.76% -1.94% -2.76% -2.82% -3.10% -3.36% -3.44% -4.30% -4.69% -5.26% -5.44% -5.72% -9.32% 2012 37,826 34,031 32,249 51,242 49,359 58,848 40,118 51,634 38,876 965,553 3,924,678 46,081 48,432 65,920 47,147 34,711 38,157 33,019 106,840 32,403 40,449 78,212 536,464 2013 38,909 34,451 32,712 51,747 49,548 59,378 40,344 51,769 38,576 966,723 3,930,573 45,623 48,343 65,964 47,077 35,145 38,289 32,930 106,065 32,486 39,987 77,383 528,577 1 Page 2009-10 36,100 32,575 31,330 50,549 59,029 34,209 40,238 48,773 38,982 52,045 46,480 67,826 36,110 49,890 39,329 110,844 34,175 43,221 48,429 81,865 572,670 2010-11 36,683 33,051 31,396 50,692 59,432 33,223 40,151 49,036 39,097 51,781 46,756 66,855 36,359 49,354 38,995 110,340 34,228 42,534 48,129 80,545 559,724 2011-12 37,412 33,450 31,853 51,322 59,132 34,571 40,217 49,207 39,034 51,771 46,629 66,563 36,011 48,704 38,640 109,211 33,780 42,849 47,914 79,501 537,267 2012-13 38,164 34,031 32,499 51,242 59,114 34,157 40,118 49,359 38,876 51,634 46,081 66,177 34,711 48,432 38,157 106,840 33,070 42,019 47,147 78,214 507,596 Comparative Analysis of District P-2 ADA from 2008-09 to 2013-14 (Ranked by Percentage Change in ADA) District 2008-09 Clovis Unified 35,838 Poway Unified 32,367 Fremont Unified 31,204 Corona-Norco Unified 49,969 Elk Grove Unified 58,943 Stockton City Unified 34,630 Riverside Unified 41,047 San Francisco Unified 50,445 Fontana Unified 39,397 Santa Ana Unified 52,909 Garden Grove Unified 46,997 Fresno Unified 68,397 Oakland Unified 36,469 Capistrano Unified 50,077 San Juan Unified 40,217 San Diego City Unified 111,469 Moreno Valley Unified 34,724 Sacramento City Unified 44,754 San Bernardino City Unified 50,661 Long Beach Unified 83,779 Los Angeles Unified 598,145 Source: State-certified data Does not include charter school ADA 2013-14 38,909 34,451 32,946 51,747 59,630 34,361 40,344 49,548 38,576 51,769 45,623 66,226 35,145 48,203 38,289 106,065 32,973 41,629 47,077 77,383 488,838 % Change 8.57 6.44 5.58 3.56 1.17 -0.78 -1.71 -1.78 -2.08 -2.16 -2.92 -3.17 -3.63 -3.74 -4.79 -4.85 -5.04 -6.98 -7.07 -7.63 -18.27 2 Page District San Francisco Unified San Bernardino City Unified San Diego City Unified Los Angeles Unified Fresno Unified Oakland Unified Elk Grove Unified Sacramento City Unified Stockton City Unified Santa Ana Unified Fremont Unified Fontana Unified San Juan Unified Moreno Valley Unified Corona-Norco Unified Riverside Unified Long Beach Unified Clovis Unified Poway Unified Garden Grove Unified Capistrano Unified Source: State-certified data P-2 ADA 2012-13 49,358.89 47,146.73 106,840.06 507,596.26 66,176.61 34,711.12 59,113.95 42,018.82 34,156.55 51,634.28 32,498.73 38,875.56 38,156.82 33,070.22 51,242.03 40,118.46 78,213.61 38,163.96 34,030.76 46,080.91 48,432.47 2013-14 49,548.10 47,077.10 106,065.00 488,838.00 66,226.46 35,144.60 59,629.97 41,629.32 34,360.78 51,768.60 32,945.94 38,576.10 38,288.60 32,973.14 51,746.60 40,343.80 77,382.70 38,909.10 34,450.60 45,622.80 48,203.10 Teacher Salary Schedule FTE 2011-12 2012-13 2013-14 3,371.64 3,345.28 3,406.42 2,768.00 2,634.00 2,597.00 6,781.60 6,602.77 5,740.28 27,208.00 25,532.00 25,813.00 3,355.55 3,223.83 3,472.65 1,771.38 1,928.36 1,829.11 3,009.92 3,055.01 3,083.87 2,255.84 2,078.13 2,068.88 1,724.00 1,696.00 1,689.00 2,476.80 2,466.87 2,461.23 1,444.08 1,493.06 1,556.61 1,780.22 1,828.38 1,810.35 1,864.70 1,877.10 1,795.78 1,572.10 1,552.80 1,502.00 2,335.40 2,253.75 2,296.20 1,685.80 1,699.40 1,725.90 3,372.61 3,292.00 3,287.64 1,540.19 1,537.48 1,631.47 1,434.00 1,431.00 1,430.23 1,917.31 1,878.53 1,891.14 2,033.50 1,923.90 1,949.90 Comparative Analysis of ADA/FTE Ratio from 2011-12 to 2013-14 (Ranked by 2013-14 ADA/FTE Ratio) 2011-12 49,206.95 47,914.02 109,210.52 537,266.57 66,563.45 36,011.22 59,132.08 42,849.47 34,570.81 51,771.13 31,852.58 39,033.85 38,640.13 33,780.29 51,321.70 40,217.49 79,501.21 37,411.67 33,449.76 46,629.22 48,704.01 Ratio (ADA/FTE) 2011-12 2012-13 2013-14 14.59 14.75 14.55 17.31 17.90 18.13 16.10 16.18 18.48 19.75 19.88 18.94 19.84 20.53 19.07 20.33 18.00 19.21 19.65 19.35 19.34 18.99 20.22 20.12 20.05 20.14 20.34 20.90 20.93 21.03 22.06 21.77 21.17 21.93 21.26 21.31 20.72 20.33 21.32 21.49 21.30 21.95 21.98 22.74 22.54 23.86 23.61 23.38 23.57 23.76 23.54 24.29 24.82 23.85 23.33 23.78 24.09 24.32 24.53 24.12 23.95 25.17 24.72 3 Page District Oakland Unified San Bernardino City Unified All Unified Districts Stockton Unified San Juan Unified Corona-Norco Unified San Francisco Unified Garden Grove Unified Fremont Unified Elk Grove Unified Comparative Group Moreno Valley Unified Poway Unified Fontana Unified Sacramento City Unified Clovis Unified Riverside Unified Santa Ana Unified San Diego Unified Capistrano Unified Fresno Unified Los Angeles Unified Long Beach Unified Source: State-certified data Teachers Nonadministrators 9.22 9.25 11.35 11.43 11.48 11.39 11.60 11.73 11.78 11.54 12.70 12.51 12.80 12.64 12.96 12.67 13.07 12.93 13.08 13.08 13.11 13.01 13.18 13.19 13.32 13.02 13.35 13.32 13.51 13.42 13.63 13.54 13.73 13.75 13.83 13.71 13.97 13.80 14.29 13.96 14.36 14.24 14.91 14.82 16.41 16.36 Administrators 9.68 14.20 11.10 13.61 10.50 13.09 14.45 13.33 15.43 14.71 14.25 14.24 11.97 14.00 12.01 16.58 17.64 14.38 17.31 12.46 16.43 18.66 18.99 Average Years of District Service for Certificated Personnel Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 All Certificated 9.29 11.70 11.36 11.85 11.47 12.55 12.78 12.71 13.05 13.17 13.09 13.23 12.92 13.37 13.34 13.84 13.99 13.75 14.01 13.87 14.39 15.18 16.50 4 Page District Poway Unified Corona-Norco Unified Long Beach Unified Fremont Unified Capistrano Unified Garden Grove Unified Santa Ana Unified Riverside Unified Sacramento City Unified Clovis Unified Comparative Group Moreno Valley Unified Fontana Unified Oakland Unified Stockton Unified San Francisco Unified Los Angeles Unified Elk Grove Unified Fresno Unified All Unified Districts San Diego Unified San Bernardino City Unified Source: State-certified data Grade K-3 25.76 28.10 28.31 27.95 25.89 25.89 28.08 26.63 27.86 26.52 24.98 27.07 24.13 23.23 22.50 20.60 22.64 22.97 23.71 22.72 23.68 22.99 Average Class Size by Grade Level Rank District Average 1 33.94 2 31.99 3 31.73 4 31.52 5 31.31 6 30.26 7 29.91 8 29.72 9 29.54 10 28.95 27.15 11 26.81 12 26.70 13 25.63 14 25.51 15 25.27 16 24.77 17 24.72 18 24.36 23.64 19 23.37 20 21.14 Grade 4-6 33.87 30.45 33.23 29.03 32.66 30.94 31.23 31.09 29.63 34.38 28.90 27.44 26.58 27.35 25.54 27.49 27.36 26.50 28.00 26.39 27.64 27.63 Grade 7-8 35.22 32.17 32.35 31.89 33.49 30.02 32.04 29.88 30.16 35.90 29.28 27.15 26.45 26.92 27.52 27.50 27.14 30.43 27.06 25.31 26.65 26.24 Grade 9-12 35.41 32.77 31.69 32.41 30.89 31.08 29.01 30.00 29.55 26.32 26.62 26.42 27.32 25.22 26.77 24.92 23.57 22.69 22.85 22.76 21.05 18.09 5 Page Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total Compensation $102,004 $98,031 $94,782 $94,241 $89,946 $88,658 $87,114 $85,232 $85,178 $84,939 $84,654 $84,625 $84,337 $83,835 $83,814 $83,128 $82,546 $81,508 $81,375 $78,936 $78,170 $75,833 $72,772 $69,511 Computed Average Salary $84,242 $81,046 $81,876 $81,556 $79,035 $82,178 $72,272 $72,715 $72,455 $69,748 $73,599 $65,695 $72,129 $71,340 $71,583 $70,982 $73,232 $67,859 $68,881 $78,936 $61,632 $64,825 $64,434 $55,670 Average Health and Welfare Benefit Contribution $17,762 $16,985 $12,906 $12,685 $10,911 $6,480 $14,842 $12,517 $12,723 $15,191 $11,055 $18,930 $12,208 $12,495 $12,231 $12,146 $9,314 $13,649 $12,494 $0 $16,538 $11,008 $8,338 $13,841 Total Compensation: Computed Average Salary Plus Average District Contribution for Health and Welfare Benefits District Garden Grove Unified Long Beach Unified Capistrano Unified Santa Ana Unified Riverside Unified Corona-Norco Unified Fontana Unified Poway Unified Comparative Group Average San Diego City Unified San Bernardino City Unified Sacramento City Unified Region 11 Unified Average Elk Grove Unified San Juan Unified Statewide Unified Average Moreno Valley Unified Fresno Unified Los Angeles Unified Fremont Unified Stockton City Unified Clovis Unified San Francisco Unified Oakland Unified Source: State-certified data 6 Page District San Diego Unified Los Angeles Unified Sacramento City Unified Long Beach Unified Oakland Unified All Unified Districts Santa Ana Unified Poway Unified Fremont Unified Capistrano Unified Comparative Group Moreno Valley Unified San Juan Unified Elk Grove Unified Riverside Unified Stockton Unified Fresno Unified Garden Grove Unified Corona-Norco Unified San Bernardino City Unified Fontana Unified Clovis Unified San Francisco Unified Source: State-certified data Revenue Per ADA $966.22 $1,026.50 $978.55 $790.10 $1,044.94 $784.51 $902.60 $757.94 $796.45 $782.46 $821.39 $815.14 $1,089.99 $806.72 $786.94 $1,076.87 $880.18 $791.42 $733.62 $845.38 $788.58 $830.22 $0.00 Contribution as Expense Contribution % of Special Per ADA Per ADA Education Expense $2,549.66 $1,583.44 62.10% $2,562.22 $1,535.72 59.94% $2,160.40 $1,181.85 54.71% $1,798.33 $1,008.24 56.07% $1,970.11 $925.17 46.96% $1,701.74 $917.23 53.90% $1,807.38 $904.77 50.06% $1,609.37 $851.42 52.90% $1,647.53 $851.07 51.66% $1,632.95 $850.49 52.08% $1,642.90 $821.51 50.00% $1,619.75 $804.61 49.68% $1,891.19 $801.19 42.36% $1,601.58 $794.86 49.63% $1,572.69 $785.75 49.96% $1,770.91 $694.04 39.19% $1,548.66 $668.48 43.17% $1,452.22 $660.81 45.50% $1,393.12 $659.50 47.34% $1,364.15 $518.76 38.03% $1,241.87 $453.30 36.50% $1,129.27 $299.05 26.48% $56.10 $56.10 100.01% Special Education Program Expense Per ADA for 2013-14 (Total of Goals 5000-5999) Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Contribution