SUSD Governing Board Special Meeting & Executive Session 10/28/2025

001All right. Okay. No, I thought it was a thumbs up. Was that a thumbs up? Thank you. I'd like to call the special meeting of the governing board uh for Tuesday, October 28th to order and ask that we stand for the pledge of allegiance. Ready? [clears throat] Begin. Ice flag of America to the stands. One nation under God, indivisible, liberty and justice for all. >> Thank you. Uh we'll do roll call of the board members, please. Mr. Shy, will you start? Mike Shy called. Go ahead. >> Matthew >> Karen Warner called >> and Amy Carney is here. All board members are present. Thank you. We don't do cold roll call for the rest of the people. Okay. Uh so uh I'd like to uh make a motion that we approve the agenda as presented. I

002need a second. >> Thank you. All those in favor say I. >> I. All right. We will begin. Uh Dr. Menso, will you give us the scope of this evening's presentation? >> Well, if I can start with superintendent comments, uh three things to highlight quickly and then uh we'll jump into uh the presentation. But first, this week we have parent teacher conferences and those are really important opportunities for our staff to meet with uh the parents of our students to talk about what's going really well to identify maybe some areas for additional support. and we encourage all of our parents to participate and look forward to hearing good reports later this week. The second thing is, as you know, the federal government, at least unless something happened that I don't know about, is still shut

003down and there are people who are concerned about what that means for SNAP benefits. Uh Patty Bilbury and her team have worked to prepare communication to send out to our families to provide reassurance that that won't have any negative impact on on breakfast and lunch for those who are on free and reduced lunch or those who are in our community eligibility schools. So while there may be some concerns in other fronts from a school perspective, we're still going to be feeding students breakfast and lunch uh under the food nutrition program. The last and exciting thing to share tonight is that u just within the last hour we received a text that the Chapperel girls golf won the state championship and not only did they win it but they won by 64 strokes and three of

004the students placed in the top 10. So that's that's pretty impressive. So that's that's the good news to start. So now we'll turn our attention to uh the purpose of tonight's meeting and to set the stage. I think it's important to talk about uh the conversation we had after the three new board members joined the board and we talked about the structure of our meetings and there was a request specifically for study sessions that would allow us to have a deep dive conversation. So like we've done before we're in a in a square to be able to have a conversation about topics of importance. Following the governing board retreat in April, on April 29th, we had a deep dive session on district enrollment trends. And so that information is available. You can watch the YouTube

005video. You can see the PowerPoint presentation. But that was our first deep dive study session. The second one was in August around academic achievement and we were in this room had a very long conversation around achievement trends over time and had a a deep and meaningful conversation. This is the third of those deep dive study sessions really focused on the district financial u situation as we think about and and begin to plan for the 2627 school year. So historically just to set the context and I have to make sure I'm changing my screen. uh we we um when we uh normally the board will see the the first blush budget for 2627 in January. So I want to be clear for the people in the room tonight as well as those who are listening. Uh

006tonight's purpose is not to make budgetary decisions for next year. The goal of tonight's meeting is to outline the historical trends, the context that uh we're operating in both from an enrollment standpoint, which drives the M budget, from a financial perspective, so that that the the board itself understands what some of those cost pressures are, what the context is for the decision- making, and so that we can learn from the board what things you need to see as we begin to con as we continue to compile information and prepare options for consideration. as we move into the beginning of 26 because in January we'll still do that preliminary budget report. We'll continue to work through the IBN process. The final budget uh decisions don't get made until the end of January or June, I mean.

007So, that's that's part of what we expect tonight. Then we we also want to make sure that there's an understanding of the revenue streams. Where does the money come from? What options do we have within that? And and what steps have we already taken to address some of the cost pressures? So to start with, I want to spend a little time talking about the state policy context because in Arizona uh schools are funded primarily uh through average daily membership, the number of students we have and and that count is weighted based on whether or not they're elementary or high school students, weighted on whether or not they're special ed or students in poverty. A lot of different weights. And so the average daily membership looks different than your headcount. Uh both are important, but the

008funding is driven by ADM. and Shannon is going to do the deep dive in the specific numbers. I'm going to provide the 30,000 foot view of the context that we're operating in. So, it should come as no surprise to anyone that in Arizona we're the 48th lowest funded state for public education in the nation. Uh 20 years ago, we were middle of the pack and now we're at the bottom. That's just a reality that we're dealing with. The expansion of choice and charters has resulted in more students leaving traditional district schools. So when you have lower funding and you have more choices, that means the pool of available um students to be able to fill our schools looks very different than it used to. So there was a time when kids just attended their neighborhood

009school and that's how it worked. with the introduction of choice and charters that began to shift. And then more recently, I think it was in 2022, um ESAs, the universal voucher program in Arizona was approved. And those unaccountable, non-transparent ESA expenditures now total about a billion dollars. The first estimate uh from the JBC in terms of what that was would cost was somewhere between 67 and 125 million. We're at a billion in terms of taxpayer dollars being shifted away from supporting district public schools and even charter schools, right? They're they're experiencing an enrollment decline similar to district schools and in part that's due to ESAs. The other thing in terms of the state policy uh context that I think is important and not everyone realizes that there was a time in Arizona where school districts

010M in particular were funded on prior year counts. Every other source of our funding is a prior year count, but M is current year funding. And what that means practically is that when we're building the budget, we have to estimate what our ADM will be. And some years, like last year, Shannon is spot on. She was really good in terms of that estimate. But there's no guarantee that we can do that. The guarantee would be is if the state went back to prior year funding because then we would know. We know what our 100th day count is. uh we will in January of 26. You could then build a budget based on that known number and and you would have confidence in terms of the revenue that you were going to receive and you would

011have calibrated accordingly. Now districts have to estimate and if if they're on the money things are good. If you're off a little bit and as of right now we appear to be a little off in the current year then you have to talk about current year adjustments or how you're going to cover that delta. And so there's a state policy change that would be possible that would make budgeting a little bit better for schools. The other thing in the state budget that's important is that in in the way we're funded, the state is required to provide up to a 2% inflationary adjustment in the base funding level. Uh and that's what it's called. It's an inflationary adjustment, but it's capped at 2%. We all know that in the last five years, the inflation rate has

012been much higher than 2%. So the increase that we get unless the legislature finds additional money and in one year after COVID we did get a billion dollar infusion. Um so that was the outlier in the in the time that I've been in the state of Arizona. Other than that it's been 2% even though the cost uh of inflation has been higher than that. So I I think from a state policy perspective those are important things to note because we can advocate for changes but we don't have any real authority over those. We need elected officials in Phoenix to do something about that. So, and and I've been having this conversation in a lot of different rooms uh with a lot of different people because I I think this is a number that just really

013helps tell the story of where we are in Scottsdale Unified School District and and it surfaced when we had our deep dive on enrollment back in April of last year. But since 2010, the district has declined in enrollment by 6,032 students. So I I was trying to identify a way to help paint a picture that would be easy to understand. So that represents 10 elementary schools of 600. Right now in our district of our elementary schools, we only have two that are over 600. So our elementarymentaries, except for two, are below that 600 figure. But 6,32 students represents 10 elementary schools or four high schools of 1500 each. So it's a significant number of students. And in that same period of time, the only school that's not operating now that was operating in 2010 is

014Tonalia Elementary. And so I I think when you think about the decline in enrollment because it was over a 15 period of 15-year period of time and and incrementally those those uh decreases they don't happen in one community or in one school that's spread out over 29 facilities. Uh it it uh suddenly becomes a much more significant issue. However, what we know is that it's not a new conversation uh in in the district and we'll talk about that in a little bit. So, school funding itself is complicated and and so anyone whose eyes glaze over when we start talking about the detail in our budget, that's understandable. But I want to focus on two aspects of our funding because there are many different revenue streams. There are two that are really important from a planning

015perspective as we think about the next school year. The first is maintenance and operation. Uh, and the M budget is really what drives our economic engine. When you're thinking about staffing your schools, that ADM drives how you staff in order to meet the needs of our students. The other funding source that's important for our conversation tonight is uh the handful of cash accounts that the district has. And not everyone understands what those are, but we'll talk a little bit more uh on the next few slides in terms of the specifics. But when I got here in 2020, those cash accounts had very high balances. Uh the the board had just engaged in a conversation to say there's a there's a high balance in these accounts. We probably need to set minimums and maximums so that

016we have a target amount there. when you're sitting uh on a cash account with a lot of money in the fund balance and you're looking at um the request from staff and the need from staff for help with health insurance benefits for salary increases and you have large fund balances uh that's why I think the board put those minimum maximum parameters in place and so over the past five years those cash accounts have uh consistently gone down and that was primarily during COVID we have uh several positions 57 I believe uh that are paid for from those cash accounts. So historically when you look at the M carry forward and these are the this is the balance year-over-year from 201617 to the projected for the current year uh we started at a low amount and

017then as we got into COVID that number grew the the board regulation DBR talks about a minimum carry forward of 4% and a maximum of 8%. We at a couple of points in time have been over that maximum amount. But if you if you look at the 25 year, that 19.6 Oh, I didn't move that one on. Thank you. That 19.6 million uh it includes 5.5 million in one-time carry forward from the prior year. And so that that is is it uh an accounting situation, not an actual fund balance total. So if you if you really look at where we were in 22 at 17.5 then the cash carry forward is 15.3 14.1 and 24 and it's projected to be 9.9 in this current year could be a little bit lower depending on how we

018deal with the ADM decline. So that's just when you think about our our carry forward amount. We're getting closer to the four percent floor on the carry forward uh not the maximum amount recommended in the regulation. So here's the slide that shows the the cash accounts and I'll talk briefly about these and then when we get to the detailed presentation Shannon can uh answer any of the questions on that. But the the uh line item the orange uh graph here that's our Medicaid reimbursement. So those are funds that we earn uh through um billable hours uh from Medicaid for special education services and it's um been inconsistent in terms of how much revenue we get every year. But you can see that the expenditures associated with that M.Y.I.P. account have increased pretty significantly and now

019we're down to less than a million dollars in that account at least projected for this current year. the the uh green bar which is more of a level line here that's our community education uh department. So early learning and community education and and it's always expected that that will be a self-funding enterprise. This is a cost center unto itself. 10% of their revenue uh is swept by Shannon to support district activities. But otherwise for community ed to be viable they get no subsidy from M. Uh they generate the revenue on their own. uh the increase uh from 2122 to 2223 was because we got uh dees grant that allowed us to do some more things. We don't always have that opportunity, but when we do have the opportunity to leverage additional grant funds, we go

020after those the the bigger ones uh the yellow line which is indirect cost and the blue one which is civic center fund. Those are where the bulk of the positions are and that's where the funding available funding has dropped the fastest. So indirect uh from federal grants, from nutrition services, from other places uh we had a revenue stream and over time the rate that we've been able to charge for indirect has gone down. The number of grants that we can charge indirect for has gone down and the the number of positions in that line item has resulted in this significant drop. The same is true for civic center. These are facility rentals and we pay for almost 17 people out of that rental fund. But when you spent the money and you're not bringing in

021the revenue at the same pace you're spending it, uh the the graph looks like this. And so while we have been monitoring uh these trends over time, they still fit within the uh prior board's minimum and maximum for these funds. But what we don't have the luxury of doing any longer is keeping those 57 positions, at least not all of them in these accounts in the 26 27 school year and beyond because of the the the amount that was in the savings account is no longer there and there's not a revenue stream to replace it. And these are the 57 positions. Uh you can see the civic center rental is 16 and a half on the far left there. The business finance services is 15 and a half. But all of those other ones on

022the bottom uh are from indirect cost. Human resources with 11 is the second largest. And so those are um people who are integral to the operation of our district. It made sense to pay for these positions out of cash accounts because that meant we had more M to be able to invest in our priorities at our sites to be able to provide payraises for our people uh to leverage M for the uses that uh we're able to do. So, so, uh, we're going to show some of the cost-saving efforts that have been underway since 2023, and there are more since I've been here. Uh, my first year, the board had me redo cabinet contracts, and we took out benefits from cabinet contracts in the first year. We had an ex an executive director and a

023director in teaching and learning department. And when both of those people left, we only replaced it with a director of teaching and learning. That's not reflected here, but those are changes that were made earlier on. So since 2023, we have reduced district office positions by 25.25 FTE. And the estimated savings of that is about 1.4 million. When we say estimated, it's because um I didn't want Shannon to spend the time trying to figure out what benefit package everybody took. And and uh so when you look at what their salary was and and you estimate, this is a conservative estimate of the savings. The change we made last year on special education where we provided the market-based stipen and hired our own versus contracting for special education services uh is showing a savings of 3.3 million

024in the current year. Last year in the budgeting cycle uh we uh worked hard with our departments to reduce uh what they were going to be given in the budget and so that it represented a savings of about 128,000 or more. And when we eliminated the Scottsdale online principal position and combined it with community ed, that's an additional 150,000. So it's not all of the ways in which we've taken action to save money, but it's representative of intentional efforts to say when we have vacancies, do we need to fill them? Are there ways we can reconfigure to save money? Uh, and those are ongoing efforts. And so tonight, uh, we're going to continue to talk about what those opportunities for savings are. And we're also going to talk about what some of the cost pressures

