Joint City Council & Board of Education Meeting March 4, 2019 Joint City Council & Board of Education Meeting Leslie Barnes, Chief Business Officer

Our Children • Learning Today • Leading Tomorrow Measure J Thank you to the City Council and voters for the funding opportunity provided through Measure J Measure J funds will provide: Greater Fiscal Stability Continuity of Programs that attract and retain students Allow for innovative student programs in the future Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

Our Children • Learning Today • Leading Tomorrow Measure J Fiscal Stabilization Fiscal Solvency remains the District’s first priority $10.1 million in budget reductions will be implemented throughout this year and next County has approved District’s Positive Certification of its First Interim Report It is anticipated that the same will be true of the Second Interim Report Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

School District Reporting and Fiscal Oversight Districts are required to report financial status four times a year July 1- Adopted Budget Dec 15th – First Interim Report March 15th – Second Interim Report Sept 15th - Unaudited Actuals Report Reports are reviewed by LACOE and submitted to the State All reports except Unaudited Actuals include Multi-Year projections with reserve requirements for all three years Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

School District Reporting and Fiscal Oversight External Audit Each year an external financial audit is conducted of all funds. Reviewed by LACOE and submitted to the State State and Federal Audits Every three years Districts are subject to audits from the State and Federal Governments. Review of all state and federal categorical programs for compliance Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

Prioritized Funding Categories Fiscal Stabilization Increase or maintain District Reserves State requires 3% Reserve for Economic Uncertainty in current and two subsequent years District’s reserve levels as of First Interim (December 2018): 2018-19 7.12% 2019-20 5.20% 2020-21 3.51% Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

Impact of Declining Enrollment Main cause of reduction in reserves is deficit spending due to declining enrollment Cannot reduce staff at the same rate as reduction in students Decline is districtwide and not tied to a particular grade level Very difficult to maintain class size ratios in a declining enrollment environment Last we spoke I was directed to work with ELT and other staff members to create a categorized list of options for the use of Measure J funds. The following priority list was compiled using the input of ELT and extended ELT, which includes department directors. The first two items were a priority of staff, the Board and the City Council members It is essential that we maintain our 3% reserve requirement in all three years in order to remain fiscal solvency and independence. The District is deficit spending in large part due to declining enrollment and ADA. The use if Measure J funds for unanticipated losses is essential to maintaining our required reserves There are some position included in the fiscal stabilization plan that will not actually result in reduced costs if eliminated, such as the $750,000 reduction for Special ED positions, as well as positions that will be needed for new grant funding received by the District. Therefore, it is recommended that this category be included to allow for changes to the fiscal stabilization plan in order to either free up general fund or LCAP funds to be shifted back to schools sites. Each year the State adds more unfunded mandates to Districts. This category would allow for one-time mandated expenditures to be paid from Measure J. One such mandate is textbook adoptions, which are very expensive. Rather than delay these adoptions, these funds could be used to offset expenses that cannot be fully paid through restricted lottery funds. Our Children • Learning Today • Leading Tomorrow

Prioritized Funding Categories Continuity of Programs The District has been successful in implementing programs that are retaining and attracting students to PUSD Signature programs International Baccalaureate Program Dual Language Immersion Program STEM/STEAM Magnets Visual and Performing Arts Programs Math Academy International Academy 1:1 Chromebook Initiative 5. Signature programs are an important aspect our schools in providing parent choice. They are also an essential part of our grad requirements for our students. The state barely provides enough funds for “core” educational programs. Therefore, maintaining these programs is costly and essentially unfunded by the state. Moving the additional cost for these programs to Measure J will allow us to focus our state funding on “core” academic programs and to provide better equity among site for such expenditures. Please note that the 1:1 iPad initiative is listed under this category as well, since it represents an additional expense to our “core” academic program and is not funded by the state 6. Each year the district is successful in receiving grant funding both from the state and through local sources such as PEF Staff is in the process of quantifying these grant losses and prioritizing those that we may wish to consider funding through Measure J. In some cases this may represent bridge funding until additional grants can be obtained. Deferred Maintenance has been placed on the list as well. In 2019-20 the District must increase its contribution to RRM to amount equal to 3% of its general fund expenditures. This equates to an addition of approximately $1.6 million for routine maintenance. These funds are already included in our out year budget projections. However, we no longer get matching funds for any contributions to a deferred maintenance fund. Inclusion of this category will allow the District to pay for one-time deferred maintenance expenditures for our school sites. Our Children • Learning Today • Leading Tomorrow

Our Children • Learning Today • Leading Tomorrow Signature Programs Districts are not sufficiently funded by the State to run such programs They require additional staff, training, supplies and equipment They are over and above the regular academic requirements Shifting the cost of these programs to Measure J allows PUSD to provide all sites with additional funds for their general academic programs 5. Signature programs are an important aspect our schools in providing parent choice. They are also an essential part of our grad requirements for our students. The state barely provides enough funds for “core” educational programs. Therefore, maintaining these programs is costly and essentially unfunded by the state. Moving the additional cost for these programs to Measure J will allow us to focus our state funding on “core” academic programs and to provide better equity among site for such expenditures. Please note that the 1:1 iPad initiative is listed under this category as well, since it represents an additional expense to our “core” academic program and is not funded by the state 6. Each year the district is successful in receiving grant funding both from the state and through local sources such as PEF Staff is in the process of quantifying these grant losses and prioritizing those that we may wish to consider funding through Measure J. In some cases this may represent bridge funding until additional grants can be obtained. Deferred Maintenance has been placed on the list as well. In 2019-20 the District must increase its contribution to RRM to amount equal to 3% of its general fund expenditures. This equates to an addition of approximately $1.6 million for routine maintenance. These funds are already included in our out year budget projections. However, we no longer get matching funds for any contributions to a deferred maintenance fund. Inclusion of this category will allow the District to pay for one-time deferred maintenance expenditures for our school sites. Our Children • Learning Today • Leading Tomorrow

