001Is that necessary? >> We're not taking them. We're not asking them to take >> no recording needed. >> Okay. >> Hi. >> We ready? >> Uh good evening everyone and welcome to our um board study budget study session. All meetings of the board of education are open to members of the public unless publicly noticed as a confidential closed session as allowed by the law. ED code section 35147. Members of the public may address the board as outlined in the public comment section of the agenda. The audio of all meetings is recorded and a member of the public may be held liable for any slanderous or otherwise defamatory statements. In consideration of the board and members of the audience, please turn off or silence your cell phones while in the boardroom. The San Marino Unified School
002District encourages those with disabilities to participate fully in the public meeting process. If you need a disability related modification or accommodation including auxiliary aids or services to participate in the public meeting, contact the assistant to the superintendent at j de laator at smusd us or 6262997000 extension 1310 at least 48 hours before the scheduled board meeting so that we may make every reasonable effort to accommodate you. Government code 54953.2 and Americans with Disabilities Act of 1990. 2022 42 USC12132. Documents will uh provided to a majority of the board of education regarding an open session item on this agenda will be made available for public inspection in the district office located at 1665 West Drive San Marino during normal business hours. In addition, such writings and documents may be viewed at the district's website at www.smusd.
003us. Number one, open session for close session 5:00 pm and the meeting is called to order at 503. >> Thank you. Call to order. Like to do a roll call. Um me, Mrs. Shelley Ryan. me present. Mrs. Gil present. Uh Mr. Chang, Mr. S, and Miss Lamb are not currently present, but may come later in the meeting. Student board member Burke is has already completed his last meeting, right? >> Um there is an approval of agenda required. So, so move and seconded. Uh, we are not voting on anything myself. >> I'll second. >> Okay, you can second. >> I did. >> Okay, then we're good. All in favor? >> Mrs. Ryan, roll call. Vote. >> I agree as well. Okay. Public comment. The board of education has adopted board policy 9323 to ensure the public's
004right to be heard in any matters pertaining to the unified uh San Marino Unified School District. Persons who wish to provide public comment will have three options to submit public comments. One, through an online form. Did we have any submissions through online form? >> We had no submissions today. Thank you. >> And two, request to speak during the meeting via Zoom. Mr. Please pause the meeting for one minute to collect public comments. >> Is there anyone in there on Zoom? >> There is members on Zoom. >> So, uh the one minute starts now. Communications from the audience regarding matters on the agenda only. Please provide your comments now. If you'd like to request to speak, please press the raise hand icon to make a request. If you're dialing in from home, please dial star9 to
005make a request or please submit a public card. There is 30 seconds left. Yeah, he sent us. He's on his way. Oh, yes. He just is pulling. There are no attendees wishing to speak. >> Wonderful. Okay. Number three, request to speak during the meeting in person via the public comment card. Do we have any submissions via the public comment card? >> Not at this time. Wonderful. >> Great. Item four, board budget study session. I'd like to turn it over to Dr. Steven Choy to facilitate a special budget board study session with the board of education. >> All right. Thank you, President Gil. It's my pleasure to guide this uh study session on the budget. Um as you know, school finance is one of those um areas where um it gets quite complex. It can be
006very complex because of the everchanging landscape of education in the state of California. Um, and being in California, um, a lot of our budget depends on the state, uh, economy. Uh so um for today what I'd like to do is to kind of walk us through um what education funding is like in California, how we got to where we are, and then give some updates from the latest governor's May revise, and then finally conclude the study session um with some hot topics in regards to how we are developing the budget for the upcoming 202627 school year. I'd also like to mention uh joining us today is our director of accounting, Miss Susanna Barbara, uh who is joining us today. Um so with that uh we'll go ahead and dive right into public education funding. Um
007as you know, the board of education, one of the key roles um in establishing an effective and efficient structure for a school district is really establishing budget priorities and adopting the budget. Those are one of your key responsibilities as a board member. Uh secondly, um in addition to uh you know adopting the budget, u one of her key roles is to ensure accountability to the public, which is really monitoring and adjusting district finances as needed. So the budget cycle um is a cyclical process. Um the school budget is very much in line with the state's budget process. Um starting in January, uh the governor does propose his uh budget uh for the upcoming year. Um and it isn't until miday or May 14th to be specific that the governor then updates that proposal and provides
008a May revise. Um and then it is up until June 15th where the legislature then finally uh passes or adopts the budget in order to start effectively July 1st. Now, school budgets, especially public school uh budgets, um are dependent on this uh budget cycle. Um so, when the uh state of California passes their budget, um school districts follow um this the state budget in the sense that timing wise, it's starting also July 1st. And then throughout the year, there are interim updates. So, the first three months go by and the district provides a snapshot, which is called the first interim. And then another three months go by and we provide a second interim. Uh and then finally as the year wraps up at the end of the year on June 30th uh the district will
009then provide a financial report called the unodudited actuals which give you gives you like a a rearview mirror of uh what's happening uh what has happened with the school's budget. So as you know that you may be familiar with these terms on whether a budget is determined to be negative qualified or positive. Uh so whenever we provide financial reports we are uh recommending to the board uh the state of the budget not just for the current year but the next two years out as well. And of course the evolution of California public school funding um has definitely evolved over the years. um in what initially started as u mostly locally funded schools over a hundred years ago has really evolved u into a funding formula structure uh which is really more focused on equity. Um
010and then with the uh introduction of Prop 13 in 1978 really having a negative impact on school funding um the school in fact the state has um passed Prop 98 uh shortly shortly after Prop 13 to ensure that there is a minimum funding guarantee for public schools. And then fast forward uh 15 years later, we are now in the era of the local control funding formula, which is still focused on equity, but it's more formulaic in the sense that you uh schools are looking at uh serving high need students through supplemental and concentration funding. So, it's becoming definitely a lot more formulaic in that sense. When we zoom out and take a look at California's overall state budget, uh K12 education uh has a big slice of that pie. Uh for many years K12 education