025are. We also know that there were some decisions that were made at the board table in the last couple of years that had the reverse effect. They added cost to the budget. So, two years ago through the IBN process, we recommended a 1% pay raise. Uh and then after um some efforts by the the uh associations to say that's not enough and the board's interest in doing more, that was increased to 2%. That was a 1.4 4 million. I should give someone this. That was a $ 1.4 million change in year one. Then because we had a pay increase last year of 1%, it's compounding. So it's closer to three million in the first two years of that change. And then last year through the IBN process, we had a negotiated agreement to adjust the

026ratio of assistant principles based on enrollment in buildings. And the board at that time decided that they did not want to do that. We wanted to guarantee that any building that was open had at least two administrators, a principal and an assistant principal. So, there were $400,000 of additional costs that could have been savings with different decisions. And the reason I bring that up is not to judge the decisions of the prior boards. It's to just put on the table that every decision that a governing board makes has an impact on the bottom line. And so if you add somewhere given the historical trend of 6,000 fewer students in 15 years and the projections that that trend is likely to continue for the next year or two, even if even if we met the wildly

027important goal of increasing our capture rate by 3% by 2030, that's 600 kids. That's that's not anywhere close to the 6,000 that we've declined. So when we get to the repurposing conversation, I think it's important ju to just do a little bit of a historical review. It's not a new conversation. Boards have been talking about this for a very long time. There have been times in the past where decisions have been made to close schools. Scottsdale High closed in 1983. It's a long time ago. The last merger of of schools outside of the Tonali Elementary and Supai Middle School was in 2008 2009 when Zouri and Aztec merged and became Redfield. So, so there have been many discussions uh even when I got here I was handed a granite reef corridor study of the schools

028along Granite Reef Corridor. So, you have Navajo, Puma, Hokum and Yavapai and conversations about what does the demographic study tell us? what do we anticipate from a school age population and should we be doing something different there but uh we had sufficient funds in our in our cash accounts uh through COVID we had supplemental funding that was provided every board wanted to focus on marketing and growing uh since I've been here uh the board that hired me the board that took over as a majority in January of 2021 no board wanted to move forward with the conversation of closing a school however However, when you think about the decline of 6,000 students in the past 15 years, I don't think this is a question of if schools need to be repurposed. It's about which ones.

029When you have 29 open school facilities and many of them are significantly under capacity, you're spending money to keep buildings open and that's money that you can't spend to invest in your staff in the form of pay increases or addressing the rising cost of health insurance. I don't like the idea of repurposing schools. I know that it has an impact on kids and staff and families anytime you have the conversation. Yet, we've had two demographic studies done since I've been here and we've got the third one that will be coming in November and the data is going to look very similar. Our capture rate is part of the challenge. We went from 71% to 55%. Demographics in terms of birth rate, the birth rate has declined more quickly than our decline in enrollment. and the

030number of choices that parents and families have have increased in that same period of time. And so if our goal is to have full and thriving schools, then we have to talk about what the footprint is and how we maximize the resources that are available in order to ensure that Scottsdale Unified School District students receive the best possible education. And so I think tonight the the the hope is that as we look at our budget reality and we talk about the components of the budget, we think about the difficult decisions that will be on the horizon for the board. We know one is top of mind and that's the repurposing conversation and that's because we have a hearing on the 13th. We have a board meeting on November 18th where we can have more conversations

031and process what we've heard, think about what some of the other options might be, and then a decision point on December 9th on one aspect of what will impact our budget. If the board decided we're not going to repurpose those two schools, we're going to keep them open. Then we have 2 million more at least of cost cutting that we need to find to fill the $8 million hole that Shannon's going to talk about as we get into the conversation. And when it comes to that $8 million hole, I want to be clear that part of it, about 3.3 million or so, is tied to the loss of student enrollment. The other five million is in those cash accounts. And because we don't have the money in the cash accounts anymore, we have to move

032positions over to M. So the hole is bigger than just the regular decline in ADM that we've been navigating uh for 15 years. The hole is bigger because the funding sources that have allowed us to avoid some very difficult decisions no longer exist. And so I would encourage the board to think not only about this next year, think about the next two years because the decisions that the board makes as we build the budget for next year, but think about the next two are going to set the trajectory for the next decade. We anticipate that through concerted effort, we're going to continue to improve academic achievement. We know that in 2025, Scottsdale Unified School District has the top test scores in Maricopa County and the top in all of the state of any uh district

033that's serving more than 10,000 students. We don't believe that our scores are good enough. Uh but we are the best in the valley and the best uh in the state with anyone who's serving a population our size. and we can do better, but we can't do better if we're spending money on under enrolled schools that could be put into ensuring that we have full and thriving schools with the top uh educational programs that are possible. So, our goal is to build understanding. Uh from my perspective, I hope that we have a shared understanding when we leave. From an administrative perspective, what we want to know is what you would like to learn and know more of as you're looking at this data. What questions does it prompt for you? uh when we think about what

034the options are going forward, we want to make sure that we're exploring all the options. We don't want to take anything off the table prematurely, but we also know uh that any decision when you're looking at an $8 million hole is going to create some level of pain. And so the goal is to think about how do we ensure a financially responsible and viable district for the next decade through responsible decisionmaking over the next two years. With that, I'll open it up to any preliminary questions before we have Shannon dive into the specific details. >> We're going to slow down a little. We're going to school. >> Okay. Thank you. I just uh have a comment that I would like to start out with. Um, I take some offense to the blaming of the board

035on some of these decisions and saying that uh we didn't want to have a conversation about closing schools because that is not true. That never even came up. Um, obviously we knew enrollment is a problem, but uh nothing was ever brought to us. Hey, would you like to talk about this further? I had actually asked what was going on with the growth plan uh commitments that were in place in 2018 and never got a response. So, I just think that's disingenuous to say that since we were part of a prior board. Um, I take offense to that because I was never asked if that was a conversation I wanted to have. [clears throat] >> What I thought I heard you say is that prior boards have talked about and wanted to talk about school closing.

036>> So, they have uh and historically they have. You can go through the record and look at the minutes. uh and and uh when when I got here, I mean, they they talked about it through the demographic studies. We're looking at the numbers who are that are there. And that's why the emphasis was on on how do you grow because it was clear to me in in the conversations with the board that they didn't want to close schools. And so the the focus had always been how do we grow, but those were conversations were outgrowth of the demographic studies and looking at our enrollment trends. >> Yeah. My point was I didn't take you as implying that prior boards didn't want to raise this difficult issue. I took you as saying the opposite. >> Um,

037and as someone who voted to keep the assistant principles, I appreciate you pointing out some of the actions that the district tried to take where the board made a different decision to really understand the total number of initiatives that have been pursued by the district's leadership to try to manage our our budget challenges. Um, and again, I'm someone who voted for at least one of those. I don't I don't personally take offense from that. Um, I guess my question is, are we going to go a little deeper into the cash account and why it's dropped so precipitously, so quickly, where the dollars came from, and why those dollars are not >> trending. So, Shannon will come back to that slide. We moved it up from the 30,000 view, and then she will be able to

038talk on that in the detail on that slide. >> Then I'll hold off on my questions. Thank you. Uh, member Warner, just for the record, um, when we were discussing the vice principles last spring and the budget, I repeatedly asked for the budget to be on the agenda so that we can continue discussions and I was denied. And I think that considering where we are today, that would have been absolutely invaluable if you'd had those conversations last spring. Thank you. >> Anybody else? >> All right, we're going to turn it over to Shannon. Uh, thank you for those questions and comments. And, um, again, even though these mics aren't working, we'll pass around the handheld. It does help when your green lights on. That allows President Lewis to to see who's asking to speak or

039ask a question. >> Thank you. Um well, thank you Dr. Mensel for um setting the context of where we're going to go through um the budget for tonight. Um this first one really just looks at all of our funds. And we've I've showed similar slide before, but what this really basically shows is that there are different funding sources that we have as the district. Um the primary one being Maintenance and operations. Um some of our budgets are budgeted meaning there's a state formula that says this is how you will generate those funds. Uh that's the case with M and capital. We have cash accounts. Those are things I've know people have said well what's a cash account? Um and that's really um money that we've gotten from different efforts that the district does. So cash

040account could be something like auxiliary where you're charging a fee to go to the football game or a fee for classes. Um, another cash account being the community schools program, rentals, those are things that go into cash accounts. Some are more flexible, some of them have restrictions. Um, so the ones that we've generally focused on are the ones that are a little bit more flexible and have some areas where we could um, use them for M type operations. Um, but there are other cash accounts that we have that are limited on how we do things. Um, but again, our day-to-day operations, the bulk of our money is through M. Whoops. Keep up with the clicker. Um, so across our Whoops. >> Okay. Um, within our M, the bulk of our I'm sorry, within all of

041our funds, the bulk of our money is within salary and benefits. Um, when you look at all of the expenditures, that's about 62% of all of our expenditures. Um when you get down to maintenance and operations, 82% of our budget go of a minnow goes to salary and benefits. Um which really means that the vast majority of our spending is really directed towards um people, teachers, support staff, those types of things. Um which is makes sense because our job is is work is dealing with people. Um when we break down that down that down even more so um you can see that 68% of our salaries are for certified um employees that's going to be teachers, guidance counselors, psychologists, individuals that are working directly with um students and in the classroom. 19% of that is

042for classified. So that's going to be supporting roles, uh supporting assistants, um facilities, nutritional services, those type of things. And then 13% of that is within um administration. And again, we we narrowed that down a little bit because there's district administration and there's um school level exper uh administration. So really looking at it um the bulk of it is going into certified just uh 3% for each of those two administrative categories. So, heading into historical trends. Um, this one takes a look at our ADM history. And so, again, MDA, I'm sorry, ADM is um how our M is funded. And again, that is a state set formula that looks at um the ADM and then divides it out for um an amount per student. Um, ADM is based on how many days a student is

043with us within the first 100 days. So, to give an example of how we calculate that and why it's a little bit different than enrollment, um, if a second grader joined us on day one and was with us through day 100, that is one ADM. Um, kindergarten is only funded at half day. So, same situation, kindergarten student, that would be a 0.5 ADM. But if somebody started say on day 10, their ADM is 0.9. So, um that first 100 days really makes a big difference. Um but it also indicates um why enrollment can look a little bit different than um what our ADM really is. As we're looking at this historically, you can see I mean we had a big dip in um 2020 with COVID. Um we bounced back a little bit, but really

044we've kind of been at a 2% decline uh for a number of years. When we look ahead at our M funding, um, this shows where we've been the past couple years. Um, and then a projection for the next couple of years. A couple things that are assumptions we have to make when we're doing projections. So, the first one assumes that our decline in average DMly membership will continue at the same rate um, as it has in past years. I say question. Yeah. Partly I'm trying to understand this. I also think it's helpful for the community to understand it. A student joins joins us on a day 101. How many days in the school year roughly? Okay. And they're going to be with us then for 79 more days. we're not going to get a single

045dollar to support that student's education even as we're going to have, you know, some number of direct costs associated with supporting that student. >> It's all within that first 100 days. And and that's why prior year funding would be a better solution because we would have been paid for the kids that we had and we know what we're budgeting for. in in real terms, anyone that comes after that is we're we're required to provide the education with no supplemental funding for that. >> Yeah. And and a student who comes in halfway through those first 100 days who we still have to support all the remaining amount of days, we're getting a fraction of the total dollars needed to support that student. Yeah. >> Question. Thank you. Um so for the projections again um we are

046I'm assuming that our decline in average daily membership will stay what um it's been we did bump I did bump that up um moving forward as this year's decline has been a little bit more than prior years. Um it also assumes a 2% uh increase to the to the base level or amount that we get per student. Again that's all uh dependent on what happens with inflation. Um the state has had times where they were generous and gave more than the 2%. Um and um so that's obviously been helpful. Um but it is dependent on that. Um there is also a little bit of a fear that's happening within um schools districts in that um there is a provision where if you hit a certain percentage of the general budget um it can impact what

047um what that base level is at. So there's a concern because is we are getting closer to that percentage. Um but we did this based off the assumption that base level would continue to be at at uh 2%. The other assumption um is that the carry forward would stay at 8 million. Um and again that's based off the idea that one I think that's where we'll be for next year. We're watching that carry forward go down and down and down. Um, but we also know that the minimum that's been set through regulation says that we need to stay at at least 4% and 8 mil 8 million is just a little bit above 4%. Um, so we are building that assumption in and I would point out that this is revenue. This is the what

048we believe the revenue coming in will be. Um, so obviously if our expenditures are looking higher than that then we'll have to adjust. But those are the assumptions that we're making in projecting out for the next couple of years. Um, with that, the next one to that we're looking at here is district additional assistance for capital. And there are really two sources for that. The top source is the state allocated capital, which is based on prior year ADM and again a set dollar amount per student. Um, using that formula, we project approximately 11.6 6 million with a slow decline uh decline in the next couple of years as uh ADM or enrollment Oops, thank you. Um declines. Um with that you'll also see we have done the governing board approved transferring 4.2 million of those

049funds into M for this current year. Um those went to cover salaries and other expenses. So we know that that's an amount that's got to stay as we move forward. Um or else we have to reduce those expenses in M. Um so keeping that in mind, we have projected that in one of the questions that was asked um I think at the last board meeting or one of the last board meetings was how much can we move of that capital over to M and the answer is we can move all of our allocation. So, for instance, next year that could be roughly $11 million. Um, and we can do that. Um, this projection looks at would that how would that look? And we know right now that our carry forward into this year was 10

