2020-12-15 PPS School Board Work Session

From SunshinePPS Wiki
District Portland Public Schools
Date 2020-12-15
Time 16:30:00
Venue Virtual/Online
Meeting Type work
Directors Present missing


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Notices/Agendas

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Transcripts

Event 1: PPS Board of Education Work Session 12/15/2020

00h 00m 00s
good evening and welcome tonight's board work session on um our budget goals and priorities this meeting is being audio streamed live on channel 28 and will be replayed throughout the next two weeks please check the district website for replay times this meeting is also being audio streamed live on our pps tv services website um so tonight the board will be looking at some budget scenarios and um superintendent guerrero would you like to start us off i'll start us off by turning the mic over to deputy superintendent claire hurts who's gonna the focus of today's topic is to talk about our five-year financial forecast okay and so every time that we want to talk about this financial forecast the governor makes another announcement about resources so again we will continue to refine as new information emerges just as we always do so i just wanted to highlight that for folks that while we're looking at this today um the governor has announced a special session on the 21st and um but we're not bringing this to an action item uh until january when we return after winter break so that will probably all work out all right so i want to thank you for um continuing to work with us to refine this forecast and um i couldn't have done it without our director budget um nicole bassin who joins in with me tonight and so we are going to run through some of the changes since the last time we presented this publicly and then we will um give an opportunity well we're going to ask um chair lowry to run through a couple of questions at the end one is what are your questions after we've gone through this and the second will be what would you recommend we're showing originally we had four scenarios you're going to have one through four again but two has an alternate and then you'll see a staff recommendation so we'll run you through that and then we'll we'd like to hear from you what you would recommend okay next slide please so some of the things um that just to highlight is that we're looking at a 9.1 billion dollar state school fund for the next biennium for k-12 education and that overall there is an average of six percent per savings for the biennium across the state and that's important because um pers uh portland is not seeing quite as much they're one percent because we've had historically low pers rates due to our bonded debt um lowering our rates for the last 15 plus years we also are recognizing a 50 50 split for the state school fund from um year one and year two um from the prior biennium running forward as they project current service level at the state level that makes 163 million dollar difference statewide so that does have an impact on us having a hard time maintaining current service level in the um when we are starting at the second year of the biennium rather than a 50 50 split and then also reminding you that even before covid we had a predicted through the psu um population center uh that we would have a slight enrollment decline across the district so that we um while this year we've had a drop of our primary years in due to the pandemic we're also as we're recovering over this five-year period you'll note that even when the cobid pandemic is finished our um [Music] our student enrollment is predicted to decline now again we will update probably post pandemic to see what those numbers will be because an event of this type could certainly impact enrollment numbers over time next slide please so here are the revenue assumptions and in this slide i would show that we have also as requested added two years of history to compare to so you'll see in 1819 and 1920 that we have comparison years so we can see that our state school fund growth um for the last three years
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have been over um over four percent in the next biennium due to that per savings we're expecting a little bit over one percent um growth in state school fund and then we would return back to what um once were posed pandemic we would expect to get back to a more regular cadence and um again with the trigger of the state um the uh economic forecast from the state economist and that we would expect in 2324 to have um somewhat of a recovery and employment and thus um again returning to um a higher um resource collection throughout the state and then with our hopes and of continuing in our predictions that it would be returned to more of a four percent cadence of um state school fund growth on an annual basis the um you can see in the admw that's our enrollment with the extra weightings you can see that in the last three years that there is we're using what we would call the hold harmless extended admw because that would be years where we're showing decline in enrollment due to um lower you know across the district and that there's a stair-stepping with the state that as you have a lower enrollment you're held harmless for one year before they lower your revenue so that gives you time to lower your service level to match the enrollment now we have not uh projected a significant decrease in um expenditures when we if we lose 450 or 800 students in a year when that's over 80 to 100 locations over 12 grade levels there's just a one or two student here and there it's hard to predict exactly how much staffing would change and most likely from one year to the next there'd be little staffing need changes when a class size is going from 27 to 26 or another one's going from 30 to 29. so just um so we have not lowered expenditures in that area um also on the local you'll see that we have both percentages and dollars in this chart which was requested from last time so you can see that for the local option levy as well you will note that the um the local option levy has um a growth that um in in a little while that while historically we've had some higher percentages recently they've been lower percentages and so that's what we're projecting forward and then also that our sia has gone up to 31 million so nicole please speak up if i'm neglecting to um um point out something that we had intended to share with the board okay claire just a really quick uh clarifying question i'm sorry i think you might have said this and i missed it but in the state school fund um um for uh pps you know we're going from 513 million to 507 million but but there's an overall growth of 0.56 percent is is that doing going back to that split and the pers issues or is there something else going on there um 0.56 over each year to is because of the pers rate because we're not realizing the savings when they calculate current service level they're counting savings in every you know across the whole state as an average um but because we realize savings for 15 plus years we're not getting those savings now so um it puts us in a dilemma in terms of um resources available to us right so just for the public this is this is an important point not to lose is that even though the state school fund is is growing pps is actually going to see a reduction as a result of those assumptions is that accurate that's correct okay well the current service level it's it's not really a reduction because it's still an increase in revenue but it is not enough to cover our current service level because we're not realizing the savings on the expenditure side and essentially because our population is declining slightly while the rest of the state is growing that would mean we get a smaller piece of the pie of the state school fund that's correct next slide please so here are expenditure assumptions again we've added dollars as well as percentages in the history and you can see that um in terms of salaries you can see a percentage increase over time
