1. Lodi Unified School District Construction Projects Status Board Study Session August 19, 2008 Prepared by: Douglas Barge Douglas Barge Art Hand Art Hand Y:\Business Services\Financial Modeling\Construction Planning\Waterfall - Round 7\B08-19-08 District Construction Projects Status.ppt

2. Executive Summary  As with any program the Measure “K” Construction has evolved into it’s final stages.  This evolution will require a change in strategy:  Placing a greater focus on cash in conjunction with budget  Rapid completion and filing of all applications and reports required for State funding  More detailed reporting to the Board as part of project approval  To relieve the current cash pressures the District would:  Use existing capital project reserves  Maintain original project start up schedules  Restructure existing COPs repayment strategies  Recapture balances from projects that are completed or nearing completion  Other strategies outlined in the report

3. Table of Contents DESCRIPTION PAGE # A. Opening Comments B. Problem Statement C. Measure “K” Projects D. State Projects E. Measure “L” Projects F. Cash Problem G. Solutions H. Recommendations I. Appendix 1 2 3 – 8 9 10 11 - 13 14 - 17 18 i

4. Opening Comments With the passage of Measure “K” the District embarked upon an aggressive construction program to increase capacity within the system, get the District off of the M.T. calendar and modernize existing facilities. The program required the infusion of cash early in the program to be successful. This was accomplished with the sale of bonds and use of accumulated development fees. This infusion of cash was augmented by the State’s contribution to the programs. The State’s contribution would propel the program into the next phases of projects. In the past we have referred to this process as the “Waterfall”. The purpose of the “Waterfall” was to leverage the District’s cash position to allow for the rapid completion of the construction projects. Now the District has entered the final phase of the Measure “K” program with the sale of the final series of bonds last year. This will be the “Pond” phase of the program. Don’t fish until there is water in the pond. Water being “cash”, in this case. 1

5. Problem Statement Construction of new facilities within Measure “K” is slowing. The program has entered the Modernization phase. This phase of the program will rely heavily on State funding catching up with the needs of the District, or the program must be slowed to match available cash resources. It is now important that all Measure “K” projects be viewed closely in terms of available cash and not just in terms of budget. With the slowing economy and student population growth it may, also, be time to review the pace of the Measure “L” program. To be clear, the “Waterfall” program will still work for Measure “L” if there are supporting resources Developer Fees. Finally, the Tokay High and Lawrence repairs have been completed. That program was supported with Certificates of Participation (COP’s). With the delays in State resources and cash needs of Measure “K” it is appropriate to revisit our strategies for repayment. 2

6. Measure “K” Waterfall #7 ii

7. Status of Measure “K” Projects  Several projects have exceeded the original program budgets as previously outlined in Board reports:  Tokay Repairs  Tokay Modernization  Tokay Addition  Lawrence Repairs  Lodi High Addition  Lockeford Addition  To complete these projects funding was diverted from other projects. Our Facilities Department estimates additional State resources will help backfill a portion of the additional cost. However, State funding has yet to arrive for most of these projects including Lodi High Repairs. 3

8. How the Waterfall Worked STATE MEASURE “K” - Series #1 $50,000,000 MEASURE “K” - Series #2 $50,000,000 CAPITAL FACILITIES Series #3 4

9. Moving to the Pond Will Work STATE MEASURE “K” - Series #3 $9,000,000 CAPITAL FACILITIES 5

10. What Have We Done?  Three Additions  Six New Schools COMPLETED Measure KStateDev. Fees /Other $ 115,876  Podesta ($1,609,533) NEW SCHOOL SITES  Gantner  Remaining (80,024) 6 $ 112,938 $ 0 ($1,689,557)  Total Completed  Total New Sites ($ 99,083) ($ 2,938) ($ 99,083) $ 0

11. How Are We Doing?  Lincoln  Mosher CURRENT PROJECTS Measure KStateDev. Fees /Other  Additions – Four Schools $ 0 $688,208 FUTURE ADDITIONS  McNair 2,759  Woodbridge ($ 3,702) $3,914,157 7 $2,283,353 $ 0 $ 1,716,630 $ 1,716,630  Total Current $ 5,673,583 $ 5,673,583 ($1,630,804) 1,717,573

12. What Are We Going to Do? Modernizations - Continued  Lodi High $2,213,000  All the Others * REMAINING MODS. $ 124,015 801,299 801,299$2,025,422 (4,322,519) ($2,109,519) ($2,109,519) $ 925,314 $2,025,422  Total Remaining Measure K State $ (714,577) $ (714,577) $ 925,314 $9,316,552  GRAND TOTAL 8 * Includes Lawrence Elementary & Tokay High School projects. Other Funds

13. STATE PROJECTS iii

14. Summary of State Projects  Tokay Repairs  Tokay Science Additions Funds Needed 3,773,164 PROJECTS 9 $5,950,896  Total State Projects $2,177,732

