Agenda - 04-26-2012 - Attachment 2

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4 Federal Education Jobs Appropriation Loss $1,406,850 Foreign Language Assistance Program(Federal Cut) 251,508 Subtotal—Federal Funding Cuts $1,658,358 State Funding Situation As a result of legislative funding cuts,North Carolina public school systems were forced to employ 11,833 fewer staff statewide. Orange County Schools has made major cuts to personnel. Since 2008, fifteen positions have been cut from the Central Office, and we have decreased the number of teacher assistants from 151 to 123. For the current year, specific state funding cuts impacting Orange County Schools include instructional supplies, school technology, instructional support,assistant principals and central office administration and are in addition to the$2.1 million discretionary cut we were required to make. State Discretionary Cuts The largest cut to state funding, known as the discretionary reversion,requires school districts to send funds back to the state after they have been appropriated. Since 2008 Orange County Schools has sent back$7.4 million. For the 2012-2013 budget year, Orange County Schools will be required to send back, or revert, $2,500,524. This is an increase of$394,077 over last year's total. For the current year,our system met these reversions by sending back funding for positions(21 teachers,24 teacher assistants,and 4 support positions). These 49 positions were not filled while enrollment increased by 126 students. Taken all together,the projected funding shortfall for 2012-13 will be$4,438,882. Local Cost Increases $ 280,000 Federal Cuts—New 1,658,358 State funding reversion 2,500,524 Total Projected Funding Shortfall $4,438,882 Meeting the decline in revenue without negatively affecting the classroom is critically important. Our Board and staff members have worked hard to identify savings to reduce costs and to protect the classroom unit. We cannot make further cuts without affecting classroom services. Recommendations For the 2012-2013 budget year, I am recommending that the Board(1)request an increase in the per-pupil appropriation provided by the County, (2)apply state payroll flexibility savings and(3)appropriate from fund balance. Since 2008,the School Board has focused on cost cutting and has not requested an increase in the per-pupil appropriation. In order to prevent cuts that will directly affect students, I am recommending that the Board of Education request additional funding from the Board of County Commissioners. The requested increase will be essential in order to maintain existing programs. It will be used to prevent further teacher layoffs,prevent excessive class size increases, and keep our elementary and middle school foreign language programs intact. I am recommending that the Board of Education request a$220 increase in the per-pupil appropriation. This would generate an additional $2,307,184 and maintain funding for 38 teacher positions which include elementary and middle school foreign language instructors. This level of funding is necessary in order to counteract the negative effects of state and federal budget cuts to our schools. I am also recommending that the Board of Education appropriate payroll savings generated from a comprehensive analysis of our state and federal position allotments. Complicated State Board of Education financial flexibility guidelines allow school systems to shift categories of funding in order to optimize resources which have been appropriated. By applying this flexibility, Orange County Schools has identified$700,000 for the current year and the same amount can be applied for next year. Should the Board approve using these savings, $1.4 million in additional revenues will be applied to next year's budget.