MVUSD Study Session Meeting Board of Education 6/15/26

001All right. The Board of Education opened a special sessions meeting at 3:01 p.m. Roll call, please. >> Isabella Carballo, student board member, present. >> Joanna Leiba, present. >> Justin Jackson, present. >> Roach Williams, present. >> Sammy [clears throat] Luna, present. >> Brandy Clark, present. >> Alejandro Rocabado, present. >> Robert Verdi, present. >> Esmeralda Arce, present. >> Susana Lopez, present. >> Thank you. Now, we will do the Pledge of Allegiance and student board member >> May everyone please stand? Thank you. Put your right hand over your heart. Ready, begin. >> 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. >> Thank you. You may be seated. Now we are I can't hear Miss Clark.

002Now we are moving on to the public comments on agenda items. Any person requesting to speak to an item on the agenda item only may do so at this time or when the item is addressed by the Board of Education. Individual speakers shall be allowed to speak for 3 minutes. The Board of Education shall limit the total time for public input on each agenda item to 21 minutes per board bylaw 9323B section 5. Per board bylaw 9323 twice the allotted time will be provided for a member of the public utilizing a translator. Miss Claudia, do we have any public comments on agenda items? >> One public speaker. >> Thank you. One public speaker, Mr. Blecker to the podium. >> So it appears from the report the Board of Education, Moreno Valley Unified School District administrators,

003and everybody have been reduced to below TK students cuz the first question on there or statement is what is a budget? If we're starting from that point, as our 41st esteemed President George Poppy Bush said, we're in deep do-do. The issue is, let's put it plainly, costs are exceeding the dollars coming in. They have been for years. You have been warned from this podium by yours truly that you were going to do be at this place. The COVID con funds papered it over, but here we are. No amount of measure, Xs or Us, which are bad for you, are going to solve this. You're going to have to make some very very tough choices. Because you learned nothing of the last one where we were up here and this we were on the verge of

004receivership, and you punted at the can down the road. I put the solution in front of you. If you would have took it, you would not be here. This place would not be financially solvent and would be financially thriving. Gomez, the head of the Riverside County school, Scott Price, this board, and everybody is complicit in it because you had the solution to fix it, and you did not. In fact, you chose to double down on stupidity. Let's put it very plainly. $525 million of the $700 million dollar is salaries and benefits. So, as your report said, your projections are poor. That leads to bad decisions. You, your colleagues before that, have had a decades record of doing this. You ignored the warnings in '96. You ignored the warnings a couple of years ago. They gave

005you a chance to fix it. You said the sixth grade educated ditch bank Oakley didn't know what he was talking about, and here you are. On top of that, we're ninth in the nation in credit card debt. Our community doesn't have the money to fix this because you're getting 28 grand per student, three times more than you've had, and we're still here. It is criminal. >> Thank you so much for your kind words. We're moving on to item C, study session on fiscal stabilization plan. Ms. Gomez Ms. Lopez, excuse me. Okay. Thank you, board president, Mrs. Clark, members of the board, superintendent Dr. Rualcaba, cabinet, members of the audience. My name is Susana Lopez. I'm the chief business official here in Moreno Valley USD, and I have a co-presenter this afternoon. I have uh Mr.

006Johnny Leyva, who is our director of business services. So, we are going to be tag teaming this presentation this afternoon. Um I'm very excited to be leading a discussion regarding the budget. So, I do want to start off uh by thanking the board for this opportunity um to have a good, positive, proactive conversation when it comes to the budget. At tomorrow night's uh board meeting, we will have a public hearing for our 2026-2027 adopted budget. And then at the following board meeting on June 23rd, we are actually recommending approval uh for a budget that meets all of the requirements for a positive or approved certification. This means that when we present the budget, we are anticipating to be fiscally solvent through 2028-2029, which is what the requirements are for an approved budget for current year

0072026-2027 and two subsequent years. The reason that we're having a presentation today is that when we're looking further out, so we're looking out past that third year, we are seeing that there's some challenges to the budget. And it's not unique to us. I think many of us are hearing about this. Uh many of the conversations take place um with other districts. We're seeing what they are dealing with. And that's not a position we want to be in. And so, that's what the purpose is of this meeting is that we want to make sure we take a proactive approach and that we don't uh face being in that situation where we were there a couple years ago where immediate action was needed. Um and so, really we want to just take this opportunity to begin the

008conversations about things that can be done today. Cuz I think um we we know it's a big budget. And there is going to be today a budget 101 type presentation cuz we want to make sure that everybody has that same foundation when we're talking about the budget. And then we're going to be engaging in some activities as well. And so, with that, I just wanted to make sure I I said that at the beginning because this is not something that's going to require immediate action today. We are simply using this as a proactive tool to plan for the future. And rest assured that the budget that's going to be presented to you tomorrow, as well as for approval at that board meeting on June 23rd, does meet all the requirements for an approved budget. So,

009I wanted to make sure we covered that. When we take a look at the goals uh for our district, and we can see the five goals, it's going to be much easier to focus on these five goals knowing that we are fiscally solvent, right? And so, we want to make sure that if we have that fiscal solvency in place, it is going to allow our board, our staff, um our members to focus on the five goals, and so you can see them outlined here. Again, our vision is to empower students to become future-ready and positively impact the world. And having that fiscal stability is going to be key to make sure that we continue to focus in all of these areas. I will go ahead and read read our land acknowledgement uh for this evening.

010So, the Moreno Valley Unified School District acknowledges that our schools and district sites are situated on the ancestral homelands and traditional territories of indigenous peoples, including the Cahuilla, the Gabrielino Tongva, the Luiseño, and the Serrano. We appreciate their connection to this region, and sincerely appreciate the opportunity to educate our students on their traditional homeland. Their continued presence, resilience, and vital contributions remind us of our responsibility to honor and care for this land and its people. So, we're going to start off with really what is a budget. And I think many of us have a budget definition in mind, but when it comes to an educational agency or LEA, local education agency, we need to remember that it's a board-approved financial plan. The board is being provided information that meets the again the educational goals and

011objectives, and that's why it's important to reference those goals for our district because that's what it's about, right? We need to make sure that we have those adequate resources. Do want to state that it is a single-year fiscal budget, right? And it's a living, changing document. So, when folks say the numbers change, that's the purpose of a budget, right? And whether it's our district budget or your household budget, whatever budget it might be, you want to make sure that as more information or more knowledge is gained and that you have a better situation that you are making those adjustments so that it's an accurate budget. When it comes to a multi-year budget, which is what is required of school districts, so we are required to adopt a budget for a fiscal year. In this case,

012we are looking at the 26-27 as being our base fiscal year. We also need to make sure that we include two subsequent years. And so, when it comes to multi-year budgets, we need to make sure that they align those ongoing expenditures with ongoing projected multi-year revenues. At the same time, maintaining that core instructional goal. So, the definition sounds pretty easy, right? But I'm going to just share a couple of fun facts with you. Uh did you know that our district budget encompasses 250 different resource codes. When we talk about a resource code, that's a program. A lot of us are familiar with title one. Title one is one resource. We manage 250 of those resources. Every single one of those resources will come with a set of guidelines about how revenues are generated as well

013as allowable expenditures. Did you know that our budget consists of 145,000 budget lines? So, when you take a look at our one-year budget for 25-26, um we are able to determine that we had to deal with 145,000 budget lines. So, think about it. We have conversations and we've had conversations about the different categories and salaries and materials and services, but then we have to track all of these by location. Um is it a school site that made the purchase? Is it a department? And then we need to determine whether it's a focus of something that's occurring in the classroom. Is it instructional? Um is it for a a special education class? When we talk and present information, we're presenting information because it's all coded and and that's how we determine we are dissecting and and

014getting this information. And the reason we mentioned this is because there's a lot of information that we can get. Um and if there's ever an interest to know about dollar amounts spent in certain areas or trends or history, that's what we do. That's what we use to to put together that budget as we move forward. So, with that, I I do want to share um that we have some of our account accountants here in the audience today because I don't think we ever really give them the recognition, but when I talk about managing these resources, if I can have our accountants stand up. Let's see, we've got Radena here, we have Carrie, Rosa, Claudia. If you guys can just wave. Um this is this is your group that handles the resources, that works with all

015of our school sites, and our departments to make sure that things are done accurately. So, thank you guys for being here. Uh thank you guys for all the work because it sounds easy, but it's not easy. So, well-deserved applause. And we also will give credit to Mr. Leyuda and then to Mr. Letko in the back, our accounting supervisor, that oversee the accountants because at the end of the day So, David, do you want to stand up and wave? Um again, just this is this is the group that's responsible for that. So, I didn't want to continue without acknowledging them. So, we talked about what a budget is. Well, let's talk a little bit about the budget development cycle because even though we have the budget conversations in in May, and we have budget conversations conversations

016in June, really the budget is a year-long process. And so, we're going to start with June, and so there at the top of this diagram, you can see that in June is when we adopt the budget. Um you can see that there is right next to that a 45-day revision that typically will take place um by August because the statute requires that if there are material changes to the state budget, and that leads to material changes at the district budget, that we need to incorporate that. And so, we have 45 days to do that from July 1st, and so that is what we would consider a 45-day budget revision. Um very creative, right? Um LAO is the Legislative Analyst Office, and so they this is the agency that around November is going to give an

017analysis as to what is happening at the state level. One thing that is critical is that even though as a district we're having to manage this, we are simply managing what is given to us from the state. As a district, yes, we can look at data when it comes to enrollment, to attendance, and so forth, but all the assumptions about COLA, how much funding we're going to get for these different programs, that's all given to us by the state. One thing that we need to realize is that whereas we know that it's in law that the state budget 40% of the state budget is going to be allocated to um TK-14 education, so TK-12 as well as community colleges, there is today probably more competing um agencies, whether it's medical, health care, safety, that want

018a share of [snorts] our budget. And so in the past, it was very common that school, that education um would probably get the better allocation as there was a lot of sympathy and empathy, everything was all about schools. Today, there's a lot more competing other agencies competing for that. And so it's not an automatic that when a state budget is approved, that it's going to be allocated um necessarily in favor of schools because of all these competing needs at the state level. Once we get that information in November, then this is really the first time that school districts are are looking to update their financial information. We present a budget in July, but by the time that December comes around, we have actual enrollment, right? We we know what our enrollment was on that first

019Wednesday of October, that is going to be the enrollment locked in for the year. Um we have a better figure of who did we hire, right? Usually in the summer is a time where you've got personnel, a lot of personnel changes, and so as we're estimating what our expenditures are for many of these positions they are simply that estimates because we don't know who's going to be in these actual positions. By December usually we have a better idea. And so when we put together that report and of what the projections will be that is known as the first interim financial report and the first interim financial report that official definition is you are looking at actual information through October 31st and then projections through June 30th. Everything every report is about what we project that

020we will look like as a district on June 30th. Okay? So that's first interim. Usually early in January usually by January 10th the governor will release a proposal of what they anticipate the future year to look like. So this year in 25-26 Governor Newsom released his proposal of what he thought the 26-27 budget would be. And in those proposals he throws out ideas about we think funding should be allocated in these areas. This is what we estimate Cola to be. This is what we estimate the different funding levels for different programs. Districts will take that information and and you work through the scenarios and and this is where our COE will step in. They will release guidelines but at the same time there's also um caution messages, right? If you're going to incorporate for example

