001Good morning everyone. I would like to call to order the RBOSD special board meeting at 8:33 a.m. on December 11th, 2025. Uh leading us in the pledge of allegiance today will be Dr. Ned Alurn, Deputy Superintendent. Excellent. Thank you. Do we have a motion and a second to approve the agenda? >> Second. >> All those in favor? >> I. Any opposed or abstensions? Hearing? None. The motion passes. Brings us to item 3.1 reports to the board. The 2025 2026 first interim budget financial report presentation by Dr. Annette Alurn, Deputy Superintendent Administrative Services. Good morning for our special board meeting. Um I appreciate you all coming early for this um meeting. The reason we're having the meeting today is because our first interim report is due on um no later than December 15th, which is Monday,
002and our next regularly scheduled board meeting is um Tuesday, December 16th. So, thank you again for being here. Um, today I'm going to um talk briefly about the budget cycle. The first interim report is um the first of two interim reports that I provide to the board over the course of the fiscal year. It includes all of the um transactions between July 1 and October 31. and it gives a picture of where um our district's financial position remains relative to the um adoption of our actual our 45day budget back at the end of July. Um so you can see I've sort of given you the picture of the whole year with the highlight on December 15th first interim report. So to summarize um included in this report are changes from our unodudited actuals um which
003you saw um in September, right? Um and that equates to what you'll see is um 3.45 million decrease in our ending fund balance um for and that includes both restricted and unrestricted dollars. So for our unrestricted dollars, um it's actually an increase and that increase is primarily due to increases in LCFF because of the cost of living adjustment increases um and one-time block grant funding as well as carryover funds from the prior year. So increase in unrestricted dollars, decrease in restricted funds and that is um primarily due to additional um salary and health benefits for staff as well as um expenditures from categorical funds. And then our reserve, which I'll get into a little bit later, um went down slightly. I do want to point out when I'm gonna get into the numbers that um
004because two of our associations have ratified their collective bargaining agreements, those assumptions are built into our first interim um CSEA has not yet ratified and so any increases for CSEA or health benefit increases for CSEA is not included in our assumptions. Okay. And um I'm going to share with you some of the assumptions that we include both on the revenue side and then on the expenditure side. So the cost of living adjustment that we assume is based on the department of finance statutory um cost of living. So this year 2.3 for cost of living um that's what gets applied to the LCFF. um next year it's published at 3.02% the as we're factoring in what's happening with the economy um it's likely going to be closer to a 2.5 right so but we we have
005to build our assumptions based on what um is the standard as of the time of of publication and then 27 28 the assumption is a 3.42% 42% cola. It never almost never ends up being exactly um where that where that assumption is, but there it's a projection based in reliable information as of that date. Our enrollment um assumptions uh actually have gone down and the reason they've gone down is um again that's an executive decision about what we assume. So for the last number of years, we've been assuming a half a percent reduction a year and that was with the expansion of transitional kindergarten. Because transitional kindergarten is now fully implemented, we have built in an assumption factor of a negative.75%. So just slightly um increasing the decline. Again, we will be monitoring that year
006by year and then we adjust how we um break that out. But that's the rationale for that assumption. Um and then as you know what what we're funded for is not what our actual enrollment is. It's based on a combination of our enrollment and our attendance rates. Um, and it's also like a three-year rolling average, like whether it's the last prior year or a three-year average. Whatever the higher number is is the number we're able to utilize. So, um, we're funded on, uh, the column at at the bottom or the rows at the bottom is. So on average, if you said we have we're funded at 9,16 students and we're getting let's say 13,000 a student, that's generally what our LCF number equates to. >> Yes, that's it. Right. we have it we have the
007option and we take whatever's the better. Thus far, it's been the three-year average. But let's say we have a year where we get an enrollment growth, we can take that as our Absolutely. Absolutely. Okay. And then um and on the assumption side related to expenditures, I just take the big ones um because these two are are the big ones and that is the district contribution um to the um to Calsters and to Calpers. Um Calsters has been at 19.1% for a number of years. Um and CalPERS um fluctuates Um, I I made a notation at the bottom because Calers's board cannot authorize a rate beyond 20.25. It's that's part of their their operations. And so it's been at 19.1 for many years. It's possible it could go up, but we know that it won't go
008beyond 20.25. On CalPERS, they don't have that same limitation. And when I go and I do my budget road shows, um, I share that um Cal PERS has almost tripled um in the last dozen years. And so um again their salaries are lower than our Cal Sters employees, but um the total cost of a classified employee is is much higher than what one would assume based on their salaries, right? Because we um contribute so much to their to the retirement fund. Okay. And this is um a a view of our enrollment. It's um I think it's it's pretty striking. Um and that's why I like to share it at uh my budget road shows with the school sites. Um prior to COVID, we were seeing as a district increasing enrollment anywhere from 1 to 3%
