EGEA Budget Philosophy
EGUSD School Board
February 17, 2009
Objectives:
• To explain why we are at impasse
• To explain where we go from here
2
Philosophical Differences:
• Budgeting should serve educational
needs
• Spend this year’s money on this year’s
students
• Make decisions based on real numbers
3
Introduction to Graphs
• Slides 5, 7, 9, and 11 are graphs which show different
projections of the Unrestricted Ending Fund Balance minus the
2% state mandated reserve.
• EGEA has subtracted the 2% reserve in all the graphs because
this is the number that most accurately reflects the money
available for bargaining purposes.
• The blue bar graphs represent projections made by the District.
• The red bar graph represents the actual ending balance.
• The blue graphs are extremely important because these are the
numbers the District uses to make bargaining decisions.
2005-2006 Unrestricted Ending Fund Balance
Projections without 2% Reserves
$7,000,000
$5,000,000
$3,000,000
$1,000,000
-$1,000,000
-$3,000,000
-$5,000,000
-$7,000,000
-$9,000,000
-$11,000,000
6/4/2004
11/19/2004
2nd Interim
3/05
Budget
7/05
EGUSD Projections
1st Interim
12/05
2nd Interim
3/06
Unaudited Actual
Estimated
6/06
Unaudited
9/06
5
Slide 5 2005-2006
• All 7 projections were under the actual amount which came in
around $6.3 Million.
• There is a great variance between projections and the real
number. For instance, in June of 04 the District projected an
ending balance deficit of over $10 million, a difference of over
$16 million from the actual amount.
• Notice the estimated projection, a projection made a month
prior to the close of the fiscal year is not as accurate as the
original budget made a year in advance. A difference of almost
$6 million form the actual number.
2006-2007 Unrestricted Ending Fund Balance
Projections without 2% Reserves
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
11/19/2004
1/26/2005
9/22/2005
11/17/2005
11/28/2005
1/24/2006
EGUSD Projections
3/17/2006
Budget
7/06
1st Interim 2nd Interim 3/26/2007
12/06
3/07
Unaudited Actuals
Estimated
6/07
Unaudited
9/07
7
Slide 7 2006-2007
• All 12 projections were under the actual amount which came in at almost $18
million
• 4 projections were for deficit ending balances, while the actual number was
almost 18 million.
• In November of 2005, the District projected a deficit around $4.5 million, a
difference of over $22 million.
• The Estimated Actuals in June of 07, the most recent projection compared to the
actual, you see a difference of almost $12 million.
• 2006-2007 was a pivotal year for bargaining. We were in the final year of a 3
year agreement. We had contingency language- if more money came in from the
state, which it did, then we could bargain for those additional monies. We were
meeting regularly during this year for that purpose. These projections were
considerably off, and had a great impact on bargaining.
2007-2008 Unrestricted Ending Fund Balance
Projections without 2% Reserves
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
-$10,000,000
9/22/2005
11/17/2005
11/28/2005
3/17/2006
5/30/2006
8/31/2006
10/30/2006
EGUSD Projections
2/13/2007
3/20/2007
3/26/2007
Budget
7/07
1st Interim 2nd Interim Estimated
12/07
3/08
6/08
Unaudited
9/08
Unaudited Actuals
9
Slide 9 2007-2008
• The District made 14 projections, 13 were under the actual
amount, while 1 was over.
• Again the District projected deficit ending balances while the
real number was over $23 million.
• We see a difference of over $31 million from the projection
made in Nov of 05 and the real number.
• The most optimistic projection made in Oct of 06 for over $26
million. This projection and many others did not include the
additional salary increase of around 2.4% ($7.3) agreed upon
in April.
2008-2009 Unrestricted Ending Fund Balance
Projections without 2% Reserves
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
-$10,000,000
5/30/2006
6/5/2006
10/30/2006
2/13/2007
3/26/2007
12/3/2007
3/4/2008
5/20/2008
EGUSD Projections
6/10/2008
Budget
7/08
1st Interim
12/08
1/23/2009
11
Slide 11 2007-2008
• This slide shows the current year projections.
• There is no red bar graph because there is no real number yet.
• Again we see a wide variance in projections with a difference
of over $43 million between October of 06 and March of 08.
• The last projections come form the recently e-mailed budget
watch projecting a deficit of around $600,000.
Projections v Actuals 2005/2006-2008/2009
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
-$10,000,000
2005-2006
2006-2007
2007-2008
2008-2009
Unaudited Actual Ending Balance without 2% Reserve
EGUSD Ending Balance Projections without 2% Reserve
13
Slide 13 Summary Graph
• This graph is a summary of the 4 previous graphs.
• The blue line and points represent all the District
projections and the red stars represent the real
number.
• For the 3 years that we have a real number:
– 32 out of 33 projections were under projected.
– 9 projections were for a deficit ending balance while the actual
numbers came in at 6, 17, 23 million.
