Board of Education — June 2, 2020

okay according to my phone it is now 4:30 I called Lee ordered the special meeting board study session for the Board of Education Tuesday June 2nd 2020 at 4:30 p.m. for the record this study session is being live streamed on YouTube channel for the Chino Valley Unified School District and will be recorded I will now conduct a roll call board

members please acknowledge your presence mr. Cruz I think here you're muted yes yes this is Don yay is it miss Fernandez here mr. na here and I am present we will now have the Pledge of Allegiance miss Fernandez if you would please lead us this evening ok please place your right hand over your heart ready thank you miss you were up

alphabetically we're just going down the line I have a flag next time moving on comments from the audience on the item on the agenda we are now at comments for a one agenda item as noted in the public advisory posted in the agenda staff will now read into the record the names and comments of emails received during the

specified window and in accordance with board bylaw 93 a 23 meeting conduct comments will be read into record and the order of the email was received did you receive any public comments via email regarding the subject matter listed on the agenda one email compliment was received as follows good afternoon president Schafer board members and superintendent Enfield I am

writing to express my disdain II in the proposal to eliminate elementary intervention teachers near the 2019 2020 Dell kept I found the following page three titled greatest progress shows a continued investment was made toward implementing an MTS s a a partial list of MTS s - eight achievements includes the ela academic in indicator improved from yellow to green foster group

increased by thirty three point four points an increase in the Asian student group went from green to blue there are more successes for MTS s best a listed in the L cap these are just a few a list of student performance gaps can be found on page four turn to page five of the L cap state CB USD plans to address the

performance gap by providing intervention teachers at the elementary schools to bridge academic achievement gaps on page 62 of the L cap it was noted students in elementary intervention made an average growth of 57 skill score points on the caaspp a progress of district goals actions and services that are aligned to the eight state priorities were reviewed with

educated bargaining units and stakeholders as noted in the L cap on pages 81 to 84 based on two surveys and 17,000 966 comments received from stakeholders the intervention teachers were listed as a top priority like parents teachers and administrators as documented by district data above elementary intervention is essential I cannot comprehend the board considering the elimination eliminating

a program that is not only successful based on lkf data but is necessary to fill performance gaps and is rated as a top three district priority by parents teachers and administrators furthermore due to koban 19 students have been out of the classroom for more than two months the need for k-6 intervention at this time will be more demanding now

than it ever has been many students will undoubtedly return to the 2020 - 21 school year with gap and will need extra support especially those who were already below grade level before March 16th this is not the time to cut a program that has been so vital to the students who need it as cuts are being considered

please be cognizant to the fact we need to keep them as far away from the classroom as possible the elimination of elementary intervention teachers will be disastrous for thousands of students who will now need at most three minutes there are no further a male comments Lao K L o you thank you very much moving on to item 2 board study session 2 a1

the governor's may revision impact on CB USD budget 2020 2021 budget and beyond dr. impo would you please briefly explain what we were about to hear in this bestest evening for the 2020 21 school year and but before we begin I want to provide some background information regarding the budget process the first off every May the governor of

California presents the proposed budget for the upcoming fiscal year and that is called the May revision budget and then after that the California Legislature comprised of the House and the assembly we'll get together there or they will separately look at and adopt or modified or reject part of the governor's proposed budgets and then they will work out a final budget that will be

presented to the governor hopefully by June 15th and then be signed by the governor now during that time school districts they must have to start preparing a budget and presented to the board for board approval in June and because of that school districts across the state of California used the may revision to build their that first budget proposal that we're going to be

talking about tonight and I share that because it's not the final budget it's just the last bit of information the governor presented with the latest economic forecast for our state and so again tonight the session is based on that projected budget which is going to be brought forward as an information item at our Thursday board meeting on

June 4th and then we'll bring it back to the board hopefully for approval on Thursday June 18th so once the state has a final budget we will come and take a look at that final budget and then we'll come forward and have another board study session because then we'll know the actual potential cuts to our district and then we'll come

and present those to our board and hopefully July August at the latest depending on when the budget or when the budget is approved but the other factor in there is they postponed income tax to July 15th and so a lot of those revenues from the income tax will impact our budget with cash flow and so we may need

to wait a little bit to see what those numbers are but we would hope to by July probably August have a board study session on what does that look like for our district so with that I'm going to turn it over to miss Qin to present tonight regarding our budget good afternoon board member dschafer and members of the board we have a very

ambitious agenda for you today I will be walking you through the various trends and pattern on the last 14 years at CB USD and identify the main Drive the revenues and expenditures of our budget equipping you with this critical background information will help hopefully assist you in making informed decisions later on then we will dive right into the may revision and

understand the fiscal impacts of that to the district and then we will discuss where we go from there before we begin you so that you will have an unobstructed view of the slide you may wish to hide the thumbnail videos on the upper right hand corner okay this is the list of common school business terms that you will hear me