021something like Cola in all three years you need to have a contingency plan because these are all proposals, right? And so if you remember a couple years ago we as a district um decided that we were going to only be budgeting Cola for the budget year so that we aren't caught in that dilemma and and we'll see in a in a couple of slides how sometimes that can get you in trouble. But that is known what uh the governor's January budget proposal. And then soon after that, school districts will start working on their second interim financial report. So now you have actual information through January 31st, and now our goal is to project what will things look like this coming June? The same exercise that you did for first interim, you're doing for second interim,

022but you have a lot more information, right? Now you have that January governor's proposal. Now you have a better idea of what my attendance looks like. Now you have a better idea of what we're seeing with trends, and so you update that, incorporate all that into second interim. In case that a district were to issue a second interim that is not positive, meaning that they're not able to meet their financial obligations for all 3 years, because remember each of these reports is for 3 years, they would be required to do a third interim. And a couple years ago, we had to do a third interim because we presented a qualified second interim report. And so you had to go through the exercise again of working on that third interim, because now a couple months had

023gone by, you're closer to the end of the year. Now you're really having to estimate what June 30th will look like. And then in May, uh we get what is known as the May revise. And so again, the governor comes out with his proposal of what he thinks the 2026-2027 budget will look like, but it's very important to note that it's still just a proposal. Right now, there is negotiating going on at the state level, right? The governor works on his proposal for the state budget, the legislators are working on their proposal for their state budget, and they're going to go take the governor's proposal, they're going to make some recommendations. It's not until that state budget is signed, that that is what will be enacted come July 1st. And so, again, a lot of

024the times you hear information, and you have to have the conversations at the district level. There's conversations with the county. How reasonable is it or how likely is it that this is going to happen? How risky is this to your budget? And so, this brings you full circle, um and just again, an understanding that even though you might only be seeing an adopted budget being presented in June, it's really a year-long process that goes on with it. So, the issue that we are dealing with today is that we are faced with lower statutory cost of living adjustments. The COLAs are lower than they have been in the last couple of years. In addition to that, we have a number of one-time state and federal relief grants that are ending. Um yes, there was a large

025number of one-time monies. We have a slide where we're going to look at what some of those dollar amounts were. Uh and again, this is something that many districts um took these funds and had to allocate it sometimes to ongoing expenditures. I think we as a district did a good job to not necessarily tie positions to it, but the bottom line is that any expenditures that you tie to it, whether they're ongoing or not, people might think that they're going to be ongoing. Or that if for these couple of years we were making technology purchases for all school sites, and that all of a sudden ended because COVID funds ended, we need to make sure that that communication takes place with our school sites, with our departments, so that they understand that it's those are

026all items that need to be incorporated into their budget, again. So, that is the first thing. The second thing is we have an enrollment that is declining. >> Okay. We have an enrollment that is declining. And we see our enrollment reports with every single financial presentation that is done, presented to the board, and you can see that decline. We're going to review it later today, as well. And what that translates to is our average daily attendance, or our ADA, is also declining. And then the third item is that, again, we are required to have a proactive plan in place so that we can maintain our positive fiscal certification, um positive certification with our COE. Uh we don't want to be in a in a place where they're here presenting, uh telling us that we have

027a certain period of time to turn things around, and that we have to incorporate reductions into our budgets. Uh we don't want to be there, and so these are all things that we are keeping in mind so that we can continue to have positive and approved budgets in the future. I mentioned in that first, um bullet about the historical COLAs being lower than they were. This is a chart that will take you and show you a COLAs going back to when LCFF, Local Control Funding Formula, became our major revenue source. So, prior to '13-'14, districts were funded by what is known revenue limits. And then we had Local Control Funding Formula, and what this graph will show you is that in the blue, you can see what the statutory COLA was for each year. But

028in the gray, you can see how school districts were actually funded, what the final COLA funded amount was that was allocated to districts. But when you take a look at the last 2 years, 2024-2025 and 2025-2026, it's very obvious to see that those graph >> Testing. >> Okay. Is that better? Okay. Third time's a charm. So, if you look at 2024-2025, which was last year, and 2025-2026, you can see the Colas of 1.07 and 2.3. And if you were to take a look at what the Colas were prior to that, you can see why it's a challenge, right? All of a sudden, our revenues are declining significantly. >> Testing one. >> Sorry, you're going to you're going to have to hold it. Okay. >> Okay. Okay, is that better? Okay. Um so 24 25 25

02926 you can see are very low. If you look a couple years back, so let's look at 21 22. Even though in 21 22 the Cola was only 1.7, you can see that the funded amounts, there was actually augmentations to that Cola. You can see that those amounts actually resulted in higher revenues being allocated to the district. But for the last couple of years and 26 27 is not much better, you can see that now we are again in an environment of lower Colas. And just think about it, if the projections even a couple years ago were all showing higher Colas in the future, and many districts were using the average of higher Colas in the future, you can see why you would get into trouble, right? Because you're counting on the higher percentages and

030all of a sudden that doesn't happen. And so we just wanted to show you that we are truly in an environment where Colas are very very low. And when you think about just inflation and the cost of going to the grocery store, right? Or putting gas and what how much that has changed over time, it's no secret that the changes, just the cost of purchasing, that your purchasing power is much higher than what the increases in revenues. And And so that's pretty That's pretty significant. So, when you take a look at the COLA cost of living adjustment for 26-27 and we talked about we get different versions, right? So, back in July, early in 25-26 uh we were being told that the estimated COLA was probably going to be 3.02%. Come January, that percent was

031again updated and now it looked like it was a 2.41% increase. Our final COLA in the May revision is 2.87%. Now, COLA is simply a formula. So, by May, we know that it will be 2.87. But just think about it. If you were a district that is budgeting COLA ahead of time and you budgeted a 3.02% you're already having to make adjustments. Right? And again, this is a reason why we recommended and and the approval was that we wait until the COLA amounts are known before we incorporate it into the budget. Now, for 26-27, we did have to incorporate a small percent um about mid-year. So, by second interim, we did build in a COLA for 26-27 and the COLA that we built in was a 2% to make sure that we satisfied and were

032able to meet our financial obligations for all 3 years. Um but you can see that had we been a district that had budgeted the 3.02 we would have already had to have been making reductions um to reflect the lower COLA of 2.87%. I do want to add on because again, in full transparency, there is a proposed augmentation that was um shared with us at the May revision. And that is an augmentation of a 1.44% augmented cola. But this is the first time that they're proposing an augmented cola cuz you saw in the previous slide, there was years where the actual final cola was higher. This is the first year that it's going to come with a mandate. And that mandate is that districts will receive that additional 1.44% cola, but they will be responsible for

033paying uh for one of our our programs, our our paid pregnancy disability leave uh 14 up to 14 weeks. And we are working with HR on calculating a cost. We do have some preliminary cost. We're not ready to to do that. It The estimates right now show that at least uh 65 to 75% of that 1.44% increase would be needed to pay for the uh 14 weeks of pay for the for this new leave. Um but again, these are just estimates cuz what we did is we just took out historically what are the number of leaves that we have? It doesn't mean that again, it's going to be exact, but it it's going to be our estimate and it's going to be something that if it's in the final budget, we will need to continue

034to revise that estimate. But we did not want to bring in the additional revenues if we weren't bringing in the additional expenditures and we weren't ready to just at that time. So, that will be coming uh once the budget is signed in July. This is a slide that I think is very common to us and and it's our enrollment history and projections. And again, you can see that through 25-26, they're in the gray, that is all actual information. It's based on the first Wednesday in October. And when you take a look at the last 3 years, uh 23-24, 24-25, 25-26, that average decline has been 465 students per year. And that is why moving forward, we are projecting a decline of 475 students. Um again, this is one that I I hope that this is

035a projection that we're we we are we miss. That come that first Wednesday in October that we actually have a lot more students, so that we can revise these numbers. But then the conversation is what do you do? Do you just wait for 1 year to change? Do you wait for 2 years? Do you re- re-bench, right? Do you look um at, you know, a couple of years to determine a new average? Those are all conversations and and determinations that we need to make. But again, it's it's always better to to take uh that approach where you're not having to reduce expenditures. And you can see that when you look at the difference between 24-25 and 25-26, that number was actually greater than 465. Um but we're choosing to to look at that 3-year average.

036One highlight that we have is that we are seeing improvement in our attendance, and that is something that we definitely need to celebrate. Um we, as you can see, it's very easy to see prior to um the pandemic because as a district, we were over 94% and statewide average is usually around 95%, and I know that is our goal. But you can see that for 25-26 because the year just ended and we're still re-running reports, we are very hopeful that we are going to reach 93% attendance, which would be really good. And again, we are continuing to project 93% attendance, but we did bump it up in 2028-29 to 93 and 1/2. Again, if if we start the year and and we're starting to see that there's much more improvement, again, this is one of

037the assumptions that we can control and and make updates to. So, I want to walk you just through a an exercise because I think sometimes it it just seems like, "Okay, well, you're losing students, so you're not going to need as much, right?" So, just reduce what correspond what expenditures corresponds to the loss in students, and and that's good. So, we're going to walk through this exercise, and and you can see that we have our income loss. And this is an example where we're going to decline 100 ADA. Our average daily attendance is going to go down by 100 students. And if I look at just the revenue that is generated by the local control funding formula, which is a just a little under 17,000 per ADA, you just multiply the 16,691 by 100, my

038revenues would decrease by 1.6 million. Right? And so, if you're losing 100 students, well, let's let's right-size, right? We have 100 less students, so let's right-size and and and reduce our expenditures. So, on the on the right here, you can see that with 100 students, we could say that you could lose or we could reduce four teachers, right? We are a 24 to one average, and so if I'm losing 100 students, I should be able to reduce four teachers. I'm I'm seeing some questionable faces, right? Do Do that make sense? If if I lose 100 students, could I reduce 100 teachers? Four. >> So, my question is the aster by the ADA, is that actual numbers? What does this 16,691 represent? Is that our true ADA this year for 20 5 26? >> That is

039our true revenue amount per ADA for our based on our local control funding formula, yes. >> Thank you. >> Yes. >> So, we wanted to to make the math easy, and so this is just LCFF. >> Yeah. We have how many schools? So, imagine if we were to lose 100 students, 100 ADA. Are they all going to be in one area of the district? So, the reality is that even reducing four teachers when you're losing 100 ADA might not happen. We always state that kids don't come in packages of 24 and 25, right? Uh think about it, all the different grade levels, the different programs. But, let's just say that as a district, we found a way to reduce four teachers. So, our average cost per teacher would be about 90,000. And you multiply that

040by four, and that's 360,000 that we would be able to save in salaries. Let's say that we can save another $500 a student and just instructional materials, because think about it, am I going to be able to reduce proportionately on on things like utilities? No, right? I I'm not going to, you know, get rid of it and say I'm not going to buy a desk because I don't need it in the classroom. The furniture's still going to be there. So, let's just say it's $500 a student um times 100, that's 50,000. And so, I would be able to reduce four hundred and ten thousand, which is the amount of the salary savings and just miscellaneous. But, this still leaves almost a one point three million dollar deficit. That's why it's a challenge. Because there aren't

041protections in place to help districts that are in decline. Yes, there's a funding mechanism where your base you're funded on on on the higher of ADA for current year or prior year, but that's that's not enough. And and that's been something that has been advocated for at the state level. Um, that you feel the income loss right away, but you're not able to right-size. The right-sizing comes over time, and it's just ongoing discussions. And the reality is that especially in in a district that covers a large geographic area, because we are a large geographic area, we are I believe still one of the top thirty when it comes to the highest enrollment. 25. In in the state. And so, there are different challenges that are are faced with each district. And and it's very difficult

