23-12-06 Berryessa Union School District Special Board Meeting

001has been adopted public comments and agenda items are there any public comments at this time okay seeing none we will move forward to review and discussion uh item a budget stabilization update Dr Fus thank you so much trusty s voson this evening we're gathered here today to take a look at the recent updates for our budget stabilization committee our committee has been working um very diligently in reviewing our budget and considering different options uh for the board in terms of meeting our $6 million resolution for reduction uh to put into place for our first interim budget for coming our next upcoming meeting so with that I'm going to hand it over to our assistant superintendent of business Kevin Franklin so he can provide more context for the meeting and introduce our budget stabilization committee facilitators

002all right good evening um so uh our two facilitators who have led the committee um are Craig mccalpin and Michael Taylor Craig's been um with the committee for the entire um time since the the creation of the committee and then Michael joined about halfway through um earlier this year so both Craig and Michael will be presenting the results and Josh and I will be here to answer any detailed questions about any of the financial data all set okay well good evening Board of Trustees superintendent Fuentes uh other employees of the district community staff everybody who's joining us T night remotely just would like to First actually say happy holidays to everyone uh it feels like the holiday is coming in on the rain so coming from Southern California it was nice to see uh things

003a little different up here um I grew up in the Bay area so I do always like to come back but uh just want to thank you um and uh thank you for having the time for us tonight to kind of share um what we've been going through for the last uh I think it was May of 2022 is when the committee was first formed so we've uh been meeting together a handful of times and uh tonight we just wanted to kind of come up with an update and kind of share with you um the recommendations that have been made by the committee so to get started I think I have the clicker here maybe there we go so to start the so start the presentation tonight we'd like to start with the agenda we're

004going to have uh kind of four main points that we uh put on the agenda for this evening the first one will be the budget stabilization committee what we'd like to do is just kind of share with you briefly the purpose the history the rules some of the steps we've went through just as a committee the second one will be the challenge which essentially is kind of why are we here why are we at this point tonight is what we want to do is some of the main um parts of this will be the recap the Santa Clara County Office of Education letter and then talk about some of the structural issues that have brought us to where we are again tonight today with this challenge which is the declining enrollment the structural deficit the

005overall structural deficit is a fancy way of saying if you will a deficit that's been ongoing instead of just kind of a a one time or a short time that structure deficit means a deficit has been kind of ongoing for years and then lastly talk about the covid money and how that has played into the district and the and the multier projection the myp and then the the most important this really is is students right at the end of the day why are we all here is students and so what we really want to also focus on is what is this going to what is the impact to the student learning experience at beresa going to be because of all these all these U monetary issues that we're going to be discussing then the third

006part will be kind of the main part of this presentation some of these at the beginning just because of nence of time and it's holidays and I know everybody's very busy we'll try to go through some of these a little quick so please raise your hand if you do want me to slow down but some of this stuff is more of a history part maybe we'll try to go through that a little quicker so we can more focus on the number three which again is talking about the pros and cons recommendations so I want to make sure we have the time uh for that part of the the main part of the presentation tonight and then finish with the next steps will be the last part okay so the purpose in the history again um

007this is kind of what is a purpose and again the budget um the BC the budget stabilization committee is an advisory capacity only again we were brought together to advise overall what's going and so part of this um is the understanding of the budget development and I I I want to share that Connor who's on the teamsters it really warned my heart I have to be honest about two meetings ago he he used the term structural deficit in the middle of all these conversation it just I think both Michael and I felt good even Josh and Kevin as well of hey we are really starting to discuss this and it's really maybe sinking in in terms of some of the issues that we're talking about so I know that made us all feel good in

008terms of uh some of the some of the these tough discussions that we're having but again also part of this is the transparency the involvement the consideration of budget Improvement opportunities when we say budget Improvement opportunities want to focus on that is not only expenditures right that's also the revenue part of bringing in the money to the district and looking at the revenue so just want to make sure that we um focus on not just one versus the other and then the last part again there the committee is why Where We Are Tonight which again is the rec the proposed recommendations to the superintendent and Board of Education and that's where we are tonight but before we go any further I do want to just thank uh personally you know on behalf of Michael and

009I both um just all the members who were on that budget stabilization committee it is not an easy committee to be on you know you're dealing with with tough subjects you know but I just want to really thank all those folks hopefully they're listening in tonight but just want to thank them uh for their honesty for their discussion for their questions for their their pullback if you will because again some of this stuff is not easy to discuss when it again is going to affect the students of the district and the education so just want to thank all thank all of them and also as well Kevin and Josh have been just uh uh really helpful in terms of you know answering any questions that we have you know we're outside Consultants so we're trying

010to come in from afar if you will and look at the overall Financial picture of the district but obviously we need to get some information from them so just want to thank them as well for um for for for the information they provided but also there's the local part that we are not part of this District that they really have been provided us so just want to thank them as well and then the history so why are we here so again as we all know and again I'll try to go through these a little quicker so we can focus on the Meat part of this presentation this evening but back in 201920 the Santa Clara County Office of Ed advised uh the district to start looking at budget stabilization plan because they were kind of

011concerned about the the long-term fiscal picture of the district and so then back in uh 2122 they required uh the board to to adopt a resolution which they which you all did I should say back on June 15 of 2021 to adopt resolution 2013 talking about identifying $6 million in reductions in 2223 and 2324 so again just want to share the quick history for maybe those who are also new to this conversation this evening about where the path has been and where we're going forward and then the the stabilization committee was formed in May of 2022 again I was part of that initial as an outsider to be brought in and part of the reason for the simple real reason for Budget stabilization committee is to just get a lot of stakeholders from the community

012and have them all brought in so that it's not just maybe one or two people or three people sharing ideas you're getting Buy in from a lot of different folks that are part of this part of this District so it's a great great way to bounce ideas off so again the committee was formed and um we had eight meetings and again um referenced one recently with Connor but had a lot of good meetings started off virtually and then uh it was nice to be able to meet in person I think that also really um generates good conversation when you're able to see people face to face then again as mentioned um myself and Michael Taylor are the two independent consultants and I think uh shouldn't use the word lead I think just facilitate we didn't

013lead this in terms of lead but it was really facil facilitating the conversation so again um the committee um representa representatives are listed right there and again just want to thank them all for for this uh for this and I think you guys will appreciate in terms of the documentation and the um what we're going to provide tonight the detail and the thought process it went through um again not easy decisions but I think you'll see that a lot of thought was really brought into everything that we're going to be presenting tonight the perceptions so this was um this was just kind of a question we tried to start off the whole part of the budget stabilization committee with and this is kind of like you know the the part about what are we here

014for what are your budget perceptions what what is kind of the word on the street if you will and so I think it was very interesting you know to see to to kind of hear from folks saying we don't trust it we don't know if the numbers are correct we don't why is there always this Doom and Gloom feeling that's going on so it was just very interesting to kind of hear people's of of feelings about what are the perceptions and and most of them were negative and so that's where our job was what we kind of want to do is start off with kind of budget 101 we're going to start explaining to you some of the parts that bring up the budget we're going to share that with with you as the board

015in a moment here as well but just kind of hearing those negative perceptions and then number two is just how do we get beyond your budget Perceptions in in terms if they are negative so communication again that's a key part I I know myself and some of the board was as well at the csba Symposium last week um in San Francisco and obviously that's a big part that was brought up in a lot of different semin regardless of what it's about people in the community want to know because it is their students or their or their neighbor kids or whoever it is but the communication is a big part so we've really tried to make sure that we're constantly sharing and communicating the ideas and what's being brought out of those stabilization committees and along

016with that is just transparency again a very important word and all parts of life but especially in education so especially with dollars and then the ground rules go through these uh just quickly but again we just want to just want to share this with you as well tonight that this was a committee that we you know we don't just kind of show up and talk that we had very specific cific expectations and so these are some of the ground rules that we talked about just one speak at a time um each person has their own views and we have to be respectful of that give everybody a chance to speak you know we ask people sometimes to raise their hand it got a got a little hot a few times but nothing out of control

017at all but there's a few times we said let's you know take a step back uh because again these are tough topics um so again and just uh gree to make an effort to stay on track ask clarifying questions so again I think we had very communic very good communication throughout the uh the meetings that we had um and again kind of the last to um especially the last one or second to last excuse me each person reserves the right to disagree we all don't have to come there and and and agree with everything but let's at least hear each other out so I think it was very uh open open conversations that we had okay so now we're going to get kind of part of why are we again here tonight what what is

018the the challenge if you will of why we have a budget stabilization committee for the district so again as mentioned with the Senate clar Office of Ed um a letter that was brought to the board in the superintendent back in August of 28 uh excuse me August 28th to 2023 they gave they were concerned about the financial future of the district in terms of where where the multi-year projection shows that the numbers are going to be going forward and again quickly I know Kevin and Josh had probably talked about this but an myyp is going to focus on the current year that you have which would be the 23 24 school year and then the two out years which are the next two years that are going to be forthcoming uh so they're going to

019look at that but obviously they're going to have a probably a larger view overall and look at the out years as well past that um so they provided an approval of a conditional approval if you if you remember back to a few months ago and essentially what that means is they're approving your budget if some certain things are met and the first requirement as we noted on the presentation here was to submit an updated NP on October 9th with proposed Revenue increases and expenditure decreases so again that was what was just a simple proposal again nothing was in um in concrete or anything like that at all but that was a proposal and now on the very the last two week put some quotes on there about I continue to have concerns for long-term from

020health of the district and then the last one is which is truly where we are today by December 15th I'm requesting documentation of and the key word here is detailed detailed board approved stabilization plan so again why we're here tonight so that's what they want to see now what they want to see is the uh the action if you will of proposals now becoming approved um reductions in the budget so does anybody have any questions on on this piece so far okay so this is the the main one of the main reasons why we're here right if everybody looks at this you're going to see a downward slide and this is obviously about enrollment this is how many students are in the district and this is essentially the main reason why we are here tonight

021because the district has had a decrease since 201617 to 2526 is documented here even went back a few years before that but why we're here today in terms of what needs to be done is an enrollment has dropped but the problem that the district had is that the expenses have not um been reduced to offset these enrollment so the next slide um not to give away what the next slide is going to be I'm sure everybody's looked at it already but you're going to see the same downward slide whereas what you want to see is that almost going flat or up obviously but the point is just simply that reductions in expenditures have not occurred and so that's where they need to follow this enrollment history Trend so just want to um make a few

022quick points on here and um I'm G to flip to my notes because I want to make sure I say this number correctly if that's okay but on the if you use sorry for this on 2122 if you see at the bottom and then to 2223 you see that the district had 6,258 students enrolled and then the next year it dropped down to 5,940 so just to look at my notes that was a drop of 318 students but just to show the gravity in terms of the dollars and what that does to your budget that and using a round number if you will this is roughly but there's obviously different factors for every student every student has a little bit of different money that they're going to bring but let's just use 12,000 just for

023conversation sake right now roughly about what you'd get per student that's $ 3.81 million that you lost just in that one year by this decline in students so just W to just want to use that as a a reference to show the gravity of this decline enrollment and the Steep decline that's gone on for years now do want to at least share some overall positive news again I would like to to share that these um the numbers in blue are from I believe that was beginning of October is that correct okay so those were the the calpads or the excuse me the census data for that time period so you can see that you actually had had a little increase the green boxes are represented at un audited actuals that's essentially when you close the

024books that was toward the the the middle of uh of middle to end of August and then the report was presented to the board in September but what this is showing is that and I apologize the the the red dots went over the top of the numbers but it was projected for this year to be at 5,893 but at that point at the beginning of October it was currently at 673 so that's positive news so don't want everything to be negative tonight but that was at least positive news that there are some kids coming but again the the the caution if you will for right now is just simply it is still December there's still many more months in the school year um and historically there are a lot of Trends sometimes where kids will

025you maybe not come back from Christmas break or families move so again just want to use that as positive news but that's something to be really obviously watching I know the team here and the team that they have are obviously watching this because this is a huge huge factor in many many decision um so anyway does anybody have any questions on the enrollment history so one thing to note here is uh preco 201920 uh the enrollment was 6,800 and as it came out of covid it uh dropped to 594 and now it's 6,7 so this so the the net preco today is about 8 800 780 students give take and that translates to about eight8 million would I would it probably yeah I don't have the math yeah one year yeah in in you know

