2007-2008 2nd Interim Financial Report

1. 2007-2008 2nd InterimFinancial Report Wednesday, March 12, 2008

2. Financial Leadership Team • Vincent Matthews – State Administrator • Leon Glaster – Chief Financial Officer • Roberta Sadler – Controller • Jason Willis – Budget Director

3. Financial Leadership Team • Sandra Anderson-Knox – Financial Services Manager • Waly Ndiaye – Financial Accountant II • Quyen Nyo – Financial Accountant II • Azeb Legesse – Financial Accountant I • Minh Co – Financial Accountant I • Michael Ezeh – Financial Accountant I • David Lewis – Financial Accountant I • Adan Hernandez – Accounting Technician, Receivables, Billing

4. Financial Leadership Team • Roxanne Dunn, Financial Services Associate II • Linda Wu, Financial Services Associate II • Katema Slocum, Financial Services Associate II • Diane O’Hara, Financial Services Associate I • Keisha Smith, Financial Services Associate I • Marla Williams, Financial Services Associate I

5. Agenda • General Fund Overview • Impact of Governor’s Budget Proposal • Multi-Year Budget Projections • Other Fund Overview • Audit Findings • Cash Flow • Debt Service

6. General Fund Overview: 2007-08

7. General Fund Overview: 2007-08 The District has a balanced Unrestricted, General Fund budget. The $655,004 net fund decrease was the result of using Fund Balance (Measure E reserves) to pay for student textbooks and consumable materials. The District is in the process of restructuring categorical spending rates because of the Governor’s proposal to take back all unspent state categorical funds at the end of this fiscal year. The District will be carrying over federal categorical funds while spending all state categorical funds.

8. General Fund: 1st Interim vs. 2nd Interim

9. General Fund: 1st Interim vs. 2nd Interim There were several changes between financial reporting periods including: Increase in beginning fund balance is due to a financial restatement; Increase in total revenue due to additional grants; Decrease in salaries was the result of a targeted hiring freeze; Increase in books was for textbook and consumable materials purchase using Measure E fund balance; Increase in services is due to rising utility costs and additional contracted services; and Increase in other outgo is due to special education encroachment increases.

10. Impact of Governor’s Budget: 2008-09 Under the Governor’s budget proposal for the coming fiscal year education funding would be cut by an estimated $4.8 billion. The impact on OUSD for the 2008-09 fiscal year is approximately a $23 million reduction in overall revenues.

11. Impact of Governor’s Budget: 2008-09 OUSD has taken steps to ensure these budget cuts are farthest away from the classroom: Reducing Central Administration costs by at least 10%; Combining typical attrition with a staff restructuring plan; Continuing to implement a targeted hiring freeze; Reducing the absolute site funding allocations while increasing the portion that goes to schools; and Making a one-time withdrawal from the “designated for uncertainty” reserve while maintaining the 2% fund balance required by state law.

12. Impact of Governor’s Budget General Fund Budget Reductions

13. Multi-Year Budget Projections:Unrestricted, General Fund

14. Multi-Year Budget Projections:Unrestricted, General Fund 2007-08: Structural deficit eliminated. 2008-09: Beginning fund balance is reduced by $2.7 million. These one-time funds were used to mitigate loss of revenue from Governor’s budget proposal 2009-10: The budget is balance. Please note that the budget does not include potential salary increases.

15. OUSD Enrollment Trends OUSD Enrollment Trends

16. 2nd Interim: Other Fund Overview

17. 2nd Interim: Other Fund Overview (cont.)

18. Audit Findings Update

19. Audit Findings Update 2002-03: Audit is complete. $300,000 of the $911,856 audit findings may be retained by the District to implement FCMAT recommendations as specified in the official EAAP appeal decision. Must be paid to the state Department of Finance this fiscal year. 2003-04: Audit is complete. $887,029 must be paid to the state Department of Finance this fiscal year. (The CDE has strongly recommended that we use the state drawdown loan to satisfy this debt.) 2004-05: District is in the process of resolving findings. We are encouraged by the results of our initial negotiations. 2005-06; 2006-07: To Be Determined

20. Cash Flow Analysis

21. Cash Flow Analysis (cont.)

22. OUSD Outstanding Bonds General Obligation Bonds are approved by voters and repaid by taxpayers. District still has $305 million of bonds authorized but not yet issued. Taxpayer currently paying $80.10 per $100,000 of assessed value each year for bond repayment.

23. Oakland USD Outstanding Lease Obligations School Districts can only enter into long term DEBT if voter approved. However, districts can enter into long term LEASES. Certificates of Participation, or “COPs” are based on lease agreements. COPs are repaid by the District (General Fund).

24. OUSD Outstanding State Loan Original State Loan for $65 Million converted to “Lease Revenue Bonds” by the State. Annual repayment of $3,890,532 is automatically deducted. Additional draw-down of $35 Million set-aside for specific purposes and to repay itself. (SEE NEXT SLIDE)

25. $35 Million and Fund 17 Draw-down of remaining $35 million of State Loan in June/July 2006. State has approved expenditures for IFAS/Technology Upgrades of $7,000,000. State has also approved expenditures for audit findings for 2002-03 and 2003-04 totaling $1,798,885. Remaining balance is to be applied to repayment. Funds only sufficient to make payments through 2019. District will still need to repay approximately $10.5 million of principal.

26. Ratings The District is rated by Standard & Poor’s Rating Agency and Moody’s Investors Service. Standard and Poor’s Rating: BBB+ Stable Outlook Moody’s Investors Rating: Baa2 Stable Outlook