Background

School District budgets are presented at least four times each fiscal year. A projection of the current year plus two more, known as a Multi-Year Projection, is required at the Original, First Interim, and Second Interim Budgets. Preparing a multi-year budget takes about six weeks. A fifth budget report, the 45 Day Revise, may be presented in August. This is an opportunity for the district to revise revenues and expenditures resulting from the Budget Act.

Budget Reports

• Original Budget: Must be adopted before the fiscal year starts on July 1.
• First Interim: Presented in December, includes actual revenue and expenses through October 31.
• Second Interim: Presented in March, includes actual revenue and expenses through January 31.
• Unaudited Actuals: Presented in September after the fiscal year ends, providing the most accurate financial data based on actual expenses and revenues.
• 45-Day Revise: May be presented in August to revise revenues and expenditures based on the Budget Act.

Audit and Review

An independent firm audits the district's data in the fall, with findings presented in January.

Funding Sources

The baseline level of funding for California school districts is determined by Prop 98. California voters approved Proposition 98 in 1988. It guarantees the State will provide a minimum funding level to K-14, which includes grades TK through Community College. Funding is distributed to Local Education Agencies through the Local Control Funding Formula (LCFF)

Proposition 98

• Prop 98 is calculated by comparing three main formulas or "tests.”
• Test 1 applies in strong economic years and guarantees education funding will be at least 39% of the state’s General Fund Revenues
• Test 2 applies when the economy is stable of growing moderately and maintains the prior year funding adjusted for growth and inflation
• Test 3 applies during economic downturns and adjusts the prior year funding based on the change in per capita General Fund revenues plus an additional .5%

Enrollment and ADA

ADA is the average number of students attending school and is used to calculate LCFF funding. ADA may also be used to calculate some Federal and other State funding sources. Due to student absences, ADA is always lower than total enrollment. Attendance is counted every day of the year, but the LCFF funding is based on attendance through the Second Principal Apportionment or P-2, which is from July 1 through the last school month ending before April 15.

Funded ADA is not synonymous with actual ADA. Funded ADA is calculated using the district’s average actual ADA over the three previous years, the prior year actual ADA or the current year actual ADA, whichever is highest. The three year average includes artificially high proxy ADA for the 2021/2022 year.

Higher attendance rates have a positive impact on academic success and are critical to the financial health of the district.. Each 1% of attendance change translates to about $1 million in ongoing LCFF revenue. In 2019/2020, Lompoc attendance rates were over 93%. During the following three years, attendance dropped to 89%. Last year, LUSD schools began an attendance campaign resulting in improved attendance. During the third school month of 2024/2025, LUSD attendance rates were 93.3%.

Funded ADA for 2024-25

• Lompoc Unified is currently projecting funded ADA using the three year average which results in a gradual drop in funded ADA. For 2024/2025, the district’s funded ADA is 8,412, but decreases closer to actual ADA in 2025/2026. For 2024/2025, enrollment is 8,903, and projected to continue a slight decline in the two outer years.

Revenue

The Standardized Account Code Structure (SACS) divides school district revenues into four overarching categories shown in the chart above.

The largest portion comes from the Local Control Funding Formula. In this budget, the LCFF is projected to provide 71% of the district’s revenues. The LCFF is an equity model that was implemented in 2013 under Governor Jerry Brown. Under the LCFF, districts receive a base grant for all students and additional grants for high-need students such as English Learners and socio-economically disadvantaged pupils.

The remaining three categories are other State, Federal, and Local. Most of the revenue is these categories is restricted and can only be expensed on specific programs.

