001ready. Okay, I'm going to call or uh order regular governing board meeting. Um I guess I'll lead us in the pledge. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Roll call. Governing board president, Miss Patricia Himenez, present. Governing board vice president, Miss Maria Guzman, present. Governing board member Miss Maria Hernandez present. Governing board member Mr. Rudy Santa Cruz. Present. And governing board member Mr. Harry Garwell. Present. Thank you. Thank you. Next appro of October 15, 2025 regular governing board meeting agenda. Is there a motion? So moved. Is there a second? Second. Call for the vote. Mr. Santa Chris, I will take your verbal vote. Uh I Miss Guzman, I will take your
002v verbal vote. I Mr. Garwell, I will take your vote. I. And Miss Hernandez, I will take your vote. I. Okay. Thank you. Motion carries. Next. Approval of September 25, 2025 regular governing board meeting minutes. Is there a motion? So moved. Is there a second? Second. Any discuss discussions, changes? Hearing none, call for the vote. [Music] Miss Guusman, I will take your vote. I, Mr. Santa Cruz, I will take your vote. I, Mr. Garwell, I will take your vote. I, and Miss Hernandez, I will take your vote. I, okay. And just for the record, I abstain. and I wasn't here um at that governing board meeting. Next we have governing board reports. First is Miss Ernnandez. Do you have a report? I have no report at this time. Thank you. Okay. Next is Mr. Garwell.
003Do you have a report? Madam President, I do not have a report for this uh this meeting. Thank you. Mr. Santa Cruz, do you have a report? I also have a report. Thank you. Miss Guzman, do you have a report? No, I don't have none. Thank you. Okay. Next is myself, which I do. Um, I just want to say, you know, good afternoon everyone. I want to update you on a crucial initiative that we're currently working on. The governing board has called for an election on the override and bond, which will take place November 4th. Over the past three weeks, I have had the privilege of working alongside many dedicated individuals in our community. I'm truly humbled by the support and hard work that has gone into this effort. I want to take a moment
004to thank everyone who has been out walking, canvasing, and spreading the word. Your efforts are invaluable and gives gives me great confidence of moving forward. This election is particularly important because as many as you know, it directly impacts our schools and the future of our community. The override will help maintain essential funding for our classrooms while the bond will provide critical uptakes to our facilities. These measures are not just about today, but about ensuring that we have the resources to provide a high quality education for our students for many years to come. Thank you again for your dedication and passion. Let's keep pushing forward and stay united in this important uh cause. We are making pro progress and I am proud to be in this with you all. So, thank you. That's my end of
005my report. Okay. Next, we have um superintendent update Dr. Lily Messma is community. Right before uh fall break um our students and teachers from October 1st to the 3, our schools held parent teacher conferences. This important time for family engagement provided teachers and families the opportunity to discuss student progress and goals for the quarter ahead. Some school took this opportunity also to go beyond traditional conferences showcasing student learning through hands-on presentations and classroom demonstrations that highlighted student creativity, curiosity, and growth. The month of October is also National Principles Month, a time to recognize and celebrate the leadership and dedication of our principles. Principles set the tone for culture, ensure that teaching and learning are of the highest qualities and serve as the essential link between students, staff, and families. Their ability to lead with vision,
006empathy, and consistency directly impact student success and staff well-being. On behalf of the governing board and cabinet, I want to express my deep appreciation for our principles and their commitment to excellence. This week also marks the beginning of the second quarter of the school year, a time when students make wonderful leaps in their learning and am I am looking forward to celebrating their growth and achievements throughout, but most especially at the conclusion of the semester. That concludes my report. Madame President, thank you. Next is new business information and discussion and action. First is presentation of the 2025 ML override expenditure pursuant to ARS15-481 Y Mr. Jim Serman chief financial officer information and discussion Madame President, members of the board, um I'd like to give the report of the fiscical year 25 M override expenditures. This
007is required by statute um for bonds and overrides of any type so that the public has an idea of where the money was spent for the prior year and where it will be spent uh projected to be spent in the future year which is the current year 2026. Um the the presentation essentially is this is the statute in and it essentially says that we must between September 1st and October 31st give a presentation to let the public know where their money was spent for the overwrite. And the update shall include a minimum of expended for uh previous year and then also for the year coming up which is 26. The expenditures are broken down into primarily what was shown on the pamphlet that was given to voters when voter approved the measure. Just like we