00h 10m 00s
um based on um contractual obligations as well as anticipated um in the future and then looking at our pers rate you can see that in 1819 we had 2.82 while other districts might have had um in you know a double-digit number and even into the 20 and the 20 range um and then we've gone um fluctuated a little and this is based on also our pers bonded debt to refinance our um pers costs and um so you can see that we're going from 4.68 down to 4.11 and so that is about a half a percent change rather than the 6 average across the state um payroll costs you can see their percentage there across um historically and in the future and then i would highlight the health increase where we had some in 1819 we had buy down in rates lower rates in our health insurance in 1920 we were not we did not buy down and we also had some higher claims which made a higher percentage and then you can see we're anticipating about a five percent across across the future based on historical trending our charter school rate is based specifically on what our state school fund rates you can see when the state school fund goes up that same percentage goes up for our charter schools and then um nicole would you describe the two um sia dollar amounts at the bottom of this chart please sure um the biggest piece of this um from the last time we chatted was the the economists were forecasting roughly around 750 million that's bumped up a little bit so that we'll actually see closer to 780 million over the biennium which um does equate so current allocations 150 million for this year and we see 12.4 million of that so we will have an increase in our sia funding in the next biennium in it we should see around 31 million dollars a year so in the current year we had moved some of the sia investments from um when they reduced the funding over to the general fund for this year so the assumption uh moving forward in the forecast is that in uh next year we'll move the original amount which was 9.8 million that we're funding this year in general fund back over to the sia allocation and then we do have additional investments that we're making within our general fund that are part of our strategies uh that align with the sia funding so that additional 7.7 would be the additional funding we have available to move those strategies over into the sia funds and we had originally identified those investments to be um supported by sia it's just that the funding came in lower and the general fund came in higher so we ended up having to move them but we're putting them back from from the to the original intent in our budgeting process next slide please so as these were some variables the board had asked us to share and so we show the value of a local option value of one percent increase is about a million dollars a year and then we are forecasting three percent um that's our most recent experience um and then the five percent is probably if you trended it historically um that would be where it would end up on an annual basis and then if you just did a average over all the years then it comes in much higher but it's not something that is of recent history in in the local option but we wanted to share those with you and if we were looking to save one percent of um salary savings across all employees that would be about three and a half million um in in year one and as you go forward um and then the state school fund um admw increase pre-covered because we in our projection we said half of our students would come back in the next year but if they all came back um and we went back to what our enrollment was expected to be that would be an additional 4 million next slide please so some of you had asked for uh numbers and this is the um simple roll-up of we started at with 2021 we started with 64.4 million in our beginning fund balance we're
00h 15m 00s
anticipating revenue of 678 million in expenditures of 679 million um with you know a variance of a little less than a million and our ending fund balance would be at 63.6 million now that projection there that we have changes every minute of every day so um just just to give you a sense of what we anticipate but know that each quarter we're giving you an update on what those numbers um are currently so we'll continue to update those for you on a quarterly basis so then you take that 63.6 million and you carry that forward to the 2122 year and that becomes your beginning fund balance and i want you to pay attention to the budget shortfall line and 21 22. so when we look at anticipated revenue and anticipated expenditures we have a shortfall of about 30 million in 2122 and that carries forward um you can see how much that shortfall would be over time for each year um still 30 million and 22.23 now we're showing as um if we were not to make any reductions we would run out of fund balance basically at the end of 2223 and then in 2324 we would be in a deficit mode so that's just to give you a sense of how long our fund balance would last it's certainly not a recommendation of this staff of this financial team to do anything of the sort but it just to give you a sense of how long our fund balance would last next side pete please this is a goal that was set formally in policy and we've kept the same standards from going from uh up building our fund balance up to ten percent at one percent per year and uh showing that uh we're slated to end the year at six percent this year and carrying forward to 24.25 reaching 10 percent we are ahead of that and we have been for the last several years with a realizing um savings during the year um certainly last year we made some significant savings and we've gotten up to the nine percent fund balance that's also to help us get through um these uh pandemic years in recession next slide please so here is um the scenarios that we have presented to you now i'm going to ask nicole to run through this first one the um we have laid it out a little bit differently um if you look at the bottom two lines you can see what the fund balance is each year and then the projected fund balance percentage-wise each year and so i'm gonna with that turn that over to nicole sure so you can see at the the first row where it says um well the first row we added the years so that