001Uh, now that we're back live, we have a team from Hannah Interpreting as our Spanish interpreters. For those who would like to attend the meeting virtually in Spanish, that option is available. Hannah interpreting, would you please communicate that for us this evening? Thank you. Absolutely. In order to provide language access, this meeting will have simultaneous birectional interpretation into English and Spanish. If you're bilingual, you don't have to click anything. But if you're not bilingual and you're using your laptop, in a few seconds, you'll see an icon shaped like a globe at the bottom of your screen. Click on language interpretation and then select English. If you're using your phone or an iPad, then locate the three dot menu in one of the corners of your screen. Click on language interpretation and then select English. When
002you speak, do so at a moderate pace because the interpreters are going to be simultaneously interpreting everything you say. Thank you. Okay. If you wish to view closed captions of this meeting, please view the meeting on the SMUHSD board meeting YouTube channel. The link to the YouTube channel can be found on our website. You may view the captions in English as we live stream our meeting tonight, and you may view the captions in a variety of other languages. If you choose to watch after this meeting has ended, viewers may request additional accommodations by calling 650-5582201. Okay, we now we will now have our next special presentation. Superintendent Booker, thank you very much. This evening, we're going to be discussing uh the budget assumptions that we use to build the 2526 uh school year budget for
003our district. And with that, I'm going to hand it over to uh Mr. Hawkins. Thank you so much, Superintendent Booker. Uh thank you. Welcome to our many many people, I'm sure, watching online tonight. Um uh first, I'd like to thank um the team, the fiscal team. Uh I've noted this at most of my presentations, but um 99 plus percent of this work um is done by the fiscal team led by Valerie Miller, Vanessa Castano um and help helped by Christina Tang in my office. So a big thank you for apologies. Point of order. I made an error, President Griffin. We do have uh ASL interpreters online. And I made an error by stating I didn't realize that they are interpreting for us as well this evening. Should I go back and read that? I apologize.
004Yes, I'm sorry. Okay, hold that thought. Okay, now I got to recreate viewers. Okay, for our deaf and heart of hearing community, we have a team from Hannah interpreting services and they will be interpreting our meeting this evening. We would like to ask everyone to speak at a clear and reasonable pace for our interpreters. Thank you. Thank you. So, where are we tonight in the budget process? Uh earlier this year in January, the board approved the 2025 uh budget development calendar. Um and then in March uh we were uh the board approved uh the second interim report uh which included a multi-year projection including the 2526 year. Uh tonight's staff will uh ask the board to approve the major assumptions in the budget. Uh I would like to note though that uh none of these
005assumptions should be uh too surprising as uh the board has seen them uh in terms of the enrollment projections that the board approved earlier this year. Um and we noted or we looked at the projections from second interim uh in terms of uh you know multiple different uh projections. Uh so none of this should be too surprising for uh folks who have been uh following us along during our budget process. Um but uh if trustees have any questions feel please feel free uh to ask during the presentation or at the end of the presentation whichever makes the most sense. Uh after this the next steps um on June 12th uh staff will bring the preliminary budget um for review uh and public hearing and then at the June 26th budget staff will ask uh the
006board to approve the proposed budget for the 2025 year. Hold on one second. My clicker is not working. All right, going now. So, tonight we'll go over uh key takeaways from the budget assumptions. We'll look at factors impacting the budget. um relook at those enrollment projections that were approved by the board earlier this year. Um look at staffing projections, most of those based on the enrollment projections uh and capacities approved by the board. Uh talk about STERS, PERS, and other statutory rates. um take a brief look at employee compensation. Uh look at some of our major budget assumptions. Uh go over uh the step down of one-time expenditures and uh look at the 202425 second interim and 2526 initial budget assumptions. Uh and then we'll end as we usually do with next steps. All right.