as % of Total Expense 20.94% 18.21% 17.01% 15.91% 9.58% 13.13% 12.04% 14.82% 14.34% 14.51% 11.87% 12.58% 10.83% 11.94% 11.82% 9.06% 8.24% 9.05% 11.54% 7.66% 8.03% 4.71% 0.77% 7 Page District Sacramento City Unified San Diego Unified Los Angeles Unified Oakland Unified San Francisco Unified Stockton Unified Fresno Unified Garden Grove Unified San Bernardino City Unified Comparative Group San Juan Unified Long Beach Unified All Unified Districts Fontana Unified Santa Ana Unified Elk Grove Unified Clovis Unified Poway Unified Moreno Valley Unified Capistrano Unified Riverside Unified Corona-Norco Unified Fremont Unified Source: State-certified data Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Employee Benefits Dollars $106,058,973.02 $280,672,705.43 $1,385,731,679.42 $89,591,901.94 $117,352,041.12 $74,919,681.46 $144,276,528.73 $93,847,040.88 $94,327,575.03 $1,904,353,067.55 $75,151,834.46 $148,053,399.55 $7,462,335,034.14 $73,140,976.96 $96,424,455.28 $110,325,339.70 $65,828,907.08 $56,143,442.69 $53,159,448.75 $74,064,863.44 $58,268,477.97 $61,431,736.28 $31,313,737.78 Total Employee Benefit Expense for 2013-14 Employee Benefits Per ADA $2,652.37 $2,646.24 $2,621.63 $2,549.24 $2,368.45 $2,306.24 $2,187.19 $2,057.02 $2,003.68 $1,969.90 $1,962.77 $1,913.26 $1,898.54 $1,896.02 $1,862.61 $1,858.00 $1,691.87 $1,629.68 $1,614.31 $1,532.07 $1,444.30 $1,187.16 $957.25 % of Total Expense, Transfers, and Other Uses 27.48% 24.97% 24.01% 21.26% 19.36% 23.68% 22.23% 22.97% 19.45% 21.17% 22.53% 21.93% 20.12% 22.26% 19.90% 21.75% 20.26% 19.97% 19.18% 19.96% 16.81% 15.33% 11.69% % of Total Salary 50.63% 39.04% 40.93% 40.77% 37.11% 39.55% 36.19% 35.88% 32.47% 34.15% 34.86% 34.35% 32.86% 36.10% 31.38% 33.73% 32.66% 31.00% 29.54% 30.60% 27.16% 22.12% 16.40% 8 Page District Los Angeles Unified San Francisco Unified Sacramento City Unified Fresno Unified Elk Grove Unified All Unified Districts Comparative Group Garden Grove Unified Long Beach Unified Stockton Unified Clovis Unified Santa Ana Unified Fontana Unified San Bernardino City Unified San Juan Unified Fremont Unified Moreno Valley Unified Capistrano Unified Poway Unified Riverside Unified Corona-Norco Unified San Diego Unified Oakland Unified Source: State-certified data OPEB Per ADA $544.53 $523.53 $493.10 $397.10 $239.23 $171.33 $158.56 $157.45 $151.74 $147.97 $145.67 $141.58 $129.62 $129.56 $125.72 $99.17 $65.97 $45.33 $43.71 $37.59 $25.92 $24.67 $0.00 OPEB Dollars $287,826,031.96 $25,940,112.64 $19,717,410.25 $26,194,362.16 $14,204,879.52 $673,436,291.13 $153,287,186.32 $7,183,222.08 $11,742,271.18 $4,806,919.93 $5,667,769.38 $7,329,252.72 $5,000,284.02 $6,099,469.74 $4,813,547.76 $3,244,142.27 $2,172,301.28 $2,191,364.23 $1,505,746.64 $1,516,412.92 $1,341,485.00 $2,616,232.60 $0.00 % of Total Expense, Transfers, and Other Uses 4.99% 4.28% 5.11% 4.04% 2.80% 1.82% 1.70% 1.76% 1.74% 1.52% 1.74% 1.51% 1.52% 1.26% 1.44% 1.21% 0.78% 0.59% 0.54% 0.44% 0.33% 0.23% 0.00% Other Postemployment Benefits (OPEB) Expense for 2013-14 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 % of Total Salary 8.50% 8.20% 9.41% 6.57% 4.34% 2.97% 2.75% 2.75% 2.72% 2.54% 2.81% 2.39% 2.47% 2.10% 2.23% 1.70% 1.21% 0.91% 0.83% 0.71% 0.48% 0.36% 0.00% 9 Page Special Education Funding and Enrollment Trends California Allocation System In California, resources for students with disabilities are allocated under the following model: • Students with disabilities are included in Local Control Funding Formula (LCFF) allocations to districts, but there are currently no additional weights for any disability. • Restricted resources for students with disabilities are allocated as a separate categorical program. 2 California Allocation System • Special Education funding is based on K-12 ADA (average daily attendance) of all students, not just special education students. Funding has no relationship to actual expenditures. • There is no additional funding for moderate to severe students. • The California Department of Education allocates federal, state, and local funds specifically for students with disabilities to 120 regional groups of school districts known as SELPAs (Special Education Local Plan Areas). • The SELPA allocation includes a Special Education Apportionment under AB 602. Funds are primarily allocated based on each District’s total ADA, regardless of its actual share of students with disabilities, or the type of disability. In effect, AB 602 assumes that students with disabilities are evenly proportional to total student enrollment across the state. 3 IDEA Grants Under the Individuals with Disabilities Education Act (IDEA), federal special education funds are distributed through state grant programs and several discretionary grant programs. Part B of the law, the main program, authorizes grants to state and local education agencies to offset part of the costs of the K-12 education needs of children with disabilities; Part C authorizes infant and toddler state grants for pre-kindergarten programs and early intervention services. IDEA grants are based on a complex formula that accounts for number of students with disabilities in the SELPA and share of students receiving free or reduced priced meals. 4 Federal Guidelines The federal Individuals with Disabilities Education Act (IDEA) sets the following mandates for districts in serving students with disabilities: • Students with disabilities have a legal entitlement to a “free and appropriate public education” or FAPE. • Districts must serve disabled children regardless of funding availability and costs of needs. 5 Federal Guidelines IDEA specified that the federal government would, beginning in 1980, subsidize up to 40 percent of the average cost of per pupil expenditures to subsidize the excess cost of special education. This has not yet happened. School districts incur excess costs when they spend more on educating students with disabilities than they spend on the average of all students. LAUSD actual IDEA Part B allocation for FY 2013-14 is 15.8% ($121.5M) even though it was promised 40% ($308.4M) 6 Federal Guidelines - MOE Districts must also meet federal Maintenance of Effort (MOE) requirements. • Districts receive funds under Part B IDEA Section 611 that shall be used only to pay the excess costs of special education and related services. • Districts must also spend the same level of funds on students with disabilities as in the prior year, either in terms of total or per student expenditures. 7 Challenges Facing the District Overall declining Revenues Increased Fixed Costs Additional challenges for special education programs MOE amount stays the same as prior year even if special education revenues are declining More pressure on General Fund 8 2011-12 2010-11 Year $131,304,989 $127,978,723 $132,822,733 LAUSD Actual Part B Allocation 15.76% 16.66% 17.03% 17.19% Percent of Average Per Pupil Expenditure $154,175,610 $157,622,061 $150,316,829 $154,524,303 $192,719,512 $197,027,576 $187,896,036 $193,155,378 $231,263,414 $236,433,092 $225,475,243 $231,786,454 $269,807,317 $275,838,607 $263,054,450 $270,417,529 $308,351,219 $315,244,122 $300,633,657 $309,048,605 LAUSD SELPA Would Have Received Tens of Millions, if Not Hundreds of Millions More, if the Federal Government Funded Even a Slightly Larger Share of the Excess Cost of Special Education, 2010-11 to 2013-14 2012-13 $121,475,074 Allocation if Allocation if Allocation if 20% of Avg Per 25% of Avg Per Allocation if 30% 35% of Avg Per Allocation if 40% Pupil Exp Pupil Exp of Avg Per Pupil Pupil Exp of Avg Per Pupil Funded Funded Exp Funded Funded Exp Funded 2013-14 9 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 $300,633,657 2011-12 $127,978,723 $315,244,122 2012-13 $131,304,989 $308,351,219 $121,475,074 2013-14 LAUSD Part B Allocation Full 40% Allocation LAUSD SELPA Would Have Received Almost $200M More Each Year if Federal Government Upheld Commitment to Fund 40 Percent of Average Per Pupil Expenditure $309,048,605 $132,822,733 2010-11 10 Percent of Students With Disabilities in California's Total Enrollment 11.40% 11.20% 11.00% 10.80% 10.60% 10.40% 10.20% 10.00% 9.80% 9.60% Share of Students With Disabilities is Increasing in California 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11 Percent of Students With Significant Disabilities Among Students With Disabilities 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Among Students With Disabilities, Share of Significant Disabilities in California is Increasing 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12 Enrollment 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - Overall District Enrollment is Declining, But Share of Special Education Students Are Increasing 13.4% 737,739 13.3% 74,653 698,092 13.0% 75,325 2013-14 718,238 12.8% 75,799 2012-13 727,133 12.6% 77,184 2011-12 637,051 12.3% 77,828 2010-11 653,215 12.2% 78,548 2009-10 673,500 11.9% 79,506 2008-09 601,713 11.8% 80,104 2007-08 617,798 11.5% 82,523 2006-07 556,115 11.6% 82,253 2005-06 566,604 11.5% 84,622 2004-05 581,445 84,819 2003-04 School Year % of Sp Ed Enrollment Enrollment 2002-03 Sp Ed Enrollment 13 90,000 76.59% District Incidence of Moderate to Severe Disabilities Is Increasing Among All Students With Disabilities 76.90% 75.09% 76.03% 70.25% 72.36% 70.81% 74.04% 52,442 2007-08 Mild to Moderate 2008-09 2009-10 Mild to Moderate % 2010-11 2011-12 2012-13 2013-14 14 22,211 29.75% 53,334 21,991 29.19% 71.87% 25.96% 28.13% 24.91% 27.64% 23.97% 54,475 21,324 78.23% 23.29% 61,445 77.93% 2006-07 18,659 80,000 23.41% 63,203 76.71% 19,320 70,000 23.10% 63,250 60,000 19,003 2005-06 55,854 21,330 50,000 21.77% 