001All right. So, first off is the 2425 financial statement presentation. Um, typically, uh, in during a fiscal year, the CFO, business manager, what have you, only gives two presentations. Usually, there's a financial, you know, year-end presentation, which I'm about to give, and then we do a budget presentation in June or July, and that's about it. But this 2425 year was a bit of an unusual year. So, I uh kind of thought we'd do a quick recap before we get into the year-end um financial statements. Uh so, really January, February is about the time that we can really hone in on projections. We don't find out our transportation allocation until February. We start, you know, honing in on what our actual enrollment is like and that type of thing. And that's when my director and I
002realized around February, March that instead of a $4 million deficit for 2425, that it looked like we were going to end the year with a $10 million deficit. So, I came in and did a a budget status report back in March to let you know. Um, this was primarily due to an increase in the number of special education uh students that we had entering the district and the need to hire a lot of additional certificated and classified staff for that. Um, as you know, the special education is not fully funded by the state. So, anything additional comes out of levy dollars or fund balance. Um, so back in March, we kind of projected that we were going to come against our budget appropriations that was approved last August and that we were going to need
003to do a budget extension. Um, in June, we passed a resolution allowing us an additional $10 million to spend uh for our total expenditures. then that is filed with OSPI. Um then July 8th I did another board update. Um that was when federal funding was very unsure and there was a lot of consternation around are we going to even have federal funds for 2526. Um that was about $2 million and so I did a presentation about that. We have uh received those funds for 2526 but we're still up in the air whether they will continue into 2627. And at that time I did another budget status that we still were on track to to end the year with the $10 million deficit. And then of course in August we had our our budget presentation. All
004right. So I'll get started on the presentation and I'll try to keep it brief but not talk too fast. Um our enrollment trend. This is an important uh slide. Enrollment is the number of students we served. We've had a 16 and a half% decline since 1617. Um that was really a high point for Evergreen at 26,000 students and we're we ended the year with 22,000 students. Um and to put this in perspective for every student we get basic education money about $11,000 per student. Um so losing $4,000 students, we would have had another $44 million this year if we had stayed at our enrollment at 26,000. Um, so this has been a big reason why we've seen three years of reductions and why we're going to continue to have to make those reductions to adjust
005for this. [snorts] Um, a big kind of story behind this, people say, where have the students gone? Uh, for the most part, it's that our incoming kindergarten classes are getting smaller and smaller year after year. When I look back at that 1617, our kindergarten class was 1,800 students. Now we have 1,400 and in this current year it's down to 1320. So we have these small class sizes coming up through the district. I did look to see out of those 1,800 kindergarteners that started back then, how many eighth graders do we have? And it's about 1750. So there's a little bit of attrition through the years, but the the big difference is that we're graduating out classes of 1,800 and bringing in small classes of 1400. Um, so we're we're seeing it more at the the
006elementary uh years right now, but those small class sizes will continue to to grow up through our middle and high school. Uh, so very brief summary overall in 22 23 we kept our fund balance around 28 million. Um, we had ESSER funds at that time. So these were special funds granted by the federal government to help with uh the impact from the pandemic. So, we were allowed to maintain more staffing during this time using those federal funds. Um, which was was great, but of course those federal funds went away in 2324. Um, we were able to bank a little bit of fund balance and get up to 32 million, which we intended to use that additional 4 million in the 2425 year. Um, however, we ended the year with the $10 million deficit that we
007had projected. So, we did end the year at 22 million. [snorts] Um the general fund is made up of reserve accounts and then unreserved accounts. Uh reserve accounts are accounts we legally have to hold that money aside for those purposes. So for instance, food services. Uh we're we're very fortunate that we're community eligibility provisions. So we get free breakfast and lunches for all students which is fabulous. So every meal we serve, we get uh reimbursed from USDA for that. But those funds come from uh federal government and they have to be held aside and only spent on food service purposes. So those funds can't be used to pay teachers or principles or any anything else. They can only be used for that specific purpose. Um so that left our unrestricted fund balance at just over
00814 million and we do have fund balance policy that that should be 5% of the previous year's expenditures. So we have now closed the books with just 3.4% 4% of our unrestricted fund balance. And this is something we've talked about over the last few months. [snorts] Um, and I will talk about again when I talk about the 2526 update. Um, just a general review of our revenue. We brought in $430 million. U most of that was in state revenue. The green is our general purpose. This pays for just our basic teachers, principles, secretaries, just our basic instructional um team. Uh we have state special purpose money and that is again part of those reserves, the transportation, the multilingual lab, some different grants that have to be spent for that purpose. Our federal special purpose is