007So, so key takeaways. Uh, as always, we're looking very hard at our secured property tax growth. We're looking every day, uh, at that. Um, we're trailing a little bit from where we were last year in terms of the assessed value uh, tracker from the county of San Mo. So, we're going to watch that. Um, we currently have a secured property tax growth projection of 3 and a.5% which is basically where we are. So, probably a little bit of upside and we're hoping more upside than less in there. Uh, as we have the last few years, we really are focusing on the long-term impact of that one-term COVID 19 funding from the federal and state governments. Um, and our significant commitments in positions funded by those one-time dollars. Uh, we're looking at enrollment impacts. uh we
008actually uh are seeing a little bit of a change uh in the uh trend that we've seen the last 5 years. So that's an important thing to look at. We're actually maybe looking at a tiny bit of growth uh coming into the 25 26 uh year. Um we also have a lot of uncertainty regarding federal funding. While we're lucky that we are relatively um not reliant on federal funding, uh we still have several million dollars in terms of our budget and those funds are uh mostly related to special education uh and lowincome uh students. So really important funding. Also stock market losses. We've seen pretty big losses in the stock market uh over the last month. Um and the state of California is very reliant on capital gains taxes. So, uh we're going to look
009at the we're going to continue to monitor the stock market. Hopefully, we will be making up some of those losses. Um and it won't impact the state budget too much. Uh we've looked at the governor's proposed budget uh which includes no real one sorry no real ongoing uh proposed funding but uh we are looking at likely some one-time funding uh related to the increases in Prop 98. Um we have inflationary and interest rate pressures. Um we just were on a a call a couple days ago and the the rates on GEO bonds um actually have really jumped uh over the last couple of weeks. Uh and so that impacts us with an upcoming uh uh issuance of the series D of our measure L bonds. Um we still have continued negative uh pressure from statemandated
010pension rates. uh stirs has leveled off, but PERS uh still continues to tick up and if the losses in the stock market aren't rebounded, uh that likely could bump up the projection in the PERS rates. Um, and we I I would like to note though, um, and this is mainly due to the actions of this board, is that the district's in a really strong financial position to face these challenges. Not to um, lessen any of the challenges that we're facing, but we are in a very strong financial position to face those challenges. Uh so in terms of factors impacting the budget, I'm just going to hit on a couple. Uh I noted uh assessed value. So secured property taxes is the major driver of revenue growth in the district. So we are daily looking at
011the Sanonteo County uh assessed value tracker uh in creating our final projections. While I'm asking tonight uh to approve the three and a half percent uh projection, uh we will update that to whatever is in the assessed value tracker on the day we lock in the budget assumptions. So that is one that we know will change uh before the uh June budget. Uh uh in terms of the federal budget, that's going to be a very interesting one. Usually that's a you know not a very interesting uh part but uh definitely seeing uh potential changes uh in our funding es especially in federal IDEIDA uh which is special education uh in title one uh which is uh funding for low socioeconomic uh we also receive a a decent chunk of funding uh out of the national
012school lunch program uh and then our adult education program uh has some CTE programs Uh in terms of enrollment projections, I noted that after about a 5-year uh kind of slow decline, we're actually seeing a flattening and maybe uh an increase uh and uh especially an impact at at one site that one of our board members might be aware of. Um and then um we've talked about it at every presentation over the last uh few years, but uh that stepped down in one time funding. Uh we had an unprecedented amount of funding coming out of coming in and coming out of COVID. Uh and so uh that was great and that was really needed, but uh as we move forward uh we have to look at stepping down some of those uh commitments that have
013been made. So, uh, as noted, uh, these are the enrollment projections, uh, and capacities that the board approved, uh, uh, I think in February. Um, as you can see, um, we hit a, uh, a temporary high, uh, in 2020 and 2021, a little over 9,000 students. We've seen a a slow but steady decline uh, into 2024 25. Um, and we're actually actually this year projecting a small increase potentially for the the school district. Um, and then over the next couple of years a little bit of a potential increase and then we're also looking at that kind of slow decrease uh in as we look to the 3 to 5year window outside. In terms of our sites, I'll go quickly through each of our sites. Um, Aragon's relatively stable uh projections. Um and then uh some
014of those same project sorry those same trend lines as we get out into the fifth year. Uh Berling game uh is a pretty unique um of our six sites. Um the Berlingame Elementary School District um is the one school district of our five partner districts um who has stayed stable in their enrollment uh over the past 10 years. Um and we actually have a bubble um going through uh as trustee land knows he's seeing those. Yeah, he's in that bubble. Um and so we are projecting uh an increase over the next few years. Um but uh as with every bubble um that bubble does start to decline um and based on the enrollment in some of the younger grades in the Berling game school district uh we will see that uh decline. Quick question. What
