Business Manager and CFO Roundtable Discussion January 21, 2016 Hank Johnson Consultant

STIFEL Ranked #1 Nationally in School Finance – K-12* PUBLIC FINANCE Austin Houston San Antonio 9600 Great Hills Trail, Suite 150W Austin, TX | 700 Louisiana Street, Suite 2350 Houston, TX | 70 Northeast Loop 410, Suite 295 San Antonio, TX *2015 Calendar ranking according to Securities Data Corporation

 Stifel continues to rank #1 underwriter nationally in terms of number of negotiated transactions  In 2015, Stifel ranked 6 th nationally in terms of negotiated par amount, up from 8 th in 2014 *Source: Thomson Reuters; SDC (True Economics to Bookrunner) National, Negotiated Transactions Stifel Financial Overview National Underwriter Rankings 3 Top-ranked national underwriter

K-12 Experience Core of Stifel 4 Stifel ranked #1 Nationally in School Finance – K-12 Education*  School Financing /Education is Stifel’s key focus and specialty of our Public Finance business; 49% of Stifel’s national negotiated public finance experience was in K-12 education (by number of issues)  Stifel continues to rank #1 nationally in K-12 education* having underwritten 398 transactions with a collective par amount of $7.7 billion in 2015  Stifel is the Texas leader in variable rate school financings. Stifel Texas senior bankers and lead underwriter worked and executed the first transaction in 2001 and have completed over $2.3 billion to date *2015 Calendar ranking for negotiated issues according to Securities Data Corporation both by par amount and by number of issues Stifel Public Finance Experience Negotiated Issues by Number of Issues

Texas K-12 Experience Stifel is Committed to K-12 Education in Texas 5 (1)Source: Securities Data Corporation. Full credit to each manager. (2)Source: Securities Data Corporation. Full credit to book runner (equal if joint)  Stifel has underwritten 122 Texas K-12 issues since 2008 with a collective par amount of $5.6 billion  Senior-managed 46 negotiated Texas K-12 financings totaling over $1.21 billion in par amount  Co-managed 76 negotiated Texas K-12 financings totaling over $4.39 billion in par amount  In 2015, Stifel underwrote 51 Texas K-12 transactions totaling $2.51 billion in par amount 1 ($417 million as senior manager 2 ), and in 2014, 28 Texas K-12 transactions totaling $1.03 billion in par amount 1 ($218 million as senior manager 2 )  Added two senior bankers covering Texas school districts  In two years, Stifel has become the 7 th ranked underwriter of negotiated Texas K-12 transactions by number of issues and the 8 th ranked by par 1 # 19 #7#7 # 26 #8#8

Agenda Introductions Upcoming Events Updates on recent TEA Correspondence Gear-Up for Budget Current News and Updates/Reminders Small Group Discussions Discussion for Future Meetings Questions and Comments

Upcoming Events May 5 th - Public Funds Investment Training The ESC Region 11 Business Center is hosting a Public Funds Investment Training presented by guest speaker Patrick Shinkle, Associate Director for the Center for Public Management at the University of North Texas. CPAs will receive 5 hours of CPE credit. Registration link will open soon

Upcoming Events Maintenance of Effort (MOE) Training TEA will be providing training on Maintenance of Effort (MOE) in February. Two sessions: February 9, 2016, from 10:00–11:00 a.m. February 11, 2016, from 1:30–2:30 p.m. Provide insight into the process TEA uses to determine a LEA’s compliance with the MOE requirement. The training will be provided through a Texas Education Telecommunications Network (TETN) presentation.

Recent TEA Correspondence: School Report Card The school report cards are available Report card combines: accountability ratings, data from the Texas Academic Performance Reports (TAPR), and financial information ( ) Intended specifically to inform parents and guardians about a school’s individual characteristics and its academic performance

Recent TEA Correspondence: IFA and EDA Updated IFA and EDA amounts are available for Review - Summaries of Finances (SOFs) for the 2015–2016 school year Payments for these programs were planned for November 15. Property Value Exemption Hold Harmless the increase in homestead exemption is not reflected in the current numbers. Revised property values to be incorporated in January If eligible for state EDA of IFA assistance under the hold-harmless provisions, Payments will be made through the EDA payment ledger After incorporating the additional homestead exemption as supplemental payments

Recent TEA Correspondence: Charter Schools and Pension Related Disclosures The TEA letter dated September 30, 2015 stated Charter schools did not have to follow GASB 68 But that there were disclosures that needed to be included in the annual financial report. TEA correspondence dated November 6, 2015 Provides reporting guidance to Subchapter D Charter Schools only. Subchapter C and E charters are required to follow GASB 68

Recent TEA Correspondence: House Bill 2610 Updated House Bill 2610 Frequently Asked Questions Updated 2015–2016 Student Attendance Accounting Handbook (SAAH) Change Document Original posting of the proposed 2015–2016 SAAH Draft Strikes language requiring 180 days of instruction Replacing with language requiring districts to provide at least 75,600 minutes Adds language that allows school districts to add minutes as necessary to compensate for minutes of instruction lost due to school closures caused by disaster, flood, extreme weather conditions, fuel curtailment, or another calamity.