would make it much easier to read but the next one actually has the budget shortfall so that aligns with sort of the summary from up above for each of the years the next one will tell you information on the prior year identified reductions so in the forecast the assumption is that those reductions that we identified to balance the budget in the previous year carry through in all of the years so the next row talks about the fund balance that we would use in each scenario to help balance the budget so it's important to note that in each of the scenarios we are using a portion of fund balance it's just uh the only variance is how much we use in each of the years so we have uh the first subtotal which is the annual reductions that are needed at the high level those are the big ones the 20.7 million in next year the sia funds available is that taking into account of moving those uh original investments that were planned out of sia over back into the available resources so we have a revised shortfall of what we would need to balance the general fund budget in each of the scenarios so you can kind of track that along and then as claire pointed out you have the fund balance for each of those years and the percent of that as a whole so you can kind of get a feel for what each scenario would leave us so revised shortfall if you look at the totals column in that scenario we need over the five year window 18.3 million to balance the budget and then we would be left with 30 million 30.5 million as our fund balance which is four percent of our general fund so those are kind of the high pieces and there is a summary uh area as well that will kind of highlight those i don't know if we want to walk through next slide please and in your report you will notice there's an analysis paragraph on each scenario
00h 20m 00s
and so the next one is very similar in in terms of layout and what i would highlight is this one it starts with our nine percent uses two percent in the first year um and then grows back up to the eight nine and ten percent by 2425 it would come at a cost of 26.9 million reductions over five years and i would draw to your attention that the 17.7 reduction in million in 2223 is something that we would want to try to smooth out better with a possible different scenario next slide please nicole add anything at any point in time please okay and here this one is a little bit this is the revised scenario two where we go down to seven percent in the first year and stay at seven percent in the second year and then continue to grow and um back up to the 10 and you can see that that would use 34 million and it would require 34 million in reductions but it does smooth out the re reductions over smoother than the prior scenario to and it does get us back to a 10 fund balance at the end um can i just mention um in this memo on page six um it says that the board has established a goal in 2017 to reach a 10 percent general fund balance by 2025. um so in in the existing policy it no longer has a specific date by which the board um sort of mandates reaching a 10 reserve um and we we had a date in 2016 there was a date and then we we revised this policy in 2019 precisely to give more flexibility in the use of reserves in the event of revenue shortfalls so i i think it's important to remember that um we are not necessarily we have not mandated for ourselves that we must achieve a 10 um fund balance by 2025. correct um and the purpose of this conversation of having a five year forecast is to make sure we're having that conversation with our board about what the goals are for the fund balance and certainly um while this is the first time we've done that with the board in in our recent memory um that's something that we'll be returning each fall to give an updated projection and ask you to make those decisions about uh setting a goal on fund balance as we work through the budget process in the spring so that the intent is to finish this work in december i know we're creeping a little bit past winter break which is fine in order to prep us for our january through april may budget process next slide please and on this one it's maintaining a seven percent fund balance as an option and you can see that it would again be a 26 million dollar reduction and it does smooth it out um better than scenario the original scenario two and um it does um end with a seven percent fund balance and the next scenario please and this one is um starting at nine percent and um uh maintaining an eight percent fund balance and would um equate to another also 26 million in reductions and it does um have a larger amount up front and then you can see that in the remaining years the amount is much lower and [Music] so it is it allows us to keep our maintain our fund balance and also keep a very similar amount of reductions over time having um that pers correction um in the funding formula there's um i think the staff has an interest in seeing us uh correct our service level
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to match up to the funding level that is now been brought forward is current service level from from the um state school fund calculation next slide please so here are some unknowns right so we're going to make our best estimate and the board's going to make a recommendation and then we're going to do our budgeting but these are things that we're still um need to consider are that could impact this decision-making process one is that um in um the work that we need to do going forward so the governor is holding a special session next week we don't know what that might hold for us um in k-12 but we certainly are going to be listening carefully and we have the co-chairs budget generally comes out after the next economic forecast in and towards the middle to end of february and then we have um a k-12 advocacy groups um asking for a 9.5 billion for state school fund and that would be an additional 31 million for the biennium for pps and we also have the needs of our you know our students that we've lost quality education time with their teachers and we in terms of instruction and we just need some acceleration we're not sure what those will be and how much those will cost yet but we need to recognize that that's sitting before us as we recover from this pandemic and um next slide please so the staff is recommending scenario four and the um reason we are doing that is because it would maintain an eight percent fund balance in the end and it does take the reduction sooner so that it means that we have smaller reductions in the remaining years and it tends to snowball when you don't take the reduction up front into snowballs into larger reductions in the following years so that's our kind of our mindset and if you bring the next slide up and of course we're going to listen to it the board has to think about all of this just wanted to provide a summary of all the scenarios i know it's a lot of numbers on the page you can see the staff recommendation on the bottom and um what we've brought forward to you is at the end of each year what the fund balance dollar-wise would be what percentage-wise it would be and the amount that