Unaudited Actuals September 12, 2016

Agenda 2  Basic Aid vs. State Funded Overview  Funding Factor Components  General Fund Revenue and Expense Categories  General Fund Activity Summary  Change in Fund Balance Reconciliation – Unrestricted General Fund  General Fund Ending Fund Balance Components  Activity & Balances (All Funds)  Next Steps  Questions

Basic Aid (HSD) vs State Funded (ESD) 3  District is entitled to a calculated Entitlement  Comprised of property taxes and State Aid  If Property taxes fill the bucket and overflow, the district keeps the overflow $$ and only receives a minimum amount of State Aid  District is entitled to a calculated Entitlement  Comprised of property taxes and State Aid  When property taxes don’t fill the bucket, the State makes up the shortfall with State Aid

Basic Aid Districts 4  Guaranteed same state funding per ADA as received in  Various State categorical funds under LCFF lose their restrictions  No strings attached  Some basic aid districts will become state funded in the future  Result of additional state funding  Result of LCFF formula  Result of growth in enrollment  The District will get whichever funding mechanism provides more dollars; there is no ‘penalty’ for not being basic aid.

 Enacted State Budget established uniform target funding rates by grade span toward which Districts will transition 5 Local Control Funding Formula Transition Percentage Revenue Limit 12.00% Base Sup & Con LCFF Sup & Con Base State Categoricals LCFF Sup & Con Base LCFF Sup & Con Base LCFF Sup & Con Base LCFF Sup & Con Base LCFF Sup & Con Base LCFF Sup & Con Base 31.16% 52.56% 54.18% 72.99% 40.36% 73.98% Fully Funded LCFF Sup & Con Base

Components: Funding Factors  Average Daily Attendance (ADA)  ESD - Actual ADA for was 4612, which was an increase of 130 ADA from  HSD - Actual ADA for was 2233, which was an increase of 78 ADA from  Due to the fact that the HSD is community funded, the increase in ADA from does not significantly impact operating revenues, but does significantly increase operating expenditures. 6

Property Taxes > LCFF Transition = Basic Aid Status for HSD Property Tax Revenue$ 23,000,000 Less: LCFF Transition Revenue $ 19,268,000 Excess Property Taxes $ 3,732,000 7 SRHSD would be entitled to $21.9 million if LCFF were fully funded in Based on current assumptions and 4% annual property tax growth, SRHSD would be entitled to approximately $25.5 million by under the LCFF Amount is $2.2 million less than projected property taxes that year; thus, more than likely SRHSD will remain designated as a “Basic Aid” District in the foreseeable future

Components: Other Funding Factors  Lottery  Unrestricted – funded at $146 per ADA  Restricted – funded at $48 per ADA  Mandated Cost Block Grant  Grades K-8 at $28 per ADA  Grades 9-12 at $56 per ADA  One-Time Mandated Cost Entitlement  $529 per ADA  Note, one-time Mandated Cost revenue of $214 for the current year, with zero budgeted going forward 8

Components of General Fund Revenue  Elementary SD :  High School District: 9

General Fund Revenue Budget General Purpose – Property taxes, basic state aide, and education protection account funds Federal – District must follow specific grant guidelines (Title I, Title II, etc.) Other State – State funds not part of State Aid (Lottery, Special Education, Mandate etc.) Local – Funds received from local sources (Parcel Tax, Foundation support, PTSA support, Interest, etc.) General Purpose – Property taxes, basic state aide, and education protection account funds Federal – District must follow specific grant guidelines (Title I, Title II, etc.) Other State – State funds not part of State Aid (Lottery, Special Education, Mandate etc.) Local – Funds received from local sources (Parcel Tax, Foundation support, PTSA support, Interest, etc.) 10

Components: EPA  Education Protection Account (EPA)  Amount must be utilized for instructional purposes 11

General Fund Expenditures (ESD) 12  Reflects General Fund only (no Cafeteria, Bonds, Child Development)  While employee costs are 72%, remember that approx half of the 5000’s (Other Services) reflect other agency’s employee costs (SELPA, NPS/NPA)

General Fund Expenditures (HSD) 13  Reflects General Fund only (no Cafeteria, Bonds, Adult Ed)  While employee costs are 78%, remember that approx half of the 5000’s (Other Services) reflect other agency’s employee costs (SELPA, NPS/NPA)

Contributions and Transfers (ESD) 14  Additional SELPA revenue at year end, salary savings and reduced contribution to Routine Maintenance

Contributions and Transfers HSD 15  Savings in ROP, Library and Routine Maintenance

Summary (ESD General Fund) 16

Summary (HSD General Fund) 17

Change in Fund Balance ESD Unrestricted General Fund Reconciliation Components 18 Components ChangedAmount Transfer to Def Maint, high LCFF estimates$ (614,700) Other additional sources$ 71,100 Salary & benefit savings (unfilled positions, unspent stipends & extra duty, actual STRS, PERS and H&W costs under budget) $ 1,100,000 Unspent supplies (primarily software, textbooks, computers)$ 938,000 Unspent utility budget$ 55,000 Unspent travel & conferences, communications, and other services$ 277,000 Additional indirect costs charged to programs (primarily food services)$ 87,000 Less contributions than projected to special education and other programs$ 653,000 Total$ 2,476,000

Change in Fund Balance HSD Unrestricted General Fund Reconciliation Components 19 Components ChangedAmount Additional property taxes, net of transferring RDA and Def Maint revenues$ (85,000) Other additional sources$ (25,000) Salary & benefit savings (unfilled positions, unspent stipends & extra duty, actual STRS, PERS and H&W costs under budget) $ 566,500 Unspent supplies$ 323,000 Unspent utility budget$ 68,000 Unspent travel & conferences, communications, and other services$ 260,000 Additional capital outlay and less indirect cost recovery$ (12,500) Less contributions than projected to ROP, Library, and Routine Maint$ 163,000 Total$ 1,257,000

Procedures to Help Minimize Variances  Further assist sites and departments to maximize use of funds  Adjust for extraordinary items and differing trends at Second Interim (salary and benefit savings, technology needs, ADA and property tax changes)  Create contra accounts to help estimate actual activity without adjusting actual site or department accounts  Important to not alter site and/or department budgets when funds are allowed to be carried over to subsequent year  Tighter estimates of actual spending will be critical, especially in the HSD, as budget reductions become necessary 20

Components of the Ending Fund Balance (ESD) 21  Various assignments of carryover funds, legally restricted reserves, EPA, a contingency to provide cash flow protection, and a minimal reserve of 5% total, per Board Policy

Components of the Ending Fund Balance (HSD) 22  Various assignments of carryover funds, legally restricted reserves, a contingency to provide cash flow protection, and, per Board Policy, an adequate basic aid reserve to protect against property tax swings

Ending Fund Balances All Funds (ESD) 23

Ending Fund Balances All Funds (HSD) 24

Next Steps 25  Staff has finished closing the books  The auditors will audit and express an opinion  “In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District as of June 30, 2016…”  This is the opinion we want to see!  Begin working with the auditors to get them information  Scheduled to come finish audit during October  We are expecting a large restatement of fixed assets to bring audit and books into balance with online asset tracking system  Financial Statements are the responsibility of management  The numbers belong to the District; the opinion to the auditors

Questions 26