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General. State law requires that each school district maintain a balanced budget in each fiscal year, and that each district project beginning balances, revenues, expenditures, and ending balances for two subsequent years in order to provide, based upon the available information, that the district can project a positive, qualified or negative certification. See “– State Financial Accountability and Oversight Provisions” herein.

The CDE imposes a uniform budgeting and accounting format for school districts. Under current law, a school district governing board using a single adoption process must file with the county superintendent of schools (a “County Superintendent”) a budget by June 30 immediately prior to each fiscal year. A school district using a dual adoption process must file a provisional budget with the County Superintendent by June 30 immediately prior to each fiscal year and revise and re-adopt a budget by September 8 of each fiscal year. After approval of the budget, the school district’s administration may submit budget revisions for governing board approval during the fiscal year. The District currently uses a single adoption process.

School districts in the State must also conduct a review of their budgets according to certain standards and criteria established by the CDE. A written explanation must be provided for any element in the budget that does not meet the established standards and criteria. The school district superintendent or designee must certify that such a review has been conducted and the certification, together with the budget review checklist and a written narrative, must accompany the budget when it is submitted to the school district’s county office of education. The balanced budget requirement makes appropriations reductions necessary to offset any revenue shortfalls, unless sufficient balances exist to cover the shortfall.

Furthermore, county offices of education are required to review school district budgets, complete a budget review checklist, and conduct an analysis of any budget item that does not meet the established standards and criteria. In addition, county offices of education are required to determine whether the adopted budget will allow the school district to meet its financial obligations during the fiscal year and is consistent with a financial plan that will enable the school district to satisfy its multiyear financial commitments. Pursuant to the Education Code of the State (the “Education Code”), on or before August 15 of each year, the County Superintendent must approve, conditionally approve, or disapprove the adopted budget for each school district. A copy of the completed checklist, together with any comments or recommendations, must be provided to the school district and its governing board by November 1 of such year.

If the county office of education disapproves the school district’s budget, the county superintendent will submit to the governing board of the school district on or before August 15 of such year recommendations regarding revisions of the budget and the reasons for the recommendations, including, but not limited to, the amounts of any budget adjustments needed before the County Superintendent can conditionally approve that budget. On or before September 8 of each year, the governing board of the school district must adopt a revised budget reflecting changes in its projected income or expenditures subsequent to July 1, and including any response to the recommendations of the County Superintendent, and must file the revised budget with the County Superintendent. If the County Superintendent disapproves the revised budget, he or she will call for the formation of a budget review committee. By November 30 of each year, every school district must have an adopted and approved budget, or the County Superintendent will impose a budget and report such school district to the Legislature of the State (“State Legislature”) and the State Director of Finance.

Fiscal Year 2013-14 District Budget. The District Board adopted the District’s budget for Fiscal Year 2013-14 on June 27, 2013 (the “Fiscal Year 2013-14 District Budget”) and submitted the Fiscal Year 2013-14 District Budget to LACOE in a timely manner for review. The Fiscal Year 2013-14 District Budget reflected the information provided by the State to the District through the Governor’s May Revision to the Fiscal Year 2013-14 Proposed State Budget and the updates thereto.

The Fiscal Year 2013-14 District Budget projected a General Fund beginning balance of $8.5 million, revenues of $66.2 million, total estimated expenditures of $70.3 million and an ending balance of $4.1 million. The District’s estimated average daily attendance (“ADA”) is 6,161 for Fiscal Year 2012-13 and is projected to be 6,290 for Fiscal Year 2013-14.

Although the State has adopted a new funding formula for K-12 school districts that no longer use the revenue limit system, the Fiscal Year 2013-14 District Budget was prepared under the assumption the revenue limit system would continue. In the Fiscal Year 2013-14 District Budget, the Base Revenue Limit, the largest unrestricted General Fund revenue source, was projected to be $52.7 million in Fiscal Year 2013-14. The Fiscal Year 2013-14 District Budget assumed a deficit factor of 0.77728%. After the deficit factor for Fiscal Year 2013-14 and other adjustments by the State are applied, the District’s funded revenue limit was expected to generate approximately $40.9 million in Fiscal Year 2013-14.

Based on these factors, the District’s Fiscal Year 2013-14 funded Base Revenue Limit per unit of ADA was projected in the Fiscal Year 2013-14 District Budget to be $6,508, which represents an increase from the estimated Fiscal Year 2012-13 funded Base Revenue Limit per ADA of $6,407. The information set forth in Table C-11 herein reflects the Base Revenue Limit prior to the application of the deficit factor. The District’s Fiscal Year 2013-14 District Budget projects reserve levels of the General Fund of 3% in Fiscal Year 2013-14, Fiscal Year 2014-15, and Fiscal Year 2015-16.

The Fiscal Year 2013-14 District Budget includes certain assumptions and policies, including among other things, increases in attendance relating to academy programs in each high school and reductions in non-salary expenditures.

The following Table C-1 summarizes the District’s adopted budget for the General Fund, inclusive of Regular and Special Fund programs, for Fiscal Years 2009-10 through 2013-14, audited actuals for Fiscal Years 2009-10 through 2011-12, and estimated actuals for Fiscal Year 2012-13.

TABLE C-1

CENTINELA VALLEY UNION HIGH SCHOOL DISTRICT

Adopted General Fund Budget and Statement of Changes in Fund Balance, Revenues, and Expenditures Fiscal Years 2009-10 Through 2012-13 and Adopted General Fund Budget for Fiscal Year 2013-14

REVENUES 2009-10 Adopted Budget 2009-10 Audited Actuals 2010-11 Adopted Budget(1) 2010-11 Audited Actuals 2011-12 Adopted Budget 2011-12 Audited Actuals 2012-13 Adopted Budget 2012-13 Estimated Actuals(2) 2013-14 Adopted Budget

Revenue Limit Sources $45,009,529 $44,900,813 $37,677,654 $ 40,060,065 $39,411,111 $39,360,436 $36,939,753 $40,105,076 $40,426,648

Federal Sources 8,332,942 8,017,652 4,171,257 6,136,036 4,088,291 4,611,292 3,965,342 4,199,258 3,808,981

Other State Sources 17,357,296 17,569,134 14,722,182 15,800,458 15,042,808 16,245,179 15,374,441 15,984,109 17,012,749

Other Local Sources 673,928 966,659 1,156,626 807,063 853,876 1,946,302 803,903 1,772,548 4,907,599

TOTAL REVENUES(1) $71,373,695 $71,454,258 $57,727,719 $ 62,803,622 $59,396,086 $62,163,209 $57,083,439 $62,060,992 $66,157,978