would need to be reduced each year by each scenario so it's an easy way to see all of it at once and um so we're recommending um that may start you know using some in the first year and then if you look in uh we'd have 13 million in reduction in 2122 and then it goes down to four and pretty even and three and six for the remaining years so when we look at having to reduce 26 million in three of the scenarios it's the same dollar amount but when you look at the difference of what the fund balance is and also the amount of reductions that you have to make each year that's how we made our decision on recommending this scenario with that i'll move to the next line and at this point we want to turn it over to our board chair and ask we want to make sure we get questions answered from the board and then also are wanting to hear from our board members what they're seeing in the scenarios and what they would recommend um for the budget if you know what goal to set for the budget and and why so let's can we go ahead and leave that slide up so that we can have the question well uh let's actually um see one another for this part and then we'll go back for the second question to the slide um do you all think we need to go in order with questions or do you think we should just popcorn it board members thumbs up for order thumb sideway for popcorn all right popcorn great um maybe it looks like you have a question i know i do amy go ahead go ahead and leave with your question i was i was going to just say you know i'm still wrestling with this idea that in scenario four the recommended one we would have cuts the first year when we just talked about learning loss and so it feels like year one is when we should cut nothing because we're gonna have kids back in classrooms and we're gonna need to sort of like do some additional work so i just just wondering about how that sort of
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resolves in knowing we actually might need to invest more in year one to help get students back into school culture back into the flow of academics so one of the things that are still being discussed at both the state and the federal level is additional resources to respond to the to covet in the pandemic so that is one of the reasons that we're at this point staying with uh scenario four and uh as a recommendation because uh it does um it i do hear you that the need is great um and i also hear a lot of advocacy both at the state level and at this federal level for k-12 education superintendent guru i think that's right uh deputy hurts i i think you heard claire say at the outset that this is an iterative process uh we're hopeful that the advocacy and a change of in administration uh does prioritize public ed and k-12 and that that trickles down through the states and oregon and to us eventually so these these are still a little bit of moving numbers but on principle when you see the notion of retaining that fund balance percentage gives us a steady trajectory which hopefully will only improve in the coming weeks and months okay so we're kind of hoping that the federal government swoops in and does the right thing okay so okay well and i would say there is also um that you don't have to pick one thing you could say it would be this scenario unless this happens or it would be that scenario if this happens right so you guys can have caveats and ranges right well the other the other thing with regard to that claire is that we have we have variables on both sides so i think what you're asking us to do tonight is outline a general approach and generally speaking um i can get on board with this recommendation because it decreases the the aggregate amount of reductions that we'll have to do over time by taking a hit up front um but it also uh you know keeps our reserves at what i would consider a reasonable level i do i do back to our conversation um two weeks ago when we discussed this um it does feel a little bit like the tail wagging the dog and and trying to figure out um what what is our overall philosophy going to be regarding our reserves when we don't have data that informs um a strategic you know initiative around how to address learning loss and what kind of interventions and additional services we're going to um but that's through no fault of our own i mean we just don't know that yet um we don't know what's gonna come forth from the state we don't know what's gonna come forth from the feds so we've got puts and takes um so i i think for the way i look at this personally i just i'm trying to get myself comfortable with a general approach um and then um we have a lot of opportunities in the future to talk about um where we need to spend and where we may need to cut and i don't think landing on a particular approach regarding our reserves ties our hands with how we're going to address learning loss and and and where we might need to make investments and cuts other questions from board colleagues uh yeah i have a couple questions um so i'm i i'm looking at the projection uh revenue assumptions and and then expenditures and shortfalls um so if i understand correctly um because we were expecting enrollment declines um over the next five years um our revenue even absent coveted um and recession we would be looking at um some decline in state school fund revenues is that correct that's correct okay um can you give me some sense of kind of the order of
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magnitude of the um revenue reductions based on the enrollment rejections it's not very significant is what i would say in when you look when you're looking in the hundreds of millions it is um but we can get you a specific number yeah i mean a ballpark number would be fine but where i'm going with this is they're projecting that um we're going to have an economic turnaround um for the 2324 biennium right but at that point we're looking at um significantly higher shortfalls in in 2324 a shortfall of 38 million 24.25 almost 50 million 25 26 6 63 million um and that's during a period when where wherefore they're forecasting an economic turnaround so um can so me through that so the one thing that um that doesn't when we're when you're looking at just that straight chart when you have a shortfall in one year of 30 million and you don't do anything to correct it by making reductions then that carries through into the next year so that shortfall continues to grow over time because you've never made the correction to the service level meaning lowering your expenditures so if we were for instance to take out that 30 million in that first year then those numbers would drop down significantly and if each year we were responsive to making reductions and on our shortfalls you those numbers would be much smaller and that's what you're seeing in the later on scenarios so this is just a straight um but our current service level as it goes forward but what we know is that we would not we would make reductions and so those numbers would become would go down so the numbers in these charts represents um an assumption of stable expenditures yes okay in that chart yes okay okay so all right