042when at the state level assumptions are given, dollar amounts are given, because the reality is that every district is so unique. And maybe if you are a district that has two or three schools, which there's a lot of districts that have two or three schools, or have their total ADA be under a thousand, and you're having to cut ten ADA, you might be able to do things they might have different challenges of their own. But, we just wanted to share what this real impact is of the lost ADA, because I think a lot of the times um, you know, So there could be conversations about what is the district doing wrong. It's not anything that the district might be doing wrong. You're simply trying to to react and to implement what is being given to

043us by the state and by other agencies. Okay? So I think you've heard enough of me. I'm going to turn it over to Mr. Leyuta who's going to walk you through some of our different funding sources um and then I'll come back. >> Thank you, Susanna. Once again, thank you, Susanna. Uh good afternoon, Board President Clark, members of the board, Superintendent Rubalcaba, cabinet, our union partners, and all of our educational partners throughout Moreno Valley, those in attendance and those watching from home. Once again, my name is John Leyuta and I am the director of business services and it is my honor to be here to co-present with Susanna. So, where does our funding come from? I can tell you a vast majority, the lion's share of our funding comes from the local control funding formula,

044also known as the LCFF, uh which is heavily dependent on our student attendance. Um we do receive some federal and state grants, but those are highly restricted funds. Where those funds comes in and they're earmarked for specific purposes and we must spend those funding according to those specific purposes. There is some local revenue that we do receive in the form of our facility use fees. There's some interest revenues that we earn. And there's some small local grants and donations that we get that that also goes into our local revenue. One thing that I want to note on this slide is is our local our local control funding formula provides us the most flexibility. It it comes in a form of being discretionary while the other ones there's some restrictions towards it. So, let's take a

045closer look at our the LCF funding formula. The the formula itself is is quite complex, but the the basics of it is fairly simple. There's a base amount that we get per student, and depending on the grade level of that student and the demographics of that students, there's additional funding that we could get. You take all of that, you multiply by their daily attendance, and we get our LCFF revenue. On this slide right here, I just want to highlight some of the additional funding beyond the base that we get. Um as I mentioned earlier, just depending on the grade level, there is some additional funding that we do get. We do get a a a grade span adjustment for our K to uh third graders, and this is to help with uh lower class sizes

046and our um our early literacy. And at the high school level, the state has recognized that hey, there's additional programs and it's more expensive at the high school, so they do provide additional funding at the high school level for each district. We do receive additional uh funding for our based on the demographics of our students, that's called our unduplicated pupil percentage, also known as our UPP. So, there's additional funding provided for our our English learners, our low-income students, and our our foster youth. And the reason why it's called unduplicated is because those students can only be counted once in this formula. Whether the student is both an English learner and low-income, we can only count them once for the purposes of our UPP. And district like us, where our our UPP is greater than 55%,

047we do get additional concentration funds. And and our percentage is higher than 55%. We're we're above that 65%, where we do get additional funding, but there's also additional services, direct services that we we must provide to our students. And the funding that those students earn um all our supplemental and concentration grants must go to support those students. So, this is our our our UPP percentages. I just want to highlight a couple thing on this slide. If you look at 25-26, our single year UPP is 87.28%. Yet, our rolling average is 87.76%, which is a benefit to us. Since we're we are in declining enrollment, the state does allow us to use the rolling 3-year average that benefits uh districts that are going through decline. Um if you look at the 24-25 fiscal year, you'll see

048that our rolling average was only 83.49%, and this was due to ma- um a major reason why this would happen was during the COVID year, universal meals came out. There was a form that needed to be completed to qualify for free and reduced lunch. Uh we didn't need to complete those forms anymore. Districts throughout California suffered this where their UPP count dropped. But, the good thing is our UPP's back on track where at 87.76, and it's kind of leveled out. So, it makes it easier easier for us to project in out years. And I I I want to speak on the the impact that declining enrollment has on our COLA and on and on our funding. Suzanne did mention earlier that the COLA for the 26-27 fiscal year is 2.87%. So, at first glance, you

049would you would think that, "Hey, my revenue from this year to next year should increase by 2.87%." However, when you do the calculation, if you guys have a calculator out there, go ahead and type it in in your calculator. If you take the current year revenue of 466.4 million, times it by the cola that we're getting of the 2.87, you'll you'll get closer to 13.4 million. But, if you look at this, the increase is only 10.9. And you might be thinking, "Why?" And the reason why you guys all know the answer is because we are declining in enrollment. So, that actual effective interest cola rate that we are getting is a 2.34% compared to the 2.87 that we should be getting. And one thing to highlight is the Yes, the funding per student is increasing,

050but the way districts receive the funding is per student. As as our enrollment decreases, our attendance decrease. And so, we're not able to to benefit off that full 2.8% percent the full cola just because of the fact that we are declining in enrollment. And and this is throughout California. It's not unique to us. And Susanna mentioned it earlier, there's a lot of discussion of going on of how districts should be funded. But, the tricky part is a lot of districts are declining in enrollment. So, if you change it based off enrollment instead of attendance, we're still declining. So, how do we solve that problem? Which is a it's it's a problem that that's a lot of people are aware of. On this slide, it compares our unrestricted revenue. It's the pie chart to the left

051and our restricted revenue, which is the pie chart to the right. So, I mentioned earlier a lion's share of our funding comes from the LCFF. Uh as you can see on the unrestricted side, it's 95.4% of our revenue comes from the LCFF, which is tied to our student attendance. And that's why our student attendance is paramount. Not only are they losing There's an educational loss when they don't attend. We also lose the funding to support them when they do attend. So, I'm going to stress attendance matters. And there's a lot of stuff that we're doing in this district to improve our students' attendance. Uh there is some state revenues that we receive, that 2.7%. There's some local funding. On the restricted side, which this is all restricted funds, we are getting some federal revenue that

052are federally restricted and there's some mandates of how those fundings must be spent. We uh, 22% of our restricted revenue is from the federal side, about 77% from the state, and there is some local restricted funding that we get. So, um, these are figures that we pulled from the School Services of California along with RCOE. They provide guidance of of how we should budget for this year and the outgoing year for the mandated block grant and the lottery funds. So, with the month with the mandated block grant, um, if you guys look at both, you'll notice that there's a per ADA. So, yes, these are unres- these are unrestricted funds that we're getting, but ADA impacts more than just LCFF. So, our mandated block grant for the for 26-27 at kindergarten through 8 is $40.40

053per ADA. At the high school level is 79.27 per ADA. And, um, there's a misconception out there that the lottery funds should fully support school districts, but if you take a look at that dollar amount, $190 per ADA on the unrestricted and $82 per ADA on the restricted side, the reason why there's an unrestricted and restricted, the unres- the restricted portion can only be used for instructional materials, but I don't know too many districts that that could fully support all their initiative with the lottery funds. So, there's a misconception out there. We do receive lottery funds and it is appreciated, but it does not fully support school districts. And I just want to highlight some of our federal revenues that that's out there. Once again, these are restricted. We have our head start funding that

054are for our our our early learners. So So our pre-K before There's some title funding that we get that that are it has to be used for our low income. It's to supplement, not supplant. So it's to provide additional services. There's also some special ed funding that we receive on the federal side. At the state level um these fundings are also restricted and must be used for those intended purposes. Back in November of 2022 uh our voters did approve Prop 28 arts and music in schools. The caveat with that is 80% of the funding that we receive for those must be used for salaries and benefits. We have our expanded learning opportunity program. This is our ELOP funds. It's for extended learning before and after school. And I want to highlight the after school education

055and safety. This is going to be new to us next year. Um prior year this was the county received the funding and they handle it. They used to handle the program and everything, but now that we have Nick Sterns, our director of ELOP here. So this is additional funding that he's going to be able to utilize to expand his program. And this is has to be used for the after school program. At this time, I'm going to go ahead and turn it back over to Ms. Lopez. >> Before you do, can you go back to the previous slide? >> Yes. >> Thank you. Can you tell me a little what's the difference from ELOP and the after school education and safety program? Cuz both are for after school. >> Yeah. >> items, right? >> So

056with with with ELOP, the intended purposes is is for uh kinder through third. Uh the after school program kind of extends it, I want to say from kinder to eighth grade. Um It it it it's new to our district and there's another grant out there that we will that that that we will try to be go after that that includes the high school. It's called ASSETS, but you know, we're not there yet. >> Thank you. >> So, Dr. Arsy can share a little bit more on that, but ASES um is the city program that they used to run. So, they've now given it up and it's going to come to us. Dr. Arsy, can you share a little bit of the differences between the two? >> The biggest difference is ELOP is universal. It's for

057all students that fall within the TK-8 grade. You have to take care of base, which is TK-6 grade, and anything as long as you do base, you can then allocate it to middle school. ASES is a certain allocation per student per school. So, for example, you could There are some of our schools that don't get ASES. Um the idea is not to duplicate both of them, uh but but provided combined, you can now uh support a bigger body of students. Quick example, uh let's just take Sunnyvale Elementary. Sunnyvale Elementary for ASES qualifies for for example, 50 students. So, we have to take care of those 50 students. We know them by name, by number. ELOP comes in and says, "Now you have the ability to expand from those 50 to 300 students." So, it's it's

058working um together. >> Thank you. >> Could Could you just kind of elaborate on what you anticipate for the high schools? program as far as that funding or that type of funding? >> Yeah, there's a funding out there that that we could use to target that the high school. How we're going to use that funding, uh it's it's a discussion that needs to be made. I I just know there's funding out there that we could go after for the high school level. >> Okay. >> Thank you, Mr. Layuta, for that. Um just continuing on unrestricted versus restricted and going back to those graphs, um 71% of our funding is driven by local control funding formula, and that again is why attendance is so important. And also having that updated unduplicated pupil percentage counts, which I

059think our district uh made a priority several years ago and and we continue to do a good job. Uh we also have the LCAP alignment. So, as was mentioned, what is generated by the unduplicated pupil percentage is known as supplemental and concentration dollars, and that is what in turn um is incorporated into the LCAP. So, I know that we have Ms. Brown here, who spends a lot of time in business services because the LCAP is a big uh portion of our budget, and the purpose of that is again that those dollars need to be spent on expanding or improving services for those students that generate it. So, focusing on our low income, our English language learners, and our foster youth. And so, sometimes it gets tricky as you're working on the budget, right? Because there's

060certain monies that can only be spent on on certain students. And then finally, uh to close off the section on unrestricted and restricted, we have what many out there are calling this one-time cliff. As districts were getting very used to and accustomed to recei- receiving a lot of these restricted one-time monies, and if you were a district that um allocated that money for programs or salaries, that's why you saw many districts actually having to go through layoffs, right? And and programs having to be eliminated because all of these expenditures have to go back to the unrestricted general fund. So, if we take a closer look at just our district, and these are the probably the biggest um categorical one-time fund programs that we received. And I'll start at the very top. We have our arts,

061music, and instructional materials block grant that was allocated um in 22-23. It was a 4-year program that actually is ending June 30th of 25-26. And you can see that it was an 18.4 million-dollar expenditure. And you can see the dollar amount that was being spent by the district each year. So, if you then take a look at just right below that, educator effectiveness is 7.7 million. The The problem with these grants is that the districts are given the money. So, this money is sitting in your ending fund balance on your restricted side. And at a glance, it looks like, "Wow, there's a lot of money sitting there." But when you're expected to utilize this money over a period of time, in some cases 2 years, 3 years, 4 years, 5 years, you can see where