026one question was brought up a lot in the budget stabilization committee meetings is where are the students going and so we did a little bit of analysis to look and one factor I thought that was very interesting is is obviously in this Tech Community that BS is obviously very much located in there are a lot of people that see looks like they're on work visas and maybe those visas are ending or maybe their job went somewhere different but there's a lot of students that fell in that category when we kind of did some analysis to to try to understand because of course and I've gone through it myself my sister-in-law brother-in-law they were probably like many people here moved to Texas you know we've all gone through that um but but an interesting one was

027just the tech sector jobs that people weren't coming back to this area and going somewhere different so that was a big part of the decline overall but there's obviously numerous factors going to neighboring districts going to private school home school I mean there's there so many so many reasons I have a quick question again can you so you pointed out the 2021 to 2022 and then the to the 2022 to 2023 number can you repeat how many students and how much how many students we lost and how much that is equivalent to in dollars again yeah and again it's not an exact number I was just trying to make a reference of using 12,000 but from 2122 to 2223 it's always hard to say the 20 it was 318 students MH and then at $112,000

028per student the loss in Revenue in state aid if you will to the district was $ 3.81 six million 3186 3816 3.8 one6 million yes okay or 3.8 million and I was just using that as a simple just to to try to drive home the point we could obviously do the math on all those and kind of see the change uh but just wanted to show the gravity in terms of what this slide is really representing and so as I mentioned the next slide unfortunately has the same Trend and that's again the real unfortunate big big issue of of kind of why we're here tonight um and you can see it's a structural deficit and so what I'd like to point out as we just look at this slide and kind of let it soak

029in is if you go back to 1718 it was up at 25% and so this is representing the ending fund balance which is at the top of the screen and so you know what is fund balance and use let's just use our own personal lives right we we have a job we bring in x amount of dollars and then we have all these expenses that we're going to have throughout the month but how does our bank account end at each day or the end of the month that's kind of essentially what the ending fund balance is your revenues minus your expenditures and kind of where you finish off and so what this is talking about is unrestricted dollars that in again back to 1718 it was 2 2.46 and now the concerning part is in

0302223 and forward now you're at 3% and why I would just want to bring up 3% right now you've probably I'm sure Kevin and Josh have drilled home this kind of number to in the past but 3% is the reserve for economic uncertainty that districts the size of beresa need to maintain in the state of California so if you go below three that's when all of a sudden more things like the letter from the Santa clar County Office of Ed are going to come come forward and so 3% is just kind of a big deal number if you will in terms of that can allow you um excuse me that's not going to allow you that's I'm trying to think of a better word that going to essentially make the budgets and all the reports

031be qualified and there's going to be be a lot more um looking at all the numbers and a lot more analysis that's going to be done by the county and potentially by the state as well so just the big concern about this slide again is it's following the same Trend as the enrollment in terms of declining where because what you as I mentioned at the beginning what you'd want to see is as the decline is going on the expenses are going to start um going down because you know you're going to have less students to to sustain all those expenses so the problem is again showing the slide it's going down and now you're at that 3% so this is where again why the letter came from the S clar County Office of Ed and

032we need to make sure that we get above that because again if one small thing can change that to where all of a sudden you're below the 3% so is anybody have any questions about this this was a lot of time was spent at the budget stabilization committee meetings uh as well because again this is um kind of what kind of what the the number if you will that the gentlemen here have to live by in terms of really kind of focusing on because this is what the multi your projection is really focus on all the time every single year so yes so uh looking at 2020 or 2020 2021 2021 2022 uh there is about A5 million doll drop uh 20 2020 during the time we did get a lot of uh uh onetime

033dollars and uh uh we were there was no uh Ada U what is it called penalty or anything like that right uh in spite of that we had that that that um that drop whe whether not able to during that same time period but if the if the Ada is uh held true if it's not there's no penalty with um because they didn't do the Ada adjustments right for for one year um so why I'm just I mean I I understand it it'll be uh the number will drop but I'm just curious why it's just such a steep drop yeah so there was the Ada hold harmless but at the same time in 2021 um 2020 2021 to then 2122 there was covid relief but there were there was also a lot of the requirements

034of you can't reduce the number of Staff you couldn't lay anybody off you had to maintain Staffing levels and then we're also facing requirements of um you know challenges that were things like um virtual you know learning and then returning to the classroom and all of those things and so um we didn't necessarily recognize all of the revenues also back then but we had this deficit spending issue already built into the budget at those same Ada levels prior which is why we got that original letter in 1920 stating that um we needed to start uh developing a stabilization plan at that time so the deficit spending already existed and it continued and was just exacerbated by the pandemic so even though we did get some of those revenues they were restricted in their one time

035and they were not within the unrestricted side of the general fund we still had um those High expenditures on the unrestricted side and those did continue and as Kevin said um just to kind of piggyback off of that and that's where the term structural deficit comes on this is kind of the slide that drives home the point to that that to that term structural deficit you can see the deficits been continuing and by deficit just meaning the overspending and so it's making the ending fund balance go down year after year after year so you're saying the five million drop from 21 to 22 is mainly due to expenditures that we had to do relating to the pandemic that onetime dollars did not help us with so we had to cut into the ending fund balance

036is that am I understanding that correctly yeah so we were already deficit spending to the to around the $ four or five million Mark at that time and so those revenues came into the restricted side of the budget and we did have additional expenditures there and we did move some of those expenditures there but there were other things as Craig mentioned as the students Dro we need to reduce expenditures we were already over staffed in Prior years and that and then we had to maintain those Staffing levels so you know we're always kind of playing catchup with um our student um Decline and Ada decline so those in 2122 we should have been making adjustments from the 1819 1920 school year and being overstaffed and then what happened was we were having to stay at

037the same Staffing levels that were already high and having to continue that while also um paying for additional um additional uh costs due to the pandemic okay I think I'm slightly understanding it but it doesn't correlate this the slope on the enrollment history seems a lot more stable than the ending fund balance history I'm just so intrigued as to why the slope is so much higher between the pandemic and 20 and the following year after that and so is it only because of declining enrollment because if enrollment is kind of like stably I would expect the drop to be from like the 20 22 2022 and 2023 the 318 students that drops be higher than the 20202 2021 do you know you know what I'm saying I'm just trying to figure out like why is

038that slope higher I I'm just not really understanding yeah so I mean they're not going to always correlate anyway but the other thing that we had too a lot of our we get different amounts of money per student depending on grade level so um at that time we had middle schools that were very large 7800 students and now they're around 600 students and that those large groups that generate higher dollar amounts per student were exiting and then they're being backfilled by students who have a lower uh Revenue dollar amount per student um so that's part of it um and so you're not going to see that exact match and so then we're also having to then make then adjustments to our staffing um and then also in 2122 to 2223 we also had things like

039um our uh retirement incentive things like that where yes we're going to save money in the future but they're starting to be expenditures um going out as we're having to pay some of those uh retirement incentive costs that's just one example um but that's why also am I missing anything else Josh I think there was um then there's just some of the other factors that are still at play to increased special ed costs things like that special requirements um those all continued to rise inflation um rise and cost gas I remember um just from I think in March 2020 to uh June 2020 I think or was it 2020 I think it was in 2021 and I'm looking over at Dan because Dan had to come over to us and say in within like two

040or three months they spent double what they normally would spend on our buses and our White Fleet within like a two or three-month period and they had we had to just increase our gas purchase orders and then gas continued to shoot up and we had to then increase so we had we had large increases in those type of expenditures that were unplanned and that you know there's not an amount of students that can make that up and those are just increased costs um but yeah Dan visited Josh and I a few times within like two or three months because of how quickly um those costs were were Rising another big cost just because I thought about it between 1920 2021 and 2122 is a liability insurance has gone up I think over 500,000 so it's

041liability insurance The increased inflation and then middle schoolers also graduating out so that's why there a lot of those are just some of the factors different factors okay thank you okay move on to the next slot oops oh here we go so this is um one slide and let me go back just one quick second I just want to make a quick Point as we move forward on our presentation we will see this slide again in a moment and what this is going to do we're going to see different numbers toward the last three years um Mr Taylor is going to make a presentation about some of the recommendations and how those will affect what the numbers look like so just want to share that we're going to see this slide again then the next

042one I'll show um just kind of briefly here and then the next slide as well so I just want to make a quick point to tell you guys the next three slides we'll see again but the numbers are going to look different uh but with this slide just um this is one that actually has the restricted so the number that's obviously jumping at everyone when you look here is that 12 uh point is that six I have glasses on I can't even see it 12.6 million and what that is representing is the restricted dollars and the main piece of that was covid and the reason we're just simply bringing this up and obviously we want to share it here as well but in some ways for a lot of districts um I was going to

043say in California but I think Nationwide our company's working with some districts outside of California that covid kind of put an umbrella over some of the expenditure issues going on and everything looked good if that's a simple way to say it kind of a layman terms way of saying it but it's because there was all this money so maybe weren't having to deal with some of the issues in terms of like hey we got to look at some of these Cuts we need to look at some of these issues that are causing us to have a structure deficit covid kind of masked that and so I just we just wanted to make a quick point today just to show you how big that number was for your District also within that is some of the

044new restricted um programs that have come out recently as well so I don't want to say that that number is 100% covid but there's elop um art music has come about now so there's some new restricted programs have come about but just wanted to show you the gravity of what Co the dollar amount that your district and so many other districts got in the state of California and then the the last slide before we move on to the to the next part of of the presentation the recommendations and this is the deficit spending I know Kevin just mentioned the term deficit spending what this is doing is showing is obviously the black line across the top there if you will is um zero everything in red is where the district you know it's it's kind

045of like if you know if Grandma gives you a dollar and then you go buy a candy bar it's a125 well maybe you got got a quarter from your friend or somebody else that's kind of defit spending you really only had a dollar but you spent more than it was that's essentially what's going on here and this is showing that we went back at 1718 for this slide that it's the district has had continual years of defit spending again this is part of that structural deficit term that we've used and then recently it does show and and Kevin if you want to expound on that at all just because there is positive news if you will on that last year but again that's barely above the line that's not necessarily ending the structural deficit by

046any means um and so if you want to expound on that just since yeah and so then just to also that as Josh reminded me too one of the one of the main reasons too that you can see here the 2122 which correlates with the ending fund balance is um we had salary settlements also that were 4% and then I think even our our off schedule got paid out in that following year so the salary settlement cost over $3 million for that year as well so that's part of that increase in the deficit spending on the unrestricted general fund side um and then what you can see here too is that we had deficit spending projected um for this current year the next year and then a slight positive and that's because we're trying to

047incorporate reductions uh due to the declining enrollment um and adjusting for Ada and then we also had the adjustment for uh the increase in students that Craig mentioned earlier so we had that increase we recognized that when we submitted our multi-year projection back in October to the county um to get the actual budget approval as part of what the condition was for their budget approval and so with that led to higher Revenue in the out years and so that that ended up um taking us into the positive in the third year so um the increase in students this year is great but it doesn't really bring any actual additional Revenue this year um because we're were funded based off of a rolling average of our prior three years so um unless you have a current

048year Ada that's higher than that average so yes we do have more students this year we'll probably get a little bit more supplemental income uh supplemental revenue for those students um but as far as lcff dollars there's no increase this year that increases realized in the next two years so you know that's kind of a good thing and a bad thing because you have an influx like we do this of TK students but we don't get um recognition for those students and the increased cost that's associated with them until the following year so hopefully that makes sense okay well anyway I'm gonna um introduce Mr Taylor thank you um for the time I might jump back up as well but just want to say these are tough decisions to make um myself and both Mr

049Taylor have been cbos for years at districts and we've gone through a lot of the same stuff so um I do appreciate the the format that the superintendent set up for the budget stabilization I think that was very wise to just have again that transparency in a lot of different stakeholders inolved so I think that was really a um a lot of good conversation came about so from that we'll kind of talk about the recommendations so I'll let Mr Taylor have the podium well thank you correct good evening ladies and gentlemen um what I'd like to do before we head into the next set of slides is to provide a little more context based on what you just heard Craig has done a very nice job in kind of setting the stage as to where

050the district has been and also the challenges that the district will continue to face if some hard decisions are not made so let's start with the context I'm adding a little bit more context let's talk about covid Co has had a tremendous effect on school districts even now that were past covid as I want to say your name member board member Joe H hog yeah so your point about the significant decrease in that one year and then in the next year you see a spike in the restricted column and that's because of a huge influx of covid dollars so covid dollars kind of came in the trickled in at the very beginning during the pandemic and then there was a massive infusion of dollars to districts so that could be a one of the reasons