011has had the biggest piece of that pie. But um in the last two years it has dropped to second place in the sense that health and human services now has the biggest piece of that pie. And K12 education has traditionally represented about 40% of the state's budget. And of course with the LCFF um public school districts are funded two ways. Um either through LCFF or through basic aid. And for communities that have very high uh property values, um some of these districts may generate sufficient property taxes to fully fund uh above and beyond what the state considers a minimum level. Um and that is often mistaken here in San Marino. Uh a lot of folks believe that because of the high property values in San Marino that San Marino is a basic a district when
012in fact it is not. Um, San Marino Unified is an LCFF district. Uh, unfortunately, uh, homes in San Marino Unified do not generate sufficient property taxes to meet that state guaranteed minimum level. As you can see on the chart here, um, represented with the bucket on the left, uh, with San Mar Unified, property taxes represent about $20 million of our budget. That's about half of what's needed in order to meet that state minimum level. uh the district does in fact receive a state aid to meet that revenue limit and the local control funding formula is indeed a formula. Uh it takes a look at the number of students and looks at what grade levels are at. Uh and the way it's calculated is based on number of students you have a base uh a base
013grant which is a certain dollar amount per student and depending on the grade levels whether it's TK through 3, 4 through 6, 9 through 12 will determine a unique base grant level. Now on top of that certain grade levels have a add-on. So for TK through 3 and 9 through 12 uh school districts will receive an additional add-on. Now what's also um unique about the LCFF is uh the opportunity to uh earn some supplemental or concentration grant money. Here in San Mar you know Unifi 20% of our students are considered high need students and we do receive some supplemental grant funding and this additional fund these additional funds are for lowincome uh foster youth English learners. Um so San Marino Unifi does receive um a little bit of supplemental grant money. Unfortunately, um our district
014does not receive any concentration money. Uh concentration grant funds are available to those districts that have a 55% or more um uh high need student population. And at San Marino, we are close to about 20% of our population having that um that high need um percentage. And of course, uh the the big takeaway is not only is enrollment important, but attendance is also very important. So part of the formula is calculating uh the actual number of days that students are actually in school. Uh and so enrollment isn't enough. We want to make sure that our kiddos are in school. And of course, one of the big uh talking points that we want to ensure that our community is educated about is the fact that San Marino Unified is one of the lowest funded school districts
015in the state of California. As you can see on the chart here, when we take a look at San Mar Unifi, we receive about $13,000 per student from the state. In comparison to a lot of these com, you know, districts that we often compare ourselves with. Um, when you take a look at the top three, those are basic aid districts, they receive three times the amount that we receive uh in terms of state and federal funds. So, San Marino Unified uh is indeed one of the lowest funded public school districts in California. When we take a look at our overall revenues, LCFF is still significant, right? It represents 65% of our revenues. 30% of our revenues are from local sources, including our parcel taxes, our San Marino schools foundation, as well as our PTAs that
016contribute towards that. This slide should look familiar. It's from our second interim. Um, every interim report we always provide a comparison of the last financial report so that you can take a look at what's changed. And as you can see here, we are funded by the ADA. So despite having 3,272 students enrolled, we are um earning uh 3,192.37 uh for ADA. Um and what's also interesting here is the unduplicated count which you see uh most currently at 723. That unduplicated count is the number of high need students in our district. And it's called unduplicated count because um for every student that is high need, you can't count that student more than once in the sense that if the student is an English learner and also is a low-income student, they only count once. So that's
017why they're called unduplicated count. And of course our local revenues with schools foundation and parcel tax revenues uh those are reflected here in terms of our assumptions for revenues. Now on the expenditure side uh 75% of our budget goes towards people. Uh this includes salaries and health and welfare benefits. This is not unique to San Marino. Most public school districts do spend a majority of their expenditures on people. And again this is uh another snapshot of that second interim expenditures report. Um nothing surprising here but these are numbers behind that chart. Now a common um uh question I get is how much do we spend on special education? And when it comes to special education um we want to take a look at how much of our budget is actually spent on special education. And
018when we compare ourselves, San Marino Unified with all the other districts in Los Angeles County, you can see that San Marino Unified is on the far right side of this chart, showing that we spend about 20% of our budget on special education, which is in many regards very well-managed. Um what you want to avoid is spending too much on special education in the sense that um there is something called a maintenance of effort um factor that require school districts to spend more each and every year. You can't spend less. So, one and that's one of the key reasons why we call um you know managing special education expenditures a full-time task is that a lot of time and I'm speaking on behalf of Susanna Barber here is that a lot of time is spent coding
019expenditures to ensure that we we don't spend more than what we have to in the sense of coding these expenditures. So, I think the district is doing a very good job of managing special education. >> Dr. Can you go back to last two special ation figure. Yeah. >> Yeah. So, the special education figure that you see on there uh is the district's contribution to towards special education. So, with special education, the district simply does not receive enough money from the state or even from the federal level uh designed specifically for special education that the district has to pull from its general fund in order to contribute towards these expenditures. Is that this number including for settlement amount? Sometime we have a settlement >> um >> including or not including >> it depends generally if it's
020a special education expenditure it would be >> uh so 4.9 is about 20%. It's about uh 20% that is the um I believe that's the overall um special education expenditure right >> revenues that's revenues coming from our SULPA actually right yeah so our SUPA so the way that school districts are funded with special education funding is that it comes from the state it goes through um the uh SULPA which is the local agency representing all the different districts that utilize special education services >> this revenue So how much is the expense? >> So um we would have to look at our um our budget to get the detailed number but in terms of our overall expenditures it's about 20% of our expenditures. Just to reiterate, we're spending about 20% of our total budget on special
