001So again, this is in the main presentation, this is in the appendix, but it's referring to our unrestricted reserves, which I know has been a topic of conversation. If you could, Patrick, just speak to what we're looking at here. There's been talks of how much we have in reserves, how much of it is actually unrestricted and available, how much we've already tapped into in the last couple of years. If you could just walk through us what we're looking at there and sort of implications as it relates to this budget conversation in general. Yeah, absolutely. I'd be happy to do so because I do think there's a lot of misinformation that's circulating in the community right now. And I would love to have the opportunity to kind of inform the public and get some clarity around
002this. So if you take a look at the slide in front of you, so for folks who are looking to pay per copy, it's slide two of appendix A. These are the projected unrestricted reserve balances for the end of this year. So 25, 26, that is projected for June 30th of this year, and then each of the next two years. So what we consider to be the reserve is effectively the pink bar, right? That is the unrestricted reserve, and you can see right now that's projected for the end of this year to be just over 5%, 5.56%. We are required by state law to maintain a minimum of 2%. So you can see that line, black line across that you see across all three of those bars represents that number. So some of the comments
003that we've seen in public from FTA are stating that our reserves are over $180 million, they're over 10%. And the figures that they're using represent effectively the entire stacked bar, the pink, the yellow, the green, the blue, and the purple. And so what I want to talk is a little bit about those components and why we feel, you know, have a difference of opinion on the reserves. So fundamentally, the unrestricted, unassigned reserve, you can see we're actively spending that down. You can see that that pink bar goes from just over 5% at the end of this year. And in year three, the 27, 28, the third bar, that's down to 2.77%. So you can see that that is we are just above the state requirement for the 2% reserve level. Additionally, the orange bar, that
004mostly represents prepaid items and inventory. So things like large mowers, photocopiers that we own, about over $3 million of that is in assets, not something we can spend. And the bulk of the rest of that slim orange bar are prepaid items. So if we have a summer school contract that goes across the fiscal year into next year, we know we're going to have those expenses, so we have to set cash aside to pay for those. So that's not something that we can tap into. The next is the green. That's a fund that we created a number of years ago. One of my predecessors created a fund for future textbook adoptions. We know that we have new curriculum that comes up. We have new textbook adoptions. So we have tried historically to be rather innovative. A
005lot of districts just try to pay for curriculum when it comes out. We have tried to pre-fund that so that we always have a reserve. We have a K-12 math curriculum that is going to be tested next year and then implemented the year after, followed by a K-12 ELA curriculum. And what you can see is you can see that money being spent down as part of the drawdown of our reserves, and we're not replenishing that. And we're not replenishing that so that we can reserve funds to keep people in positions. So we're spending the unrestricted reserve down to keep folks in positions. We're spending the textbook fund down to keep folks in positions. The next block, the blue block, is the pandemic recovery funds. Those are one-time funds that we've been able to extend after
006the pandemic. You can see that those will all be spent down by the end of next year. Those are unrestricted dollars, and 89 percent of our unrestricted dollars are spent on employee salary and benefits. So I want to be very clear. So 89 cents out of every dollar in unrestricted goes towards keeping folks in positions and paying for their benefits. So all of that as part of this is being spent down to keep folks in positions. And then finally, the last piece, this is the board agreed with the Fresno Teachers Association in the last bargaining unit, bargaining cycle, to give $30 million for student supports that the Fresno Teachers Association would be able to direct. That's their unspent money. So I can't touch that. That's part of the agreement. It's in the CBA with the
007Fresno Teachers Association. They have the ability to direct those funds. I literally can't touch that money. So I just want to be very clear. You can see over from the end of this year through the next two years, we are rapidly spending down all of our reserves. And I also want to be very clear to the public that these bars include the reductions that the board is being asked to make for this year and for next year. So this includes all of the reductions for this year and that we project to have to make for next year. Were we not to make these reductions, that bar in the third year effectively goes to zero and that is when FICMAT and the CDE come in and effectively take over decision making authority from the superintendent and
008the board on how to spend resources and money.