refer to throughout the presentation throughout the study session top mighty eight lcff average daily attendance based grant proration factor cash deferrals deficit spending and multi-year projection or myp all of these terms are very critical I will explain each of them in detail as they come up during their presentation and if you have any questions regarding any of

the slides I would really appreciate it if you drop down the slide numbers and then we will come back and revisit each of the slides that you have a question on let's begin with the trends and patterns of the school district this flight right here shows a great progression from kindergarten through twelfth grade for the years of 1997-98

through 2003 2004 well we like I'd like to point out to you here it is if you take a look at the outgoing seniors on this slide versus the incoming Kinder's and the first graders you'll note that we're losing fewer students and we're gaining a higher number of incoming lower grades so this is telling us that we've got a growth bubble in the

elementary years that we'll be progressing through and changing our pattern so during this time our district was booming and was growing like crazy class size reduction was in place and we were dropping portables left and right if you take a look at this data let's follow those first graders all the way through to 2003 2004 those first graders

are now seven Gladers so our growth bubble just moved into the secondary next year those same first graders or eighth graders in two thousand four and five and if you take a look at this pattern you'll see that the outgoing seniors now are much higher than the incoming Kinder's and first graders likewise the incoming Kinder's and first graders are much lower in

comparison to the numbers in 97-98 what this is telling us is that we are going to have a growth bubble leaving the district and what's coming up through is going to change the pattern of what our district is going to look like so I'm going to take you through all the way to current here the black dotted line is

the current enrollment number by grade of our school district in nineteen twenty take a look at the exiting 12th graders and the incoming lower grades every single grade level has declined in comparison to prior years this is setting our enrollment into a declining trend as you'll see in the next slide this is our overall enrollment and attendance trend the green line

represents the enrollment and the orange line represents the attendance each year as you can see on this chart beginning oh seven oh eight we have been declined will actually be giving oh five OH six we've been declining steadily every every year you'll see that there's a steeper decline in 2010-11 and that's because a charter school had opened that

year which drew some of our students that charter school closed down in 1516 excuse me in 1617 and that's why in 1718 we actually experienced a little bump in enrollment because we have we absorb some of those students the following year another charter school opened and we again lost a few of our students to them and since then we have been

declining steadily this is really critical information to us because as you know we are funded based on attendance not on enrollment and so despite the fact that we have very very high attendance rate as a Unified School District we average approximately ninety six point five percent of our enrollment despite the fact that we have that great of an

attendance a declining enrollment trend simply means less resources for us each year even if we had a hundred percent attendance rate it still with less resourced in the prior year okay now let's dive into the drivers of our revenues and expenditures this is a chart that shows what our estimated actuals are so this is 1920 current year

well we expect to receive for all of our revenues from the state and feds we anticipate approximately just under three hundred and seven million dollars and in our revenues we have unrestricted and restricted so on the unrestricted side you can see that majority of our budget revenue here comes from lcff local control funding formula up to 95

percent a small percentage comes from other state revenues such as mandated Block Grant we had we received some one-time preschool funding this year and another 2% comes from other local revenues which are our donations our bus passes etc just as the term suggests the unrestricted revenue means the board has discretion to use where where you want with those resources unrestricted on the

other side means you do not have that discretion that specifics that the specific uses of that has been determined by the agency that's provided us the funding so you cannot move any of those sources around onto the unrestricted side of the house okay so let's go over the district decides we receive about 31 percent of our total

restricted dollars from the feds this pays for a special education our title programs title 1 title 2 and title 3 there's a little bit of CTE in there we also have some restrictive funds from the state this pays for our after-school program our CTE incentive grant r2p etc and then we also have some local revenues that's consider restricted

these includes our pass throughs from the selpa our special ed so we get our special ed funding from the federal government and from our local cellphone okay what I do want to point out here is take a look at the total amount of restricted resources we anticipate to get this year thirty nine point six million that covers approximately fifty

percent of our total restricted expenses I will show you where the other 50 percent is covered next is our expenditures same thing just like the revenues we have unrestricted unrestricted expenditures and restricted expenditures let's start with the unrestricted expenditures this is the breakdown of what our unrestricted expenditures is comprised of 87 percent of that goes to salaries and benefits

the other 13 percent pays for everything else on a day to day operations purposes they include books and supplies base to the department's to the school sites services and other operating expenses such as contracts utilities our vendors are in there capital outlay in there now we've got some plus replacement projects that were in there other outgo so these are dollars that we send to the

county for some of the pass throughs and this is a negative this is indirect cause this is when other restrictive programs are managed by our district those programs then pay general fund a specific amount of money to offset our labor cost then in addition to salaries benefits and these other 13% of cost there's another big expense called

other uses contribution thirty five point eight million dollars I will show you where in a second where this goes those go over to restricted expenditures note here the total amount of expenditures projected a seventy six million dollars the split between the expenses for the restricted expenditures has always been very steady as sixty forty percent there are salaries and benefits of