008have a pamphlet for the election coming up, it also has uh points that we are going to spend the override money for. One was maintaining school health, safety, and security, maintaining smaller class sizes, providing competitive salaries to recruit and retrain highly qualified staff, providing student support services at all campuses such as counselors, social workers, and psychologists. and continuing after school and additional learning opportunities for students. The actual expenditures are essentially for 2025 have been broken down to be the district spent five approximately 582,000 for maintaining school health, safety, and security. Smaller class sizes, which is the bulk of the money spent, is essentially $2,852,000. Providing competitive salaries to recruit and retrain 1.1 million 311,000 for providing student support services and 125,761 for continuing some afterchool programs. For the fiscal year coming up, we have we
009are uh going to budget approximately 600,000 of the money for maintaining school health, safety, and and security. 3.225 million for maintaining smaller class sizes, $500,000 for providing competitive salaries to recruit and retain. $320,000 for providing student support services and approximately 30,000 for afterchool programs. Like to point out that the the revenue expected for next the 26th year is $4,675,000 from the M override. That is equivalent to approximately 52 teachers for their salaries and benefits. If the M overrides essentially are not voted on for approval in future for future years, they will eventually phase out within the next uh two three years and that would affect 22 the salary equivalent and benefits of 52 teachers. So as you can see it's a significant amount of money that is badly needed by the district to continue operating
010with smaller class sizes. If we were to lose 52 teachers because of the lack of an M override, it would have an significant impact upon the district. Are there any questions from members of the board, members of the public present? Does the board have any questions? Madam President, uh Mr. Garwell. Yes. Uh Mr. serving as I'm looking at this. So that accounts for the reduction in the amount of uh revenue that's going to be coming up. It's just because of the fact that we have downsized and you know rightsized a number of different u you know like staff and other things in in the district right over this last year that's going to be carrying forward to us for us. Well, we did in fact those things there were where there were reductions within the
011the district and within the budget amounts and staffing and so forth. However, this this as the numbers indicate, the reduction would have been even more significant without the benefits of the M. Okay, good. Yeah. So, I'm glad that we're on top of this and and I'm looking forward to it and hopefully the override does get passed. I know what we're all doing our best to try to make sure that people support it. So, I'm looking forward to the upcoming elections. Thank you. Anybody else have a question, Mr. Sherman? So, just for clarification, like I mentioned in my report earlier, um just to confirm what you said, and this is why I call for everybody that it's very very important to put your differences aside. We need to focus on moving this district forward. We need
012to make sure that that the community is is and this is very informative. Thank you very much. Cuz as you know people ask this is asking what's going to happen. So just for clarification and I'm very confident because in over the years the overrights has been very very successful. Um but you mentioned that if this doesn't pass it's going to affect 52 teachers. Correct. it it will d there'll be a phase out period of the current M over over override. So we next year is the last full funded year of the M override and after that we'll have two years of reductions. At the end of those two years we will then have no money coming in from an M override and that the lack of the drop in $4.6 million or so in money
013would would basically affect 52 teachers. the equivalent of 52 teachers. Okay. Okay. Well, this is why, like I said, Bernett's been very supportive and we need to continue working together and continue moving forward. And, um, if anybody else doesn't have any questions, um, Madam President, Mr. Garwell. Yeah. Um, so just to be clear, what you just stated, uh, Mr. receiver is that um if the override by chance did not pass that we would not see these reductions until 2028. Is that correct? We would have one more year so that the we would essentially have the um the 2026 year is fully funded. the 27year would be fully funded and after that we begin the two-year reduction period and on the third year after that there would be no funding. Okay. So, um it's really just,
014you know, a timing issue for us, right? Because it'll be about three years all the way out. Uh even more the reason that we want to make sure we get passed. But however, um if the override doesn't pass this year, we still have an opportunity to go back out again next year. Correct. That is correct. Okay. All right. Well, so we would still it'd be it'd be fully funded next year after that than the the reduction. So, we do have if the override um hopefully passes, but if it were not, we'd still have one more uh November election to be able to let voters um have the decision to continue it. Well, we're going to be confident because it is going to pass because it's a lot of work to do an overwrite. Thank you.
015Okay. So, this is just for discussion, correct? Okay. So, next next we have approval of the 2025 annual financial report. Mr. Jim Servin, chief financial officer. Information, discussion, and for action as well. Okay. Is there a motion? So move. Is there a second? Second. Okay. Mr. Servin. Madame President, members of the board, um viewers and and people here in the boardroom. So the question a lot of people ask is um what is the AFR or the annual financial report? Let me just say that the annual financial report is unique to school districts. Um in Arizona it's referred to as a essentially Mr. Serbin I'm sorry we lost u Mr. Santa Cruz. Can you just give us one minute to call him? We'll pause to reconnect. Thank you. Hello, Mr. Santa Cruz. Okay, I'm back on.