– Over half (17) projections were off by over $5 million and
almost 25 % (8) were off by over $ 10 million.
• The districts projections are consistently and
considerably under projected.
EGEA’s Proposals
• The graphs in slides 16, 18 and 20 compare the District’s
projections to EGEA’s calculations for salary increase
proposals .
• The District projected what the ending balances would be if
the offers were accepted. These projections are once again
seen in the blue bar graphs.
• EGEA recently calculated what the ending balances would
have actually been working backwards from the real ending
balance. These numbers are represented by the red bar graphs.
Ending Balance Projections without 2 % Reserve
based on EGEA Salary Proposal 11/06/06
$19,000,000
$14,000,000
$9,000,000
$4,000,000
-$1,000,000
2006-2007
2% Salary Increase Retro
2007-2008
2% Salary Increase
2008-2009
1% Salary Increase
EGUSD Projections 11/06/06
EGEA Calculated from Unaudited Actuals
EGEA Calculated from 1st Interim
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Slide 15 EGEA Salary Proposal 11/06/06
• In November of 06 EGEA made an offer for a 2% salary increase
(retroactively) for 06/07, 2% for 07/08 and 1% for 08/09.
• The District projected a little more than $4 million for 06/07 and 07/08, and
our calculations show ending balances would have been over $19 million, a
difference of over $15 million.
• For 08/09 the bar is orange because that number is based on the 1st Interim
number of 08/09 and is not a real number. The difference is over $12
million.
• EGEA believed then it was a reasonable and economically sound offer. The
District claimed they the could not afford this offer. Obviously they could.
Ending Balance Projections without 2 % Reserve based
on EGEA Salary Proposal 2/13/07
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
-$10,000,000
2006-2007
0% Salary Increase
2007-2008
5% Salary Increase
2008-2009
0% Salary Increase
EGUSD Projections 2/13/07
EGEA Calculated from Unadudited Actuals
EGEA Calculated from 1st Interim
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Slide 17 EGEA Proposal 2/13/07
• EGEA made another offer in February of 07. No salary
increase for 06/07, 5% for 07/08, 0 for 08/09
• Again the blue graphs represent the Districts projections made
in February of 07 with deficits in the years 07/08 and 08/09.
• Our calculations show there would have been a surplus of over
$25 million in 06/07, over $22 million in 07/08, and $14
million in 08/09. A difference of over 20 million in all three
projections.
• Yet again, another offer that we felt then was reasonable and
economically sound was denied due to deficit projections.
Ending Balance Projections without 2% Reserve based on
additional Salary Agreement of 2.4351% for 2006-2007
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
-$5,000,000
-$10,000,000
2006/2007
2007/2008
EGUSD Projections 3/26/07
2008/2009
Unaudited Actuals
2009/2010
1st Interim
20
Slide 19 EGEA Proposal Accepted
• After many prolonged negotiations and offers that were turned down, we
finally agreed to a one year salary increase of over
2.4 % (2%, 1% H step) retro for 06/07.
• A few weeks before we accepted this agreement, the district kept claiming
that is all the could afford based in their projections. In fact they even
projecting deficits in 08/09 and 09/10.
• The District projected at the time a little over $1 million for 06/07, the
actual ending balance was almost $18 million.
• A similar $1 million projection for 07/08 ended up with a real balance of
over $23 million, almost a $22 million difference.
• So when we say we are still bargaining for 06/07 this is the reason why.
How does this impact bargaining?
• The District continually denies reasonable offers based on
their 3 year budget projections.
• The projections are so varied and under projected making
bargaining close to impossible.
• We can’t bargain for the future because of these projections.
When there is considerable amounts of money available like in
the years 06/07 and 07/08, we can’t bargain for these dollars
because the District claims it needs the money based on deficit
projections in the future.
• So we can’t bargain for the past.
• So in essence we can’t bargain.
• This is the reason why we are at impasse.
Available Reserves v Deficit Spending
$110,000,000
$100,000,000
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2008-2011
Unrestricted Ending Balance -2% and Fund 17
Unrestricted Ending Balance -2% and Funds 17 and 67
Projected Total Deficit Spending by 2010-2011
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Slide 22 Reserves v Deficits
• The red and green bar graph represent actual ending balances and special
reserve funds. (2008-2009 based on District’s 1st Interim)
• The amount of available reserves has grown considerably the last 3 years.
The available reserves have grown by $23 million to reach almost $30
million by 08/09
• The blue graph represents the District’s projected deficit spending for the
next 3 years, a projection of over $110 million.
• No amount of accumulated reserves could match this projected number.
• Again pointing out that without real numbers it is impossible for us to
bargain intelligently.
We need to:
• Develop common agreements on how we budget
for the future
• Put an emphasis on real numbers and real trends
• Plan for problems without creating a negative
environment
• Create an educational and financial vision for
the future
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