employees who provide direct services to those restricted programs and therefore some of those salaries are funded directly out of the restricted sources and likewise the other is comprised of these type of expenses but they are specifically for those programs special education title ones through threes all of those so where does the other half of that come from well if you take a look

at the left side out of the thirty five point eight million dollars at the unrestricted side of the expenses three hundred of that goes to Adult Ed fund the balance goes to offset the costs on the restrictor side and when you take a look at the total on the bottom they amount to just one hundred three hundred

and six million dollars so those are some of the drivers this is the big-picture overview of where our expenses are this is another way to take a look at what those drivers are in this bar graph very quickly you see that certificate of salaries classified salaries employee benefits and contributions stand out the rest of them only represents thirteen percent out of

our unrestricted side next is our general fund revenue trend if you take a look at this chart I start they started tracking all of the fiscal data for the district back in oh seven oh eight that's because oh seven oh eight was the last best year prior to the recession hit oh seven oh eight the state funded

us every single penny that was owed to us there was no deficit factor there was no negative or zero Cola we received every dollar as you can see even though recession actually ended in June 2009 the impacts to our district really followed in the 3-4 years after the economy was deemed to be recovering so some of us

who were with the district back then we would never forgive those dark days where every day was about budget cuts and if you look up Google Wikipedia you might even find that there has been 11 years of economic expansion since the Great Recession but if you look at our actual chart you'll see we really did not start to recover as a district

didn't until 1314 so I really wanted to walk you through the rollercoaster of what we went through because the budget is cyclical what goes up must come down and what goes down must come back up and so we are kind of in that cycle right now we were threatening back then with multiple cuts they were beginning of

your cuts middle ear cuts end of your cuts it really was not until November of 2012 when voters of California bailed out California filled out the state with the passage of prop 30 so prop 30 was a if you recall it increased the sales tax by a quarter cent through 2016 it also increased the income tax rate for the heighth earners

through 2018 and so when that was passed those cuts a lot of these cuts were eliminated at the state level I want to mention I did go back and do another chart to see if this if those if that prop 13 did not pass and those cuts happened we actually there was not enough on the table for any school

district to cut - I lived through that so we're very happy that poverty passed 2013-14 was the introduction of the local control funding formula it replaced a 40 year old revenue limit system under Governor Brown and it was supposed to be an eight year funding program 2016 55 pass prop 55 is an extension of prop 30 it actually

extended the income the higher income tax rate on the high earners for another 12 years so as I mentioned earlier lcff was supposed to be a multi-year program under Governor Brown it actually reached its full funding in 1819 so what that means is after 1819 the funding for lcff was only going to be increased with cost-of-living adjustment so under governor Newsom his

first year with us this past fiscal year we only received Cola and that's why you see the flattening of the revenue line he included in there some one-time preschool dollars but you know one-time dollars are great but they don't help us offset ongoing long-term costs and then that cycle is going to probably come down a little bit we always knew that

recession was around the corner what Cove in my team did was it exacerbated the timing of it literally occurred overnight and it also exacerbated the magnitude of it so I know this is a lot of information to absorb the next few slides will be a lot more straightforward okay so the next few slides I wanted you to zoom in on

the main driver of our revenue on the restricted side I'll be unrestricted side so you already knew that lcff was the main driver and that's why this trend line looks a lot like our overall trend line one thing I only want to know here to you is while this looks like a steep line when lcff was introduced in

1314 what Governor Brown did was he lumped a lot of the previously restricted programs with lcff but those restricted programs we are still operating so it made this line look a lot higher because those restricted dollars were originally tracked on the restrictive side of the house so now that will I meant to what I wanted to convey across the area is not all LCFS

dollars are new dollars to the district we had a lot of those programs already running they were not eliminated so they were still part of here the main driver on the federal side is a federal revenue if federal revenue has always been very volatile there were a couple of stimulus funding that were presented to us way back early on

seven la jeune is first maker years but since then it's been very low it really hasn't funded what those programs required this is our expenditure trend line they very much mirrors on the revenue line as it should because if we don't have enough revenue we should cut our expenses we did our part during the Great Recession as you can see we hit

rock bottom in 1213 but then prop 13 was passed and we were able as a district to reinvest in our people reinvest in our educational program and create new programs for our students and reinvested in our technology from then on which is why you see such an increase in expenditure trend line so what are these drivers of the expenses I'm pretty sure

you already know what they are one of the first one is employee salaries since then we were able to hire more staffing we were able to provide lower class sizes and we were able the board was able to provide compensation increases to all employee groups along with higher increase salaries means higher employee benefits so when I mean employee

benefits these are paid for by the employer see the USD this includes Sturt CalSTRS employer CalSTRS contribution rate pers contribution rate statutory benefits and our health and welfare cap for each employee groups but what really is driving this steep trend line is the employers contribution rate which you see in this next slide the pink line represents CalSTRS