66,199 2004-05 57,624 20,204 40,000 22.07% 2003-04 58,984 19,564 30,000 2002-03 60,451 19,055 20,000 10,000 0 18,423 Moderate to Severe % 66,097 Moderate to Severe 18,722 Moderate to Severe % 710 819 954 1,449 2,546 2,881 3,778 4,705 5,096 6,458 7,440 7,711 Total 78% 78% 77% 77% 77% 76% 75% 74% 72% 72% 71% 70% Mild to Moderate % 22% 22% 23% 23% 23% 24% 25% 26% 28% 28% 29% 30% Moderate to Severe % 84,819 84,622 82,253 82,523 80,104 79,506 78,548 77,828 77,184 75,799 75,325 74,653 Total 78% 78% 77% 77% 77% 77% 76% 75% 73% 73% 72% 72% Mild to Moderate % 22% 22% 23% 23% 23% 23% 24% 25% 27% 27% 28% 28% Moderate to Severe % 85,529 85,441 83,207 83,972 82,650 82,387 82,326 82,533 82,280 82,257 82,765 82,364 Total SELPA Mild to Moderate % 12% 11% 16% 12% 11% 10% 12% 12% 12% 14% 14% 15% District 88% 89% 84% 88% 89% 90% 88% 88% 88% 86% 86% 85% Fiscally Independent Charters Share of Students With Moderate to Severe Disabilities are Increasing Across the District, Independent Charters, and SELPA As a Whole CASEMIS Report Date Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Mild to Moderate: SLD, SLI, OHI Moderate to Severe: MR, HH, DEAF, VI, ED, OI, DB, MD, AUT, TBI 15 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - 5,709 2008-09 2009-10 5,909 2010-11 5,976 6,127 2011-12 2012-13 6,310 2013-14 6,342 LAUSD SELPA's Preschoolers With Disabilities Are Increasing 5,561 2007-08 16 Relationship of Special Education Programs to the District-wide Budget Since State funding for special education is based on District-wide K-12 ADA, declining District-wide general education enrollment means less revenue for special education, and more pressure on an already reduced General Fund. $670.5 Million of special education expenditures are budgeted from the General Fund in Fiscal Year 2014-15. 17 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- $868 $961 $995 $982 $987 $1,141 $1,246 District General Fund Contribution to Special Education Per ADA is Increasing $743 $1,680 Note: Prior to the implementation of LCFF, the General Fund Contribution Per ADA accounted for the Revenue Limit for Special Education. If we were to continue to account for the Revenue Limit, the General Fund Contribution would be $1,350 per ADA for 13-14. 18 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 $150 $199 $478 2009-10 $165 $461 $611 $438 $679 $142 $111 $439 2012-13 Federal IDEA *General Fund Contribution 2011-12 $144 $138 $616 LAUSD SELPA Expenditures By Revenue Source In Millions $603 $147 2010-11 Revenue Limit for Students in Special Day Classes State & Local based on K-12 ADA $0 $126 $398 2013-14 Note: General Fund Contribution includes Beginning and Ending Balances. Revenue Limit funds are unrestricted apportionments from the State based on the ADA of Special Education students. State and local funds include restricted AB602 resources, donations, and inter-district billing. $812 19 70% 60% 50% 40% 30% 20% 10% 0% 11% 14% 33% 2009-10 12% 33% 44% 10%10% 31% 2011-12 49% 11% 9% 34% 2012-13 47% 0% 30% 2013-14 9% 61% Share of Revenue Source for LAUSD SELPA Expenditures 42% 11% 2010-11 Note: General Fund Contribution includes Beginning and Ending Balances. Revenue Limit for Students in Special Day Classes Federal IDEA State & Local based on K-12 ADA *General Fund Contribution 20 $848.9 67% Amount in millions Other School Resources (NPS/NPA, APEIS, Psych Srvcs, Transportation, Infant/Preschool, Nursing, PSA & PSW) Other Resources (Div. of Special Education and Indirect Support) Classroom Resources (Teachers, Assistants, Related Services, ESY) 96% of Special Education Expenditures are School-Based $374.1 29% $53.1 4% Special Education Expenditures Fiscal Year 2013-14 21 Revenue & Expenditure Data FY 2013-14 $8,399 Revenues per ADA LCFF $181 $586 $9,166 $17,093 IDEA State (AB 602) Total Revenues per ADA As mentioned in previous slides, Special Education revenues are based on Districtwide ADA. Special Education Expenditures Average District wide expenditure per Special Ed student Average cost per student at Special Ed. Center $29,456 $40,889 $9,523 Average cost per student at Non-Public School $44,990 Average cost per student in RSP classroom without additional services Average cost per student for Behavior Intervention Implementation Services (BII) Data for Fiscal Year 2013-14 22 58% 39% 3% # of Staff 2 2 4 4 4 107 80 16 11 Budgeted Cost $ 189,582 161,850 189,269 189,269 180,000 75% 15% 10% 4881-Limerick EL School B 38 22 15 1 Budgeted Cost $ 187,662 84,584 149,559 55,305 45,000 $ 8,504 $ 909,970 # of Staff 2 1 3 1 1 13,740 $ 522,110 $ Total 6384-Rosewood EL School A Accountability - Profile of two schools Total student with disabilities Mild/Moderate Moderate/Severe Included (Services Only) Resources Special Day Program Teachers Resource Specialist Program Teachers Baseline Assistants Adult Assistants Behavior Intervention Implementation Aides Average cost per student for the above services Data source: SAP, Welligent, Current Modified Budget FY 2014-15 Report date: 1/29/2015 23 Accountability at School, Local District, and Central Levels (Internal Effort) Review Current Programs & Service Delivery Models Identify and implement effective & cost efficient programs and services that provide educational benefit for students with disabilities Use Data To Make Informed Decisions Student data to determine supports & services School data to determine how supports & services are provided District data used to make informed decisions that may impact programs & services for students with disabilities Personnel Accountabilities All staff at all levels assume responsibility for implementing compliant IEP supports and services for students District professional development must include the needs of students with disabilities and staff who provide these programs Special education resources including personnel are used for the intended purpose of providing supports & services to students with disabilities 24 10/22/2015 Draft and Confidential LOCAL CONTROL ACCOUNTABILITY PLAN (UPDATE) ALL YOUTH ACHIEVING Board of Education - Official Public Hearing: June 16, 2015 Draft and Confidential Serving Our Students 1 10/22/2015 Draft and Confidential Funding puts greater focus on Student Success Student Support The LCFF provides an opportunity for the LAUSD to increase targeted support and intervention for our highest need students, while creating an opportunity to raise the bar and push toward meeting the District Goals. Targeted Increased Community Intervention Accountability Engagement Draft and Confidential Funds Increase Support for District Strategies Student Support Targeted Intervention Increased Accountability FY 14-15 $17.5 FY 14-15 $61.9 FY15-16 $114.3 FY15-16 $45.1 Community Engagement FY 14-15 $4.6 FY 14-15 $80.5 FY15-16 FY15-16 $5.0 $153.3 2 10/22/2015 Draft and Confidential Shared Strategies and Outcomes Student Impact School Impact Community Impact Draft and Confidential Accomplishments for 2014-15 3 10/22/2015 Draft and Confidential Strengthening School-Sites with Essential Resources School Budget Autonomy embraces spirit of decentralized decision-making while targeting our neediest students Distributed funds via a new method that embraced the tenets of the Local Control Funding Formula, known as the “Student Equity-Based Index”. Nearly $154 million went to school-sites to support core staffing to improve school climate, hire nurses, counselors, reduce class sizes, and more. Student Impact Community Impact School Impact Draft and Confidential Investments & Accomplishments for Targeted Students $4.2 million to expand Restorative Justice in High Schools 68% of schools are now implementing practices to address student behavior and improve school climate Percentage of Schools Using Discipline Foundation Policy 80 60 Student Impact 40 20 School Impact 0 2008 Community Impact 2015 4 10/22/2015 Draft and Confidential Investments & Accomplishments for Targeted Students Continued decrease in the number of instructional days lost to suspension. Exceeded the 2014-15 LCAP Target of 8250 instructional days # of Days Lost to Suspension 30,000 25,000 20,000 15,000 Student Impact 10,000 5,000 School Impact 0 2011-12 2012-13 2013-14 Community Impact 2014-15 Draft and Confidential Investments & Accomplishments for Targeted Students $8.9 million to establish the District’s Foster Youth Achievement Program 70 new counseling personnel to support a more intensive intervention and support program for Foster youth. Student Impact School Impact Community Impact 5 10/22/2015 Draft and Confidential Investments & Accomplishments for Targeted Students Implemented Year 1 of the District’s Foster Youth Achievement Program Exceeded the District’s target of completing academic assessments for the majority of Foster Youth Draft and Confidential Investments & Accomplishments for Targeted Students Continued success in increasing the reclassification of English Learners Reclassification Rate 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Student Impact School Impact 2012-13 2013-14 2014-15 Community Impact LCAP Target: 15-16 6 10/22/2015 Draft and Confidential Sustaining Our Commitment Draft and Confidential New Investments Serving Targeted Youth Investment Description 2015-16 Investment After-School Program: Enhanced Youth Services After-School program – Priority for Targeted Students $7.3 million Arts Program: Realigned Arts program to target sites with arts program deficits $26.4 million 4 year-old Academic TK program: Transition the District’s School Readiness and Literacy Development Program to a more academically rigorous transitional kindergarten