021education, >> which is 20% of our student population, >> right? >> Special >> students is less than%. >> Yeah. The number of students, right? >> Yeah. I was talking about funding. The funding represents about 20% of our expenditure. >> Yeah. Yeah. >> It's about 76. And I'm glad you brought this up because um later on in the presentation I'll talk about some of the updates uh in regards to special education funding. We've we've received some very positive news from the state in regards to that. >> Um I also want to talk >> catch up with all the years that we did not >> it still does not very observant make sure you say that. >> Yes. Yes. Um in terms of inner district permits um 30% of our students are on inner district permits uh
022in San Marino Unified and many of these students are the children of our teachers, our staff and city uh employees as well. And this is significant. It's significant in the sense that it produces and generates $14 million in revenues for our school district. And this $14 million is significant in the sense that it represents 40% of our non-fixed expenditures. So those non-fixed expenditures meaning utility bills um you know uh internet access uh various operating costs just to keep the lights on and and the classrooms open um those 30% of students uh bring in more than enough revenue to cover 40% of those expenditures. So these revenues are critical to our district. Um, what's also important that's not so much noted on this slide is the fact that inner districts also provide us the opportunity to
023provide a very comprehensive educational program at our district. Without interdist students, we simply don't have enough students to really provide that full breath of um, programs and services that we offer. And of course this slide um I really ought to frame this in my office because this is something that is that we we are extremely proud of uh which is a snapshot of how we've performed in terms of our enrollment in ADA over the last 15 years. Um you'll see going back to 2010 um through 2021 there was a slight drop in the number of students enrolled in our school district. Now what you see here is very unique to San Marino Unified which is starting in 2023 it begins to go back up. Um the majority of districts in the state of California including
024especially in Los Angeles County will not see that increase uh will not see that uptick uh starting in 2023. Most districts continue to decline. uh we are very fortunate and very proud of the fact that we do have um have restored the number of uh students that are enrolled in our school district. >> So let me ask that question. So it seems like that in 2010 we have the enrollment 3,200 but right now we have a 3,000 still we are a little bit lower than at the time of >> that is correct. That is correct. We still have a little we're not fully restored back to the city. at 3,200 right now. >> So this is 2025 uh data going back from 24 to 25, >> right? So once we have the 2526 data, you'll
025see that enrollment continue to go up. >> Yeah. Share what it is today. >> Okay. So that mean that we are now we are going back to the full capacity. >> We're headed toward full >> full capacity. >> Yeah. >> What what is that number exactly? >> 3300 is >> probably 300 is probably next >> 3300. Well we were over that actually one year. >> I do recall and in fact I think um before 2010 at some time we were in the 3,300s. Yeah. Also if we pass using the measure M if we building the class even more is does it mean that our capacity is actually going to go up too? >> Say that again. Repeat that. So, so, so since we passing the major M already and we building more classroom, I don't
026know if we building more classroom. Does it mean that we're going to have a bigger capacity so we can contain 3600? >> Buildings was really to our existing needs. >> I see. >> Um, we now have to educate >> transitional kindergarten students. >> Um, three and four year olds are developmentally um in a different space and kindergarten students and so they need classrooms that meet their needs and have rest access. So we have designed some of those classroom spaces with that in mind that we're building at the elementary schools. In addition to that we talked about having food service at Valentine which Valentine has not had in the past. Um and at the high school we're really looking at creating a career technical education w that to our medical arts program, robotics, um, and any
027other technical education program that we may want to bring to San High School students in the future. >> Okay. >> So, it's not necessarily that we're creating more classrooms to add more kids. That's not really what we're doing at all. >> Okay. Yeah. But I'm just wondering, oh, we're going to have a little bit bigger capacity. >> Yeah. I think the biggest >> the key difference here is that in 2010 we didn't serve TK students >> but now we do >> now we do >> so so as part of the measure M program uh it is one part of the design that we do provide facilities appropriate for TK students that we didn't have to before >> are there children we have four sections of seven sections per class so we were saying 140 U
028by the way is is that uh school district able to get the uh lo census either from county or from the city uh for to know the uh how many uh each age because we I think we were uh the B song trying to say what is our maximum capacity >> with capacity. So we always also need to know the each age the number and also we also need to know traditionally how how many they go to the private school. >> Yeah. So, so then uh with those data then we can figure out is that we are able and also we I think we also don't want to break to the thresh we we probably with all the senses consensus then a cap not to over so for those factor yeah together. >> Yeah. Um
029determining um the number of students in the community. Uh I think educational services does a great job with the enrollment and registration to try to track and project the number of students that are um within the San Marina Unified community. I know in past years um um Dr. Richtor's team has reached out to even preschools in the area just to just to gauge and see u and we've done a really good job in terms of um gathering that information as soon as possible. Uh a lot of that has now transitioned to online where families can uh pre-register and enroll their students as early as possible so that we can have the data sooner rather than later. >> So Mr. I've done that research um census data and I can tell you um with 100% confidence
030that we do not have enough school age children residing within the San Marino district boundaries to get to the 3200 kids that we need in order to provide the comprehensive programs and services that we currently do. So I can get you the detailed information. I don't have it with me today. I wasn't prepared to speak on that. Um, but I know for a fact that we just don't have the kids in San Marino. Um, in order to fill up our schools and to be able to continue to provide services, we would have to consider consolidation of our schools. if we were um to eliminate the inner district students from the equation. In addition to that um the laws are such that even when we deny district permits the county office of education often times overrules
031us through the appeals process and then we end up taking those students anyway. And and we have remember we have our legacy permit which is grandparents in the community who have lived or are able to enroll their grandchildren. That is a type of bless and we see the number of grandparent residents enrolling their grandchildren increasing year. So that also increases um the percentage of district kids that are actually legacy students um in our district. I'm happy to provide you with that information if you would like to see it. >> Well, ju just let that let that you know for for my profession I I keep uh uh watching you know for last three year. So in this neighborhood a QK hospital OB department they close one the you know the go here you know USC
