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Video-1: youtube.com/watch?v=CjAhXRA0jHg

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Uh it is 603. So we'll get our meeting underway. Um call the meeting to order officially. We do roll call please. Barkley here. Davidson here. Here. Gordon here. Green Street here.

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you're all here. Um, first just want to say thank you to everyone for making time to come in in July. I know we're not normally supposed to or don't normally have meetings in July as our our one month of restit but um we have

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important things to cover and so we're here and I thank you all for making the time extend that thank you to you as well Anthony who um have up until this point been wonderful about answering questions about our program or training program um and for being willing to come

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in today and just kind of share that information. Um, you know, purpose of today is is just to really help um our board make sure we all have the same information and our community. Um, you know, there's a lot of kind of misinformation or or half information out there about how the program works,

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what it's for. Um, and so just looking to make sure we've got everybody on the same page so we can move forward with with proper information for the decisions we have to to make here in the future. Um, so if you want to introduce yourself and then maybe just introduce the program a little bit and then we'll

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kind of get into the meat of questions. >> Yeah, absolutely. I think I'm happy to help. Um, so I have a whole long list of questions here. If I don't cover anything, feel free to either cut me off or jump in. I'm certainly used to it. So um >> I don't think your mic is you have to hold that little button there in the

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front till the lights. >> There you go. >> There we go. Okay. Um, just to reiterate, uh, if I have or I'll kind of run through it fairly quickly. Um, like I said, I have a whole long list of questions. Feel free to cut me off or interject. Um, and I don't mind at all.

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Um, so I've taken this, well, my name's Anthony Sing. First of all, I work with RBC Capital Markets. Um, out of Denver, most of my job actually entails bond underwriting. So, when district like elections or MLOs's or what have you, um, that's the whole 75% of our

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business. Um the other 25% I manage this program. Um so it's a program offered um from uh Colorado Treasury that's administered by RBC. Um we've been administering this program now well over 20 years. Um I have been doing it for 20

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years. I take I took it over from an individual named Rand who pioneered it. He for better or worse more or less the same spreadsheet. Um over the last 20 years it's very complicated. There's a lot of colors and I'm color blind. So

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it is what it is. But um this program was introduced 20 years ago actually when uh the state of Colorado switched um fiscal years from calendar years to uh the fiscal year we currently operate on. Believe me, I know like every city and county operates on the calendar

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year. It's so much more straightforward. It's like every fiscal year 26, 27, what whatever. Um but it was introduced because of that. Um and as you have seen actually the last 20 years especially it's been exasperate exacerbated in the last kind of five since co um the state

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while they're keeping the total pie of funding more or less the same if not increasing it on the margin they're shifting the onus more towards districts. Um so of that pie most your most districts are made up of local funding so your property taxes that you

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that you pay that you mill every single year and then equalization. those are the two main components outside of being low or anything else you vote on. Um so if that pie is the same you just say it's 50/50 that means half of your revenue comes in for the the equalization which is just previously

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used to be um you get one number. So if it's $12 million you cut in 12 sorry you cut in 12 you get a million dollar check every single month. Um the state actually switched this. Um there's some work that we've done as well to kind of see the implications of it to where it's not

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nine months for most school districts. Um we'll get into the reason why later. Um so you more or less get a safe paycheck from equalization. On the other end, you take your property taxes. Um the homeowner gender like you know we pay our property taxes in the March time frame. Um, so if you think about how a

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school drop rates, right, you guys have more or less a steady uh you have to pay 112 of your expenses just to keep the math simple every single month. The problem is is that if you're fully locally funded, which a lot of uh resort communities are, you think about your

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Aspens, your Eagles, your Summits, um, etc. The issue is that you get paid effectively three times a year. So you need to cut checks for largely teacher salaries. It's the largest component of expenses by a wide margin. Of course, the one you can't miss, right? You can

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miss insurance or, you know, not pay a contract or whatever it may be, but your teachers need to get paid every single month. Um, so the program was created to bridge that gap. Um, so again, I'll just use one of the resort communities that's on the very end of the spectrum, um, but

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is a huge borrower in the program for this exact reason. You get paid three times. you need to start writing checks in July all the way through February when you receive your first property tax and again they receive a substantial amount of property taxes um once they hit March they're good to go. Um the

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issue is is that we've seen I don't know again since I've kind of been working in this program um since co that uh you see a lot of neighboring districts kind of uptick each other in or really competing with your neighbors or keeping up with

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the Joneses is terms of teacher salaries and the issue is that they don't have the other side of the revenue to support those increases in revenue or they don't have um like MLOS's or whatever it may be or don't want to go to the voters for XYZ reasons to keep up. So, the problem

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gets, you know, you start to draw down your fund balance at the beginning of the year, which is typically a district's high point in cash. Um, and when you start to draw that down, the quicker and quicker you do it, um, you know, you need to figure out where you're going to get funding from. And the state again started this program

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that, you know, we'll borrow last year's was like$1.2 billion on the state's level between series A and B. Um, so we'll borrow $1.2 2 billion at whatever the interest rate is and then it take turn take take those funds that we borrowed turn around to a school district and lend those out

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interest free. Um so the alternative realistically if you didn't want to participate in the program or um you don't meet the criteria if you can call that even in air quotes is taking out a bank loan but obviously that has probably substantial interest rate

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particularly then they're looking at the district's credit rating they're looking at financials and what have you and while we do look at all that stuff again like the goal of this is to to not make it difficult on districts that do need to participate and it ranges in the levels of complexity that I work with right so there are people all the way,

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you know, the the large metro school districts where there's people that just manage this on behalf of them. It's one person that like manages this program and works with me. That's their sole job. On the other end of the spectrum, you know, it's one person wearing many hats. It's a CFO, COO, sometimes an

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internal superintendent, um or you know, it's somebody who just got quickly promoted through the accounts payable team that needs to figure all this stuff out on the fly. So, we really try to work with a lot of school districts um to to allow them to borrow to meet their obligations um every single month and um

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so far we've had zero districts ever default on any of their in the 20-year history of the program. We've come pretty close, but zero districts have have not repaid their loan at the end of the year. And getting into the little bit of the nitty-gritty, this is one of

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the questions that I that I recall. Uh there is other than a mention in your audit that you participate the program because it's an intra-year borrowing meaning uh from the start of your fiscal year to the end of the fiscal year. Um you take out a loan from the state

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effectively and then repay it. It's not a multi-year obligation. Um so it's not like voter authorized debt because it doesn't extend beyond that one year. So you draw it, you repay it, good to go. Um so um, that's kind of a brief synopsis of

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the program. Um, we have some specific questions here. Just kind of rapid fire through them. Um, but if you guys have any questions on that part, happy to answer them. >> I Where does the money come from? >> From the last two years, it's been from

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uh very very large investment banks in New York that will bid on it. So, we go through it twice a year. It's kind of funny just be at breakfast and stuff and watch them, but you actually see them bid against each other and they can see each other bid um and then they'll buy those securities >> um into their accounts up in New York

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and then distribute them to all their investors. >> But it's like City Bank, Goldman Sachs, JP Morgan preferably from my perspective, it's easier if one bank buys it and then I don't have to call people but they buy it. They don't usually make a whole lot

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of money when they do it. Uh but then they turn around and sell those securities to investors. >> Yeah. And it's a it carries the state's um credit rating, which is a AAA, so it's a exceptionally safe investment. Um and again, in the 20 year history, we've

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never had a default. And if any district were to default, there are a plethora of other funds the state has that impact. And there are certain consequences that districts would undergo if they don't repay this funds. So if it's a no interest loan, how do they make money on it? >> It's not no interest for the state,

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right? >> The state serves it. Oh, >> gotcha. Okay. >> So from like 2010 till like 2021, interest rates were effectively zero. Um because they're borrowing under a year. You think, you know, think of like my

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savings account and the US bank, whatever it is, and it's like 0.00001%, right? Um, so it's it's a nonredit, you know, effectively each called zero. Um, so the states borrowing effectively zero. They're lending it out. They're taking a small haircut obviously on that

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spread. But since 2021, as everybody else know, there's gas price and everything else, uh, rates have gone kind of through the roof, like the highest they've been since I've been alive. Um, and because a result of that, there's a very real cost

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to the state um, when they're borrowing this fund. So, they're borrowing it, you know, three or four percent, which again is better than I could borrow from a personal loan. But, uh, billion, >> 3% on a billion dollars, it's a lot of money. Um, that said, there are some offsetting factors, right? The same thing with like a bond fund or Cafe

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account or whatever it is. When they get those funds in, um, they can invest those um, on their side. So, I have to set up a whole schedule of like here's how the districts plan on borrowing so they can set up their investment portfolio such that you minimize the amount of time that dollars are out the

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door because >> um and this is actually a good kind of segue, districts do not borrow all of it up front. Um if that were the case, the state would obviously generate you know money from that. the cost of the program would skyrocket, but because we kind of

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match as close as we can the the draw periods for districts to whenever they're going to be paid most of March, uh you're minimizing the amount of time that the money's available for you. So the longer the state has it, the more it offsets the cost, but it is still a variable cost.

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>> Thank you. >> I just want to clarify so with the um the state equalization >> Yeah. Um, from what I understand that the I based on the the statute is that it's intended to try to be as equal as possible each

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month would combine the property tax component of the local share like looking at the >> statute and I'm wondering like from what I understand like the truly though like our the cash flow that we project and

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we'll see is that we have like a really disproportionately low share paid like in the month of July for example and then it stays relatively consistent and then spikes again like when the property tax comes in. Is that right? But I just want to when it when when it says

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equalization I don't understand how like the principle of equalization applies if it's still really spread you know what I mean like in terms of the way in which the funding flows through. I think what you're saying. So, um, >> the way historically it's done, we'll just we'll just say it was 12 months and

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a lot of districts now are in nine because the state opted everybody into it unless they sent an email specifically saying they didn't want >> I saw that. Yeah. And I was trying to understand what does that mean? Yeah. >> So, the reason is that again if you you receive uh let's just call it $9 million, right? Instead of that 9

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million being broken up into 12 months, u meaning you get an equal amount every single month of the year from July all the way through the following June. The idea is that if you break it up into nine months, you can compress some of that funding. So you're getting some of those $9 million that are more kind of mission critical for the district

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between July and February, which is the low point. Again, most districts are flushed with cash in March, May, and June and those property taxes come in. So now you receive you receive equalization for every single month other than March and June.

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>> Okay. Okay. >> So same again the idea is that you frontload cash for districts. Um you're increasing the revenues on you know when they need to pay stuff out before they're like get their real paychecks from March and June. And also you can use those proceeds um that you would

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have otherwise not received. So again, if it was like um you know, you're receiving an incremental amount, the difference between 9 and 12 months, just dividing by 9 to 12, you can use those interest per extra proceeds assuming you don't just spend right out the door, which you know, money's in, you're going

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to spend it, get that. Um but, uh you can use that to invest in, you know, 5% of your CF account, whatever it is. So by the end of the year, you actually have more utilization. That's how generally operates for districts. So you receive more cash up front. you can invest those proceeds assuming you don't

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spend it. Um but that also came through this cost to the state because they they need to figure out now how are we going to fund in front school districts this this money. So, it's just just to be clear though, the equalization is just the state share, right? It's not there's not like we're not misunderstanding that

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the property tax is going to come in at a more equal rate. Like that's not a recent change or anything like it's just the state share and there's still going to be and there is right those big spikes in March um April May. >> March May and June. Okay. >> Yeah. The only weird thing is that with

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uh March, May and June, it's not a third a third a third between property taxes and it really depends upon your your tax base really. >> Yeah. So like it well it seems like well county for example flood oil and gas up there and they you know private entities they get very large tax bills every year

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because their assessment rate is so high. It's like 87 and a half%. >> So they pay their uh you know they they go through all the regal uh to make sure all those are accurate. So they don't pay their tax bills until pretty much as late as possible. um just one way of doing it. Meaning that all the county

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school districts, most of them don't receive a substantial part of their property taxes until June u which is very close to you know fiscal year ends with the notes need to get repaid to the state so on and so forth. But if you're like you know like an Aspen or Eagle

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where it's like primarily just residential homes almost everything there >> uh they pay their tax bills whenever it comes in March they're gone. So I would say like 90% of the school districts participate fully in March and then

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>> I think that does anyone know true? I think that's kind of how ours is, right? Like it's largely March like our favorite of the year. Yeah. So this is because you mentioned some schools will invest the loan.

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Um and it's a question on here too, but my it's asking like when can you explain how district a district's cash reserves factor into the in process? >> Yeah. And specifically, I'm wondering if

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we're at a zero reserve and then we're it kicks in to receive it, how can we investing when we need that to pay our bills? >> So, the equalization money you can invest um

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um specifically as interest free loan um should not be invested. Uh the idea and this is statute and it's in the resolution that all districts sign off on is you get to effectively a zero balance outside of a table reserve and a bond fund if you have one um you get to

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a zero balance and this is this whole gigantic spreadsheet if forecasts out a month you say we're going to be at negative $2 million at the end of February. Um so then the state will give you $2 million in the middle of February so that you can meet whatever that

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obligation is. to just to get you back up to zero. Um assuming of course that it's a it's effectively the way that it works is a bridge loan. Um meaning that it all has to be repaid and it's firstly on your property taxes. So we often get districts that will um receive their

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cash and receive their property taxes in March and then they forget to pay the loan or it's like well now we have all this money and like we're going to go spend it. Um but in that resolution it does say within one business day it's you know they give districts leeway for whatever it may be but within one business day you're receiving those

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property taxes you have to repeat that one and we only allow districts to borrow to a certain amount but um back to your question about investing proceeds for equalization you certainly can um you just take whatever you were receiving before um divided by 12 and whatever you're receiving now divided by

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9 that differential between those two assuming it's hopefully higher Um, for some it's not uh assuming it's higher. You just take that and you say, "Okay, this is the extra money now we're getting every single month between just knowing we're not going to get paid more." You can invest that out the door,

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but the interest free loan money should not be invested. >> So, you touched on it a little bit there right? in order to receive funds. So, so you're accepted into the program and I think we'll we'll talk a little bit more about that here in a minute, but you're you're

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accepted into the program, the district sends you notification that we are in in danger or going to hit the zero or negative balance. The errand program only brings us back to zero. It doesn't bring us into the positive. Is that correct?