Continuity of Programs Restoration of Fiscal Stabilization Plan (FSP) Reductions As we implement the FSP it may be necessary to restore some reductions If there are unforeseen increases elsewhere due to reduction Harms programmatic outcomes Restore expiring grant funding Short-term bridge until funding can be identified or restored 5. Signature programs are an important aspect our schools in providing parent choice. They are also an essential part of our grad requirements for our students. The state barely provides enough funds for “core” educational programs. Therefore, maintaining these programs is costly and essentially unfunded by the state. Moving the additional cost for these programs to Measure J will allow us to focus our state funding on “core” academic programs and to provide better equity among site for such expenditures. Please note that the 1:1 iPad initiative is listed under this category as well, since it represents an additional expense to our “core” academic program and is not funded by the state 6. Each year the district is successful in receiving grant funding both from the state and through local sources such as PEF Staff is in the process of quantifying these grant losses and prioritizing those that we may wish to consider funding through Measure J. In some cases this may represent bridge funding until additional grants can be obtained. Deferred Maintenance has been placed on the list as well. In 2019-20 the District must increase its contribution to RRM to amount equal to 3% of its general fund expenditures. This equates to an addition of approximately $1.6 million for routine maintenance. These funds are already included in our out year budget projections. However, we no longer get matching funds for any contributions to a deferred maintenance fund. Inclusion of this category will allow the District to pay for one-time deferred maintenance expenditures for our school sites. Our Children • Learning Today • Leading Tomorrow

Other Priorities and Projects Benefiting Students It is anticipated that the first two priorities of Fiscal Stabilization and Program Continuity will be used for the 2019-20 budget cycle In the future, other funding priorities or projects benefiting PUSD students might be identified for use of Measure J funds 5. Signature programs are an important aspect our schools in providing parent choice. They are also an essential part of our grad requirements for our students. The state barely provides enough funds for “core” educational programs. Therefore, maintaining these programs is costly and essentially unfunded by the state. Moving the additional cost for these programs to Measure J will allow us to focus our state funding on “core” academic programs and to provide better equity among site for such expenditures. Please note that the 1:1 iPad initiative is listed under this category as well, since it represents an additional expense to our “core” academic program and is not funded by the state 6. Each year the district is successful in receiving grant funding both from the state and through local sources such as PEF Staff is in the process of quantifying these grant losses and prioritizing those that we may wish to consider funding through Measure J. In some cases this may represent bridge funding until additional grants can be obtained. Deferred Maintenance has been placed on the list as well. In 2019-20 the District must increase its contribution to RRM to amount equal to 3% of its general fund expenditures. This equates to an addition of approximately $1.6 million for routine maintenance. These funds are already included in our out year budget projections. However, we no longer get matching funds for any contributions to a deferred maintenance fund. Inclusion of this category will allow the District to pay for one-time deferred maintenance expenditures for our school sites. Our Children • Learning Today • Leading Tomorrow

As Discussed in the Ad Hoc Committee Timeline & Process As Discussed in the Ad Hoc Committee District will provide the City Council with a proposal for use of Measure J funds for the coming year The District will report actual expenditures at the annual Joint City Council and Board of Education meeting in March MOU extension needed by April of each year in order to include in the multi-year projection of the District’s Adopted Budget 5. Signature programs are an important aspect our schools in providing parent choice. They are also an essential part of our grad requirements for our students. The state barely provides enough funds for “core” educational programs. Therefore, maintaining these programs is costly and essentially unfunded by the state. Moving the additional cost for these programs to Measure J will allow us to focus our state funding on “core” academic programs and to provide better equity among site for such expenditures. Please note that the 1:1 iPad initiative is listed under this category as well, since it represents an additional expense to our “core” academic program and is not funded by the state 6. Each year the district is successful in receiving grant funding both from the state and through local sources such as PEF Staff is in the process of quantifying these grant losses and prioritizing those that we may wish to consider funding through Measure J. In some cases this may represent bridge funding until additional grants can be obtained. Deferred Maintenance has been placed on the list as well. In 2019-20 the District must increase its contribution to RRM to amount equal to 3% of its general fund expenditures. This equates to an addition of approximately $1.6 million for routine maintenance. These funds are already included in our out year budget projections. However, we no longer get matching funds for any contributions to a deferred maintenance fund. Inclusion of this category will allow the District to pay for one-time deferred maintenance expenditures for our school sites. Our Children • Learning Today • Leading Tomorrow

Our Children • Learning Today • Leading Tomorrow Questions & Comments Our Children • Learning Today • Leading Tomorrow