009mostly made up of our title one, title two grants, and then also those USDA funds that fund our um our food service program. uh when we had ESRE funds come in we that was up to 13% of our total budget. So we were very fortunate to have a lot of those federal monies and they helped us out for a number of years. Um and then our EPO tech levy revenue is at 14% of our total. [snorts] So for expenditures I break them down in a couple different ways. Um there's a million ways you can break these down $440 million. Um so I just picked two. This one is based on what we call object code. You can see 60% are spent on certificated salary and benefits. So those are all of our classroom teachers, our
010uh counselors, instructional coaches, and our principles are also included in there. 23% for classified salary and benefits. And you can see um all of the different staff that covers, including our staff here at ASC that work in payroll and fiscal. Um our supplies budget is just 3% and includes things like fuel. Um our services, purchase services are a total of 11% and a big chunk of that is for things like insurance, utilities. Our running start runs through purchase services. That's about $3.5 million. So that's just a flow through. We have students sign up at Clark and then we have to play pay Clark and the state pays us through aortionment. Um 2.2% 2% of that is our food service contract with Chartwells and 2.3% of those services are custodial contract with ABM. So, it's just
011kind of trying to point out that um that food service and custodial contracts are a lot of staff. We have all of our custodials out custodians out cleaning all of the buildings and our food service staff. Um, and so really when you look at the classified and certificated and those two contracts, it's about over 87% of our funding is for our staff in our schools. [snorts] Um, and the other way I broke up expenditures is by activity. And this is one way that OSPI often displays this information. So grouping things by teaching and what's really in the classroom for the student directly. Um school administration is the principal principal's office. Our central administration is the districtwide administrators and our fiscal services. And then we have other support activities. So OSPI does uh show like what
012a comparable district will have for each of these uh percentages and then what what statewide um the different districts have. So for districts about our size, 73% and statewide is about 72% for teaching. School admin is around 6% for comparable districts and 5.6% for statewide. Central admin is uh 4.7% for comparable districts and 5.4% for uh statewide. and then our other support activities that usually runs around 16 to 17%. Um my last slide on this portion of the presentation is just a little explanation of our other funds. So being government, we have fund accounting and these separate funds. We can't mix and match and use these funds for other purposes. Capital projects are only for building uh new buildings or modernization. We can replace HVAC and roofs with these funds. Um, and this is where
013when we went out for bonds, the money came into our capital projects fund and was spent out of there. So, we're ending the year with 89 uh million in there. So, it's got a healthy fund balance. And we this funds all of our summer capital renewal projects. Um, and it's made up of all kinds of revenues including impact fees and uh we just sold the old image. So, that all went into the capital projects fund. Um, our debt service fund, the revenue is just uh local taxes collected to pay off bonds that then built the capital projects fund um buildings. Our ASB, you know, associated student body uh students did good. They added 50,000 to their fund balance last year. So, they've done a great job fundraising and managing their budgets. And then lastly, our
014transportation vehicle fund that just goes to purchase buses. It's just 42 from buses. So we have a a healthy balance in there as well. So uh the transportation department does a great job of managing our fleet and replacing and and uh doing all those things. All right. So now I'm going to do you a quick 2526 budget status update. Um um now that I finished the 2425 school year, um I just want to give you an update on how we're looking for enrollment this year. Uh we budgeted 21565. September's kind of a a little bit of a wonky month to look at because it doesn't include our running start yet. That doesn't start till the end of September. So that's about 400 students. And then also it takes a while to get kids enrolled, get
015all the paperwork through and that. Um we also had um a delayed start this year. So that also probably had an impact on that September count. Um our October count came in at 21,565.24. Um I have to say in my 23 years, I've never come that close [laughter] to actual enrollment before with my budgeted projection. So um that's good news. we're going to receive revenue in through a portionment of of what we expect to um as long as we don't lose students throughout the year. So, um I feel pretty good about where we're at as far as enrollment and and uh what our aortionment will look like this year. Um one thing I want to point out is our kindergarten did come in low. So, we're at about 1320 and we budgeted 1,400. Um but
016we made up for it in the secondary grades. So, those came in a little higher than expected. Um, I do bring up this graph because I think it's really important when we're thinking about the big picture and why we're looking at reductions. Um, it's a hard one to look at uh over this 30-year period. Our enrollment hit a high in 1617 of about 26,000 students. And so you think of all those years of building programs and and schools. Um and now we're back down to where enrollment was in 0102. Um and since 0102 we have built an additional elementary, we've added Hila and we've added Union and now we're down at the enrollment level we were back then. Um, this is this is a difficult one and it's why we've had to continue to downsize