015does SDC stand for? Yeah. Oh, okay. Uh for us, um uh it's our Bay Academy programs. Um a lot of the state level they call it STC. Uh in terms of Cappuccino, uh pretty stable at Cappuccino, but I do want to note um that that's actually really good news in the sense of our projections even 2 3 years ago um were showing potentially a relatively larger decline. Um and it had us you know a little bit concerned in terms of you know how do we uh keep a a strong full program there. So, it's good to see uh a little stability uh at Cappuccino projections. Uh Hillsdale same pretty relatively stable uh with those same trends in the you know 5-year out. Um Mills relatively stable and potentially even maybe a little bit of growth
016um in the out years, but uh we'll we'll keep a eye on that. Um and then Peninsula uh don't uh don't let these numbers fool you. Um we didn't decrease by 90 students at Peninsula. Um we were lucky or not lucky that the the um uh Superintendent Booker and the staff uh started the bridge academy as its own CDS code. So those numbers have been pulled out for the Peninsula High School projections. And then at Sonteo High School, similarly uh we are projecting uh some growth at Sonteo High School. Um but then in the out years that same trend of uh declining so a little bit of a bubble coming in Sonteo High School potentially. Uh the following few pages are our certificated staffing projections. I know um they are really small. So uh but
017we do want to make sure that we are giving all of the information to the board and the community. Um relatively stable certificated staffing. Really the only changes there are related to those enrollment numbers that have been improved by the board. So you know at Berling Game High School we're projecting some more students. Uh and then our staffing formulas would add some staff there uh to provide the needed staffing for those additional students. Similarly in classified um uh really uh on the same level as 24 25 staffing levels. So uh in terms of stirs our our state our state teachers retirement system uh it is nice to see that 19.1% stirs rate flattening um but I don't want this chart to fool to to sorry to um overshadow um the changes that have happened over
018the last 10 years uh in this rate back in 2013, the state teachers retirement um systems rate for school districts was 8 and a4%. Um and now it's 19.1%. To put that in perspective, um the Sanonteo Union High School District um could hire 50 more teachers with the cost of the increased cost of stirrers over that time period. So um by good fiscal decision-m the district has been able to uh you know absorb those costs um but uh they are significant uh over the years and this is for all school districts. Uh as the board very well knows the board does not set these rates uh these are set uh by the legislator of legislature of the state of California. uh PERS actually if you look at kind of the outy years is showing relatively
019stable. Um but I do want to put a big asterct on that because uh the PERS rates are not set by the legislature. They are set by the PERS board uh and their projections change every year uh based on uh actuarial studies and a huge chunk of that is the investments that are under management of PERS. Um, and as the stock market is down uh pretty significantly over the last month, I expect if those uh losses in the stock market are not regained, uh we'll see a decent tick up uh in projected outyear rates for PERS. This schedule uh shows our AV growth um and related salary increases along with stirs and pers increases. Um so it has the last 5 years also uh two things that are I think pretty important. Uh the stop
020the step uh the cost of step in column um which is kind of the the uh the average uh step from year to year for our staff um is about $1.7 million. Uh and the cost of a 1% raise for all units uh is about $1.5 million. These are the major assumptions that we're asking the board to approve tonight. Um I'm only going to hit on a couple uh because these are very similar if not the same uh to the second interim uh projections that we've already talked about in March. Uh but the 3 and a half% is our assessed valuation as I noted before. We will update that um at whatever the assessed value tracker is at the date that we finalize our budget numbers. Um also related to that uh the salary increase
021right now there is 0% uh in the budget um but we will update that at our preliminary budget um for something closer to where we believe that we will settle uh for the year. So uh we will put something in there um for the preliminary budget. So, this slide uh notes kind of a focus on the step down of some of our uh larger uh one-time grants. Um I've included the major grants that uh had cash balances as of the beginning of the year. Uh this doesn't include a lot of the federal money um which was uh primarily spent uh in prior years in COVID and actually even three or four pretty major state grants that were spent uh by June 30th, 2024. So, this involves about $16 million uh of uh mostly state funding
022and uh one of the trustees or a couple of the trustees at the last meeting asked uh can we put are these the entitlement amounts or are these the amounts of funding that are still remaining? So, we've included a column now uh with the rem the cash balances as of March 31st, 2025. So, of that 16 million uh entitlement, uh we've got a little less than a third of that remaining or 4.8 million as of March 31st. Uh this is our current plan uh for the sunsetting of the one-time funding. Uh we've got some uh positions that were always uh looked at as temporary in terms of the uh the TOSA and the districtwide instructional leader uh program. Uh and then the uh MTSS 504 coordinator. Um but the the bigger chunk or 10.2 FTE