program for 4 year olds over the next two years. $27 million Homeless Youth Program: Continue commitment to serving our most at-risk by providing unique counseling and support services to homeless youth. $1.8 million Targeted On-going Maintenance: Provide maintenance tiger team support to school-sites utilizing a methodology that prioritizes schools with high concentrations of unduplicated students and significant maintenance needs. $15 million 7 10/22/2015 Draft and Confidential New Investments Serving Targeted Youth Investment Description 2015-16 Investment Counseling Support: College, Career and Academic Counseling services $13 million A-G Drop-Out Intervention: Focus on increase A-G eligibility and supporting graduation efforts $15 million Diploma Project: Additional support to continue graduation awareness throughout the District $2 million Student Engagement: Implementation of a student leadership and engagement plan $0.25 million Draft and Confidential Sustained & Increased Investments Serving Targeted Youth Investment Description Sustained Investment Increased Investment Total Investment for 2015-16 Foster Youth Achievement Program $8.9 million $2.1 million $11 million School Climate & Restorative Justice $4.2 million $3 million $7.2 million Class Size Reduction $13 million School Site Supports (clerical, custodial, nurses, counselors, & APs) English Learner & Standard English Learner Coaches -- $13 million $64.4 million $18.5 million $82.9 million $6.8 million $0.4 million $7.2 million 8 10/22/2015 Draft and Confidential Outcome-driven Accountability Draft and Confidential Career & College-Ready Students The LCAP contains various career and college-ready measures to ensure that all students are on the path to graduate Increase the number of students on track to meet A-G in 2015-16 Increase the pass rate of Advanced Placement exam takers Early Assessment Program exam performance measure 9 10/22/2015 Draft and Confidential Instructional Targets An expansion of instructional targets in early literacy & special education student integration Target for 2nd grade literacy: 84% demonstrating proficiency in 2015-16 Target for Special Education students in general education settings: 80% or more of the school day in 2015-16 Draft and Confidential Additional Metrics Measuring school safety and climate Tracking the District’s progress in reducing middle and high school drop-outs Expanding attendance accountability measures to employees 76% of school site staff attending 96% or more of their work year in 2015-16 Expanding attendance accountability measures to employees 10 10/22/2015 Draft and Confidential Build more Capacity System-wide Recognize school leaders need more support and training Need to fully integrate LCFF resources into school planning and promote best practices for stakeholder engagement Strengthen labor and community partnerships to leverage existing infrastructures of parent, teacher and student leaders. Draft and Confidential Q&A 11 Please visit resources. for additional 10/22/2015 12 10/22/2015 Superintendent’s 2015-16 Budget & Review of Ending Balances June 2015 May Revise Highlights The Governor’s May Revision provides good news, with an estimated additional $415 million for the upcoming 2015-16 school year. Half of the monies are ongoing and half are one-time only funds. These dollars are sufficient to balance our budget for 2015-16 and 2016-17. However, we are still estimating a deficit of over $300 million for 2017-18, even with the Governor’s increase in dollars. 1 10/22/2015 May Revise Highlights LACOE and AB 1200 require a balanced budget through 2017-18. One-time additional funds from the May Revision are being “committed” to balance 2016-17. All of the new funding from the Governor’s May Revision is “spent.” Covers the recent health benefit agreements, salary increases, and growing bills. Third Interim Results and Final Budget Ending Balance Ending Balance (in millions) Non-spendable (inherently non-spendable) Restricted (externally enforceable limitations) Committed (self-imposed by highest level of authority) 2014-15 2015-16 2016-17 2017-18 $19.60 $19.60 $19.60 $19.60 $124.50 $58.40 $44.80 $35.90 $0.00 $218.30 $0.00 $0.00 Categories Subject to Reserve Cap Assigned (limitation resulting from intended use)* Unassigned- (Reserve of Economic Uncertainty)* $341.00 $308.90 $312.60 $309.90 $65.40 $72.40 $72.40 $72.40 Unassigned (residual resources for unrestricted use)* $114.70 $41.30 Estimated Total Ending Balance $665.20 $718.90 $450.30 $104.50 $0.90 ($333.40) *Subject to the “cap” requirement, if in effect. State law “caps” assigned and unassigned balances at a certain percentage of expenditures. 2 10/22/2015 Breakdown of the Components of the Assigned Ending Balance 2015-16 2016-17 2017-18 General Fund School Allocation $130.6 $128.2 $125.8 District-wide Cost $92.8 $97.1 $102.7 School Site Programs $ 79.2 $80.9 $75.0 Central Office $5.9 $5.9 $5.9 Salary Increase Set Aside $0.4 Total Assigned Ending Balance $308.9 $0.6 $0.6 $312.6 $309.9 “Assigned Ending Balance” refers to monies that can be used for any purpose but have been designated for specific future uses. Examples of this are school site allocations, donation and filming accounts. Calculation of Minimum Reserve Requirement (in millions) 2015-16 2016-17 2017-18 Minimum Reserve Levels applicable for the District 1% 1% 1% Minimum Reserve Requirements $70.9 $71.1 $72.0 Reserve Cap (if CAP is in effect) is 3 times minimum reserve requirement $212.6 $213.4 $216.0 Estimated Total Assigned and Unassigned Ending Balance (with Fiscal Stabilization Plan) $423.0 $385.0 $382.3 Excess over Minimum $352.1 $313.9 $310.3 Excess over Cap Reserve Requirement (if in effect) $210.4 $171.6 $166.3 3 10/22/2015 What’s In Assigned Ending Balance? Approximately 65% of the assigned ending balances are in the General Fund School Allocation and School Site Program categories. These are the main accounts that schools use for their local needs. Other accounts are specific local revenues such as donations and filming revenues. The District has been decentralizing resources and decision-making to school sites with community engagement, accountability, and greater support. Good News: The District’s Revenues and Expenditures Have Been Volatile Over the Past Decade, But Have Increased in the Past Few Years Since Passage of Proposition 30 District Funding Still Well Below Pre-Crisis Levels $ Millions $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 FY 99 FY 00 FY 01 FY 02 FY 03 Operating Revenues • FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Operating Expenditures Sources: The District’s audits, with the exception of FY 2014-15 which is projected as of the Third Interim Projection 4 10/22/2015 LCFF District Funding Increases Will Slow Down as the District Approaches Target Funding Levels $6000.0 (In Millions) 74% $4000.0 +146.9 $3000.0 +225.5 95% 94% 92% 82% $5000.0 +8.4 +55.6 +170 +249.4 +2.1 +23.2 $2000.0 $1000.0 $- 2013-14 Base 2014-15 2015-16 2016-17 Supplemental and Concentration 2017-18 Target Note: Excludes revenue for affiliated charter schools. LCFF Increases Support for Targeted Student Populations LCAP Aligns Resources to Quality Student Services to Increase Academic Achievement Student Support FY 14-15 $61.90 FY15-16 $114.30 Total $176.20 Targeted Intervention $17.50 $45.10 $62.60 Increased Accountability $80.50 $153.30 $233.80 Community Engagement Total $4.50 $164.40 $4.90 $317.60 $9.40 $482.00 Note: Dollars are approximated and may differ from overall totals due to rounding. 5 10/22/2015 Additional Resources For Student Priorities A to G and Zero Dropout initiatives, $15m Transitional Kindergarten Program, $14m Caps and Gowns, $2m Athletic Fees, $2m Dual Language Program, $6.2m Magnet Program Expansion (16-17), $2.2m Redesign and refocus programs to serve students: Arts Afterschool Maintenance Cost Considerations for the Future Expected Slowdown in Revenues Declining Enrollment Special Education Requirement Increasing Pension Costs Labor Agreements Maintenance Requirement 6 10/22/2015 The District’s Estimated Annual Expenditure Increases Expected to Outpace Its Annual LCFF Base Revenue Increases as Mandatory Bills Rise (in Millions) $396.7 $300.0 $249.4 $250.0 $218.5 $200.0 $175.9 $150.0 $100.0 $50.0 $23.2 $2.1 $District LCFF Base Revenue Increase District Expenditure Increase District LCFF Base Revenue Increase 2015-16 District Expenditure Increase District LCFF Base Revenue Increase 2016-17 District Expenditure Increase 2017-18 Expenditure Increase includes: Salary compensation, pension costs, health and welfare contribution, workers’ compensation, Other Post Employment Benefits, utilities, Routine Repair and General Maintenance, and Special Education support. The District Has Experienced a Steep Decline in Enrollment Since 2002-03 750,000 700,000 650,000 600,000 550,000 500,000 450,000 400,000 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 District K-12 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Estimated 2015-16 Independent Charters • The District lost approximately 156,000 students in the last decade (from 2005-06 to 2014-15) • The District is estimated to continue to lose an average of 15,000 students annually over the next few years • Correspondingly, the District could lose an estimated $100 million each year due to this enrollment decline 7 10/22/2015 Special Education For 15-16, we estimate a General Fund contribution to Special Education of $923.5m, or $1,966 per General Ed K-12 ADA. Overall District enrollment has declined over the past decade, but Special Education students are a growing share of enrollment. State funding for special education is based on District-wide K-12 ADA So if overall enrollment declines, but share of Special Education students increases, this means less revenue for Special Education The share of students with severe disabilities is also increasing among all students with disabilities at the District. The District does not receive any additional revenue based on type of disability Services for students with moderate to severe disabilities are more costly Districtwide Enrollment Has Declined, But Share of Special Education Students Has Steadily Increased 800,000 14% 13.3% 12.8% 13% 13.4% 13.5% 700,000 13.0% 600,000 12.6% 13% 12.2% 500,000 11.8% 11.9% 12% 12% 12.3% 400,000 11.5% 300,000 11% 200,000 11% 100,000 10% Districtwide Enrollment Special Ed Enrollment as a Percent of Districtwide Enrollment 14% 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 School Year Special Ed Enrollment as a Percent of Districtwide Enrollment 2011-12 2012-13 2013-14 2014-15 Districtwide Enrollment Note: Excludes enrollment for Independent Charters. 