009annually. Um in those first two years um after the onset of COVID, we saw a decline of 5%. So that was extreme. Um once we began implementing the universal transitional kindergarten in 2022 and then we had um full day kindergarten in 2024, we really saw kind of a mitigation of that rate of declining enrollment. So you can see while we were declining for the last number of years, um the decline was at a pretty manageable rate. Um, and so really it's the it's what we're projecting for the next couple years that is going to be so important for us to really keep our eyes on now that we have um um the implementation of TK. Um we have discussed as um as a district we have discussed that over the next couple of years because
010of the decline in enrollment that we do have some some space and we're planning to build more space with um bond funds but that we are hoping to in the next like two years be able to offer a full day transitional kindergarten program and um we believe that that may help um generate some more attendance um I'm sorry, enrollment just as it did when we went to full day kindergarten um last year. >> So in those you you you can see between >> you want to ask the question again? Yeah, I was just curious if we're still going to be for the next for the projections be using a half a percent assumption or a 1%. >> It's a 75 okay% reduction. >> Okay, that's good. I like that. >> And there's >> you can
011see from the 9412 this year to the 9341 to the 9271 you see the rate um on that slide go down a bit. >> That's the difference. I was going to say and then there's always those wild card factors like 650 housing units being approved at the Galleria or some of the other housing lawsuits or things in the city, but until something's actually built, we don't know. >> We're still waiting to see some enrollment from Legato. >> Yeah. >> Which we yet to see. So, yep. Watching and waiting. Okay. This is the this is the big one. It's um so I'm going to review with you kind of section by section. Um the top um the top two lines are really looking at our current revenues and like total revenues and total expenditures. When you
012get to line three where it talks about net increase or net decrease that reflects our planned deficit spending. This is a result of declining enrollment coupled with um negotiated salary and benefit increases. So, we discussed as a board that um when we entered into um negotiations this year for salary and benefits that we would, and I share this again at our at our budget road shows, that we know we are engaging in deficit spending. We're able to do that because we have a healthy reserve, but that won't always be the case. So, this is where like the numbers are really reflected here. Um so you can see 3.4 million that is a that's a combination of both restricted and unrestricted um funds but 3.4 million this year 1.9 million the following year and then 500,000
013um further out. So those are our projections as of first interim. Um but that's kind of that's sort of where you see that >> um >> the the 13.78%. >> Yeah. >> Is that after the >> the decrease? >> It is. Yep. So uh let me talk about the bottom of the table that >> but not including the CSEA >> not including >> CSEA if they got that. >> Yeah. Uh it's probably it'll with CSEA it would be about 13. It's about another percent. Um so let's talk about the bottom portion of this table. Um and the difference between what the line where you see beginning fund balance and ending fund balance. That's sort of that's like your savings account, right? It's what's in the bank, right? So at the beginning of this year, 41.2
014million in the bank. We believe at the end of the year we'll have 37.7 million in the bank. And that's restricted and and unrestricted. >> Yes. >> And so um out of that 37.7 million that's will be in the bank quote unquote um there there's 18.1 million that's sort of like untouchable in the sense that those are dollars that you have assigned already. um what we refer to as our committed funds as well as some restricted dollars that are not available for let's say negotiations, right? There's commitments um restrictions that we have to spend 3% on reaching restricted maintenance or >> but like Prop 28 funds >> or Prop 28 funds, right? You can't use Prop 28 funds for just general salary increases. And so that second to bottom line where it says reserves for
015economic uncertainty, that's the amount that we talk about as our reserve, right? Because that's really truly what's available. Um and so right now we're looking at 13.78 um for the end of the year. When we do the second interim report in March, we'll get another number. Um hopefully it'll be close to that. Um and then um we are looking at given our given our projections we're looking at basically a very solid reserve over the next couple of years based on the projections and the assumptions that we have now obviously subject to change. The legal requirement I know you know this but I'm just stating it for the public. The legal requirement for a district our size is to have a 3% minimum reserve and our board's goal is to maintain a minimum of an 8%
016reserve. So, congratulations. You're doing a great job >> and but we'll get to that 8% at some point based on the >> agreements that we have in place. And we also have pending strategic plan initiatives that will cost a few million dollars including the math adoption and other adoptions we need to do um next year wi which includes the actual curriculum and training and release time for staff to prep. So it really depends on whether or not those adoptions all the the pieces of those adoptions are able to come out of the committed funds. If they are able to come out of the committed funds, it won't impact our reserve. If we're if we're not able to take them all out of the committed funds, then it will. >> Um and then >> Dr. Yes.