Unrestricted LCFF Sources (Local Control Funding Formula):

• The total Unrestricted LCFF revenues are projected at $118,625,411.
• Under LCFF, most state categorical programs are eliminated. Instead, Districts receive base, supplemental, and concentration grants.
• The base grant is calculated by multiplying the district's funded ADA by uniform amounts depending on the grade level, with grades 9-12 receiving the highest. The adjustment provides additional funding for students in grades TK-3 and 9-12 and includes funding for districts maintaining K-3 class ratios below 24 to 1. This year, the base grant and adjustment provide $94.3 million.
• The Supplemental and Concentration grants are calculated using the district’s unduplicated count which is 70% of the district’s students who are either English Learners, Low-Income, or Foster Youth. Districts with an unduplicated percentage below 55% are not eligible to receive the concentration grant. These dollars are budgeted for goals and actions in the Local Control Accountability Plan, or LCAP and funding is used to increase or improve services for the District’s highest needs students. This year, the Supplemental and Concentration grants provide about $22.2 million.
• The smallest percentage of LCFF revenues are the add-ons for TK, Targeted Improvement, and Transportation. Those generally amount to less than 2% of the total or around $2 million this year. The TK add-on is about $3,077 per TK ADA. Targeted Improvement is calculated based on the 2012/2013 funding levels and is designed to support instructional improvement. Home to School Transportation is a fixed amount based on the 2012/2013 funding levels but beginning in 2022/2023, it began receiving statutory COLA adjustments.
• LCFF growth estimates will be limited to cost-of-living percentage adjustments.

Restricted LCFF Sources:

Special Education taxes transferred to districts from the County are projected at $2,675,804.

Expenditures

LUSD's most significant expenses are the salary and benefits of staff. In this budget, 68% of expense budgets are projected for payroll and benefits. Lompoc has about 1,100 Full Time Equivalent (FTE) staff.

Authorized Staffing:

• Certificated: 567.8 FTE
• Certificated Management: 47 FTE
• Classified: 479.0 FTE
• Classified Management: 9 FTE
• Confidential: 5 FTE

Other Expense Categories

The remaining 22% of the district's expenses are categorized as follows:

• Supplies: Includes textbooks, paper, pencils, pens, and technology.
• Services and Operating Expenses: Insurance, utilities, travel, temporary employment agencies, and firms providing various services for staff and students.
• Capital Outlay: Facility projects.
• Other Outgo: Special Education expense budgets
• Transfer of Indirect Costs: Based on a rate provided by the California Department of Education. It represents the ratio of indirect and direct costs and is an efficient way to recover some general management costs from individual programs. For unrestricted programs, the transfer of indirect is always negative, and for restricted programs, it’s always positive.

LUSD Expenses in Dollars

This chart presents the same expenses in dollars rather than percentages. Almost seven out of every ten dollars received is budgeted for the salary and benefits of LUSD staff. Payroll is processed using Escape software and checks are printed at the Santa Barbara County Education Office. This process can take up to two weeks to complete and is similar to the process used at other districts. A summary report of each month's payroll is included in the Consent Agenda for Board ratification.

The remaining 32% of LUSD’s expenses are handled by accounting staff through an extensive accounts payable process. Payments are audited by the Santa Barbara County Education Office. All districts in the state are subject to oversight from County Education Offices which helps mitigate mistakes and produces payments to vendors within 60 days. Warrant lists are included in the Consent Agenda for Board ratification.

Multi-Year Projections and Assumptions

Under the Education Code (Section 42131) all California School Districts must be able to show that they have a sound financial plan in place that will assure fiscal solvency in the current year plus the next two years. This is accomplished by preparing a Multi-Year Projection report that shows projected revenues and expenditures for the current and each of the next two years. Organizations with credible experts in school finance, like the Fiscal Crisis and Management Assistance Team (FCMAT) and School Services of California (SSC), provide future assumptions to districts. The Lompoc Unified School District Multi-Year Projection reflects that the district will be able to meet its financial obligations.

