200607 FIRST INTERIM FINANCIAL REPORT December 12 2006

2006/07 FIRST INTERIM FINANCIAL REPORT December 12, 2006

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Agenda • Agenda Ø Purpose Ø Revenue Considerations … 2006/07 Ø Expenditure Considerations … 2006/07 Ø Major Assumptions … 2007/08 – 2008/09 Ø Multi-Year Projections … 2006/07 – 2008/09 Ø Targeted Ending Balance … 2006/07 Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 1

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Purpose • The Board Must Approve the District’s First Interim Financial Report on the Budget Status as of October 31, 2006 Ø California Education Code 42130 Requires Approval by December 15, 2006 • The Board is Also Required to Certify to the State That the District’s Projected Financial Condition is one of the Following: Ø Positive Certification. . . will be Able to Meet Financial Obligations Ø Qualified Certification … may not Meet its Financial Obligations Ø Negative Certification … will be Unable to Meet its Financial Obligations • Recommend Positive Certification Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 2

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Revenue Considerations • Actual Enrollment Declined Less Than Projected Ø Gained Back 580 Students • Received the Planned State Funded COLA of 5. 92% • Obtained Additional Equalization Aid of $1. 1 m • Unexpectedly Received Significant One-Time Mandated Cost Reimbursement Revenue of $39. 0 m Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 3

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Expenditure Considerations • • Provided for 5. 78% Salary Increase Retroactive to 7/1/06 • Made Additional Bus Replacement Deposit of $1. 5 m Using One. Time Mandated Cost Reimbursement Revenue • Set Aside Special Reserve for $30. 0 m Mandated Cost Reimbursement Revenue Achieved. 78% Mid-Year Health and Welfare Benefits Cost Savings Ø Must Anticipate Possible State Controller’s Office Audit Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 4

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Expenditure Considerations (Continued) • Subsidizing Existing Programs - Unplanned Additional Needs Ø Special Education ……………………. $5. 5 m Ø Child Development …………………. . . $2. 0 m Ø Community Day School (ALBA) ……………. . $0. 9 m • Funding Emergent Programs - New Requirements Ø School Site IT Support Teams ……………. . $1. 0 m Ø Twain Satellite at Morse Site. . . $0. 6 m Ø Arabic Program at Carver Site ……………. . $0. 6 m Unbudgeted Expenditure Growth … $10. 6 m Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 5

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Major Assumptions – 2007/08 & 2008/09 • Factored in Forecasted Enrollment Decline for Seventh (2007/08) & Eighth (2008/09) Consecutive years • Considered Projected State Funded COLA 2007/08 -2, 000 2008/09 -2, 000 +4. 7% * +2. 8% Ø Applied Fall 2006 “School Services CA” Dartboard Ø * COLA Subject to Drop to 3% - 4% Range Based on new Dept. of Commerce Data Ø * Legislative Analyst Office November 2006 Report Projects 3. 8% Ø Will Update as Appropriate in Second Interim Report Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 6

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Major Assumptions – 2007/08 & 2008/09 • Planned for Annual Health & Welfare Cost Increase 2007/08 +10% 2008/09 +10% Yes +1. 5% Ø Applied Inflation Factor to 2006/07 Actuals • Continued Funding of 2006/07 5. 78% Salary Schedule Increase • Maintained Annual Salary Schedule Step Progression Ø Other Salary Adjustment Subject to Board/Superintendent Direction ØSustained 2006/07 Existing Program Subsidies & New Program Requirements (Refer to Page 5) $10. 6 m Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 7

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Major Assumptions – 2007/08 & 2008/09 • Increased Special Education Requirement 2007/08 $5. 6 m 2008/09 $3. 6 m Yes Ø Subsidized Special Education Total Compensation • Included Previous Board Approved Actions to Transfer Expenditures for Capital Outlays, Early Retirement Payments, School Police, & Non-Capital Equipment to Other Funds • Key Take-Away: Continually Working With Operational and Instructional Staff to Understand, Assess, and Price out old Programs and new Initiatives … K – 8 Vision, Truancy Center, Custodial Services, etc. Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 8

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Multi-Year Projection ($ MILLIONS) Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 9

2006/07 FIRST INTERIM FINANCIAL REPORT General Fund – Unrestricted Targeted 2006/07 Ending Balances Our Mission is to: Accelerate gains in student performance. Provide safe, orderly & well-maintained schools. Strengthen parent, community, business & higher education support. Boost employee morale. Secure adequate funding for our schools. 10