contribution rate from the employer you can see in 1314 it was as low as 0.25 percent meaning every employee every teacher we hire we contributed 0.25 percent to the pension plan this year that rate is now 17.1% same thing with CalPERS the blue line represents our contribution to CalPERS we started at eleven point four four and now for every

employee that's almost one percent that we deposit into the CalPERS pension plan this trendline is supposed to go much steeper in 2021 and 2122 governor's may revise proposed some funding to buy down our next two years rates and that's why you're seeing a slight decrease here and there's a slide later on that I will go into it a little

bit more this pie chart shows the salaries and benefits combined of our employee groups this is always an informative one I think to take a look at our employees in the that belong to the AC T group it represents approximately 69 percent of our overall salaries and command benefits and our classifier represents about 20% 1/5 of that camp which consists of the

management group and the confidential group represents about mine percent of that and then there's a small 1% that goes to fund about employee benefits for our retirees up to beer their age 65 this next slide is a just an informative schedule for the board to see that since the economy recovered in 1314 the board has really taken good care of its

employees all groups and these are the salary and benefit increases year after year okay special education is also a driver of our expenditures do you see here the number of students with IEP s in our district has actually remained steadily high between three to four thousand students but if you take a look at the number of special education

special education students as part of our total enrollment the trend line actually increases and that is because our overall enrollment is declining which is why the special ed line looks like it's increasing and the cost of course increases as this trend line increases and next I will show you that remember I mentioned earlier from BIA the contribution from the unrestricted

side of the house going to the restricted side of the house the main driver that is special education program so you can see that there was a little dip in oh it online that's because we receive some federal stimulus dollars back then to bring that number down but again is one time it was one time and so

that number continues to climb year after year and this number although it does not just include special ed that is the primary driver of this okay now let's strip tears and dive right into governor's may revision so army 14 the governor presented an overview of the May revision it is this last statutory step in the state budget

before the legislative before the legislature approves the state spending plan this is definitely not a normal year and it's definitely not an ordinary meri vision it's usually built on actual projections of tax receipts and a study economic projection unfortunately neither one is available this year especially when the tax filings is dr. infill mentioned earlier or extended until July and the economy is just

slowly opening back up there's really no good indicators of where where the state is headed so with many of these unknowns we believe that the state will likely need to revise its budget sometime later this summer but I will go over with you what the governor has proposed for school districts so California's economy is hit hard because it's actually a

fifth largest economy in the world with the unemployment rate increasing all three of the state's primary revenues have dropped significantly personal income tax sales tax and corporation tax those three sources make up 90 percent of the state's general fund and all three of them have dropped by more than twenty percent so with the projected state deficit of 54 billion dollars

Governor Brown maps out a multi-year effort to address the budget shortfall using a variety of strategies such as you know he's using the state's reserved over several years he has cancelled any new programs that he had proposed back in January but we were going to focus on the cuts that have an impact on school district which are the ones highlighted

below suspension of cola programmatic cuts to our funding source and deferring our cash apportionment so I have summarized governor's may revision into these bubble diagrams he is proposing to suspend Cola 10% cuts during lcff 50% cut to many of our categorical programs and deferring our cash payment but these are the impacts to school districts he does offer some relief he is offered to buy

down CalSTRS and CalPERS contribution rates for the next 200 he is offered to maintain funding and it in fact increase especially at funding by a little bit and there are some other minor budget flexibilities that he's given to school districts and he's also introduced some federal stimulus dollars so the next few slides go into detail on each of those I

will focus only on the ones that are that have the greatest impact you'll note note on the upper right-hand corner of some of these next few slides if it's a cut to us it shows a cut if it's a relief it'll show a plus sign so these will coordinate with our summary page okay as I mentioned earlier governor

acknowledges that there should be a cola but we are actually not going to get a funded because of the 10% cut there is a cola is also suspended on these catechol categorical programs which affect us so what do I mean by he is going to acknowledge the cola but he's not going to fund it so I want to walk you through

the mechanics of this because I know you usually get a lot of questions on lcff lcff is the new funding program that provides a base grant per a DA by grace span this funding system equalized the base grant for all school districts when we were under revenue limit system each district had a different grant amount under lcff we all start the same then we

add the 2.3 1% Cola to this year's grant to get to next year's grant what it would have been if we fund it but he's not funding that so he is going to apply a 10% cut on top of what we would have gotten so you see - 788 out of 7,000 880 so these cuts will be applied to this

grant to come up with our new grant for next year so this is the effective 2021 base grant per ad eight five grade spans then we take that grace ban and it gets adjusted for two categories our class size reduction gets an additional 738 per k3 student at the high school level we get an additional two hundred and

twenty three dollars for CTE programs career tech education but you see because these are already adjusted downward anything that we add on is also adjusted down then this new total is called adjusted base grant we take down you total come down here and this is where every district starts to look different if you if we are a district

with a high percentage of poplin duplicated population meaning a student who's an English Learner and/or free or reduced-price and/or foster youth if a student is all three of those their account at once that's what we call the unduplicated pupil percentage for our district whereas 50 percent so one out of every two students in our district is um it's categorized as one of these

subgroups we get 20% additional amounts off of the adjusted base grant before a district with 55 percent or more unduplicated population we get 50% more funding but since we are not that district we will not even and focus on that this is where we are so with this 10% cut on top of this 2.3 one Cola that meant out to a seven-point

