1. San Marino Unified School District Second Interim Financial Report and Long Range Financial Projections March 11, 2008

2. Proposition 98 The Governor’s position has not changed – he continues to propose suspension of Proposition 98 The proposed suspension reduces the minimum guarantee by $4 billion from what it should be Proposition 98 provides a guarantee of funding for Education equal to approximately 40% of State revenues with adjustments for inflation This is not what voters expected when they passed Proposition 98

3. Governor’s Proposed Cuts K-12 Education Funding in 2008-09  Suspend Proposition 98 Guarantee  Revenue Limit Deficit 6.99%  Special Education Deficit 6.5%  State Categorical Programs Deficit 6.5%

4. Outcome of Special Emergency Legislative Session 2008 ABX3 4 and ABX 3 7 Deferral of $1.1 billion in advance apportionments from July to September Reduction of Proposition 98 by $507 million for 2008-09 (more to come) Recapture unallocated categorical funds (i.e. QEIA, After School Education and Safety Program) Appropriates $409 million from Public Transportation Account to Home to School Transportation No current year cuts to Revenue Limit Funding (however LACOE and SSC have expressed caution to reserve funds for other mid-year cuts that may come about.

5. Reductions to Current Year Spending  Reduced funding for Targeted Instructional Improvement Grant  Unallocated savings in Economic Impact Aid funds  Recapture Home-to-school transportation funds  Possible deficit factor for K-3 and Grade 9 Class Size Reduction programs

6. Legislative Analyst’s Alternative Budget Plan Projected State Budget Deficit $16 billion Lower than projected State tax revenues and lower revenues from tribal gaming compacts Targeted Approach to Spending Maintain core services at their current spending level (reduce K-12 Education funding to current minimum guarantee level $800 million loss vs. $4 billion), Identify reductions in each area of government (health, education, higher ed., social services, criminal justice, etc.) Balanced Approach to Budgeting Establish priorities – essential and most critical services. Analyze the revenue side of the equation for addt’l budget options Shift programs to local levels Reduction and Consolidation of K-12 Revenue Limits and State Categorical Programs Long Term Balanced Budget Plan Restructure existing debt Rather than broad based tax increases, eliminate tax credits/exemptions

7. Community Budget Summit What is most important and critical in providing schooling for our students?

8. 2008-09 Budget - Next Steps... Ongoing c ommunication with parents, teachers, bargaining units, and the community Closely monitor development of the 2008-09 State Budget including the “May Revise” Report. Meet with key State and Education leaders. Continue to monitor Student Enrollment & Attendance Develop staffing plans based on P1 (5 th month) student enrollment Meet and confer with the Budget Committee, Site Principals, Leadership, and Cabinet to review the District Budget. Develop ideas for areas of cost savings, potential additional resources, and budget reductions. Communicate, confer, and provide recommendations to the Board of Education

9. March – June – Meet and confer with the Principals, Department Managers, Budget Committee, Leadership, Cabinet and the Board of Education to assess the impact of the proposed State budget cuts in K-12 Education, identify areas of cost savings and potential budget reductions, communicate with staff, parents and the community on possible areas of reduction. April – Recommended areas of reduction and savings submitted to the Board of Education for consideration and approval. May - Incorporate adjustments to the budget based on retirements and attrition. Provide an update based on the State’s “May Revise” Report. June – Submit a Proposed Budget to the Board of Education July 1- Submit the 2008-09 Budget to Los Angeles County Tentative Timeline

10. Short and Long Term Planning The current fiscal crisis in California is a multi-year problem. The State Budget includes structural fiscal problems (i.e. funding the ongoing cost of COLA with one-time resources and borrowing) The District is developing a plan to address both the short- term (2008-09) the long-term effects of State budget reductions. We will conquer these fiscally challenging times - together!

11. Questions