032hospital they close OB so that area the OB doctor I don't know how they can survive then the valley need to relocate and and then the Montreal the two hospital they cross OV no one hospital cross OB valley medical center cross OV Yeah. Close. >> Yeah. Birth rates um not just in San Marino but throughout California uh is of concern. I think nationally it is of concern. Um we do need folks to have more babies in order so >> and um our public information officer is helping with that problem because she is due. So, thank you. >> So, if I may, I I'd like to highlight some of some of the May revisions. >> Thank you. >> So, the governor came out with his May revision on May 14th, uh, which in my opinion is
033some very positive news for, uh, TK through 12 education. Uh and I'll start with um just looking at at a macro level when we take a look at um how important the economy is and how its relationship is to uh TK through 12 public education um we often have to look at uh economic statistics and we look at the GDP which is u the United States GDP right and you can see that year-over-year since 2022 there has been consistent growth and a lot of this growth is really fueled by AI and I think initially when that observation was made a lot of folks uh just assumed that oh it's it's probably tech companies and AI companies that is really just feeling that growth and what UCLA for uh forecast um and also pointed out was
034that it turns out it's not just AI companies it's actually traditional companies as well in various industries that are investing in AI. So it's not just the AI companies themselves. They're investing. The amount of dollars that are being invested in AI is really driving um the growth of of the GDP. And when we zoom in a little bit more in terms of what's happening in California, uh that growth is also being experienced in California. However, when we look at how we assess the economy in California, that has shifted a little bit. Traditionally when we look at California's economy we have focused on the unemployment rate or even US job openings uh in relation in comparison to California and interestingly enough um economists are calling this California's new bifurcated economy and it doesn't seem to jive
035with what we used to use before which was if the unemployment rate was low and uh job openings uh were high um you would experience growth What we're seeing is that unemployment in California is higher than the US unemployment rate and at the same time the number of jobs in California relatively is lower um in percentage- wise uh when compared to the nation but yet at the same time there is significant growth in terms of revenues for the state. So that's why economists are calling this a bifurcated economy. doesn't it doesn't really uh make sense uh when we look at it through just uh unemployment and job openings. So when we zoom in on the big three taxes here in California, these are the major revenue drivers that produce revenues for the state of California
036and ultimately will affect public schools. Um you can see in this uh chart here that the majority of the revenues are still coming from personal income tax. Um and what's hopeful here and optimistic is that when we look at the current year 2526 there was significant significant revenue growth uh coming from uh these personal income taxes uh even when we compare back to January when the governor first proposed his budget. In fact, if we zoom in uh back in, uh uh comparing a year ago, that growth in personal income tax was about $1.1 billion in the previous year. But this current year uh just between January and May, it's a $9 billion increase in personal income tax. That is significant. And of course, economists are somewhat skeptical. They don't know if whether or not this
037is sustainable in future years out, but they're still projecting growth. So, this is this is very unique and I think it sets the foundation for what we're what we're going to hear about um some of the key changes happening in the May revise. And as you heard uh with Prop 98 providing a minimum level of funding for public schools, um what's interesting is at the same time enrollment across the state has declined. you'll see that there's a 9.3% decrease in enrollment in the state of California, but yet the Proposition 98 per student funding has increased 161%. Now, on this chart here, it says Prop 98 per funding per student funding is at 22,000. We don't see that. We don't see that here in San Marino. Uh, as as I mentioned earlier, we we're closer to
038about 13,000. But still at the same time um Prop 98 has delivered uh significant additional funding per student um across the state over the last several years. And of course um I have to bring this up because this is a this is a major major concern for many school districts if not all public school districts in the state of California. Um is this whole idea of settling up. Um it was initially introduced by the governor a couple years ago. They first called it a maneuver and then they called it a maneuver number two. And then now it's it's uh it's uh more appropriately called a settle up. But there's really two ways um that schools can be underappropriated, meaning that state law says school districts re receive this amount of money. And in the past
039um the governor and the state could suspend Prop 98. That was the legal way of um the state coming in and saying, "Well, we can't afford to pay this much, so we're going to suspend Prop 98." And by suspending it, there are a couple of things that you have to do in order uh for the suspension to happen. One is uh even if the Prop 98 level of funding is suspended, um schools would still qualify for COLA, for example, for that suspended amount. Secondly, the constitution would then determine how that amount would ultimately be repaid to the districts. And then finally, it does require twothirds of the legislature to approve that suspension. Well, the governor about two years ago uh came up with a very creative approach and not suspending it but rather using the
040settleup approach which is very concerning for school districts because one it does underappropriate the amount of money that the state schools are constitutionally guaranteed but there's no COLA. So with a settle um there's no COLA adjustment. Also the state constitution then doesn't determine how it's repaid. it's determined by the director of finance. And then finally, it doesn't even require a two-thirds vote. It requires a simple majority vote by the legislature. So these are very significant concerns. Um and what this ultimately means for the 2526 school year is the governor is proposing a $3.9 billion settle. That means an underappropriation. Schools are supposed to be constitutionally provided this amount of money. I guess there is a silver lining to this which is originally in January the governor proposed um withholding 5.6 billion but as of May
041the governor has backed off a little bit and said we'll just withhold 3.9. Still significant in the sense that for districts that represents $654 per ADA. In our district that's $2 million. 2 million additional dollars that we should have received but is no longer going to receive because of this settle up withholding. Now, one piece of good news for the state um is that the governor has uh replenished the reserve, the public school system stabilization account. This is the rainy day fund for Prop 98. Um and what this ultimately means is that for local reserve caps um that will be back in place. So when when Prop 98 was suspended um school districts no longer had that local reserve cap of 10%. Um and a lot of districts especially with CO money did build up