050million. So, we could we feel like we could do that for a year, the concern becomes that if that continues out for multiple years. Um, so if we, and I don't have it on this slide, but I went ahead and projected out like what would it look like if we did that um, for multiple years and we would could maybe get through 27 28 assuming that our expenses that we currently have in place right now stay the same, but then we'd get into a situation where we would have to start reducing what our expenses are in capital. So we would have to start thinking about cutting back on what we could do um, with technology curriculum. Um I know Dennis has a very very re real fear um because it also his a lot of

051the things that they do in maintenance and facilities run through capital. Um so that is one thing to think about. Um once you move that over and you absorb cost and M with that money then you've either got to keep that in there or you've got to cut cost and M down the road. So something to think with that. Uh the other pot that we have for capital is the voters did approve a capital override. Oh >> okay. Sorry to sorry to stop you there in the middle but I don't want to get too far and forget. Okay. So help help me understand or help us understand. I thought that you said that the uh the override could not be like 11 couldn't be transferred because it needed to stick to what was on the

052pamphlet for the voters. Can you explain now why it we can do that? >> So this up above here is this the state allocation. So the state gives us an allocation for capital or district additional assistance. We can move that. So that allocation is about $11 million each year. We could move that allocation and that would be fine. The one below is our override. The override we can't move. Now what we did differently last year, and we'll do that moving forward, is that we made sure that expenses that might have been paid out of the state allocation that qualify for uh the categories within the override, we moved those expenses down to the override. So we cleared out the override each year. Um, so that frees up that's what freed up more of the money

053within our state allocation. So we can move 100% of the state allocation each year. We just can't we can't there might be some flexibility we want to look into within the DA uh I'm sorry within the override but we can't transfer that to M just the state portion. That's okay. It's all good. Yep. Okay. Um and again we talked about this a little bit. Um earlier uh in 2001 that was the last time that we um opened a new school. Um I gotta look at my note. Uh one it was interesting we looked at um the number and in when we opened up Copper Ridge we in 2008 2009 uh which was when they merged into a K8 school that school had uh 1,200 kids enrolled in it. Um and it's actually down to 440

054this year but that was the first or the last school that we opened up that was a brand new build and expanding our footprint. Uh then as Dr. Mensel mentioned earlier um as in 2009 we merged Aztec and Zouri on the Zonyi campus which became Redfield. Um Cheyenne traditional moved over to what was the Aztec campus and the campus that was previously Cheyenne is now what we call Choya and we have quite a few rentals actually through there. Um 2014 we did the Tanalia um the supupi merger and then pulled that back out in um 2022 making Tanalia just a middle school 68 grade level and moving the kids the K5 kids back to Puma Yavapai and Hoka. It was my understanding that Yavapai was closed in 20 18 maybe or 2020 and then you

055reopened it. >> So it was it was um colllocated with Hokum. They still kept their separate um school identification. So they tracked the kids separately. But while Hokum was being rebuilt, both schools were located on the Yavapai campus. >> Yes, that is correct. When they were so when we were um redoing Hokum, they put them on the Yavapai campus and we kept their expenses and their CTD number, CTDS number. um and their enrollment separated between the two. >> Yes. So the question was that did the board ever vote to close Yavapai and the answer is no. And we technic we never really closed it. We just put Hokum kids as Hokum was being rebuilt on their campus. Yeah. Collocated. Um I'm not and we can talk more about this if you want to. This is

056um the cash accounts. I believe there was questions on that and I know we have some more information in the appendix. So I can either flip to that now or we can talk about that in a little bit. >> Yeah. So I knew this slide was the same here which is why I was asking earlier. I it would be helpful just because it's such an important part of the story. We've been able, as I understand it, and you can correct me if I'm wrong, we've been able to offset some of the structural budget deficits that we have with this cash account and now we can't. And so I think it's helpful for me and the community to understand what's changed in the sources of funding and you've separated them out here. Um so within the

057ones that really were most material in drop which would be the um civic center one kind of why in the past does it seem to be able to run consistently plus or minus and then all of a sudden it's dropping. >> Um do you want me to there is an appendix slide that shows that a little bit more in detail. It is actually Hang on. I think it's in here. 39. Okay. Are you able to super click? Um, this looks a Whoops. 39. Um this breaks it down a little bit more into um actual expenditures and revenue, but I can tell you a little bit of what happened. Um so within >> Yep. Yep. Uhuh. the revenue. So within Civic Center, um I think two things have really taken place. Um, one, we streamlined our

058um our rental handbook and tried to make that a little bit more understandable and also to be a little bit more um to work a little bit more with our partners that, you know, they have programs within our schools. Um, they're they're doing activities with our kids and to make it a little bit more cost um effective for them to be there as well. So, I think that impacted our revenue a little bit. The other thing we know is postcoid we don't have the number of activities happening on our campuses that we used to. So there used to be quite a bit more um football game or football programs and soccer programs and athletic programs that are happening on all of the campuses. There's still a lot of those things that are happening but they're

059not it's taken a little bit to get you know it took a while with COVID and I don't know that we've totally gotten all the way back there. Dennis, would you I mean I know you the a lot of those rentals run through your office. I think those are the two things that have really impacted that revenue within that. Um in addition, we've added expenses to it. So um the first thing that we do with rental money when it comes in is we have to cover the cost of the activity that happened. So um whatever facilities worker is there, we now a lot of times have security. Not a bad thing, that's a good thing, but we have security there. that adds a cost to that we we didn't always have before. So, some of

060those costs have risen as well. Um, we do charge for those those activities, but there's a there's a cost shift there with um we've put more towards towards rentals. We also moved more people over to the rental account because it was such a high balance um and we knew that we needed to bring those balances down. So, we added positions to it and our revenue has decreased within it. within the civic center um within the indirect cost the biggest impact for us and I think Dr. M. So, oh, you want me to I'll hold. >> Can I summarize that? And I don't know, governing board member Sharky, if your facial expression isn't interested in asking a question. Um, so if I'm going to summarize this a little bit, I'll use the term auxiliary services just

061because in higher ed, that's my what we might call it. These ways that we make money. Um, they're less profitable. We're able to charge less for them and they cost more to deliver things like security. And then so that's part of it, the less profitable. Second, we're just there's less of it. There's less activities generating the less profitable dollars. And then the third one is we made a concerted effort to write more checks, so to metaphorically write more checks out of that account. So even as it was getting less income, we also were burning it up faster. Is that >> it is >> a way of summarizing what you described? And I will add to pass Mike. Um, one of the things that we did two years ago that also impacted our expenses is that

062we offered a the last retention stipen to um, classified employees. We didn't have ESRE funds to do that. So that and that was something that was really important to them. Um, and so that that um, retention stipen also came out of that account. >> So there was one big check that came out um, a couple years ago. Um on the detail just doing some quick math on the revenue and the expenditures the revenue has been pretty steady around 11 million for the last four years and expenditures haven't been bad. So it's really more the third thing we've just been dipping into the till too much. It seems like it's kind of negligible how much it's changed in the actual revenue and expenditures. It's really more that we kept dipping into it again and again and

063again. >> That is true. I mean, especially, like I said, we did um within rentals a couple years ago, we paid a COVID retention stipen to our classified employees out of there. That was a couple million dollars. Um yeah, it's hard to keep track of all of the different renters, but we also lost a significant renter in um Lexus Prep. uh during COVID they were about a quarter of a million dollars a year uh revenue source and they um closed their doors. So some of these renters that we have uh really create some revenue for us and then when they're gone they're just gone. Um okay so then the next one I would I think that we've really um utilized is indirect cost. Um and the biggest drive within that you uh or reduction in

064revenue within the indirect cost um comes from the fact that uh food services or nutritional services in the past had been able to contribute 25% um of their revenue towards us from uh their federal reimbursements. That was well over a million dollars. The the law changed in what they could contribute to us and it reduced it down to 18%. Now 25 to 18 doesn't seem like a whole lot, but it really equates to a good three or $400,000 a year. Again, that's not a ton, but when you're talking about, you know, positions out of there and having to to reduce what's in there, um we we have taken a hit within what they can contribute. they'd be willing and are able to contribute more than that, but we are capped at 18% for what they

065can contribute within their indirect costs. Um the same is true with grants. Um as those grants go down, um we are limited by what we can take and and each year our indirect uh rate changes uh depending on a formula with AD on um the revenues that you have in and your expenses that you you've done. So the indirect rate can fluctuate from year to year. It's not a huge fluctuation, but between the flu that kind of fluctuation, the reduction in what we can do um from food services and what they can contribute and then we just know that federal grants are going down um in revenue and again we have pushed an awful lot into indirect cost and you see that when the bulk of the positions, this is not something that's happened in

066the last three, four years. I mean, this has gone on for a number of years where positions were um funded through those accounts. Uh there was lengthy discussions. I remember when Jeff Gad was here um talking about the balances that were in those accounts and the need to get them down. And so that's um when the district started pushing um positions into uh indirect costs. So same type thing of revenue down, expenses up. >> What's the decision process on that? I at ASU we have things where like oh we've got a three-year uh grant to do this thing and somebody will hire a full-time employee and then three years later there's no funding for them and it's like well we made this bet three years ago and they're still here. So when we make these

067decisions to move a position to be paid out of the cash, is there a is it a kick the can down the road like we we'll figure it out later or is it because we're basically making a bet and we say let's pay it out of cash knowing that that's not a perpetual fund source. >> It it's it's a good question and it and it depends, right? So we have terminated contracts for a number of grants like you're talking about. So when we know it's done, we structure the contract. That doesn't mean it's still not a surprise when it when it comes, but we have that. When it comes to indirect, there there is a gen you pointed it out the the revenue stream is somewhat consistent in all of the cash accounts, but indirect

068took that hit from food service. So, we had been paying for positions, which actually makes sense. If you think HR and finance, those are behind the scenes necessary functions that benefit every department and and that's why indirect is charged. So I would always anticipate there's a handful of positions that are in those. We maximized what was there uh during the the past few years. Uh in in order to ensure that we could protect M. So I I think part of it with the grants we do just like you're talking about in the other we knew that some positions would always be there. Uh Shannon has for a few years said Scott we're going to need to move some of these cash account positions back into M. And I kept looking at the minimum and maximum

069and saying yes I agree but we don't have to do it yet because we are still so far over the the the maximum amount that we can protect M for another year. So now we're at the point where we have to have very different conversations because those numbers have dropped to the point where we can't you know say there's another year to spend the money. Um the casumar lawsuit did that impact us anyway because that was a chunk of cash. >> Um that did not impact us in any way. Um the quasaire lawsuit impacted the cash that we have in our um M account. Um again that's a budgeted fund. So um it doesn't impact the fact that we didn't have to cut our budget to be able to um to pay that back. Um

070it means that the cash that we have in um in the bank for M uh is less than what our budgeted um allowance is. [snorts] >> It really doesn't. The question had to do with um where would you see the Quasmir lawsuit and how would you see that deficit? Where you would see that is on the AFR. And when you look at the AFR uh summary page, um you'll see um fund balance and you'll see what the expenditures are. And if you subtract out the uh fund balance and the expenditures, you'll see that there's um a five million I think it was a little over $5 million deficit on in and what we had on that M. So it really stands out on the um AFR. In fact, our finance director said, "Him, this is

071wrong. this is wrong. You can't have it. You can't have it. And I said, we know what this is. It's quazamire. >> So when we get to the discussion of costs that we have to cut, obviously another thing we'd like to do is generate more revenue to not have to cut the costs. Um, so where in the district leadership is the person responsible for owning this number and kind of growing it? So who in the district wakes up every day? I know we're not like a event renting space like we're a school district but to the extent we make a lot of revenue from activities who wakes up every day thinking how do we get more community organizations to use our space more sporting activities you know all the things that can help generate more

072revenues in this area I wouldn't say it's a singular person I think that you have a couple of different avenues so community education uh athletics and and facilities ities and facilities is the point person on all of this. So, from a a facility rental perspective, there's a process for people to make the request. Uh there's a cost that's that's uh identified at the beginning and Dennis could probably walk through the process, but I would say he he's his department is the one that serves point on this. But from a community education perspective, they're always looking at what are the offerings and we can generate some revenue there. But most of that stays in their community ed budget. Uh, so Dennis, I don't want to talk about it. >> I'm talking more about the it was

073the civic center I think is where we were mostly. And so is does someone sit down with Dennis and say, you know, we need to generate X amount this year and right now we're tracking to less than X. What can we do? Can there be more marketing activities? You know, has someone dropped us and how do we get them back? Like I'm sure Dennis has a full-time job just running all the facilities, thinking about growing that revenue, but but maybe I'm wrong. >> Our facilities run uh 14 hours a day, seven days a week. Um there there's there are some opportunities, but very few. Uh our athletics throughout our high schools are in the gyms all the time. Um we uh three years ago, four years ago, lacrosse uh became a deal. They were a

074club within the schools but not an AIA sanctioned um activity. So we made a deal with them that we'll treat you like our schools uh athletes. And so they became uh a revenue source that just flittered away. they now became part of our school. And then finding the field space and the time for them is very very one person uh in my department that manages every single event that comes in um to the school district and um then that trickles down into security. And so it is not something that is a department if you will uh looking do more. We are we are doing everything we can with the people that we have and our schools. I I can bring up a calendar right now and you'll see activity in pretty much every school. >>

075So I would say I'm confused by the statement that since COVID we have less activity and the statement that we're kind of brimming. I kind of got in your answer a little bit that maybe activities that used to generate revenue are now gratus and that's I think your lacrosse example but I I would say there's a little bit of a disconnect in exactly what's driving >> what what is the lacrosse season? When did that go start and when does it end? Well, it used to be uh a little bit more specific and now it has spread to a larger part of the season. They start in the fall and then go to the very early part of the spring. >> Okay, since we're on the topic, this is something I'm very interested in as well.