062it might be a little deceiving, right? Because if you don't know that full story, to know that wait a minute, and let's take a look at the the arts music block grant. That $5.9 million that is being spent in 25-26, that money is all utilized for an increase that we gave to our health and welfare cap a couple years ago. And this is the pot of money that we were utilizing so that we could slowly bring back that expenditure to the unrestricted general fund. So, in the budget for 26-27, now that money's being reflected on the unrestricted side. So, when you're able to have those conversations and you know what is happening and everything's well documented, you have time to prepare for it. But think about situations where maybe you're not on the same page

063or you didn't realize that maybe it wasn't that wasn't the plan, um it it just could get you in trouble if you if you're not keeping track of the things that need to go back to the unrestricted general fund. If you're not keeping track of those things on on a just a detailed and and know exactly the dollar amount and the date when things are going to happen, it can get you in trouble. I I see there's questions. >> I agree with everything you're saying. I believe that to be true. And I guess this is for informational purposes only, right? Because I'm just I'm dissecting it, right? I'm thinking if we have if we have a 18.4 um, million dollar grant or allocation, the way we project out in the out years, we are are

064just as mentioned. So, 6.6 million dollars in revenue and then we're going to have 6.6 million dollars in expenses. If we didn't spend all that, of course there's going to be the variance and then we're going to roll it over to the next year and so on and so on. So, we shouldn't get in trouble. Is my my thoughts. >> We shouldn't except that the revenue all comes in one year. And so, if we can document it properly to show that I'm getting the 18.4, but it's already tied up. It's committed. >> Well, right. Exactly. So, that's why we have an encumbered or what whatever or holding Right? >> Yes. >> show us the budget >> to it. >> Right. Okay. >> And I think the the other piece that I would add is not

065only is it important to keep track of those funds during the term of the grant, but what happens to the expenditures, the programs and the personnel once that money's gone? >> Well, that should be thought about prior. >> Exactly. >> Right? We should already have that done. >> Absolutely. Anytime we're using one-time one-time funds, there should be an exit strategy. How are we going to wean off of these funds when we're done? Unfortunately, a lot of districts didn't do that and that's why it's called that financial cliff. >> And I thought the goal was not to use one-time funds for like administration and personnel. >> Absolutely. Now, we can >> We can >> but but we we wouldn't we would be very specific about those positions are limited funding. >> Contract. >> Based on the

066availability of those of those funds. >> I have a question. Would the community schools program be an example of one-time funds? >> Uh no, that we are being told is ongoing. >> Okay. >> There's an implementation piece that is one-time. There's a component to implement. Um but I know that is high on the priority to turn into ongoing. The dollar amount is what's yet to be determined. Yeah. And that's what's tricky with a lot of the implementation amounts is that you think that that's what you're going to get every year, and then when they scale back the implementation, that could have an impact. Um the learning recovery emergency block grant, uh $51.7 million, and you can see we have through 27-28 to spend. Um so think about it, that's significant. If we look at things

067year by year, um and let's just start with 25-26, that's the year we're in. In our budget, and and again, this is on the restricted side, we have $14.9 million of really one-time cost is what it should be, right? Um because if we're not using this for ongoing purposes, we have um expenditures of 14.9. In 26-27, you see that 23.9 million? That's a significant portion of the budget, and I can speak to that 8.9 million under the student support and professional development discretionary block grant. The reason you're seeing this dollar amount all under one year, even though you can see that the spending deadline is through June 30th of 2029, is that we are due for a textbook adoption in 2026-27 and so that dollar amount will be designated for that textbook adoption which I

068believe that adoption is closer to 10 million correct Dr. RC but they do have some restricted lottery funds that will be utilized but this 8.9 that's the full allocation and typically we don't spend full allocations in one year but in this case we will because of the textbook adoption. So that's a perfect example of a good way to spend the money right that textbook adoption is is one time. And and so that would be a just a good example of of treating those one-time funds. >> Can I can I ask a question? Or is it just for you guys? Do you want me to wait till the end? Am I allowed to ask a question? >> So the this is a board study session so if you have any questions there is going to be

069a comment period and then you can do it at that point. >> Okay. >> So just keep track of your questions please. And Otto too as well and then we'll remind wait. >> I I did have a question on that last slide so the restricted funds there are specific ways in which you need to use those but it's up to the school district's discretion as to when you're going to implement those mandates essentially. >> So for example on the student support and professional development discretionary block grant it gives a list of allowable expenditures and then it even at the very bottom is a it says any other cost or any other needs associated with rising cost. >> Okay. >> But the year >> Oh the year is provided to yes given to us. >> Oh

070the year is given as well. >> Yes the year as when we have to spend funds by is given to us but as a district we could choose to spend it all in one year or two or that is at the discretion of the district. Usually whatever number of years we have to spend is usually the approach that this district has taken in the past. So, this is a makeup of our expenditures on the unrestricted side, and you can see that you have it broken down by the categories that align to our reports. Certificated salaries, our management salaries, classified salaries. We did lump all of employee benefits together. Um and then you can see the books and supplies 3.9% services and operating expenses 7.5%. This is why it's so difficult to make adjustments to your

071budget because in this case, this is our unrestricted general fund. 88% of this budget is for salaries and benefits. And so, it gets difficult when you need to make adjustments to a budget because it's going to be very difficult to make any adjustments without touching personnel. So, let's talk a little bit more about salaries and benefits. Again, um I know we present a lot of financial information to you, but you know, sometimes I it we we want to make sure that that you you were fully all understanding. So, let's take a look at just the month of May. So, just month of May just ended. This is a snapshot of what it look our employee compensation look like for the month of May. Our employee earnings were 31 million for the month, and the district

072paid benefits and statutory costs, which would include your retirement, whether it's STRS and PERS, health and welfare benefit cap, Medicare, social security, workers' comp, unemployment insurance. These are all known as our our fringe or statutory benefits. That amounted to 12.7 million. So, the total cost to the district for the May payroll is 43.7 million. So, if you think about conversations we've had when we present financial information to you, um and we talk about like a 3% reserve and that 3% is usually about 20 million. And when we talk about that doesn't even cover the month of payroll. Like I think things like this really put things in perspective, right? It's it's significant. And again, because it's 88% of the budget, it's a big number. So, now multiply this by the 11 months or in many

073case 12 months of salaries and and you can see that this is these are big numbers, right? >> Really quick question. Um just because it's a school district then we have less employment during the summer, this dramatically drops during the summer months, right? >> The summer months is probably about half. Um for just July. Um most employees are 11 month. >> Thank you. >> Any other questions? Okay. So, we know salaries and benefits are the larger expense, but just to be fair again, we did say that there are other expenses and so if we take a look at the unrestricted and again, just a reminder on our pie graph, this was the 3.9%. So, that 3.9% equals to about 15.6 million. And this is the amount that's spent district wide on everything from library books,

074materials, supplies, equipment, technology equipment, laptops, computers. All of that would be captured in this materials and supplies category. And so, the the 3.9% equates to 15.6 million on that unrestricted side. And then you can see we just highlighted a couple of the bigger dollar amounts. So, on the unrestricted side, we had about 3.5 million for textbooks, 9.3 million for materials and supplies, 2.8 for technology supplies and equipment district-wide. Again, remember when we are sharing this budget information, it's for the district as a whole, but we have mechanisms in place to track by department, by school site, by specific resource because a lot of these What we haven't mentioned is that a lot of these grants all of these one-time monies have comprehensive reports about tell us how this was spent, how much did you spend,

075what did you spend it on. And so many times when we are scrutinizing purchases, we're doing it cuz we want to make sure that all of the reports that are submitted are accepted and and not sent back because if districts spend funds in ways that they're not supposed to, you would have to give money back. Right? And so we don't ever want to be caught in that situation. So now looking at our services, and so if you look at the services, that was about 7 and 1/2% So the 7 and 1/2% um equates to about 30.2 million district-wide. And again, in the services another operating expenditure category, you're going to see things like utilities, contracts, consultants, legal services, field trips, travel and conference, communication services. And so look at the big categories here, and if

076you look at the 30.2 million as a district, almost half of that is for utilities, right? 12 million is spent on utilities. And just like you deal with your household budget, can you project what your utilities will increase year after year? So when we're putting together a budget, we're we're looking at trend, we're looking at history to show electricity has gone up 5% and waste has gone up, you know, 3%. But again, these are all just This is just projections based on what we have, but that doesn't mean that Southern California Edison isn't going to send us a letter like sometimes you get a letter saying rates are going to go up by 10%, right? And and so, we just we just wanted to put some of the categories here because I think a lot

077of the times when we're presenting information, uh you know, it it it's a it's a comprehensive document, it's a quick presentation, it's part of a a board meeting where there's lots of other things being discussed and and I don't know if sometimes we we realize all the all of the information that that is included. So, then we'll shift gears to restricted. And on the restricted side, you can see that the dynamics are a little different, right? You You don't see as many personnel costs on the restricted side because think about it, if there's a lot of one-time monies on the restricted side, you don't want to get caught up with that money being set aside for personnel cost. So, on the restricted side, when you add up the percentages for certificated salaries, for classified salaries,

078management salaries, and employee benefits, you're looking at about 57 to 58%. And so, a little over half of that money that's being spent on on personnel, uh you can see that the percentage for books and supplies is much larger, 12.4%, and then services operating expenses 26.5. It's not that I want to ignore capital outlay, but with it being 1.6%, I we we don't really break that down. But let's take a look at what some of those dollar amounts are on the restricted side. And so, for that books and supplies category, which was about 12.4% of the budget, that dollar amount is about 34.7 million and here you can see that uh 9.6 million on textbooks and other books, 20 million on materials and supplies, and then 4.7 on technology supplies and equipment district-wide. So, a

079lot more focus on on things in the classroom, right? On the technology. Um and then when you look at services and other operating expenditures, you can see that that percentage was 26 and 1/2%. that. So, that dollar amount was much larger, 74.5 million. And again, this would be on the restricted side, utilities, contracts, consultants, legal services, field trips, traveling conference and communication. And you can see about 8.4 million for rental leases and repairs. That number's high, but think about one of the programs that's on the restricted side is our routine repair maintenance program. That's about a $20 million budget that is set aside for the upkeep of our facilities, right? Our maintenance. And so, you expect to see a large number there. 2 million for software licenses and then 49.8 for contracted services. So, as

080we get to our next section, which is going to be on multi-year projections so that we can prepare for our activities, just wanted to go over some certifications. Oh, we have questions. I apologize. >> Can you give me an example of unrestricted books and supplies versus restricted books and supplies? Cuz I'm looking at your two examples. So, is there a easy way to look at that and say, "Okay, I know that's unrestricted. Yeah, that's restricted." But it's still a library book. >> It could be, but think about Title 1 is on the restricted side. So, all of your Title 1 book purchases, you're going to see on the restricted side. On the unrestricted side, it's not only your core materials, but it's also going to be any of your L cap purchases. Um so, remember

081L cap is unrestricted. Yes, and so that's why you do see those those larger dollar amounts because L cap is 125 million, I believe, of the unrestricted budget. Um and so that would be the difference. The other big program on the restricted side, um special education. Other questions? >> That's on the unrestricted side? >> Uh special education is on the restricted side. >> I think you answered my question because I was going to ask for a certificated um program that would be on restricted funds, and that's the answer. So, thank you so much. >> Yes, special education is restricted. ELOP is restricted. Title one is restricted, and I believe that those might be our three largest programs on the restricted side, along with the routine repair maintenance, which is more of an operational one on