042its reserves. But with now with the rainy day fund being uh replenished um that is something that we'll be talking a little bit more about which is um how we will address that uh when the local reserve cap 10% will be back into back into play. So I think the big piece of good news is uh the cola. So, um, as you may know, uh, public school districts really have only a few ways, uh, where, um, cost of living adjustments are made, and that's typically dependent on the COLA. Um, in January when when the budget was enacted, um, we estimated that the COLA would be at 3.02%. Uh, when the governor then uh, provided his uh, budget proposal in January, it was estimated at 2.41, a little bit lower than what we had budgeted. And
043then the May revise comes out and the statutory cola is set at 2.87. Um what came as a surprise uh I think especially for us was the fact that the governor is not only proposing that um the state fully fund the statutory cola of 2.87%. But also that the state is providing an additional COLA of 1.44%. And they're calling this the additional LCFF investment making a super cola of now 4.31%. This is huge news uh for public school districts because again we had budgeted at 3.02 uh and then looked at it uh possibly going down and now we are very fortunate to have this uh super cola of 4.31%. This is exclusive to TK through 12 public school districts. it is not something that is being provided to other state departments. So this is huge
044news uh for uh public school districts in California. Next is uh and this is big news. Uh we talked a little bit about special education uh funds. Um the governor is proposing an additional increase and this is a historic additional increase uh to special education funding. in fact a 43% increase to uh the base rate of what schools receive in terms of ADA for special education funding in our district. This is significant. This is an additional $1 million in funding that will ultimately help us offset our special education contribution. Um and this is very welcome news for for our district. So does does it mean that we getting the special education we get the funding based on the ADA not on the special education but ADA of everybody? >> So the way that is proposed
045is that's how it is being calculated >> um and as um u shel or board shel ran mentioned you know special education costs um is is underfunded um state and the federal uh levels do not provide sufficient funding. So um you know every year when you look at our budget there is a special line item in there and it says special education contribution and what the district has to do is um after taking the funds available from the south button from the state the district has to make an additional contribution to pay to to fund special education. What this will now do is that it increases the the base rate. I believe it was around 900 a little below $900 uh for the 2526 school year. In 2627 it is proposed that that uh base
046rate be increased 43%. So this is significant >> base rate of the special education too. >> No for for all students. >> all students. Yes. >> To to funding for the special ed >> to pay towards special education. Yes. >> And of course learning recovery emergency block grant. This was a very significant source of one-time funds available to public school districts, especially after the pandemic. Um, the governor is proposing to uh fully restore the remaining uh dollar amounts that were um committed towards this program. And what that translates to us is 228 additional dollars per ADA for our school district comes out to be a little bit over $600,000 in additional onetime funds that the district can spend on the same on on the same priorities. It's it's not it's not something that you can
047spend on everything or anything. Uh it's still very much in line with the priorities of the learning recovery emergency block grant. But this is very welcome news uh for us uh as well. And of course, mandate block grant uh is a um is a grant that is provided to public school districts to meet the requirements of state mandates. Um there's a slight bump in this as well. Uh in addition to the statutory cola uh and you know some some of the mandate block grant requirements um vary uh every year in the first state packet we provide a document that kind of summarizes all of the new laws that come into play for the school year. Um, and then the state comes in and says, "Well, here here's a here's a chunk of money. It's called
048the mandate block print. You figure out how to pay for it." So, um, this is very welcomed as well for us to to be able to have this additional money to pay and meet those requirements. Another uh piece of big news um I think for all school districts um is this student support and professional development discretionary block grant. It it is a it is a long one. Um so last year the district received about $900,000. Uh it was onetime funds. Uh the district has three years to spend that on um state priorities. Uh although it is a fully discretionary grant. Uh that means districts can spend it however they want. The priorities of that grant is to spend on professional development, dual enrollment, career pathways, and to address rising costs. Um the governor on May
04914th came out and proposed that he's going to provide another round of this discretionary block grant and it's significant at $936.98 per ADA. That translates to about $2.8 million for our school district. Now, something to caution, it's big yellow part of the chart here, um is that it hasn't passed legislature yet. And there is some talk about um the potential of um legislature coming out and saying that well, we're not going to we're not going to distribute it uh just based on ADA. We may uh take your up um or um you know uh supplemental or concentration grant formula into consideration when we distribute this. So that that would negatively impact us in that regard. Uh or two uh restricting on how some of these funds could be used. So right now it is fully
050discretionary meaning districts can spend it how they choose. Uh but we'll see how the legislature turns out uh after um June 15th in terms of providing any specific requirements uh to use these funds. And this chart um is valuable in the sense that uh not only is it visual uh it provides a nice comparison of the revenue growth in comparison to expenditure costs. Um so it's nice in the sense that it also provides a multi-year view. So if we look at um the 2026 27 you'll see that on the left um see I think I could probably point there. I don't know if you can see it but this particular chart is nice in the sense that it is outpacing the expenditures right so um that is good news we we do we do want
051to see um revenues outpacing expenditures right it it reflects the base growth uh it uh in terms of expenditures it does show inflation being a factor step and column um and one of the major things I want to point out is that special education contribution coming down from the previous year so that that white box there uh from the previous year uh is significantly bigger than what is projected in 2627. Uh what's also new uh and I think our PI will appreciate this is the PPDL is the paid pregnancy le uh disability leave program. It is a new program exclusive to um exclusive to uh TK through 12 education. uh it is provided uh to all employees 14 weeks of paid leave. Uh and and that's huge news in the sense that um should employees