076And I had asked about the rental revenue for Puma and Echo Canyon. Um, and we received that as a board. And I'm just wondering, uh, do the schools keep the f the revenue that's coming into them specifically or is it going to a general fund? Uh, what we do with all of the rental money is it all goes into a general account um that we first pay all of the expenses throughout the year. At the end of the year once we've balanced all the books what we do is look and see what is the different you know take the revenue minus the expenses and we allocate that out to the school. So there's a dollar amount that we'll allocate out to the schools based on their um uh ADM or I'm sorry enrollment. Um the

077past couple of years the revenue has the expenses have exceeded the revenue but we've still tried to allocate out at least a portion of that to the schools so they get some of that money. Um that's something I think we have to evaluate what we do. um moving forward if we still do that, but I know it's a source that the schools like it's additional money that the schools utilize as well um outside of their MOS. So, they do get a portion of it, but it's really goes into a general fund um or general pot and at the end of the year we take um revenue minus expenses and and allocate by out based off of that. Um I think I think what Dennis was was saying and and what I was also trying to

078say is that um our schools are used a lot but it's a lot of ourselves using those campuses not outside groups as much. It's a lot of our own selves internally using a lot of our facil facilities. I think one area that could be a good source of revenue um or help with some of this is the 68th Street um facility that we now have. But we also know you can't have people on grass, you know, all the time. That grass has got to have time to rejuvenate again and get watered and and do some things. But I think that is um something that could it's not going to it's not going to change this necessarily, but I think it is an additional source um where we can generate some revenue. Dennis is looking at

079me a little >> and I didn't want to take us too far down one particular but as we think about expense reductions we also want to think about revenue generators and not just look at one side of the equation >> and that's part of and we sent this to the board the the uh rubric that we have for facility reuse that when you think about like the Choya campus for example and and we we put um the Boys and Girls Club project at Tanalia through that to say you know are these are they are they filling an educational need. Are they generating revenue? Are they doing these other things? And so we've got a process by which we can evaluate any potential use of a facility that's repurposed from being a school to something else

080in the community that can help generate revenue and offset the pressure on the M budget. And our our facility rentals piece is complex. We have a relationship, a longstanding relationship with the city of Scottsdale where we have an intergovernmental agreement with our facilities, with our gyms, with a lot of locations. And with that, we um get uh design review services, permitting, different things at no cost. uh in return uh they get to use our gyms, they get to use our our turf areas. So there's a give and take within those IGAs. And so it's not that every location can become a cash cow because it's being like if you go outside right now, the the turf area for um the Mojave Fields is lit. It's paid for by the city of Scottsdale and they have

081all their city activities on that field. We don't we take care of it, but they use it. So there there's a lot to it. It's not just simply, hey, we have space. Let's rent it out. >> Thank you. I wonder, Dennis, if you could update the facility rental um spreadsheet you gave the board prior board like a year ago or so. Maybe that would be good for the new board members to see. If we could get an updated um of that report, that'd be great. And how easy is it to rent a facility? Is it is it a simple process so that anyone can easily get in touch with who they need to get in touch with and get their paperwork done? And is that something that's a simple process for community members or is

082it something that's cumbersome and they end up going somewhere else? And the second part is have you guys been able to capture like Arcadia Little League and things like that in those particular the school Echo Canadian that we're that that's up for discussion today. >> We're going down a rabbit hole on this one. Um, Arcadia Little League has had a long-term agreement um that they do services and in return they get to use the facilities. Most recently, uh, Arcadia Little League invested $47,000 into Engleides two fields in lie of rent. So, we're not we don't get to see that, but we get to see the improvements on the field. Um, what was the first part of your question? I I can absolutely. >> So the the most challenging part about our facility rental process is

083one uh they have to have a certificate of insurance to be able to use our facilities. Obviously we need to protect our liabilities. So certificate of insurance is probably the biggest hurdle. And then secondly, um many users do not want to have to pay for a facilities person andor security to uh be on the site during their event. Those are the two biggest challenges. All right. Okay. Um as we Oh, >> so to wrap up um Dr. Pinsk's point, so in wanting to be able to have more groups and individuals be able to rent our facilities, is the price of hiring one of our facilities individuals or security so large that it becomes cumbersome on them or is it something that is fairly And I'd imagine that most people that are have a group already

084have their certificate insurance. And so I would I'd be curious to look at the process to see how simple that is. And and when we want to bring more people into rent, I want to ensure that we have a a good simple process for them. >> I can certainly put something together to uh show the board the process. >> All right. Um, so moving into uh the projected budget, um, I wanted to start out with looking at the current year first because I think it kind of sets the tone for where we're moving in the future. Um, so um, as we look at that, um, as Dr. Menel mentioned, um, our ADM is currently trending below what we budgeted for this year. Um, because we are funded on current year ADM, that can fluctuate between

085now and the 100th day. Um so we're going to continue to monitor that closely, but um as of about a month ago, we were we were down um about two this weighted count was down about 297 more than what we had projected. Um our budget carry forward came in also a little bit lower than anticipated. We were shooting for just over 10 million and as you can see it was about um I don't have the number on there but it was uh just 157,000 less. So n in the 9 million range. Um we did the state had some one-time funding. Um it's happened two years in a row. So um we'll take it. I don't know that we'll have it in the future, but um that helped out offset some of that decline. Um but

086we are looking at right now about a $861,000 um reduction that we'll need to make in the current year budget. Um, I want to be clear that that doesn't mean that we're going to suddenly go into like mid-year um, reduction budget cuts or whatnot. We're going to keep monitoring that. Um, but it does mean, and we've told our schools this and we've told our departments this, that we just need to be careful about how we spend our dollars. And I think that's true any year. These are taxpayer dollars. We always need to be careful about it. But what we've said is you really need to look at um, is this a need or is this a want? Um, and and start to to look at those things. Um, additionally, and we've done this for over

087a year now, is anytime a position becomes vacant in the district, that position comes back to cabinet, we review it as a team and we decide, um, is this something that we really do need to get filled? It's vital, or is this something that we can put a hold on, um, and recoup some savings there. So, we will continue to do that, um, and and and look at those funds. And, you know, at the end of the day, we do have some budget carry forward. So worst case scenario, there's that or we might have to move some capital, a little bit more capital over to cover that. But we'll keep monitoring it and watching what we're spending um to address that for this year. Um looking ahead for 2627, as kind of been mentioned, um

088we are anticipating enrollment trends to continue like they have. That being the case, um we are projecting a reduction of 583 in the weighted student count. that weighted student count is the ADM times uh like 1.23% or a little bit more depending on what grade level you're in. Um again assuming a 2% increase to the per student funding amount or base level amount. Um and so that does give us a reduction in our revenue for next year. We also anticipate bringing down the budget carry forward another $ 1.9 million. That's um follows the trend that we've been seeing the last couple of years. Um, I'm not counting on the $849,000 in onetime funds that we received from the state. Um, and so with that, that puts us at um a reduction of about $3.4 million

089to the budget. Um, as Dr. M uh Dr. Mensel mentioned earlier, uh there are 57 positions that are funded through rental and indirect costs that will need to move back into um M. uh as well as some other expenses that we've moved to other cash accounts that can um no longer continue to do that. So that is looking at um 3.9 to 4.5 um million impact. And then the last one is the self- insurance trust has had a very healthy balance. Um self- insurance trust covers our medical insurance. It also covers our property casualty and workers compensation. It has had a very very healthy balance. We've been bringing that down. um we have not fully been funding from M or property casualty because that account was so um well established um in fact there was

090a year that we didn't contribute at all to it um and brought that down. That being the case, we are at a point where again we need to we need to fully fund that property casualty insurance premium out of our M. um we can kind of tear it a little bit and just do uh you know about 500,000. Um but if we were to fully cover it, it would be about a million dollars more um for that. Um I did have somebody suggest to me that we might want to look at are there some places within our um coverage to see if there's some savings we could realize there. Um, so that is something we'll take a look at to see, you know, is there something we're we're covering or doing within that um that

091can lower the cost, but um again, we'll need to make sure that we fully fund that u that premium. So, when we combine all of that, that brings us to our budget gap of about 7.8 uh to 9 uh to about $9 million for next year. Did you have corn this? Okay. All right. Um I uh was had the privilege of going to um ASBO International or Association of Business Administrators um last week and um every almost every class there was about right sizing school districts, dealing with inclining enrollment and evaluating your return on investment. Um, and this was actually uh a slide that was in one of those those uh presentations, but I thought it was really fitting within kind of what we're looking at in the decisions we're at right now where it

092talks about um operating costs, robust programs, and small enrollment. And really, we've hit a point where we we've got to prioritize those things because our resources are getting limited. But I thought that really kind of demonstrated where we're at exactly. Um, do you want to click? So, again, we have the program cost considerations. Um, I want to emphasize again that these are considerations. These are not recommendations. Um, we're not trying to say this is what we have to do or we need to do or we should do. It's really just to show this is where we spend our dollars and uh the programs that we offer and and what they cost. Um, and so it's really just to be transparent on on um on those items. Before we go into them, I think this is

093an important question to ask Dr. Mensel. These are considerations. They're not recommendations. We haven't decided to do them. And yet to the community, we've scheduled a hearing to close two schools. and there's already been some conversations at those schools about a recommendation that I don't think you've actually formally yet made to the board. Um, so can you kind of reconcile what is it about the as we think through these considerations and understand them? And I'm I don't think I'm going to be crossing the line, but you'll tell me if I am. >> So, yeah. Can you explain to the community and to me quite honestly what is it about the process of giving the board the option to consider closing a school that sort of in a weird way creates an order of operations in

094which it almost appears to be having been decided like I'm I genuinely don't understand that and I know that's a question that I get a lot from the community >> if if I could just uh set the stage Uh so the the statute that requires a public hearing before a school con district considers closing or repurposing a school was enacted probably 15 18 years ago. So before that there wasn't wasn't any requirement and then the legislature set up a specific requirement and it's in the portion of the title 15 that is a must not a may. So, the boards are required to do this. Um, and the purpose of it is to allow for the board, it says it has a three-part analysis. Number one, the governing board has to set the hearing. Number two,

095the hearing has to be held with specific notice given. And number three, the board's decision cannot come until after the public hearing. So the legislative intent was to require governing boards to hear from the public before they start their deliberations on whether to close or not to close. It is not a foregone conclusion that this board or any other will make the decision to repurpose. In my experience, I've had multiple school districts stop that moving train along the path at any time and that's within the purview of this board. But before this board can even start to really have the conversation about repurposing, there needs to be that public comment because of the legislative statute. >> So it is it is it as simplistic as saying everything else on this list we can talk about

096and decide yay or nay with the exception of that f in with complete discretion with the exception of that first one. The only way you can talk about that first one is by going through this required process that you're describing, which then creates the odd order of operations in which you're having a hearing about doing something you haven't yet decided to do. But you can't consider whether you're going to decide to do something until you schedule the hearing to help you decide whether you're going to do what you're going to do. And if that makes sense to anyone, that should be in politics. But it doesn't make sense to me. >> It it is correct. And I just want to add a little bit more context to uh the conversations that have happened in Scottsdale.

097So in 2018 2019 uh Dr. Creekard launched the grower consolidate conversations identifying schools that were underenrolled setting growth targets for those schools. Dr. Sacos was here at the time. There were presentations to the governing board at the time. uh many of the schools made progress the year after the grower consolidate targets were set and then COVID hit and when COVID hit everything pivoted and so we had a a dramatic decline like everybody else did you know maybe twice what we normally had in that first year of COVID and and it didn't make any sense to have a grower consolidate conversation when we were coming out of the pandemic trying to figure out okay what can we do to support all of our schools in getting back enrollment that they lost as a result of the

098pandemic. So, we restarted the grower consolidate conversation last fall. But the other thing about this that's tricky is that the moment you say the consolidation word, families begin to look for other options. So, we don't lead with consolidation as the option for schools. We talk about what are the things that we're putting in place in order to help our schools get to a threshold where we don't have a conversation about whether or not they should be open or not because we've reached a a tipping point that says okay with 400 or 450 or 500 whatever the number is. This is a number where uh they're viable as a standalone school and don't need to be on that list. We always are concerned about enrollment but there's there's a threshold. So in 24 we drew a

099line at 400 said if you're below 400 you're in our most urgent tier. And so we had individual meetings with the leaders of those schools. Had conversations built plans talked about marketing to address those schools. Then you had that next tier that said you know you're not over the threshold. You're four between 400 and 450 from an elementary perspect perspective. You really want to get to 450 and up just to be comfortable. So we started those conversations. But if we had started with going public with a list of all the underenrolled schools, which people see, but if you now say you're on a grower consolidate list and perhaps you're not going to be there any longer, you see what happens like happened this fall when that conversation became public. We had families, I don't know,

100Dr. Bono, I think 17 was the number I saw between Echo Canyon and Puma where parents have already moved. The vast majority moved them to other SUSD schools, but they wanted to get ahead of any decision the board might make because we were talking about consolidation. So, we don't lead with that because we don't want to have the unintended consequence of driving families away. And when we put out the list of schools that are underenrolled that are around or at 400, so the two that are on the list for phase one are below 300. The next tier is at or below 400. When we put those schools on the list, those principles have been getting calls from their families. Is it is is our school in jeopardy of closing? Should I be planning for other

101options for my kids? So the the staging is awkward to your point, but when we were starting the conversation internally, Jennifer made it very clear, Scott, the law says this is the the sequence of events that have to transpire if you're going to go down the road toward considering closing schools. Now, we use the language of repurposing because I don't believe it's ever advisable for us to sell a school property that was a school building. uh one there's not new property to acquire and two if you lease versus sell you have more flexibility with the revenue. If you sell that goes into plant funding can't be used to pay your people. So so there's a whole lot behind the the thinking that's gone behind a deliberate strategy of phase one and phase two. The phase

102two doesn't presuppose anything. There's never been a conversation with the cabinet about closing the six schools on the phase two list. The conversation is about right sizing our footprint based on historical enrollment declines and how do we ensure full and thriving schools. Those schools hit a tipping point just like the two schools that are on the list this year did. And and uh despite all of the good efforts when you look at the demographics and you look at the geography of Echo Canyon, no matter what we've done, that that trajectory hasn't turned. And so it's not that you can't consider, well, are there other or better options? We we chose to hang our hat on the actual enrollment numbers that drive revenue and the historical trends over time and the demographic data that said there's

103really, you know, not an argument to make that if you give it one more year, you're going to turn this around. In fact, we had set a growth target for both of the schools that we're talking about in phase one of 350 for this year and both fell below 300. They were above 300 last year. They're below 300 this year. So even with the growth target, the the trends are such that it makes it difficult. So when you think about ensuring that we're a financially viable district into the future and that we're able to offer the most competitive academic programming, it means that we have to consider some very difficult, painful choices about the number of buildings that we can continue to keep open. And so that's why that is on the table for consideration.

