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opportunities. Other topics they talked about were identifying more at -risk kids so fewer students are left behind, wanting a teen center, and receiving more information on health. Ms. Goard said the safe ride program, a program available for students who need a ride home, is beneficial to teens. Mayor Hosterman and President Grant thanked the students for their great presentations and thanked staff for arranging the day. 5. OVERVIEW OF CITY AND DISTRICT FINANCES Dr. Casey gave an overview of the District's budget situation. He said the District is facing financial struggles and challenges. We are facing an ever changing landscape and we do not know what will happen as a result of the May 19 State election. The School Board has done their due diligence to put the district in a position to have a balanced budget. He said that we have belt tightened, pulled money in from every account we could, and we had to hand out 337 notices of possible layoffs to classified, management, and certificated staff. A list of possible reductions for 2009 -10 has been identified. The Board has also put before the voters the question of a 4 -year parcel tax as bridge funding to get us through some tough times. The funding we receive from the state is unstable and unpredictable. Dr. Casey introduced Luz Cazares, assistant superintendent of Business Services, who highlighted some significant revisions to the District's budget. She said that in February, our 8 month of the fiscal year, a budget was released that included some significant revisions to our revenue. Our revenue limit was cut and categorical programs are reduced. We cannot close schools, we cannot close classrooms, and we cannot layoff staff at this point in the year. Our 3% reserve is about $3.8M; in December we expected to meet this plus have a little extra. With all the reductions, our ending fund balance is now expected to be about $40,000. She said that next year we are also expected to lose $1.2M in revenue and another 4.5% categorical loss. We are experiencing a loss on interest income, we are collecting less in facility use fees, we have lost revenue, and lottery sales have decreased. We have to plan on revising spending next year. In addition, we have increases on items such as insurance, utilities, salaries step and column, and we have to plan for OPEB (other post employment benefits). The solution to the budget act has some assumptions built into it and we don't know if we can count on those. Dr. Casey said that on June 3, the Board will know much better what the outcome will be. Mayor Hosterman said that in the early 1990's, the Education Revenue Augmentation Fund (ERAF) took money from local governments to pay for shortfalls for schools. She said that since 1992, the City has lost something over $100,000 in ERAF funds and asked how those dollars come to the district. Ms. Cazares replied that ERAF is included within our local property tax figure; it is an offset to the state's portion. If property taxes go down, the state aid portion goes up. Discussion continued regarding the reduction of lottery funds, the state not funding COLA, the uncertainty of whether federal funds will be released or held at the state, and the need for stable funding. The district is still in discussion with APT and CSEA regarding givebacks. The management team will reduce their salary and work year by three days next year. Mileage allowances and cell phones are being reduced. Last year the district reduced three administrative positions and next year the proposed reductions would reduce the management team by about 1/3. City Council Minutes Page 2 of 4 March 23, 2009