051that you see that huge decrease because districts had to buy PPE right away and all those covid dollars didn't show up just in one day it took some time for those covid dollars to actually come in so there were two factors one covid and the impact on School District as far as additional expenditures second declining enrollment as Craig mentioned the district has been losing kids for a number of years and you've been losing millions of dollars in revenue for a number of years and when you have a healthy ending balance you can absorb that but you can only absorb it for so long because that ending balance at one point will run out it will run out the other thing I want to commend you all for usually when we give these kinds of presentations

052people have math anxiety because we show a lot of numbers we show a lot of graphs and I got to say you guys are doing a really good job in keeping up and asking some really good questions so let me see if I can get this going recommendations so a big shout out to the committee we had some passionate conversations and I want to use the word passion because there were some passionate conversations about some of these issues this is aough tough subject a lot of different opinions a lot of different viewpoints but that's good for the conversation and these recommendations that you're about to see are result of those tough conversations those different perspectives coming to the table and not having two or three people sitting in a smoke filled room and coming up

053with the grand plan the budget stabilization committee was a collaborative effort we're all voice were allowed to be heard so recommendations and I'm going to go through each one of these separately and right now you see a blank slate moving forward well let me just explained the green those are Revenue recommendations renting leasing District property selling District property and the yellow are expenditure reductions and we're going to go go through each one of them separately and talk about the pros and cons for each one of them and allow you to have to ask questions about every one of them so one of the questions we were asked well when is this funding for these recommendations when would the district be able to use that funding in the first year this year not going to see

054any funding from any of these initiatives because we're already into the fiscal year and selling District property is a long process consolidating and merging schools is a long process Staffing reductions and we're going to talk about that in just a few minutes that's a process that doesn't happen in a couple weeks doesn't happen in a couple of months and a supplemental early retirement program again it's a process does not happen in a couple of months so the first year the year that we're in now you're not going to see any any funding drop to the bottom line now that changes when we get to next year where we see we have the potential of about four and a half million dollar being available to the district to address its budget and fiscal challenges item number

055one renting and leasing empty sites or classrooms a possibility we estimate about 76,000 but it could be higher it could be less and it's not guaranteed and again we're going to talk about them individually next year in 25 the following in 2526 selling District property is probably the big ticket item and during the committee when we talked about this a lot of the members said Craig and Michael $42.5 million we done let's go home not so fast not so fast and we're going to talk about this in detail consolidating emerging schools if you have declining enrollment do you have excess capacity at your sites and the answer is probably yes do you have do you have a school as an example that has a capacity of 800 but only 350 kids in them and is

056that an adequate utilization of your school district facility it's a rhetorical question but I think this is an area where the district could realize some savings some potential savings and we're going to talk about this in detail also item number four and this was a very contentious issue within the committee very difficult because you're talking about people's lives you're talking about their income so we spent a lot of time talking about this but the challenge here is when you have declining enrollment and you're losing millions of dollars and your expenditures are not being reduced correspondingly that's going to catch up to you and that's where we are the declining enrollment the loss of millions of dollars in revenue and expenditure staying relatively constant has caught up to the district and as Craig mentioned the covid

057dollars helped mass that because that infusion of millions of dollars but those are one-time dollars and they will run out in fact eser 3 will run out in September of 24 so again just providing that context so you fully understand the gravity of the the situation item number five supplemental early retirement program a lot of districts use this as a method to have people retire and we give them an incentive to retire I think based on Kevin I think you've all have done a a supplemental early retirement program about two or three years ago so I'm not sure if you when you run the numbers there's usually uh a technical term is scanogram how many people are eligible to retire and if the number isn't big enough the program doesn't pencil out the financials do

058not pencil out and right now it was brought up as a recommendation but it's probably based on preliminary data it's probably not going to pencil out so again these are the initiatives and also when you could expect to see the benefits I.E the fin financials or the dollars associated with each of those benefits in each year so I want to come to a full stop I know I've just presented you with some information there's more to come any questions Sir with the supplemental early retirement program if it does materialize there is a cost involved um to have those uh employees retire so does that offset some of the other that would I would imagine it will offset some of the other costs savings that that we might have so as a rule of thumb supplemental

059early retirement plans the way districts essentially derive savings by is getting a large number of teachers to retire but districts are usually always forced to also offer the supplemental early retirement program to classify people and because certificated salaries tend to be higher that's where districts can actually realize some savings and districts realize Savings in either not backfilling those positions when people retire or they bring in a relatively younger teacher at a lower salary and the districts realize the Savings in that increment the more I would say mature teacher is probably at the far end of the salary schedule you bring in a younger teacher and you have a salary differential so there are two ways to derive savings the salary differential or not backfilling positions so hence you a question if it does if you

060have enough people specifically certificated a Ser could work and it also depends what kind of incentive you give of them if you give them 50% of the salary 60 70 I've seen districts give 80 to 90% and those are some very healthy retirement incentives so um any other any other questions will you be going over how you got the numbers like the 756k and the 42.5 million later um yeah and I think we we we did some prelim we don't have the actual calculations but we did preliminary calculations for each one of them and so um so we're not going to go through the exact calculation no okay but we can provide that information on how those numbers were derived yeah would be useful for later thank you any other questions okay now for those

061of you who have math anxiety we're going to talk about numbers so you just saw as Craig presented a similar slide there are two fundamental changes well actually one what one of the the important changes here is unaudited actuals the District closed its books for last year and was able to realize an increases in its ending balance which means that the beginning balance for this year was a little higher I think it was about 427,000 or thereabouts so that helped the second thing and in yellow below at the very bottom of the slide you see the budget stabilization committee recommendations of three and four let me go back consolidating and merging schools and Staffing reductions are included in these numbers and as you can see the district's Financial picture improves let me just give you

062again a little bit more context when you look at the very have a when you look at the far end of the of the graph when you see the look at the far end of the graph and you see this trajectory downward you see that the district has an ending fund balance of above 3% which is fine as Craig mentioned the state requires that a district of this size have an ending fund balance or at least 3% set aside for economic uncertainties you've come down from 22% on average elementary school districts in the state of California are around 20% on average you're now around just above 3% you're hovering above 3% so you're very close you're just barely being able to meet your financial requirements now this includes the Staffing reductions and also the school

063consolidation initiative so the financial picture gets a little bit better let me just offer again the similar Slide the same slide but also includ cluding the restricted dollars and that big blip that big spike those are the co dollars and I think the district is just about out as as far as Co dollars are concerned and so again those those covid dollars a lot of most districts in the state of California received a lot of covid dollars and we're able to use those covid dollars I think it's also important to realize that with those covid dollars there was a lot of flexibility the question that we got all the time was Michael can we use it for X can we use it for y well the language is kind of it's not very clear and

064that was on purpose to give districts as much flexibility with using this funding and dealing with the pandemic so again the district's financial situation has gotten better specifically because of recommendations number three and four and the deficit spending has also slightly improved and again if I could direct your attention to the very far right instead of one small green bar now we've got two and so again because of these recommendations the district's Financial picture has gotten better again structural deficit we're still projecting a structural deficit for this year but moving out into the out years it looks better again with these recommendations um I just want to we're going to get into each one of the initiatives but there's some important information that you all need to be aware of if if you're already not

065aware of it we just recently learned from the legislative affairs office the Lao that the projected Cola for next year is going to be an anemic 1% I'm sorry it's 1.27% let me repeat that one a cola of [Music] 1.27% your fixed costs your steping column the cost for utilities that's a lot higher than 1.27% so that's what's on the horizon the other major initiative the state of California delayed collecting tax receipts from April through November estimated tax P receipts projections are down $26 million billion I'm sorry billion billion those are two major initiatives that we don't really have any answers for yet and we're just dealing with our current situation with a one% cola and we had for next year we had I think 3.9% in the budget or in the multi-year projections how

066is the district going to address that what's the state going to do with a 26 billion dollar shortfall in Revenue receipts we don't know yet we'll have to wait until the governor comes out with his January budget proposal so before we get into the individual initiatives any questions okay renting leasing District property the pros and I was made aware I did not know this that pros and cons do not have apostrophes and have always used apostrophes so thank you Bara for reminding us of that or allowing us to make that grammatical adjustment so renting leasing District Property Pros as was seen in the in the slide before the previous slide estimating about $756,000 now it could be higher it could be lower but there are no guarantees here it would essentially establish a regular income

067stream and IT addresses the structural deficit problem con limited funding outside entities on School District property getting comfortable with change and again there are no guarantees um potential available sites at the very bottom Birchwood former district office existing classroom space so just wanted to highlight that and then so I'll just kind of add on since I know that you had the question about how did we arrive at some of these numbers so what this particular dollar amount is is the projected Revenue if the pedmont road district office is rented out it's currently up for lease there's an RFP out and so that's how we derived that figure um Birchwood is currently um under a lease agreement but of course things can always change there's limited term to that lease and so there's always potential with

068that particular site as well so I just wanted to bring that up um to help clarify where those numbers came from and just for further clarification the dollars from the Birchwood lease agreement is not part of the 756 because it's already a component of our existing Revenue correct and because we've had the peont road uh office um listed for leasee and there had been interest at various uh points in time uh this dollar amount has already been included in our multi-year projection so the change that would come about from the leasing of that property would be if we leased it and we going to receive more revenue or if we were going to receive Revenue at a at an earlier date um you know or if we leas at a higher amount per square foot

069um that dollar amount was also generated from I believe leasing it at um uh us still utilizing a portion of the site and um we are now going to lease the entire the entirety of the site so that number could go up um but again that's all just based on the lease terms um if and when we do have a tenant and so that's why it's not in the current year it's in the the two out years um and then of course leasing of any of the other sites or additional classroom space would generate dollars over and above that dollar amount but just to be conservative we we did not project anything higher than what was currently out in an RFP right now it also does not include the potential of leasing out the group

070of Portables at Birchwood um that's in the currently Le agreement with mil pedus Christian [Music] School was land leasing considered in rental property or was it only for existing facilities so with this this was for we didn't have a lot of discussion about land lease but what I can tell you from the research that I've done with uh a land lease the site that would be um the one site that would have potential for a land lease would be the Pont road district office property versus either Birchwood or um Commodore um which would be um the vacant site that we have over kind of in the Vincy Park area um and the reason being is that typically you have um you know commercial properties that are interested in the long-term land lease or apartment complex

071um and I don't think that either Birchwood or Commodore would be a viable apartment complex or or commercial type site um but the pedmont road location potentially could be um so there would be that potential but that was not discussed in detail with the with the committee they didn't bring that up it was more of leasing out current facilities um or the selling of property which is on the next uh slide sell a sale of District property we had a lot of conversation about this and at the very bottom potential sides Birchwood former district office and commodore projected revenue from a sale almost $43 million part of the pros is less property to maintain reduce Insurance liability the challenge here as we get over into the cons as we look at a structural deficit 42

072and a half million dollars is a lot of is a lot of money however it's onetime money and it really does not address the district's structural deficit issue so even though it's a large sum it's onetime money and we all know one-time money if you keep using it at some point it will run out so potential 711 committee not that that's necessarily a bad thing but it's a process but since these were not from what I understand these these these uh these properties were not used for educational purposes or at some point there was a waiver that was extended correct so the pedmont road office and commodore have never been used for anything um other than their original intent which was an office or vacant uh land uh the Birchwood site was previously used as

073a school and that's why milp Christian School is leasing that property but it was surplused in 1984 and so I don't believe it would need to be surplused again and so since that property had been surplused uh we would not be required to go through the process and so as we continue to look at the cons what are the legal implications from what I understand the city of San Jose has some specific parameters as to what who owns the property and again Kevin if you could just elaborate on that I can go ahead and elaborate on that so just knowing that um the city does have their Ur you know their large Urban PL in um vision and so any uh change in zoning of properties that we would want to do in order to

074match uh a potential buyer would have to go through the city of San Jose uh permit process uh currently if that intent is not in alignment with the city of San Jose's urban planning Vision it has potential to not be approved and then also since this would be a process the earliest you could probably see the funds would be 25 26 so that's a ways out Michael can you also please clarify um when you sell property uh the usage of that funds are there limitations for example yes so getting back to number two legal implications so it's not necessar it's not necessarily true that just because you sell District property that it all goes to the general fund there are strict guidelines established in Ed code as to how much of that funding from the

075sale of surplus property can be used in the general fund so those are also some of the limitations associated with the sale of District property now could you use it for some major deferred maintenance kinds of issues yes but to Mo to transfer all into the general fund there are there very specific limitations on how much can be transferred Kevin I don't know if you w to yeah and so there are some um legislative flexibilities right now that um allow for a broader use within the general fund those um uh those do expire though June 30th 2024 and so my understanding is that for you to be able to have that broader use within the general fund you have to be under contract with um whoever you're selling the property to by that time frame