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>> Exactly. Yeah. And uh just like thinking of this right beneath my head, it'll the way that it works is that there's a line item in there and it's all the hidden stuff, but like the line item in there will effectively take whatever your negative balances and just branch back up to zero and that's the exact dollar value that you're going to be bringing

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down. Um that said, everything in there should be it's mostly general fund. It's like 95% of districts. Um the only thing that aren't that are excluded are again bond reserve funds and people activity. Um, so the things that are included are food service funds, transportation, and

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I've gone back and forth about the food service fund about like is what it is, but uh uh all that money is included. A cap reserve fund, a lot of districts have a cap reserve fund that they use. Effectively, it's just a general fund transfer. So that's another thing. It's like if you're transferring

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money and not your general fund, assuming that money's funible, it really boils down to if it can pay salaries. If you can take that cap reserve money just transfer it back do an inter fund transfer and then pay teacher salaries with it that needs to be included because that the paramount issue and the whole thing you trans trying to solve

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was that you're paying your monthly expenses which is largely salaries and benefits. >> Yeah. >> Um and then you also mentioned there when you were going through that explanation that there is a cap on the amount we're allowed to borrow.

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Obviously, there's a built-in cap of the property tax that comes in because otherwise >> we have nothing to to back up the loan. >> Um, is there a additional >> uh cut or or limit on that? >> Absolutely. Um, so it's not a hard and

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fast rule and we've never actually had to modify it. Um, but that's the biggest thing I get like when I receive a spreadsheet from a district that's a first-time persistent and says like, "Hey, we need to borrow 150% of our property taxes." like that's not going to work like I can repay it. Um so you

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know something's wrong through it whatever it may be. Um but the the formal guideline is 70% of your March May and June property taxes >> 70%. Um, again, it's no real exact science to that. Um, and it largely

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stems from districts with a either that, and I don't mean to bring it up, but like if you have issues getting your audit in time because an accounting treasurer will uh withhold taxes and it happens every single year with multiple districts. Um, if you're, you know,

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accounting treasurer, like in the case of Aspen, like you have to physically go pick up a check. um has to go pick up a check and go walk it down. Like that takes time like it's not certain figures always like a week delay and like he's like I walk down there and get lunch and

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like pick up. Uh or then the more the larger issue is if again you're it's mainly oil and gas districts. Um if you have a very large taxpayer um say for example during COVID like a lot of them went defunct um they

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go bankrupt they're not thinking about paying their property taxes they have many other things even though that's detor's law first lean on that but um they should uh if they don't pay the property taxes then and it's 60% of your tax base like the loan can't get repaid

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um so then it can push on and on and on and that's happened a handful of times that's why one of the questions actually in the questionnaire is does any kind of exactly like is there a concentration in your in your tax base for you guys the answer is no but for a lot of them it's like yeah two taxpayers make up 80% of

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our tax bill I think that's kind of scary >> that's that's very scary particularly if you know like you know say for example it's a mine like a mine has like a definite closing life or a closing date whereas like oil and gas doesn't flow a mine's going to close in 20 years it's

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like well then month but um no districts We don't, again, we don't allow districts to exceed that 70% when you're setting a resolution. I don't like to set it right at the limit on the get-go because it doesn't make you any factor. Um, so we'll usually set it, you know,

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if you say you need to borrow 5 million, we'll set it at 6 million just because obviously circumstances change. Um, so just so you don't have to go back in front of your board and then get a new resolution just for that additional million. I also have other districts that if you need $5 million, just set it right at 5 million. Like I

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say, we're going to be successfully prudent as possible. problem is if you're $1 off, I can't deal with you that additional dollar until you get back to board, etc., etc. >> Yeah. >> Yeah. So, it's kind of a pain, but um we usually allow five 10% over whatever the spreadsheet spits out. >> And we don't borrow either the

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resolution amount. So, if you guys need $10 million um we don't borrow the $10 million up front. We'll see how much you need by in the first issue. So, we issue these notes twice a year. Say 500 million, 500 billion. How much do you need by mid January? borrow that amount to the district and then when it comes

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time, you know, after we'll have six months of data, we'll come back in January and say, "How much do you need in the back half of Jan or from January to and then borrow that amount?" So, it's two times, but we don't borrow whatever's in the the resolution amount comes from the spreadsheet.

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>> So, I'm going to get this one level deeper. You're saying cap is at 70% of our March, May, and June property taxes. >> Y, >> but what the spreadsheet spits out isn't necessarily that.

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>> No, it's for most school districts, the the bar I really have to guess. Just say it's like 20% of their property taxes that they would need to borrow. Um, so you're borrowing 20% of your Marching and as you know, like property taxes actually come in throughout the year.

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So, it's not truly the the total pie actually to why we just chose those months. It's just like the biggest ones. It's like 90% 95% of property taxes. Um, but very rarely does a district when they initially set up a spreadsheet intend to

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borrow up to that 70%. And if so, oh, that's like my first like four to first. Yes, that's definitely a red flag. Um because if something goes wrong, if the roof collapses, if the boiler goes out in the middle of the year and you can borrow out of the general fund, there's no money left to borrow because then

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we're at risk of not being repaid or the state's at risk of not being repaid. So we watch it very very closely and fortunately March, so March of this year again most districts repay their loans and then they just I'll send them spreadsheets

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for another month and then they don't want to complete it anymore. So they don't that's fine by me. Um so then they're done until we kick off the program the following year and just because the timeline of the question as well um used to be like everything

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uh again since I took it over um used to be everything like one month back um so you start this process in May go to your hor June spreadsheet so it's kind of following file the prior fiscal year um since I've been doing it by districts

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that the I backtrack a little bit but one of the most important components to go into the spreadsheet is district's starting cash balance not their fund balance although they're sometimes interconnected but their starting cash balance >> for that fiscal year >> for the upcoming fiscal year so like

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well we'll talk to them in May and say like what do you think you're going to be at July hopefully that number's close there's a precedent though of that number being very very wrong like to the factor of like $100 million the problem is that we'll borrow that $und00 million that's

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necessary and then need to figure out how to spend it. Similar to bond proceeds, we need to spend the money that that the state borrows within a certain time period. There's all sorts of IRS regulations in order to make it tax exempt for the investors to buy it. >> Um so we have to hit all these spending

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tests um you know certain amount of proceeds need to be spent by like mid January. So the starting cash balance is like mission critical um when you're borrowing in this and if you have misstate that or the number is unfortunately wrong and it tends to be a

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big issue. So what we're doing now is we've kind of pushed everything back a month. So like right now I'm going to email districts everybody that's planning on participating and email them hopefully tomorrow morning um asking them hey go back and look at your spreadsheet tell them what your cash

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balance is um if it's changed substantially now that we've already passed 71 obviously the books aren't finalized and I get that if you can narrow down that number any closer that'd be great and then we'll use that starting cash balance um as a more refined and it worked very well last year um we were within like $20 million

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of a $550 million insurance whatever plus which is pretty good >> and that helps just give you an idea of when districts are going to need to start borrowing >> the cash balance. >> Yeah. >> Yeah. So cash balance is um how quickly

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they're going to borrow um in addition to how much they're going to borrow. So the lower cash balance that a district start with starts with it's not a linear um kind of issue or like borrowing amount um if you start with like two you know 50% of your cash balance you can

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borrow 50% more um it actually is exponential because you quickly burn through that cash quite a bit quicker and the sooner you borrow so if you're borrowing like August or something which is kind of unprecedented um if you're borrowing in August you could pretty

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easily hit that cap um by you know February and then you're done. >> I was going to ask when when do most schools if there if there is an average that start borrowing? When do when do you see the most requests coming in?

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>> DPS is usually the the soonest for the last three four years. Um that's like September, late September. Um, most school districts are December January, which is about, you know, sounds about right

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considering they're been paying all these expenses, not receiving any money, and then they get, um, chewed up in in March, May, and June for property taxes. But, um, I also have other districts that will complete all of the necessary work, pass the resolution, and then never borrow. Um, they just use it as a

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cash flow tool, which is, um, you know, great. they I have all the work, they have to do all the work, but um if they ever needed a loan or they're even on margin, they have everything in place to just email us and then and the the important the loans go out once a month.

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Um so I send them out to districts the first handful of business days every month and then I expect them back by the 10th business day of every month. And that's like a hard and fast rule. Not partially for me, but mostly because um the the Treasury will set up like wires

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from all that information. So they get really upset if they're late. So 10th business day is the rule. >> So the first of the month is when the present month's uh loan would come in and the 10th of the month is when the past month's loan would need to be

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repaid. >> So this part this I always trick districts up with this. There's a calendar that I can send around the old timelines. So I So we'll just take um October for example. Um in October I'll send them out by

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um usually the first third or fourth business day of the month. I send them out the first people forget about 10. Um so I'll send them out and I expect them back by the 10th business day. By the 10th business day they'll send me a spreadsheet, an updated spreadsheet. in addition to a draw request form. That

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draw request form will have three different values on it, three line items for how much we need to borrow in the upcoming month. So if I get it back by the 10th business day, districts borrow for the upcoming calendar 17th, the upcoming calendar on the 7th and then

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the following month 7th. And the idea is that if you're borrowing for the seventh following month and I don't send them out and expect them back until the 10th business day, you can hopefully close your books for the month prior. Um, so we have another month of actual data versus just using estimates the entire time. Close your books for the prior

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month. Input actual data by the 10th business day. And then you should have a good a better idea of what you need to borrow the following month. And if it the 17 27th or 7 falling holiday, it'll be next the fall business day after not before. So I think um

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Thanksgiving there's like an important holiday this year where like it falls right on it. So hopefully getting districts ahead of that. >> So do you find like you mentioned there was one school district that starts

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borrowing um in September. Um do you do they wind up having to borrow them basically every month up until the property taxes come in? >> Pretty much. Yeah. Um unless there's some random external revenue source like a grant that comes in like a federal

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grant like who knows they could um you just they just kind of come in it seems like uh if there's a random external revenue source then yes um otherwise or they pass in a loan I guess that doesn't really make a difference because it won't come until the fall of March but

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um generally if you're borrowing in particular month you'll be borrowing every single month until March when it paid >> because you're just coming back up to zero every time. Exactly. Yeah. If if you actually like fall in and out of it, unless it's like a small amount, that would not be a red flag because I don't really know what's going on as far as

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like grants and people serve like all these random funds that come in. Um, but it would be kind of cautious and like, well, you borrowed this amount last month. Like, what are you doing with it? And again, not saying the districts do this, but the first thing you think of is like, well, they borrowed unnecessarily. They're investing that

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money that they shouldn't be. Um, and effectively just kind of arbitraring the state. Just not with the districts. are not what the program's intended for. We're trying to minimize the amount that it costs and the lend the money out to to districts interest free.

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>> Um I want to make sure Anthony that I understand what what accounts need to be at zero, you know, for the for the loan. Um if there is a um a reserve or a fund balance that's sitting there and it's sort of

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the emergency y >> the boiler goes out um does that fund have to be spent down to zero as well? >> Nope. So the I think what you're referring to is probably the cable reserve that's a state mandated 3% of your cable spending which is like

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actually revenue closer aligned to your revenue number. So it should just match whatever your revenues are, but it's 3% that's always sitting on the side that is never intended to be used in the scope of each trans. And the way that it works when we're putting that starting cash balance for districts, there's a line item in there for the tab reserve

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that's taken off the top that's taken completely out of the context of the program. That money should be sitting on the side somewhere else. Uh I can tell you that districts will tap it from time to time if they need to, you know, bridge a week or whatever it is, but we don't advise it. Um it should be

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strictly outside of the the context of heat trans. >> Okay. It's not really very much at a table reserve for if a boiler goes out if it can actually be spent right >> think you can. >> Are there specific circumstances where

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you can spend two? I don't know how that works. >> I think it's under district discretion. Um it's advised you're a 3enter actually probably can correct me on this but um I don't think there's an official mandate but it is state does look at that to make sure you have a sufficient tum that

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said like things like um uh certificate deposit stuff like that. Um, we do require that money to be spent because for all intents and purposes, like you could just call those back, you know, maybe you take a hit, but you need to use that to pay benefits.

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And then the other largest one is redemption fund. And then all MLO money or all MLO dollars or overrides including definely schools levies which a little different but um for all intents and purposes it operates. So all

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that included and some districts have very substantial overrides. That's really kind of the only way that see district or more and more and more every year and see the fund balance declining every year. kind of see the writing on the wall. You know, like maybe not it's not an issue this year or next fiscal

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year, but two fiscal years be at a pretty level and the only way to get out of that is spend less cut expenses or get more revenue just get more money. It's a lot more difficult.

