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pau aor.; Pr op THE CITY OF F e- AGENDA REPORT J r" t C CITY COUNCIL AND BOARD OF TRUSTEES `/ V pLEASANTON. JOINT MEETING PLEASANTON UNIFIED SCHOOL DISTRICT MEMORANDUM Date: March 28, 2011 To: City Council and PUSD Board of . Trustees ru From: Nelson Fialho, City Manager M' Parvin Ahmadi, Superintendent WV Subject: OVERVIEW OF CITY AND DISTRICT FINANCES SUMMARY This agenda report is intended to provide an overview of both City of Pleasanton and Pleasanton Unified School District finances. BACKGROUND Overview of School District Finances The State continues to face economic challenges. This fact is evident in the Governor's Proposed Budget for FY11/12, which has raised questions and created uncertainties regarding revenues and expenditures for school districts. On the revenue side, the most significant question centers on the Governor's proposal to provide flat- funding for schools. In order to provide flat- funding, the Governor's Proposed Budget assumes that taxes set to expire this fiscal year will be extended for an additional five (5) years. Failure to extend the expiring taxes could impact the District by $5.4M. On the expenditure side, questions have been raised as a result of actions taken in the current year regarding funding for mental health services for our students with disabilities (AB 3632). In the past, the District has neither been required to provide the services nor to fund the services. The issue of whether counties, the state, or local school districts are financially responsible to provide services is working its way through the courts and the Legislature. In FY09 /10, the cost of AB 3632 services for Pleasanton students totaled $1.2M. Given the questions and uncertainties in the Governor's Proposed Budget, the Pleasanton Unified School District (PUSD) has positioned itself to make $3.5M in spending reductions and use $4.6M in reserves for FY11/12. Based on board action, the PUSD will be able to maintain the 3% reserve for economic uncertainties and has certified its financial status with positive certification on the Second Interim Report. A list of approved spending reductions is attached.