052need this um it's available to them and it's a priority of the state to offer this to public school employees. So that is very welcome news. Um and in this chart you'll see that that is uh on the cost expenditure side. >> Explain why there's such a reduction but then it just goes right back up to what it was before. >> So, um the main driver of that is really special education contribution is that we still don't know if it's enough, right? Even with the additional 43% increase to special education, um what we don't know is whether or not that's still going to be enough to outpace um revenues. So it will still continue to be underfunded in the sense even with the 43% increase it's not enough to cover it all. >> So it's
053it's kind like a forecasting. >> It is. >> Yeah. >> It is forecast. Yeah. And and one thing I want to reiterate is that um school services of California is uh asking students I mean asking school districts for that matter to consider this special education contribution um more as an investment. And you know when I heard that um you know we were at the workshop and we kind of looked at each other and it's like we we're already doing that. We're we've implemented MTSS, we've implemented so many different programs really designed um to to to make you know um experiences more inclusive. Um so it's I think it's a right move in the direction for the state of California. But I'm I'm also proud to say that in our district, we've implemented a lot of
054things in the right in the right direction already. So this is a this is a huge um uh boon for us to be able to to to leverage some of these dollars. So all in all in terms of budget development uh we will take into the statutory and the additional uh LCFF investment colas. Um we are being very cautious about the discretionary block grant. Um and of course we are um in terms of risk level we are anticipating that um that um LREBG as well as the special education base rate into our budget planning for the new year. Uh one thing I do want to mention uh because this was a finding uh in our 2425 uh audit uh is the CA requirement. This is a century old law uh where school districts are mandated
055to spend 55% of their budget um expenditures for that matter on certificated salaries. Um and in 2425 the district was short I believe point less than half a percent. Um so many and I guess the point of showing the slide is that we are not the only ones. In fact uh last year u 58% of districts failed to meet this requirement. So um one of the key takeaways from the workshop we attended was that school services provided some tips in terms of how we really ought to code and take a look at how our expenditures are classified uh when it comes to uh categorizing uh certificated expenditures um in terms of addressing this requirement. And uh again we are not the only ones. We're seeing this continue to to grow and escalate uh as we
056proceed. And then on the topic of reserve levels, um uh we are not unique in the sense that our uh reserves are very healthy. Most districts uh throughout the state of California have experienced uh significant growth in their uh reserves since the pandemic. Um but yet at the same time in terms of addressing escalating costs, we are beginning to see those reserves coming down. Looking at the state of California, the average has uh you begin to see that decrease from 2324. Um and you know uh it's not unique. Uh but that is something that um is of consideration as districts look to find ways to offset some of those increasing costs. They are looking at their reserves. Good news, the universal school meals program will continue in the new year. It will be fully funded.
057And another unique program is the kitchen and infrastructure training grant. Um in the last two years, uh state of California provided a competitive grant process. Uh and I'm proud to say that our district benefited from that competitive grant process. Our district did apply and receive uh kit funds uh to um replace a lot of our kitchen appliances, uh infrastructure upgrades, um copper pipes, things like that. So, so the good news is that the governor is proposing to continue to fund a similar program. Uh, but in the sense that it won't be competitive. It'll actually be distributed to districts. Um, whether that be uh on an ADA level, we're not sure yet, but um we're looking at it being allocated and we hope to take advantage of these additional funds to also continue to improve our
058kitchen infrastructure. And of course, this is the famous dart board um that all districts uh rely on when it comes to taking a look at what uh the budget uh translates into numbers. Uh some of the key takeaways here is that you'll see the um additional cola on there. Um also, uh what's important to point out is that additional TK add-on. Um there is stat uh statutory cola applied to that. However, that um additional super cola is not applied to that TK add-on. Uh another important uh thing to point out here is when we take a look at our pension liabilities and we look at Calsters and CalpERS, uh we do see that leveling off. Uh year-over-year, we've all uh we often see that continue to go up, but you can see especially with Kalpers,
059it goes at 26.81 81 uh this current year and then it uh goes down and then maybe up a little bit and 27 28 but then goes back down to 25. So uh we do see that stabilizing and uh possibly maybe hitting the ceiling hopefully. So let's shift into budget development. Um I do want to mention how we are addressing things like increased costs, cash flow and our committed balances. So let's start with increased costs. Uh generally um there has been an increase in our overall cost and uh those will be offset with the cola that we will be receiving. Um and of course another significant increased cost is um the cost of employee uh benefits, health and welfare benefits when we look specifically at medical benefits. Uh we're looking at approximately a 12% increase
060in that. So we are uh leveraging that super cola to help offset uh some of those costs. Uh, of course, another major area that we are looking very closely at is the instructional materials and supplies. Uh, we are seeing u increased costs related to those supplies. Uh, and we have made adjustments to our budget to allocate additional funds to our schools. Uh, and we are very much looking forward to utilizing uh, some of those discretionary block grant funds to help offset some of those increased costs and of course transportation costs. Um with the with the changes in the league at the high school level um they are looking at an additional increased cost of approximately 30% when it comes to transportation costs. Um and um the cost >> does that mean in dollars? >> So
061um we spend approximately $150,000 um just for athletic transportation. No uh athletic and um VAPA transportation cost. And when you look at a 30% increase, um it is it is a projection. Um what we don't know yet is because we haven't even started that league yet. Uh in our conversations with our school sites, especially at the high school level, um we've been very fortunate to be brought um up to up to at least knowing that it's going to happen, right? But until it happens, um, a lot of times when, uh, it comes to athletic transportations, we really don't know if if, uh, if certain, uh, games will happen. Depends on on whether or not they make it to a certain level, right? Uh, but, uh, based on our projections, based on what we're looking at,
062we are estimating an additional 30% increase in transportation costs. So, uh, we are looking to offset that, um, with, um, with a three-year plan to leverage, uh, that discretionary block grant to help offset that. It's going to go up because we're going to work 10% this year. >> That would be a positive. That would be a positive. In terms of cash flow, uh, because Prop 98 is being proposed uh, uh, to be underappropriated, we have to take into consideration the potential for deferrals. and it won't be the first time that school districts have experienced deferrals. Uh uh we have experienced deferrals in the past. Um we want to ensure that we have sufficient cash flow. Um we also want to mitigate or avoid borrowing um if we don't have to. Uh in past years our