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>> And no levy override that money comes in kind of that same March. >> March and June. >> Yep. So in actually in December and this actually kind of goes back to the equalization thing uh we get true up assessed value numbers like accurate assess value numbers hopefully the ones

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that we were using before are close so that's not the case uh we get updated assess value numbers we get updated people count numbers which then get revised again in January so really it's just like getting the the school finance uh formula um as accurate as possible we

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update all the information in our spreadsheet to reflect new equalization values because that recalculates through you get new equalization values that get paid out over those should be January February so it's like even more compressed so it's kind of weird dynamic uh but the numbers should get more and

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more accurate as time goes on >> um I know so obviously the amount that the state can borrow through the the bond program is is fairly limited I'll put that in you know, and it's not necessarily

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limited, but it's it's, you know, a definite amount, right? >> Um, so does every school that apply who meet the criteria get accepted into the program or or you know, is there a place where you don't have enough to

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spread that out? >> Yeah. Um, so actually uh I get this question a lot. It's not necessarily an application. Um, every certified school district in the state is allowed to borrow money in the program. It's

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intended for districts that receive, you know, less zero equalization like the mountain because again, they only get paid three times. If you're receiving an equal paycheck every nine months out of the year or 12 months, whatever it may be, you should be able to meet your obligations. That makes more sense, right? Um, so it's intended for people

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that are districts that may not tell you that's not always the case. Um but there's no formal application process. Um it's communicated by CP or like an FP meeting and other forms. We send emails

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out to every CFO and superintendent of the state or they go out send them go out but uh they'll send them out and then hopefully I get something back saying hey we intend to participate. That's all that it is. Do you intend to participate? If the answer to that is

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yes, I'll go through everything and then set up all their spreadsheets and send all that stuff after it. I'll collect all them. I get 40 emails. Um all which is typically the amount that started the program or start at the beginning of every fiscal year. I get 40 different districts. I'll put the materials

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together for each one of them. Um that which will include the uh spreadsheet, the big long spreadsheet, a questionnaire. It's like a two page questionnaire. It's like 15 questions or something. um that has some pretty critical information in it and then the resolution which is supposed to be left

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blank until we determine what amount we want to go to the board with. Um so no formal application but through the largely through the questionnaire I can kind of decipher like if there are any glaring issues going on particularly like late audits um tax collection

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issues whether for whatever reason um fund balance issues because it has two years ago and had this last year and then it has what you expect upcoming year and like if I see that number declining like that's just going to be an issue particularly for districts that haven't been in the program historically. I will tell you that more and more will continue to participate

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just because that pie that I was talking about is shifting. Um but that said, um between that and the spreadsheet, you can see where your district's going to. >> Yeah. >> Um so I'll, you know, the first thing I do is I'll look at like how much you

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intend to spend uh how much do you plan to bring in revenue versus your expenses. I compare that against your questionnaire. It's like well your questionnaire or your budget phase one budget uh says you're going to be collected over year. the spreadsheet says that you're going to overspend by

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10%. So there's like a difference. We need to figure out what that difference is and there's legitimate reasons for that. Um, you know, it's like, hey, we need to pay, you know, we need to replace a roof in six months, whatever. Uh, so there may be legitimate reasons or it's like that's scenario. We'll go back, we're fine. It's certainly this is

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more art than science for sure. uh and getting kind of everything captured um within like you know a very reasonable amount or a reasonable like uh framework I guess. >> So then I guess not using the word apply

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but expressing intent then >> um >> most of the schools if if they meet you know your your criteria >> who express intent are accepted and are able to borrow from the program. I'll say I'll get 40 emails back. I'll send

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out materials for all of them. Five I never hear back from. Uh five don't need the program, but they're going to update the um spreadsheets for the same reason. Maybe they jump in and out of the program. Maybe they borrow once, but they'll do all this stuff in the upfront. There's actually like three that I can think of off top of my head

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that do that specifically. Um, and then the rest of them be pretty consistent borrowers through series A, which starts I guess now August through January. And then also series B, which is January through um, June.

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Usually it's about 30ish borrowers and that includes very very very small school districts. Um it also includes a few guesses Jerry P. >> Um Anthony, has there ever been a time that by the end of the program there was

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um there were insufficient funds to continue to meet all of the obligations for what what schools had requested. >> So like the the state went to zero and no. So, um, this is very hard, not a

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science. Uh, when we're determining the amount to borrow for a particular school year, we usually add margin on top of that. And I can tell you that the second borrowing that occurs in January, the margin that we're allowed um on top of that is a lot more lenient relative to

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the first series. So I try to be within series A. So from like now end of August, January, we try to be as close as we can um to the amount that districts had to borrow plus a little bit over is fine, but you can't go dramatically over a series B. The

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spending test I was talking about is a lot more lenient. Again, you can borrow 30% more. But that point, it's really an issue. But there was I can think of a handful of circumstances within series A because you know, we're trying to hit the exam. It's really hard because it's based on estimates from all districts

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across the state. Um some of them are just getting just thrown together, but they have other obligations from you know person who wear is wearing like 10 different hats. Um but no uh we can advance the issuance for series B. So we

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can pull it up and we we have some description over that. Um the issues have falls on like MLK uh like holiday and New Year's like we effectively like Siri be Roberts from Christmas to MLK like a lot of people

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just aren't around hard to get hold of >> and the bond market's pretty slow right then. So, um, we do have some discretion over that, but not in my experience because if you think about it, all of the 30 different districts that participate, it's kind of a lot of averages. Like, some will request for or

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need more funds than their indicated, some will need less. And the idea is that it does net out. And truly, it does. I can go back many different fiscal years go back to 2000s of showing like, hey, this district was over by 50 million. This one was under by 50 million. They kn out. We're good to go.

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Um and the other side of that is that largely like one to three districts like dictate a lot of this program which is effectively rounding for them but is substantial for other. So if we add 10% let's say like a

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DPS amount or cherry creek amount or whoever whoever it may be who's borrowing hundreds of millions of dollars um you know it's not an issue to lend out but into to a smaller school district. That said, everybody has to same circumstances. Um, so everybody has to have an spreadsheet. Um, and that's

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kind of the beauty of the program. I guess that way everybody does the same work. Um, just see which ones we've missed. >> Um, >> documentation. >> Yeah. So when we're setting everything

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up, we require district audits, although those are now available online filed. Require district audits um and the questionnaire up front. We also require the resolution private any money going out the door of course expense. Um and then every single month, which is

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the the most difficult part of the program particularly for CFOs and David um in this case is the monthly updates to the spreadsheet. It's the most work right now setting it up because I'm asking every single district in the state or everyone that wants to

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participate. Um I'm asking the forecast out the entire fiscal year which is very difficult. The spreadsheet goes down not just by month but by week. Um so if you pay payroll in the back half of the month I expect you to put the expense in that like that part of the month so on and so forth. Um it's a very long

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process to update all those values and get them back to you which I'm very appreciative of. A lot of them do it very timely. It's done a great job with that. So here's the back in time manner and then once I have that every single month then we'll uh so every single

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month goes by we'll just go back to the previous month and update it with actual values. The idea is that we're taking just a forecast of 12 months and then by August we'll have July actuals. So one month of actual 11 months of forecast then we'll have 10 and two and nine and

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three so on and so forth. Um, so as time goes on, um, we're getting closer and closer to what the actuals for the district are as close as possible. So by the end of this, I should have a very accurate representation of like how this spends their money by week um, effectively. So even when I'm setting it

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up for, you know, right now for this fiscal year, so 26 27, um, I can look back at their old spreadsheets. It's like, well, you ended up with a surplus. Why is your cash sale? That doesn't make sense right? That's the the monthly monthly part of it.

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>> Does a disclaimer opinion is it treated differently a full? >> I don't think so. No. Um I mean it certainly warrants attention from us like they do an audit and see like okay what is your I really it's

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hard to determine particularly from fund balances because fund balances and cash are not always the same thing. They should be close, but they're not always the same. So, you can look back at three years of audits and get a general idea of what the cash balance is going to be. Um, but the quality of the audit doesn't

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necessarily make a difference. I do care that you file a profit though. That is that's a very important one. And it's again, it's I we dealt with the district last year, but I hadn't filed in like three years. I'm like, well, how have you got like going on like uh so it's

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Yeah it's >> feel good now. Yeah. in that situation. But >> but like that's like if you haven't received property taxes in two years, it may not make a difference if you're like

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fully uh state funded and receive a check from the state. Um obviously like CD little catch that, but um they had to file an audit. So they wouldn't be I don't think any

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conscience >> um so so we kind of covering here like this the state's equalization payments is obviously based on our our um student count >> um but that's not what we're borrowing

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against. We're borrowing against the tax local taxes property tax and that kind of thing. So I I think that student count is one of the questions on the questionnaire. Is that how many there >> probably is?

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>> Okay. Is that part of the calculation of how much money a school can borrow or is it just looking at the property tax? So the through an indirect way I'm not sure if it's actually on the questionnaire but it is an input into the spreadsheet and everything that goes into the

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spreadsheet is provided by CDE in school finance app. So whatever goes into those inputs sometimes we get it's like hey the student count is very inaccurate. It's like well that tell them so then they can adjust your funding and then I can come back and fix it. Um, but I will

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never take liberty or do anything like that in terms of adjusting any of those values already. Even if the district tells me it's wrong, like the like you know this like for example SOT and how it's being treated for the specific ownership tax like oh it falls over here falls over here like I'm going to take

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whatever is given to me the best estimates and that's what it's going to be because ultimately uh districts get paid based on whatever that school finance act is again right or wrong and in December all of those values are chewed up. So if there are issues or

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anything like that particular like student count assess value that should flow through to the funding um and again I've just used the school fan like the same one you can get on CT's website and that's simply the input which an input of that is people count >> and that and that number was used to

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kind of help determine what our cash flow is or is that used to determine like what we can borrow against? that will impact should impact your equalization, >> right? >> Like amount or size of that whole pie, but

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it doesn't directly impact the spreadsheet in any way other than that. I just take the input and put it in there because if I start changing stuff and it is on me and then also it's not going to work out with how districts are being paid for six months. Assessed value is a big one. So like

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these reassessment years when we know assess value is going to go up 30 40% for rent for say gas district because they know they can see the doubles being built. >> Um and oh um and you know maybe their estimate

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from legislative council which is where those aims come from flat that's going to shift your f your funding formula dramatically. you're going to be going from somebody who probably receives equalization to now you're fully locally funded. Um so Bennett School was one of those last year that they went from

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receiving equalization to actually you need to pay back that equalization >> as well once you go fully globally funded. So um again it's like they knew that their AV was going to go up 30% despite the estimate being down 10%. um

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they were very fiscally prudent. They can say that they save that money so they can repay it. Um but uh again it's just an input that that they're going to receive it for six months and then just we know in six months you're going to need to the whole thing is going to shift around or repay it.

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>> Okay. >> From time to time actually. So I understand clearly it's it's more the student count is more about what equalization the funding we're going to receiving from the state and not necessarily the the

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>> I'm not and going into answer this better than I can exactly how the input goes into your total program for uh formula >> uh in terms of people count because it also depends on you know ELLL um uh there's like a ton of different factors now it's like very impossibly

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complicated every single year. uh many other factors that go into it. uh but it does impact it indirectly but it impacts your total program I think more than it impacts like one particular component of those because your total program can swing pretty dramatically depending on

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people count which makes sense just then the composition of that isization factor >> but what this program is designed to borrow against is the local portion Correct.

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>> So that local portion might constitute a larger portion of the total money coming into a district, >> but which is something you're looking at to see what our cash flows would be. But when we're when we're applying for, hey, we need to borrow x amount of money.

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You're just looking at the local taxes coming in, not the state equalization. >> I look at the composition of it. Um because >> well, I mean to to decide how much like the amount we're allowed to borrow. It's it's solely based on the amount that a district can borrow. And again, it's not

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a hard and fast rule, but it's we've used this for a handful of years now. 70% March, May, and June property taxes only, not including equalization. >> Okay. >> But that does include overrides. >> I'd say it more impacts your total

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program formula size and then the break like if it's larger, obviously the breakdown's different. if it's smaller or same thing. And then I just take that calculate your bar. Answer that. It does not impact the district longer financial positions unless you're borrowing more and more

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every single year and your fund balance goes down and down but within the year it's just a line item in your participation. So it doesn't necessarily have to it's not voted upon by the public but

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like federal agencies care a lot about your fund balance um and this some is with that. So if your general fund balance is declining you're borrowing more or more they're going to take a second look and they're say well district this district for example is a lot less credit worthy from their

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perspective and I can also see that like hey they're be in a bit bad position within a couple years which is usually the the time frame that we can forecast out. Can you clarify too like I know like when you say fund balance we you generally like use the term like

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reserves like is that is that the same thing or like because I know that there's table reserve y >> and then there's like what I guess we consider is that like unassigned fund balance or I just want to make sure I'm understanding like the language right >> I'm specifically referring to general fund balance

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>> okay >> um sometimes I think that unsigned fund balances will flow through there for depending on your account policies um but specifically the general fund balance. So when you go into your audit, it's like the very first line item uh general fund starting balance. That's

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that's the value. Um but again, we don't we don't require or other than like yeah general fund cash balance is the specific like which is not the same as your fund balance. It should be it

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should be close but the cash that you have in the bank will matters not you know wherever that money signed to particular funds or what have you care about how much cash I guess you need to pay salaries not like fun balance and

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that's too >> when they talk about kind of long-term implications of participating um you know so historically before this program or for schools that aren't participating, right? You do kind of have this influx of cash at the end of

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the fiscal year because that's when the property taxes come in. So, if you've been able to kind of bridge that gap on your own the whole year, then at the end of one fiscal year, the start of another fiscal year, you kind of have this lump sum. When you're participating in the program

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though, you because you're having to pay it back as as you go, you you don't necessarily have that kind of lump sum at the end of one fiscal year to bring you into the start of another fiscal year because you were kind of borrowing all along. >> It's a it's a good question. I'll point

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something out. Um when you start borrowing just say it's about whatever they borrow in November, December, January, February typically repay everything is repaid in March. We don't require districts. We actually tell districts not even if they figure

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find some cash somewhere else. Do not repay the loan until March. It's mid March. So as you're borrowing, you're not continuously repaying. Um same thing with April actually because April you don't see any property taxes or like maybe like whatever. Some districts will send us a check and it's like they told

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me specifically not to do that. Wait until June the following month, which is a good position for them to be in, right? Because you receive property taxes, you invest those proceeds or whatever you want to do with them or spend it on whatever and then repay it the following month. But um that answer

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it >> kind of I I think it's more like instead of having a lump sum at the end of the year when you kind of are able to recoup that if you've been able to make that bridge you're because you have to repay what you borrowed earlier in the year.