016Thank you. Thank you. Excellent. Welcome back, Rudy. Thank you. So, the annual financial report is essentially uh for all intents purposes a cash basis report. Um it is not like the normal financial report put out by a publicly traded company. It does not in include acral basis accounting. We have auditors and accountants that will produce the financial statement under the um generally accepted accounting principles and reporting. However, the AFR gives the Arizona Department of Education, the public, and the federal government information about our operations of what our revenues were and expenditures were on a cash basis during the fiscal year. It's required by statute. Today is the last day that AFRS are due. So needless to say, AD is quite busy. Uh it must be approved and submitted by today. It includes maintenance and operation
017expenditures and revenues, capital revenues, grants, revenues and expenses, and special revenue funds and cashbased funds. It also has a food service annual financial report, a school level AFR and classroom site fund AFR, which is due later in the year. The data is then supplied to AD. It also goes to the to the uh US Department of Education for the numbers that they use and they use our combine our numbers with all other school districts in Arizona along with all other school public school districts in the United States. That's how the Census Bureau and Department of Education comes up with master numbers that they give out to the public regarding funding of states and who funds the most, who funds the lease, and where the monies go. So these these documents are very important for government
018agencies to prepare the AFR. District staff has to re we get forms provided by the auditor general's office and AD. We verify our accounting records to make sure that they're in compliance with the uniform standard for accounting. We reconcile the beginning fund f balances. We ensure that all journal entries have been completed. We test sped for maintenance of effort. We validate the data to existing AD final year-end reports. That would include ADM. We have to make sure that we've got the the most recent ADM number for our membership of students. And we also use other reports as far as classroom site fund payments, instructional payments, and grant payments. We upload the accounting data into the forms. We edit that and ought make sure they're they are correct. We bridge the f prior year's reports budget
019and AFR into the current year AFR. And then we input manual data where required. The forms aren't completely automated. It requires a lot of um input time and review. the 25 2025 expenditures uh overlook of that we essentially for M we spent $41 million in maintenance operation we spent $3.3 million in capital outlay classroom site fund we spent $8 million grants total of the grants including state grants $12 million for cash funds which is usually cash is the budget uh that is not met it's not stated by a formula 4.8 million schools facility division provided the district with 1.9 million in money to improve our schools and food services generated um uh had expenditures of $5.2 million as well. So that's how our money was spent in 2025. If we look at M expenditures by
020category, as you can see, 52% of our money in 2025 went to salaries. 21.6% of our money went to benefits, which includes state retirement, social security, um, and, uh, unemployment. We purchased services, uh, of 20.6% 6% um and uh uh supplies were a mere 4.6%. So as you can see the bulk of our money basically 70 almost 74% of our money goes to salaries and benefits. On a top of that we also for purchase services were at 20.6. The majority of the purchase services involves special education uh support people um that our contracted employees. It also covers our auditors uh expenses, the receiver expenses and outside companies that um offer have different products um for us to use within the school year. We spent a total in M of 41 million and our budget was
02141 million along with some other dollars. But essentially our carry forward right now as it stands with this AFR is 28 million or 28,623. So we finished the the year in the black and um we will carry that forward over into the um 2026 budget when we do the revised budget in December. A breakdown by category of our expenditures is for instruction. This would be classroom instruction. So teachers and pair of professionals in the classroom also supplies and so outside support is essentially 51% of our expenditures goes directly into the classroom. In addition, the student support area is 15%. Student support includes um nurses, counselors and people directly related to meeting with students. So it has an impact on the students directly. Um and therefore we normally add those two numbers together to just as
022a test and we're at 65% goes toward the students in the classroom and supporting those students. Instructional support is only 1.49% or 613,000. That would be uh um the teaching and learning departments um and supporting the teachers. Again, they don't support the students directly. They work with the teachers. General administration um is the um uh superintendent area. It's also the governing board area and it includes a lot of things um that are related to running a board such as the um uh services that we use um just to even these productions for these meetings pub on the public site. School administration is principles and the principal's office and those amount to $3.2 million. Operation of plant, very important, uh was $3.6 million. And um food service, we're required to spend money on food service. It's
023part of the matching that we have to do in order to get federal dollars and revenues from food service from the federal government. So, we've spent a total of $25,000 in food service. That was our portion of the shared expenses uh that we have to put in. And it's a mathematical formula. We put more than the formula in that number. We have transportation at 1.2 million, school sponsored activities at 98,000 and heart of Isac $34,000. So in total there are expenditures again 41,091597. So what's next? Well the this AFR is merely a point in time. It will be revised. We are in the current process. Just got the okay from AD to move forward. We have uh they have finished processing our 2023 amended budget and annual financial report. We will turn around now and