104And if the board doesn't consider it, that means we have to look at something else because the economic reality hasn't changed. We still have an $8 million hole to fill. And that's before we talk about pay increases for employees, the impact of health insurance increases, and and as you can see, some of the other um costs that need to be covered by M. >> So, um to your point again, Dr. Uh, what has been concerning is that on September 29th, you had a conversation with a cafeteria full of parents, talking about an $8 million shortfall that the board had not been notified of, and that you also told them to go apply for other schools for open enrollment, which we had also not been notified of. And in my time on the board, we have

105never had a conversation about the health of any of our schools, which we could do outside of the procedure of going to voting on to closing or repurposing a school. Uh so there are many other ways that this could have happened and the board could have been you know notified in a in a better manner than from parents um being upset that their school is possibly going to be taken away. Um so it's just uh it's very disappointing the way that this has gone. It's disappointing to the community and to the board as well. I think this could have been handled in a much better manner. >> Um I I just want to encourage you. I don't know if you were able to look uh at the let's talk responses that we received. I think

106you'll be interested if you have not read those. I suggest that you do and you'll see that uh there were responses going out from administrators to community members uh conf confirming that they were looking at a special uh level D level D special education program at Puma. That's how I learned that they were looking at doing an early learning center at Echo Canyon. So things were going out to people and if you have not read those you need to read them so you have the information I think it's um and you look at the dates. >> So thank you. I I have read them and I wanted to the spirit of my question was not to start going into the merit of this particular choice. It was just to try to genuinely understand but also

107help the community understand what feels like an odd order of operations where we're having a meeting now to discuss a bud budget shortfall. In fairness, you send us weekly updates and I read those weekly updates and so nothing that you did was a surprise to me because it was all generally communicated in the weekly updates. Um, and in our enrollment study session, we began that we also talked about it. So, as one board member, I feel like you've commu communicated very clearly to the board about this entire enterprise. The piece that I've never understood is why we need to start the process that to a community member looks like a process to close schools before we as a board have adjudicated these different options to meet the budget shortfall. only one of which be it

108the largest or with one exception you know is closing a school and I think the answer is that again in this odd logic you can't consider an option until you put in place a process which then means you're signaling a direction even though your intent is only to give yourself the option if I'm simplifying it >> it's it's fair and there are other approaches other school districts have created committees that make a recommendation. You saw that in Kyne, the committee came forward with a recommendation to close nine schools. I think that got paired back to seven. They're having the community conversations. Everyone is mobilizing to say, "You can't close my school." These are predictable whenever you're looking at closing a school. It doesn't matter the district, it's going to be the same kind of response.

109What we tried to do was be thoughtful in a repurposing conversation to say we and we talked about this at the board retreat and at the enrollment study. That is when Paradise Valley closed their schools, they made a decision in February or March and parents had a very short period of time to pivot and and the question was asked and my answer was that if we are going to repurpose schools for 2627 we the board needs to make a decision by December. So at that meeting, that was my response to the question and we built a backward timeline to ensure that we could have a recommendation and a decision point that met the December timeline so that our families had ample time to adjust to the change, that our staff would be treated fairly, that

110we could plan for next steps. And and part of why that's important is is while we've given examples of what repurposing could look like, those are not decisions, nor are they final recommendations. I felt it was incumbent on us to demonstrate what that could look like to take the pressure off of the M budget if the board was going to make the difficult decision to repurpose schools. So those are examples that we know are viable, but they're not the only examples. And so when I met with the Echo Canyon families, I said, "If the board decides to move in this direction, we'll invite you to share what your ideas are with respect to repurposing. We've got the rubric that will guide a recommendation for final action by the board." The first step in that is

111the board deciding to actually close the school so that repurposing is necessary. If the board doesn't do that, there's not enough time in our schedule to run through all of the potential scenarios of how they could be repurposed. We needed to show that there was a viable path forward in the instance of the schools that are underenrolled and and that's why there's still time for the conversations, the hearing that's really important on the 13th, the meeting on November 18th where we can talk about ideas that people have already surfaced. We've had agenda requests that I've committed to put on that agenda. The decision points not till December 9th. And so while it it's strange in the order of how it may have been introduced to the community, it wasn't a new concept to the building

112leaders or the staff because I had those conversations with the building leaders and staff a year ago as did my team. We didn't socialize it with parents in the same way because what you don't want is to create a mass exodus that creates a self-fulfilling prophecy. So it's the combination of all those things. Yes, the order of operations seems a little strange, but we're still in a point where the purpose of tonight's meeting is to say, here's the whole pie. Here's what we have. Difficult decisions have to get made, and if we don't do this, we have to do something else. Which difficult decision is it that the board will prioritize? Um, so in Oh, >> can you just talk I interrupt you? >> That's [laughter] okay. >> Well, I wasn't necessarily going to go

113through every single bulleted item, but we can. >> I mean, can you talk? >> Sure. >> Um, >> how you got this? Is this the menu that you think should be working? No, this was really a how do we spend our dollars if we're going to look at the fact that um you know we only have so many dollars. This was really a look into and and and I know the board memo had a little bit more even with with um within departments. It's really I think to understand how to cut the budget we have to know how the budget is fully utilized and how we are using that. Um so for um so at looking at these whoops I just jumped ahead on my screen. Um, and looking at these, uh, you know, we

114took a look at what are the different programs that we have that are out there. Um, especially ones that are optional programs. Um, I'm not saying I would at all advise, um, eliminating IB. That's a program that brings students in. A lot of the things that we do are programs that bring enrollment in. Um, but it was to show that the things that we do offer, the programs, the robust programs that we offer, all have a cost associated with it. So this was looking at um like for instance IB what does it cost to have that program? Um we we are able to identify those things. We tag those items with a special account code so we can look at it and say what are the costs associated with that program at um Desert Mountain

115High School. The same thing. So that total is looking at what it is for Desert Mountain High School. We also have the middle years program um primarily at Mountainside, but it also feeds into Desert Mountain High School and the >> prim I always want to call it early years primary year program which is at Anastasi. The combined total for the international balorette program from the primary year up through high school um has a cost of 364,000 almost 365,000. Same thing with AVID. um we're able to pull that out because of how we tag that in our account code um to show this is what we spend um within the AVID program. We have a math and science academy that's at um started at Saworro. So the bulk of that expenditure is at Saworro, but um

116we've we've trickled it down to Mojave. So this is the first year of having um the start of that program at Mojave. There are staff members associated with it. Um, as well as a I believe there's a coordinator at the middle school level or I'm sorry, at the high school level for that program. Um, dual language immersion, we have that at multiple schools. Um, we have the Spanish immersion program at PBLO. Those kids move up to Mojave. So, we've expanded that program to Mojave. Um, we also have the Mandarin program at Desert Canyon Elementary. Um, and Desert Canyon Middle School. Um and within the board docs you will also see uh I think that's actually in the appendix as well you'll see um what those program costs consist of but also how many students participate

117in those programs the last couple of years. Um so we first looked at what are the different programs that we offer. Um then we started to take a look at what are some things that we do that other districts might not do. Um, so for instance, um, we have RNs in our school, most of our schools. Um, but that's not the case at every other school district. A lot of the other school districts will have health aids or health assistance instead of an RN. So the cost difference between what um, what an RN cost and a um, health assistant is looking at that average. if we were to change out RNs into health assistance. Um the same thing with library assistance. We have teacher librarians at our schools. Not all districts offer that at their

118schools. Some of them um do just teacher or librarian assistance. And so again, this is looking at if we the difference in price or cost between a certified librarian and a librarian assistant, what would that look like if we were to to switch that over? Um, within the guidance counselors, we we actually um reduced our ratio for those a couple years ago um and made those levels lower. So, this took a look at if we were to change that ratio back to what it previously had been um which is currently below the state average is my understanding Dr. Sakos um that if we were to make that option that could save us again about um 678,000 [snorts] on the additional um security this is um we looked at a added an extra year for security

119so that we can pick up what changed after Yuvaldi. One of the things to keep in mind with security Um we've done a lot of we bought a lot of technology and some equipment. Um so that is why that number looks awfully high. Um but we have also added um we changed our security guards at our school sites from 10-month to 12-month positions and we added additional security guards. So um preuvaldi we did not have a security guard at any of the elementary campuses. Um right now we have one that rotates within the learning community. So they're kind of split between multiple elementary campuses. Um the other thing that you'll see in the appendixes when you talk about um security is right now we have a grant that pays for SRO's at a number of

120our schools or um no the SRO's but there's uh SSOs. Yes. Um that grant ends at the end of this year. So again, I mean, we can either choose to continue to do that, but we would be funding it through M at a cost or know that that's a that's something that would no unless unless something happens at the state level and there's a grant that comes through for it um that would impact security. And while the mic's passing, I would just say that I was on the um superintendent of public instructions superintendent advisory committee today and that is a big part of his budget ask is to renew those grants and so he's hopeful that the legislature will appropriate the funds. So, so while we can't and he couldn't guarantee it, it is certainly

121the top priority for him. >> Okay. So, u piggybacking on that, I was wondering why social workers weren't on this cost reduction consideration considering um we went, you know, two years ago or 23 24 we were paying for one at $78,000 and now this year we're paying $681,000. Um so why did you not include them as a a big area of cost reduction for us to look at? >> We need more mics. Um, a lot of that is funded through a grant. Um, and some of what you'll even see within M right now. We have a couple of social workers who didn't have um or were working on the certification that they needed. They just needed to get that through AD. Um, we couldn't pay them for the grant until they got that done. That's

122happening. I think I actually already happened with the the I think there's like three or four that were in in that case. So, for this they're showing in M. We have to pay for them right now out of M. they will be moving um into into that grant. We just had to get their certification through through AD. Um honestly, not having it on here, I it's later on in here, it's in the appendix and we've showed it in the other I just >> and I and I would add that that um the number that we were working with before some of these changes 19 and a half covered by the grant. So, it's not a it's not a cost reduction unless the board decides to keep the positions. then it's a cost increase of about

123one and a half million to cover those positions that are covered by the grant. So it would be shown as a as a cost ad if we maintain those positions. It's not a you the grant goes away terminating contracts. You don't you don't have the position or if the board believes those are important positions. Then we have to find the money to continue paying for for those because the grant's gone. >> And we do have a couple that are paid out of M from the school. So that would be a decision to make as to you know do we want to have just one that's paid through um uh I think we use dropout funds for it. It's a Mc Mckin Vento position um or do what that looks like but primarily because it's it's

124funded from a grant and that grant will also end at the end of this year. >> So I understand the cash account can still shoulder some of the structural deficit. That said I think if I add all of this up it's still less than $8 million even with two schools. So, can you help us understand and you run the district, we don't, right? I don't think the board sits around and says, "Okay, we're going to do this, we're going to do that." We work off of your recommendation for what the, you know, cuts are that are consistent with what we're trying to accomplish as a district. So can you help us understand what to expect from these considerations to an ultimate recommendation on you know the least bad options when it comes to addressing our

125structural budget deficit. And then there are things apologize that are not listed here like spend less on software or you know cut 10 more positions from the district office. H how do we understand whether those are also being considered? So, so the next slide gets to some of those. >> Yeah. >> Uh and not all of them and we don't know the price on all of them, >> but but uh the last bullet point is probably the the one that uh shows where you can cover a a chunk of the difference uh in this year. But to Shannon's earlier point, the more you spend of district additional assistance in M uh you're you're kicking the can down the road two years from now when you've spent all of that money. So, uh, you I would