last question on this um i understand that even with uh some declines in enrollment um that would not necessarily translate into significant sort of commensurate declines in the necessary level of expenditures to serve the students that we have right okay can you quantify that for me in any way like is it so if you have a teacher of a of a hundred thousand dollar cost it's actually higher than that but we'll just use that for easy and then if you're saying you have um let's say 25 teacher 25 students per teacher at 100 000 and then you're taking out 450 students you can't you're not going to necessarily have what is that 4 8 12 16 18 we're not going to reduce 18 teachers because they don't come out in even increments in the classrooms across the district does that help with yes okay okay thank you any other questions scott scott you're not muted but we can't hear you so i don't know what's going on with your your sound there still can't hear you nope maybe leave and come back you were working earlier i heard you talk earlier can anyone hear him no i'm trying to read his lips but no luck i think he's leaving him gonna come back okay michelle i saw you on mute did you have a question or were you just going to tell scott we couldn't hear him i was going to tell scott that we couldn't hear him my question's mostly been answered through the question that you raised i was curious if we'd heard or it were anticipating with that scenario for any
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additional federal stimulus coming our way fingers crossed by the end of the year still working on it this work excellent thank you claire yes all right you're back we can hear you it's been a weird technology night 10 minutes ago my screen went completely dark and i had to shut down and restart and good times so one thing director de depass and i have in the past discussed uh enrollment projections and what's happening with housing uh in the future um so it would be helpful to get some more definite data on uh construction of family-friendly units going forward because she and i had i mean it was a it's a really good discussion but we need the data and then uh we'll we'll figure out who who was writer we're both right don't we have a new um demographic projection yeah moment projection coming from psu in january claire yes that includes all the um permitting and all the new housing starts it does there's a link into there yeah there's a link to um the one we received last year in the memo so you can look at that but yes you are right um we should have a new one out early january is what we're hoping and and that's good uh and that doesn't include um anything that isn't permitted but uh is likely to happen over you know the foreseeable future uh that's one of the strengths of the psu projections is that they are really grounded on what's actually happening uh and it's also uh one of the weaknesses is that there might be things in the works that aren't anticipated that are really more speculative that aren't included in that uh so that's one thing um second thing is um and again we're wrestling with what's a conservative uh projection going forward and what's out there that's like the federal additional federal funding that may be out there and it seems like for us to go ahead with uh what i'm what i'm hearing is on the one hand where we should be conservative but on the other hand we're kind of thinking that the federal the feds will in part bail us out um and i that that seems to be a bit of a contradiction for me and how we look at the future and that we should construct a scenario of assuming that there's going to be very little if any fed bailout um and how we would act and another for if there is a you know a reasonable projection for a fed bailout and those are going to be two very to me two very different uh paths going forward and a third way of thinking about this i'm really concerned i mean i mean uh i agree with director constand that just looking at the numbers the prudent thing to do is to make early cuts um and keep us in a relatively good financial position going forward at the same time as director lowry uh chair lowry has pointed out we have immediate needs that are enormous so i think splitting the difference on that would be to spend down reserves earlier quicker for those temporary short-term programs that we wouldn't build in going forward a greatly expanded summer program for example for maybe one or really two summers going forward might really be needed to catch a lot of kids up and we should think about so that wouldn't carry into a long-term expenditure pattern but would address the huge needs that we're going to have so that's just top of mind thinking
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and we would still have to make those reductions like if we did that for two years we'd still have to make that correction in that third year right but that that's that's different from um saying hey we're going to not cut teachers for two years and then having to have a huge teacher cut in year three we're talking about programs that are kind of above and beyond the core classroom i uh sort of weighing in on this because i think this is a really it's a really interesting conversation about how we respond to the pandemic and i think maybe one of the things that's important to keep in mind is the limited role that one individual school district can have and so what i hear you know people saying and i'm totally on board is there are huge needs there's there's there's you know a great article i read the last couple days about the need for a marshall plan right around you know children's education in this country and i think everyone on this you know uh in this district would agree with that but i think it's worth recognizing as an individual district we cannot provide the funding for that like like it is just beyond our fiscal capacity and i'm sort of reminded of back during the great recession when you know there was some stimulus but not not nearly what we needed and and some local governments including you know ours around here started saying well we have to come up with local stimulus um and we did some studies with echo northwest right about what that would take and and the reality is that it's impossible right so even no matter how much political will there is to do that the reason why we need the federal government to step in is because the federal government is the only government with the resources to do that the state a little bit more but but still somewhat limited in terms of of the need to balance its budget and of course we are you know um legally bound you know to balance our budget so i i want to be a little careful well i absolutely support the need in in these you know coming out of this pandemic to invest in our children if state and federal resources don't come in i think we need to be honest with the public about the fact that we will not be able to provide the services that our children need coming out it's it's not like if they don't come through we can move things around in the budget and make it work we can put a couple band-aids on a on a wide-open