063district has borrowed in order to ensure that we make payroll. Uh these are uh um have been referred to as uh trans or tax and revenue anticipation notes. It gives public school districts the opportunity to borrow from the county office which uh utilizes a pool. It's a it's a much better uh interest rate if you will compared to borrowing from a bank. But what we want to do is because of the reserves that we have, we want to ensure that we have sufficient cash flow so that we don't have to borrow. Uh and of course looking at our committed balances, we want to ensure that we commit sufficient funds for cash flow. Does the cash flow cash flow account count towards the reserve percentage or >> so the way that our cash flow account which
064is fund 17.2 would count uh towards the 10% reserve cap. Uh what we are proposing is taking a look at our committed funds and committed funds will not count towards that reserve cap. So, one of our proposals u in the upcoming adopted budget is to uh ensure that we commit $4 million in the cash flow reserve. Um just going back to the cash flow, um we currently have about just under $4 million uh for cash flow and that represents a little over a month of of of payroll. Um so um you know it's it's important um that we have sufficient funds designated for cash flow especially when deferrals come and looking at our ending fund balance. This is our ending fund balance a snapshot as of our most recent second interim financial report. Um we
065have an opportunity uh to work with you the board to take a look at what uh the board would like to commit uh to its uh committed funds. And here's here's what we propose. Um, one uh is to commit uh enrollment and revenue stabilization reserve of $2 million. Uh this $2 million committed balance uh would help uh offset um any potential for declining enrollment. Uh as you saw um many districts in California uh are uh experiencing declining enrollment. Uh this would provide us um the sufficient buffer. Um although we did not experience a decline in enrollment at least for the last two to three years. Um this would provide us a a sufficient reserve um to stabilize our budget uh should there be an effect of declining revenues. Secondly, um we are proposing that we
066commit $6 million uh towards a fa a fiscal stabilization reserve. And this is uh pretty much in line uh with the fact that this district relies on two parcel taxes. Uh both measures R and E provide $6.1 million in ongoing revenues uh for our district year after year. Um and this reserve would provide us that cushion uh that rainy day fund if you will should the parcel taxes be affected. Um the third committed balance uh being considered here is the capital facilities and infrastructure reserve. $5 million to go towards uh a reserve uh in the event that um as you know uh we have a measure M bond program. Um, and knowing that many districts, um, because it takes time to to leverage bond dollars and to build buildings and capital facilities, there are significant
067cost escalation factors to consider. Uh, by setting aside $5 million uh, and committed towards capital facilities helps us ensure that there are sufficient funds in the event that we don't have enough measure M dollars. So, uh, that would be the purpose of that committed fund balance. Uh the next two are not new uh in the sense but they are uh being recommended for committed balances which is instructional materials and textbook reserve as well as the program innovations reserve. Um these are balances that uh were in our budget uh under assigned balances. Uh but definitely uh in the sense that when we are looking at committed balances we want to ensure that uh we are committing these funds for these purposes because these are priorities for the district. should we not have enough money to cover
068these priorities. And of course, we've talked a little bit about cash flow reserve already. So, uh, with that, um, I do want to wrap up with some very positive news, which has to do with clear gov transparency. As you may recall um back uh when the board had its um admin uh board retreat, we talked about the the prospect of implementing a online portal that will provide not just budget information but the opportunity to tell our financial story. Um and since then we have worked very closely with clear gov to not just sync the data and to incorporate our um our financial data over several years. Uh we now have gone live with our smusd.transparency portal. Uh not only does it provide um financial information where it allows the user to drill down and take
069a very close look at our revenues and expenditures, but it also helps tell our financial story. A lot of the things um I'm thinking being selfish here when I say uh telling our financial story. Um I I tell the financial story over and over again and um it's always been a dream of mine to be able to have that story be told online. So, um, with this portal, what you'll see is not only does it provide, um, student information and our demographic information about our district, uh, as well as employee information, it also provides, uh, information where, um, visitors can drill into the actual revenues and expenditures and actually take a very detailed look at where the money is going and where the money is coming from. And, um, you'll see this in various visual
070ways. you'll be able to see it as pie and bar charts. And then in this particular example, you see it as a mountain chart here. Uh furthermore, uh it's not just one year of data. It goes back um this one goes all the way back to 2022. And what's really nice is I want to highlight the dashboards. Um so we have a very uh well-developed section called interesting facts on the district's budget as well as a frequently asked questions. And in this section, you'll see that It not only highlights some of the slides and things that I've talked about in our study session today, but it also features some really important facts and key talking points that I think everyone in the San Marino unified community should be aware of. So, it's really an education
071piece. It talks about very important things like why does the district need donations, right? Um it talks about, you know, where our local support uh um comes from and what it represents for our district and the importance of the parcel taxes and our schools foundation as well as our PTA contributions. Um it also addresses a very important question of reserves. What do we do with our reserves? Why are we committing these dollars? And the importance of the fact that these reserves really represent one-time funds. Uh they're not ongoing funds. Um, and also a very common question, well, didn't we just pass a $200 million bond? Doesn't that address all of our financial uh concerns? Well, it addresses our financial concerns when it comes to facilities and construction, but it doesn't address all of our all
072of our concerns, right? U so I encourage you and anyone who's listening in uh and the public u to take a look at smusd usparency. >> Um Dr. Where is that listed though on the homepage? Because I could put in the transparency, but if if you wanted to try to just navigate to that, is it what's it under? >> So, right now, um it is that link and what we're going to do is we're going to provide a link um on the business services homepage. Um >> business services. >> Yeah. So, we will we will provide that link on our business services homepage. Uh but I wanted to introduce that and and share it with with you first. >> Thank you. >> Do we have any questions from the board about the budget at all?