126advise that we carefully look at and consider what the priorities are. I don't believe we should not fund the specialty programs. I've watched what's happened in our neighboring districts when they close their DLI programs. We've actually been the beneficiary of those, even though they're very expensive. The IV program is a calling card for many of our people. So, I I don't think that that's where you get the savings. I'm not recommending we eliminate RNs, but asking the question when you rank order priorities, what are those positions? Right? If we're going to prioritize the classroom, uh we have to then look at the teachers in the classroom and the people who are supporting the teachers. That that I believe is the top priority, but then you have to support the ongoing operations of the district. And

127so, it's ultimately a balancing act. We continue to look for where there's lowerhanging fruit, but on that slide 33, it would take 160 software savings of 50,000 each to get to 8 million. Uh, and that we don't have that kind of a of of an incremental savings. And so it it's likely a combination of these things. We work hard to get to the number where we can, but all of this is before we talk about payraises. And so just to put it in context, a 2% raise for our people is three million. The the >> So the 8 million shortfall is assuming no pay raise. >> It it does not include >> an 11 million shortfall >> with if you're going to have% 2% pay raise. And that 2% is8% below the cost of living

128adjustment that was just announced. So that that's the other reason why these again we talk about painful decisions but doing ones that help move us forward. We do have some money in the DAA but there would be heartburn if we spent it all in one year because that means you're just delay just like our cash accounts. It's the same thing. You don't have the same level of revenue every year because you're spending a big chunk of that carry forward. So, I apologize because you did speak to the calendar earlier, but when will you come to the board in the unenviable position of having to make recommendations? I'm sure in a different world you would rather not make um or we would have made them. When when do you adjudicate all these different options and give

129us what you think the optimal mix of least bad options? >> The the first touch point will be the decision on December 9th. Um because the the way the hearing is framed and I did say this to the staff that I've spoken with and I meet with the Puma uh PTO or PTA whichever they are tomorrow night um that because they're under 300, I cannot recommend keeping them open in their current configuration. I don't think it's fiscally responsible and after a 15-year history of declining enrollment 6,000 kids, I can't make that recommendation. the board can make a different decision and so all of that I think should be thoroughly adjudicated and vetted. So the first decision points December 9th and that's a board decision. Uh and I've telegraphed what my recommendation is because I I

130don't personally believe that there's a way forward that financially is doable with the realities we're looking at tonight. Then in January, Shannon presents kind of what we know from the state. It will probably be briefer presentation because we're in close proximity here, but by March, we have to know through the IBN process what we can recommend to the governing board for pay increases because contracts have to go out by March 15th to our certified staff. So between January and March is when we have to dial in on what these other adjustments are. My hope is between now and the end of the calendar year, we get clarity on what the board's priorities are so that as the team's looking at, okay, where can we, you know, move some things, how can we uh where how

131and where can we make other reductions while ensuring that we have full and thriving schools and that we're improving academic outcomes for kids. Uh we need to know if if uh social workers are untouchable, I have to find another 1.5 million. if if uh you know so you just go through the list and and if nothing can get cut from the list that puts us in a a different kind of position because something has to get cut to balance the budget or you spend all of your carry forward in one year and say we'll fix it in 27 28 and I don't I don't know that that's possible uh without ending up in a position like districts that are in receiverhip because they've spent more in total than they have. So this is the window

132of opportunity this year and next. And you can balance between the two. So there can be some give and take, but the first step in the process is deciding what to do on repurposing. The next step is in prioritizing these things. We're going to push hard. If if we know that we can get savings by saying no. We say no to more vendors now. Or we say go find someone who's going to fund it because we can't. And when we can say no to software that no longer is providing a a demonstrable benefit, we say no to that. So, we're doing those things. But it's a combination of all of those that will make the difference to get us across the finish line. Like like we could increase class size ratios. If we did that

133by one through every level, that that's saves 1.5 million. That's money that could be put somewhere else. But that's also something you you do in bargaining with the SEA. >> Thank you. I just wanted to say I I um think our specialty programs are really important and like I said a big driver to our schools. So I I hate to even um to go hate to even go there. But I do want to just mention one thing that I had I had pulled uh our positions from 2018 and our positions from this year. And we have 27 more specialists uh right now than we did in 2018. So I think we really need to look at positions even though like I said it's painful no matter what we do. Um but we we do have

134more positions than we had in 2018 even though we have a big decline in enrollment. So we we just need to be really mindful of what hard decision we're going to make. But we do need to look at those numbers. So, when we're talking about the timing, um the that everything hinges on a decision on the n December 9th and the challenge I have with that timing is that I hear us talking and and I'm assuming from previous years and and hopefully I'm not misrepresenting that there's always been this kind of kicking the can or or chasing. I I use the analogy of the movie Twister where you look in your rearview mirror and the tornado's behind you and you're driving and it's always there and I don't want to be there next year and

135the year after and the year after. I look at the menu of options whether it's schools phase one, phase two, a menu of options. Um I want us to be ahead of this and this is more of a positioning thing. Um right look what just came out with our our state test scores like how many districts would kill to be Scottsdale right now? And I don't want us to be on the defensive of saying, "Ah, you know what, I got to close a school this year and you know, maybe next year will get better and then I'll close the school that year." And so, going back to the timing and the packaging of this, um, I would much rather us have the whole plan on the table, and this would be the 18th to say,

136"Here are the pieces. Here's the the the structuring so that we can position this." this and I'm not saying marketing is going to solve our problems. Um although there's a piece to that I'll hit on maybe on this slide. Um but we position this as here is our plan, right? Here is Scottsdale for the future. Um if anyone's been involved with uh fundraising campaigns I'm at ASU and we've got a new campaign, right? You you have a goal and you have a message and you launch and everyone is working towards this and there's a vision. Um that's where I think we need to be. And so my request is that on the 18th we have a more clear picture of the holistic plan. Not that it's said and done, right? It's the plan that you

137and your cabinet put on the table for us to to bounce off of and and uh give feedback on, but that way we see the whole thing. Um and so that to me is the timing that I'd like to see working. And I think that's consistent with um what I said at the beginning, and that is we really need to be taking a two-year look at this. Even though this is setting the stage for preparing a budget for next year, it's really about in the next two years, we set the the tone for the next decade. and and I think being strategic about that and and I believe we can bring a framing for how we do Scottsdale of the future with the caveat that once we put anything out there just like the conversation

138in phase one it's going to uh bring a lot of different reactions a lot of different thoughts and and a ton of different ideas well why not do this instead of that. So understanding that that it will be the straw man that people react to but it will at least be one that can paint a destination picture for what's possible with because it's not no pain but the least amount of pain in order to move us forward and to build on the positive momentum that we see like you just referenced. >> So is that doable at the November 18th? It's have that. >> Okay. Um and then just on this slide, the the last bullet on centralized enrollment um and kind of talking there's been lots of conversations about marketing in the past and the

139in the previous boards were all about marketing and enroll and and using that to solve the problem. Um I look at marketing enrollment and retention as a single function. Um, you know, in my conversations with families, with principles, um, it's hard for me to hear principles talking about the marketing they do because that's not their thing. They're great principles, but they're not necessarily great marketers. And I think giving the the long view on this, principles didn't have to be marketers. Your kids went to your local schools and they got them and they focused on being great principles. That's changed. Um, I don't know if we've fairly said to our principles, hey, you have an additional job now, which is to be a marketer and here's how we support you or you're on your own. And

140so the centralized enrollment to me is two things. One, having the focus on all three functions, marketing, enrollment, and retention because those all go hand inand um and two, preventing the suboptimization. And by that I mean somebody at elementary school X saying, "Hey, I'm a family comes to me and I want them or I say no to them or whatever it might be without thinking of the whole district and saying, "Hey, I know, you know, we don't have room here, but you know, we have this other school down the road." Um, and again, no offense if that's done at schools. We understand why that's their role. That's where they sit every day. but to reframe this as SUSD. Um, and when you and it's not even centralized, it's more federated sort of at the community

141level and support from the district that to me frames this as a much more us being on the offense of what we're doing as opposed to kind of being chased year-to-year. >> So, I think it's a it's a really good point. will send a B memo update on the uh marketing strategies that have been implemented over the past uh three to four years since Christine's been here. Uh she's done boot camps for principles on that point of you weren't hired to be a marketer, you were hired to be an instructional leader and this is part of the gig and the district has gone down the road of centralized enrollment before and there were pros and cons with that. Uh we do think that there's a way to save money here, but we need to do

142some more work on what that restructuring looks like to provide the kind of customized support by learning community in all likelihood to ensure that we can make that happen. So, so I think you're you're hitting on another component uh that we can send information out to the board and include as part of that bigger picture of where we're going from here. Um, lastly for me, go back on slide 32. The first thing, the average savings per school building closed one uh million. When will we see that on the 18th, the itemized breakdown on on those savings or when will we see what that actually looks like? Because that where do we get that number? Um, I I I thought I had included that in the um program cost, but I might not have. So, um

143I can go back. I I do have that. Um what it really comes down to is um obviously office staff is is part of that. It's also um cutting back on utilities. We're still going to have to pay part of the utilities for a school. Um but cutting back part of the utilities um maybe only one FC at a campus versus um two. You're not paying ADM to go in and clean as much. So, there's some savings within that. Uh the unknown part of it really comes down to the teaching staff. They're going to have they're likely going to end up going somewhere following where the kids are at. And so there's a question about how much that really saves, but it really comes down to um utility cleaning and you know office type stuff.

144>> Yeah. And I I I have it. >> Sure. Uh the question was um will we be sending that out? I'm I have that information so I'm happy to send that to you. Yep. Yes. >> So, this is similar to what you almost answered. So, what is the cost of mothballing a building if we're really going to close it and with um u landscaping with, you know, you turn the lights up, you turn what is that actual cost? Because I think the million dollars is probably a little high. >> You think we'd save less than a million or save more than a million? we'd say there's more just run. >> Um I mean I would have to pull up the breakdown for those two specific ones. So when I looked at what are those savings

145I took what were the actual expenses last year for well I took their staffing for this year. Um but then for the utilities and cleaning and whatnot I took that based off of what their expenses were last year um specifically for that school. Um, again, a lot of it comes down to um, you know, what office staff are in there. I mean, obviously off stuff does not equate to a million dollars. So, utilities plays a big role into it. Um, mothballing it. I mean, you you wouldn't have your cleaning, but you're still going to have to mow the grass. You're still going to have to water it. Now, you're not going to use as much water. You're not going to use as much electricity by any sense. Um, I think Dennis, you told me to

146project uh half of the utilities um, on that. Uh so when we looked at that, we looked at a couple of different ways. We looked at if we just moth balled it and if we if we did have something on it. Um and so that's what we used is that half uh half savings on utilities. >> So I'd also love to see that. And this wasn't what I would ask the mic for, but I think it's really important when we think about how much we're going to save that we do it on a net basis considering the fact that some number of families may choose to leave the district. And so we're not going to keep a 100% of the revenue uh and then reduce the expenses. We're going to have less revenues and but

147then also have less expenses. Um so but my question kind of cheating a little bit. The rest of this is all expense stuff. So can you speak a little bit to revenues? Can you speak to, for example, what are the unutilized facilities that we could still be leasing? We could be generating more leasing revenue from. You know, one of our sites we use is a bus depot. Could that be generating more revenue? So can you talk a little bit about kind of a similar exercise that you've been doing to assess where there's more opportunity to generate revenue in addition to where there's opportunities to cut expenses? >> Yeah. Well, has that happened? And >> um yes. Um to your first question, one of the things we have looked at um is what was the decline

148that happened um or the red, you know, decline in ADM over the you know year-over-year for those two schools. Um and so we have that information. Um I think when you combine that in, yes, there is a little bit of a cost. The question becomes of how many students do we capture back and hopefully we'd capture all of them, but I know that that's not reality. Um, so we do have a breakdown of what that looks like if it was 5%, 10% or more than that. Um, so we do have that, but I think part of it too is that the percentage that they're you they're losing anyways year-over-year. I think we have to factor that into it as well. >> And and we talked to I did I talked to um the former superintendent

149and board president at the time in Paradise Valley as well as the superintendent of Cape Creek just to get a sense. Cape Creek closed two schools, Paradise Valley closed three. they both said um they lost maybe 50 students above and beyond their normal decline when you take that into account. So in in both instances they said it wasn't a mass exodus. It was a little bit more than what they had been declining uh over time. So I think it was helpful to know just from proximity uh perspective that's what our neighbors experienced. >> Yep. Um, on your other question, yes, we have I mean I I don't think you can say, hey, we need to look at our footprint within our schools and not do the same within our own district properties that aren't school

150campuses. I think we have to look at all both of those things. Um, we have looked at that. Um, one of the things we've looked at is, you know, could we could we unload Main Street office um and move people over into this campus? We've also looked at our Oak campus and what options are there. Um depending on what happens, there's some things some steps that have to happen to be able to close um or, you know, mothball those to or sell those locations. Um there is some costs that's associated with also moving some of the food service stuff out of out of Oak. Um but there's cost savings that would happen if we if we didn't continue to, you know, keep the Oak campus running. Um we have several renters on our Choya campus.

151Um we just lost one of them. Um but we've gotten um several. So I think I know before that was fairly full um until just recently with at our Choya campus um with the miracle league and um the state of stars. Yep. >> And then the Noah clinic was in there for a while and then they moved out and and there are others that that approach us uh over time with uh interest in leasing space. I sent an update by one of those in in my last weekly update, a conversation we had. Uh there there are potential opportunities. Um several years ago, I tried to get EVIT to set a health program up at the Choya campus because of its location between um Honor Health and Mayo. And I'm like, this is a perfect place.