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You are starting the next fiscal year with a smaller >> not necessarily. >> Okay. Um, if you run a balanced budget and you start borrowing because all you're really doing is think of it like a bridge loan, you're just advancing the money you receive in property taxes

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later on in the year. That's kind of the idea of it. So that money is net net assuming you're running that balance budget will end up you'll end up at the exact same spot you started the year. So if you're borrowing 20% of your property taxes, it gets

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repaid in March. You're going to receive the other 80% that you otherwise are going to. So the the total pie of property tax is the same assuming um assuming that you run a balanced budget. The problem is that if you not run a balanced budget, um you're going to

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start lower and lower. And again, because I mentioned it's not linear by one, >> it's exponential. Yeah. So, uh, your fund balance goes from whatever 50% of what it was to now 25%, now 10%. Um, so you kind you step down pretty quickly.

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Um, which is unfortunately the situation that most districts are in just mainly from salary pressures. >> Yeah. >> Insurance. >> Insurance boilers roofs

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are very expensive. >> Okay. So that's I guess worth mentioning like lease payments are because there lease is paid out of it and you guys appropriate that money every year because it's on a bond technically uh on a deal bond at least. Uh lease payments fall within the virtue of this

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and I can see some districts that take out leases and then use this to borrow against it but the end of the day they're still at least for 20 years. So it's a very unwise way to use it and we don't we don't advise strongly against

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it but people do it unfortunately but like cops so like a district that is has this camp that can't pass a geo bond or um whatever it may be that has substantial amount of certificates participation outstanding which there are handful of them um they

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will that needs to fall within this because it's paid out of your general fund. So the money that is going to pay those cops is the same money that's being used to pay regardless of the fund put it in it's all property tax revenue that comes in it's effectively parity

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the salaries which is why like it's a very hard argument to make with people who pay this lease for this building or do we pay salaries it's like well all needs to be included in this um because it all comes out of your general fund. Um I think the the last few questions we have in here unless other people have

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additional ones that have popped up right um you know when you're talking I don't know if you talk to school boards all that often first when you're talking to school boards right um what is or what are like

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the top things you want them to walk away understanding the like what's most important for a school board to know >> um when participating or when deciding if they want to. >> Um it's better to have and not need than

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we did and not have. Um so if you're on the cusp of borrowing or you're like hey maybe we're going to be short. There's a handful of large districts this year that have not participated in the past but like maybe we're going to be shortened. like let's get everything in place because if you call me and say we need ex you know need $100 million next

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week which has happened before it's like you have nothing done then you know we need to start from scratch and you have a board meeting it's like there are a lot more steps on the go um I advise districts if you can fill out the spreadsheet and it shows whatever it be

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x amount of dollars to to potentially borrow just put it in the resolution because again we're not borrowing that resolution borrowing whatever spreadsheet says based on cash flows, what have you. Um, that's the biggest take. I for any

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district that's on the cost of borrowing, it's better to do the work now. It's a short-term pain for uh, you know, down the line if you if you need it. Um, there's a cap, of course, that that you can borrow against, and that's your property taxes. it's first lean,

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meaning before anything else goes out the door, the resolution says within one business day, that money needs to be wired back to the state. Even if it's not sufficient to repay your loan. So if you have a $10 million loan outstanding and you receive $5 million in property taxes in March, the state wants that

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five million or we and the state wants $5 million in those property taxes and then you know uh or yeah, then you only have a $5 million balance. So you'll continue to borrow through April and then hopefully make you pay June. So uh it's not like you get to keep that

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amount because you can't repay it. It's like you can repay everything that you take in the door for March and June. So it is truly first. Um you can't have any parody loans against it. So if you don't want to go or participate new trans on the onset and you want to go take out a

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bank loan, the bank loan has the same lean on property taxes, you can't participate. That will exclude you. um assuming it's the same funding source if they're in a I don't know sequester building or something that's different but generally most districts will go

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this route because it's interest free. Um and then finally that you can't get all the money up front. Um it gets paid sporadically or intermittently depending on whatever your cash flows indicate. So you can't get all of it in August or September or even at the beginning of

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the month. Um, we make sure we align it with like exactly when you need the money. Again, to give that time, it's actually for smaller districts, it doesn't matter as much as larger districts because we're talking about here and there. But for larger districts, that can make the difference between $40 million in interest for three weeks uh which is substantial

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amount of money uh that the state's paying or the districts are banking. So, we do try to have that specificity in them and then everybody goes through the same process. Um, everybody has the same spreadsheet. I can refer to specific cells in the spreadsheets. It's the same

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for every single same for DPS as it is for. >> So, you mentioned uh, Anthony that the like the earliest that most districts or like that even the districts who need it the most are accessing it is September, but is like what's the earliest that you

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could possibly access it like in the worst circumstance? >> Pasly in July. >> Okay. uh I'm not going to name the district but um I was talking about earlier about how delayed the issuance is so like August

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cash balances there are a lot of benefits to it but it also lessens uh the interest amount the state has to pay because you're not paying the extra one month whatever whatever the amount is um delaying the issuance the only real

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drawback from a perspective is if districts need funs sooner. So if you need funds in July for example, we don't have the money in this year this 20 26A series this year. Um we don't have the

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money until the end of August. Um we can't roll over the funds from the prior year. Uh even if there was October um we would need to know about that as soon as possible. So then we can shift the

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timing for the round of when we issue the the notes such that you can make those cash flows. The real issue with that is is that if districts need funds in July um they should be at their highest cash

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balance possible on July 1. Sorry every July 1 the highest cash balance the district pass whatever it's around that time frame. So, if you're immediately needing to borrow funds, that's a major red flag because that means you have already spent through all of the cash and property taxes you received from the

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file the prior fiscal year. That money's all gone. Now, you need to borrow from July all the way through to February, >> right? >> Yeah. >> And you would quickly run a foul. We've done this math. You would run a foul percent limit. Um, but largely it's

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like, well, if you borrow all of your funds that you're allowed to by December, how are you going to get through June and February? two, how do you intend to repay the loan in March even if we want you all this money because you just quickly spent through it? Um, we were able to kind of work that out this year thing, but uh it

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is a certainly an issue if you delay that is because we would then need to shift all of our time back which is again subject to all the different school districts sending materials and resolutions. Um, so like in that example, I would need to go to every single school district and say, "You guys need to hold special board

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meeting," which I really don't want to do because then special board meeting. But no, like most school boards meet in August is like at the soonest. Um, and some of it's just like a non-starter. But if that were the case, I would need to go to every single one of them, get

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them to pass the resolution, and then I can go issue the notes. It take a lot of leg work though. So even though like a district flags like in our case or they express their intent to participate like until you actually get the some kind of approval or feedback from from the program right

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from you guys then we then the board still has to approve a resolution in order to like enact that right so like let's say we got approval it's August we get approval then and I think we did this last year right like I can't remember exactly what time we did it but

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like David came to us and we the resolution and we reviewed it and we understood the the the nature of what we were borrowing and how it was going to be repaid. Um so that's all that's still that sequence of events has to take place regardless of when you start to access the funds, right? Like then you

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can say like then you come back to the district and basically say yeah you are the borrow as early as this amount or as early as this time frame >> and you have to take the resolution to your right. my uh it's not me it's the attorneys um the

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moral first program working on it uh they want the resol if you intend to participate at any point in the upcoming fiscal year they want to have the resolutions in hand before we issue the first year so in that case this year it's like August 26th or whatever they tell you that that's not always the case

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there are other districts for example that like who those kind of fringe ones who don't maybe we all think they They may just prefer not to have a resolution on hand until because it's never a meaningful amount, but they just prefer not to go in front of the board if they don't need it. Um then they'll

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need to go October guidance in December of last year. Um which is the case for a lot of districts as well because they also for new CFOs they didn't know the program exists. They hear about it and they're like this is a way better option than bank loan

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and then you go through all the processes. The issue is like if a giant school came to me in this October and said we needed $100 million by December like I don't I could there's no way to really solve that just because that money's already been

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borrowed >> stagnation. Yeah. >> Okay. >> But we strongly strongly try to have everything buttoned up by the end of the first or the the closing date of the first issuance which ended this year August.

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But it has to be so that's attorney rules um the district school board that's fine before you officially get money to work the state.

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Okay. Um can you explain too then so how does this work for districts that have charter schools and how does it affect at all charter school flow through? >> So the way that the spreadsheet works and this is um

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touch on this position uh the only way that it it flows through in the spreadsheet is a monthly pass through our school. It's a line item, same line item as some line item is treated the same as teacher salaries. It's an expense in the middle

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of the month or whatever it is. Okay. And you say how much is going to get passed through. That's it. That's the only uh way it functions with any trans one

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pass through. And so just to be clear, it can be included the ex the flow through is considered or can be considered an expense of the district, right? And part of the obligations that >> that the school district is, you know,

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pay through paying to pass through those funds from the state in any given month. >> Yep. >> Okay. That's helpful because I think I previously understood just from an accounting perspective that um flow through wasn't necessarily recognized as revenue expense that it was just kind of

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revenue like in and out of when I follow the equalization number it does include the amount that's attributed to a charter school and then again it's just a line item charter school it's exactly the same thing as a charter school payment or

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something and for districts that don't have it zero but It's treated the same way as any other expensive district has largely salaries and benefits. >> Okay, that's really helpful. Thank you. >> Yeah. So, if you put million dollars in

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each column, it' be $2 million in expenses. >> But it's just a I mean it's it's essentially a wash, right? Because of the revenue in and out from the district in terms of how it flows through. >> Not necessarily. If you here so this be the last bet but uh if

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you try to pay equal 12 divide whatever those payments are you say salaries and benefits um anything else we'll say salaries benefits you pay them every equally every 12 months you divide them by 12 the problem is that you're not receiving more revenue until March and

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June so you can borrow more more and more that exponential curve uh sooner to meet those obligations early on. And then if you have discretion over when you pay those, so be with advis

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paychecks or you delay things to contractors, whatever, you can work closely align your revenues with your expenses, but you don't theoretically have to do that. >> Okay. But the the the designation as an expense is really key. So I appreciate

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that. Yeah. It's not very good. >> Um, you talked about for the board having to have a resolution come in front of them before we can start borrowing anything. >> Um, does the resolution have to be the exact

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amount we need that month or can it can it be larger so that the uh, you know, the finance team wouldn't have to come back to the board so we just have like one resolution. I strongly advise that it's 10% larger. You can't like

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>> So looking at your spreadsheet, >> hopefully David's fine. I mean, you're gonna see it anyways, I guess. Um, >> so your resolution right now, I don't know if this works good, but says 1.6 million. So by all means, I strongly advise you to plug in 2 million in the

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resolution. It's a round number. It's good to work with, and it gives you a $400,000 buffer. What I don't want is district to say we're going to pass the resolution $5 million which I do get some back where like they'll send me the resolution before I review anything. The issue with that is like now you have uh

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you have a free line of credit effectively up to $5 million um that you can tap that's been approved by your board that I have really recourse against. So in those cases letting them go back in front of which is a horrible look to then lower your resolution like I didn't view this stuff. Um but if you

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it's a 1.6 six. You plug in 2.6. That's fine. It's better. So, you don't have to hopefully hear about it for the rest of this clear. >> I will say the second resolution is only two pages though. It's not 15. >> We're reading through that last year.

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>> Yeah. >> Um >> and that that resolution is what you're planning on borrowing for the entire year. >> The whole year. Yeah. >> If you pass it once. Um so in your case it

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it is of the 1.6 6 1.5 is through January. Most of it remainder is February. Then you repay slated to repair all. >> Do you have one on that document there when our first uh request was going to

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be? Is that part of the document? >> Yep. October. >> Okay. the the early amounts are usually pretty small and then it ramps up very quickly for districts as they are borrowing zero. Uh you you start to tap

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into that cash balance and then by February you're like way in the red so you're a lot more and more and more so like pace in January you're taking out for dollars >> in it starts or something.

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>> Yeah. And if for some reason, you know, we passed the resolution in August that we're good for the rest of the year. If we needed to borrow, like if it turns out we needed to borrow before October, >> would would we be in a safe place at

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that point or do we run into the risk of hitting that 70% before we're starting to receive revenue? >> You guys are so far off of the 70% that it it's not a concern. >> Okay. Um guys, but it's all in

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it'll all be in the resolution. This is like actually the last page that gets required in port packets. So hopefully you see it. % >> yeah 14%. So like not even close to seven

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um like hey we you know want to spend all this money and this this number goes from 14 to I've seen this before something happens in a district or you know changes leadership or whatever it may be 14 goes to 50 the following year there's a precedent of this happening

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that's an issue because you'll probably get one more year before you legally because all that means is that you're outspending by a very wide margin. um which does happen of course or you know receive enough revenue but you have

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14 to 50 and once you're at 50 you can run a foul of 70% of something happens very easily like within two fiscal years usually um you can see kind of the red wall at which point like

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I've exhausted the this resource um that said I don't think we've ever in my experience I'm sure many has returned a district and go away from saying they're going to need too much. Like we have run we've run some districts run right at 70%. Those are fully funded. They're just like this is what it is. They run a

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balanced budget where they you know maybe that good number goes from 70 to 65 the following year or 60 because they're building a little bit of a surplus every year which is that's a good thing to to have. Um but there are some districts that have a credit at 70 and borrow 70 but we need a very good

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reason to to do that. >> Is there just curious is there like a kind of like a point of no return maybe like if you said if it goes from like 14 to 50 you're going oh this is probably not going to be good. Is there like a >> within a happy spot?

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It's kind of a time frame, but like >> so if the district comes to me doing the first borrowing of 50, like something happened between last year, this year, you may need to borrow 50% of the property taxes like ASAP, that's an issue. So new entrance, if they're borrowing considerable amount of money,

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that's a that's a big red flag. Also, if you're receiving substantial amount of equalization because in theory you're if you get all fully equalization or state funded, you should be able to match your revenues and expenses idently

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jump up year over year for new entrance. Again, going from 15 15 to 50 or 60, it's like, okay, what happened last year? And again, this is I work with other districts when this has happened. It's like we need to get something to go after we need to figure this out

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because you know sometimes it's like uh it's like parents something kind of good when you're happy versus a third party coming in telling you like hey you need to get this in your control um at which point again you run into no recourse. So

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those are two pretty big red flags and it's not a red flag really but more of kind of a word of caution is that when the program changes hands in a district even for large districts a lot like this is the

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last thing that people generally like pass knowledge along with which makes it very difficult. So if you're like a new CFO, you're learning how to do everything else that you know that's required of that. Sign checks payable sign contractors whatever it may be.