92% reduction to our lcff revenue amounting to roughly 23 million dollars and these are ongoing costs this is not one time this is ongoing it carries forward this is where the governor says but wait if the feds step up and provided us with more money then these cuts would be triggered off this is the deviation from the Great

Recession during the Great Recession years we had tons of threats of cuts that they will be triggered on if certain things didn't happen in governor's may revision these cuts are built-in and will be triggered off if something happened you know the Fed stepped up in addition to the lcff base grant cuts there's a couple of add-ons that we have on to that program that's

also receiving a ten percent cut and these two two programs right here targeted instructional improvement grants and home to school transportation grant these grant amounts have never even received any Cola since 1213 so without any increases over the last eight years they're going to be getting a 10 percent cut and that's an additional reduction of 250 to our

budget these categorical programs are getting the 50% cut and those programs that affect us are the ones that I circle here we don't quite know what the fiscal impact to us are most of these are outside of the general fund so we are not sure excuse me these are outside of the unrestricted side of the revenue so

we don't know what these effects are going to be yet okay odd cash deferrals what this means is instead of paying at the district look school districts are paid based on a statutory schedule in ED code so we know every month what percentage of apportionment is supposed to come to us well governor Newsom is recommending is taking all of our June apportionment and

delay the payment to us in July so it's a budgeting gimmick that the state has used back in Belgrade they basically mark in their books that it's a June payment but they don't pay us till July so if we didn't have enough cash available in our County and we would have to go out and borrow that money so this one month impact right

here it's actually only 10 days but that's a delay of 26 million dollars 2cb USD later basically saying I was supposed to pay you on June 30th but let me give you an IOU and I'll pay you ten days later he's also proposing more cash deferrals here these are going to be significant we we haven't quite gone

that far out to see what these are going to be yet because some of these he has not determined whether it's going to be a hundred percent deferral of that month or maybe a percentage deferral for it for each of those month nor do we know whether or not he plans to pay us in July or the month after okay that's it

for the cuts for now let's talk a little bit about the reliefs so you'll see a relief icon on the upper right corner so this is where he proposes to buy down two years of calpers and calsters rates instead of using that money somewhere else so this is a huge benefit to the district to be able to drop that down

from eighteen point four to sixteen point one five eighteen point two to sixteen point O two for the next year the way purse rates and sters rates are established it's a little bit different um CalPERS sets our weights every year at the riot the CalPERS board CalSTRS rates are statutorily set and there's a maximum of how much they can go up to though we

don't have weights for the future yet but when we don't we use the same weight for estimation whether we leave here especially as I mentioned earlier governor proposes to maintain special education program although he suspends the cola for that program as well he is increasing the base grant a little bit to six hundred forty five dollars per

ABA in special education so that's an additional 2.1 million dollars to our district these are some other local relief measures that he has proposed which will probably provide some minimal impact to us this next slide shows the relief from the Stimpy from the federal government okay there are a lot of acronyms right here as a result of Cova 19 both of these funds

are under the cares at coronavirus aid relief and Economic Security fund act under s er ester stands for elementary and secondary school emergency relief governor proposes to use 90% of the 1.65 billion and distribute it to school districts based on our title one allocation formula this is this is the news even though we have to apply to it

we believe they're working on the application and they have the state has said to as the application will be a simple one now if we do get it it's an additional one-time 3.8 million dollars to offset our losses on the other side coronavirus fund is a four point four billion dollar estimate that of which he is proposing to allocate 1.5 billion of

that to offset the cost of students with disability at $1,900 per student so you saw earlier are a number of special ed student students in our district is roughly 3,500 and that will amount to one-time 6.8 million dollars to cvsd governor also pros up proposes to allocate 2.8 five billion dollars to school districts that have concentration that receive concentration grants

remember we don't receive concentration grants we receive supplemental ramps so this offset here actually does not apply to us for the time being unless laws are changed unless the governor changes his proposal later okay and then finally you may have heard some rumblings about the helos Act it's facing an uphill battle at the Senate the heroes act as a

follow-up to the Cure's at governor Newsom is pinning a lot of hope on additional federal relief to prevent the state from significantly cutting programs so the May revision does include a mechanism to trigger off those reductions if the federal government provides sufficient funding unfortunately school districts do not have the luxury of building a budget based on hope we can certainly be

optimistic but we cannot be unrealistic so we will use our best information today and build our budget based on the assumptions that's been provided to us from the May revision the county and school services of California okay now we're going to take a look at that and see how that impacts our district okay so part of what goes into developing a

budget our assumptions while that need to be in place for both revenues and expenditures so the state requires that we provide multi-year projections for the budget year and to subsequent years Luisi twenty twenty twenty one twenty two twenty three and these assumptions you have seen earlier we're building our assumptions with a DA with a cola factor with what the deficit

reduction factor is with one-time funds and other programs to get a good estimate of what our revenue is going to look like on the expenditure side it's actually quite straightforward we built in our expenses you know our main drivers step in column increase CalSTRS rate staffing based on what our projected aroma is going to be and El