073You want to go back to anything? >> So how it did perform in the past three years like versus deficit or surplus in the past three years? Do you can you share me how? >> Yeah, absolutely. Absolutely. We get that question a lot. like have have has the district been deficit spending because you see it in the news today, right? You see a lot of districts really getting into financial trouble when they deficit spend and when they deficit spend for multiple years, it becomes a structural deficit, right? Uh and when you look at our financials and you look at our budgets, uh you have to look at the audited actuals, right? Because it is the most accurate snapshot of our budget. And when you look at the last three years, we have not deficit spent,
074right? Our district has surplus. That means we have uh more revenues than our expenditures in the last three year over year. And that explains why we have such a healthy reserve, right? And the board is very wise in the in the sense that it's committing balances to very important priorities to protect that reserve. We're not just spending down those reserves, right? These are priorities that reflect our values as a district. So, um I'm very proud of our budget. I'm very proud of our financial status and where we are. Uh in the last three years, uh when you take a look at our audited, uh financials, um it's not only been positive uh and you know, we hear it from our auditors every year that uh we have very very strong healthy uh finances. Um we
075have not been deficit. Yeah, I believe that we are the one of very few district around here that we have actually surplus in the past few years because >> That's right. And and I do want to point out it's it's not always a bad thing to deficit spend. Sometimes it's necessary. Yeah. >> Because when you deficit spend and sometimes it could be an investment in something, right? you're you're the the district is spending a certain amount of dollars that may span multiple years and it may be worth the effort or the the you know to deficit spend because you're making an investment right um but when you look at our end of the year audited actuals we have not deficit spent >> thank you so much >> anything else Mr. saying anything? >> Uh well,
076uh I have a question. Since the school foundation uh stay here, you you know the I I see the Y sign some some of the the the student parent look like they have their own uh perception. So they They're not maybe it's not big but big group but uh I think before I I I think they always school foundation and then PTA donation I I don't know is there is a trend right now some they just commit for PTA and not the school foundation if you look at the the the street you see the I I I I see the they have a kid but they are not have a sign but but but I saw I saw them go to the school activity they have to buy the ticket >> so I think we
077we need to pay attention on this issue >> yeah that that is an interesting observation um and you know I think it's it's ongoing discussion that we have with the San Marino Schools Foundation. Um that is something that we are observing very closely because as as we look at, you know, where the funds are coming uh and where they're going. Um that is something that I believe it's a partnership. Uh in our district, we rely so much on our local organizations. Uh and it's not just schools foundation or PTA, right? There's there's a number of community- based organizations that um that it is an ongoing collaboration. Uh and that's something that we will continue to have conversations and that dialogue to ensure that um our schools are taking advantage and and really valuing that local
078uh revenue. It's important for our district. Without that local revenue um it would it would be a disaster uh for us. So we rely very heavily on these local revenues. You know what? because the school foundation uh donate among I think is essential. So mean they they commit each year certain amount. I I I think the entire community including the PIO here I definitely you know this a public school we cannot push people right uh probably write a check but uh I think this community it's been the 40 year you know the go through the school foundation effort you know help the school district I I think we need to continue continuously deliver this message to the public to the new uh camera. Yeah. Yeah. Because they may think okay they write a check uh
079directly give to the PTA and PDA give to spend in the classroom. So then the the teacher they are happy. No no they I think we we we need to have the school build up you know the the besides the stay uh revenue then the second school foundation everyone need to participate >> I agree I agree with you the San Marino schools foundation >> so I I I think we we entire the community need to to have this kind of sensus they not said okay because I I praise the teacher Today I I I I I I tell you I I uh intentionally to speak up this because you know the last night I I come back then I I I try through so I I know the each probably not the 100% I know
080which house they have a kid but but they don't have a sign. They don't have a sign but instead of some of the senior citizen they still the commit you know they commit even $100 get the sign because this is show the the support the difference this community with the neighborhood community the difference because of the school foundation This is a good transition. Yeah, you you can see that right now you know South P they also start to have the sign. We we don't want to see the one day we don't see the sign in this community. >> I agree. I think it's an educational >> I I mean the the administration need to help with this administration work with the see how how we we can support the school foundation you know to continue
081to send a message. Yeah, >> absolutely. I I believe it's a >> I don't know is that this violate the the law. If we don't see the the sign in front the house, I think this is not cooperate the family to to to try to to uh you know to make help the school make a effort for quality education. Yeah. Well, I have to say that um I appreciate the foundation for all the work they're doing and I think that um this next year ahead they're working on some exciting things, some strategic shifts maybe um that are very positive. Yeah, I I I know. I I I know that. >> No, they're doing he's talking about >> is working very hard, but Yeah, but but you know, we have to help. Well, I think maybe
082people will see these new programs and get excited about them and hopefully that'll spark some more um interest. Yeah, that's good. If we get a one then You want excited really also. Make sure you enable Thank you. >> Yes. Thank you so much. foundation and and um Stephen can you go back on the last slide in terms of no where you were recommending some ideas about >> the the funds >> the funds committed funds >> at the very end >> there. Okay. So um would like to really make a suggestion on this in terms of committing funds to innovation and academic um achievement if you will. Um I see a lot of that has to do with the business side as well as the um operational side. Um would like some funds or consideration. I
083want to talk to my board about this about how we grow those um like if this is if this is the San Marino brand, if this is in fact the destination um school district, then we need to continue to invest in the programs that we have or look at new opportunities for our students. And so one of the things I'm going to talk to my board members about is that academic piece in terms of committing funds for the achievement and not just high performing students but all students, right? What what are we reinvesting when we have that? I'm not saying this isn't a great start. I'm just saying part of what I don't see, what I'm really passionate about is the academic innovation that we have here in San Marino. And it is part of
084who we are. No one's coming here if not for the academics and the not necessarily the rigor, but the the the opportunities that we provide. >> Appreciate that input. Thank you. >> Not a question, just a Thank you. >> Okay. Um, with that I think we need to adjourn. We have to get into close session um for the board. So, thank you.