152Uh and it was more than they wanted to invest at the time, but Eva has shown a willingness to say, you know, we might want to think about locating central campus programs out in local districts. And so the fire science is the first program in our district. But if you think about where the oak campus is now across the street from Coronado, that might be an optimal place to to renovate and find a partner like EVIT or higher ed. So we're open to all of those things. Part of the the domino effect is knowing what's going to be available and where we're skating to to the point of, you know, what's the the district of the future. We need to know what those opportunities are. a Choya facility as Dennis will remind me. I mean,

153it's it's an older facility and it it took work to even get it ready for the the last person that that came in or the last company. Uh Apache the same way. Uh very very old, the two-story building probably needs to be torn down. But we've actually had multiple conversations with different developers and the the IDA for the city of Scottsdale to say, could we convert part of that parcel to be workforce housing? you know, are there creative strategies to benefit our employees on some of the district-owned assets? The 68th and Oak Street project is is a potential revenue generator for the rentals at that location, but it's also an investment in a neighborhood uh where they were worried we were going to sell it to someone else and it would become something that they

154didn't really want. So, you know, we have been looking at those options uh and strategically vetting what fits within the facility rubric that the board adopted. I would also add that the revenue that comes in for those long-term leases is not something that goes into civic center. Um, if it's a longer term lease, that has to go what's in called plant fund and can then only be used for capital expenses. Now, that means more money in that account. We could use more of the capital account. So, there's a little bit of fluctuating around in there, but >> yeah, I don't get to say I'm new for much longer, but um I am I will admit I don't fully appreciate how many nonschool sites we as a district own that list looks like. Is it 10,

15520 above the 30, five above the 30? And then and I don't want an answer now just to be efficient but this would be a follow-up question and to understand for them which of them are generating revenue through leasing of some form and which of them are not for whatever reason just so I kind of understand the total opportunity. So, with Apache, I think we only have one renter there now, 27,000 a year. Uh, it is prime real estate and there are options for that. It's we could sell it, we could do a ground lease. Uh, and I'd really like to look at these facilities where we don't have students and staffs who have um um you have Choya and I know that it has several renters, but I don't know if it's actually producing

156an income versus what the expenses are. like to see that. Uh there's oak and there's a lot of staff in there, but can that staff be moved out of that property? This sold or do a ground lease. Ground leases are generally more lucrative than just leasing the space. And um even with with 68th and Oak, I just think it's important that we are looking at what revenue can be generated from from these facilities that are not being used so that we can protect the facilities that are being used that we have students and staff in. we we will do the work to to gather that information, kind of paint the picture, talk about the options. Uh, you know, if you're going to sale uh a property, then there's legislation that requires us to go to

157a vote of the people. Many districts have done that. If if it's a straightup sale and it's approved by the voters, you cannot discriminate against who buys the property. Uh, so you could be inviting competition into that uh sale. So there are a lot of things to consider, but I believe that it's important for us to look at all of the district assets and make the best decisions we can and understand what the limitations are on the use of any proceeds in that way, but also think about, you know, where we're going to from here and what makes the most sense. >> I would just add that in that analysis that I appreciate being brought up by Miss Warner that we look at the distinction between the lease, the gains from a lease versus the

158gains from a sale. All right. Um, so just looking at other Oh, skipping. Okay. Um, other cost reductions like is so we don't have pricing on all of these, but we are looking at what a retirement incentive could look like. Um, the insurance >> can I just interject there? almost in in every case that I'm familiar with, when you're looking at reducing the number of buildings you have and you're thinking about how you you address the issue of the staff concerns. Where am I going to be next year? Uh oftentimes, not all all the time, but oftentimes a retirement incentive is included to say, okay, there are people who are maybe one or two years away from from moving into retirement. And if you sweeten the pot, it may create vacancy so that you can

159through attrition maintain the staff versus having to to do a reduction in force. So it's a way to potentially get to a win-win for the organization. And so that's why it's on the table. We don't know what the structure would look like. We're not the only districts that that have and are considering it in the state of Arizona. And it's it's a common thing to do when you're reducing your footprint. Um, we also have the insurance RFP that closed on October 15th. Um, USI is the company that we hired to help um, look through that those responses and put it into a more layman's term for us to be able to review. Um, so they are doing that right now. Um, we hope to have the uh, association team people together the first part of

160November, which is honestly next week um, to start looking at that and have a recommendation to the governing board um, in December. Um, so hopefully there will be some savings there. Um, we're looking at cell phones and hotspots. We're looking at how those are used, who they're given out to, our policies and procedures on that. Um, and we think that there's about $100,000 savings within that um, and tightening that up. And then again, standalone printers. Um, it's really convenient to have a printer in your classroom or nearby. Um, but having all those extra printers versus using the network system, um, which is going to require some steps. Um, but it could save us at least $100,000 because those toners and the maintenance on those are pretty high. Um, again, we're still looking through all the

161software. You know, software is not going to get us to $8 million savings, but um, we want to be good stewards of our dollars, and so we're looking at what are the redundancies and where can we cut some of that back. Um and then again we've talked about centralized enrollment. Um this really goes forward to um if you know the beyond the uh the things that we need to do to reduce our expenses. Um the cost of a 1% salary increase is about $ 1.5 million. Um I think we've talked about the other two bullets quite a bit. So I'm going to move on. Um and really this just kind of summarizes everything we've talked about today or this evening. Um you we know that enrollment has dropped by 6,000 students. Um we still operate

162nearly the same amount of schools and the cash balances or reserves that we've had are declining. They're no longer sustainable for what we've been doing. Um we've already put in $4.7 million in reductions and efficiencies. Um trying to keep that as far as away from the classroom as possible, but that's where the bulk of our dollars are are spent. um we still have a a deficit and so really how do we address those issues with the resources that we have and align them so that we I I know I hate having this conversation every single year of we need to cut we need to cut. I would love to come to one of these meetings one day and say we don't have to cut. Um, so again, how do we get through the road ahead?

163Um, so that we can get ahead of where we are and hopefully have discussions on how we can utilize those dollars in a way that's not always cutting. Um, so with that, there are a lot of other slides beyond this that break down cost into um more specific detail. So I'm just going to open it up if there's specific ones that you want to take a look at or specific slides that you want to take a look at. Thank you. Um slide 46 please. Okay. Um at the bottom Scottsdale online learning. just um would like to know why that has not been a consideration showing that um we have a a million dollar loss right now. Um why has that not been something we're talking about cutting? >> I'm glad you asked that question. >>

164Um so is a diffic difficult one to look at in in that when we look at the ADM. So this really took what is the ADM that that specific school generates. um at looking at this. This is just what they generate for kids who are registered and in soul. Um but we know that there are over 2,000 I think the number I got was um [snorts] 2,800 students last year within our brickandmortar classes or schools that took online learning classes. That doesn't get picked up as revenue for soul because they're at Chapparel or Arcadia or Sorro. Um their student that revenue for that student is at that school. but they still took an e-learning class. Um, and so there's an expense for having that teacher that is coded to um to soul. When you take

165a look at how many students do that um and if a student takes just one class that um so say they're with us all day but they decide to take one PE class on you know ASU prep or one of the other online sources out there that reduces their FTE for us to 75. So even though we've had them all day and we've taught them all day, if they take one of those classes online with a death at another school, then that reduces our FTE that reduces which equates to ADM. So looking at how many and I just use the number of 2,000 looking at that um with the number of kids who took on learning classes, if we weren't capturing all of their enrollment, that right there is $3.3 million based off of how

166many kids took e-learning classes last year. Um, one of the things that, um, Seamar pulled for me is we actually do lose some enrollment because kids do take classes, online classes at other programs. Um, so for last year, looking at the enrollment that we lost in our ADM um, because of that was actually 70 76 77 um, ADM. That's about $350,000 that we lost because students took classes online and another and another online option. So while it looks like they are losing um when you look at straight we only get x amount of dollars for kids who are specifically enrolled in soul um or maybe started with brick and mortar and then just switched to soul the last semester. Um it's it's not it's not exactly an apples to apples when it comes to that

167program. And so that's not that's why we haven't said hey that's a program we need to um look at at cutting. Now, could there be some savings that we do within that program? One of the things we did for this year is we combined the principal with the director of community education. There's other savings we probably could look at to see if there's other ways to save within it, but it's hard to say these are the true revenue and the true expenses because a lot of the revenue is actually earmarked at the high schools, but the expense is sitting with the teachers who are coded to Scottsdale online learning. That makes sense. early 2000s. The question is is when did we start soul? I'm it at least going back to um when Dr. Peterson was

168here. So going back to 2014ish th 2013 2014 but I will have to verify my my very rusty memory and Dr. Sacos would tell you that she and I have had many a discussion on are we making money or are we losing money with with this program um because it is hard to tell. you you touched on this earlier, I'm going to ask you to walk us through the process here on the fund balance. Um the this is from the AFR. The funding the ending fund balance for 2024 was 29,928,667. Then when 2025 was sent, the prior year ending fund balance was 5,447,230 variance of $24 million. Then the 2026 estimated year end of 2025 was $24,28,777 and that was as of July 5th. And on the 2025 AFR ending fund balance that was submitted

169on October 8th was negative $5 million $35,858 which is a variance of $29 million244. So if you could just walk us through what happened there, what the process was and >> so that really relates back to the question earlier about quasmire and how it affects our cash balances. Um, we have a budgetary formula for Mino and for capital that says this is what the state will fund you for. Um, however, you have to also tax for the cash to be able to cover what that budgetary expense is. Um, the Quasomy lawsuit came in at just over $24 million. I don't know, it was about 20 a little over $24 million. Um, which took away from our cash. So when you talk about um the ending cash balance I said I think you said one of

170them was a $24 million difference quasmire 24 millionish dollars that is why our cash balance is now negative 5 million and what you have to factor into there as well is that when you look at our carry forward so our carry forward being what nine a little over nine million close to $10 million um your carry forward should actually equate to what your cash balance is If there's a difference, it means that your cash balance is actually below where um your budgeted expenses could actually come up to. That all goes back to quasmire. We did not tax for quasmire the the um amount that was taken back from us from the county. We did not do that in the prior year. We put in we want to phase that over the next couple of years.

171So, it wasn't such a huge impact to our taxpayers. Um so, we factored in a little over five million for this year. Um, but that is why you will see a negative $5 million cash balance on our M is because even though we have the budget capacity to be able to do things, our cash balance is lower than what our budget capacity is because of quasmire. So we issued Tans on that. So where does the TAN fall into this? TANS was just a to get you the cash that you might need so you don't run below um in it. So it's really just a loan that took place last year. Um we did $5 million um last year. I believe it was five million uh $5 million on the TANS. We took that out at

172the beginning of the year. We know that the money starts rolling in when people start paying their taxes in October. What we didn't know is how fast was the county going to take out. Was the 24 million going to come out right away or was it going to take time? So that $5 million tans was to basically ensure that we had enough cash in our accounts to cover the checks or warrants that the county was issuing. We um did that $5 million tans and we sold that back in November so that we didn't continue to accumulate um interest charges on it. So, and and just to for people who may not remember what the Quasmir lawsuit was, this related to the county assessor's office, um classifying properties in a way that the courts deemed was

173not appropriate. And so, many many uh parcels were overt taxed for a period of time. And while the case was being litigated, they continued to be taxed at a wrong rate. By the time the final determination was made, uh, the taxing entities that had been the beneficiary of those revenues, which the county sets for us, we didn't do that. It wasn't a decision within Scottsdale Unified. We're told that they were going to have money clawed back by the county to pay the judgment from the courts. But all of this relates to decisions that were made by the county assessor's office, not by Scottsdale Unified School District, which is why we were scrambling to find a way to deal with we were the the largest school district impacted by the Quasmire lawsuit. Um on slide 63

174with guidance counselors um the implication is if we increase the ratios there's a savings because we won't have as many headcount to cover the students. Why is it so much higher for middle school? >> I'm going to let Dr. Sacos answer that question. [laughter] So in 2020 the ratios were just that for middle school was 550 to1 and high school was 450 >> to1av >> I'm gonna let Shannon talk about the her calculation. I'm sorry. Sorry. >> Um well, part of it I think is keep in mind this is an estimate of Shannon saying if we change this ratio the FTE would be say 2.1 at a school and be going well I guess we'd probably bump that up to 2.5. Um so that's part of it. Part of it too we need to re

175uh rec confirm and we realized this morning that we had high schools at 450 and middle schools at 550. But it really comes down, so there might be a little bit of difference between those two, but it really comes down to looking at one, how many how many are we doing? I think there's a pretty big savings. Um I don't have it right in front of me, but the detail right in front of me, but um I mean, when you look at like Echo Canyon and some of our middle schools that are pretty low count and the number of FTE that they have. Um so we can look into that a little bit more, but that's there's a couple factors into that. Yeah. And can you share I'm not sure what the current ratio is

176right now, but I think that also feeds into it. >> The current ratio is 375 to1 for both middle school and high school. Um, and that happened around 2020ish. Um, and so yes, prior to that it was high schools 450 to1 and middle schools 550 to1. >> So what I would say is we want to look into this a little bit more. >> Uh, while I have the microphone, I want to correct myself. Um, and soul uh began during the 2011 2012 school year. Thank you to my peers around the table that did some quick searches um to to to correct me. Thank you. >> Just a procedural question uh to follow up and wrap up what I was asking about the uh um fund balance. Uh, is it typical or was there a specific

