4 of 22

What is a Positive Certification?

Ed Code 42131 requires each school district to maintain 3% of it’s General Fund Expenditures as a Reserve for Economic Uncertainty (REU). This is considered a financial obligation.
At the 1st and 2nd Interim Reporting Periods, the District must certify whether it’s financial condition is:

Positive – The District will meet its financial obligations for the current and 2 subsequent years.
Qualified – The District may not meet its financial obligations for the current and 2 subsequent years.
Negative – The District will not meet its financial obligations for the current and 2 subsequent years.

If the District self-certifies as anything other than “Positive”, the ACOE will require the Board to provide a plan that will bring the budget back into balance by the 2nd Interim Reporting Period.

5 of 22

Headlines

For 2021-22, the District expects to meet all financial obligations, including the requirement for a 3% reserve.
State, Federal and local revenues have enhanced the revenues and expenditures for 2021-22 to allow additional support for students to recover any learning loss from last year.
The projections for the next 2 years assume a continued decline in enrollment, rightsizing staff accordingly, and elimination of the one-time revenues and associated programs
If the legislature does not address the "ADA Cliff", the District may need to make additional adjustments to the 2022-23 budget.

6 of 22

Revenues

50% is based on the Local Control Funding Formula (LCFF)
39% is locally generated - parcel taxes, PEF, parents

7 of 22

2021-22 Changes in Revenue

The 2021-22 Budget was adopted in June 2021 and will be revised throughout the year. The table below identifies the changes to revenues over the past 5 months.

$3.72 M

8 of 22

Changes to Revenues

Changes since 1st Interim result in an increase of $494,224 in revenues.

9 of 22

Expenditures

80% of expenditures are salaries and benefits.

10 of 22

2021-22 Changes to Expenditures

The salary increases resulted in approximately $970,000 increase in expenses; $586,000 is from Measure H funds.

$3.31 M

11 of 22

Changes in Expenditures

Changes in Expenditures since 1st Interim increased by $1.6 million. This includes the expenditures associated with the new revenues.

12 of 22

Net Change to Fund Balance

13 of 22

General Fund - Multiyear

The following assumptions were used in the MYP:

Assumption	2021-22	2022-23	2023-24
Enrollment	2,349	2,291	2269
Estimated ADA based on enrollment	2,261.99	2,223.33	2,198.08
ADA used for LCFF calculations	2,495.47	2,261.99	2,223.33
Cost of Living Increase (COLA) for LCFF per pupil funding	5.07%	5.33%	3.61%
COLA for increase in other State revenues	1.70%	5.33%	3.61%
COLA for Measure G Funds	2.0%	2.0%	2.0%
Natural progression (Step & Column) in Employee Salaries	APT: 1.45% CSEA: 1.00%	APT: 1.33% CSEA: 1.00%	APT: 1.33% CSEA: 1.00%
STRS Rate	16.92%	19.10%	19.10%
PERS Rate	22.91%	26.10%	27.10%

14 of 22

ADA Cliff

LCFF Funding is based on greater of current or prior year ADA
Enrollment has been declining throughout the State
Legislature has allowed districts to use 2019-20 ADA for funding.
Starting with 2022-23, most Districts will drop to 2021-22 ADA, which is like falling off a "cliff" in funding levels. For Piedmont, the decline is 233.48 students, versus a decline in enrollment of 58.
The Governor has proposed an alternative funding method - 3 year average.
Other proposals are also under consideration by the legislature.
Until the Legislature changes the law (formula), we cannot depend on the additional revenue.

15 of 22

STRS & PERS

Employee pension costs continue to increase, even with fewer employees.
A contribution made by the State on behalf of schools could lower the District's rate. A reduction in rate of 1% would result in $270K in savings.

	2021-22	2022-23	Difference
Certificated Salaries	19,886,342	19,720,863	-165,479
Classified Salaries	7,219,403	6,955,025	-264,378
STRS Rate	16.92%	19.10%	2.18%
PER Rate	22.91%	26.10%	3.19%
STRS Cost	3,364,769	3,766,685	401,916
PERS Cost	1,653,965	1,815,262	161,296

16 of 22

Add’l Elements of MYP

To identify whether additional reductions are needed, we start by eliminating those expenditures that we know were one-time, or those that are related to the number of students.

Assumptions about:	2022-23	2023-24
Certificated Employees	Incorporate savings from new hires Eliminate one-time positions Reduce 3.0 FTE for rightsizing	Reduce 2.0 FTE for rightsizing
Classified Employees	Eliminate one-time positions Reduce 3.0 FTE for rightsizing	Reduce 2.0 FTE for rightsizing
Books and Supplies	Eliminate one-time purchases and spending tied to one-time funds.
Services & Other Operating Expense	Eliminate one-time contracts and spending tied to one-time funds.

17 of 22

Multiyear Assuming Current ADA Rules and Projections

18 of 22

Additional Scenarios

The State is swimming in revenues, and a portion will need to be applied to schools (per Prop 98), so it is likely we will see more funding, but which option will the Legislature and Governor choose?

Option for Additional Funding	Additional Revenues
Governor's Proposal for ADA 3 prior year average	$1,465,512
AB1607 (Muratsuchi) Current + 2 prior years average	$1,141,565
AB1609 (Muratsuchi) & SB579 (Allen) Greater of current or 3 prior years	$2,191,092
Additional 1% COLA	$208,222
Interdistrict Transfers first 58 - no difference up to 75	$0 (2021-22 ADA is still greater) $294,555

19 of 22

Board Resolution

Because the MYP shows a shortfall next year, we need to consider how we may address this if the Legislature doesn't provide relief. A Board Resolution will identify how the gap will be addressed:

Monitor interdistrict transfers.
Monitor COLA calculations (currently 6.17% per 7 of 8 factors in formula, which is .84% higher than in MYP projection)
Monitor for an adjustment to the LCFF funding formula that recognizes statewide declining enrollment.
Monitor for additional contributions by the State towards STRS and PERS
Ensure classes are at the maximum allowable size before hiring replacement staff (we have several retirements).

20 of 22

Big Unknowns

ADA cliff - what support will State provide?
COVID - we are eliminating COVID-related supports.
Universal Meals - Will the cost of offering delicious and nutritious breakfasts and lunches to all students exceed the reimbursement rate?
IDTs - How will Oakland's IDT release policy impact transfers to Piedmont?

21 of 22

Next Steps

March	BAC Meeting to review 2nd Interim 2nd Interim Report presented with MYP Projections Board takes action on reductions for 2022-23 that involve positions March 15 notices delivered
May	Governor releases May Revisions to budget proposal for 2022-23
June	Board holds public hearing on draft budget Final budget adopted by Board

22 of 22

Acknowledgments

Thank you to the Business Services Team!

Suzanne Binder

Nancy Brahm

Upexa Captan

Cherrie Deangkinay

Cheryl Kaiser

Julie Kim

Kim Randlett

Cindy Sivilaythong

Jennifer Stahl

Shamaree Worley