017and downsize over the years. Um, there was one more thing that just escaped out of my head. This is only part of the story though because we also have a lack of state funding. So, there are kind of two pieces to the story and we're seeing it across the state is that state funding also is not keeping up with our needs. Uh, for instance, last year our utilities or our insurance went up by a million dollars and the total additional funding we got from the state to cover that cost was $300,000. So, we are getting small bits of 2% increases from the state while we're seeing these huge inflationary increases that we need to cover. So, there's kind of two things going on here that are hitting us now. Um, and it's uh it's it's
018a lot to to swallow, I know. Um, so we'll just keep continuing to to try to downsize. And there was one more thing about this slide that just escaped my mind. So, um, I'll think of it as soon as I'm done here. Um, so just a reminder, we just adopted the 2526 budget in August. Um, beginning fund balance, we estimated at 22 million and we did come in really close to that and we estimated we'd spend about 5 million uh, during the year of that fund balance. And that would bring that estimated fund balance, the unrestricted portion down to 2 and a half%. Um, I'm going to just follow up with the next. Why is the fund balance important? I did bring this slide up a few months back so you're familiar with this. Um,
019but I think it's important to for everyone to understand that it is very important we have a fund balance. Some people see 22 million and think, well, you know, that's plenty of money. But we spend 36 to 38 million every month just on paying our accounts payable and our salaries and our benefits. Um so we really do need that reserves. Uh we need we have emergencies that come up. For instance, last year with our special education, we needed to spend some of that down to cover those expenses. Um there's gaps in cash flow like I just mentioned uh that we have to cover. There's also planned usage. Some districts have reserves. If they foresee, you know, needing to redo a turf field or something, then they start setting funds aside for that. Um, and then
020also our bond ratings. So, we did experience in August a ratings downgrade as well. Um, so our reserves have fallen below our minimum 5% set in board policy and the policy requires that we develop a financial action plan to restore the fund balance back to the 5% required amount. And this is part of the operational expectation five. So speaking of cash flow, um this is our projected cash balance for the year as of right now. So excluding um doing an inter fund loan, you can see we dip down to 4.9 million is expected the end of January and 3.3 million in February. Now people think, well, that's a positive number. That's great. But we need money to pay our bills during the month. And so if we end February with only three million in the
021bank and we don't get paid again until the end of the month, that's not enough. We need six to eight million every month to just pay our weekly bills. So it's kind of like you get your paycheck at the end of the month. If it all goes to your mortgage, you still need to eat and pay your utilities and do the things during the month until you get your next paycheck. And that's that's where we're at right now. So, I put a resolution together for a short-term interfund loan of $10 million that we will take from the capital projects fund. So, that'll go on the December board agenda. And I think I shared that out. Um, and that will give Dr. Maloney and myself the latitude to transfer the money over from capital projects in
022December to make sure that we don't get into trouble um in the next few months. And then in July or August when our big aortionment payments come back, we will pay it back. So those short-term loans, you cannot take them for longer than one year. And we also have to pay ourselves interest on that loan. So it's it's not the most ideal, but at least we're paying ourselves the interest and not another entity. So um so that's our plan for next month. [snorts] Um just a reminder, this was the financial forecast. All of this is out on our website. Uh we put together a forecast. I worked with Dr. Maloney and the board on how to build that 5% back up. Um we originally looked at doing it more quickly but decided uh we didn't
023want to sustain those huger cuts up front and that we could spread it over three years. So the idea is that we will cut 11.5 million going into next year and build it back to the three and a half% um a 7.5 million the following year and get up to the 4 and a.5% and then a 6.9 million reduction in the following year and that should get us to 5%. Now of course there are a lot of assumptions that go into making threeyear out projections. Someone once looked and said it was something like 300 assumptions go into putting together a forecast like this. Um but two of the most important ones is this is assuming no additional funding from the state other than their maintenance level funding. So if we were fortunate and uh the
024state allocated us some additional funds that that would help us out there. Um and the other main assumption is that uh we could get um all staff groups to agree to only accept IPD which is the implicit price deflator as their increase for the next um all the next contracts. So, in the past, we got a kind of a cola from the state, which is now the IPD, and that was just what was passed on to um to employees. And now, we've kind of got in this trend of getting IPD plus 2%, IPD plus 1%, and we're just we're not going to be able to afford over what the state allocation is. So, um so those two assumptions are built into this forecast. So, next steps. So, we're starting now digging into the budget reduction