15. Measure L Bonds First Series iv

16. CONSTRUCTION MEASURE “L” Summary of Sources – Series 2007 Bonds 1. Podesta Ranch 2. Delta Sierra 3. Morada 4. Bear Creek 5. K-6 & K-8 Sites 6. Middle School Site 7. High School (small) 8. Safety 9. Reserves 10. Total New Schools Description Dev. Fees $3,600,0004,550,0008,450,000 $16,600,000 Project $22,900,0003,200,0003,200,00021,500,00026,190,0004,875,00016,900,000800,000 $99,565,000 Measure L $10,300,0003,200,0003,200,00017,000,0008,545,0002,437,500800,000 4,517,500 4,517,500$50,000,000 State $9,000,0004,500,00013,095,0002,437,5008,450,000 $37,482,500 10 * May include Developer Fee Credits * *

17. The Cash Problem But the Budget Worked? v

18. Problem Statement  McNair still faces cash shortage problems related to the City of Stockton which still owes the District an estimated $4,171,397.  Because of the need to borrow resources from Lockeford to support the Lawrence repairs project pending receipt of State funding. The Lockeford addition needs $5,111,270 to move forward.  Resources for purchase of future school sites have been moved to support other projects pending receipt of State funding.  The various Tokay projects are waiting State funding.  Funding for Gantner is predicated on receipt of State funding and an agreement with the developers on fee credits.  The combined impact of these events has caused a budget and cash strain on the District’s construction program 11

19. Sample Sample of the Budget/Cash?  Beginning Balance $500,000  Measure K 500,000 REVENUES BudgetActualCash 500,000  Project $1,500,000$2,140,000$1,500,000 EXPENSES  State 500,000  Development Fees 0200,000 12 $2,140,000 $ 1,001,000 $ 0 ($499,000)($699,000)  Total Completed BALANCE BALANCE $ 801,000  Other Revenues 1,000(60,000) $1,000,000 0 $300,000 500,000 0 1,000 0

20. Summary of Budget/Cash Needs 13

21. Solutions vi

22. Internal Project Re-Alignments  Measure K  State Amount 69,825 SOURCES 14 $ 447,641  Total Project Re-Alignments $ 714,577  Others (513,505) (513,505)  Development Fee 176,744

23. Certificates of Participation 15 The State will be funding a major portion of the work on the Lawrence and Tokay projects. Funding by the State will be on a reimbursement model requiring the District to front the cash. To bridge cash needs, $13.5 Million of Certificates of Participation (COPs) were issued. The program was designed to allow for a payoff of the debt to be made at any time. State funds to be directed to payoff of the notes as soon as possible. Annual payments are being made from Routine Restricted Maintenance resources. After all of the State income is received the repayment will be reduced to approximately $244,000.

24. COPS DEBT 16

25. 17 Options for Funding Existing Obligations

26. Recommendations  In recognition of the natural evolution for the Measure “K” Construction Program, all future project approvals will include: 1. A financial plan included in the documentation requesting approval. 2. A cash flow plan showing that cash will be available to support the project before there is a demand for the cash.  Staff Recommends changes to the construction program as outlined in this report to cover cash needs pending receipt of State funding. 18

27. vii The End

28. Appendix I. State Funds - Status II. Measure “L” - Detail A1 B1 – B2 PageDescription viii

29. STATE CONSTRUCTION FUNDS Status Project CDEDSASAB A1 Funding a. Bear Creek High b. Delta Sierra Science c. Lawrence Addition d. Lockeford Addition e. Lodi High Mod f. Lodi High Addition g. Morada Science h. Podesta Ranch i. Tokay HS Rehab & Modernization j. Tokay HS Science A k. Elkhorn Mod November 2008 January 2009 October 2008 2009 December 2008 January 2009 November 2008 January 2009 March 2009 YesPendingYesPendingYesYesPendingYesYesPendingPendingYesYesYesPendingYesYesYesYesYesYesPending September 2008 November 2008 September 2008 2009 October 2008 November 2008 September 2008 November 2008 January 2009

30. MEASURE “L” CONSTRUCTION Summary of Future Bond Series 1. K-8 School 3. Elementary School 4. Middle School 5. Safety 6. Reserves 7. Total 2 nd Series Description $4,650,0006,600,000 $11,250,000 Costs $31,250,00028,161,00041,124,0001,200,000 $101,735,000 Measure L $21,481,00015,076,50022,508,0001,200,000 (4,517,500) (4,517,500)$55,748,000 State $9,769,0008,434,50012,016,000 $30,219,500 A. NEXT SERIES OF BONDS B1 Dev. Fees * May include Developer Fee Credits * *

31. MEASURE “L” CONSTRUCTION Summary of Future Bond Series (cont.) C. TOTAL MEASURE “L” C. TOTAL MEASURE “L” Description Costs $222,200,000 Measure L $114,048,000$73,702,000 State $34,450,000 Other 1. Academy High 2. Total Final Series $6,600,000$6,600,000$20,900,000$20,900,000$8,300,000$8,300,000$6,000,000$6,000,000 B. FINAL SERIES OF BONDS B2