076you don't have to have completed the sale but have to be in agreement with that and then even after that there's a process like Michael mentioned so even though you have allowable use within the general fund you can only use it for one-time expenditures and those expenditures have to be approved by the state allocation board so you have to come up with a plan of expenditure submit to to the state allocation board for approval and then they will uh approve that usage or disapprove the usage within the general fund um so that could help alleviate some of the strain on the general fund and some of that deficit spending but again it has to be approved by another entity and can only be used for one-time expenditures so they couldn't be used for ongoing salaries

077but it could be used for other one-time costs within the general fund so is there a is there a percentage U of that is assigned that we can use in the general funds for salaries and things like that so with that flexibility no but um but I don't know what the parameters would be that the state allocation board is looking for for allowable use and of course you only have a certain amount of of one-time type expenditures within the general fund so being that you know over 90% of our general fund expenditures currently are for salaries and benefits those are ongoing costs that are not one time in nature so that in and of itself limits the amount that can be spent for one-time purposes that doesn't mean that you can't set dollars aside so

078I believe New Haven um utilized this flexibility many years ago the only other time that I'm aware of that this um this provision within the Ed code was uh flexible uh to allow this and what New Haven did was they set aside a certain amount of the property sale um as reserves um that they will not touch to always maintain fiscal solvency within the district and then they had some other um one-time retirement costs that um they put in their plan uh for expenditure and then some other Capital facilities projects and things of that nature but they did use a portion of it as a one-time um kind of payment into the general fund to set aside for um economic uncertainty and that was allowed at that time of the state allocation board how long

079ago was this case New Haven I want to say it was more than 10 years ago but you could still find it on their website they still have that there they still have the FAQs about the process they went through and then how much was set aside at that time with the provisions that New Haven had still even apply if it was a decade ago yes because it was the same when they brought on the new this flexibility that was enacted I think two years ago for property sale um it's the same Provisions so it's the same rules and requirements and I think historically if we could point to New Haven's case if that was something that we as a district wanted to do I think we would have a strong case with the All

080State allocation board to approve a plan similar in nature I I would just add that there's probably if the district does decide to pursue this particular initiative that it's very important that you all get a legal opinion because of the different all of the different possibil ities and that you stay within Education Code government code as it relates to this particular issue any other questions on the sale of District property so I have a very specific question and I apologize it's a very specific question for various commodor property um so there there is a lot of incentive right now uh with the under the the inflation reduction act for school districts to build um to lease land for EV charging uh stations uh and there's like deep discounts for for school districts or tax credits

081for them to bring up EV charging stations I think the Comal property like it's it's right in the middle of the neighborhood it's a open next to a park there's nothing going on there that could be a prime location for something like that if uh if you want to look at something that yeah that was something that that we did internally discussed I've had some of those discussions with staff um a lot of it is is paying for that onetime upfront cost um and then how do we maintain that how do we staff something like that but you know if that is kind of the next question is if you know property sale is not something that that the board wants to do um we need to look at other Revenue generating ideas for the

082property um a lot of the ideas that we have unfortunately come with a lot of upfront cost and a long uh time to recoup those costs but uh we did look into um we did start to look into the charging stations um we were looking at some of the portable ones um but a lot of that is just infrastructure um there's no infrastructure there right now and so that would all have to be installed that would all have to be uh paid for UPF front and so that is something that we could take a deeper dive look into if that's um if that's what the board would like us to do for that potential property um and so then I will mention that the $42 and a half million dollar that you see on here

083under the pros um that is kind of derived from what either the Commodore or Birchwood properties would net as a uh property sale just using comps for about a 10 Acre Site um in the area um of course if it was the pedmont road office um space that's um that's a lot less acreage I think it's around three or four acres versus 10 so that would not net that much um Revenue um but those two sites just because those are the larger sites um that was the number that was used and specifically because the committee had um been talking specifically about the commod property that was why that dollar amount was um utilized for for this plan 10 acres or 9.9 yes it's for the whole property including the fields except after I think either

0844 or 5: PM and then the fields are um utilized by the district um but again because this is a long process miled Christian's lease expires in a little over two years um I don't know that that would prohibit us from um being able to uh look into selling of that property if that's the direction that's given um I think there's also um less strict optout or termination language within our lease with them um with the least extension that we gave previously it was having to give a three-year um heads up um or three-year notice for them I don't believe that the language is um is that long anymore so um but again the process is a long process it would probably take one to two years um to sell that particular site we would

085have to rezone that site that's site I think is either is zoned agricultural just like uh the district office property so it would be a long process where I believe mil petus Christian could probably stay at the site for the entirety of the lease I kind of like the idea of doing something with the Commodore property not necessarily selling it what are the options there um you know to keep it but yet generate some revenue from there such as the like charging station idea how about like you know sports facilities or something like that that could be rented out right so sports facilities we talked about especially when we were talking about the purchase or the remodel of the former district office property um and what that would entail and I and I think we

086even had run a scenario where Sometimes some of the developers would come in and say we'll do this and and we can maybe help develop a site like that we didn't get any um interest on that we we had the idea of sports properties um the cost to put in a sports property on on around 10 acres would be relatively High and the amount of Revenue that would come in from leasing out property for sports um it would take a long time to net um positive um gains out of that um but that is something that we we had thought about um the other thing that we had thought about besides um the charging stations we thought of storage facility um I know that it was even brought to our attention that there's a high

087demand for boat storage um again I don't know that the community in that area would want something like that um so we have ideas um it's just you know then do we want to uh how how much do we want to look into them and and are they realistic in uh bringing in uh positive revenue for the district yeah and these are you know more long-term things but you know like Commodore perhaps and you know and we don't have to sell the whole property right so for Commodore or for birwood if we were to decide to sell one of those it could be half of that a third of that and it could still a developer could still do something correct you know maybe build some homes or something like that yeah and that that

088goes for all of our properties so not even just those ones that are vacant or that are under lease uh some of our properties have a lot more field than than what um our schools currently utilize or they just have areas of um just dead grass or weeds um that just aren't utilized At All by the schools so that could be analyzed for all of our properties as well yeah actually that's a pretty good idea so not just you know the vacant Properties or properties we aren't using but there might be school sites that have extra land especially you know the ones that where the enrollment is kind of low um and I don't know if there's a requirement for a certain am number of students or just for a School site in general if

089there's a a requirement um but maybe you know at least selling bits just bits here and bits there could could get us there and it' be a whole lot easier than selling like say 10 acres right I think the key to to remember with the selling off of a piece of property is the length of time that it would take for us to do that analysis or to have a real estate consultant do that and then actually have that listed and go through all the legal um items that we'd have to go to go through to sell off a piece of that land to realize the actual general fund um flexibility that would have to be done in the next six months um so I'm not sure about the feasibility of that these were highlighted

090because these are already Surplus properties uh with the district so the requirements that we do it within the next six months that is only to meet the current flexible legislation change that current exist without that flexibility though that Revenue could be placed where only Capital facilities projects or um maintenance right I mean but that's as that money could go to that but then the savings there from that from those revenues could be used for other things now right so most of our capital projects are all gone are all done through the bond not through the general fund so we don't have any how about like maintenance and stuff like that it can't be used for routine restricted maintenance so it wouldn't be able to be used for our daily um maintenance issues that we have

091it has to be for actual Capital facilities um projects okay and you're saying six months because of the June 30th expiration of that flexibility law essentially now if that gets extended I don't know if it will if it does um that's why it's good to have these conversations because if there is that if they do extend that flexibility um then it's good to know and we can we can continue to look into some of these ideas the extended flexibility is that from a state Bill and it just has a Sunset date yes is any do do we happen to know any legislators who may be working on a bill to extend that is that I haven't heard anything about advocacy towards that that some I've been mentioning in my meetings because we're not a district

092alone that could benefit from having that particular um language being extended past June so it's not a priority of like csba AXA no I have not seen it on anyone's list formal listing yet but a lot of those platforms are being developed right now and that's not to say that with a lot of the talk about school consolidation that it can't be brought back so as more schools have unused uh School sites due to the fact that enrollment is declining um throughout California um it could definitely be brought back um but I haven't heard anything what's the ACT call or the law that's on setting I have to go and look up the exact one but I can get that for you yeah yes please we can ask people in the legislature yes so the

09342.5 is that the the net cost or the net um say revenues from potential sale of all three sites or just two or no just one one one 10 Acre Site oh one 10 Acre Site how much is one acre so I guess it' be four about $4 million yes so if we were to say you know like one acre at the Birchwood C campus or something like that yeah so former district office property on pount road would be about 10 to 12 million okay but we wouldn't have to sell so I mean I'm just saying we don't have to sell the whole property we can because I'm not a fan of getting rid of property because we don't I mean first of all it's you know it's an investment to have properties with the

094price of real estate the way you know the direction it's headed and then we don't know the needs of the The District in the future right I mean we're looking now we're looking five maybe even 10 years down the line to 20 30 years um you know land's going to be much more scarce population are going to be higher so the district might need then but you know I think that if we have a 10 Acre Site maybe you know being able to sell one acre um and we have you know a couple of properties that are like that it's two acres Etc and that was something that the that the committee did talk about and um and so um I think when we get to the next one and talk about uh School consolidation

095that's where the committee was then more open to the the sale of a whole um site like Commodore because if we do consolidate or merge schools then there would be a vacant site um then available as well and that we would have then unused property so if there was growth um in the future they were they were um satisfied with knowing that there was still a a property that uh we could utilize again as a School site so um that's kind of some of the discussion the committee had Is it feasible to sell something or like get that agreement within that six-month period though like is that some like a Poss have we done that before in the past or like is there history that school districts are able to get an agreement within that

096six months so that's a good question I did talk to our really real estate consultant about that um you know if we had things in place um which some of the sites do some of them already have a waiver Birchwood and the the the pedmont road property have waivers already it's um it is feasible it's it comes down to the city of San Jose and and and is it part of that plan or not and can we can we do that and come into contract the developer so when I talk to real estate consultant um there's current uh Pleasant and UniFi is currently going went through the same same thing and they were going to sell a property one of them was a 10 Acre Site similar to Commodore and they got under contract within

097um two and a half months and they had they put out an RFP and they had uh six developers bid on the RFP thank you so the district wouldn't have to do any kind of uh rezoning or anything that's something so say the the former district office site has it's I think agriculture right so the developer potential developer would then purchase side and they take care of everything that's actually contingent so that that offer for sale um is contingent on that resoning happening to their favor so that's sort of the holdup of what's happening in Oak Grove School District right now right Commodore is currently zoned residential right and so that's the only one of those three sites that's residential um at the moment right okay any other questions on the sale of District property

098so as you can see a lot of moving Parts a lot of legislation involved a lot of parameters um this legislation the way it currently stands is about to the flexibility as was mentioned earlier is about to expire could the district maybe take advantage of that six-month period possibly um but it's a process to sale of District property and um I think this is a good segue into the next issue consolidating and merging of schools and Michael before you go on I'm just gonna add to the board that uh this evening because of the six-month time frame that we have with this legislative piece we are interested in getting feedback from the board regarding sale of District property Andor any of these ideas you've had regarding land lease and and um specialized projects on the

099vacant land that we have at the Commodore that we get feedback this evening so that we can then move ahead and reach out to other Specialists to be able to bring those um potential opportunities back to the board okay so I just want I know you're hearing a lot of information so I want you to let that resonate before we go into the next area because we we will be seeking Direction at the end consolidating and the merging of schools again this is a a result of declining enrollment as I mentioned earlier this is not unique to beresa a lot of school districts within the state of California have experienced declining enrollment and so they're faced with a situation where they have excess capacity at their schools as I mentioned earlier a school with a

100capacity of 800 might only have 350 kids is that the adequate utilization of that school facility space most likely not but a lot of districts are looking at this and had the opportunity I think well I saw you all at the csba conference last week in San Francisco at a one of the breakout session centered around school consolidation School closure and I think they had six breakout sessions and I had an opportunity to go to maybe four of them so this is a Hot Topic a lot of districts are wrestling with what to do with this excess capacity at their sites generated by declining enrollment so we did take a stab at this and had I would say a robust conversation about school consolidation School mergers and so looking at the pros uh reduced number