Cap services and utility weight increases even though we're only required to do three years since the inception of lcff we have added two additional years although with with a economic contraction these are really quite far out and hard to predict or project so let's take a look at what this means numerically this pipe this is the last difficult

slide so if you would if you would please follow me along I want to walk you through our multi-year projection this is current year so this year we received a 3.2 6% Cola we start the year with a beginning balance so this is the beginning balance from last year last year we end up with this and so this

year we start with this we take a look at what our projected revenue is for this year which was 267 million we subtract from that our expenditures projected for this year which is 265 million the difference of the two is 1.8 that savings because our expenses are going to be below our revenues this savings is then added back up to our

beginning balance to form our new ending balance however at the end of every year we must excuse me so this new ending balance then becomes next year's beginning balance but as part of the requirements from the state we need to demonstrate to the state that we are able to maintain some of these require set asides we have a revolving cash fund

and we have reserved for economic uncertainty a quick point about our reserve it is set at 25 million dollars a little higher than our minimum statutory requirement but it's not even enough for a one month expenditure so this is something we need to demonstrate each year after we establish what our ending balances so now let's take a look

at the multi-year you saw the cola in our assumptions the 10% reduction which is also called proration factor to offset the 2.31 and the following year at two point four eight percent Cola there proration factored to offset by cola and the following year three to 6% the proration factor to offset them what that does is it it decreases

our revenues each year some courier so if you look at that if you look at this reduced revenue and if we do nothing to change our expenditure projections we're going to end up with a lot of Reds this is what we call deficit spending when you spend more than what you make you are a deficit spending and I want to

point out to you that even though 2021 shows 16.8 only it's actually closer to 27 because included in this revenue is close to 11 million dollars of one-time funds to offset that so where does the sixty million point eight deficit get paid from it gets paid from the beginning balance that we carried over so it comes out of our basically our

reserve our ending balance when you subtract 16.8 from 88 you end up with the lower ending balance and that gets carried over to the following year then that new ending balance the beginning balance takes away the deficit spending of the following year and we end up with thirty seven point nine carry that forward to the next year that takes away

39 point three million dollars of deficit spending we end up with a deficit one point four at which point we cannot demonstrate to the county that we can have a reserve if we added our twenty five point three million dollar reserve to that negative we're showing the county a third year insolvency so this is how the mechanics of the numbers

work in an my P based on our current assumptions um you're for year five there they're just too too far out at this point to take a look at but why did we do the projection and that's where they are so all of those numbers that I just shared with you transform into this line this is the revenue line for

the unrestricted I remember we only have discretion over the unrestricted side and I'm overlapping the expenditure line on top of that everything that you see in here in the crevasse green is revenue red is expensive expenditure this means we spent within our means so these green right here add to our ending balance and this is a year with a lot of green

because the governor proposed quite a few one-time money back then over the last 10 years there's only been three instances where we have spent beyond our means meaning the red line is on top of the green and that was doing nine ten the first couple of years of major cuts thirteen fourteen when we started restoring positions in providing raises

and 1415 when we made fake investment to our education programs so what's gonna happen out here based on the current may revision looks like this and I want to point out that it is never our intention to move forward with any regs we work very hard if you take a look at our trend lines right here we have always

spent very closely to our projected revenues and that's the idea so if we can't add money to make this green closer to the red then at some point we need to reduce the red to make it closer to the green and that's where our next project a deficit spending is this coming up this next year okay some of

these concerns that I have listed are in no particular order these are just concerns that have been exacerbated because of copán 19 that we need to be cognizant of we know that the state's budget is may may or may not change we don't know how quickly the recovery of our economy will be whether it's gonna be a u-shape quickly down and quickly up

or long drawn-out recovery and now shape like the Great Recession we know that the employer contribution is always the threat to our budget cash flow is now a new threat to us a reopening of schools we don't know what type of fiscal impact that will be to type our schools are reopening continues declining enrollment these last three bullets are our own local

issues you saw the trend lines it will take us a little to come back up we're not a high funding district meaning 50% unduplicated count is not high now we also have to charter schools in our district okay next up so we are required to approve our budget by July 1st and the quani will notify us of our approval

status by August 15th unless you saw earlier a budget with a 30-year deficit we need to identify a plan and share that with the county by first interim which is December this is our annual district budget calendar we are pretty close to June 4th right here there's a public hearing on this budget on June 4th and then subsequently on the 18th