082the restricted side. >> Um I had a question about books and supplies as well. Um what do we do if books and supplies are not in use? So, like does that lead us to losing money or >> So, if books and supplies So, remember on the expenditure, this accounts for the purchase, right? So, you would see this reflected here. Um so, there's could be a number of things. Um I know that I and I can let Dr. Arcy speak on on the warehouse for instructional materials, cuz that might be a little different, but I know that, for example, the warehouse that we have, sometimes you're making the purchases ahead of time and it's there available um for use, but you're always having to make sure that um the items are are still going to be

083um good when they're allocated to the sites, right? Whether it's a version of a book, uh, for the most part school sites are ordering as they need. So, there's not really a build-up or a stock of cuz even the warehouse on our end is is not really the a warehouse where you can stock up for a year's worth of items. But, on the textbooks specifically, cuz I think that's where the question might be on on textbooks that whether they're used or not. >> Yeah, it's uh, we have something called Williams Act and per Williams, every student has to have access to their textbooks. Uh, so you don't lose the money. The idea behind it though is if you have $100 for example and you have to put $25 for shoes and $25 for clothes and

084$15 for what have you, but you notice year to year you do a trend data analysis that you really don't spend $25 for shoes every year. You might say, "But, I spent a lot of money on lunch. I'm going to take a little bit of the $25 for shoes and bring them over to the lunch." So, we just have to adjust year to year so we don't lose the money. It's just how we allocated um, at the district office depending on the needs. And so, if we need to adjust and add more money to textbooks because we had increase of students or we lost some textbooks, we adjust and same is true for the reverse. >> I understand. Thank you. On slide 29, we we've touched already on the three major certifications. Positive, district is

085able to meet its obligations for current to subsequent years. Qualified, you might not be able to and negative, you aren't able to. But, we're going to continue to just focus on the positive, right? Uh, so looking at multi-year projections, what are MYPs? Again, these are mathematical calculations based on the information that we know today. They're based on economic assumptions. They are just estimates and they're reflections of decisions that have already been made. They are not predictions, they're not forecasts. I don't have a crystal ball as much as I would love to have one. Um it's not a tool for measuring wrongness and it doesn't guarantee future outcomes. Um MYPs are simply planning tools and that's why when we're presenting these projections to you, it's to help us plan for future decision making, but the reality

086is that just like, you know, um 6 years ago, nobody would have been able to to predict a pandemic. Um we don't know what the impact will be on the assumptions that are provided to us. So, these are all just planning tools. >> Ms. Susanna. >> Yes. >> For [snorts] enrollment was since we wrapped up the school year, was the were your projections for 2025, 2026 right on right on on the money? >> Slightly lower than what we projected. >> Okay. >> So, I wanted to just find a really easy MYP impact because we're going to start to talk about multi-year projections. So, if we just look at year one and and you are all familiar with a beginning balance and if we start with zero and we have revenues of 10, expenditures of nine,

087our ending fund balance or our reserve is going to be one. Um and so, we're going to start year two with a beginning balance of one. I'm going to continue to have my revenues at 10, my expenditures at nine. Things are looking good, right? Too. Um this might seem like it's really easy, but you can use this in millions, right? Somebody had shared an example of just like when you go to to a grocery store and you take a $100 bill, chances are you're not going to use all $100, right? If you use If you >> [laughter] >> If you have a dollar left, that's pretty good, right? If we have a dollar left at the end of the year, it's good. So, now at the end of year two, we have $2. So, year

088three, things are going to stay the same. I'm going to end up with $3. And what if we we say, "You know what? I have $3. I really should take that money back, and I'm going to enter into a multi-year contract cuz I've got $3." And and so, I can increase my expenditures by three. Right? And so, what would that do? So, if you look at you begin year three, and your revenue stay the same at 10, your expenditures are now 12. Well, that first year year four, you're like, "Okay, like okay, I made it. I have one left." But look at what that does for the out years. And so, that's why we say what you do today is three times what will result at the end of that MYP. And and so, even

089when we have this conversation of what is our deficit spending amount, we know we're good for 3 years. But if we do something today, imagine how much better we're going to look in that fourth year and that fifth year where we are anticipating some challenges. Right? So, that's the power of the MYP. >> So, Susanna's now going to transition us to actual dollars and looking at our budget. And this is priming the conversation for a couple of activities that we have planned. The one thing that I want to point out is um on the dais, the board has had several conversations about not just looking 3 years out, but looking 4 years out in terms of a budget. Um and the reason for that is anytime you're in the budget year, that fourth year out

090is in play. Cuz once you've passed first interim, now that fourth year out is not a fourth year anymore. It's actually your year three. So, as a board, I think it was extremely wise for the board to direct us to start looking at a projection not just 3 years out, which is the required, but fourth year out because that gives her gives us kind of that future that, you know, 8-mi away distance look at what do we what can we predict? What can we project? What can we do now to prevent financial difficulties in the future years? So this look this is a little bit different but know that going forward the three slides that follow have a fourth year out um in terms of the projections. Susana? >> Yes, thank you Dr. Rualcaba. So

091we are going to be presenting a 2026-2027 budget and our two subsequent years would take us to through 2028-2029. We are presenting a budget that's approved because by the end of 2028-2029 you can see that we are projected to end with 28.4 million which would be enough to cover a 3% reserve for economic uncertainties. That's what the requirement is for an approved budget. However, we wanted to add that fourth year. So you're seeing 2029-2030 and again it gets more and more difficult to project the more years you add out but what you can see in 2029-2030 is that revenues have continued to decline. Again, we realize we're incorporating a 0% cola in the out years so this particular slide only captures cola of the 2.86% in 2026-2027. Our expenditures as we walk through our our

092budget presentations, we always go through the assumptions, things like step and call step and column for example and so you can see expenditures there's some reduction because we are able to make reductions but not at the rate of the revenues declining like we had shown in the example. Our other sources and uses which is mainly our special education and routine restricted maintenance program those numbers again continue to increase so you can see that the yellow highlighted area is the amount that we are spending more than we're bringing in deficit spending. 12.3 million, 29.7 million, 42.8 million, 53.1. The reason that I want you to take a look at this is because in the next two slides we are adding some scenarios with some COLAs because again, we realize that we are including 0% COLAs in

093the out years. So, the next couple of slides will incorporate two different scenarios with two different COLA amounts. >> Can you hold it here just for a few more moments? >> Yes. Just at a glance. And maybe I just don't understand. I'm not sure if the top line. So, if we're looking at total revenue in 2026-27, we're getting 500. Total expenses 400. Other sources. >> And uses. Yes, this is the That's the contribution to special education and routine restricted maintenance program. >> deficit of 120 >> Yes, that is money that we have to take from unrestricted and turn it over and place it on the restricted fund because we don't have enough revenues coming in restricted to fund special education. >> What you just explained. Got it. I just wanted to make sure I understood

094it. >> So, all the revenue Okay, we'll take it from the unrestricted here. So, those revenues are just restricted revenues. >> This is all unrestricted. >> The amount that is in red as a negative, the negative 112 million, the negative 124, these are all money that I'm taking from unrestricted and moving it over to restricted. >> I'm taking it from unrestricted. >> Mhm. >> It's a contribution. Yes. >> So, the next slide is probably going to be restricted general fund budget. So, that 112 will appear there. >> It would if that was the next slide, but it's not the next slide. But yes, it would it would appear as a contribution as a positive amount under other sources and uses on the restricted side. Yes. >> Got it. Thank you. >> Suzanne, before you go

095on to the next slide, I just just know that one of the dynamics that we struggle with is if we don't address an issue in one year, it only compounds. So, notice that in 2026-2027 in this in our scenario, if we don't address that 12.3 million, it compounds to 29, compounds to 42, compounds to 50. So, just notice that trend. >> Is it Is it that it's compounding or just those costs are are increasing? >> It's a little bit of both. >> Yeah. >> Because you didn't address the 12.3 this year, >> Okay. >> then that escalated to 15. or 14.74. >> Okay. >> And then that then you add the escalation factors. >> Mhm. Okay. Okay. I'm there. >> So, then on this scenario, cuz again, we are one of the things every time

096we present a budget, we're we present the assumptions. Tomorrow when we go through the budget, we're going to tell you these are the assumptions. So, in this scenario, we said, "Well, what if we built in a 1.15% COLA in 2027-2028?" What would that do, right? So, when you add a 1.15% COLA in 2027-2028, and we wanted to just really be transparent, so it has its own separate line, all the other numbers remain the same, you can see it would generate about $5 million in additional revenue each year. So, again, this is good, right? If we knew that we had the exact number, but because we don't know what that exact number is, if we fully expand the COLAs, it just that's what gets districts in trouble. So, in this scenario if I have $5 million

097extra every year you can see that the amount that I'm deficit spending is going to be reduced by $5 million, right? So, this is just an example and and so let's say that we want to uh right now, the way that it stands the projection is that in 2027-28, the COLA will be 3.3. So, we said let's build it in. Again, this is not going to be reflected in tomorrow's presentation cuz we're going to maintain the 0% COLA in the out years. But, for purposes of this exercise, knowing that we were going to incorporate this fourth year let's build in the 3.3% COLA. That would generate the 15 point almost little over 15 million each year. And then look at what happens. Your deficit spending amount is is updated and reduced by that $15 million

098each year, right? So, again, these are all just different scenarios. The reality is I could do a scenario for every single percentage, but we did this strategically because this is going to lead us to our problem that we're going to look to address. So what are we observing? We're observing that even with that 3.3% COLA, we're still deficit spending, right? So, ongoing expenditures are still rising at a faster rate than incoming state revenues. We knew that. And so, this is creating a structural deficit of approximately 13 million. If unaddressed, the drop in available reserves could fall below the state mandated 3% by fiscal year 2029-30. Again, it's that fourth year out that we're not required to look at today, but that we want to be proactive about so that we don't have to deal with

099this down the road. And so, this slide here is going to take just 26 and 27. For both of these years, we've have fully built-in cola, right? 2.86% in 26-27 and 3.30 in 27-28. So, we are fully building in the cola for this because we really want to make sure that if we're going to do this comparison and go through the scenario, we don't want to say, "Well, you know, as a district, you purposely left out the cola." No, we we want to make sure that we are really addressing what the problem is. Yes. >> I want to make sure I understand. So, smart to build out the the 26-27 at the 2.87 because we know, right? I'm wondering about the 3.3%. Because that's pretty high, and we spoke about not getting into that cycle.