101of combination classes opportunity for Teacher collab ation improv differentiated instruction so one of the questions that I asked one of the panel members at the csba conference do you have any data any metrics to support that the consolidation or the merger of schools actually helps with student achievement and the answer was we don't most the consensus is that the that the inform that the that the um that the results are mixed at this point but you do have the opportunity as is outlined on the slide to reduce the number of combination classes the collaboration among teachers would be improved and also the opportunity for differentiated instruction item number two under Pros generates about a million dollars and we do have the calculation for that the specific calculation working with with Kevin uh and also a

102cost model that we have we've done a few of these ourselves as a firm working with District on consolidating emerging school so we do have a very robust cost model to help us gener uh generate potential savings it would reduce expenditures and keep in mind that when you're consolidating emerging schools you're probably going to have some redundant positions do you necessarily need two principles do you need eight custodians so those are some of the tough questions that you have to a uh uh answer it allows for the repurposing of schools ensures efficient use of District uh um facility assets and it allows you to look not just at one or two schools an initiative like this allows you to look at the entire District we're working with a district now where we're looking at the

103entire district and looking at where is most of the decline happening and what actually makes sense when it relates to consolidating and merging schools now one of the unintended consequences is when you merge two schools that there's probably going to be a vacant site then the question is District what are you going to do with the vacant site and again that's another process a district that I worked with about three months ago that V one of those vacant sites was going to be turned into a sports facility it was a High School District a lot of Athletics and they needed more space for athletics so one of those vacant sites was going to be turned into a sports facility um IT addresses the structural deficit because you will be reducing your expenditures and again most

104of the reduction in the expenditures come on the Personnel side now are there some savings on Material supplies operating expenses routine restricted maintenance yes but a majority of the saving come from Personnel reductions now one of the ways that districts can help mitigate that reduction in Personnel is Again by not backfilling retiree positions also not backfilling vacant positions some of the cons staff and students have to move you will have personel reductions because of redundant positions there could be there probably will be some negative Community feedback because this is a very emotional issue people are very passionate about their schools especially neighborhood schools my great great great Granddad went to these schools I dare you these are some of the these are some of the comments that you get and they're real but there's also

105a financial reality associated with keeping schools like that open we worked with a major large District up in Northern California Elementary School capacity is 600 150 kids in the school you have a lot of excess capacity it can be a lengthy process our recommendation if you decide to pursue this give yourself a long Runway give yourself time do not do this fast think it through have a committee with multiple stakeholders to really talk about all the possibilities communicate to the community get feed back listen listen then communicate some more and if you communicate that's great and you will probably do a nice job in communicating but there will be someone that will say no one told me there will be one or two or three or four no one told me so communication having a

106a good communication strategy on this particular issue is very important getting comfortable with change and the earliest where the funding would be available 25 26 so that's Downstream but definitely within the realm of the possible so that essentially and then also at the very bottom the node you'd have to set up again it's a process a separate committee to help facilitate this conversation about what's possible so one note about the the fund uh the amount of funds generated from this particular uh recommendation the $977,000 is an average of the an average of the average cost of a middle school and the average cost of an elementary school so it's an average of those two so we we took you know what is operating one of our elementary schools typically cost what is operating one of

107our middle schools typically cost and we average those out so an elementary schools about $700,000 or so in savings and a middle school is around 1.1 or $1.2 million in potential savings ings so that's where that number was derived from so again this number is is um flexible of course if if this does move forward and it's an elementary school only then the amount uh of savings that it would generate would be less if it's a middle school it would be more if it's both an elementary and a middle school then we would have a significant uh amount more than that um in savings so typically the the process to um from start to finish to close the site School site uh takes like a is that a year that it takes or is it

108so the process to make the decision on which schools that would be impacted I would say takes anywhere between four to seven months where the committee gets together and then comes up with a number of options presents them to the board you have a number number of community uh meetings to talk about what the committee came up with and then again giving yourself a long Runway give yourself about a year for planning for the closure and also the welcoming school might need some modernization efforts to welcome the new schools from the school that would be essentially closed so a year gives you enough time to do that get the facility the new facility the welcoming facility ready and also get the community as much as you can on board with this change yeah and I

109think to some of what the committee discussed too is that this is not necessarily black and white that it's this school or this school or it's in a certain fashion so I mean there were other ideas discussed of how can we reconfigure schools is that a K8 is that making you know one of our schools School sites a K8 is it k6 that c certain School sites is it you know there's a lot of options and so those are options that could be discussed that will change those dollar amounts um just dependent on what um what we want to do as a district and so like Michael said there could be some reconfiguring of School site so if if a K8 was something that we wanted to look into then that would you know the

110site would have to be chosen and then we would have to make adjustments um to that site so if that was taking one of the middle schools for instance and and having that become a c 8 school then of course playgrounds would have to be added classrooms would have to be adjusted to have um kindergarten students and some of the younger age students in restrooms so some of those um are costs that we would have to incur incur uh to do that but those are ideas that the committee um discussed and they know that that's then going to be further discussed by another committee on how to do this process but those are ideas that were discussed uh during this process so one sorry oh go ahead I'll add later yeah so one thing you

111just mentioned K six uh that's been in my mind for a while but uh I was uh not sure about the logistics of how that would work but anyway my um question is and not to alarm anybody in the room uh if we decide today to close one particular site uh for example uh from today it would take a year give or take to close it site um 2022 23 24 and then we immediately realize the revenue in 25 26 or is it still one more year after that it would be 25 26 so as soon as we're currently in 2324 we would have the process go through and into the 2425 let so let me just add there's three phases to the process and they can vary in terms of time based on the

112conversations the first phase is going to be the longest because the first phase will be an initial committee that comes together and there's quite extensive research that has to go into this process there's lots of variables that's going to be considered um you know they'll have to look at enrollment of every School site they'll have to look at what are the trends of the incoming Kinder students uh incoming sixth graders for every site uh they'll have to um examine the facilities are the you know what is the condition of the facilities so when we have um you know a vacant site how is that going to be in terms of uh easily accessible for lease or whatever we choose to do with that site right so all of those components this committee will review um

113they will also uh review traffic patterns you you know safety zones um where do children live in the neighborhood what's their capacity to get to a new school uh the legislature uh passed a recent uh Bill knowing that Statewide California is facing declining students and that school consolidation is going to be something most districts are going to have to address uh there's now an equity analysis that's required to be done by this committee so that's another review process so that phase one is going to be the most extensive then um once that committee uh PR presents to the board different scenarios different configurations that's where the uh programming will also be discussed there right what is that vision for learning environments for our children is it K8 is it k6 what does that look like

114so all of those topics will be discussed with that committee then once they present that to the board then at that point the board would make the decision you're not making a decision to uh close or consolidate schools tonight we're just looking for direction to commence this acttiv this committee to do this review process and then they will bring that information back to the board and based on those scenarios created by them then the will the board will take action based on that feedback if at that point the board does decide to move forward with saying okay we like you know when one or two of these scenarios the committee has provided and it does involve you know School consolidation or merger or creation of a new type of school then um we'll go into

115the board will take action to approve that recommendation then we go into phase two phase two now is another committee which is the 711 committee which now has to uh there's lots of Regulation State regulation that that group will need to adhere to to determine what do we now do now that we know which sites will be available for potential lease or sale that committee will do a review process of that and bring that recommendation back to the board and simultaneously I would recommend we'd have another committee over here on the side that is also working on transition of those students to their new locations because you want to make sure that there's planning for that in terms of addressing the needs of those families of those students of the staff how to welcome them

116into you know a new school site so so that would be another planning process if that makes it a little bit more clearer of what those steps could include any more questions on consolidating and merging of schools okay so Staffing reductions the pros the funding would be available and there specific positions that have been identified and they're not listed here but what we have is the potential savings are not backfilling those positions so the funding would be available next year and next year would be about $3.7 million and the following year would be about 4.1 million dollar and I want to make a distinction that the 3.7 would be ongoing and then so you would have an additional 300 or 400,000 tacked on to that 3.7 to get you to the 4.1 million the district

117recommendation to help mitigate the impact of this use retiree positions and vacant positions and not backfill them to help mitigate the impact of this Staffing reduction District probably should look at it Staffing ratios teacher to student ratio at each of the sites are you at 24 to1 are you at 30 to1 how does that align with the current contract this would definitely address your structural deficit because you are reducing expenditures on an ongoing basis cons layoffs that is just one of the consequences of this particular initiative and then also the potential negative morale so funding would be available next year at the very bottom right you see in yellow the number F FTE certificated classified and management then I know Michael pointed this out too the the Lao putting out the co at about 1.27%

118um a reduction from the current 3.94 down to 1.27 would be just under $2 million in revenue for us so if that's what the governor's budget is in January for next year as far as the cola and then again just because that's the statutory Cola because of the tax revenue shortfall is the cola going to be funded that's another question to ask is there going to be any backfilling of that will they fund above the Cola with some of the rainy day funds um any of that um we have to take that into consideration so an additional one and a half to $2 million um in additional reductions on top of this may be necessary for us to uh identify between now and the second interim so this this information just came out last Friday

119so it's all relatively new which is why it's not in our first interim um we're moving forward with the 3.94% but that's what's going to be um necessary between first interim and second interim is is the recognition that the revenues could uh drop as a result of the cola being calculated at a lower uh percentage and so to add on to that and I think you just alluded to it Kevin is we don't know yet and how these two issues are going to unfold but is this an opportunity for the state to use its rainy day fund and is it raining a lot of districts will be impacted by this so it seems that this would be a perfect opportunity to invoke or use the r day fund to make sure districts are not severely

120impacted by this information and then also I'm sure you all know next year is an election year and so things can happen let me just leave it that way quad question yes so those are those are positions that we've come with that would get us to the amount of savings that we specify here which um get us to a balanced budget um that you could see on those previous slides and get us into the positive in that about $1.2 million or so on the third year we don't have titles at this time the certificated positions on the first line and Kevin correct me if I'm wrong but that also is inclusive of what we typically do year toe based on student enrollment yes so that takes into account some of the um positions that we

121already plann for in reducing because of declining enrollment from year to year and so uh so knowing that going back to the pros side in terms of the process we always go to any retirees those will be counted against those numbers any uh staff members that move out of the district you know for New Opportunities Etc that will all go against those figures and uh we will not backfill you know those positions unless required to do so so that's our first attempt so you know I know that um for certificated there's a long um Lane for them to tell us for retirement you know they don't need to tell us right away but we would encourage our staff members to let us know if they they know that they plan to retire if they know

122that they're moving and are going to be going to you know a new workplace the sooner we know that information the better it will be for us and to support to the staff that do stay with us so that way we can uh provide more accurate numbers of what we need to um reduce and that's you know and that was brought up multiple times at our committee meetings is that this plan is a fluid plan and that's exactly why you know depending on what retirements we have that changes some of those figures if you know it's some of the the higher cost staff that retire maybe that number goes down um of course like I mentioned with the lower Cola we will have to potentially increase those numbers and that's why the plan also needs

123to be fluid and we need to have multiple um items identified um just beyond um Staffing uh to try to help uh balance our budget does the same go for classified stuff same cor correct with classified as well um and then in terms of timing of when do we know when what these positions will be we will have to be able to have those positions identified by February because our February board meeting is when uh we need to make decisions about any potential reductions that we're going to have because all of our employees um it is a state requirement that they be informed by March 15th if they're going to be released how about um custodial staff and uh and M it's the same for all staff that timeline but did we identify I mean

124the so when we just say classified we're including all factors all factors but again uh we can only reduce staff if they're not needed right so uh so there's going to be staff that even if they leave it's going to be a position we still need so that's where that evaluation piece goes in because there are services that were required to provide that certain positions must be maintained in the district uh and so I go back again to reiterating the sooner we know from individuals what their plans are the more helpful that will be and there always is the possibility that if someone receives a a March 15th notice and we find out you know later on that a person's retiring or moving that has that same position they can be called back in but

125you know there's rules around that too um but the unfortunate thing is we have to give notice very early just so to so people can prepare and and make plans for their families right so that's where that March 15th deadline comes into play the difference between that and a hiring freeze so again a hiring freeze like Dr vent has mentioned there's certain positions that are required so um you know a strict hiring freeze um we could Implement and not fill positions but there's positions that are required so there's for instance par educator positions that are required um you know so if we had a hiring freeze we would still have to hire those those folks so um it's something that we're definitely looking at and we're valuating every position um that's vacant um during this

126process and that's those are the first positions too that we would look at as far as um as far as eliminating our our positions that are vacant positions or INF filled positions those would go first yeah I mean if we have to resort to Staffing reductions obviously as you said you know starting off with not filling the positions where people retire or they leave um but then you know maybe hiring frees to seeing seeing I know I know there's positions that you can't you know not replace people that you have to replace them just to meet the the state U you know requirements but right um you know maybe we could look at that as well um yeah yeah and then in addition to that um in terms of looking at that priority Focus right

