At the conclusion of the budget presentation, I’ll ask that you provide any additional direction that might inform our budget development prior to the budget hearing and board action in August.

Before we begin, I’d like to make a few brief remarks:

• This is the ninth consecutive budget cycle in which Vancouver Public Schools has faced a budget shortfall. The outlook over the next biennium may be similarly difficult. State underfunded mandates continue to eat away at our local levy. We subsidize basic education expenses because of the structural deficit with state education funding, including employee compensation, non-employee related operational costs, transportation, special education, and substitutes. The cumulative impact over nine years is $29 million in lost revenue. 
  
  
• The consensus budget resulted in significant reductions to special purpose designated fund sources that are not defined as constitutionally protected basic education—$2.8 million in I-728 class size reduction, or 35 teaching positions, and $800,000 in 4^th grade enhanced staffing, or 10 teaching positions.  Regrettably, the state has chosen to cut funding for 45 teaching positions. 
  
  
• Just like last year, we have developed a learner-centered set of budget solutions. We recommend that the board “buy back” 20 of the teaching positions the state chose to cut to ensure adequate staffing to provide a high-quality instructional program that supports improved student achievement. As a result of the lost teacher positions (25), class size will increase, on average, by approximately one student. Over a two-year period, the state has cut $10.6 million in funding, which has paid for 138 teacher positions in our district. As a result of values-based budgeting, this board has been able to redirect resources to retain 72 of those positions.
  
  
• Due to certificated retirements, voluntary leave requests and the expiration of one-year contracts, a reduction in force for 2010-11 will not be necessary.
  
  
• Our budget recommendations also reflect the board’s commitment to educating the whole person. We do not propose to reduce the arts, physical education, and elective programs. Our co-curricular program is left intact. And, these solutions sustain our district’s commitment to program excellence and innovation. 
  
  
• We’ve developed a fiscal plan that tackles the budget challenge by redirecting approximately $130,000 from non-teaching personnel reductions, $770,000 in belt tightening and efficiency solutions, $1.1 million from the 2009-10 ending fund balance, and $1.975 million in teaching position reductions as a result of the state revenue cuts in I-728 and 4^th grade staffing enhancement. Additionally, I recommend that we replenish the fiscal stabilization designated reserve for 2010-11 in the amount of $1.5 million to retain employee positions in 2011-12. This reserve is necessary because of the forecasted state shortfall of $3.0 billion in the next biennium.

Next, Steve Olsen will present the budget challenge, budget criteria, preliminary solutions to consider, recent revenue adjustments, and final recommended solutions. The final budget will be presented to the board for adoption after a public hearing in August.