First Interim Report

1. First Interim Report December 8, 2009

2. Outline • Recap of District’s Financial Condition • Continued Qualified Certification • Review Cash Flow Profile • Grim Outlook for 2010-11 • Budget Solutions • Review Prioritized Inputs from Stakeholders • Recommendations

3. District’s Financial Position • Qualified First Interim Report • May not be able to meet next year’s and/or subsequent year’s financial obligations • Reserve down to 1.3% • $1,450,000 was used to react to State Cuts implemented in July (after contract settlement) • Reduction from 3% to 1% permitted under interim law • Restoration to 3% required by 2011-12 • Cash flow remains to be a “tight rope act” due to various State deferrals of apportionments • Jeopardized cash position if budget is not balanced • Running out of cash w/in the year defines Financial Insolvency • Deep Budget Reductions Necessary and Unavoidable

4. Budget Reductionsin 2008-09 & 09-10:$9,993,000 Summary of Two Year Problems

5. Projected Ending BalanceUnrestricted Components of Projected Ending Balance Reserve for Economic Uncertainty to be restored to 3% by 2011-12

6. Cash Flow Profile • Depleting Cash due to • State Deferrals • Severe Drop in Revenue • Expense exceeds Revenue • Erosion of Ending Balance • Use of One-time sources • Necessitates Interfund Borrowing: • OPEB $570,000 • Textbook $300,000 • Def Maint $750,000 • Child Nutr $750,000

7. 2010-11 Budget Scenario Balance of $3,700,000

8. Prioritized InputYMT 1.Close YHS-9th grade campus utilizing Option A 2. Furlough days equal to YCEA and CSEA 3. Implement 175 day school year with work schedules to be aligned 4. Continue energy management assessment and restore temps to 78° and 68° policy 5. Recovery of lost ADA/ time for our students during Minimum Days and Spring Break and improve monitoring of student absences 6. Increase CSR to maximum savings potential provided by state, i.e. 30:1 7. Research most cost efficient delivery methods for health benefits 8. Increase recycling efforts district wide to defray trash service cost 9. Renegotiate whenever possible with outside contracts/vendors 10. Eliminate district uniform service 11. Eliminate alarm monitoring service and retain local only alarm operation 12. Implement dark campuses at night district wide 13. Research software options for energy savings for technology and require shut off of all electrical devices upon completion of work schedule, i.e. computers, lights 14. Eliminate staff overtime costs for after hour activities wherever possible 15. Eliminate space heaters and charge for use of personal appliances 16. Reduce paper use, i.e. fliers, Board Highlights and use e mail to communicate whenever possible for newsletters, menus, etc. 17. Retire old appliances and if approved replace with energy efficient appliances. 18. Increase transportation fees

9. Prioritized InputCSEA • Centralize and consolidate services/depts. At the DO to cut positions • Benefits – look at equitable ways, i.e. a possible flex plan for people with double coverage • Early retirement incentives • Eliminate TOAs • CSR –go with (previous) recommendation to Board to eliminate 3rd gr. and option 2 for K, but keep non CSR classes at 24 • Across the board salary cuts (amount to be determined based on actual state budget) • Delay adoption of books, ELA materials until end of cycle • Explore 4 day work week • Block out all schools & district office on holidays • Furlough days • Stay away from eliminating positions • Technology -- energy savings sleep mode for computers, software options to automatically shut down computers • More school consolidation (in the future) • Renegotiate outside contracts/vendors

10. Prioritized InputPTA • Prioritize potential cuts based on impact to the classroom. Cuts having direct impact on CORE instructional programs, i.e. cutting CSR, absolute last resort. • Across the board salary cuts (amounts to be determined) • Reorganization and reduction in Administrative, Classified, and Certificaed Employees • Hiring Freeze • Furlough Days • Implement 175 day school year with work schedules to be aligned • Early retirement incentives • Create a more efficient organization; i.e. paperless forms/documents, B&W copies print only, (reduce) utility usage • Technology – energy savings sleep mode for computers, software options to automatically shut down computers • Reduce bussing for extra curricular programs, i.e. sports, band, etc. with waivers for lower income families • Delay adoption of books, ELA materials until end of cycle • Close 9th Grade Campus (send students to YHS or MVMS) • Consolidate Elementary Schools

11. Proposed Budget Reduction for 2010-11 Ref No. Ref No.

12. Summary • Declining Revenues & Increasing Costs • Continued State Fiscal Shortfalls • No COLA • 18.355 deficit • 20% cut to Transportation • 19.8% cut to Categorical programs • Deferrals • Increases in Utilities & Services • Step/Column Advancements • Repeal of Furlough • Enrollment Trend • H&W Premium Increase • Reserve down to 1% • Depletion of Cash to Dangerous Levels • URGENT Actions necessary to reduce the budget by $3,700,000* • Ensure adequate cash reserve to meet on-going obligations • Begin to restore 2% reserve in 2010-11 • ARRA – Federal Stimulus Money gone in 2011-12 • More State Cuts for 2010-11 Likely * Based on current assumptions. Estimate will be updated as changes to the assumptions change.

13. Recommendations • Approve Qualified First Interim Report • Approve Recommended Budget Reduction Measures and Negotiate with Associations