8 10/22/2015 The District's General Fund Contribution Per K-12 ADA Continues to Rise $2,500 $1,966 $2,000 $1,656 $1,504 $1,500 $1,116 $1,213 $1,262 $1,000 $500 $0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Note: Prior to the implementation of LCFF, the General Fund Contribution accounted for the Revenue Limit for students in Special Day Classes. Cost Considerations Pension costs are expected to sharply increase by over 100% in the next few years (or by over $300 million). Fiscal Year 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 CalSTRS Rates Cumulative Change due CalSTRS to CalSTRS Employer Rate Rate Change ($ Millions) 8.25% 8.88% $23 10.73% $90 12.58% $145 14.43% $197 16.28% $249 18.13% $301 19.10% $328 CalPERS Rates Fiscal Year 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Cumulative CalPERS Change due to Employer CalPERS Rate Rate Change ($ (Misc) Millions) 11.44% 11.77% 11.84% 13.05% 16.60% 18.20% 19.90% 20.40% $7 $22 $42 $58 $72 $89 $94 9 10/22/2015 LACOE requires a District Fiscal Stabilization plan and contingency plan Fiscal Stabilization Plan (in Millions) DOF Estimates 2016-17 2017-18 Estimated Deficit Release of Committed Funds Balance from 15-16, 16-17 Deficit to Address -$259 $218 $41 $1 Solutions Onetime Sources* Program Reduction** Total Balance $1 LACOE Guidance 2016-17 2017-18 -$334 -$644 $1 -$333 -$437 $218 $41 -$177 $120 $217 $337 $20 $157 $177 $100 $544 $644 $3 $0 $0 -$644 *One-time sources include change in carryover policies for per pupil schools. **Program reductions include decrease in central and districtwide programs as well as increase in class sizes in Grades 4 through 12, administrator, counselor, and clerical norms. Next Steps The Board is being asked to adopt and approve the following: Superintendent’s 2015-16 Final Budget and Local Control Accountability Plan; Superintendent’s Fiscal Stabilization Plan as required by LACOE and AB 1200; Resolution Regarding Expenditures from the Educational Protection Account (“EPA); Commitment of one time funds of $218.3 million needed to pay for recent salary compensation increases in 2016-17. 10 10/22/2015 Next Steps Although we are almost at our target LCFF funding levels, we must continue to advocate for adequate funding that recognizes the District’s needs On a positive note, LCFF allows us to invest strategically in programs to ensure success for all students This Budget is a concerted effort to meet the needs of our community and moves our District forward on a path of stability into the future We must continue to persist towards a balanced budget for multiple years and refocus our programs to best serve our students Calendar June 16: Public Hearing required for Local Control Accountability Plan (LCAP) and for the Budget June 23: Adoption of LCAP and Budget 11 10/22/2015 LAUSD Student Data Independent Financial Review Panel 6/24/2015 Agenda • • • • Enrollment Attendance Graduation Rates Dropout Rates 1 10/22/2015 Declining Enrollment Enrollment has fallen by about 196,000 students since 2002-03 ─ About 100,000 have moved to about 185 independent charter schools in the District per the District’s reform initiatives ─ Demographics have changed (for example, birth rates) 800,000 700,000 600,000 500,000 400,000 Independent Charters District Schools 300,000 200,000 100,000 0 * Projected Declining Live Births Live Births (Lagged 5 Years) 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2 10/22/2015 Percent of Enrollment Decline Since 2002-03, enrollment has declined 2.6% per year on average 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Student Attendance The percentage of students with at least 96% attendance has been increasing 80% 71% 68% 70% 65% 62% 60% 50% Chronically Absent (<91%) 40% Basic (92 - 95%) Proficient/Advanced (>96%) 30% 21% 20% 17% 20% 15% 15% 17% 13% 16% 10% 0% 2010-11 2011-12 2012-13 2013-14 3 10/22/2015 Student Attendance – By Gender 2013-14 Attendance 80.00% 70.00% 60.00% 50.00% Chronically Absent (<91%) 40.00% Basic (92 - 95%) Proficient/Advanced (>96%) 30.00% 20.00% 10.00% 0.00% FEMALE MALE Student Attendance – By Ethnicity 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% Chronically Absent (<91%) 20.00% Basic (92 - 95%) Proficient/Advanced (>96%) 10.00% 0.00% 4 10/22/2015 Student Attendance – By Grade Level 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% Chronically Absent (<91%) Basic (92 - 95%) 30.00% Proficient/Advanced (>96%) 20.00% 10.00% 0.00% Average Daily Attendance (ADA) 700,000.00 100.0% 98.0% 600,000.00 96.0% 500,000.00 94.0% 92.0% 400,000.00 90.0% P-2 ADA ADA/Enrollment 300,000.00 88.0% 86.0% 200,000.00 84.0% 100,000.00 82.0% - 80.0% 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 5 10/22/2015 Cohort Graduation Rate Cohort Graduation Rate 85 80.4 80 80.8 78.9 77.1 75 74.7 LAUSD 70.4 State 70 68.1 66.6 64.8 65 62.4 60 2009-10 2010-11 2011-12 2012-13 2013-14 Cohort Dropout Rate Cohort Dropout Rate 30 25 24.7 22.6 20.3 20 16.6 17.2 17 11.4 11.6 2012-13 2013-14 14.7 15 LAUSD 13.1 State 10 5 0 2009-10 2010-11 2011-12 6 08/11/2015 LAUSD Pension Benefits Independent Financial Review Panel 8/11/2015 State Budget Picture • Positive signs for education funding continue • We are well into the implementation of the Local Control Funding Formula (LCFF) for K-12 education • New funding is estimated to close the gap between 2015-16 funding levels and LCFF full implementation targets by 32.19% • When combined with 2013-14 and 2014-15 LCFF funding, implementation progress would cover almost 58% of the gap in just three years 1 08/11/2015 State Budget Picture • But, no new funding to address the increased district costs for California State Teachers’ Retirement System (CalSTRS) and California Public Employees’ Retirement System (CalPERS) LAUSD’s Primary Retirement Systems Certificated staff Classified staff Part-time/seasonal staff 2 08/11/2015 Pension Benefits • Because both of the California pension systems covering our employees are underfunded, contributions are increasing significantly for both systems • Governmental Accounting Standards Board Statement No. 68 (GASB 68) requires LEAs to recognize their respective portions of these unfunded liabilities on their local financial statements – Starting with the 2014-15 fiscal year • Questions and issues about implementation of pension reform remain CalSTRS and CalPERS • The employer contribution costs for both CalSTRS and CalPERS are projected to double over the span of seven years – CalSTRS–From 8.25% in 2013-14 to 19.1% in 2020-21 – CalPERS–From 11.442% in 2013-14 to 20.4% in 2020-21 • The 2015-16 State Budget proposal does not address these cost increases for school districts or COEs – The Governor does propose allocation increases for the California Community Colleges, partly in recognition of increased expenses in the area of retirement benefits 3 08/11/2015 CalPERS Rate Increases • The employer contribution to CalPERS is projected to increase from 11.771% in 2014-15 to 11.847%in 201516 (final rate received CalPERS Board approval 4/15/15) – Classic members continue to pay 7.00% – New members pay 6.00%, which may fluctuate from year to year based on the PEPRA requirement to pay half the normal cost rate • Estimates of the resulting future contribution rate increases for school employers are as follows: CalSTRS Rate Increases • Unlike CalPERS employer contributions, which are set by the CalPERS Board each year, contributions to the CalSTRS are set by statute: – The employee contribution rate has been 8% of creditable compensation since 1972 – The employer contribution rate was 8.25% since 1990 – The state’s contribution rate has changed frequently over the years and is currently 3.291% – Any change to the contribution rates requires legislation • For the first time since the above rates were set, the State Budget Act of 2014 specifies a progressive increase in contribution rates 4 08/11/2015 CalSTRS Rate Increases • Employer rates are increasing to 10.73% in 2015-16, up from 8.88% in 2014-15 – No specific funds are provided for this cost increase • Once the statutory rates are achieved, CalSTRS will have the authority to marginally increase or decrease the employer and state contribution rates CalSTRS Rate Increases Following passage of AB1469 in June 2014, CalSTRS’ pension costs began to increase significantly in 2014-15 ─ Rates may be revised for 2021-22 and after to stay on track to retire the CalSTRS UAAL by June 30, 2046 CalSTRS Pension Costs (As a % of Covered Payroll) Contribution Rates 25% 