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This often gets left out and if you're starting from zero without like somebody physically in front of you like the how this works be very difficult. Anthony, do you know how long has participated in >> Exactly.

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>> I think last year was first year. It may have happened before this or took this over, but I'll just look at the last because generally once the school district's in unless they pass wrongs or they were on surplus, they're going to

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be for a while. But but as far as fiscal years, I think David was the first one to participate. And again, like it's a better alternative to a bank fund. It's less cumbersome,

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just a spreadsheet, which kind of sucks, but to get that out of the way, did what it is. Um, and it's interest free. So I think it's a great program. State offers a very certain uh guard rails on it. again in the history of the program.

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Very proud of it in the hundreds and hundreds and hundreds and millions of dollars. Oh, billions of dollars probably whatever it is. It's well into the billions um of money that's been m to districts. Not a single one's ever

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you see many years but just because we keep such strict there's always something comes up or get a call saying next week but we've always figured it out too there's always been like hey that

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instance we'll go to other farms say hey can you like lower this a little bit this expense around school not considerably but like hey we'll put put it instead at the beginning of the month put at the end of the month so

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then you have more fun out so that's kind of where it becomes an art um so it is very fun but no districts ever a lot to write books but do >> that might be helpful.

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>> Yeah. But yeah, uh districts jump in and out. Um mostly once they send me an email, I'll do a work and then get into it. Um and then if I never hear back I can't like be responsible for like that's

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another thing I guess it's like if if you intend to participate I do work there's ample time to do it like this year I sent the spreadsheets out in June got married back >> didn't expect them back till like the followers

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will go quiet but uh if I don't hear back I just can call 40 different with them. That said, it's like if I know you're gonna borrow, I will be like, "Hey, get this over to me." And then this calendar that I mentioned that

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Treasury really tries to follow. There used to be some uh some discretion about when those ones went out, not the 17th, 27,7th, whatever. They really try to last few years try to likely send money out those

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dates. got pretty close to telling districts no last year. MLK is the the holiday this year that follows one of those dates. So if you need funds for example exactly like if you need to pay payroll back after the month uh getting money on

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the 27th help you right you need money on the 7th so then you can adjust the spreadsheets as necessary so then receive money in advance of when it's needed. Yeah, it's it's all last year there was a bunch of a ton of holidays, but this year it was just

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>> Can you um just really quickly clarify the status and timeline of our application like when it was received and what's the status of it now? >> But uh I have received your complete spreadsheet. I've signed off on it. Um I

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have the questionnaire too. Sure. So then the only thing left is to take the resolution in front of the board um between now and August 26th is that we deliver the funds on that date. Um get the money to run out on that date.

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>> And that's the earliest, right? Like it could come later. >> Anybody that anybody that is going to participate for the entire fiscal year, we strongly prefer to have them by August. >> By August the resolution. >> The resolution is that that officially allows borrowing, >> right? Even if you don't plan on

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borrowing till November. >> Okay. Because we didn't see the resolution until like our December though last year, right? Yeah. So is that just elected in August? >> Oh, you're right. >> Yeah. I I think there >> I don't remember I don't remember happening in August. I guess the last

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Yeah. So I remember there being one resolution prior to the board change over and discussing participating in the program. I don't have the exact date off the top of my head, but I do have a recollection

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of that happening prior to >> Okay, December is also like if you were just make sure in December, it's not the worst thing in the world to January because there's more funds delivered in January.

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It's usually like 40% 60% speed. So 400 million from July to mid January and 600 million January. >> Yeah. >> And just to clarify, I think the um what

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uh what was submitted in our case was two separate funding models and both of them have been reviewed or are they both been considered? I'm not sure how that works. Uh we but there's one spreadsheet that

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we just spread. There's only one spreadsheet that operate from. >> Okay. >> Because I make updates to it that's a good message to make or to make updates with it every month like just value that sort of stuff. Uh

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but there should be one that we operate from hits whatever that million dollar number. >> Okay. And depending on the um the funding model in that spreadsheet are there is there are there opportunities then to make adjustments or I just want to make it really clear on like what

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>> Absolutely. >> Okay. >> Yeah. Yeah. So um grant revenue is a good one like if you like nobody knows when those grants are getting paid could be July that'd be great but you know it's often it's huge question mark so what I tell districts to do is be more

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conservative than more aggressive because if you knew and again within the context park is very small scheme like you can move up to 1.6 bill8

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million borrowing easily guys other districts. So that said um uh we strongly prefer smaller districts to be more conservative in the sense that if you need the money we'll borrow the money for you before um because the

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answer we're having in the context of all of it. Um so be more conservative particularly for grant revenue. to just say like we're going to get that grant revenue in May of next year, maybe it comes in December. So then once we pass December, I'll have you stated to remove

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that grant revenue that comes in that he anticipated for May and then put it now in December. So we're effectively just true, but um that would be an adjustment if your borrowing is going to go down. It's going to say, "Hey, we're not going to get this huge revenue coming in until

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way later in the year." It actually came in December, so that's good. We'll put it in December, get rid of it in the future. We'll count it and then the other one edit or um roof goes or goes

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or whatever in the last month. It's like we actually, you know, we only forecasted this much money. Now, we had a million dollar expense last month that we didn't anticipate. That'll change your borrowing almost uncertainly. >> Um it'll go up more sooner if you weren't part of it already. That's

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totally fine. that happens. That's why we usually allow some budget in your resolution and then using the amount that the state borrows. So all districts like last year it was like 470 is what was anticipated between

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January usually on top of that too. >> So if districts need more money. >> Okay. So in theory, like if all of a sudden we had a million dollar expense next month, like we would be able to go back to you and say, "Hey, we actually just need to borrow more money." Is that >> Yeah. True. Okay.

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>> Yeah. I I really really want to do that because I don't want them to come to me after the fact and say, "Hey, we knew we needed to pay this million dollar like we'll just take a lossy set for example, not in that situation, but like we know we need to pay this loss. It's not it's not the spreadsheet." And then I look

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back and why is this way different than I thought before versus somebody experience like hey we need to borrow this money sooner we know we didn't think it was going to happen just middle of the year whatever it's very fluid >> okay

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>> even for districts too >> okay >> like people count we didn't expect this many students to leave the state or district or whatever it is rather than I'd rather not early on because I can see students out first is finding out about it in December. It's like well now all of your

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funding but yeah you can make you should maintain this for sure. >> Okay. And just to be clear um it's only something that's available to districts directly right in terms of like charter schools can apply. Is that right? Okay.

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districts only state like 30 any given year 25 to 30 will actually participate in borrowing. >> Okay. actually topic but like the only thing or one of the very important points that um is

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covered in those rating presentations with all the rating agencies effectively with the state's credit rating is what percentage of revenue or property taxes are districts borrowing against and I have to go line by line all these districts that intend to participate um

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and then call out specifically the ones that are approaching 70% regardless of their So it is that's like a 30 minute conversation with them like hey this district's miss for this reason but if you're borrowing 10 15% in your case

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>> okay and so just to clarify then the reason why we're only borrowing 14% is because theory we have enough cash on hand to be able to cover beyond that right so like if we didn't then we would be logically borrowing more so if you cut your starting cash balance

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in half you wouldn't go from 15. It would be like 50. >> Okay. >> Mhm. >> Fortunately, you guys have very strong cash throughout the year and also you understandization

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relative to other issues. >> Okay. Because that's one of the things I think at least I'm personally wrestling with is that this this idea of like our reserves are critically low. like we can't or like we don't have enough money to be able to like uh you know pay for

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an a really unexpect like big unexpected expense but it seems as though I mean yes we would want to have always want to have more certainly right but that based on that 14% number we actually could utilize far more and still be

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>> within the expected range of the appropriate openings that we're going to receive. Yeah. in terms of property property. >> The only issue is that um and I agree 14% are not 14% is not concerning help at all. Um there's quite a bit of runway

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there. The issue is that if you bump up your expenses considerably without increasing your revenues next year, you're going to start with right half catch of whatever it is and now you go from 14 to 50 and then you go from 50 to 70. It's usually how it's within a couple years I said.

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>> Yeah. uh that you run into issues. So unless you for example this is the way it works for not particularly you guys but for other districts they're promising rates with no source of revenue coming in for example uh the issue with that is that you have 1450 to

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70 to go on here but um not case but in theory you just need to run balanced budget thereafter to keep it at a more stable level but you can slightly spend problems

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dramatically on spending run into that issue. >> Okay. >> Yeah. I'm still trying to I'm still trying to wrap my head around the idea of the exponential increase. Is there any like any way to do you have anything that illustrates that? >> Yeah. >> Yeah.

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>> Well, I think it's it's how much money we have. So if we're borrowing like 15%, then at the end of the year, you know, we still have a good chunk of the property tax sitting in to start the following year with. The more you borrow this year, the smaller this portion is

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at the start of next fiscal year, which could mean we have to borrow even more. So basically, think of it like two beers of water, right? And so if we need to fill more of this beaker from this bucket from this beaker earlier in the

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year, then this bucket, which is what we're starting next year with, is already lower. >> Yeah. >> And so then you would have to do it even more and eventually there's nothing left in that next figure. >> Okay. it and and correct me if if this is also wrong, but it would seem to me

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that the people that tend to buy maybe borrow a higher percentage are those that are more property tax funded. Yes. >> And because we have a lot of um backation, uh state equalization, then we should be

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on the lower side. >> Yeah. >> Okay. >> That's another issue, too. >> That's that's important. Yeah. because I assume that we were much higher in property tax relatively. >> I think you're close to 5050. >> Okay. >> It might >> it might swing a little. It's like 40 60

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something like that, but it's pretty close. >> Um you're not fully locally funded and you're not fully state funed either. If you're that's a big bar, but that's a big red flag, too. If you're fully state funded and you're borrowing money, what are you spending? Like you should be able to match your own expenses every

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month. What else is going on? >> Yeah. Okay. >> So, so it's we don't want to go higher. >> Okay. Right. Yes. For sure. >> Without additional revenue, >> right? >> Because typically with those expenses,

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like I mentioned, like they're they've been promised maybe raises or whatever. Maybe it's hard to get like once you bump it up, you can't hold back, >> you know? >> Right. It's like getting your raises out of your reserves. >> Yeah. Which

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Yes, it has happened. >> You might have seen it happen, Vinnie. >> Yeah. Um, >> I think the other thing, you know, I know you've been giving information um program specific and I I appreciate that. So, this is more sidebar for our

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our group here. um to remember too as opposed to you know borrowing last year which we did we still had this the sales tax coming in last year to previous this school years

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>> right I'm sorry not school year but >> there was a year where we borrowed from the program while we still had the sales tax revenue coming >> so we're already kind of in a position where we are needing to borrow more

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earlier in the year because we don't have that revenue coming in and so want to make sure we're not overextending the borrowing. >> Keeping that part in mind, >> right? Because previously we weren't paying the CLP out of general fund. That

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was coming out of the sales tax revenues >> and now it comes out of our general. different. So that should be like for sure. Um so just by way of example all I did the only input that I changed in the spreadsheet that I got from David half

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cap starting cash balance. So instead of starting with whatever it is now it's divided by two your borrowing goes from 50 to 47. >> Okay you repeat that same exercise. So like if this happened again the fiscal year because ideally that we're in a balanced budget you start the same

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fiscal year at this it's going to be >> do you know what we were at last year >> somewhere around this button. Last year you were at 19. Good, right? Ideally, the number stays

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the same or slightly and it can also be attributed to changing your composition to a program or people count or whatever it is. Um, but like you go from 193 19 >> as long as as long as it's a constant level. It's not going to

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47 in your face. >> Okay. Um last one to me can you clarify that um with the as you described the flow through the I'm assuming that revenue is also part of what is collateralized involved. Is that right?

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>> Um >> because it's part of whatever the district in to in totality is receiving right. >> Yeah. Yeah. because it's it's a it's a component of your state like people count obviously

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depends on whatever the opposite line charter two large ones they go into your count impacts your total program your total program changes how much that pie is based on property tax or or equalization

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so indirectly through property tax I guess whatever pieces of that piece of that. But >> so just to clarify then like it's not just the the the funds that are being paid directly to the district for

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district operating expenses that are being collateralized like like the flow through and and like the total program inclusive of the flow through is is is the entire sum total of what's being collateralized and for the does that make sense? kind

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of I think the best way to think about is all of it is one. >> Yeah. Regardless of how you're slicing it up, all of it should be included, including charable payments or expenses or paying for a boiler or cop lease,

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whatever. It's all on par with everything. Like all of your expenses are treated the exact same. There's no priority of of salaries and benefits. That's more of an internal district thing. things like do we prioritize this kick this expense back what have you um

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and part of the same total pie it also impacts the total program which impacts the equalization property check so it's all one piece so it all should be thought it's not like school and everything else like

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should be or pass through payments should be treated the same as like every other expense Okay. >> So, it's not that we're so we're not like in that case what I wanted to clarify is like that we're not necess we're not like taking a risk on behalf of another party like it's all the money

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in its entirety with the whole pie is is inclusive of everything. Does that make sense? >> Let's let's just say you would let's use this right? >> Yeah. >> Um you could base 12 times a month or 12 times a year. Yeah. >> Um

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you if you paid that lease like if you just want to pay it 12 times equally, that's one way to do it, right? Um you would be ill advised, especially if you only get paid in March, May, June, to pay that lease,

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you know, 75% in July because it doesn't match your revenues. Um you can closely match your revenues to your expenses. That's the best case. That's how it is. Just like that. It's the whole basis of fund accounting. It's like you're not district shouldn't make money or lose money should try to operate you know at

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a consistent level generally speak. So by increasing your expenses earlier on for any purpose um so say for example you take out which happens in in year a take out COP and the first payment is due in December. It's like well we're

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going to put the money in the account in August. Why would you do that? um you should pay it when it's due um or uh try to break it out accordingly. Hopefully that makes sense. >> If you front run expenses, you're worse

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than your own cash position. And by way, right, >> the same thing. If you're woring your own cash position, you're getting that exponential curve pretty quickly because you're borrowing sooner constant for any any purpose. Like if you promised, this happened two years ago.