100>> Mhm. >> And in the last, if we're talking about trends and memory, I I can go back to the side, but if you look at the last 3 years, it hasn't reached the 3.0 level or 3.3. So, should we do that? >> And that's why we're not doing that in the budget report. This is just we wanted to just really figure out what our structural deficit was, but I wanted to make sure that we did incorporate it in there so that we have that argument of like, "Look, we're building the cola." And when you look at this for 26-27 and 27-28, you see that there's a deficit spending of 12.3 million in 26-27 and 14.2 in 27-28. So, our structural deficit, when you look at that average, is we we need to reduce our

101ongoing structural deficit spending by over 13 million. >> Mhm. And we should >> Dr. Rualcaba wanted to go with 14 and I said we're going to keep it at 13 cuz I kind of like that number. >> [laughter] >> But but but um this really just again, we we are comparing both years COLAs in both years, but to the point that Ms. Clark made if we were to incorporate this in our budget and we maximize and we barely have a 3% reserve and then come July if the governor says your COLA is only going to be 2%, guess what? We're already too late to having to address cuts for that year in order to have an approved budget. >> And that's what brings me to a question I'm sure you have an answer for and

102but I struggle with this every time we do a budget review and that is in fact the deficit spending. I don't like it personally and as a trustee and someone that's overseeing fiscal responsibility, I would like to see that shrink to zero. We should not be since we should not be spending or deficit spending. I can see it in the current year but in the out years, I don't understand because we have the capability, it's my understanding, to make sure that that's at zero. Now does that mean getting rid of programs or laying off? I wouldn't want to see that so I know that you guys work around it the best way you can is that we don't build a certain thing. I'm not sure what that looks like. I'll leave it to the subject

103matter experts. But we do have the capability to project out and ensure that it is a zero. Net zero, yeah. >> And you did exactly what Susana was going to point out which is our problem the problem that that we have right now is a 13 million dollar problem. We're spending 13 million dollars more than we're receiving year after year and so it continues to compound. >> My question on the 13 million dollar that's for next year, 2026 2027, right? So, why why is that the number to target when you don't know what the deficit spending will be for 27 28? Like if it's going to 14, if you're projecting it to 14 million right now, why only take a bite of the Why just do 13 million now and not do the full 14

104or what it's going to be in 29 2029? >> Now you're siding with Dr. Walker. Remember I said he wanted to go 14. So so think about So think about it. Remember that exercise? If I can save $1 today, it's worth three on my MYP. Just like if I am going to spend an extra dollar, it's really a $3 impact on the MYP. And so if we can do things today >> We're not going to get to Okay. Okay. And then we're only comfortable deficit spending right now just because of the reserves. >> Yes. >> Okay. >> Yes. >> Susanna, I like the zero cola piece because that's We got to live within our means. >> That's our only protection. >> And how do we not have deficit spending? Because No, you say it. >>

105It was better when you said it. >> I just said don't start no cola, there won't be no cola. >> So uh Trustee Williams, I'm not I like the way you said it, but I'm going to rephrase it a little bit which is you're exactly right. The reason that we're presenting this now is for this exercise. The budget that we present tomorrow will have a zero cola in the out years. >> To me, it's real simple. >> I just feel like, you know, we have seen these um budget presentations, you know, even before I was a board member, and I just feel like, you know, my colleagues are saying, you know, we cannot be relying on the COLA because we know where we're getting to. I feel like we would be safer doing that zero

106COLA just because we have seen and we have seen our district running and, you know, even LAUSD, you know, how they are being affected and my biggest worry is like laid off. I don't want laid off or maybe even thinking about closure of schools, you know, so I I feel that the safer way is to base our budget on a zero COLA just to be protected. >> And that's why we want to have this conversation now because we have time to do things. We don't have to find 13 million. It would be unrealistic to say, "After the next couple of exercises, we're going to have a list of their 13." And we're like that it's unreal- This is an ongoing conversation. And that's why we just really do appreciate the conversation because these are all

107things that are going to happen over time. >> I want to add, I understand the reason for the zero the zero percent COLA. It's going to get there sooner or later. It keeps us conservative to not estimate it in, but even when you do estimate it in, it doesn't We We still are at a deficit, so it's You know, there's actions that do have to be taken taken in order to remedy that deficit in the long term. In spite of us, you know, putting the numbers at a zero percent COLA right now. >> Correct. Good point. Okay, so I think we are ready for our activity. And so at this point, I am going to turn it over to Dr. Davalcava that is going to lead us in the first activity. >> Thank you, Susana.

108So before we get to that point, um it this is the time this is the appropriate time for any of our um panel members. We also have our incoming board trustees, Andrew and Andrea, who are here. If they have any questions, the board is going to engage in a couple of activities. And so, if there's something that you want to ask to clarify, it might help them as well. So, any questions that you have, now is the time to do it. So, we had um board members on the dais ask questions. Andrew and Andrea, I don't know if you have any questions. Not yet? Perfect. All right, so we'll open it up for any other questions from our other colleagues. >> Susanna? >> Yes, go for it. Susanna's ready. >> Okay. On slide 23, I'm

109just going to refer to the slides cuz I kind of have things written in order. On slide 23, are all these one-time funds restricted? >> Yes. >> And are they all um reflected in the budget as committed monies already? >> These are all would fall on on the restricted side. They use the term assigned. >> So, are they assigned already? So, when we see the budget with the pieces that are already assigned, that incorporates these dollars? >> Um for the first three, they are all assigned. I believe the student support and professional one, that one is that one is already in the budget. Yes. Also assigned. >> Okay, um my follow-up question, um the 8.9 million for the textbook adoption, out of restricted money? I thought we couldn't purchase core from restricted money. >> So

110again, remember one of the allowable expenses for this block grant, very similar to the um allowance that we got with the arts and music up above, is that they can be used for district any rising costs, so any needs that the district might have, um which would allow for that to happen. Um and we also do get restricted funding specific to textbooks, like restricted lottery, and so restricted text restricted funds are allowable uses for textbooks. >> Okay. Uh On slide 20 six. We recently got a survey about um the Chromebook policy at the district that it might be being looked at to be changed. Would that be a savings reflected here, and do you know how much that savings would be? >> Dr. Arce might have a better answer on that. >> Okay. >> So

111we're only collecting right now um data and results. That is not reflected here because we have to assume that it's going to be an annual purchase and replenishment of Chromebooks, but once that occurs, um it's all come most of it comes from LCAP anyways. So it's um it's not going to be reflected on the on the general. It's part of LCFF LCAP. Uh but it's not reflected yet because we don't know the outcome. >> So um and Tiffany is on our our JFMC committee. So, thank you, Tiffany, but we've learned to I I know what you're thinking. So, let me let me rephrase that, Tiffany, and see if that helps. >> Thank you very much. >> Yes. So, currently that allocation for the Chromebooks is part of the LCAP expenditure, and so it is included

112in the dollar amount here. If that if they were to change the dollar amount, um it would specifically lower it for the Chromebook expense. However, because it's LCAP, it would need to be used in some other allowable area that still meets the LCAP guidelines. So, it might be books and supplies, but it could be something else. >> Okay. All right, I get you. Um slide 28. Thank you. And I have a feeling that this is going to go in conjunction with slide 32. Um one questions about So, my My question on slide 28 is the contracted services for $49.8 million. It's been an ongoing conversation in JFMC this whole year, um particularly centered around special education spending. Um that contracted service thing I know is a huge concern for our CSEA partners because those are

113It's my understanding um a lot of our contracted services are positions that are related to special education that could be provided by district employees if those district employees existed. Um and so we can't fill positions [snorts] and need to contract them out at a much higher rate. Am I all the and so this is a very big concern of mine, um which is why it's in conjunction with slide 32, which is where I'm going to end up because it looks to me like one of the easiest ways for us to decrease our deficit spending is to decrease our contribution from unrestricted to restricted. And a huge huge chunk of that, like 78 million dollars, I believe, is a contribution from unrestricted to special education. Um which definitely needs funding, but if we are looking for

114ways to decrease our deficit spending, decrease our That sounded weird when it came out of my mouth. Um fixing that has to happen. So, one of my questions about slide 32 is the governor's budget um is going to include a percent increase to special education? Is that what it 43? >> I don't know what the exact percent is, but I do know that it resulted in about a thousand dollar increase per ADA. And so, the amount that has been built in is about 300, which corresponds to the COLA. Um and again, it's another area that once the budget is signed, if there's additional funding for special ed, we would incorporate it. Right now, we added the dollar amount that corresponds to the COLA of the 2.86%. We are anticipating there could be additional funds at

115the state level, as you mentioned, Tiffany. They are looking at ways because we are one of many districts that has been asking for. I think Ms. Clark at a previous board meeting, you had even said like we need to just realize that this is our problem now and own it. We can't keep saying if only the federal government would. We we realize this is a state problem, and so the state is one of the one of the proposals is to include additional dollar amount for special education, which we would built in if that is in the final state budget. Which will help a little. >> And so right now that's not reflected in this. >> Correct. Correct. >> And we would build it in at the 45-day revise. Is that correct? >> Either 45-day revise

116if it's material enough, but definitely by first interim. >> And when would we know that that's going to be affected because the the budget's getting approved like right now, right? >> Right, but again, remember that's why we are continuously making changes to the budget because things will change. So we have to adopt a budget before this before it's approved at the state. Um and so that that is a recommendation from our COE is that if it's a material change, we do it within 45 days if not, we do it at first interim. However, that would only be the reporting portion. We could still recognize the information in our financials. And and we would it would be communicated to special education. It would be communicated um to folks as well, but I don't want to necessarily

117say you're going to see a 45-day budget because if it's not material, we might not be doing one. And so I I just careful about saying that. >> Yeah, all right. I get you. Um and that that is also true for the augmentation of the COLA, the >> the 1.44% >> Yes. >> Um either at a 45-day revise or a first interim. >> Yes, we would add any additional revenues tied to the 1.44% augmentation, but we also need to add the expenditures related to the 14 weeks of the paid pregnancy leave that would be available. So, we would need to do both. >> Okay. Really quick while we're on this slide, the the deficit spending um and you know, we're making up for it in the reserves. The reserve balance is used for other things

118outside of deficit spending as well, right? So, it's not just only deficit spending that we're taking the reserve money for. >> Yes, you're stealing my ending slides. >> Got you. Okay. >> [laughter] >> But yes, the the reserves uh there's committed balances in the reserves. Yes. Be because that's where that's back to slide 23, right? Like those committed from the reserves, those are sitting in the reserves, those things on 23, right? >> Yes, except slide 23 is restricted, remember? Yes. >> All right. I'm good. Thank you. >> Thank you. >> So, the activity that follows >> I'm sorry, I'm sorry. I had a couple >> Chris. >> Sorry. I yielded to the better half for today. Um first of all, I want to thank Susanna and Johnny and the staff. Hello, staff. I didn't know

119you guys existed till today, so hello, guys. Um as an association, we probably agree on most of what you said. There are some things though that we do disagree on and I don't want to belabor the point and I want to crunch numbers too much. Um but I would like to say for the board, I know there was a lot of talk about cola. Does anyone happen to know when the last time a zero cola actually happened? 2015. So, there's a general push to say we might not get a cola. We might not get a cola. Almost universally, we do. So, on the one hand, I understand fiscal responsibility, but I also understand fiscal reality. We almost always get a cola, almost always. And going back to I'm sorry, Susan. I forgot what slide it

120was, but you showed the historical trend of the colas, and I believe your comment was colas are now very, very low. Thank you. So, I used to be a sixth grade teacher, right? And we did this thing called outliers. [snorts] What I would submit to everyone in this room respectfully is that 2022 and 23 and 2324, those are outliers. If you take those two out, and you look at the other colas, it's much more in line with what they normally are. So, again, I don't want to I don't want to say too much about oh, colas are getting bad. Colas are going low. Colas No, colas is what This is what we normally operated with. And I believe this district has been very responsible with how they approach this. So, from that line of thinking,

121I think we shouldn't automatically assume oh, things are getting bad. Things are getting so much worse. No, they're not getting so much worse. They're just right where they have always been. So, we don't have to prepare to drive off a cliff. We have not driven off a cliff in any of those other years. And like I said, Cola is never on it has with rare exception never been zero. So, I just want us to be realistic. You know, we talk about you know, creating a budget. We don't want to create a budget that makes us not spend what we need to spend. We don't want to go hungry on the weekends cuz we were scared we didn't have enough money. And then at the end of the month it's like, "Oh man, we had enough