Key Components

• Statutory COLA: The statutory COLA, or Cost of Living Adjustment, is applied to some, but not all funding sources. It is projected to rise by about 2% over the next two years.
• Per/ADA Revenue: The per/ADA revenue is an average per student LCFF funding amount based on a tool provided by FCMAT. Students are funded at different rates due to grade level or classification within groups that receive additional funding.
• Unduplicated Count: The unduplicated count is the number of students who are either English Learners, Low-Income, or Foster Youth.
• Funded ADA: Funded ADA, estimated actual ADA, and total enrollment are critical to district revenues. The funded ADA is used to calculate the district's LCFF base grant and can be used to calculate some other State and Federal revenues.
• Indirect Costs: Indirect costs are a percentage of the organization's indirect costs compared to its direct costs, an efficient way to recover a share of general management costs from individual programs.
• Step and Column: Step and column are the contractual increases for LUSD staff. Those increase the district’s expenses by about $1 million each year.
• Health and Welfare Costs: Health and welfare costs (including medical and dental contributions) have risen by about 5% compared to year 2023-24. Over the next two years, the District projects an increase of 7% each year.
• STRS and PERS: STRS and PERS are employer contributions to the two employee retirement programs, the State Teachers’ Retirement System and the Public Employees’ Retirement System. STRS has leveled in recent years, but PERS continues to increase.
• Statutory Benefits: Statutory benefits, excluding STRS and PERS, include State Unemployment Insurance, Workers' Compensation, and Social Security. The Certificated percent is lower primarily due to the absence of Social Security.
• Routine Maintenance Contribution:• The routine maintenance contribution must equal 3% of the district’s expenses (some expenses are excluded). It pays for the salaries, supplies, and equipment of our staff who maintain the schools and make routine repairs. RRMA is not designed nor adequate to fund school renovations.
• Special Education Contribution: The difference between current expenses and revenues received for Special Education.
• Transportation Contribution: The difference between current expenses and State transportation revenues received.

Other Funds

Fund 01, the General Fund, is the chief operating fund for all districts. It accounts for the district's ordinary operations. All transactions except those accounted for in these other funds are accounted for in the General Fund. This chart describes the activity for funds outside of the General Fund 01 and currently used by the district. The descriptions of these funds are included in the California School Accounting Manual which is posted on the district's website.

• Fund 08: The Student Activity Special Revenue Fund for the Associated Student Body activities that do not meet fiduciary activity criteria but are determined to be governmental activities.
• Fund 11: Accounts separately for federal, State, and local revenues that are restricted or committed to the activities of the Lompoc Adult School & Career Center program.
• Fund 13: Accounts separately for federal, State, and local resources needed to operate the Child Nutrition Services program.
• Fund 14: Accounts separately for restricted or committed revenues for deferred maintenance purposes.
• Fund 17: It is an extension of the General Fund where the district can hold fund balance for future needs or contingencies. Districts must transfer funds from the Special Reserve into the General Fund or other appropriate funds before expenditures may be made. In the Multi-year projection, almost $15 million is transferred to Fund 01 to meet reserve requirements in the three-year projection.
• Fund 25: Accounts for money received from fees levied on development projects. Guidelines, procedures, and restrictions regarding the levying of Developer Fees are primarily found within AB2926, AB1600, and AB181. Use of these funds must be related to new students generated by residential, commercial, or industrial projects.
• Fund 35: Established to receive apportionments from the State School Facilities Fund. A State Charter School Program grant allocated these funds for some of the design costs related to the Manzanita Public Charter School (MPCS) Public Schools on Military Installations (PSMI) project.
• Fund 40: Exists primarily to accumulate general fund money for capital outlay purposes.
• Fund 51: Used to repay Measure N 2002 bonds issued by the district. The SBCEO maintains control over this Fund.

Factors Impacting the 2024-25 Budget

• The cost of sub-agreements (including temp agencies) increased by $2.1 million to $4.8 million.
• Increase in contributions by $2.9 million compared to estimated actuals
• Carryover is budgeted in the 1st Interim budget which causes an increase in revenue and expense in some restricted programs.
• 2024-25 LCFF revenues are lower than 2023-24 by $1.1 million due to declining funded ADA that isn’t fully offset by the COLA percentage. LCFF projections improve in the outer years.
• The attendance rate of 93% (in Month 3) is still lower than pre-covid rates but district attendance improvement efforts are continuing to make a difference.
• Ongoing expenses exceed ongoing revenues in this projection. In a budget where salaries and benefits make up 68% of the expenses, a plan to reduce deficit spending may involve revising staffing formulas according to the number of students in attendance.