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Everybody promised bonuses in December um and they just immediately wor their cash position. We ran into this scenario where we're like we need to figure out how we're going to shift money around for districts because like I got the call saying we needion in three weeks. >> Yeah.

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>> Why why do you guys promise bonuses at this time? Because the fact like you're not bringing any money till whatever it may be. >> Okay. >> For whatever the purpose was. >> Okay. I think your question is tiptoeing into like did we put our

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flow through for merits payments into our proforma that we send um and I don't know if you've had a chance to look at it but it's in there um I think where there is questions right so in both you

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mentioned two two um spreadsheets right so in both spreadsheets it has the full amount that the district will flow through to merit getting to them by the end of the year, >> right? >> In both those >> Yeah. >> the the difference is is when and so I

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think what where it is and what David was trying to do and what I hear here is that um if we make 12 equal payments, we would not be borrowing 15%. because we would need more money sooner

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because we don't get that money from the state. We can't we don't have that cash on hand to cover the full flow through until the property tax comes in. So in order to make 12 equal payments without dipping into our own district reserves,

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we'd need to borrow more from each program earlier, which could have put us closer to I don't know the the 40% of what I think instead of instead of borrowing $1 million or 1.6, I think it puts us closer to 4 million

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>> that we would need to ask to borrow and we would need more of it earlier in the year. >> Okay. Yeah. So that's like in both those for in both of these spreadsheets the flow through to merit is there and by the end of the year we're calculating

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giving them 100% of it. It's just the timing and what financial position it puts us in depending on when you borrowed it. >> Yeah. And when I was I think that all makes sense to me. And I think what I was trying to clarify is does it um does that the portion of funds that is flowed

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through does that um jeopardize our ability to pay back the loan if that makes sense like because it's but I don't think it's because it's of the the way it's collateralized. So >> it shouldn't because >> property taxes or the amount you should

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receive in property taxes does not change. Mhm. >> Um it will change when you pay it back probably. Um don't remember if you bring in $4 million in margin property taxes, but like if that's not the case, now you have a loan outstanding until May. Um

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and then you know, maybe large property tax payment doesn't come in or something happens with the treasur or something like that. Then you quickly get back to like late May, early June. Now we need to figure out what way he's making up front like ASAP and that the final payment date like the

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end of June but um that would be the only scenario is that if you're borrowing more it just takes longer to pay it. Um they most kind of think about it like just something their head. So, so in theory then this is more a question we have for us like if we

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based on the funding model from last year we paid we started borrowing earlier than the other ways would have needed to if if uh if we were following the funding model that's been articulated for this year so far. Is that right? I don't know that I understand your

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>> based on like the the model in which the payments are closer to equal right that was and we used the errand loan last year >> uh we did use but it's my understanding that we actually dipped into our own

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district reserves at the beginning of the year to make those payments equals and didn't borrow until December and then paid back the loan paid back the reserve.

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Okay. Another thing to keep in mind is the more we're borrowing. So if instead of 14 it's will be it's double that to 28 then we also are paying with the March

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property tax we're paying out a third of that to out to flow through to the charter school as well. So then what's left of the district is >> you know we're paying off the rand that's our first

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>> and then the charter gets their proportion of the amount and then what's left and so we're now also looking at having less available to the full district when the more word

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came out that month. It's kind of a good point. So if you say you get to March, you have a loan outstanding that's larger than you bring in property taxes. So say you bring in 20% of property taxes, but you pledge 40

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and you borrow 40, right? Meaning you can't pay everything in March or you can't pay the entire loan, just get it off. um you would need to and this is um resolution would need to pay back the amount that you can in all of your

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property taxes and then continue to borrow in March and in April and then you have a larger but then you have a new balance in May that you then just go iterative. So regardless of how you pick up those

394
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expenses, uh you get back get negative or back to zero with um repaying the loan amount and then you have zero dollars in revenue coming in. Assuming you don't get any other revenue sources gives you a new equalization. All of your property

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tax immediately go out the door loan. Then you have salaries, benefits, other payments, lease payments, whatever it may be that you need to borrow for it again for that month in April. But property taxes continue to borrow. So you get in the situation this

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happens like you can borrow and repay at the same time which a lot can't grasp but it's simply the fact that you can't repay the your entire outstanding loan in one shot. Whereas right now the entire thing

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is done in March. Everything you get on top of that is yours like hopefully on your feet. >> Okay. >> And and how that affects the school district is what our starting fund balance is for the next year. >> It won't necessarily impact it again assuming everything's because it's

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>> assuming there's no barrier that you just borrow. >> You borrow longer. Yeah. And it I mean it's can be kind of a headache if you I have to district on this like you because I

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know when those checks go out for districts or when they get wired from the treasur county treasur like I will call them and say you need to repay this amount as soon as possible because resolution saying blah blah blah it's like well we don't have any money

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to pay everything else. It's like well you just borrow and that's never a fun situation to be in for all parties. It happens and for various reasons like the you don't receive 70% of your property taxes till June you're just

401
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going to do that iteratively until June but then we just need to done something. Hey go. >> It is it is thankful for it. Yes. Yeah.

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>> Yeah. Good stuff. >> I think >> else happy to follow up over email or maybe um or to Yeah. You guys have a meeting before

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early. I just I just made a data >> whenever you can send my >> Okay. >> Hopefully that's my question. nasty all the way down there.

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>> Trees have cut. >> It's like a noxious rain. They're all over the world. There's one. We bought our house in December and it's 14 ft above our house line. >> Oh my gosh. >> In six months. >> Yeah. They're like a They grow like noxious weeds and they grow everywhere.

405
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Like when we were in uh Because on my we were on our honeymoon, I noticed them like in the center divide in France. >> Oh, they're impossible to get rid of. >> Hopefully you guys

406
01:56:42.960 --> 01:57:02.159
track them up here on >> No, they're like these like green like long leaves and and like the male ones smell really bad. So thankfully smell like all the rain. I like I see it grow

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like how am I going to do this with one arm? >> All right. Well, thank you. >> Well, I think that was >> very informative. >> Super helpful. >> Yeah. Um again I was a little sad that um no one

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from Darrett just couldn't come. Um you know they had questions about it as well and hopefully we were able to cover the questions that they might have had. Um I think if some of them were able to watch from home maybe that helps them as well.

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>> Um just a quick question because I not I think you mentioned um I think our that was included on the invite was James from the treasury but I don't think he was president. >> He didn't. We got an email or um Anthony said right before the meeting started that uh he was delayed or needed for

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something else at the treasury level. Okay. >> And wasn't able to sign on. >> Okay. Um so just a just a heads up. I when I spoke earlier to Mary, it sounded like she sent a bunch of questions to James. She was hopeful that James would be here to be able to answer some of the

411
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questions that she had sent in advance. Um, a lot of them were very specific. I don't know if they would have been appropriate for Anthony given the circumstances, but um, just a heads up, like I know he wasn't here, but I didn't know what the circumstances were around that, but unfortunately seemed like it

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was a missed opportunity. So, I don't know if I'll get those questions answered by other means or through email, but yeah, I just wasn't was curious about James and therefore mistaken. So >> yeah, I I don't know the specifics. Just that Anthony said he had gotten a call from him right before the meeting

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started that he wasn't going to be able to log on. So >> okay, >> no treasury department that held him back but >> um >> All right. So I I think we've got um some more things to kind of mle over

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based on that information. Um, you know, and I, you know, Cassidy, I know you have some updates on on conversations that you've had. Obviously, at Merit's last board meeting, they um went into executive session, came out and and voted to um

415
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pursue legal um actions. I know that we have received calls from their lawyer Richard Harris about um talking about these things um and and that he's been in contact with our lawyer as well. Um

416
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so we're kind of in that spot. You know, my hope is that meetings like this and and maybe some more of the two on twos would be able to prevent us from getting to that place so that we can keep the money with our students and not spend more of them on lawyers. But um you know

417
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that is our goal here and that was the purpose of this meeting. So um hopefully we can do that but we'll just kind of keep going as we need to and use data as we get it to inform our decisions. Yeah. I think one thing, one

418
02:00:15.920 --> 02:00:31.360
just overarching takeaway that I have is that like one of the fundamental questions and please correct me if you guys heard this differently from Anthony was that I had understood previously that like the flow through payments to charter schools could not be considered

419
02:00:31.360 --> 02:00:47.199
as a part of the e train program at all. It sounds like they can based on what Anthony shared, right? that the that um they're recognized as both revenue and expenses and can be accounted for in the amount that we borrow. Is that correct?

420
02:00:47.199 --> 02:01:02.000
>> Is that what you guys heard? >> It it is counted in the spreadsheet that we send to them that shows what our monthly and and weekly expenses are, >> right? >> So, it's it's in it's in there. Yes. M

421
02:01:02.000 --> 02:01:19.280
>> but not as I think as the proportionate amount for that month not as an equal payment. Right. >> So I I believe that depends on what expenses >> what what you put in there. So if we

422
02:01:19.280 --> 02:01:34.239
decided as a district that we were making equal payments, we would put that in the spreadsheet that our monthly expenses were, you know, that much higher, which I think in this instance is uh close to $300,000

423
02:01:34.239 --> 02:01:52.400
more a month in the first few months. Um, and then the difference is how what percentage of the property tax we need to borrow >> and when. Whereas if if we're not again based on the spreadsheets I've seen if we're not

424
02:01:52.400 --> 02:02:06.880
doing 12 equal payments but 12 payments based on the state equalization that we receive monthly and giving merit their one-third or their you know appropriate portion based on their student count um

425
02:02:06.880 --> 02:02:23.360
as we receive it from state that's that is different and we can make those payments because it's as we have the money in. So we're not putting ourselves in debt basically early in the year to make those payments. We can make those without dipping into reserves or

426
02:02:23.360 --> 02:02:41.360
borrowing extra which just kind of kicks that can out. >> Right. And I think what I also heard too emphasis I believe what we had already understood and had also communicated to Merritt in our two two board meetings with Bat and Mary was that the ear it sounds like the earliest we can really

427
02:02:41.360 --> 02:02:57.119
access funds is September. the you know like we can't turn that we can't turn on ERAN funding for like this month or next month that it sounds like the resolutions have to be submitted by the 26th of August right so we'd have to take action to approve a resolution in

428
02:02:57.119 --> 02:03:13.920
August in order to access those funds and then the soonest that they could come into effect would be September but as of right now I think it change our forecast depending on the funding model check right depending of when we would want when we would need to access those funds

429
02:03:13.920 --> 02:03:29.679
What do you mean by forecast? >> Uh so depending on how the monthly expenses are forecasted, right? Based on the amount of the amount of money that were flowing through, >> okay, >> we would need to access to your point, I

430
02:03:29.679 --> 02:03:44.080
think you said this like months earlier rather than later depending on the amount of those payments at the at the front, right, at the earlier part of the the fiscal year, right? the timing and amount >> because right now our the plan that he

431
02:03:44.080 --> 02:04:01.119
was talking about that is 1.6 million um is is when we have burned through all of our cash on hand for our expenses

432
02:04:01.119 --> 02:04:18.080
and then can show a zero balance and need to borrow against that. Right now we're saying we will hit that zero in October. Right? If we do the equal 12 equal payments, we will get that zero balance in July

433
02:04:18.080 --> 02:04:36.080
and have to dip into reserves even in July to make a12 payment >> into tab reserves or to what >> into our no into our our >> that's what I was trying to ask was the question of like what is it the

434
02:04:36.080 --> 02:04:53.520
general fund balance is that right? Our general fund balance has to be at zero to borrow, >> right? >> That's separate from our TAB reserve. And then I think we also have an additional >> it sounded to me my understanding was it

435
02:04:53.520 --> 02:05:10.800
it it's only our Taber reserves that are >> right or if there's some other um assigned that can't be transferred back to yeah so so it's just so we have to burn

436
02:05:10.800 --> 02:05:27.520
through >> Taber is also right we're supposed to retain what 90 days of or 60 days of I I am sorry I don't >> 60 to 90 >> 60 to 90 days

437
02:05:27.520 --> 02:05:47.840
>> that's not t recommendation right on on assigned fund balance is that on top of >> on top of taper right >> so we would we would not have that >> well I think the at least from what David explained to is that in the one

438
02:05:47.840 --> 02:06:06.320
version of the model that um we would get to zero in November December in another version of the model we would need access to those to er as early as September. So what I don't know is what exactly are

439
02:06:06.320 --> 02:06:21.840
we talking about for July and August because I think that was and when we spoke to Matt Mary this is what we articulated and said hey we don't know you know what what do we do in this situation and this is where we proposed you know a joint approach to the state board to say how do we solve this together

440
02:06:21.840 --> 02:06:35.760
>> because I think that's the the question is if we're not able to access the ran program for two months then how do we handle those two months Right. Right. >> Did um in your conversations with Matt

441
02:06:35.760 --> 02:06:51.599
and Mary, did they express to you um what that would mean to Meritt's budget if they didn't get a 112th portion in July? Like are they able to open in July? Are they able to pay their teachers in July?