017>> on on that slide we just had. Um thank you by the way for explaining those various items for 26 27 2720th figures expenditures particularly. Uh, do those include any projected, excuse me, increases that we would likely to have for salaries and benefits for hardworking employees. >> Um, we do make assumptions for step-in column increases um for employees, but not any additional um >> except for 26 27 because we did the two-year. >> Yes. Not any additional other than what we have already negotiated. >> Understood? So the 2720 numbers >> it's it's prudent for us to understand that the expenses are likely going to be higher than 141. >> Exactly. >> And we may and we we negotiate every year. So we may have to also still look at the impact of health care on
018our employees next year even though we did agree to a two-year salary increase. >> That's right. So these these three-year projections are um are statutoily required. Um, but they give you a picture that is close but, you know, never really precise because exactly of the kinds of questions that you're all asking. And and also that's why it's so helpful to do these interim reports because we do get to kind of true up where we are as over the course of the year as opposed to once a year when you do a budget approval. Sorry, just one other thing to highlight on here for those who may be watching at home. This does not include measure S funding or any of the bond funding or anything like that. That's a whole separate beast. >> This is
019all fund one. >> Thank you. >> I just had a question, Dr. Alpin. Do any of these um numbers take into account unanticipated legal litigation expenses and and costs? That's a great question because we do have a pending AB218. >> Um, so there are some options available to the district um around that. We we build in our our regular costs for uh legal those are those are projected out. If we have, let's say, a large settlement, the board would have um the ability to be able to make a choice as to where to take those dollars. Um so, for instance, you could consider looking at committed funds. um you could you know but but we would come to you and um have a discussion if it was if it fell outside of but we do
020um build in assumptions for increases in uh insurance costs and increases in utility costs and and all the rest of it. So that is built in um to our assumptions. And follow up to that though, the state did give one-time funds this year, not specifically for AB218, but really with the idea of supporting those AB218 lawsuits that they'd allowed. >> Yeah. Thank you. >> Okay, I'm going to go to the next slide, which is basically our last slide, um, which is your consideration of approving um, the first interim report for positive certification. And that's a consent item on today's calendar. In January, we will hear um the governor's final budget proposal. I mean, his final proposal, not a final proposal, but this governor. Um in March, um we will have um a certification of the
021second interim report. So, I'll be doing another report similar to this one. Um but that will consider our uh revenues and expenditures through the end of January and then um in miday we'll get a revision from the governor around and at that time or actually a couple weeks before that we'll have a much clearer picture about like the um cost of living adjustment and the kinds of assumptions we'll be needing to build into our budget planning for 2627 and in um 26 u in June um you both approved the local accountability control accountability plan known as LCAP as well as um the budget and then um in June hopefully the um legislature also approves the 2627 budget. If there's a big change between what the legislature approves in June and what the governor is um
022recommending in May, that's when we go and do the 45day budget adjustment in the summertime. Um and that's it. Also, I want to thank my teams, um, my accounting team and, um, Norico and Laura and and all the people that I rely on to, um, really do the number crunching and working with me on um, building out these projections and assumptions. >> Thank you. You know, I'd like to thank you and your team as well because uh, we are very fortunate to be in the situation where we do have healthy reserves. Not a lot of surrounding districts are in that position. they do have these layoff notices that go out almost every year and it's a really scary situation. So I just want to thank you know everyone for being very cautious about how we
023expend funds to make sure that we don't find ourselves in any type of boom bust situation because that impacts you know obviously our teachers and staff but also our students. Um deficit spending of course is scary but that is why we built up these reserves is for some of these situations. Um, so yeah, just thank you all for being cautious with how we spend money to make sure that every dollar we spend does the most good possible for our students. >> One more question. I should have asked this earlier. I apologize. Um, what sub impact have we experienced so far? Um and what excuse me addition impact u we may anticipate with the cuts from federal funding. It's been more um talk than fact. Um so we have not had any impacts to um our
024local program as a result of what's happening at the federal level. Um I think I don't I'm not sure um Dr. Garland isn't isn't available this morning, but I would imagine that what I'm reading is the greatest potential impact is with the changes to the Department of Education and um the Office of Civil Rights um that is part of the Department of Education. Um I recently read that they're requiring laidoff employees to come back because they can't handle their OCR complaints. So, I think that's probably the greater impact as opposed to the fiscal impact. >> Well, we're hearing they're not going to touch uh like the titles >> and special ed funding, although we we know that's already not sufficient, but >> and as a percentage of our budget, how much is federal funding, >>
025particularly relative to other districts? >> 3 to 4% of our total budget is federal. >> It would be bad, but not catastrophic. Well, it would be bad. >> Very bad. Yes. >> Yeah.$5 >> million. Pretty significant. >> Well, compared to LA Unified or a district like that where it's 30% of your >> budget% >> Yeah. >> Thank you. >> Okay. That takes us into our public hearing section. Members of the audience may address the board on topics listed on the agenda. Comments from visitors shall not exceed three minutes unless the time limit is waved by majority of the board. The board shall limit the total time for public input on each item to 20 minutes. With board consent, the president may increase or decrease the time allowed for public presentation depending on the topic and
026the number of persons wishing to be heard. There are no members of the public here. Do we have any advanced written requests? Thank you. All right. This takes us to the general consent calendar. We only have one item. Um, I should have done this during agenda review. I'll just pull that just to make it an action item. So, we have item 5.1. Uh, motion is second to begin discussion on adopting the 202526 first interim budget financial report. >> So, moved. >> Any additional comments or questions anyone has. >> All right. All those in favor? >> I. >> Any nos or abstensions? Motion passes. brings us to meeting adjournment. Is there a motion and a second to adjourn at 8:59 a.m.? >> Second. >> All those in favor? >> I adjourned