20% 15% 10% 5% 0% 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Employer 8.88% 10.73% 12.58% 14.43% 16.28% 18.13% 19.10% Employee(1) 8.15% 9.20% 10.25% 10.25% 10.25% 10.25% 10.25% State 5.95% 7.39% 8.83% 8.83% 8.83% 8.83% 8.83% • (1) Applicable to employees who joined CALSTRS prior to PEPRA, for employees who joined after PEPRA, contribution will increase to 9.205% by 201617 5 08/11/2015 LAUSD Pension Contributions Increasing Estimated Employer Pension Contributions as a Percentage of General Fund Revenue 14.00% 12.00% 10.00% 2.65% 2.72% 2.43% 8.00% 2.21% PERS 1.74% STRS 6.00% 1.45% 4.00% 5.75% 2.00% 6.58% 7.43% 8.27% 8.71% 2019-20 2020-21 4.57% 0.00% 2015-16 2016-17 2017-18 2018-19 Note: 2015-16 through 2017-18 are from the District’s Multi-Year Projection (MYP) 2018-19 through 2020-21 hold salary and revenues at 2017-18 levels CalSTRS • Last year’s plan to put CalSTRS on solid financial footing was vitally important and the state is increasing its contributions as well – But without addressing the significant cost increases, LEAs are being put in a squeeze that can only result in a reduction in services to students while expectations for those services are increasing • A group of K-12 districts throughout the state –at all points on the LCFF spectrum –are forming a coalition to address the issue of increasing CalSTRS employer costs – The CalSTRS Funding Coalition is seeking a funding stream within Proposition 98 –but outside of the LCFF –to address these extraordinary costs, which were not contemplated in the creation of the LCFF 6 08/11/2015 Pension Reform • The California Public Employees’ Pension Reform Act of 2013 (PEPRA) changes the pension benefits program for new members of the pension systems as of January 1, 2013 • Any individual that is not a “new member” is classified by: – CalSTRS as a “2% at 60” member – CalPERS as a “classic” member • New members must contribute at least 50% of normal costs of the plan – For 2014-15, the new member contribution rates are: • CalPERS: 6% (classic members pay 7%) • CalSTRS: 8.15% (same as 2% at 60 members, for now) • New member contribution rates will be adjusted each year Pension Reform • Employers are not allowed to pay any portion of a new member’s contribution – Unless the terms of a contract in existence as of January 1, 2013, would be abrogated • Once the contract is terminated, amended, extended, or renewed, new members will be required to begin paying 50% of normal costs 7 08/11/2015 Pension Reform • Are classic or 2% at 60 members required to pay at least 50% of normal costs? – In other words: can classic or 2% at 60 members still benefit from the employer paying all or part of the employee’s contribution? • It differs between CalSTRSand CalPERS Pension Reform • For CalSTRS2% at 60 members: – If a collective bargaining agreement or a written employment agreement is entered into or changed on or after January 1, 2014, employer payment of the employee’s contribution is no longer allowed – –If the agreement was in effect before January 1, 2014, employers can continue to pay the member contribution until the contract expires or is renewed, amended, or extended in any way 8 08/11/2015 Pension Reform • For CalPERS classic members: – The employer can continue to pay any or all of the employee’s contribution because the employee was a member before January 1, 2013 Pension Reform • PEPRA also revised many provisions of working after retirement • Continues limiting the exemptions to the earnings limitation to retirees that meet these requirements 9 08/11/2015 Pension Reform • CalSTRS provides an exception to the 180-day waiting period if the retiree is of at least retirement age and if the appointment meets the requirements for an exception (E.C. 24214.5) – The retiree is still subject to the earnings limitation, which is $40,173 for 2014-15 and $40,321 for 2015-16 • CalPERS provides an exception to the 180-day waiting period if the appointment meets certain conditions (Government Code Section [G.C.] 7522.44 and 7522.56) – The retiree is limited to 960 hours per year Pension Reform • These provisions also apply to independent contractors and third-party employees who are retirees – So school employers are required to report the hours worked and/or earnings to CalPERSand CalSTRS 10 08/11/2015 CalSTRS • CalSTRS has been actively auditing LEAs – Developed a list of agencies to audit based upon a risk assessment, including: • Significance of pay increases provided to employees right before retirement • Excess sick leave days reported – Significant findings have been reported • Which included reclassification of some positions out of CalSTRS – Human resources, business office, information technology, etc. CalSTRS • Based upon concerns expressed by members and employers alike, CalSTRS has stopped the audits for now – In the meantime, Assembly Bill (AB) 963 (Bonilla, D-Concord) has been introduced to clarify creditable service, so stay tuned . . . 11 08/11/2015 Creditable Compensation –CalSTRS • Effective January 1, 2015, CalSTRS creditable compensation will no longer include allowances for automobile use, expenses, or cash in lieu of health benefits – These allowances are often provided to superintendents and some cabinet-level and administrative positions as mileage, telephone, and expense stipends and/or cash in lieu of health benefits Creditable Compensation –CalSTRS • Prior to January 1, 2015, these allowances were considered creditable to the Defined Benefit program • For many superintendents and certificated administrators, this change in statute means that the compensation calculation for monthly retirement benefits will be lower than it was prior to January 1, 2015 12 08/11/2015 Creditable Compensation –CalSTRS • How can this be resolved? – Districts can adjust current contracts to “restructure” into salary those amounts that will be excluded – The restructure must occur prior to January 1, 2016 • The restructured additional compensation won’t be creditable until the effective date of the restructuring • After January 1, 2016, a restructure must be part of a collective bargaining or contract negotiation agreement to be considered “consistent” • Once the restructure has occurred, there is no requirement to maintain the original purpose of the additional compensation Creditable Compensation –CalSTRS • Remember – be consistent – CalSTRS will consider compensation to be inconsistent if the additional compensation is reversed when a successor is assigned to the same position – When a superintendent or administrator receiving additional compensation (formerly mileage or expense allowance) leaves a district, it is important that his/her successor also receive the stipend in order to comply with the rule of consistency 13 10/22/2015 LAUSD Health and Welfare Benefits Independent Financial Review Panel 8/11/2015 1 Agenda • • • • • Benefits overview Cost drivers & financial impact Health Benefits Committee Other Post-Employment Benefits Potential Cost Containment Strategies 2 1 10/22/2015 .?usf History of Health Benefits 2006 ?l 2014 1969 Board Retreat OPEB Trust District pays full established Ref District receitgfta5 2015 Ire: eaf't employee 1993 vote on the HBC Fla _or_Pa at"? 5 contribution Health Benefits EStabIIShed Committee mandate established 2002 bec?mes 19405 Eliminated Benefits offered mandatory 2 year 201.8 to certificated HMO election for ACAs excuse employees new hires tax becomes effective I 1987 1992 1976 1984 2007 2009 Years of 10 years of 15 years of Rule of 80 Rule of SCI Rule of 85 service rule service rule service rule and 15 and 25 [5 veers) consecutive consecutive introduced yea rs years 2009 1992 Eliminated cash-plan and introduced HMOs MOU established baseline budget with increases based on per member contribution District Benefits Summary Paid By Benefit Provided To Bene?t District Employee Active Retiree Deiitrigzems Health Care Health (Medicai, Dental; Vision) :1 i/ t/ s? Health Care Flexible Spending Account I Dependent Care Flexible Spending Account I Employee Assistance Program 1/ a/ a/ Continuation of Health Coverage?Cobra w/ i/ I Basic Life Insurance v? Optional Life Insurance a/ Accidental Death 8: Dismemberment i/ x/ if Retirement State Teachers' Retirement System v? Public Employees' Retirement System i/ Public Agency Retirement Services (PARS) I t/ I 4030:) v? i/ 457(b) I 10/22/2015 Current Benefits – Active Employees Offered Plans • • • • • • • • Medical – Anthem EPO & HMO – Kaiser HMO – Health Net HMO – Opt-Out/Cash Back ($3,000) Dental – MetLife DHMO & PPO – Western Dental DHMO & Plan Plus Vision – EyeMed Vision Care – VSP Select Network Basic & Optional Life Flexible Spending Account Cobra and AB 528 IRS Sec. 403(b) and 457(b) Plan Miscellaneous Not Offered Short-term disability Long-term disability Accidental death & dismemberment Long-term care Cafeteria plan 5 Health Benefits Eligibility * PPAC: Patient Protection and Affordable Care Act as amended by the Health Care & Education Reconciliation Act of 2010 6 3 10/22/2015 Eligibility for District Retiree Health Benefits If Hired Consecutive Service Immediately Prior to Retirement On or before March 11, 1984 Five Before July 1, 1987, but after March 11, 1984 Ten Before June 1, 1992, but after July 1, 1987 Fifteen years of consecutive service immediately prior to retirement or ten years of consecutive service immediately prior to retirement plus ten years of non-consecutive service Before March 1, 2007 but after June 1, 1992 The sum of consecutive years of service immediately prior to retirement plus age must equal or exceed 80 Before April 