wound right but it's it's not it's not going to stop that bleeding so it just kind of gets back to the importance of needing that that that federal bailout um the other thing i'll say yeah i just i and i this is not so much a question as a statement but i think it's important to talk about and and and staff in the memo you know talk a little bit about the importance of reserves um and i think sometimes that does get lost in the public debate and when we talk about reserves they sound like oh that's you know um that's just a rainy day fund it's really nice and and we can tap into it at any time i mean the reserves really are there for a number of reasons and bond rating is one of them and that that is important right although i actually put that as sort of secondary tertiary importance although with with the bonds that we have in place um keeping a good rating saves us tens of millions of dollars um in interest costs over the life of those bonds so it is very important but more important is actually having the resources to respond to true emergencies and i think i don't want to lose sight of the fact that as a result of this pandemic we are spending down our reserves so the rainy day fund is being spent um sort of as we as we balance these short-term needs and there are other unknowns out there that may come our way and and again we as a government have a fiduciary duty to ensure that our budget is balanced and to not i mean i you know i thought the current service level chart is really helpful because it essentially says in year three we will have violated a number of laws right if we take no action we will have violated a number of of of of literally local budget laws um that cannot be violated um and so that's the reason why we need to take some action but but those reserves of which we already as a district are under reserve so so also included in the memo you know is gfoa recommendation and it's sort of noted that you know a government should have at least two months of operating reserves that's about 16 um we're significantly below that already and while we've been making some steady gains i think it's worth starting out we are in an under-reserved position um i will just note that a government um one that i'm familiar with at metro was not in an under-reserved position we were actually in a very over-reserved position and those reserves are gone and that's a good example and i think one a lesson to be learned that um even even when you are exceeding some of those national standards um you can be hit with things that were just unexpected we never ever ever expected that conventions would come to a halt completely we never ever expected that concerts would stop for a year we never expected that the governor would shut down the zoo for you know a few weeks or a couple months you know completely so well we talk about you know these issues and whether we should sort of spend down the reserves or
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increase them remember we have to keep something in case some additional catastrophes hit you know over the next you know a couple of years you know if we have a building that literally a roof collapses right if we have an earthquake if we have other things we also have a fiduciary responsibility to maintain reserves for those situations as well so again not a question so much as a statement but um i'll just sort of leave it there i never expected that i would get to drive through the oregon zoo in my car and yet that's happened so a little bit like you have fun isn't it fun i know okay okay uh the the plug is over but man it's fun all right other questions sorry go only to comment of course we're we're trying to be prudent here with money in hand and try to you know as we develop a multi-year strategic plan resource manage accordingly you know what we have available to work with and we expect some uh covered relief perhaps and i just uh sent directors the latest council wrap up dated yesterday around some provisions that we're hoping you know get entertained uh in this stimulus bill but just from my conversations with chancellor carranza or superintendent buettner or ceo jackson in new york la and chicago what they're referring to is a much grander sustainable funding mechanism for k-12 and so you know that could take the form of actually investing in all the title programs it could mean congress actually for once funding to a reasonable level idea special education services you know delivery model that you know is really um you know you're having to earmark you know a pretty massive investment for for most districts uh it doesn't enjoy the level of federal funding that it should so there there are some levers that would bring relief uh to what we have to work with but those things they still remain uh to to be in the dialogue hopefully uh uh to to sort of capture people's imagination to do the kinds of work that we would love to do and to actually engage in this conversation around an educational recovery because for us right now it's well how can we be efficient what nickels can we set aside to to really sort of put attention to to our students who've been impacted during uh this school closure um so you just have our best thinking here but of course there's we don't want to rely on what uh is an unknown right now but there's possibilities uh in the future just a final comment i i realize bond rating is important in terms of saving money i do find it somewhat of a travesty that the bond rating agencies uh were shown in the 2008 financial crisis to be completely compromised and corrupt and when when was the last time a major school district defaulted on bonds um and it's uh it's not a pretty place to be at their mercy all right any other questions before we move on to the next question which is um the big one about what we're thinking about scenarios nathaniel did you have any questions okay um could you put the slide back up just so we see the verbiage of the question you're asking it's as you review the scenarios which scenario would you recommend to determine the general fund balance for the 2122 proposed budget and why so that's our question it's coming back up on the screen and i think we'll just go through in um in a kind of everybody get a chance uh list cara sent me a new order which is very exciting it's um based on when our birthdays fall in the year so um we will start then with director depos whose birthday is in january so uh director deposta do you have a scenario a response to this question as you review the scenarios which scenario would you recommend to determine the general fund balance for the 21 22 proposed budget and why i am in favor of senator scenario 4 because it's the stock recommendation and also um as superintendent guadalupe just mentioned he did share a report that talks about the advocacy happening at the federal level that i feel helps us address some of the things that