Recent TEA Correspondence: Maintenance of Effort Revision to IDEA-B LEA Maintenance of Effort (MOE) Guidance Handbook: TEA released an update to the MOE guidance in December Handbook only Serves as a waiver till administrative code is updated Revisions: changes the Summary of Finance date from “September 10” to “First Near Final.” second revision removes wording that TEA will automatically determine the decrease in enrollment of children with disabilities if there is a decline in special education enrollment, districts are now required to provide details of expenditure reductions if there is a decline in enrollment of children with disabilities. Revisions to the Texas Administrative Code expected in the spring of 2016.

Recent TEA Correspondence: Carryover Funds – Federal Grants TEA published the amount of federal carryover funds for each individual LEA Still available for expenditure, under the rules applicable to the original federal grant Amounts are available through TEAL in the GFFC Reports and Data Collections Excess Carryover As Risk Indicator Under Federal guidance excess carryover can indicate poor planning, poor program implementation, poor fiscal management, or poor performance outcomes of federal grants. TEA considers the following carryover amounts excessive: 50 percent or more, for Individuals with Disabilities Education Act, Part B (IDEA-B) formula grant funds 25 percent or more, for grants authorized under the No Child Left Behind Act of 2001 (NCLB) and other IDEA grant funds

Recent TEA Correspondence: Changes to Shared Services Arrangements Notification of Changes to Special Education Shared Services Arrangement (SSA) Membership No later than February 1, 2016 (no exceptions or extensions) LEA’s, must notify TEA if: participating in a new special education SSA, or there is a change in membership configuration of an existing special education SSA. If no changes are planned for your special education SSA then a notification is not required.

Gear-Up for Budget Projections: results Students Revenue Expenditures Fund Balance

Gear-Up for Budget Projections: Students Enrollment Attendance Weighted Average Daily Attendance Recalibrate or adjust trends

Gear-Up for Budget Projections: Revenue Tax Collections State Aid Federal Funding ASATR Recapture

Gear-Up for Budget Projections: Expenditures Payroll Non-Payroll Recapture

Gear-Up for Budget Projections: Fund Balance Projected revenue Projected expenditures Net results Beginning balance Projected ending balance

Gear-Up for Budget Projections: Fund Balance (new) Hold harmless for additional homestead exemption Summary of Finance updated on January 8, 2016

Gear-Up for Budget Projections: Hold Harmless Summary of Finance updated on January 8, 2016 Program hold harmless included in Funding Elements Report - Other Programs line 44 Facilities hold harmless is listed line 52 of the Funding Elements report

Gear-Up for Budget Hold Harmless Calculations - Program Program hold harmless included in Funding Elements - Other Programs line 44 Amount can be found in Other Programs Report line 2 Supporting Calculations

Gear-Up for Budget Hold Harmless Calculations - Facilities Facilities hold harmless is listed line 52 of the Funding Elements report Supporting calculations

Gear-Up for Budget Estimates: Student Student enrollment - growing or declining? New program? Trend changes/adjustments New homes Aging out neighborhoods Re-greening Cohort survival

Gear-Up for Budget Estimates: Revenue Local Taxes Taxable values Tax Rate State Aid FSP Equalization Other Programs ASATR Per Capita TRS on be-half Federal Programs Other Revenue

Gear-Up for Budget Estimates: Expenditures Payroll Staffing Rates of Pay Non - Payroll Operating Capital Outlay Debt Payments

Gear-Up for Budget Budget Process Budget Calendar with key ingredients Well defined timeline with specific dates Staffing Student growth Program changes (Master Schedule – secondary) Date for budget adoption Date of tax rate adoption

Current News Mike Morath took office as Commissioner of Education on January 4, 2016 Commissioner Morath was appointed on Dec. 14, 2015 by Governor Abbott He previously served on the Dallas Independent School District (DISD) board of trustees Among his priorities are: supporting educators transitioning the state’s accountability system to an A-F framework improving the overall efficiency of TEA. Morath’s appointment is subject to Senate confirmation during the next legislative session in 2017.

Current News Texas' Teacher Equity Plan gets federal approval federally (ESEA) required state plan to, ensure equitable access to excellent educators approved by the U.S. Department of Education designed to ensure all students have equal access to a high-quality education. The plan focuses on five key strategies: Develop guidance and tools for districts to create and implement local equity plans; Facilitate targeted training and professional development for teachers, including teacher candidates; Explore opportunities for reward, recognition, and career advancement for teachers; Facilitate campus leader training and support; and Encourage training of and support for mentors of novice teachers.

Other News Texas Economy State revenues recently reduced due to drop in oil and gas prices Oil prices dropped even more since the last state revenue reduction Taxable value of minerals in your District? Will the decline in state revenue impact the outcome of a legislative resolve to a favorable court decision? Yes? No?

Small Group Discussion Budget Budget Calendar Revenue projections Student projections Salary Increases Staffing Changes EDGAR Implementation

Discussion for Future Meetings Future Topics Dates for Future Meetings

Questions and Comments