1, 2009 but after March 1, 2007 In addition to the rule of 80, a minimum of 15 consecutive years of service is required On or after April 1, 2009 The sum of consecutive years of service immediately prior to retirement plus age must equal or exceed 85, a minimum of 25 consecutive years of service is required On or after April 1, 2009 (sworn personnel only) The sum of consecutive years of service immediately prior to retirement plus age must equal or exceed 80, a minimum of 20 consecutive years of service is required Retirees must enroll in those parts of Medicare for which they are eligible 7 Monthly Composite Rates for Medical Premiums Health Plan - Actives Kaiser Health Net Anthem EPO Anthem HMO Select Medical 735.26 742.21 792.53 576.14 2011 RX 0.00 0.00 113.55 113.55 2011 Medical 735.26 816.73 742.21 916.63 906.08 992.72 689.69 685.66 2012 RX 0.00 0.00 116.80 116.80 2012 Medical 816.73 862.57 916.63 1008.02 1109.52 943.79 802.46 698.71 2013 RX 0.00 0.00 130.68 130.68 2013 Medical 862.57 923.23 1008.02 1126.36 1074.47 906.27 829.39 768.14 2014 RX 0.00 0.00 146.35 146.35 2014 Medical 923.23 945.58 1126.36 1187.12 1052.62 1019.80 914.49 805.68 2015 RX 0.00 0.00 170.25 170.25 2015 945.58 1187.12 1190.05 975.93 Health Plan - Retirees <65 Kaiser <65 Health Net <65 Anthem EPO <65 Anthem HMO Select <65 Medical 1035.26 871.14 849.16 731.12 2011 RX 0.00 0.00 244.50 244.50 2011 Medical 1035.26 1176.68 871.14 1075.86 1093.66 979.65 975.62 820.38 2012 RX 0.00 0.00 235.18 235.18 2012 Medical 1176.68 1286.70 1075.86 1183.12 1214.83 930.11 1055.56 756.07 2013 RX 0.00 0.00 263.89 263.89 2013 Medical 1286.70 1396.31 1183.12 1322.02 1194.00 836.11 1019.96 838.41 2014 RX 0.00 0.00 284.98 284.98 2014 Medical 1396.31 1469.20 1322.02 2004.83 1121.09 1112.96 1123.39 868.95 2015 RX 0.00 0.00 332.33 332.33 2015 1469.20 2004.83 1445.29 1201.28 Health Plan - Retirees 65+ Kaiser 65+ Health Net 65+ Anthem EPO 65+ Secure Horizons 65+ Medical 285.13 358.92 316.99 323.11 2011 RX 0.00 0.00 244.50 0.00 2011 Medical 285.13 259.07 358.92 383.74 561.49 208.09 323.11 355.42 2012 RX 0.00 0.00 235.18 0.00 2012 Medical 259.07 254.45 383.74 383.74 443.27 262.83 355.42 355.42 2013 RX 0.00 0.00 263.89 0.00 2013 Medical 254.45 264.68 383.74 390.48 526.72 274.08 355.42 299.00 2014 RX 0.00 0.00 284.98 0.00 2014 Medical 264.68 269.47 390.48 400.24 559.06 290.34 299.00 311.00 2015 RX 0.00 0.00 332.33 0.00 2015 269.47 400.24 622.67 311.00 4 10/22/2015 Overview of Current District Health & Welfare Benefits Plan • Plan design by the Health Benefits Committee/Coordinated Bargaining Process • Eligibility rules – Benefited active employee benefits are the same, whether employee is full-time or at least half-time, except T.A.’s – Retiree benefits are the same, whether full-time or part-time1 – No variation in retiree benefits based on years of service • No employee/retiree premium contribution for medical, dental and vision • Low copayments and deductibles • Lifetime medical, Rx, dental and vision for employee and spouse (and eligible dependents) – District pays 100% of premium – Retirees pay deductibles and make copayments 1Retiree must meet service requirements. 9 Issues and Growing Concerns • • • • • • LAUSD offers relatively generous health benefits Increasing healthcare costs ADA funding decrease (declining student enrollment) Growing ratio of retirees to active employees Growing unfunded liability for retiree health benefits Legislative compliance 10 5 10/22/2015 Medical Benefit Examples More Than Half of LA County Unified School District have Active Employee Premium Contributions Active Employee Health Benefit Premiums Paid by District (Type of Coverage) Retiree Lifetime Health Benefits Paid by District (Type of Coverage) LAUSD Fully Paid (Employee + Dependents) Beverly Hills Partially Paid (Employee + Dependents) Long Beach Fully Paid (Employee Only) Fully Paid (Employee + Dependents) Partially Paid Employee ONLY Benefits end at Age 65 Partially Paid (Employee + Dependents) Benefits End at 67 yrs None (Employee Pays Full Premium Amount) None (Employee Pays Full Premium Amount) Partially Paid (Employee + Dependents) Partially Paid (Employee + Dependents) Benefits End at 65 yrs Unified School District Oakland Partially Paid (Employee + Dependents) San Diego Fully Paid (Employee + Dependents) San Francisco Partially Paid (Employee + Dependents) Santa Ana Partially Paid (Employee + Dependents) 11 Health Benefit Cost Increases 6 10/22/2015 National Health Care Cost Drivers • Provider Cost • Hospital Cost – Physician compensation, malpractice premiums, and supply and demand – Wage pressure and workforce shortage, technology and pharmaceutical costs, hospital competition, facility expansion and technology acquisition, and increased use of inpatient, outpatient, and emergency services • Technology: Pharmaceutical, New Advanced Diagnostic Tool – New and more effective drugs cost more, pharmaceutical market growth, and direct-toconsumer advertising • Consumer Behavior • Insurance Costs • Longevity • Healthcare Reform – Patients demand for latest technology, more costly drugs, and specialty care – Administrative costs and cost shifting from Government to private entities (employers) – Longer life span – Increase to dependent coverage, increase in preventative care coverage, and decrease in governmental coverage to Medicare 13 H&W Cost vs. Enrollment H&W Cost vs Enrollment $1,200 750,000 $1,000 $911.9 $847.4 $866.3 $836.4 $856.6 $898.2 $939.9 $988.3 $994.6 700,000 Millions $800 650,000 653,215 $600 637,051 617,798 600,000 601,713 $400 581,445 566,604 $200 550,000 556,115 542,433 526,776 $0 500,000 2007-08 2008-09 2009-10 2010-11 H&W Cost 2011-12 2012-13 2013-14 2014-15 (estimated) 2015-16 (estimated) Student Enrollment 7 10/22/2015 Growing Retiree Population - 2010 vs 2014 15 Increasing Life Expectancy Remaining Life Expectancy at Age 55 Early Retirement 40 39.9 35 30 25 20 15 10 21.5 22.2 22.8 25.0 26.0 29.2 30.3 32.4 32.4 Retirees will receive a benefit longer after leaving service than while employed by an average of 15 years 5 0 1900 1950 1998 Men 2050 Low 2050 High Women Source: Statistical Abstract of the U.S. 1900, 1950, 1998. For 2050, Administration on Aging based on U.S. Census Bureau projections 16 8 10/22/2015 Affordable Care Act • The District was already in compliance for the most part • Changes required the following: – Extend dependent coverage age from 19 to 26 – Eliminate lifetime limits on benefits – “Pay or Play” Employer Shared Responsibility –A large employer may be subject to a penalty if it fails to offer its full-time employees and their dependents minimum essential coverage that is affordable and provides minimum value • Penalty A and Penalty B • Individuals not provided health benefits by their employer must purchase through the Exchange or pay a penalty – Definition of full-time employee is now an employee working: • 30 hours/week • 130 hours/month 17 Affordable Care Act – Employers will be required to report to the Internal Revenue Service (IRS) the following each year: • Names of employee and dependents covered • Number of full-time employees • Length of waiting period • Monthly premium • Employer share of cost • Actuarial value of lowest-cost option – Individual and group plans (through employers) must provide a uniform Summary of Benefits and Coverage to all applicants and enrollees. – Covered employers must notify employees upon hire about insurance exchanges, eligibility for subsidies, and loss of employer contribution (if any) if employee purchases a plan through the Exchange 18 9 10/22/2015 Health Benefits Committee (HBC) • Structure – Comprised of bargaining units – Each unit receives one vote – District receives one vote • Roles – – – – – Recommend plan design to the Board Review cost and quality of benefit programs Determine scope of financial responsibilities Be aware of legislative development Negotiate all contracts • Accomplishments – Conducted Request for Proposals for health plans – Negotiated prices – Made plan adjustments to live within means 19 Collective Bargaining Agreement and HBC Role According to the 2015-17 Coordinated Bargaining Health Benefits Agreement: “The HBC shall be responsible for proposing all plan design modifications including, but limited to, copays, deductibles, premium contributions and assessments, and selection, addition, termination of health plans/providers for all active and retired employees provided that the HBC shall not recommend any changes that would expand eligibility. Any such changes shall be implemented upon action by the HBC and in accordance with the provisions of this agreement.” 20 10 10/22/2015 District Funding to HBC • Annual budget – CY 2015 $1.029 B* – CY 2016 $1.095 B* – CY 2017 $1.163 B* • The increase from 2015 to 2016 represents a 6.5% increase • The increase from 2016 to 2017 represents a 6.1% increase • HBC is required to “live within” the annual budget as established by the District’s annual contribution as set forth in the collective bargaining agreement. * To be adjusted based on per member contribution 21 H&W Contribution vs. Expenditures in Calendar Years H&W Contribution vs. Expenditures in Calendar Year $1,000 $958.5 $958.6 $950.1 $930.4 $930.0 $928.7 $955.7 $900 Millions $884.6 $917.0 $913.4 $925.0 2011 2012 2013 $911.9 $800 $790.1 $766.0 $700 $724.2 $600 2006 2007 H&W Reserve 2008 2009 2010 Calendar Year District Contribution 2014 Actual Expenditures 22 11 Cost Against Total Budget Classi?ed other Out?t}. 2% Salaries, 1396 Active and Retiree Health Cnrlificalnd Bene?ts, 14% Salaries, 42% Bandits other than Health, 9% Instructional Banks and Supplies. 