177reason of why there was another submission on the AFR on October 8th from So the original one was done on July 5th and there was another one on October 8th. There the AFR doesn't get completed until um the first part of October. Um, so the July 5th that wouldn't it was I'm wondering if that was the general budget which happens around that time. It should have been a little bit earlier than July 5th though. Um, so without seeing what you're looking at, I don't know the exact answer, but July is typically when the budget or end of June is typically the budget submission and then October is the AFR. Okay. Well, I I just uh I don't have any questions. Does anybody else have any more questions? >> Dr. Pensky. >> Yeah, it's partly a

178question. It's more of a general comment. I mean, first let me say >> I >> Let's let everybody do that. bounce between anger and resignation that I lost the musical chairs contest and join the board when the reckoning finally happens with a loss of 6,000 enrollments and no change in our footprint. And so without thought about whether it's one school or five schools, whether it's sorted by how recently the campus was built versus how families have moved, you know, that simple math of the loss of 6,000 enrollments and no prior decisions over the course of that enrollment decline to reduce our footprint and focus on serving the needs of the many, so to speak. Um, you know, it's it makes me angry. It makes me very frustrated, but we are where we are. Um, so

179that's sort of comment number one. Comment number two is reasonable people can disagree about how much to associate where we are with the three major drivers. But I think there are clearly three major drivers. One of which is a story is old as time of a once growing district aging, becoming more expensive, having fewer school age families and where people live in the district changing within the district. And so it is part of the lion king cycle of life that unfortunately when that happens you have these difficult decisions. A second part of it, I think very clearly is a state policy that shifted from how to invest in public schools to how to give parents choices. And those are just two different philosophies. Um, but they are, if you're the public school, a policy choice

180when you already add to the fact that we're relatively underfunded and there's no extra money that says, "Hey, if you start getting competitive signals, here's an investment amount that you can start to use to do marketing and to do because I remember when board members criticized us spending money on marketing as, you know, potentially a waste of resources. There's no extra funding that allows us to compete in the market the way my company if we started to lose sales could raise capital or borrow money or do other things like that to try to turn it around. And then a third is clearly the district. I mean, I'm never going to say that the district couldn't do things better, market better, have a better mix of programs, lease more, and so on. So that, you know,

181reasonable people can disagree on how we distribute, but that's kind of where we are. the piece that I haven't seen here as much and I I you always ask us to send this in advance so I I regret that I'm throwing this on you but it's definitely the piece that's been kind of developing in my mind in a good way. I didn't come in thinking about this way and I'm trying to think of a non-technical jargon way to talk about it but if you like what this isn't exactly how it happened but once upon a time Amazon ran all these data services for the sole purposes of Amazon right and then they figured out wait a minute we could be like a platform to others we could like rent out these data centers to others

182who would love to have all the amazing security and scalability of everything it takes to run Amazon. And now it turns out that almost all the profit of Amazon comes from from that, not actually from being an e-commerce store. And that's the idea of organizations becoming platforms. And I guess the thought that I would leave us with is I think the public school district of the future in Arizona has to develop the muscle of being a really good platform of saying how do we use all of these facilities we have to generate the maximum amount of revenue? How do we use the online programs that we've created for our students to capture some of the 7,000 or $8,000 of, you know, voucher funds that are out there? I don't personally agree with this, but does

183participation in our sports allow us to capture some of that $7,000? Um, you know, are there other ways if this is the new normal and if every family has $7,000 who's not in our schools, what are the ways that we can capture some of that $7,000, offer value to those families and move from a world where it's all or nothing? We get none of the lost student. Do we get all of the law student? Do we get degrees of the law student? As well as the other ways in which we can be are there central services like human resources that smaller schools that we compete against would pay us to be their payroll processor, you know, because it's so expensive at their small scale, but at our scale, we can do it more efficiently. I'm

184guessing when we go through all of this, just like the weird order of operations, you sell a building, you can't use any of the money for how you want to use it. You know, that the answer will be no. That there's like a million reasons in which the weird world of policy and politics constrains us to be that entrepreneurial. But that's why I kept coming back to revenues is I do think not because I'm thinking hope is a strategy and if we just grew our way out of this you know because the order of magnitude of any of the growth strategies are still much less than the structural deficit. But I do think you know just a simple question who at the district is responsible for growing revenues from auxiliary services however you define that

185is increasingly a muscle that we need to be able to to build and execute as part of you know the broader vision that Mike was talking about earlier. >> Well and and I think there is merit to what you're saying and there will be constraints and and in there a couple ways to think about it. So when uh Miss Carney talked about our level D conversation, bringing private placement special ed services back into the district, uh Lee and her team have done the modeling from a financial perspective. And so instead of sending 2.3 plus million out, we're going to spend a fraction of that bringing it in. And so it's it's it's a service not only that meets the needs of our kids, but also could draw in from other areas. So, so the the

186notion of the district as a platform, uh, there are a lot of moving parts to consider, but I think it absolutely has to be on the table and I don't think there's a singular person on the revenue side. I think you have multiple people because community ed is one engine when you think about early childhood and how do you meet the needs of young families in our community that could be a a pathway. But from a system of public education perspective, there are things that we would want to advocate for in policy changes that make what you're talking about more doable. Uh, and we do have someone here who has influence on state policy. >> Uh, thank you. Piggybacking on that, is it possible or why are we not talking about just adding, you know,

187early learning to Echo Canyon, keep existing and then adding uh early learning to what is already existing. Why are we not talking about that? >> So, so that actually from an Echo Canyon perspective, uh, in in my mind that should continue and expand. So, we talked toddler, preschool, and prek or whichever order, Dr. Bono, I'm supposed to say those in. Yeah. So that that you have all groups and you could be more robust. So Hopi has no room for preschool. So you can really centralize that at Echo Canyon. You could conceivably, not that we're recommending it, if Tavon grew, you could bring all of the Arcadia learning community uh early learning onto that Echo campus. And then depending on if enrollment trends shifted or changed, you have a campus you could do more with. So

188our thinking on the move people out of Oak and into Echko was to say that's a non M cost center. Community ed can pay for the operating cost of that building out of the revenue they generate because early learning is non M. Community Ed's not M. That means you've taken Echo Canyon completely off the the M budget and that frees up real dollars, but it doesn't foreclose future opportunities. And so the anchor could still be the early learning programs. That's how we've been talking about it. No, but I'm saying why can't we just add to the existing program there the >> so the the cost of of maintaining the K8 structure with all of the courses that you have and the electives that you have to have that's what's cost prohibitive. So that's why we're

189saying when when you fall as a K8 below 300 that's not an efficient operational structure. Kids don't get the level of opportunities that they would otherwise get if you're in a full and thriving school like Engleside Middle School. And so that's that's the challenge. If you're a K8 that's got an enrollment like Cheyenne where you have 950 kids, different suite of options available to the kids. It's also a different delivery model. And so that's part of the the the economic reality that led to where we've begun the conversation on Echo Canyon. But I do think that there's something there on the preschool front that can can be a building block for the future. >> Right. I'm looking is there a way that we can just add to the existing program um and can combine without

190having to displace those families. Um piggybacking on board member Patinsky though uh I'm interested in if you all have been looking at what Mesa is doing. Mesa is doing exactly what um you're talking about. I would I've been looking into their small school model. I think that's something that we could be looking at. Um you know they're in the same situation as we are but they're not closing schools. They are uh creating a small school model that I think we should be looking into. They are also offering alleart ESA um programming and I just am wondering have you looked into that? Have >> So we had some of those conversations. I appreciate that. Uh I've talked with their former superintendent and their current superintendent. Uh one of the things about the small school model was

191they had to reconfigure staffing expectations. So shared administrators, shared nurses, shared teaching staff. So the trade-off was you didn't have the same guarantee of the level of support at each building so that you could keep those buildings open. And you have to do a lot of those shared services in order to be able to keep the smaller schools open. Quite frankly, the signal we got from this board is that any school that's open has a minimum of a principal and assistant principal. Uh we haven't had any conversations about sharing RNs or sharing other staff positions. We had internal discussions about it, but there's never been a signal from the board or the community that changing the expectation at our buildings in order to keep a building open was the the preferred approach. If the board

192wants that to be the approach, we could certainly look at it, but that would be a substantial change across not just these two schools. It would have to take place over phase one and phase two schools in order for it to hit the economic target that Mesa is looking at. >> Yeah. Well, I don't think we know something's an option until it's brought brought forward to us. So, I think it's uh something to look at because they are being innovative and they're ahead of us and um just wanting to know. Okay, last thing I'm going to touch on and I'm not sure what I kind of lost track of what slide, but going to class site fund. Um, okay. So, it looks like we're under spending our annual allocation there. And I'm wondering, can we

193shift any of that money to to pay for, you know, teacherbased salaries? So, yes, the classroom site fund has increased um its balance. We can't move that money to M. There is also a supplanting clause within it. So, we have to be careful. Um, what you can't do is say we're going to give, you know, a 1% increase to classify and we're going to pay for that out of M, but classroom site fund is going to pay for that 1% increase for teachers. One of the things I think we can and should look at is we um you can do additional compensation, which we do at a classroom site fund. Um, we offer we've got that tiered system that we do for our teachers based on longevity. I think we need to and we can

194look at um increasing that or maybe changing some of the parameters within that as a way to bring down um or utilize dollars that are in that classroom site fund. So definitely there are some things that we we've already identified as yes there's some opportunity there for our teachers still on Yeah. Okay. Could you could the board get that information of what we have been spending that those funds on and what you see us being able to shift I mean those cash positions can any of that get paid out of this like Okay. So if you could just let us know what we can use that money for and what we have been using it on. Thank you. Um so two things. one, I've met with lots of families and community members in the last

195few weeks and one thing I say is um we talk about things like chess pieces and we're going to move this and change that and it could be very impersonal and um I just want to reassure that I personally and I'm sure my colleagues here as well understand like these are human decisions. These are families. These are kids. These are their schools. And so I hope we can live in both spaces where we can talk about these things like we're moving pieces around on a board because we have a dollar to hit and and issues to overcome while still understanding these are our kids. And so I just want to put that out there and hopefully speaking for all my colleagues entirely at this table that we realize that I don't want families to forget

196that. Um second with you know the comment about options. I'm very much in the same boat. Um, and I know what I've been doing is getting the data, looking at trends, and then having conversations. I've um I have my monthly one-on- ones with Dr. Mensel. I've met with him multiple times over the last few weeks and with Shannon as well. Um, so when it comes to those options, I hope those options come out in those one-on-one conversations. I find those very rich place. Um, so I'm not as much sitting here waiting for someone to bring me options. Um I'm more trying to see what I think is out there and vetting those with different people. Um which I think is a more proactive way to do this. So um happy to have that channel on

197communication. Um you know on the communication I'll admit I didn't know planning about Echo. I have a co-orker uh at ASU and he's a Echo parent and he messaged me one day and he's like hey we just got messaging that they're going to close our school. I'm like, I didn't know that. Let's have a quick conversation. So, agree that, you know, the I wasn't looped in on the communications per se, but that wasn't a shock to me. Um, from conversations we've had, from looking at the map and where things are, um, that's absolutely something that is within the realm of possibility and then we can meet. So, very happy that we have that opportunity to talk and I think that helps in kind of fleshing out different options as we move forward. So, thank you.

198Any other final comments from the governing board? I I would just as we bring close to this study session and this special meeting that I I just want to thank the staff for the amazing thoughtful preparation for today. This was a lot of work of culminating and synthesizing all that we've asked from you in preparation over the series of meetings we've had, series of conversations that we've had to, you know, bear the burden of of this data as we process what it may or may not turn into. I really appreciated the governing board's creative approaches for considerations, the the topics and alternative ideas that were brought forward. What a healthy conversation and productive dialogue we've had as a group. um you know with the awareness of the awkward and imperfect communication that any and all

199of us have experienced in any parts of our lives. I I keep hoping for grace as the community echoes what we've all shared about our value about our kids and our families. Um the the depth of today's conversation makes me very very proud to be a part of a board that is facing a cliff. Uh, and I'm sorry that it's now and I really appreciate the the hard hard work we have ahead. So, with that, um, I'm going to ask that we do I just close it or I vote. I make a motion that we that we move uh into executive session for uh these two reasons. The governing board may recess into executive session pursuant to ARS 38431- or excuse me. 03A and5 for the purpose of discussion or consultations with designated representatives of

200the public body in order to consider its position and instruct its representatives regarding negotiations with employee organizations regarding additional input regarding parameters and board priorities during interestpace negotiations. and B, the governing board may recess into executive session for the purpose of obtaining legal advice from the attorney for the public body pursuant to ARS 38431.03A3 regarding ongoing investigation regarding technology resources. I need a second. >> I'll second the motion. >> All those in favor? >> I. The motion carries. We will move to another room for executive session. Thank you everyone for being here tonight. We will resume uh upon conclusion of our executive session. I make a motion to recon to adjourn the executive session. I need a second. All those in favor? >> Okay, motion passes. 50. Uh we are reconvening our special session and

201I am now Help me here. Let's see. >> Okay, that's >> Madame President, you need a motion to provide direction to the attorney for the public body as discussed in the first portion of the executive session 5A. >> So moved. I need a second. All those in favor? Passes 50. I move to I take a motion. I motion to adjurnn. All those in favor is adjourned. Thank you.