023um is looking at next year at the end of next year, June 30th, 2026. And a reminder of the process that we're looking at in terms of that one-time expenditures. We're still in the spring of 2025. We're monitoring our budget. Um we're still exploring other uh funding opportunities. Uh I know that we've got a team working on potentially uh getting some medical reimbursement money. Uh we're looking at other grants that are available. Um and uh we actually uh due to an increase in title one funding, it looks like that we should be able to cover a big uh portion uh of one of those positions in the 10.2. Uh but as I noted the uncertainty around federal funding uh we will know in the fall uh whether that increase will continue uh or we're going
024to see uh reductions uh in federal funding. Uh in the fall, um we're obviously going to gather principal input and uh hold our budget study session and continue to explore funding options. Um and then in the winter and spring, uh we'll take formal action and start the transition. This slide has our 2024 second interim and 202526 budget assumptions. Uh one thing I need to highlight here is the 202526 budget assumptions. Uh usually uh during this presentation uh we have a little bit of an update uh from the second interim uh but due to the county office of education's transition to the new uh ERP system on on July 1, that's that's not going to be possible. Um but it will be uh included in the uh preliminary budget on June 12th. Um uh but we
025are looking um as of right now at uh a little bit of a unrestricted deficit for uh although I do expect there to be some carryover and hopefully some budget savings as uh we're you know hoping departments uh can come in under budget. Um, so I look at probably closer to a break even uh at uh unodudited actuals and then uh we're looking at a little bit of excess of revenues over um expenditures uh for 2526 but I think it's important to note uh that we do not have a salary increase in there. So I do expect uh that we will show a little bit of a unrestricted uh deficit moving into a 2526 budget on June 12th. Um also uh a couple board members wanted uh the ending balance as a percentage. So we've
026included that uh now on the presentation. So I think that was a important ad. So looking at similar uh you know mid7% in terms of ending balance. So, in terms of next steps, uh the governor's May revision um is expected by May 10th. Um staff will attend the school services and the capital advisor's review of that budget. What we expect out of that is probably something similar to the governor's January proposal. And I think the devil will be in the detail around if there's one-time funding, if that funding is on a per ADA basis, uh which would be good for uh San Mateo. um but or if it was on more of a weighted student formula and that would probably mean a little bit less one-time funding uh for the district. Uh in before June
02730th, we expect that there will be an adopted budget at the state level. We'll keep on reviewing the Sanonteo County Office um assessed value tracker uh and update that assessed valuation as of the date um that we finalized the budget. We're going to monitor enrollment. Uh we have negotiations. We've had several productive sessions. Uh and we hope to move forward closer towards an agreement by the uh budget adoption. We're going to analyze how long-term management plans align with the district goals and LCAP. Uh we're going to manage fund balances. We're going to avoid relying on anticipated future funds or one-time revenues to cover recurring expenses. Uh and we're going to manage the step down of positions and expenditures funded by one-time grants. With that, I wanted to open it up to questions. Does the board
028have any questions, comments? Just thank you for putting percentages in. Thank you. Yeah, I think that's important. I think it is, but it helps me understand. Any other comments? Thank you. Put Thank you to the entire team for putting this together. You guys are awesome. And thank you for putting the remaining balances as well. I think that helps. Yeah, I think that's I think that was another really good that was great recommendation. I'm sorry, have one more. Sure. So, AV tracker you have at three. We have at three and a half right now. We're just under that. We were at 3.43 yesterday. Okay. So, it's up or down or what's happening? What's What's the trend is we're we're tracking about a half percent lower than we were at this time last year. um moving up
029or is it still Oh, it's moving up and it'll continue. That's all I wanted to hear. Well, I expect it to move up. Uh every year I've been here, it has moved up. Sometimes there's dips along the way um as they you know do No. And I think you're being several reasonably conservative, which is good. Yeah. Yep. Sorry. You know, I um I got two things. one of them. I just can't help feel feeling good about anything financial at this point. And uh um yeah, you know, there's just so much uncertainty uh in all the markets and consumer confidence, the uh drop in the GDP in the first quarter. Um you know, it's just, you know, it's just a lot of stuff. So, I kind of want to hear how well positioned are we? and
030you've kind of referred to this. Um, how well positioned are we, you know, for a a real storm? So, what what I would say is we're never going to be as well positioned as I would like us to be. Um, but in terms of reasonableness, uh, I think we are very well positioned. Um, you know, if we see things similar to the 2008 um, crisis, we're obviously going to have tough decisions to make. Um but the position that we are in financially uh will give us the time that we need. So it's not necessarily the fund balance doesn't necessarily stop you from having to make cuts. What it does is it doesn't make you jump at every thing, you know, everything that's going on in the world. Oh, what's going on with our federal funding?