025process for 2627. Uh, we've gone through and kind of backward plans uh the the uh calendars for both budget and staffing. Um, if we need to do a modified educational plan plan or reduced educational plan, that will need to be the end of March. And so, we need to backward plan um um all of the steps that go before that. Um, so we are working now on what our communications will look like, what type of input we'll gather from staff, student and community and getting all those things in place now. And that brings me to my last my last uh topic and that is we put together an EPS budget committee. Um, I'm really excited about this. It the purpose is just to engage our community and um try to share finances and increase our
026transparency. Um we've uh selected about 26 people I think are on the committee now. Um so a number of community members, we have two students, a couple board reps. Um we have a couple principles and then I believe from all of our union members. So teachers, um office clerical and our PSSE large group. Um so it's a it's going to be a good community together. So, their first assignment really was to watch this presentation tonight just to kind of get their feet wet and see what they're getting themselves into. Um, and then our next meeting will be December 11th and that'll be kind of a school district 101, but I will try to make it somewhat engaging [laughter] because I know in the evening accounting can get Yeah. So, anyway, that's my presentation. I uh
027I am open for questions. So does anyone have any questions about either 2425 or what I've shared so far this year? >> Are the uh enrollment change are the enrollment total changes following the demographers projection >> uh from the demographic report we got web? >> Yes. Yeah. So last year they they uh did the projections in 23 24 25 we came in a little bit above theirs. Um and uh I think this year we're pretty in alignment with what theirs were were very close to what their projections were. So um those were just done, you know, two years ago. So >> do you remember uh when they projected that enrollment would begin to increase again? It's it's a couple years. >> It was going to stay around the 20,500 for a couple of years out
028and then uh there was hopefully a gradual increase. you know, I think it was probably maybe around 30, 2030. >> 2032 was >> that's when they started. >> It's a long way off. Yeah, >> it's a ways off. >> Okay. >> Yeah. >> Thank you. >> Yeah. >> Um Jennifer, could you go back to the cash flow screen? >> Yeah. And the June 1 million, is that including the 10 or is that No, >> it's excluding Yeah. And so June tends to be the the hardest month because we only get 5% of our aortionment from the state in June. Um and you know then we get 12 and a half% in July because they've pushed it forward to their new fiscal year. So um so it puts a lot of districts in a really difficult
029bind in June. Um and so that's why we'll have to wait to get through June to make that transfer back out. So >> yeah, I mentioned too that it's possible some of our payables maybe they could go out 45 days maybe, you know, it's not ideal, but you know, >> if we have a good relationship with them, um they might be willing to, you know, allow that for short term, but >> yeah, >> we would certainly entertain that if it looked like we were getting really close. Um we could talk to our vendors. So [snorts] >> someone's got the bird. >> Did you guys [snorts] >> What? I don't think we do that right. Okay. Uh we don't have um audience questions for this particular presentation. Um but I did have a question. So, what
030are the um ramifications for doing the interfund loan at a state level for the district? This will be our second one. >> Yeah. Um right now there aren't any ramifications for doing the loan, but I have heard them entertain the idea of not allowing you to do them two years in a row. Um I have uh the accounting um there was a school district accounting meeting where they talked about you have to give full disclosure of any uh interfund loans, any aortionment advances and any registered warrants uh as part of your financial health indicator. So um they are definitely looking at that. They're also looking at um requiring a minimum and a maximum fund balance. Uh that's something that's being entertained. um what they said what I have heard is possibly a minimum fund balance
031of 8%. So that would be um difficult for us. It is a total fund balance though so it's not just the unrestricted but we would still need to work towards that. [snorts] And I know Jennifer um coming on the board two years ago um we briefly looked at um possibly closing a school to kind of make up the shortfall. Um I know that's not a popular topic, but is something like that a possibility between now and 2032? Do you or >> I think it it's certainly something we should look at and entertain. Um, but we are right now our average elementary size is over 390 per elementary and that's still a pretty healthy size. I'd say 450 would be more of a target we would want. Um, but depending on how the next kindergarteners kindergarten
032classes come in. Um, you know, they've already been hit by these low class sizes. We don't have any uh elementaryaries in our district that are at 150 students um like some of our neighboring districts and and up north that have some very very small elementarymentaries. We don't have any that small. So um you know I I'm I >> hope that would be our last resort would be closing schools and hopefully we'll see an influx of of students um in a few years. So >> any other questions? Thank you. Thank you.