2016-17 Unaudited Actuals Report Azusa Unified School District Prepared by: Marc Bommarito Assistant Superintendent, Business Services & Meghna Bulsara Director of Fiscal Services

Purpose In accordance with Education Code 41200, Azusa Unified School District must file the Board-approved unaudited actuals with the Los Angeles County Office of Education by September 15, 2017. The unaudited actuals present the financial position and results of operations of Azusa Unified School District for the 2016-17 fiscal year. The unaudited actuals are audited by our external independent auditor. The audit report is presented to the Board by December 15, 2017.

Timeline of Major Financial Reports 2016-17 Estimated Actuals & 2017-18 Budget & MYP 2017-18 1st Interim and MYP 2017-18 Estimated Actuals & 2018-19 Budget & MYP June 20, 2017 Sept 5, 2017 Dec 12, 2017 By Mar 6, 2018 By June 30, 2018 2017-18 2nd Interim and MYP 2016-17 Unaudited Actuals

2016-17 Unaudited Actuals Ending Fund Balances History Unrestricted & Restricted combined for Gen Fund Restricted funds from 17-18 to be allocated by first Interim.

Comparison of Estimated Budget to Actuals 2016-17 Unaudited Actuals Comparison of Estimated Budget to Actuals Restricted Program Balance $4,134,180 Prop 39 funds Educator Effectiveness Grant Special Ed: Mental Health College Readiness Block Grant Unrestricted Balance $1,922,569 Utilities costs reductions Contracted services reductions Reduction in materials and supplies

2016-17 Unaudited Actuals Revisions to 2017-18 Budget Revenue One time funding increase to $1.2 mil. Increase in E-Rate for $137k Reduction in LCFF funding by $100k Expenditures LACOE’s BEST Software for $100k Increase in Special Ed Contribution of $599k for MOE requirement One time funding basis - $147/ ADA for 8382.82 P2 16-17 ADA

2016-17 Unaudited Actuals General Fund – Deficit Spending and Reserves Summary of Reserves 2015-16 2016-17 2017-18 2018-19 2019-20 Fund 01 - Beginning Balance $7,345,273 $13,681,481 $12,705,230 $6,772,196 $4,029,118 Unrestricted - Surplus / (Deficit) $6,336,208 ($976,251) ($5,933,033) ($2,743,078) ($65,837) Fund 01 - Ending Balance $3,963,281 Assigned $797,725 $735,375 Projected for Declining Enrollment $9,685,013 $8,547,260 $2,650,062 $0 3 % Required Reserve $3,198,743 $3,422,596 $3,386,760 $2,071,610 $1,459,531   Fund 17 Special Reserve $3,454,516 $3,469,298 $3,477,516 $3,500,516 $3,505,016 Total Available Reserve $16,338,272 $15,439,154 $9,514,338 $5,572,125 $4,964,546 Total Reserve 15.32% 13.53% 8.43% 5.08% 4.61% Unrestricted Gen Fund only It would have been 6.66% in 17-18 with $2million it is still 8.43%

2016-17 Unaudited Actuals Other Funds Beginning Balance Revenues & Other Sources Expenditures & Other Uses Change in Fund Balance Ending Balance Fund 11 - Adult Education Fund $361,932.04 $1,957,393.64 $1,468,033.31 $489,360.33 $851,292.37 Fund 12 - Child Development Fund $0.00 $995,345.39 $982,948.70 $12,396.69 Fund 13 - Cafeteria Fund $1,632,806.93 $5,917,631.06 $6,503,361.10 $(585,730.04) $1,047,076.89 Fund 14 - Deferred Maintenance Fund $2,134,704.78 $892,251.58 $873,152.11 $19,099.47 $2,153,804.25 Fund 17 - Special Reserve Fund $3,431,515.94 $37,782.51 $3,469,298.45 Fund 21 - Building Fund $24,158,689.91 $211,295.04 $8,749,832.55 $(8,538,537.51) $15,620,152.40 Fund 25 - Capital Facilities Fund $201,213.87 $555,210.25 $171,442.01 $383,768.24 $584,982.11 Fund 51 - Bond Interest Redemption $6,763,939.00 $6,571,739.00 $192,200.00 $5,726,574.00 Fund 53 - Tax Override Fund $11,263.44 $124.01 $11,387.45 Fund 67 - Self-Insurance Fund $411,695.18 $1,745,384.93 $1,552,601.17 $192,783.76 $604,478.94

Other Funds – Special Revenue Funds Fund 11 - Adult Education Fund: This fund is used to account separately for federal, state, and local revenues that are restricted or committed for adult education programs. Fund 13 - Cafeteria Special Revenue Fund: This fund is used to account separately for federal, state, and local resources to operate the food service program (Education Code Sections 38090 and 38093). New Minimum Wage Laws will need to be addressed.