442
02:06:51.599 --> 02:07:08.480
>> I don't know. Um in the conversations that we had, this was one of the um we both jointly agreed to exchange cash flow models for uh the version that we had submitted with the errand intent to

443
02:07:08.480 --> 02:07:25.440
participate or application and then Mary um noted that merit would reciprocate that with the merits equivalent and so I think they were hoping to get like the final starting cash position for the here soon or she said within a week and

444
02:07:25.440 --> 02:07:40.320
I didn't hear I haven't heard any updates didn't I didn't know didn't sound like they had that even when I spoke with her earlier today ready but I think that's what part of the question is I don't know >> right because I think right how

445
02:07:40.320 --> 02:07:57.599
significant risk that is yeah >> we are trying to press or at least I am right is is make like I don't want to disadvantage anybody >> right >> and right now I don't feel like I have all of the information to know like okay maybe we can come this way a little bit

446
02:07:57.599 --> 02:08:13.440
more like if we if we can't borrow to to pass a 112 in July what what can we do and what would they need for it to work for them and and that's what I was hoping we'd be able to have conversations on without it going to

447
02:08:13.440 --> 02:08:31.440
lawyers but you know right what is what is what is the you know the their their balance and reserves that they can also dig into like we are, >> right? >> And what lines of credit do they have,

448
02:08:31.440 --> 02:08:48.159
>> you know, in terms of covering some of those things, >> right? Because the goal is to not put the burden of this on either one of the parties more, right? It's like, let's >> figure it out. I know, you know, as a district, we worked with our budget to

449
02:08:48.159 --> 02:09:02.960
cut so that we would have a balanced budget knowing we don't get this money until, you know, different parts of the year. And, you know, we didn't hire the all the teachers maybe we we would have wanted to or we didn't start all the programs we would have wanted to. You

450
02:09:02.960 --> 02:09:19.520
know, we didn't provide um pay increases for our teachers because we knew we were trying to keep this balanced budget. And so, you know, we we have done everything we can up until this point to to have a balanced budget. And so, you know, it

451
02:09:19.520 --> 02:09:36.000
it's it's going to them and saying, "Okay, what what do you need? What does that mean? And and are you able to make any decisions on your budget to help yourself out?" >> Yeah. >> Or does it have to come from our students so that you can operate without

452
02:09:36.000 --> 02:09:56.560
making any cuts? Yeah, I don't know. I think that's part of the followup like and we didn't get the um the cash flow model for somebody just because I know David's been extremely ill, but >> um yeah, I think that it's totally fair to say, hey, can you share with us your

453
02:09:56.560 --> 02:10:12.320
cash flow forecast and where are you? because and that's and that's really openly what we what Rob and I approached them with on the 11th was um we got to have an answer whether how we can use er program or not full stop right like that's going to be a game changer

454
02:10:12.320 --> 02:10:29.280
regardless so the answer is yeah you can but you can't access those funds until September we have got to figure out how are we going to receivables from the state >> um and so total program

455
02:10:29.280 --> 02:10:47.760
state and property. >> I don't think we get any property. >> I'm just here. >> Oh, yes. Total program. I'm sorry. Yeah. >> Um but we get it that portion from the state. Um and so you know the the current plan is okay. We're getting 4%

456
02:10:47.760 --> 02:11:01.840
of this total and we're going to give you the 30% of that which is yours which is again equal to 4% of what you would receive total >> for the course of the year and the district is also retaining 4%.

457
02:11:01.840 --> 02:11:19.840
>> So it's balanced and equal in that sense >> every student is treated the same >> right >> in that decision. Mhm. >> No, no one is being treated that being asked, >> right? No, no one school is bearing the

458
02:11:19.840 --> 02:11:36.079
larger burden. It's it is equally shared. This is how much money we have received as a district and we are splitting it up >> equally per pupil, >> right? the other if we gave them 112 they would be the merit would be

459
02:11:36.079 --> 02:11:51.760
receiving a much larger portion >> and our students >> and the district yeah >> so that's you know part of the consideration as well >> yeah the thing that I have I don't know

460
02:11:51.760 --> 02:12:08.480
that we've anybody has been able to get definitive guidance on other than sort of from a third party perspective what we've heard from Glenn and is um where or what circumstance

461
02:12:08.480 --> 02:12:25.280
seems to dictate what seems to be the norm of the one equal like I don't know where where it comes from other than it is just simply common >> you know so >> I would agree it's best practice when the district is able to do it

462
02:12:25.280 --> 02:12:40.239
>> right >> it's a matter of our district has is being a steady decline in reserves and that window of reserves is not in the 60 to 90 day window.

463
02:12:40.239 --> 02:12:57.199
>> So like 40 40 days right now is what we have for the district. >> 40 days of operating expenses on hand, right? which we need to be very conscious of. And you know, that's just one emergency and we're into the 30

464
02:12:57.199 --> 02:13:12.800
days. And so we we need to make sure all of our schools can stay operating that we have we have the funding and cash flow for that, >> right? >> So that's why this year is different,

465
02:13:12.800 --> 02:13:28.480
right? And again, that the loss of of the sales tax um you know, cut into it because instead of the COP coming out of that, it's now coming out of the district's reserves. And you know, that money was borrowed to

466
02:13:28.480 --> 02:13:45.480
fix up all of the buildings or a chunk of them, including, you know, the the building that that Merid is occupying. Um >> it was primarily the high school and the middle school at the time. Yeah.

467
02:13:46.560 --> 02:14:02.239
>> And so that has depleted the district's reserves more quickly than would have otherwise been the case. >> Right. So I think I just want to clarify too. It sounds like there are two sort of like two

468
02:14:02.239 --> 02:14:19.119
decisions that need to be considered coming out of this meeting. One of them is are we including the flow through as part of our expenses the spreadsheet for each and when and what are we doing in July and August

469
02:14:19.119 --> 02:14:35.920
right >> it is it is in the flow through is in there so the total amount is like in the program so they're aware of the total expenses we will by the end of the year it's just when what weeks of the year those

470
02:14:35.920 --> 02:14:53.800
expenses hit that we would need to adjust, >> right? Yeah. >> So, I guess the question is do we need to adjust like does anything need to be adjusted in the cash flow of monthly expenses for the errand program to be able to access it?

471
02:14:54.159 --> 02:15:13.760
Earlier or later? Right. >> Well, not later. Well, later in the contractual basis funding model. I >> I believe that is what has been submitted already. So that's like baseline. If we wanted to move it up, we would need to adjust it. >> I think both were submitted. That's what I'm saying. I think

472
02:15:13.760 --> 02:15:28.480
>> only >> I thought we No, we received some both >> two were created. >> Yeah. >> One was used as the official one because you can only send one.

473
02:15:28.480 --> 02:15:46.560
>> Okay. Um, well, I think that kind of brings us to the next item on our agenda, which is discussing our August board meeting. Um, and it may be worth

474
02:15:46.560 --> 02:16:05.560
having an executive session to further discuss this and make sure we have more of the information by that point. um to discuss this whole situation.

475
02:16:08.079 --> 02:16:24.560
The sounded like the flow through was scheduled to happen as early as the 25th, right? Two days from now. Does any action need to be taken or anything before that happens or not

476
02:16:24.560 --> 02:16:50.559
before we're talking about August? What do we need to have an executive session tomorrow? It would have to start at 8:30 at night to give 24 hours notice if we posted it like right now. >> Um

477
02:16:50.559 --> 02:17:11.840
I I still don't feel like I have enough information from Merit on what their needs are from us to be able to make that decision. So we're looking for their cash flow in

478
02:17:11.840 --> 02:17:31.920
>> which I believe has been has been requested on several occasions politely. >> Okay. So that that can be part of the conversation. Uh because again like I I I think this

479
02:17:31.920 --> 02:17:46.960
board, you know, if I can speak for all of you letting me know if I can't um like we're willing to to come to a place where we ensure both schools are opening in a good place, but I don't know what that means for Merit right now. And I

480
02:17:46.960 --> 02:18:07.840
don't feel like the district schools that house twothirds of their students would be in a good place if we sent out a full 112 payment in two days. And so that's where I'm struggling. I like I I want to find the middle ground

481
02:18:07.840 --> 02:18:25.439
so that everybody can open and nobody's worrying about whether we've got everything in place for the kids to come in in August. But I need to know that so we can work to that. >> And and I think we need to know what

482
02:18:25.439 --> 02:18:41.120
what I would expect expenses are heavy at the beginning of the school year across the board because there are things that have to be purchased. Um and so I think we'd need to know what our

483
02:18:41.120 --> 02:18:59.479
school also needs. um what our what our district schools need um in order to make sure that they're able to open and start the year out well as well. And you know, and I I I I

484
02:19:00.080 --> 02:19:16.160
don't feel like and and maybe this was discussed when I was gone, but it this concern of of our being able to do this 112 payment has been out there for quite some time since March.

485
02:19:16.160 --> 02:19:32.800
>> Right. Yeah. This is not a new issue. JL or the CFOs have been talking about it since before budgets were set >> with plenty of time to talk about it, you know, with us. >> Yeah. >> Before an emergency situation.

486
02:19:32.800 --> 02:19:57.680
>> Mhm. So, you know, I'm willing to to come in and and make meetings happen, but I I think that's important. >> Yeah. To not this didn't need to be an 11th hour conversation.

487
02:19:57.680 --> 02:20:14.000
Mhm. And as I recall when we started talking about having this meeting, we did discuss having having both boards here and also having a um

488
02:20:14.000 --> 02:20:30.720
transparent conversation on with both with with both boards showing cash flow models and where we were, right? figuring out, you know, where we where we where we need to be and where where we help each other. >> Yeah.

489
02:20:30.720 --> 02:20:48.479
>> You know, it may be that they're in a in a pretty decent place and they're okay. Next month is when they really need We don't we don't know. >> Yeah. And I think like I'm struggling with that too because I think when we left the meeting on July 11th there was if there was I felt agreement that that

490
02:20:48.479 --> 02:21:03.040
was the right approach that both boards were going to come together >> to this presentation to ask a questions that we felt like we need to ask to have the discussion to solve the problem and um and that's why we left the meeting and then later that day we learned that

491
02:21:03.040 --> 02:21:18.640
that was not the case that they didn't plan to attend based on the advice of their attorney. I get that, but it makes it really difficult to solve the problem events right here and now without them at the table, you know, and I that's what I was really hopeful for.

492
02:21:18.640 --> 02:21:36.080
>> Yeah. And it's, you know, not we don't have the opportunity then to work together to solve these problems if we're not >> Yeah. if we're being well lawyers, they are necessary but

493
02:21:36.080 --> 02:21:52.720
often cumbersome and I think it would, you know, be a greater service to the students if we could come together and just well and like you said, we're going to we're probably going to waste a ton of money in the process, right? like we could

494
02:21:52.720 --> 02:22:08.720
have sat down together and talked through this today >> and tried to work something out and I'm so hopeful that we can do that but man now we have like a really short runway and now on the 11th I even said this I think it's it was it's you know it's in

495
02:22:08.720 --> 02:22:25.680
the conversation that was that we had which was we have a runway right now between July 11th and the 25th to figure this out together how can we do this >> and and and and and on Anony's behalf, he was unwilling to cut his honeymoon

496
02:22:25.680 --> 02:22:45.640
short. >> I did call him to see if we can do this on the 17th. >> He made this earlier. >> Yeah, he was on his honeymoon. He did answer the call though. >> I'm sure his wife was not about um Yeah.

497
02:22:45.920 --> 02:23:02.960
So here's a quick question because I think that the so in the cash flow forecast model there is the contractual basis right of like we pass through the farm sales they are receipts and then there's the 12 month the equal 12 month

498
02:23:02.960 --> 02:23:19.680
payment schedule which is more of a best practice and I don't think that it's actually written it's certainly not in our contract and I don't believe it's in the state level as a requirement, >> right? Well, >> and we've always said requirements are

499
02:23:19.680 --> 02:23:36.319
are, you know, low bar, >> right? >> Um, and if you can do better, you should do better. And I think that's the way this district has operated in the past. And and right now we're at the part is can we do better than the bar set by the contract? And that's what that's the

500
02:23:36.319 --> 02:23:53.439
question I I have. So yes, the question so what I was so I was going with that which is that if the um if we if we have access to the errand program then is it still possible for us

501
02:23:53.439 --> 02:24:09.200
to and it wouldn't be 12 equal because we're talking we're still talking about July and August being a pretty significant shortfall of that but essentially equal starting from when we can access the ERP program or disproportionately higher. You know, do

502
02:24:09.200 --> 02:24:26.399
you see what I'm saying? So essentially we're saying we have it we have 12 months right of errand supported funding sorry 10 months of errand supported funding then is it is

503
02:24:26.399 --> 02:24:47.920
it possible to do a one10enth >> or is it up to March? Well, the way Yeah, the way he explained it is it's up to March unless you can't pay, >> right? And it and then it goes on to >> so how many >> as did and it sounds like if we do

504
02:24:47.920 --> 02:25:06.080
what you're proposing of of um trying to increase that funding through the errand loan then we are taking out we we are going to take out significantly more >> earlier >> and and and more total

505
02:25:06.080 --> 02:25:21.840
>> right >> more total >> um and so It's going to be that not that 14%. It's going to be higher >> um by some >> and then and then we may not be able to

506
02:25:21.840 --> 02:25:38.319
pay it with the property taxes in March until it may go into April, May. So that's just the >> it was like Anthony was saying your cast position is worse if you can't manage your if you can't match your bills with

507
02:25:38.319 --> 02:25:54.080
your with your revenue sources. >> Yeah. Right. So if we're not paying like right so if the funding if we advance funding based uh you know in excess of what we actually receive then we're not

508
02:25:54.080 --> 02:26:09.120
really matching right revenue expenses >> we would have a much higher expense >> right we'd have much higher expenses in any given month if we were to do that then we would have revenue >> right and even so like okay we we we give that smoothing payment in July and

509
02:26:09.120 --> 02:26:29.760
August >> like by the time we get to September, we we're already so far out of whack of what money has come in >> and we're not even we're not even, you know, to September. >> So, we're borrowing sooner. We're

510
02:26:29.760 --> 02:26:46.160
borrowing more. We're we're, you know, again, in the place of any emergency in even in any building, right? all district owned buildings are >> we're needing to think of

511
02:26:46.160 --> 02:27:04.319
>> that we need excess of our 30-day bills to just be able to take care of those emergencies so our kids can be educated in any building in this district >> which also includes the building that Merida is occupying right the district

