1. West Contra Costa USD Presentation to the Facilities Subcommittee Bond Budget Update March 17, 2012

2. Bond Budget Update  A small group has been meeting on a (roughly) weekly basis to discuss revenues and expenditures of the bond program.  The meetings have involved various representatives of the District’s finance and facilities departments as well as certain outside consultants.  The meetings have been an effort to produce the long- discussed “meeting of the minds” between finance and facilities.  At the end of the day, what we’d like to do is to develop a common way of looking at the bond program and its revenue needs and to implement various processes that will keep the program running smoothly through time. West Contra Costa Unified School District Facilities Subcommittee | page 1

3. Specific Goals  The specific goals of the group are to develop solutions that can be used to ensure:  That total program revenues are matched to total program expenditures (or that potential gaps in funding are identified).  That the bond program cash flows out to produce reasonable balances and reserves (particularly over a defined planning horizon).  That projects are linked to revenue sources before construction begins.  That project cost updates are presented to and approved by the Board according to a defined process. West Contra Costa Unified School District Facilities Subcommittee | page 2

4. Recent Experience  To a significant degree, these goals are born out of the District’s experience with its 2005 Measure J bond program in the aftermath of the 2008 economic downturn.  An unprecedented decrease in the District’s tax base constrained the District’s bond program.  Projects were underway without well-defined costs to completion or expenditure cash-flows.  A middle-ground financing was developed to maximize proceeds within the constraints.  In retrospect, such issue proved not to be necessary from a cash flow standpoint and would have benefitted from a structure standpoint from better information concerning project costs. West Contra Costa Unified School District Facilities Subcommittee | page 3

5. Conclusions to Date  While the process is an ongoing one, the group has begun to develop some general conclusions.  That project budgets tend to increase beyond Board approved budgets and are not re-visited by the Board.  That such cost increases cause past projects to encroach on current revenues.  That such encroachments are not adequately addressed in terms of the connection of projects to funding sources nor in terms of the schedule for future projects. West Contra Costa Unified School District Facilities Subcommittee | page 4

6. Developing Issues  Some of these issues are beginning to impact the 2010 Measure D bond program.  The operating budgets for a number of projects (including projects that are currently underway) have grown to exceed Board approved budgets.  Such cost increases will require that some Series A proceeds will be needed to complete prior projects and will not be available to fund projects originally identified as Series A projects.  At the same time, the budgets for such Series A projects have grown beyond what Series A proceeds could have provided for originally.  These changes may impact the sufficiency of funding for projects scheduled to begin this summer and will certainly impact the schedule for future projects. West Contra Costa Unified School District Facilities Subcommittee | page 5

7. Current Status – Revenues  As of now, the District has $160 million in the bank, plans to issue additional bonds in early 2013, and expectations to receive state revenues based on planned projects.  $160 million cash balance as of February 29, 2012.  Bond issue scheduled for sale in early calendar 2013 (projected at $70 million at time of Series A issuance).  Receipt of state revenues in the current fiscal year may be the last received prior to 2014-15. West Contra Costa Unified School District Facilities Subcommittee | page 6

8. Current Status – Expenditures  With these revenues, the District needs to complete projects underway and take a measured approach with regard to future projects.  The District is currently closing out projects at various schools throughout the District (Dover ES, Ford ES, King ES, Helms MS, Pinole MS, El Cerrito HS, Kennedy HS, and Richmond HS).  Major projects are underway at Ohlone ES and De Anza HS.  The District must budget for ongoing costs such as technology, furniture and equipment purchases, major maintenance projects, and program operating costs.  The District’s bond budget must first provide that sufficient revenues are allocated to the above projects before moving on to those projects originally identified as Series A projects (Portola MS, Nystrom ES, LPS Richmond/Gompers, Coronado ES, and El Cerrito stadium) and others. West Contra Costa Unified School District Facilities Subcommittee | page 7

9. Next Steps  In the coming months, the group will be finalizing budget and cash flow figures, discussing alternatives in terms of project timing and bond issuance sizing, and recommending processes designed to improve bond program management in the future.  Budget and cash flow figures will be presented to an upcoming meeting of the Facilities Subcommittee.  To the extent that the cash flow suggests any funding gaps, the group will present multiple alternatives for closing such gaps and consider alternatives suggested by the Facilities Subcommittee and the Board of Education.  Many of the processes suggested will be oriented toward re- focusing formal decision-making at the Board level. West Contra Costa Unified School District Facilities Subcommittee | page 8