031What's going on in the stock market? What's going on in the bond market? um our fund balance will give us the time not to overreact to any individual things um and give us enough time to make um you know the best decisions of hard decisions uh in that process. We're hopefully hoping that those aren't having to be made uh but this board has put the district in a really good position uh to at least have the time uh to make the best decisions possible. Yeah, I have a question about the medical funding. Um so you were saying that we are expecting a reimbursement right? Now what happens though in the event that Medicaid funding gets severely uh reduced then we would expect our reimbursements to be severely reduced. So kind of like I guess what
032kind of protections that we put in for that. So we haven't included any medical reimbursement funding into the budget that you know I'm a very much uh you know I'll believe it when I see it uh in terms of budgeting or you know you know when we have when we have uh information you know very specific that you know I'm I'm an accounting person and Bob I think would like this uh when collectibility is reasonably assured uh is kind of when I'm looking to budget for uh revenue. So we haven't included that in there. We're hopeful for that revenue because we're hopeful that maybe it can cover uh some of those positions that are looking at suns setting on June 30th, 2026. Um but yeah, we're not relying on that in building our long-term planning
033right now. Can you explain a little bit about what we've done in the past um around around the expectation of medical funding? Uh so so we haven't received medical funding uh in the past. Um there has been an expansion uh in terms of what items are allowed to be um done as as well as some changes at the state level around what uh insurance companies are supposed to be covering. Um but we're really uh you know we're looking at that um very conservatively in terms of you know what we can expect uh in terms uh of that funding. We're working with the county office right now to put in place systems that if that funding is available that we're going to take advantage of it. Um but to your point I think that you're making
034is we're not reliant upon it. Yeah. And or in other words we're hopeful to get reimbursement funding but it's not as if we've budgeted like we depend on it or dollars and then posted expenditures to them or something. Exactly. Okay. Um because well I I just got back from coast to coast and one of the conversations in a lot of our workshops was talking about idea right and the fact that 40% has is supposed to be allocated but has not been right and so going to our legislators and asking for that funding now for our district um how much and I and I'm sure you've talked about this before but if you could say it again um for folks that are around um watching this, how what is the percentage that we depend on IDA
035for our district? Yeah. So, uh we actually were talking about this with our auditors this morning. Um so, uh the current year projection for IDEIDA funds um is $1,991,000 and change. Um our special education budget is close to $45 million. So, you're talking four to 5%. Um and as as you were noting the original um commitment from the federal government is that they were going to fund 40% of the cost of special education. So they are funding onetenth of their commitment. Uh in our district in some other districts uh it's closer to the 8 to 10%. Um but I I don't think I've seen any districts where the federal government is funding more than 10% of the cost of special education. And that and that's nothing new. I mean that's not like a new policy,
036of course. Yeah. No, I I I would say though that it has steadily declined as a percentage as the IDEA funds have stagnated uh and special education as with all costs have have increased. So yeah, thank you. You're asking for approval of these budget assumptions. Uh correct. So I'm asking for uh approval for uh the team uh to move forward with these budget assumptions. Obviously if anything changes uh we will bring that at the preliminary budget like I noted. I expect assessed value to change. I expect employee compensation to change by the um but we will highlight where those changes have been made at the preliminary budget. Um and uh yeah, we're looking for approval of the budget assumptions uh in order for our team uh to bring forth the preliminary budget on June 12th.
037I just have one question. Yeah. Did COLA change? Uh it did. They finalized COLA at 2.3%. Is that I think we just got the school services article. Okay. Cuz I thought it was 2.4. Yeah, I I I'll double check, but I believe it finalized at 2.30% like yesterday. Um, now as a that's better than the 1.07% it was for our state funded uh uh partners. Um uh but and 2.3 is is a pretty normal cola at the state level. Um we've had we've seen really high colas, really low colas over the last few years. uh we're getting more into that 2 to 3% which is kind of the the average that we that we look at. I'd like to make a motion to approve the budget assumptions. I'll second that. Okay. Is there any further
038discussion? All in favor? I I motion passes unanimously. No new business. Thank you.