8% Other Operating Capilal Uulluv, Expenses. 12% me. 23 53,000 13% 57,000 15% 14% 55,000 7 12% 55,000 .E 10% 3 54,000 8% he '3 General Fund 3 531000 Expenditures a 6% 52 000 4% 51,000 - 2% HSIW Expenditures 50 7 0% 2006707 2007708 2008709 2009710 2010711 2011712 2012713 2013714 2014715 (est) [est] -General Fund Expenditure A as of GF 10/22/2015 12 10/22/2015 Current Funding Method for Retirees 25 Other Post-employment Benefits (OPEB) • Other Post-employment Benefits (OPEB) are benefits, other than pensions, that state and local governments provide to their retired employees • OPEB benefits principally involve health care benefits, but may include life insurance, disability, legal and other services 26 13 10/22/2015 Actuarial Valuation • Required by Governmental Accounting Standards Board (GASB) Statement 45 – All plans of state and local government entities that provide Other Postemployment Benefits (OPEB) are required to report the cost of these benefits on their financial statements – Requires public sector employers to conduct an actuarial valuation of their (OPEB) – School District is required to include the results in its financial statements effective with the fiscal year ending June 30, 2008 – Standardizes OPEB measurement and disclosure – Accurately quantify future financial liabilities • Assists in budget forecasting • Assists in understanding effect of past and current decisions • Important tool for decision making 27 OPEB Liability and Annual Required Contribution • Total unfunded actuarial accrued liability (UAAL) as of July 1, 2013 is $10.9B • Annual required contribution (ARC) of $869M is needed to fund the UAAL based on a 30 – year amortization • District’s current funding policy is pay-as-yougo for OPEB • Net OPEB liability increases each year if unfunded 28 14 10/22/2015 UAAL Trend Unfunded Actuarial Accrued Liability (UAAL) $11.2 $10.6 $10.0 $9.9 $12.0 $10.0 $10.9 $8.0 $6.0 $4.9 $4.0 $2.0 $2004 2005 2007 2009 2011 2013 Source: 2004 - The Epler Company Actuarial Study for OPEB as of June 30, 2004 2005, 2007 - The Segal Company Actuarial Valuation and Review of OPEB as of June 30, 2005 and June 30,2007 2009, 2011 - Buck Consultants GASB 43 &45 Valuation report as of June 30, 2009 and as of June as of 2011 2013 - Actuarial Valuation Report GASB 45 as of July 1, 2013 29 Pay-As-You Go Based on the most recent actuarial report, if the District continues funding the retiree Benefit on a pay-as-you-go basis, the cost is expected to grow an average of 5.5% annually over the next 30 years. 30 15 10/22/2015 Post-Employment Costs - OPEBs OPEB liability as of July 1, 2013 was $10.9 billion, down from $11.2 billion in 2011 ─ Net decline was the result of a combination of factors such as lower health care cost increases, changes in mortality rates, changes in the cost of dependent coverage, and a change in the discount rate OPEB Trust administered by CalPERS established in May 2014; currently $90 million Annual Required Contributions and OPEB Costs(2) ($Millions) Fiscal Year Annual Required Contribution(1) 2009-10 $1,006.8 $ 977.2 $237.3 24% 2010-11 1,050.6 1,022.0 240.1 23 2011-12 1,085.9 1,048.0 228.7 22 2012-13 1,085.9 1,038.2 245.4 24 2013-14 868.6 890.9 326.9 37 Annual OPEB Cost(1) Actual Contribution(2) Annual OPEB Cost Contributed (1) Information for Fiscal Years 2009-10 through 2012-13 reflects results of actuarial studies prepared by Buck Consultants. Information for Fiscal Year 201314 reflects results of an actuarial study prepared by Aon Hewitt. (2) Figures represent actual contributions reports in the District’s Comprehensive Annual Financial Report for the respective fiscal years included in the table. Figure for Fiscal Year 2013-14 includes $60 million contributed to the OPEB Trust. • Sources: 2013 Postemployment Valuation for FY 2009-10 through 2014-15; District’s Comprehensive Annual Financial Report for FY 2009-10 through 2013-14. Components of fully funding health benefits. Pay-Go + OPEB Obligation = Annual Required Contribution (ARC) Millions Fully Funding: H&W Expenditure including OPEB $2,000 $1615.2 $1,600 $1,200 748.8 $1673.4 $1699.8 $1580.7 $1538.1 816.7 744.3 801.6 598.2 $1564.0 575.7 $800 695.4 608.4 574.0 587.4 613.9 669.4 258.0 262.4 269.3 284.3 270.5 292.9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 (estimated) $400 $0 Pay Go Active OPEB Obligation 16 10/22/2015 Fully Funded H&W including OPEB as Percentage of General Fund Fully Funded H&W as Percentage of General Fund 35% 28.0% 30% 25.3% 29.1% 26.7% 25.6% 24.9% 25% 20% 15% 13.6% 13.5% 14.4% 2009-10 2010-11 2011-12 15.4% 16.3% 15.7% 2012-13 2013-14 2014-15 (estimated) 10% 5% 0% Percentage of General Fund if Fully Funded for OPEB Percentage of General Fund at Current Funding Method Source: Superintendent’s 2010-2011 Final Revised Budget, Superintendent’s 2006-2007 Adopted Final Budget The Segal Company Actuarial Valuation and Review of OPEB as of June 30, 2005 and June 30,2007 Buck Consultants GASB 43 &45 Valuation report as of June 30, 2009 The Segal Company Annual Projection dated 12/03/10 January 18, 2011 Strategic Budget Review: Health & Welfare 33 OPEB – How LAUSD Compares 34 17 10/22/2015 Typical Cost Containment Strategies 1. Hard cap on District contributions 2. District Contribution Based on a particular plan e.g. Mid-Priced Plan (“floating cap”) 3. Closed Formulary on Drug Plan for Blue Cross 4. Increase Rx co-pay 5. Allow families to only enroll in one plan (ROM) 6. Increase co-pays 7. Cap Reimbursement for Medicare eligible retirees at Medicare Advantage HMO costs only 8. Eliminate post-65 benefits 9. Change eligibility (subject to CBA) Source: Segal Company, 2008. Note: Figures may vary slightly due to rounding. 35 LAUSD Cost Containment • OPEB Trust • Audits – Dependent Audit • To date, estimated cost avoidance of $12.6 million – Medicare Audit – Death Match – Medical and Pharmacy Claims Audit • Employer Group Waiver Plan • Total Health Management • Contracts Negotiations 36 18 10/22/2015 LAUSD Staffing Independent Financial Review Panel 8/11/2015 1 Agenda • Contract Pool Teachers • Reduction in Force (RFP) • Staffing Trends 1 10/22/2015 Reasons for Contract Pool Teachers • Mutual Consent • Displacements of least senior teachers due to “ECAST” Enrollment Projections • Teachers returning from a Leave of Absence such as: Child Care, Personal, and Detached Service • Administrators returning to teacher class due budget reductions • Loss of funding such as QEIA • Magnet/Charter Conversion/Reconstitutions • Budget shortfall Mutual Consent • Under Mutual Consent, teachers have the right to accept or reject positions at schools and school leadership teams have the right to accept or reject potential teachers. • If a teacher without an assignment to a position has seniority, they end up in the pool. • Per the 2015 labor agreement, mandatory placements now allowed during agreed upon periods of the year. 2 10/22/2015 Contract Pool Decreasing in Size Contract Pool as of Norm Day 1,000 900 876 800 700 735 661 600 500 400 300 337 200 100 0 2012-13 2013-14 2014-15 2015-16 Size of Pool Fluctuates Throughout the Year SUBJECT CONTRACT POOL TEACHERS FROM 20142015 DISPLACED TEACHERS FOR 2015-2016 TOTAL (AS OF JUNE 8, 2015) PROJECTED FOR THE FIRST DAY OF SCHOOL (AS OF AUGUST 6, 2015) ART 9 9 18 7 BUSINESS 4 4 8 7 COMPUTER SCIENCE 5 2 7 8 COUNSELORS 11 22 33 14 EARLY CHILDHOOD EDUCATION 0 0 0 0 ELEMENTARY 108 306 414 102 ENGLISH 54 107 161 54 FOREIGN LANGUAGE 19 15 34 12 HEALTH 7 5 12 10 HOME ECONOMICS 1 0 1 1 INDUSTRIAL ARTS 3 1 4 3 MATH 51 87 138 43 MUSIC 9 4 13 5 PHYSICAL EDUCATION 23 10 33 6 SCIENCE 50 40 90 34 SOCIAL STUDIES 40 46 86 23 SPECIAL EDUCATION 21 51 72 8 TOTAL 415 709 1,124 337 3 10/22/2015 Contract Pool Teachers – First Subs of the Day • The cost of carrying the Contract Pool Teachers is offset in part by using the teachers as substitutes – However, Contract Pool Teachers are more expensive than a traditional substitute Reduction in Force (RIF) • Layoff process largely dictated by state law • State law specifies under what conditions districts can lay off teachers – Declining enrollment – Need to reduce a “particular kind of service” – State-required curriculum modification • State law also prescribes various other aspects of layoff process – Sets criteria districts are to use in determining which teachers to lay off – Sets timeline • RIF Notices by March 15 • Official layoff decisions by May 15 4 10/22/2015 Reduction in Force (RIF) Timeline June 30th Final Notification Source: Legislative Analyst’s Office Staffing Levels • School-based staff are allocated using staffing ratios, or “norm” tables 5 10/22/2015 Impact of Declining Enrollment on Staffing K-12 Teachers K-12 Teachers 30,000 8,227 25,000 6,706 7,248 7,175 19,283 19,116 18,731 20,000 19,698 Non-Norm Teachers 15,000 Norm Teacher 10,000 5,000 2011-12 2012-13 2013-14 2014-15 6 10/22/2015 K-12 Principals K-12 Principals 720 715 715 715 715 2012-13 2013-14 2014-15 710 705 700 695 690 688 685 680 675 670 2011-12 K-12 Administrators K-12 Administrators 2,500 2,000 1,926 1,962 2011-12 2012-13 2,036 2,113 1,500 1,000 500 2013-14 2014-15 7 10/22/2015 Regular Classified Personnel Regular Classified Personnel 35,000 30,000 28,911 25,000 25,959 26,534 26,311 2012-13 2013-14 2014-15 20,000 15,000 10,000 5,000 2011-12 Adult Education Teachers Adult Education Teachers 1,800 1,600 1,674 1,400 1,455 1,200 1,000 887 800 799 600 400 200 2011-12 2012-13 2013-14 2014-15 8 10/22/2015 Early Education Teachers Early Education Teachers 660 640 640 620 600 580 560 562 555 558 540 520 500 2011-12 2012-13 2013-14 2014-15 9