122money. We could have eaten." We don't want to do that. And I just want to caution everyone cuz I keep hearing things like, "Oh, it's getting bad. It's getting bad. In this many years out it's going to be bad. It's going to be bad." We are doing what we normally do. Actually, the line is pretty flat about how things go. So, we don't want to take a moment in time and say, "Okay, this is bad." Um something else I just want to make a quick comment cuz I know Dr. You want to get to your activity. Um What I kept hearing was we are accepting declining enrollment as a matter of fact. And I haven't heard at least I haven't heard any plans for mitigating or reversing that. The reason I bring that up is

123because I just made a left on Kitchen over there onto Alessandro. And I saw, I don't know, about 200 little beautiful little children over there at the Journey School. CTA has a charter school research department. Last I checked, which was this morning, Moreno Valley is losing well over 1,000 students to charter schools. And I don't mean this to be Craig is about to give his award against charter school education. That's not my point. My point is we have many households in Moreno Valley where the parents are actively choosing not to send their students here. That is our problem. That's our problem. And it's not because lack of programs, Dr. Arsay, anything like that. It's not because we don't do a good job. I will say confidently and without hesitation there is nothing that a charter

124school can do better than what our school district can do. But that is not what a number of our parents think. So until we decide to create a narrative and speak to these parents and understand the root cause as to why people think our district is not good enough for to send for the to send their child to, this the declining enrollment is going to be a problem cuz it's not as simple as oh, California's losing kids. They are losing kids. We are losing kids. People are not having as many babies. That is true, too. But at the same time, the number of charter schools is increasing, not decreasing. We just had We just Unfortunately, we just lost the battle against the Alta schools. If you're I don't know if you've heard of this. They've

125just got authorization to open more charter schools. They're not opening more because there are no kids. They're opening more because there are kids. And they're going to be targeting our kids. So what are we going to do as a district? And the association is 100% committed to not letting this happen. We were at the forefront of of um getting petitions and going to the county board to try and stop this charter school from doing these things. We are against We're not against charter schools. We are against losing our students to them. So I just wanted to say that. It's like I don't want us to take this narrative, oh, we're going to lose kids. We're going to lose kids. We don't have to lose kids. That is not written in stone. We can absolutely get

126them back, but we have to do what we need to do to get this message to our parents and to our communities. Our schools are the best. Our schools are better than anywhere else you think you might want to send your child. They can learn more with Mrs. Zick than they can sitting at home in front of a computer. That's our message. Okay, Ms. Dr. I'm done. I'm off my sermon. >> Thank you, Craig. Dwight, did you have any questions, comments? >> It's just kind of to reiterate what Craig what Craig said, which we were kind of discussing a little bit. It's just that I think like declining enrollment again and I've said this in multiple forms before is that we have great programs. Our district has really great things. It's just no one knows

127about them. The parents don't know about them. And when we do like have something at the district level with parents, it's the exact same parents we see at everything. The general public doesn't know we have all of these amazing programs. So, I don't know what that is in terms of advertising, but I think that that would get more kids to come to school if they knew like, "Hey, we have all of these fantastic things." But only a handful of people know that they're there. The other thing would be is the contractors, which I'm not going to even bring that here for now. It it's it's it's that's a argument for a different day, but all of these contractors, when we have capable people, I know Dr. Rubalcaba said this when we had our summit to

128start the year off. Like, we're looking in-house for certain things. And and my thing would be is to like let's keep with that because the contractors we're paying them an astronomical rate and they're providing almost little to no service that benefit our kids, our staff members, nothing. Um and then oh, you can't hold them accountable for nothing either. That's piece also. It it's just one of those things where it's just frustrating that so much money goes there and it doesn't help us at all in any regard, not fiscally, not with the kids, with nothing. And so, that's that's my little soapbox, but again, like and you already know how we feel about this. We are almost 100% aligned with the district's fiscal plan. We just have some nuances that we feel could could cut some

129of the the weight of the budget for services that our people can provide. And then looking at things that money is spent on sometimes that it's like, do we really need that? And a lot of that has been cut. I'll be the first to say that and I said that in multiple rooms. I'll give credit where credit is due. But then there are some things where I feel like, you know, things are promised, oh we're going to pump money into here, we're going to get this and those things haven't materialized and every time we ask, we get told, well, we're looking into it. And it's like, but where is it? And and so that for us is a little bit frustrating, but again, to go back to my initial point, I feel the district does

130amazing things. We have a lot of programs to help our babies. They just don't know about them. And and if they knew, I think more kids would would be prepared to be here. Um and I think the other piece of that in in terms of like neighboring districts where we lose kids to, like, which I can speak to uniquely, it's like sports, right? Our teams aren't good or whatever and that's what And I'm not saying that's my opinion. I'm saying that's what I hear from a lot of the parents of athletes, right? Like, the teams aren't good, so I got to go over to Orange Vista, I got to go over to Riverside Poly, I got to go over to because they just get better looks cuz Moreno Valley doesn't, right? Valley View just won

131a state championship, but it's Valley View, so they got no looks. They there's no big recruiters coming here. So, that's something else to look at, like, maybe that's a conversation with head coaches, maybe it's a conversation with you got to put out film, you it's And I don't want to go like all the way too too much, but I'm just saying there's other ways to get kids to come here because we have a lot to offer. We really do in this district. I believe that with all of my soul and I think we have people who really truly care about kids. It's just overshadowed by it a lot of the nonsense from isolated few. And then um the other piece is just that, yeah, we have services that just nobody knows about. >> Ms. Susanna,

132I was looking at the on enrollment really quickly. I was looking at the enrollment and FTE projections for 2026-2027. I may be reading it wrong, but are we projected to increase at the high school level when it comes to enrollment? >> What slide are you looking at? >> this was a document. It was in the, um, I believe >> Friday memo. >> Mhm. It was from the >> Oh, the weekly enrollment? >> The Friday memo, the weekly enrollment. >> Not not the weekly enrollment. I pulled it from the JFMC 2025-2026 agenda recap. It was discussed at the June 1st meeting and it was the preliminary FTE allocations 2026-2027. >> Can we get that answer back to you since we don't have access to those documents? >> Of course, mhm. >> Thank you. >> Mr. Garcia,

133any comments, any feedback? >> Uh, no, all of the all the questions have been answered. Just clarification, um, with the proposed, uh, increase in expenditure from the governor, is it was it a thousand dollars? Is that for ADA, or is that based on the number of students, uh, on special education? >> For special education, that's per AD. >> So, it would be the total, like, 30,000 students. >> Yes. >> Thank you so much. Great questions and great feedback. Okay, so, um, Susanna, if you can click forward to the next slide. So, budgets are about priorities. They speak to the values that any organization or institution holds. So, if you want to really assess what any organization really believes in, where their heart is in, where their values are, you look at their budget. You can

134say that about a personal financial budget. You can say that about a budget of a district. You can also say that about budgets at school sites. How they allocate their money is really speak to through belief systems. So, we want to engage the board in an activity about guiding principles. We have a 13-14 million dollar issue that we need to address. And so, we need some direction from the board in terms of what are some guiding principles that you want us to keep in mind as we're looking for opportunities to reduce costs, to to actualize some savings. And so, what you have here are some of the examples of some of the guiding principles that you might want to consider, but these are not the only ones. There are many more as well. Protecting core

135programs. You want to make sure that at all costs we're not jeopardizing the the key aspects of what we do, which is educate students. Maximizing distance of the cuts from the classroom. As much as possible, we want to protect what's in the classroom. Looking at decisions that are data-informed. Not just willy-nilly saying we're going to cut here, we're going to cut there. Making sure that we're equity-minded. We don't want to um cut something that on purpose or inadvertently might jeopardize a specific group of students in a negative fashion. Looking at attrition before layoffs. If we can save based on um folks retiring, it's always better than having to do an issue of layoff. We never want to do that. Uh prioritizing student and staff safety and well-being, for example. Is another area that we know

136and we hear about a lot. Reducing over eliminate. We have a fabulous program that we want to keep. Maybe we pare it down instead of getting rid of it completely. And then the last one, which is looking at structural changes and fixes as opposed to one-time solutions, right? So, these are just a few examples. On the next slide, there's an opportunity for you to think about some others as well, but let's go back to the previous slide. So, in your packet, you have um some some um little cutouts. >> This is activity A. >> Activity A. And so, we would like the board individually to go through those and then prioritize them. So, what you see here is exactly what you have in your little packets. So, we're going to go ahead and flip this

137light twice. Susana? One more time? So, we're asking the board to first individually put those in rank order in terms of what you feel we we should prioritize. And if you have something that you think should be prior that we had we didn't think about, write that in one of the blank ones and put those in your priority. So, we want to give you some think time, some processing time. I love how Ms. Zick and Mr. Hardesty are laughing cuz you guys are being students right now. And that's exactly what we mean. You will you have an opportunity to do so, but we want the board to engage with this first, and then we will give you an opportunity to do that as well. Okay? You can also write it on your chart. You should

138have that chart with you. Yeah. Yep. >> So, we'll take about 10 minutes for you to work individually. And then once you've collected that and you've outlined it on your chart, we will get to the second part of the activity, which is to place some on the big chart papers that we have up in front of the room. So, we'll do about 10 minutes. >> So, we have some overachievers, which we know are all of our trustees. They reviewed the slide deck ahead of time. They knew this activity was coming. So, once you've completed that, um we want to give folks a couple more minutes to think about it. We're going to ask you to tape them up on the chart in order of priority. Which one you think we should consider the first, second,

139third, fourth. If you're struggling with the tie, you can put them side by side in like one and two. Um if you don't want any priority, you can just put them all up there, but we really really would like you to prioritize them cuz that's going to help us as well. When you're ready to go up to the chart, make sure you take your tape with you cuz you're going to tape them up. And Al, if you could put yours right to the left of Oh, sorry, Isabella. I think I'll put yours right to the left of President Clark's. Thank you. If you want to do like a six or seven, just keep them down. Just keep going down. Yeah, just keep going. And there's a joke about 789 or something like that. >> Mhm.