127looking at retirements first re-evaluating vacant positions do we need them do we not need them you know as people leave evaluating those positions do we need them do not need them then the other reality too is we also brought in a lot of positions with covid funding to support covid needs and those dollars are now exhausted so that would be the next layer of positions that we would look at is positions that can no longer be funded by those one-time dollars that we had right and I will say that's one of the things that happened over the past two to three years with covid that's out of the norm the state gave uh a lot of onetime dollars with the caveat that school districts maintain and use that those dollars for Staffing however we don't

128have temporary positions and so unfortunately we have a level of Staffing that's funded by one-time dollars that then expire and that's typically not the recommendation when you have one-time funds is to use them for Staffing because they're onetime in nature um there's other positions too that may seem like they a vacancy that could be eliminated but um the reality is that they're filled by then contracted position for instance um we've had a vacant HVAC position HVAC technician position since that person retired um we haven't been able to fill that position so we've had a contractor that has to come out and and do the services when our HVAC units break down because we don't have the staff on hand to be able to address those issues so that that's a position where it's unfilled it's

129not necessarily mandated but it we incur a much higher cost because the position is unfilled and so the the elimination of certain positions like that don't net us any savings actually filling the position would actually net us the Savings in in this particular instance so I just wanted to point that out that all of that type of analysis has to be done when looking at all of these positions um especially ones that are outside of um the ones that are directly in the classroom how about looking at um you know reduced hours and furlows for staff as well as part of Staffing reductions since it's all Staffing that's possible and so one of the things was uh Staffing ratio so we actually have um one of our administrative regulations that does State the number of

130hours for certain staff clerks secretaries Etc and so that is something that we can look at we are over um those ratios in some instances and so we can make reductions there um furlows again that's something that is a negotiated item and that we would have to approach our bargaining units about that and with furlows too um there's certain number of uh required school days there's uh staff that are required to be in the particular classroom for those amount of days but that's also a possibility right yeah I mean because that's something I would suggest if we're going to look at staff reductions that we look at every possibility not just cutting positions but also possibly you know reducing hours for staff that that are going to stay on right because it's a shared pain

131um I think among everybody and then also uh furlows and obviously you know that's something that like you said has to be negotiated maybe have those discussions correct any for the questions on Staffing reductions and again this is this is hard because we're talking about people's lives and so we do not want to proceed lightly with this and um but it's definitely an option to help with the financial situation here at the district the last recommendation was the Ser supplemental early retirement plan and we did talk at the outset about a Serb and we're not quite sure at this point based on the data the certificated data if this would pencil out and the district just did one I think was it two two years ago yeah we have two more payments left for the

132the previous one so um if you all remember the pr previous one was a pretty lucrative um incentive and so I believe to achieve around $700,000 in savings we needed at least I want to say it was a dozen uh certificated staff to take that uh incentive so if something similar were offered it would require a significant amount more uh of staff to take that incentive and I don't know that we have that amount of eligible staff now that doesn't mean that an incentive would have to be structured in the same way um but just giving that as an example but we are looking into that and trying to get that data from uh our financial advisory wait you said that this was done three years ago how many um folks left because of this

133incentive how many individuals believe it was 19 total is that about right Josh you remember 19 yeah and that do you know how much it neted off the top of your head it was around 700,000 so that's 19 inclusive of both certificated classified management okay so you have two you said you have two more payments of from the last yes and how how much is that in how much is it per year yeah yeah so around half a million so when that those payments and those that that expenditure will drop off of the multi-e yes and that's that's included in our predictions yes right now that last payment is in year three but soon we'll make it in a few months when we generate next year's budget year three will be a new year and

134that will drop off so our first payment for that particular plan was in uh 2021 [Music] that paying no it was five years yes it was five annual payments um and that was for 90% of uh the salary so ladies and gentlemen we've been at this now for almost two hours and time has flown and I want to thank you for your attention for your for your questions and I want to go back to one of Craig's original slides where he talked about perception well the budget problem isn't real I hope as youve gone through these slides and looked at this information the budget challenge is real the county has weighed in and you saw some of the excerpts from the letter the county has serious concern concerns about the district's Financial viability so at

135this point the district has control on how to address these issues moving forward there have there are districts that have lost control and someone from the outside has come in and essentially tells the district what to do at this juncture as you look at all the information as you assess the information you all still have control and so as you look at the last bullets as far as next steps as Dr Fuentes has mentioned getting some direction on the sale of District property and also on the possibility of school consolidation as the district is wrestling with this issue of financial viability at this point the district is okay it can still meet its Financial Obligations but as you can see it was ending balances are running very thin and recommendations number three and four have

136have were included in the graphs but really no decision has been made yet on those so um December 13th is a pretty important date where the district will ask the entally approve the recommendations made by the budget stabil stabilization committee and and the recommendations and then also approve the first interim budget so with that and then the last bullet we are waiting for the Governor's budget for 2425 and that will come out in the beginning middle part of January so that concludes the presentation uh pending any questions that you might have of of myself or Craig any comments from Dr fenes thank you um first I do want to allow the board if there's any additional questions you have the opportunity for that otherwise we'll move into the the first bullet and so um as

137we look at all of these recommendations that have been put forth and that the committee has discussed you know our the first recommendation with leasing is already in process right we are we have our RFP out for the um the pedmont park location we have an existing lease with the Birchwood location uh we have potential with additional Portables and classroom space and we're open to you know maximizing those lease opportunities and we'll continue to engage with our partners in that area to bring in any additional Revenue that we can um the next bullet was the potential um sale of property that requires also additional analysis we'll have to update uh reassess those properties to get more current value and also look into you know whether it's Parcels if it's whole acreage you know what are

138those combinations thereof um do we want to generate an RFP to see what that interest would be there's all of those thoughts to be considered um you also brought up additional ideas for repurposing existing land like Commodore you mentioned the ideas of the stations Etc I know um Mr Franklin shared a bit of the research he's done but if you would like to see that more formally we can provide that so you know what how that cost out and what that potential is so let's start with that item you know what is the feedback from the board what would you like to see us do so I have one additional question that's not on here and we didn't really discuss it but it's um so Contract Services district has um I know some are you

139know required and some are specifically funded by the state but can we review those as well just to see maybe we can make some savings there yeah so we look through all of our contracted services and we've done that analysis to make those reductions there's potentially some areas for reduction um in some of our special ed contracts in particular um but we have done that analysis and we don't have we pretty much made those reductions already and anything that we currently have in contracted Services is because it's required so again there's some of those areas too like I mentioned with like HVAC services and things of that nature where if we have staff that can do it we would we would realize the savings but um at the moment we don't have staff in certain

140positions but if you'd like a a report analysis of that so you can see what that looks like we can provide that to you yeah I think that'd be good just you know so we know and then so the public and everybody else knows as well sure yeah it's embedded in the documents but I know gets to look at yes and so um regarding the sale of property yes so you know I think that looking at various options for that is my opinion um you know so not only looking at entire Parcels because like I said I'm not you know too uh keen on selling entire you know sites but possibilities of say selling portions of them also uh you know like the commodor site um it's a you know it's a nice site it's

141already zone for residential but perhaps uh you know I think that neighborhood could also use an amenity so maybe a combination so if developers say willing to or open to the idea of maybe you know doing cash in an exchange so an exchange for um you know certain amount of land there's cash and also like infrastructure for some amenities for the community or something we uh we can use to generate some some funding um you know just different different ways of going about it not just straight sale of an entire parcel and all that stuff kind of you know brainstorm the rest and you know some other ideas um so that one and then um I think maybe the and I know again I wouldn't want to sell the entire pedmont you know the the

142former district office property maybe looking at a portion of that and then a portion of the Birchwood I I don't know I mean i' like to keep mpus Christian as a tenant because it generates Revenue there but if we have you know 10 acres there and you know they're not using the entirely or there's a portion of that that's also Prime some prime you know potential residential land there so I will mention that there's a potential tenant for the pedmont road property um we just heard about it yesterday so um so that was new and new interest um and so we're trying to gauge the seriousness of the interest and the um from what I've gathered so far they're they're inquiring about a lease because that's what's in the RFP they um are also interested

143in purchase if it was available for purchase is my understanding um but again it we'd have to um actually meet with them and so that meeting's um we're trying to set that meeting up in the next week or two to gauge that interest um and again with Birchwood um you know my opinion on on Birchwood from the last lease extension with miletus Christian is that the site needs significant upgrades I don't know what the long-term viability is of them as a tenant in its current status because of the concerns that they mention with the site um how much it cost to upgrade it so that's some of the things to consider with that proper there's a question of are they going to be a tenant tenant I mean they've been a tenant for it for

14440 years 40 years but I I don't know how interested they are in upgrading that site um because that's we saw it needs a significant amount of of work I think just uh for clarification for staff I know trusty jenez it's it's your interest to explore potential Parcels for sale not whole sites but what about the rest of our trustees because we need consensus from everyone so my position is that um one item that I'm actually opposed against is selling any any District property and um the reasoning for that is uh I just look at the history of what baresa has done U going back to I'm not sure exact day when we sold the property at Beres Capital the the old ber school I believe that was about 35 40 years ago actually talk

145with a parent that went to that school so I know it it's not DEC it's not many decades ago it's pretty pretty in recent memory and I don't know um what the situation was back then uh I think it was either in the late 80s or early 90s when we sold that product property but we're in the same situation we we're in now I don't know what the what we use with the revenue for that property so I'd be interested in learning how much we sold it for how much it's valued now have we held on to it right so I don't know I don't know exactly when it was sold um and I wasn't doing research on that but doing research through board and items for a different purpose back from the 80s what

146I do know was that the the district was either directed by the city to sell property um or um or it was the district's decision back then to sell uh certain properties because there wasn't um for instance a a bond available to upgrade facilities and so I believe that modernization that was done in the in the early to mid 90s was done from the sale of the properties and so I believe there was a there were a few different uh sites that were sold back then in the in the mid to late 80s early 90s um and those funds I believe were used uh for some of the modernization of some of our school sites but that I don't I don't have the exact that goes back to while saying that money could have been

147um gained through a bond those you selling property so we we lost essentially millions of dollars that we held on to that property and same goes with the Flickinger site about 20 years ago we we sold that site too and where's the revenue now it didn't address the structural deficit we're in the 80s and 90s we're we're faced with the same problem I believe and we we we released a lot a huge chunk of our investment 20 years ago we did the same thing and now now we're faced with the same issue we've never addressed the structural deficit so I believe uh this my position is land is very valuable in this area and is an interest of the district to uh maintain those property for future Investments um whether through uh different types of

148leases or developments on those properties U for example the the Birchwood property we held we've held on to that property and that we're still gaining revenue from it as an ongoing revenue and same with the decision for our uh when we moved to this district office um we're leasing the we're we're intending to lease the pedmont road office and we're going to gain an ongoing revenue for that too so I believe that's a better choice and much more wiser investment for the district is to develop and leas our property opposed to selling it uh same thing with um I know we had a conversation um about portion of the CAU Park the district own a portion of that Park too I don't know what happened to it but somehow we gave up a right or

149we sold that property you know how how do we benefit from that so that's that's something I'd be interested in so I think that those properties were some of the ones that I saw that were sold for Capital facilities projects because that's what those revenues that are generated from the sell property are intended for but I couldn't tell you exactly what projects those were um one thing I will mention that the committee discussed because they had the same um Viewpoint that that you have too with the the the value of the properties and how valuable it is to to keep them um and that was something that that the committee kind of struggled with um and I don't think we mentioned it why I'm just bringing it Forward is that what the committee's intent was

150with having those as number one and number two this the lease and then the sale of properties was because they wanted to try to keep um and maintain the services and level of services that we have for our students they wanted to keep as much of the reductions out of the classroom is possible and so that was why they landed on those as the top two because they struggled with the same kind of um concern and and with not addressing the actual structural deficit but they saw that as a way to um Help The Help the the current situation um while maintaining uh the same level of Staffing and services for [Music] students right we're we're kicking the can down the road it doesn't go to programs salaries for employees really correct and that's what

151our listening to all of the uh all of the presentation and um I am opposed as well with selling our properties I think we should keep them but if we I would prefer that we as a district um look into the leasing of it because as Ka mentioned also that property is so valuable between now and the future and we are in a location that it can go up and up in so higher and higher so I think um it would be best to look into leasing our property rather than selling them off what's the I'm sorry go oh what's the potential of leasing um you know properties such as Commodore or say Birchwood after mopa Christian School decides or if they decide to not continue the lease is that is that something that we