Other Funds – Special Revenue Funds (continued) Fund 14 - Deferred Maintenance Fund: This fund is used to account separately for revenues that are restricted or committed for deferred maintenance purposes (Education Code Section 17582). Fund 17 - Special Reserve Fund: This fund is used primarily to provide for the accumulation of general fund moneys for general operating purposes (Education Code Section 42840).

Other Funds – Capital Projects Funds Fund 21 - Building Fund: This fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146). Fund 25 - Capital Facilities Fund: This fund is used primarily to account separately for moneys received from developer fees (Education Code Sections 17620–17626). Fund 51 - Bond Interest and Redemption Fund: This fund is used for the repayment of bonds issued for the LEA (Education Code Sections 15125–15262).

Other Funds – Proprietary Funds Fund 67 - Self-Insurance Fund: Self-insurance funds are used to separate moneys received for self- insurance activities from other operating funds of an LEA.

Enrollment Trends

Enrollment – Grades TK through 12 2002-03 through 2018-19

Birth Data in Zip Code 91702 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total # of Births 1,188 1170 1137 1130 1065 1141 1110 1132 1073 1066 982 878 912 856   # Change -18 -33 -7 -65 76 -31 22 -59 -84 -104 34 -56 -332 % Change -1.5% -2.8% -0.6% -5.8% 7.1% -2.7% 2.0% -5.2% -0.7% -7.9% -10.6% 3.9% -6.1% -27.9% Based on current enrollment trends (previous slide), enrollment is projected to decline in the two subsequent fiscal years. Enrollment is likely to continue to decline for years to come. Until the number of births from mothers in zip code 91702 increase, enrollment will likely continue to decline for years to come. District of Choice and changes to other laws could have an impact on enrollment. This is not factored into the 2-year enrollment projection.

Enrollment Changes from the Adopted Budget Projected Enrollment 2016-17 Actual 2017-18 Current 2018-19 Projected 2019-20 Adopted Budget 17-18 8,617 8,479 8,332 8,239 Current 17-18 8,744 8,264 7,946 7,653 Difference 127 -215 -386 -586 Loss from Prior Year -184 -480 -318 -293

LCFF Funding Based on Current Enrollment Local Control Funding Formula Factor 2016-17 2017-18 2018-19 2019-20 Enrollment 8,744 8,479 8,332 8,239 ADA 8,383 8,103 8,029 7,873 Funded ADA 8,623 8,384 8,154 8,057 Funding per ADA $10,076 $10,337 $10,694 $10,968 Total LCFF Funding at Adopted Budget $86,670,984 $86,767,227 $87,552,232 $88,733,434 Total LCFF Funding (Current) $86,885,951 $86,803,982 $86,149,592 $85,893,348 Difference $214,967 $36,755 $-1,402,640 $-2,840,086 During years 2013-14, 2014-15, 2015-16, and 2016-17, AUSD enjoyed a per student revenue growth that exceeded the rate of decline in student enrollment – thus LCFF revenues grew during these years.

Pension Cost STRS and PERS – Pension Cost Increases 2016-17 Actuals 2017-18 Budget 2018-19 Projected 2019-20 Projected STRS Rate 12.58% 14.43% 16.28% 18.13% % Point Increase 1.85% STRS Cost* $6,157,965 $6,722,300 $7,824,225 $8,503,143 PERS 2016-17 Actuals 2017-18 Budget 2018-19 Projected 2019-20 Projected PERS Rate 13.888% 15.531% 18.10% 20.80% % Point Increase 2.041% 1.612% 2.57% 2.70% PERS Cost* $1,752,895 $2,568,598 $3,086,520 $3,392,324 Total Cumulative Increase from 2016-17 Even with a 4%+ Reduction for Salaries  $1,380,038 $2,999,885 $3,984,607 While revenues are decreasing (from declining enrollment and low COLA), personnel and operating costs are increasing. STRS and PERS pension costs are increasing rapidly. By 2020-21 (three years away), AUSD will be paying $11.90 million in STRS and PERS if we don’t change staffing levels – approximately $4.0 million more than paid in 2016-17.

After Current Enrollment District’s Reserve Analysis  Reserves 2015-16 2016-17 2017-18 2018-19 2019-20 At Adoption $16,338,272 $13,439,452 $7,431,084 $5,572,125 $4,964,546 15.32% 11.80% 6.66% 3.62% 3.61% At Unaudited Actuals $15,439,154 $9,514,338 13.53% 8.43% 5.08% 4.61% After Current Enrollment $4,169,485 $721,821 3.80% 0.67%

Looking Ahead 1 – Dec 12, 2017 – First Interim Financial Report 2 – March 6, 2018 – Second Interim Financial Report 3 – By June 30, 2018: 2018-19 Budget Adoption and MYP (through 2020-21) With a Fiscal Stabilization Plan, AUSD will meet its 3% reserves.

Closing Remarks & Questions Declining Enrollment Deficit Spending Commence Planning to Maintain Fiscal Solvency and Maximum Services to our Students and Community Questions