the budget is up for adoption after that we start the new fiscal year and as dr. and Phil mentioned we will come back with additional information when the state adopts its budget and dr. Enfield I forgot to ask you check for understanding what is our main driver what is the main driver of our unrestricted revenue typically I think I

call it the general fund but I think the correct term is the local control funding formula and do you remember the three main drivers of our expenditure well salary benefits and contributions to other programs if I'm correct excellent you're a good student thank you for that and this is my last light I recognize that with a lot of information for the

board to absorb and I understand if we need some time for it to take it all in but I when you here to answer questions if you have any sorry about that the questions from the board mrs. Gagne please so thank you for the presentation I appreciate the the dearth of information we need it and I also think

it's helpful for the community to understand how the complexities of California education finance work which are very very detailed so looking at all this we clearly need to make some decisions now you know I don't want this district getting in a position where right now we you know precoded very financially healthy I think the district has done an excellent job of from the

last recession trying to make sure that we are putting our funds in the classroom supporting our teachers and increasing our education technology that being said you know have we already started thinking about some things that are away from the classroom that you know we could start implementing now and not maybe cut but maybe things that are proactive that if we started now would

help to alleviate this problem I'll jump in on that the the one area that we look at and when you look at the the presentation of majority of our budget is spent on salaries and benefits is a it's a large part of it so one of the things that we're currently doing right now is we are freezing positions we're

looking at every vacancy that that comes to open and making a determination is this critical do we need to fill it or can we delay filling it or do we just freeze that position for the time being and looking at trying to do as many of those with the thought process that every dollar we save today will help us

next year and that could be somebody's job in the future and so that's why we're trying to do as much freezing currently so that the people here are here right now aren't being impacted today and so we'll continue to go through a number of positions and look at freezing positions and and then some of those were we're moving some of some

of the positions around in our district to try to save as much money as possible but with that though we also have a list of positions and services throughout our entire district that we will at some point if we have to and again it's all going to be predicated on what is the next budget that what's the actual

budget from the state and then what's the recovery of the economy if it is a really quick recovery we may have enough funds to be able to just do some freezing and get ourselves out of this but if it's a long drawn-out process and it's this type of budget cuts then it's going to be having to probably go back

and look at many of the things that we did in the past back in oh wait oh nine oh ten mr. Schaefer was renamed as please so I just have a few items not specific questions regarding the budget but just in preparation for the approval of the budget and another board study session I would like to know whether

we've reached out to the unions the employee unions and whether they've offered ideas you know regarding cost savings measures and if they have provided those I would like to see what it is that they've suggested or offered I'd like to know the declining enrollment schools because I know that we have some that are far more affected than others and so I would like a list

of the declining enrollment schools also the home to school transportation I would like to know the overall cost of that and then aside from that I want to know I want to know the cost of transportation outside of the home to school transportation because I know we have those costs as well so I would like that information and I just want to

clarify one point regarding the the one submission that we had from the member of the public miss miss Lowe I think it was regarding intervention teachers her statement said that she can't understand why the board is considering eliminating that position I want to clarify that as a board member I haven't considered that and I don't know where

that came from that is something that has been shared via email with us and I just want to make it clear that I have not expressed considering eliminating that position that this is really the first of you know the sessions that we're having regarding positions and and work cuts will take place and I certainly would not render the

intervention teachers as the first item to go for personal reason because I know the benefit that they offer but I just want to share that because that isn't something that I've discussed or shared or has been in my thought process yet so thank you so two things one is a request for information I know that the budget

for this board of education is not the largest budget in our total budget for the school district but I'd like some recommendations on where we can make cuts where the leadership of this district and I know we have some miscellaneous expenses and other things whether it's going to conferences etc I would like to see a recommendation of

those things that can be cut I I don't know what we have to do yet I want to be very clear I don't know that we have to do any cuts I'm going to project that probably some I don't know we're certainly not in the classroom in my mind but I do think as a board I want us

to be introspective and figure out what we can do secondary to that I guess a question I have is since we are so uncertain with what's happening with the state so you know everyone's not filing their taxes to later when we make a decision on this particular budget this month is that decision being made on this state of

affairs as we've been presented just so that we have a budget passed or is that decision predicated on some suggestions such as hiring freezes I just want to make sure because miss Hernandez's comment I think is very important for two reasons one you know there's been no decisions made on things like intervention teachers but two is that something that is built into what

the decision we're gonna be making on June 18th no that's not built into any of those decisions that are being made on June 18th okay thank you I have a comment please yes I don't know when we're going to open up our meeting in a regular session or budget sessions next ones and and we do I like to invite

during like budget session uh teachers and CAC leadership's and and discuss this together as many of other districts when I think I was two thousand eight and nine ten when they're going through a difficult times I believe but their work we're working together finding ways to handle this not just making decisions with limited knowledge sometimes so by