152we see that there you know there's a pretty good chance of that's going to happen it just depends on thep entity and what they're looking for um you know so it's really hard to say without having put out the RFP that's part of the research we would have to do to be able to bring back um uh working with our real estate partner and having them be very creative with different types of rfps to see what generates interest right not yeah I also want to remind everybody that we purchased so we have another property that we didn't have you know even a few years ago when we got this one so uh you know we have more property now than we've had had in in in a while so that's also that provides a chance

153I mean we gained an acre and a half here so selling maybe an acre and a half somewhere else um that would pretty much you know um put us kind of in a good place for you know several years while we did other reductions also that you know would be ongoing reductions to uh to uh cut that structural deficit um you know I I so it's kind of a you know give and take right like we gained a property and and selling a piece of one I don't think would be it wouldn't be a net loss basically uh well first of all I just want to first thank you for the presentation this is really difficult work and this is a really difficult conversation to have but it's a necessary one to ensure that we

154have fiscal solvency within our district and my opinions are is that I am on the same page I don't want to sell whole properties but I do agree that we could sell small Acres like a small amount just to see that immediate um dollar amount come in and to take advantage of that June deadline that we have and I am on board with leasing our properties as well but I am particular particularly interested in land leasing the sites that do not have facilities and similar to the excess sites program that the department the housing department within the state has I believe it's under the jurisdiction of the governor spe I think it's dgs that handles the excess program the state uses the state also has a lot of excess sites but what they do is

155that they lease out that land to get revenue and to have other developers do what they want with the land so we wouldn't be responsible for the maintain maintaining that land or anything like that and so that's something that I'm particularly interested in you know housing is a housing unfortunately is a commodity here but it is a lot of money if a developer comes around and says you know I want to develop something here but we still own that land so it could net us something very high since we still own the land and so it's kind of a compromise between selling and leasing because you know they are allowed they own everything that's above and on the land but not the land itself and so we still gain that Revenue um from renting you

156know using that land and it is something new but it's something that I think would be really good for the district in the long run but I recognize that this will be a long long discussion and it will have a lot of research I don't know any districts you know off the top of my head that is pursuing something like this but I would really enjoy and see if barasa could come to something that we could do I mean it also doesn't have to be housing it can also I'm very interested in the EV Chargers idea I think that's a really good idea and to especially take advantage of the federal government's programs and I would also encourage us to reach out to the county to see if they may be interested in our lands

157I don't know if any if the office of Ed would have anything that they would like to use from us or any other County program I know that um even though the state and the city is facing more of a deficit the county has a bit more of a cushion so maybe they might have extra um to help us with as well so those are my thoughts on the issue then just to answer one of the questions you had before we did look up what the Senate bill was that gave that flexibility and it was Senate Bill 98 and that was uh enacted June 29th 2020 sorry s SP what 98 98 yeah okay only one to provide my thoughts on this um so uh land leases I mean I it's very interesting and to

158Echo the sentiments of my uh fellow board members I I'm not in favor of selling at all um maybe bits and pieces but that doesn't look um that doesn't sound very appey to me but U retaining property is definitely uh something we should um you know consider we should not be selling anything uh with the land leases um especially For My worry is with the with building of uh of homes San Jose is now doing a multi multi level building like uh they're doing on Capital uh they have like a seven story building coming up over there so My worry is if we do lease out or uh do something like that um is there is there potential for San Jose City to come to us come after us and say you're going I'm going

159to put up like a seven story building in a neighborhood full of single family homes is that something uh you can elaborate so the beauty with land leasing is that we are still the landlord so we have the power to say okay um we have the power to go out in the market and say okay we want this building we it would essentially be an RFP but you know for what we want on the site and so we don't have to say that we want like a 10 story high building right but we would have we would still own the property and we would still run into problems with the city of San Jose but with the city of San Jose they are a pro housing City and so they would want a little higher

160density but what they're really looking at and what I believe they would be akin to is like forp plexes duplexes like homes that are slightly densified so these so a lot of the neighborhoods within Bara is a lot of single family homes you know it's just your regular like you know you have a garage whatever it's like everything that you look around but the city would be akin to something like with that's softer density like town homes or something that has like the ability to house four families instead of just one but still looks like a house like if you walk in Downtown San Jose in District 3 you'll actually see a lot of these Victorian like they look like Victorian homes and they have like two different doors like that's a duplex so that's

161something that um would be interesting to look at or like we could even look into something similar to around like honestly the BART station like has lower density housing and like it could fit inside the neighborhood so it's not like you know I don't think the city of San Jose would be opposed to that and we do have um contacts within the city to ask like preliminar preliminarily and developers also have contacts within the city to see like what the development they're looking at would be like and see the problem with the oak grve um the problem with Oak grve is that the district asked them or the developer brought them something that was extremely low density and the city really did not like that but if we are able to come up with a

162plan or work with a developer who's more familiar with the city and and the develop or and the planners within the city we don't have to run into that issue like having someone who's more familiar with the city and what they like and what they don't like we may not run into that problem and understanding that process my understanding with the oakr site is that it's too low density and it doesn't match what the city wants but if we have a high enough density the city will leave us alone you know like they'll be like we need housing and it's like we want it to fit the character of our neighborhoods and like you know I think something that's like mid density like what talking about like something similar to what we have in like

163not downtown core but like the outskirts of downtown you know those Victorian homes duplexes forp plexes you know those kinds of um opportunities could be there but that of course this is a long process I'm not saying that this is uh going to be an immediate return but it's something that I am personally interested in and I think is something that school districts could do in the future so my understanding is any type of lease like that would be eligible to be used in the general fund however um we would still have the the rezoning to do for all of those sites because even though Commodore for instance is residential I believe it's low density residential uh in zoning and so it wouldn't have to be rezoned to do something um like that even if

164we were to do a land yeah so that is something so someone um that does do Workforce housing uh reached out today um to try to set up a meeting to discuss that and so yes um that is possible um but even with that just with the cost um a lot of a couple of them that I've seen it doesn't pay for the entire uh project because the projects are pretty significant in cost and so you'd have to find other uh means to be able to to offset that um but there are some instances where developers will fund the entire amount and then you have an agreement um over time um to recruit those funds so I think just based on what I'm hearing uh this is definitely a topic that's worthy of another of

165potentially a study session that we can bring forward with um I know our our Council uh Herold Freeman who works with us on our properties is very um knowledgeable in land leasing Workforce housing and all those options that districts are pursuing so we can certainly look at that and that idea is not F to this six-month window so it's it's something that we do have time to dig in and see uh if there are potential Partnerships that can um be established for that type of a of a revenue stream the one other idea that I have had um I think we spoke about it maybe once um uh was to build a Center of Performing Arts in the U in in berasa because I don't think we have one um Center of Performing Arts where

166you know we can have music programs or you know arts and culture uh some some facility like that uh in uh in our district uh even if we decide to uh close the site maybe we can build a Center of Performing Arts there maybe that could be in partnership with other school districts that can benefit from from having a Center of Performing Arts where they can uh have the flexibility of uh having the performances um at off-site location um so something like that is also also something to think about uh to to uh uh to look at utilizing some of those uh lands and trying to see if that would you know help us with some kind of uh uh Revenue stream generation I don't know how much uh it will but uh but utilizing

167those sites effectively in a meaningful way uh but yeah it does need more discussion for sure so the uh you know the idea of lease it's a good one but that's U it's time you know take time I don't know how and we don't have much time right uh we have to start either generating some Revenue pretty soon here or make cuts and so the other option right is Staff layoffs or school closures um so in the meantime until these ideas pan out we'll have to look at reduction now and or closing schools so that's kind of the tradeoff whereas you know that's why I'm you know again I'm against selling land also but that's it's like having money in the bank and not using it and then you know starving um you know for

168a few days just because you don't want to use that that money or if you have stocks right you know because it appreciates in value um so I mean that's just something you know I think that people should consider are we ready to make the decisions of you know uh releasing staff and closing School which to me are much uh uh less Savory choices than say you know selling an acre of land here and there know I think that going [Music] back about schools I don't know the data behind it the research more beneficial compared to K I'm not sure if that's possible because what I I I like to avoiding uh elementary schools I think that's a more impactful uh communi because kids younger kids they live closer to those schools they can walk

169parents drive into that school close I think maybe work conversation have maybe move some of those six back to elementary school like neighboring District maybe CL middle school because I know the cost saving is a lot higher at the middle school level I think that's a conversation worth having to because I know at the middle school level they're at a vulnerable vulnerable age and we need to give them much services and programs as possible and um if there's less if there's one less Middle School more programs and services can be made available to those students at those two schools and also just look at an they have two middle schools and they have a much larger District than us so I don't know how that done but um I think that's convers conversation to have

170but I think that's one of the best solutions that we probably need to explore again it all goes back to just just the numbers we've lost a quarter of our our students we're still maintaining you know the same number of schools yeah yeah that's correct and uh exactly the suggestion that you put up for consideration is what this committee would do they would go through and they would explore and do the research for all of those different types of configurations um and that brings us into the second item that we're seeking Direction on is just the ability to be able to move forward and commence this committee and the phase one process of doing all the data analysis that I described earlier so that way potential scenarios can be brought back to the board for

171consideration I would say we should move forward to with starting the committee to review and great idea to uh to close a Middle School uh for higher cost savings and consol and bring back k26 I think it's a good idea I'd say nothing's off the table right I mean we have to make Cuts so um I'm open again I don't want to do that but if it comes down to it you know we'll have to I just think there you know there other options we can explore as well oh yeah yeah I wouldn't want the direction to be to look at closing a middle school I would much rather the direction to be consider options because I don't want to scare our community in saying that we're going to close one of the middle schools

172I want them I want us to evaluate all the potential options and give proper notice so I I would rather not um direct you know Elementary or middle I want them to look at everything first and then and that's exact yeah that's exactly what they would do they would and maybe create a scenario we haven't thought of as well that would also be the task of the committee yeah I would I I would really wait for the recommendation rather than because I certainly I closing schools is never easy and moving stuff is very difficult and laying off people is even worse so um I would just go I for me personally I would prefer that we we look into it research it carefully and um and go from there okay as far as Staffing cuts

173when was the last time we had made layoffs it's been many years uh none during my time here and so this is my seventh year yeah my understanding from talk with some of the principles that have been here long term was um I think in the 2009 2010 time frame somewhere around there great trending with with all the other school districts uh things were pretty bad before 2012 so between 20 like 28 to 2012 I think that would be my guess I wasn't a board member but just kind of knowing and kind of knowing some history from some past board members okay I was asking that because I just fighter myself been working in a district where we we don't do layoffs I don't remember ever making any layoffs during my 10 years so I

174know for the past 15 years we haven't done any layoffs uh but just going back to um you know the potential staff reduction I just want to be transparent are are we talking about reduction in programs because you're talking about not backfilling people but a lot of these like areally position you got to back because there's classrooms you can't just you know eliminate teachers so we talking about like red reducing like instructional coaches or like elimin that program or what what kind of programs so definitely looking at itinerant staff because we want to make sure we are far removed from the classroom right you you still need to maintain you know your classroom teachers your support staff that are in that class room with those students that's the priority but we would look at itinerant

175positions um we would look at our management positions um examples I know like have been brought up in the past so in terms of so in terms of uh certificated staff when we look at what are itinerant positions that are not providing um that don't have a roster of children right it's our instructional coaches as one group we have our social workers as another group everyone else carries roster of children uh whether they're a specialed specialist or a classroom teacher so those would be the itinerant positions for classified um we have all of our Paras you know they all support our students directly in the classroom we have instructional Associates that support students directly in the classroom but then you have all your other operational um support staff where you do get into the discussion

176of the level of service that you want to have your Librarians your health clerks your um your office staff your custodial custodial support you know some of the um some of the positions that we've increased Service as a result of the covid pandemic is we've increased custodial support at the sites we also created um additional clerk position at the sites to help support with those Health needs so there those are all new services that came with some of those onetime dollars and then like I said with management every division right now is reviewing all of the support team that they have and we're looking to see how we can restructure and realign responsibilities there good thank you for that so that goes back to U my proposed solution of protection merging schools if we merge