140>> Okay. So, thank you for activity A. And we're going to take a look at now activity B. And so, if you continue to look in your folder. And before I get to activity B, cuz I know you're you're jotting down we're going to take this, we're going to capture it, we're going to summarize everything. So, I know that um you might be wanting to take pictures and so forth, you can, but we are going to take the information and summarize everything and provide that to you as well. So, if you look in your folder, you also have an envelope for activity B. And in activity B, we as was mentioned that we were in a situation a couple years ago where we did have to take some actions right away. And so, we have

141captured some of that in the circles that you have for activity B about things that might have started then or things that have started since then about what have we done. And so, if you look at activity B, some of the examples um and again, we're going to go through the activity of prioritizing this, but contracts, which is something that has been mentioned and the redundancy with them, taking a look at right-sizing, grant opportunities, um evaluating our contracts for that ROI, return of investment, um revenue opportunities, maximizing restricted funds, strategic about long-term commitments, being uh self-sufficient opportunities, um and so, very similar to what we did with the first activity, now we're going to take a look at the circles we have. You have also been provided some blank circles in case there's other things

142that we have done or things that we need to do, but we are going to prioritize that as well, and we have a similar table on the other end, um so that we can list our priorities. >> So, there were a couple suggestions that came up that were not cuts. So, we also want to think of opportunities. So, how do we attract more students, for example, as Craig so eloquently put. We have an amazing school district. What are some ways that we can do? Uh I know board president Clark has often mentioned we need to do better at uh our showcasing our school district, right? Kind of that that marketing program. So, think about those things as well. They don't always have to be negative. They can be positive. We just put on the ones

143here that we used last time when we were in an almost financial crisis 3 years ago. >> Would you mind giving an example of the contracts redundancy? I heard special education, but what what does that look like in our school district? >> So, one of the things that we've This happens a lot with technology where we have two or three different softwares that do the same thing. And I'll give you a perfect example. We have Q, which is student information software, and we have this another contract called A2A. And we use that for attendance. So, we found that Q can actually do what A2A does. So, we're not renewing A2A since we already have a contract with with Q. So, looking at things like that. >> I like that. Thank you. >> Okay, so we

144will take 10 minutes to go through the circles in envelope B. And again, looking at things that we have done or there's ideas of what we need to do. And it can either be related to reducing expenditures or enhancing our revenues. So, it could be a combination of both. And you will have 10 minutes to do this individually. And once again, once you have gone through your circles, completed new circles, we will complete it all and capture all on the chart paper for activity B. >> Dr. Rokava I have a question about um the right sizing. What do you What do we mean by this? Like adding students, cutting students for co- classrooms? >> I'd love it to be that if uh but right sizing would be as we we know we're declining in enrollment.

145So, if you think about the example that Ms. Lopez presented of reducing the four teachers because we lost 100 students, it would be exactly that. As we're losing students, we know that we don't hire as we're not going to need as many teachers for the following year, so we don't backfill any vacant positions as people retire or they leave our district. So, we're doing it through attrition, so we don't have to do it through layoffs. >> Okay, just to make it clear. So, that means not laying off anybody, just not filling up the position. >> Not backfilling them as they become vacant because we know we're not going to need them um because we don't have enough students to fill those those those seats for those classes. >> Okay, thank you. >> uh board and

146obviously anybody who's in the audience just have to share information um because we do not want to violate a Brown Act, we cannot have a discussion around it, but I do want to share it because you might get something on your phones as an alert. There's a fire in Calimesa and they're going to be using Valley View as an evacuation center. So, we can't discuss it. I can share it, but there can be no discussion on it. So, in case you get an alert, please know that we're aware of it and we are responding to it. >> Mhm. >> Okay. I do want to thank the board for this and thank you Dr. Arce for the idea because you know that this wouldn't have been something that I'd come up with, right? >> [laughter] >>

147So, thank you Dr. Arce for the activity. Um and again, we've captured information about the priorities. Um we've captured the information about the guiding principles. We have the information. The information we're going to collect, we're going to summarize, and then we're going to share it back with the board. Um so that you have that um information. And again, it's really about making sure that there's an alignment, right? Um with what the priorities are and making sure that they align with our guiding principles. So, thank you for that. I'm going to go ahead and cover the next couple of slides cuz I know we have gone over. So, just bear with me a little bit longer. Uh reserves. I know that earlier today Trustee Jackson had a question related to the reserves. So, thank you for

148waiting for us to cover reserves here. Um again, there's a 3% reserve economic for economic uncertainties. Um it is based on a district's size, so your average daily attendance. And it is a required minimum. It is not a maximum, and the fact is that most districts need more. Um again, the 3% for most districts represents only about 7 to 8 days of payroll cost. Uh we mentioned that for our district, it's about a $20 million dollar dollar amount. And we saw that the May payroll, for example, is um over 43 million, right? And so, we we see that that doesn't even uh give us a month's worth of payroll. A reminder that the reserve is one-time money. It's not an ongoing funding stream. And so, sometimes you might see a bigger dollar amount there, but

149once you tap into that, that money is gone because it's not an ongoing revenue stream. And we recognize that most financial problems are multi-year. Just like it usually takes a couple of years for you to get into a problem, it will take a lot to get out of that problem. And if you're going to count on one-time reserves, even if it's to solve a multi-year problem, it's only going to be temporarily because again, those reserves are only there one time. And we do want to note that Assembly Bill 1200, which requires multi-year projections, and that came about in the in 1990s. Again, that was there for a reason because there were some districts that were going insolvent. And so, we are now required to do multi-year projections that include the current year and subsequent years.

150And especially in years where there's no or low COLAs, even a 9 or 10% reserve in one year is not going to cover cost increases when you're looking at three years at a time in that multi-year format. The board did take action on June 22nd, 2022. We have a resolution that was approved regarding committed fund balances, and this allows the district to set aside funds for a number of categories. The categories that were identified in that resolution were the safety and security category, technology leases for that refresh, which really was that Chromebook. Money set aside for that. Money set aside for any future retirement increases. Vacation payable, which I wanted to touch a little bit on because even though we have a commitment set aside for it for a vacation payable, it really is a

151liability, so classified employees earn vacation time. Vacation time is part of that compensation. If that vacation time is not used, it becomes a liability, and every year we are required to report what that dollar amount is in our audit report. Because if the employee were to leave the district, upon leaving, you have to cash out you have to cash out the the employee, and so I know that we've been working closely with CSA over the last couple of years because what happened during the pandemic, um employees weren't utilizing vacation time because they weren't coming to work every day, and so we had the vacation built up. And it's been a struggle to get that dollar amount reduced. Um that vacation liability amount for all classified employees, and this includes classified CSE members, and we also

152have classified management members, is just a little under $7 million as a district. And so, I know that we've been working collaboratively on looking at options to buy back that time so that employees have the option of cashing out on the vacation. Um board also needs to know that for management cuz obviously we have a little bit more control over management. Um we are bringing forward a board policy where there will be a cap on the dollar I apologize on the vacation days that can be carried over from year to year. And so, um human resources is going to be bringing that language forward at the June 23rd meeting for a first reading. Um so that we are able to cap that, and we would have to pay out anything in excess of that cap,

153but at least it's a way to start addressing this vacation liability. Okay. And then the last category is just a reserve for deficit spending knowing that usually the third year out we had a deficit spending and so these were the five categories that were um outlined in that resolution. Again, this is a resolution that if we wanted to you can make changes to, you could update. Uh there's not a set dollar amount tied to these necessary actions. It's just a dollar amount that can be updated year after year. Um and I think the last time we had presented a financial report and we fast-forwarded to that third year out what will happen is that over time if all you have enough is enough money for or enough reserves for the 3% you are in a

154sense wiping out any dollar amounts allocated to to commitments and and so just wanted to make sure that um we shared that as well. Okay? >> So our reserves are almost like restricted funds because this board policy specifically commits them to these five categories. >> Yes and no. Yes because you could commit them and know in a sense that all it takes is a resolution to make any modifications. >> Okay. Okay. >> I would like to share I I was part of the board when we did this commitment. We had a couple of qualified >> Mhm. >> um budgets and at the time this was definitely aligned to what was happening. I'm thinking that maybe it might be time to revisit that after we get all the data back with this new board and see

155if the priorities have shifted and have a new resolution if if warranted, right? >> Could we do that sooner rather than later? Um you know, in in taking a look at these priorities and seeing how we could maybe amend that resolution. >> Absolutely. So, the next steps from our team is going to be to compile the guiding principles and the board priorities in terms of looking for opportunities for savings or reductions. And then we can bring back that data along with our current balances in each of these funds. And then give you a percentage of how much that represents of our end fund balance reserve. That way you have a full kind of wealth of information to make a decision whether we can continue to commit to that, we need to commit more, we need

156to commit less, whatever that may be. >> And I specify the urgency because I know on June 23rd, that's when we're going to be adopting this budget. So, if the board did have other priorities outside of that or an additional commitment for our reserves, um that would come after the fact most likely. >> Correct. Any of those changes would probably happen at first interim. >> Okay. >> But again, that's the nice thing about a budget, right? It's an ever-changing document. And so, we take all that information, and it might be helpful because we're going to come July, um everybody, you know, it's summer vacation, but for business, we're closing the books. Um so, we're going to close the books, and we're going to bring information to you at that board meeting in September to show

157you what the final balances are for the 25-26 year. And it would be good at that time to look at what those dollar amounts are, and then if we need to make any changes to this resolution, it could all be incorporated into our first interim report. >> And I want to also specify one thing as a priority, maybe for me personally, but also President Clark it gets at what you were um mentioning of not deficit spending. It shouldn't be a priority to increase our reserves just so we can continue to deficit spend. Um and so, maybe that should not be a priority moving forward. >> I honestly I think that that statement basically captures the purpose of our meeting today. That was very well done. We should make shirts from that. MBUSD Sell them to

158Fik Matthews School Services. >> [laughter] >> That's very well said. >> What was he asking for next year? >> No, very well said, absolutely. >> Suzanne? >> Yes. >> Um You you mentioned vacation pay and uh administrators get vacation pay? >> Classified management. >> Oh, classified management. I'm sorry. Thank you. >> Yes. So, classified managers um are not on a positive work year, correct? And so, they do vacation days. Okay. You survived a budget study session. So, our next steps um again, we do have a public hearing tomorrow on the on the adopted budget, but adoption will take place at the June 23rd board meeting, where it not only is 26-27 budget, but how we estimate we're going to end the year 25-26, and then hopefully between now and July 1st, we're going to have

159a state budget that is adopted based on whether those changes are material or not, we might present a 45-day budget update to the board. So, that would happen probably by the um July board meeting. Uh September 8th is the board meeting where we present an audited actuals, meaning we've closed the books on the 25-26 fiscal year. And then December 15th is our first interim report. So, the budget development cycle continues. So, with that, I just really do want to thank the board for the time, uh giving us feedback with the activities, and then a special shout-out to my staff, not only those that are working on the budget, Mr. Hadighi, who was puts together all the presentations and make sure that um all those deadlines are met. And, you know, I've got some directors that

160decided to show up, and they're not even in the in the business department and then even some of the Ed Services directors which I feel are part business directors even though Dr. Arce doesn't agree. So Thank you. >> [laughter] >> Thank you. Thank you. >> I have one last question cuz it it takes in my head. You were talking about the 14 weeks. The the district will become, you know, financially responsible now. Is that correct? >> If the mandate for the augmented cola for the 1.44% then the district would you would be required to pay the salary for up to 14 weeks for the paid pregnancy leave. Yes. >> do you have an amount of money that that will cost the district? >> It's a very rough estimate. We estimate based on average about a

161hundred folks are usually out for maternity leave. So, we would calculate that at least about 70 to 75% of the income we receive would be used for the salaries. It's just very difficult again to to project. >> I know, but I was just you know >> of that money would be used for that and that's really an argument because if if it really is an augmented cola then that there shouldn't be a mandate tied to it. And and so that is fine. You we can have the the 14 weeks pay but have that be a reimbursable so that you're not penalizing the districts based on the usage because you could have districts that have a lot of employees taking advantage and others that don't. And so the argument is okay, make it a reimbursement and

162then do whatever the cola is separate not tying it to a mandate. So, it's not that we have a a feeling about it and support or not support is it just we don't feel it should be tied to a mandate. >> That other 25% has to be given back to the state? >> No, we would keep it. We would keep the additional revenues. >> That was all my question cuz I was like to see how would that benefit the 1. % compared to, you know, how much money we're going to spend on the 14 weeks. >> Thank you for that. >> Okay, I will turn it back over to the board president. >> Thank you, Ms. Lopez, for that wonderful presentation and all that assisted. Thank you. With no other business to come before the

163Board of Education, this meeting is adjourned at 5:36 p.m.