having our teachers and NCC leadership in our budget session I think it'll be beneficial for the district as a whole you know um for the past decade we've always had a positive budget thank you miss Chen but I'm just just for clarification so the third third year deficit for 20 22 23 of course that won't be a positive budget would that be

considered a neutral or a negative budget if we if we don't do anything okay so budget approvals are a little bit different from interim reports budget approvals are either budgets are either approved conditionally approved or disapproved so what will likely happen with her third year deficit is the board the county will provide us with a conditional approval and provide us a timeline to

come up with a contingency plan and that's that's sort of the timeline that we will be working with the next with the next three to six months the with the passage of the state with the abduction of the state budget we will know exactly what the state has in cuts for us we will make those adjustments and the next report that we bring

forward to the board is sometime in September when the board approves the unaudited actuals so we will have a finalized 1920 and at that point in time we will also make some adjustments to our 2021 school year with the latest budget information and then the next time we come back to the board will be December for the first interim report

that's when we will need to share with the county what reductions we are considering to build into the out years to bring that reduction down excuse me to bring that deficit down okay thank you any other questions mr. cruise no thank you mr. Chen thank you very much for all the work and for the great presentation I

just had a couple of questions on slide 38 if he could explain a little further the the proration factor where those from ten to twelve point eight I thought has that change I thought that was ten across the board estimated for the next three you're sorry about that that's a very good question mr. Schaefer so if you take a look at year 2021 and you see

the 2.3 one percent hmm with the 10 percent Croatian factor and I mentioned earlier so the cut actually becomes a net seven point nine two percent so these proration factors right here are a little bit higher because Annette's it out so that it's a continuous 7.92 across the board so basically it's fat funding okay what whatever we are getting projecting in

2021 is the same projection that we're getting going forward the only difference in here is the number of 88th that goes into the formula okay okay thank you and then on the next last slide just a quick question I saw that El Cap was lying down as that those approvals have been pushed out yes another great question typically so

since the introduction of El Cap yeah I did in El Kheir have been married together in terms of the public hearing and approvals but one of the flexibilities of governor's maybe vision is that it will be postponed to December okay okay perfect that is all I had thank you very much miss Gagne yes can we go back to slide

38 please thank you so it looks like we're we're starting to run well clearly running into problems even starting 2020 2021 where we really start to run into problems is the 20 22 23 school year I've been getting a lot of questions about for this academic year that we have just ended whether or not the district experienced any cost savings

because we were not on campuses and if that is in fact true you know would that help with the 20 22 23 problem I'm just trying to sort of figure out already you know where we can start you know working on this because I I don't clearly know when on this board probably likes the idea of cuts so yes that's that's a

great notation I we actually did have quite a bit of savings from you know the busses rent not running I'm not having to have substitutes as much I wonder when the employees were back at work so all of those savings are currently in this reduced expenditure amount it was like a positive ending balance but again this is just estimated when we

bring to you in September the actual and audited actuals these numbers will be firmed up with the end of the year where we close the books for 1920 we will see what the actual amount of savings will be this is an estimate at this point so there might be some more falling out but at the same time I I do want to remind

the board that yes we did we have some savings because of closure but we also had some unanticipated expenditures because of the closure you know such as purchasing Chromebooks and all the sanitizer sanitizing agents now the cleaning of the schools so those were all an anticipated and I'm your other question about word you see the problem happening in the current year yes and I

would say we are definitely not the only district in this situation if you take a look at current year anyone who any district who suffers a 10 percent or a seven-point 90 percent cut to their bread and butter is going to have an impact to their ending balance and that's why it was very important that we are actually headed into this recession

in a much better shape than we headed into the Great Recession we have a very robust ending balance a very robust reserve we just need to make sure that we don't allow this recession to erode that and obviously $1 save today is $3 saved in a third year any other questions or comments from board members this is not you should I just kept going

um I plenty very clear because I feel like this is hyper-technical which it should be but I think that things that are hyper-technical have a tendency to also confuse people that are not professionals like you that do this every day and our experts on June so this Thursday I just want to clarify we're having a hearing but what we are

discussing has nothing to do with there's no proposed cuts right now true or false correct great all right dr. Ellen would you like to you're good clear that this Thursday we are just having a public hearing so if people have whatever concerns they may have about the state of the finances of the district the state etc they can

voice those concerns June 18th we are passing a budget because we must pass a budget but we will have to come back and revisit that budget when we have the actual financial information from the state which will actually direct what we will have to do as a district or not do as a district is that correct that's true okay just want to

clarify thank you so much guess I don't see all board members on my screen at the present time I'll do a quick roll call vote just to make sure nobody else has any questions or comments mr. Cruz well mrs. Gagne no miss Fernandez and mr. not and I have none dr. infill would you like to provide any additional

information for me during the meeting no I'm good I think we've covered enough okay great again miss mr. Chen thank you very much for all the hard work and for all the informations much greatly appreciated so thank you thank you with that I will close this special board study session with the Board of Education at 5:40 p.m.

thank you very much