177schools and we close one schools we could we don't have to those positions have a school that we're closing so that way someone does retire or res in the district um you know we have to replace that principle that custor staff medch the social workare that being Clos I think that that addresses the issue of Staff ruction as well yeah and those were the discussions that the that the committee had and Michael brings it up all the time about soft Landing long Runway um and and looking at those positions and so knowing that that's the direction we would look at some of those positions as we start this process so that there aren't those those uh layoffs that that need to occur and so if it's looking at consolidating em merging schools like you mentioned

178then when we do have those retirements or those resignations then we would look at not backfilling at that point and how do we support in the meanwhile until this process concludes so I have a question how permanent are school closures well does that make sense the question well Birchwood was closed 40 plus years ago so the chances of a school say you know in five 10 years time say the enrollment numbers go back up uh the chances of opening reopening a school are slim to none basically based on Tom Williams report I I was just gonna say keep in mind that our demographers report is a is a five to seven year time frame and he has our enrollment continuing to decline throughout that period but it would take three years to close the school

179so that would put us at within four years of his last it would take a year oh a year starting from today uh it takes again it depends on the conversations of the committee I can't timestamp that uh but the intention would be to work through the process so it could be realized for the 2526 school year as you saw in that slide on where that savings would impact our multi-year budget yes you're correct um those uh transitions went into effect this year yeah I think I mean we we know of instances where it's been done significantly faster um and that would not that was not the intent of the committee and not advised right would just add there there was a district in Southern California that ended up closing four schools within one year

180and the outcry from the community was tremendous and again is as I've mentioned before give yourself a long enough a Runway to get this Initiative off the ground and plenty of time for the community to provide its input so I attended a breakout session csba conference discussing schools there was tremendous push back on the closure ofo schools you got you know very hostile you know law enforcement was calleded the rest would be made to school board members parents were upset but by the time the school Clos parents are coming school board members thanking them because now their students at the schools that are being that are welcoming those schools because their students are now getting more services and programs as a result of that because now they spreading Services programs multitude of schools now one

181school students at that one school programs and Services I think that's Tim goal that sometimes and that's why going back to Middle School level that at that age you need as much service spread AC schools more beneficial for student have it you know two schools and at at the middle school level a lot of times parents are driving students across the distri a lot less impct op neighborhood that's I like and just so the board knows um what the existing reality is in our schools you know um there's impacts at both elementary and middle school that's being experienced right now so you know at the elementary level and we'll be sharing um site specific enrollment data with the board next week at our regular board meeting and you know our we have two um two

182elementary schools that are under 300 students uh one of them is under 250 students and the result of that is increased combination classrooms right so that's a very challenging programming um experience for those students and they've already been experiencing that for a few years because they've been uh below 250 for a little while uh and then in addition at the and then on the other side with the the Middle School programming the impact as trustee uh NN said is programs and services reduced elective offerings trying to maintain our music our music programs choir uh not being able to offer offer foreign language that we'd like to be able to do right that requires additional Staffing to have those elective offerings there um so there is opportunity to be able to increase those program options for

183our students when we have more Consolidated at one site than what we currently do so I would just say that the programming is being impacted at both levels currently and that's definitely a big part of the conversation that the committee will engage in and especially you know um uh our parents are going to be part of that committee as well so it gives them an opportunity to also share what is that learning experience they'd like to have for their child what do they hope for in terms of programming and supports in their schools and that will also help inform the committee with the different um potential scenarios that they may create and bring back to the board for considerations no I understand understand the impact of um you know uh having really small schools too

184small right too low enrollment but I'm just worried about you know the Optics of you know we have all this excess land um potential funds right and now we're going to you know close schools as opposed to you know just the Optics of that in the community and then so now we have even more Surplus land right with more if we consolidate schools so are we hoarding land and you know cutting closing schools what's so that's my concern so that's why you know my feeling is that nothing should be off the table when it comes to looking at um re generating revenue and then also savings yeah the committee was really um specific about that as well so it's good that you mentioned that because we did mention that when you do do a school

185consolidation or merger and you do have that um additional School site that's why the top priority was according to the committee to lease the vacant property because that was what they saw as a way to then generate Revenue in addition addition to um just the the cost of the the closing of the school site and so that's that was very intentional by the committee to place the sell uh the leasing of um vacant sites as number one so um one thing just want to clarify also just to um as this question so sale of a property the realization from the of the revenue from sale of a property uh the time line is longer and the the funds are more restricted uh versus closing a particular School site and the the funds are um the

186revenue realization is almost uh immediate and the funds are unrestricted is a accurate Yes except that we're not generating revenue from the reduction of the school set what we're doing is we're generating a savings um and expenditures so until um something that space you know once it becomes available correct but those funds are are more more unrestricted than the funds of from generated from sale of a property lease revenues are unrestricted completely so but sale of property is entirely restricted um with the exception of this s sp98 flexibility yeah but our direction today wouldn't be to sell a property it' be just to explore what that would look like and kind of what that would do right I mean it's not you know we're going to go sell the property tomorrow or List It Up

187for for sale tomorrow it's exploring how much can we get what are the options so that's why I don't think it's you know a good idea to not even look at that to not even consider that any further feedback I think as a important that U we truly do need to address our structural deficit and um not just kick the can down the road however we do it um I just want to put that out there um I think I would also add for the board that given um given the amount of funds that need to be recovered whether it's through reduction or increased Revenue we're going to need to do a combination of these recommendations so I don't want anyone to feel like it's one over the other most likely it's going to be

188a combination of multiple points of the recommendations being made but knowing that the reason we focused on the the sale of property or specifically land Leasing and school merging is because there's additional research that needs to be done in order to continue to bring that forward for conversation and decision and we want to make sure we prioritize staff's time in that in those you know directions that the board would like that feedback on so while I still remember thank thanks to both of you for your work and thanks to all the community members for putting together this presentation working hard and having those tough conversations uh if uh we haven't already said that uh one of the one of the things uh that stood out in the presentation uh just as a matter of perspective

189I we we as board members as uh people that are involved in the school district May understand this but uh from a Outsider Community uh member perspective uh this slide number 13 I don't know if you can if you want to go back to uh the slide number 13 that shows the ending fund balance history um it shows uh it's it's 22% down to 3% uh from a Outsider uninterested party Community member uh perspective which I was not too long ago that's that's steep drop uh without attribution uh looks like mismanagement to me right from as a complete uninterested party so uh along with this this data if we can publish perspective of uh you know how these funds were used we understand that there's increase in uh you know all the costs uh salaries

190and and so on and things like that that's perfectly fine but uh just to to add um appropriate attribution to this chart would be helpful so if it does get published uh on our website or something like that uh I would suggest having links to specific uh why uh on this otherwise it looks a little odd that's just my just my feedback the N gotcha yeah and we can do that there's um FAQs that we have that kind of talk about some of these things right now on the website um it doesn't necessarily mesh that story together necessarily but the other thing that I want to remind everyone too is that over the same time frame we've had in huge increases in retirement um uh contributions that that are statutorily required for stirs and purs

191that weren't necessarily projected um five six seven years ago and those are unforeseen things so so for instance like the the district stirs contribution I think eight years ago was around nine or 10% it's 19% now so that's a 10% increase on all of our certificated salaries be it management um teaching staff what have you same thing for stir or for pers perss has gone up even more than that and pers is um around 28% and that's not what it was five or six years ago significantly lower and those are those are very significant um impacts to the budget that um were not foreseen they're they're analyzed year by year and then and then those rates have been raised um so I do want to point out some of those things too because that's the

192narrative we do try to explain with all the different budget presentations um you know and then like I mentioned before liability insurance and those type of lawsuits just in the the four years that I've been here it's more than um it's almost tripled in cost so I I completely agree like I said from right for us we understand um so but when it gets projected uh without that that uh that you know reference point uh it becomes like what is the school district doing kind of a thing right and we don't want we don't want to project that kind of a image so right and so that's good to know so that we can help tell that story more clearly on the on the website issu are you any like situations where we can address

193that issue for example setting up trust contributing to that trust pay help pay those contri yeah so we have um uh fund 17 or fund 20 fun 20 right is the is the OPB it's it's typically for for um our contributions that are outside of our pension costs um you can set that up as a as a um irrevocable trust and you can earn and Michael's even mentioned setting something up like that um but it's a matter of then having those dollars in there right now we have the flexibility from the county to utilize those dollars to support our general fund right now um and so if it's um if we set up a trust we wouldn't have access to those funds and so that's kind of the dynamic but is specifically to pay for

194um the increases to purs and stirs um the board would have to take action to actually set something up like that um and and it would have to be done in a in a trust like that other districts have taken action when they had high reserves to to commit funds specifically to the increases to stirs and purs but unfortunately what what we experien in the Bay Area we just have a higher cost of living than than everywhere else and that impacts all of our families that puts the pressure on on us as a district to to compete and have those High salaries so that um you know our folks and our staff can afford to live in the area or at least close enough that that they can they can work here and so that's

195just some of the financial pressures that we have and I've mentioned it before about how low our our um Revenue per student is and so that's just um there there's nothing that's specific to it and what the governor has said and a lot of his budgets are here's some one-time dollars that should address your retirement issues but you know they're saying you can address your retirement issues keep your Staffing the same increase services for students provide social workers provide counselors because all of our students need this coming out of the pandemic for learning recovery and so with a district like ours that you know does not get as much revenue per student because we don't have the the amount of unduplicated students that that generate the the onetime dollars that that we were getting um

196it's just that balance of how do we do that do we do we allocate those funds towards the additional retirement cost to keep Staffing the same and so we've been juggling that over the past couple of years um so really you know what we've been trying to do is is through advocacy for the governor and the legislature to actually dedicate um specific funding or to reduce those rates um that had happened in the past pre- pandemic but coming out of the pandemic it was more of just here's some onetime dollars that we'll give to you and and do what you need with it and that's how the the governor address the issues as like a final note I just want to say that you know as we go through this process um my number one

197will always be considering the student I want to make sure that our students still have the best quality education and that you know if they need Services we still provide it to them as much as possible especially their highest need students um usually their families are the ones who will be desperately impacted by the decisions that we make in the future so I always want to emphasize you know cutting away from the classroom reserving our mental health you know facilities or people and folks they that they need to continue to be supported and so that's always going to be my guiding um northern light in this process because I really want to make sure that our most affected families communities um aren't as hurt by this and we land standing on our feet we land

198softly but I'm confident that we can get through this Dr FAS can you summarize what what are the next steps sure thank you sure so as we mentioned before uh in terms of the recommendations from the committee that the leasing options are already at play and we're working through those and hopefully increasing opportunity with leasing the um Staffing reduction component is an on going review process as we look at the mobility of our staff and the the decisions they make and I went over the priority of how we will evaluate that that will come back to the board in in February in order to meet a March deadline wherever we land at that time then in looking at here for um property sale consideration so what I heard were two things I I heard one

199uh the interest in land Leasing and exploring what the opportunities might be there knowing that that is a longer pathway but we have the we have the ability to be able to research that and start to look at potential possibilities I heard um strong intent on not selling property from the majority of the board um but potential looking at Parcels what would that how would that play out so we can certainly do that um but knowing that um when it comes to property sale the higher interest is going to come in the entire property we we already know that but I did hear strong disregard for moving forward in that direction and then uh again the final one was looking at school consolidation and I heard approval to go ahead and commence the committee to

200be able to start doing again that's going to be a lengthy phase one process of looking at all the different variables um and as I mentioned there's new state require requirements that we need to follow too in doing that analysis and that'll be part of that committee's conversation okay you're welcome and then also the the Staffing reductions oh I me I mentioned that that that it would go through the priority process that I mentioned that we're looking at retirements first Mobility re-evaluating vacancies seeing what matches there um but then you know we are going to have to meet that quotient numbers that we looked at and we'll have to bring that to the board in February uh for Action um based on where our staffing is at that point in time we'll have another discussion

201on Staffing later I mean I guess we're gonna have discussion February will be for Action okay once we know because that's a that's a moving there's moving parts to that depending on people's decisions for themselves on where they are for retirement New Opportunities Etc but our like I said our our priority is to First Look at at retirees to look at vacant positions what can be eliminated with vacant positions that will all count towards those numbers and then uh you know and then re-evaluating positions that we currently have uh based on funding positions that are funded on those one-time dollars that are exhausted right will go down in that order we look at uh reduction hours and furlows as well that'll be discussion with our labor Partners gotcha okay thanks [Music] School configuration MH okay

202all rightn move toour hi thank you everyone have a good night yeah thank you Michael and Craig for your support in this conversation appreciate it thank you everyone thank you FMA I'm going to end your call okay have a good one oh just you still there uh let me call you on my cell phone okay because you're still on the speaker thank you all right on