024start working on our 20 redoing our 2024 reports. That would include the budget and also the the AFR and then we'll move on to this 2025 budget. We will bring all those corrected numbers forward into the 2025. Revise the budget. revise the AFR and then with if everything moves right, we will move those change numbers into 2026 in December when we file the revised budget for 2026. So, it's a process of continuing to roll the corrections. At that point in time, after we filed the Nove the December 15th revised budget, we will be back on track from financial reporting purposes and that will set the record straight from that point forward. Thank you. Does the board have any questions? Madam President, Mr. Garwell. Uh Mr. servin. Um I'm glad that you brought this up because
025when we look at uh going back and doing 23 24 then 25 by uh going through this exercise and getting all these corrected does that in indeed just get us back into a a compliance from the letters that we had received from the auditor generals in the past? what by filing by filing the 2023 um amended forms that put us back into compliance with AD's grant requirements. We have already met the basic filing requirements. But what this essentially does is is that we'll then when we get all of these done, the auditor general will at that point in time uh obviously give us um along with a a revised improvement plan. They will take that into account, but we will still have to uh report on the the weaknesses that were that occurred both in
02624 um and then probably by soon after that also 25 weaknesses that will be um discovered during the current audit that we standard audit that we have going right now. But it does have a big impact. it will slowly get us in a position to um move out of the risk high-risisk group. That's the goal is for the district to continue to become compliant to have standard operating procedures and basically then work for a good a good clean budget in uh the years moving forward so we can move out of the high-risk and eventually move out of the receiverhip. Okay. Yeah. I just bring that up because I know we received that letter from October 1st from the uh auditor general u talking no longer in non-compliance with auto reports. So I just want to
027make sure that you know the the general public knows that we are moving towards uh getting out of that high-risisk category that we've been under for I think if I remember correctly five years. Yes. and the the the getting the the 2024 audit, the formal audit done by the CPAs submitted to AD um did in fact um meet that requirement of that letter that the auditor general sent. So we are in compliance through 2024. Okay, great. I just wanted to make sure I was tracking on this and since we got that letter October 1, so that helps out a lot just for my clear understanding. So, thank you. Okay. Anybody else have questions, Mr. Surman? I do. So, on this report, just just for clarification, this annual financial report 2025, it's the one that we're
028going to file tonight. Correct. That's correct. Okay. So, this 2025 started as of July of 2024. Okay. Which is takes us to the end of June 30. um this year. So my question to you um because you know it brings us back to January. So in this report I only see for example all the um the expenditures no the expenditures the category everything that we have done but I don't see anything are we going to report like anything in here um you know the negative the balance like things things like that that we're reporting I know it's a bit I see a lot of and the increase and decrease in actuals is that what we're talking about that we're also submitting that the stuff that we need to work on is that am I understanding
029this correctly? What you're seeing in the actual reporting forms itself is the beginning fund balance and the ending fund balances. So you will see minuses and pluses especially within the grant area. It's normal because they were waiting for reimbursement. But we also have to keep in mind that the district overspent in many categories including state and federal grants including uh funds like and so forth. those amounts until we are financially stable and able to repay those over spend over expenditures using Money, they will remain as a negative fund balance. Okay. So, just for clarification for the public, we're submitting this, but based on this because we're still working on it to get our financials stabled. So, which means next year that's you're going to um revise this this this budget this AFR, correct? AFR. budget's
030only being revised because numbers are coming forward from prior years that require us to change our budget and ultimately our budget in the AFR. But as far as these negative numbers go, the district's continued financial stability will slowly begin to pay off the deficit spending that occurred in the prior years. So this report itself only only addresses six months. Basically 5 months is while we were in receiverhip. The rest was before receiverhip. The monies were overexpended. We won't ever change the AFR for the overexpendures. Instead, in future years, we will use M surpluses to pay off the negative balances. Okay. Thank you. Okay. Um and if there's no further questions, call for the vote. Miss Gusman, I will take your verbal vote. I you Mr. Santa Cruz, I will take your verbal vote. Hi. Thank
031you. And Miss Hernandez, I will take your vote. I thank you. Okay. Motion carries. Next, do I have a motion to approve the whole consent agenda? Okay. Is there is there a second? Okay. Call for the vote. Miss Gusman, I will take your vote. I. Mr. Santa Cruz. I. And Miss Hernandez, I will take your vote. I Okay, motion carries. Uh, do we have any call to the public? Madame President, this evening we do not have any request to address the governing board. Thank you. Next, we have all enrollment for 4,215, average daily membership 3,916, average daily attendance 3,853. calendar October 16th heart of Isaac uh resource day which is tomorrow November 6 warning um hearts of heart of a heart of Isaac our next governing board meeting will be November 13 here at the
032district office and if I don't hear any objections meeting ajourn