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you brought up chair lowry in terms of the significant loss of learning kids have experienced the last nine months um so i i'm i'm happy with scenario four and by the way the birthday question it is a big one we're not we're not saying which year we're just saying where in the course of 12 months does your birthday fall because i'm telling you it's a big number and it's an important one so anyway move on to the next person who is a february birthday student representative shu uh yeah thank you um i i don't know honestly i feel like i could do to um hear a lot more background on this and um why we're making some of the assumptions we're making and uh well honestly what some of these acronyms mean as well um i i mean yeah best not to speculate beyond that i think um and maybe we can find a time to get you a little more in-depth briefing about some of this before the meeting on the fifth so claire why don't you and i touch base about that tomorrow during agenda setting great yeah that would be good great so we go from february and then we jump all the way to june and director bailey that's great except i'm september i think perhaps you meant the ice good i met director god it just was getting all ready to unmute and then you gave it over to scott i thought oh christian enough okay director scott not director bailey sorry you guys really need to have different names okay we'll get on that um yeah you know actually i'll go i'll go through them a little um i i have i have real concerns about scenario one i i wouldn't i wouldn't support that i think a four percent fund balance is is um is not um responsible um as a government to sort of plan on um so i wouldn't i wouldn't in favor of that and and well i i appreciate and i actually um i should have said overall i really appreciate the scenarios that staff put together and the recommendation i think it's a helpful uh tool for walking through this um i i i like the idea of of maintaining our focus on on that 10 target and i will also point out 10 is still a little bit low um but i do think it's appropriate at this time to pause on that and and and i like the fact that we're going to be coming back um every year to um you know to take another look at this right and and we can it's it's a it's a moving target and a moving forecast and so it's not we're not setting something in stone for five years we can we can adjust but i think it's it's it's okay to pause on that um and between scenarios in three and four you know there's not there's not a right answer in any of this um but i do i do uh agree with staff recommendation um to to sort of maintain and i think the selling point for me is that under scenarios three and four both of them we have to cut 26 million dollars scenario one um cuts it a little bit earlier um which allows us to again maintain a little more fund balance which i will point out then allows us to actually potentially use that fund balance in later years um particularly if the economy um starts kicking up there would be more resources potentially available um and scenario three takes that same amount of cuts um but but you end up in a worse financial position so so you're cutting 26 million either way but after five years you're ending up in a worse position i think there's some value in cutting early and and i think the other thing i will say and staff said this but just to reiterate um the lesson coming out of the great recession is that governments that did cut early um were more successful in the long run they were more resilient and they actually bounced back quicker and so even though they're short-term pain and it's hard to sell that um to the public um we know looking at that experience that those governments ended up they ended up cutting less because they made some of those ongoing cuts early and were again able to bounce back more quickly so um i think there's there's something to be said there as well however i will i will carry out all this by saying you know we need to keep our eye on what's going on at the state and federal level and as we get into the actual budget decisions um you know i think this is a good framework for staff as they put together the proposed budget but i think as a board we can be looking at that and adjusting as we go through the process all right i'm july so i'm next um i um and i like scenario three despite what uh director scott just said about it leaving us in a worse financial position i i um i think i could be convinced on scenario four if we get uh federal um stimulus money to um help schools i'm just so deeply concerned about what it's like if we starting back in the fall with
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substantial cuts so i'd like to spread those cuts more evenly out over the first two years rather than having such a big cut in year one um so i prefer scenario three to scenario four just for that reason but if we were gonna get some federal assistance then i would be easily moved to scenario four but that's my rationale for that is my concerns about the impact on students returning to school after a very difficult year of being out of school all right um next we move to september and while we've already set out nope sorry august next we move to august and that is director moore um thank you um so i'm kind of where chair lowry is um i am i am not entirely sanguine about the likelihood of um genuine relief coming from the feds um hope springs eternal but it usually gets dashed in washington um so i would um i would i would maybe [Applause] um yeah maybe i i'm being drawn to scenario three with the um with the caveat that if if we do get some federal funding that's actually significant that we could build back any reserves that we have used um in the short term um i'm also a little concerned about year two um because i think there's you know there are going to be increased student needs um not just next year but um probably well into the following year and as well um and while i'm a huge proponent of um robust reserves um i am we need to balance it against um you know this is the functional equivalent of of a roof collapsing probably several roofs collapsing um so um i was a huge proponent of the policy came out of cbrc when i was when i was um co-chair of it um so i don't lightly say that this might be a time to dip into reserves but it's there for a reason and i think we can be prudent and responsive at the same time and finding that balance is critical um i guess my my final thing is um i am actually more perturbed about what appears to be a structural deficit um that that we're going to be looking at in perpetuity if the state continues to use its current practices on establishing both current service level and um um state school fund appropriations um just the sim i mean correct me if i'm wrong because i may well be but it seems to me um they used to they used to divide up the allocation by uh 4951 um which took into consideration the um you know inflation rates from one year to the next um and for the last few biennia they've been using the 50 50 allocation which gives a a false appearance of sufficient funding when in fact it's a structural deficit of somewhere between two and three percent in year two um so i would like us to be respectfully aggressive um with the state in addressing some of the the structural issues that are exacerbating a general insufficiency of financial support for public education in the state there you go all right i know director bailey is excited because we're moving to september but actually director brim edwards birthday falls before director bailey's in september so director brim edwards thank you and i'm sorry i um haven't been able to get my camera
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to work um yet so um what's the date we're going to um take action on this january 5th january 5th um so a lot can happen between now and january 5th um so i um i'm really reluctant to land on any scenario um you know weeks out when we're in the midst of major major governmental transitions um if i if i had to start with a scenario i'd start with scenario four however i'm going to go back to what deputy superintendent heard i think offered at one point that we could add some caveats and criteria um and you know not and customize something um my biggest in addition to a government transition i think we are missing just a huge p i feel like we're sort of backing into this and missing um in an ordinary year i think this would be an absolutely um prudent course to take to be setting these targets and you know um taking um being good financial stewards of our resources and keeping a reserve um but i think we're just in an extraordinary time and i'm concerned um that right now we don't have any data about the learning loss that is occurring the data we got last night was not pps data and in addition um you know i'm wondering about the students that we lost um there were yes there were a fair number from kindergarten but there were a lot from first grade to eighth grade and what do those students need and so i'm i'm hesitant to say like i'm willing to put a stake in the ground and work backwards to here's here's here's what we can provide versus what is it that we need to provide and work the other way um so if i had to give an answer today it would be you know scenario four with some with some adjustments and customizations but my thinking is going to be very fluid and it's going to be very much informed by what i think may be the gap or what we know about the gap and what may be required and i want to hear from the superintendent on sort of what it would take to accelerate students um on to back onto a path of being on on track so um my thinking's gonna be fluid over the next several weeks and probably months okay and as director scott did say we are revisiting these as as more information comes through all right we are finally to back to director bailey who i tried to call on for june um director bailey what uh what uh scenario would you recommend um none of them um i'm closest to why um agree with uh director brim edwards in normal times uh scenario four would be where i would be but these are not normal times not anywhere close so i'm in a a modified one that looks at lower reserves even more aggressive spending early because of the immediate need we have over the next year maybe two years and to ignore that i can't i can't ignore that [Music] and if we do get uh more federal funding great we can do a budget amendment and keep more in reserves um but i'd rather look at it that way rather than a more optimistic viewpoints and then have to do a well uh oh the feds didn't come through all right and director constand with a november birthday ringing in the end of our year here um what scenario would you recommend dr constance again i see this as just really the purpose of this is to give our budget staff guidance on how to begin the process of putting together our budget they have to start somewhere so we're giving them general guidance
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on our our our foundational piece of the reserves i think there's a lot of room for um all the variables to come into play um i'm generally comfortable with scenario four i think with regard to um the uh bigger bigger uh reduction in year one relative to year two i think our needs are going to be just as great um in terms of addressing uh student needs and and learning loss in year two as well so um i think it makes fiscal sense to do that in year one but um yeah we just need to be very open to uh all the variables that are going to come into play but i say uh go forth make these assumptions about where we want to keep our reserves i appreciate everything rita said about this long journey that the district has had regarding our rainy day fund when i came on the board it had been after a series of years of just dwindling reserves and we had a lot of difficult conversations about creating a policy and putting the stake around in the ground about being more fiscally responsible and a lot of collaboration with the cbrc a lot of advocacy from the cbrc members to really address the need to have a healthier reserve fund so i like the fact that we're treating this conversation with such seriousness and not just not just looking to drain that that um pool of funds and we'll just have to see what how all the other variables come into play all right uh deputy hertz um what else do you need from us in this work session tonight um i've heard lots of great thinking around this and i really appreciate that this is the first time we've had this conversation in this district for some time and having staff and board um uh come together around different scenarios and of course um can i've taken notes of what each one of you have said and in terms of um working then with board leadership on what we need to bring back in january so that's my plan from this point if i could just add chair lowry to deputy hertz's comments there uh director broome edwards just brought this up and i know the board feels similarly around it's going to be really important that we get some system snapshot of student learning at this point and we hope to have that at the mid-year point because you're right we have some finite resources and we want to be able to really target those interventions and the recovery that's going to be necessary for students we know have been impacted so we know the costs there are going to be finding ways to extend learning to increase instructional time so that's some targeted summer programming we know that's going to require some additional intervention and and materials in the coming school year uh probably some staffing to really support uh those school communities that we know uh had either decreased participating participation rates or uh just weren't as engaged as we would have hoped so you know for all those reasons i know that we all want to be data informed uh as we have these conversations about our resources and so so stay tuned for more discussions on that all right anything else before we close this work session all right thank you all for taking the time to invest again in this work um i know we had had some time slated in a meeting last meeting but didn't get to everything we needed to so um this was a way for us really to dive into this deep work for the board so let's take a 13-minute break and i'll see you all back at 6 in our regular


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