512
02:27:04.319 --> 02:27:20.399
is responsible for making any major repairs that happen in that building if if the roof is leaking in that building or the boiler goes out there or whatever, we have to have the cash on hand to fix that for them too,

513
02:27:20.399 --> 02:27:46.880
which we wouldn't if we have already given them false payment. >> So, how do we these are just all the things floating in my head, right? as of considering the decision. And if I knew it was like,

514
02:27:46.880 --> 02:28:04.080
you know, an extra, you know, $100,000 that would allow them to open in a very comfortable place. Okay, let's >> let's let's talk about that. They might do that. We can >> Yeah. But if they can't without another, you know, 300 $390,000,

515
02:28:04.080 --> 02:28:19.439
well, that those are big differences and there's a lot of room in between. Yeah. >> That that I again, I would love us to be able to have that conversation to know, >> you know, are they going to be short of being able to open comfortably with the

516
02:28:19.439 --> 02:28:37.359
payment that's proposed right now? If not, how short are they? But I think that the what I don't want to be shortsighted about with this though is that yes, we're identifying this gap because of the absence of the errand. But even if we but if we're using the contractual basis funding model and and

517
02:28:37.359 --> 02:28:54.479
we're even accessing the errand and we're not needing it until later then if their budget and their cash flow their monthly expenses are going to be based on the expectation that their monthly revenue is higher then that

518
02:28:54.479 --> 02:29:10.080
problem's going to repeat itself every month >> until the you know essentially the funding catches. is up which won't happen until much later. >> Yeah. >> Right. And I, you know, again, coming to

519
02:29:10.080 --> 02:29:26.479
the table to talk through things and figure things out would and knowing what all the needs are would be helpful and doing it in March or April. Um, when this was initially discussed

520
02:29:26.479 --> 02:29:43.040
would have potentially avoided a July crisis. Yeah. Right? Because we know David expressed that we were going to move to this model

521
02:29:43.040 --> 02:30:03.840
before they set their budget. >> Right. >> And I'm not saying that, you know, that they were going to be happy about it then, but like that would have been a much easier time to come to a solution, >> right? Yeah. So, and then one of the things I think too is that

522
02:30:03.840 --> 02:30:22.080
was there is an implication from Meritt when we're meeting with them that that we are not in a unique situation that other districts are in a similar situation and are acting differently but I don't I have no basis for that like and as you

523
02:30:22.080 --> 02:30:38.399
said like if it's if 112 is best practice like are other districts in similar positions >> right >> acting differently >> outside of the 60 to9 90day window. I want to know that too.

524
02:30:38.399 --> 02:30:54.399
>> Yeah. If if they're >> and what's the size? Because that also matters. What's the size? We're >> we're twothirds of the size of the district. Most districts they charter school is not a third of the district. Yes. A ton.

525
02:30:54.399 --> 02:31:09.439
>> And so that affects our funding as well. and and it's onethird of a district that is almost 50% funded on a per pupil basis as opposed to other districts that might have like you know the oil that they were talking about or or you know

526
02:31:09.439 --> 02:31:25.920
the um mill levy override and or you know even tourist money that's coming in you know whatever it might be but >> yeah so I feel that's I think it's a great point because I don't think if we have a true peer-to-peer comparison it's really hard to know like what are others

527
02:31:25.920 --> 02:31:42.319
doing right because it seems like the circumstances are wildly different, you know. So, I wonder if there's a way to get like to get any information along those lines. How would we do that? Is that a consultation with CDE or what

528
02:31:42.319 --> 02:31:58.640
does that look like? >> I don't know. I tried doing a internet search that didn't turn up a whole lot other than um like opeds that are written. Yeah, I try to do the same thing and all it says is that everybody does it. But

529
02:31:58.640 --> 02:32:13.359
>> yeah, >> I don't know like in every circumstance, you know, >> and in a a conversation that I had from someone with someone from CDE, as I recall, they indicated that Woodland Park's

530
02:32:13.359 --> 02:32:30.080
percent charter school was fairly high >> and they mentioned Falcon and and I don't remember that they said Falcon is higher or almost as high as it was. And Elizabeth might be an interesting

531
02:32:30.080 --> 02:32:46.560
comparison because I know that Elizabeth at least 10 years ago was about the same size as we are and I think that they have at least one charter and I don't so I don't know what their

532
02:32:46.560 --> 02:33:10.720
>> isn't it open their charter >> I I thought that they had a charter even a few years ago so >> maybe they have more than That's right. >> Yeah. >> So, sorry to derail the transition to

533
02:33:10.720 --> 02:33:26.319
August 14th. I just want to be really clear like do we have any action items right now >> other than gathering more information? I mean, we're in a recession so we can't like take action, >> right? I just said like take away some things we need to do.

534
02:33:26.319 --> 02:33:42.080
>> Yeah. >> I would love more information that >> Okay. So, following up on the the cash flow, >> right? >> Which which in in in all honesty, I mean, I'm I'm glad that you're and you

535
02:33:42.080 --> 02:33:58.319
and Rob are in contact, but that should be a fairly easy conversation between CFOs. >> Yeah. I mean, that should be something that a CFO should be able to ask for a charter and then >> it's actually in the contracts that they can

536
02:33:58.319 --> 02:34:13.680
>> and and get that. >> Yeah. >> And so that shouldn't require board to board that should be >> okay. >> That should be when when they when we when our CFO asks for it, it it should be provided.

537
02:34:13.680 --> 02:34:30.479
>> Yeah. I I think um I think it just is closed tomorrow. Is that right? >> Yeah. Yeah. So, >> and David is good. >> Yeah. >> And he's out next week. >> Oh, okay. >> Oh, yeah. He's out. He's out all of next

538
02:34:30.479 --> 02:34:48.120
week. >> Yeah. >> Good for him. I don't think he's a vacation. He >> has had the vacation. No. >> Um Yeah. So,

539
02:34:50.399 --> 02:35:07.760
so here's here's the let's talk hypothetically. This is based on what I don't know exactly what their cash looks like, but from what I understood based on the most recent audit that they're they might have had a low reserve balance or that reserves were nearly

540
02:35:07.760 --> 02:35:26.120
out. I don't know if that's the case or not. We'd have to we'd have to validate that. Let's say hypothetically they can't pay their bills in July. >> I don't know what recourse there is in that situation.

541
02:35:27.680 --> 02:35:43.920
>> That seems interesting. I I mean, I guess I'd have to go back and look at what their what their um audit said. Um, but I know they've been hiring a lot and and I believe gave raises to their teachers. So that would be surprising if

542
02:35:43.920 --> 02:36:00.640
their cash reserve was so low that they were >> in that way. Um, so I'd have to double check. >> They're not at the same I guess because they've been getting smoothing their peak reserves aren't the same as

543
02:36:00.640 --> 02:36:17.600
ours. Theirs are more steady across the year. Whereas ours is a good point. >> Yeah. >> June, July, because we've just gotten our big payments. >> That's true. That's a good point. >> Although this year that was less of an

544
02:36:17.600 --> 02:36:35.640
less of a issue because of the loans, >> right? >> Because of the ERA loans. Yeah. We ate a lot of that up during the year. So, yeah. Yeah. I I um you know I um

545
02:36:36.640 --> 02:36:54.880
I I was I'm reminded of you know a a question that was posed to me um a year ago during the campaign and I don't I I want to see um um Merit Academy

546
02:36:54.880 --> 02:37:13.200
succeed um and if it's a finance issue I would like to figure out how and if we can work with them on it. >> Um, suiness is not the best way to do it and

547
02:37:13.200 --> 02:37:29.439
resolve it quickly. Coming and talking openly about what's going on seems a better approach if it if it really is a an immediate desperate sort of thing. Um, I don't think there's anyone in this

548
02:37:29.439 --> 02:37:45.200
room or this district that wants to just, you know, withhold money that we that we have, if we have it >> that that could help them, but it it has to come with conversation

549
02:37:45.200 --> 02:38:01.040
and with coming together and working on it together. >> Yeah. And there's there is there's responsibility on their end as well. You know, as Keegan was was referring that we don't have any control over their

550
02:38:01.040 --> 02:38:16.720
budget. Um and and again in March um it's it's confirmed that our CFO told their CFO that we didn't have the reserves,

551
02:38:16.720 --> 02:38:34.000
you know, to to to smooth payments. um what would it look like right now if in April they had come to us and said we can't function without payments being

552
02:38:34.000 --> 02:38:55.840
smooth what can we do and we had started to work on that in April was David they're um or May Yeah. When I think that

553
02:38:55.840 --> 02:39:12.479
from what I recall too in May that was when there was initially the reach out it was like miday right or towards the or maybe it was in June in June when that was like the ask of like please include us in the errand application

554
02:39:12.479 --> 02:39:27.280
right there was a June 30 deadline >> June I think it was >> June I guess the email I don't remember >> yeah something like that the end of June Um, but I don't know that we had any other

555
02:39:27.280 --> 02:39:48.560
information at that point other than I don't remember. We'll have to go back. But I think like to your point Carol and to and what I think we mentioned earlier was that like in the absence of of clear guidance either in statute or otherwise

556
02:39:48.560 --> 02:40:05.760
then I think we want to work towards a joint solution which is why we proposed or like why I think it was your idea Laura's great idea like why don't we jointly approach the the state board of education and say what do we do right >> like are should is are we doing the right thing you

557
02:40:05.760 --> 02:40:19.600
is June 18th. >> June 18th. >> Yeah. >> How do we solve this >> rather than Yeah. >> without spending the money, you know, in the lawsuit. >> Yeah. >> Together. Let's find out what's right to

558
02:40:19.600 --> 02:40:36.240
do because again, we're we as the district board, as the elected officials of this district are responsible for all schools. And it can feel then I can see to merit that we're not being fair to

559
02:40:36.240 --> 02:40:51.359
them if we're not giving them every immediate request that they have. But it's because we have to weigh it with every student in mind and we have to be careful and sure that the district is stable and the district is able to

560
02:40:51.359 --> 02:41:06.800
function. So we have a broader um responsibility >> and that's why this it's not trying to be unfair to any one school. It's every school has to be weighed in the decision

561
02:41:06.800 --> 02:41:26.399
and the impact the decisions are to all and I I I mean honestly sick to my stomach that I feel like we're in a place where we're we either disadvantage the district students to give nar what they're asking

562
02:41:26.399 --> 02:41:43.040
or or where we're getting sued and spending money in a lawsuit fighting over it and that we were not able as adults to come together >> to try and find a solution that helped all of the kids without spending more

563
02:41:43.040 --> 02:41:58.479
money on lawyers >> when we had months to do like I >> I don't like I do not see a solution that doesn't >> doesn't where someone doesn't get hurt at this point

564
02:41:58.479 --> 02:42:14.880
>> and I and I and I want to find the spot that that limits that as much as possible. That is my goal and I I I wish we weren't in this spot, but it's this is where we are. >> Well, it takes everyone wanting to work together for the

565
02:42:14.880 --> 02:42:36.000
students to not get I don't know. I don't know if that I don't know that we can come to an answer tonight. um other than we need a bit more information. Um I I

566
02:42:36.000 --> 02:42:53.120
um and I don't think that's going to happen before July 25th just given the school's days off and um David's vacation. Um,

567
02:42:53.120 --> 02:43:11.200
and the fact that, um, I think Merit has made it clear that they don't want to, or they're they've been advised by their lawyer not to work with us in this capacity at this point. >> Yeah. I guess the only the only thing we

568
02:43:11.200 --> 02:43:27.040
could essentially propose with such a short timeline is is like tomorrow to try to decide together to approach the state board and if that doesn't happen then

569
02:43:27.040 --> 02:43:46.000
>> well so um because the lawyers have been involved I I think that's now off the table >> is that the state has has been um

570
02:43:46.000 --> 02:44:01.279
notified that this is an issue. >> Yes. >> Um as such can no longer help in a mediator way because it may come to them. >> So what they were notified by Merit's legal counsel?

571
02:44:01.279 --> 02:44:20.000
>> I don't have all the details. I just know they know. So, you know, I reached out to see if that was an option because we had discussed, you know, trying to go to the state like, "Hey, we're in this position. Is there anything you guys can do?" Um, you know, they had people

572
02:44:20.000 --> 02:44:45.760
looking into it to see what would be appropriate and then I got a call this morning saying that they wasn't an option anymore. >> Okay. Yeah. >> I mean, not the state. I understand the

573
02:44:45.760 --> 02:45:14.880
position they've been put in. >> I just wish I would have time to get. >> Yeah. So, do we put this on it as a discussion item for the next meeting? >> You have to have a resolution at the

574
02:45:14.880 --> 02:45:32.080
next meeting. Is that right? Or we >> Yes, we do. I I think from what Anthony said, we could in the August meeting change what you were requesting. >> So that's still on the table if we decide to go that route. I think we need more information before we get to our

575
02:45:32.080 --> 02:45:49.120
August 12th meeting to be able to make an informed decision about what makes the most sense for everybody. Um so hopefully we can get those data points before then so that we can vote in an informed way. Um, and I would I would

576
02:45:49.120 --> 02:46:05.040
say that under the financial report, I mean, unless you feel like it needs to be pulled out separately, um, if David David can >> Yeah. provide provide, you know, what

577
02:46:05.040 --> 02:46:21.120
information he's gotten um from from Mary Academy and then that can and and and what adjustment he might think we could make on the um etc.

578
02:46:21.120 --> 02:46:38.319
>> And then that can come out, you know, in the in the financial report. I don't know. Or maybe we need a discussion about the errand and then we need a resolution. I I think it'd be good just to have a discussion. Well, at least discussion before the resolution before

579
02:46:38.319 --> 02:46:54.080
then >> or as a part, right? I mean, you would normally have a first and a second and then there's discussion time as well, but I I personally always appreciate having a separate discussion time before any any

580
02:46:54.080 --> 02:47:10.120
motion has been made so that we're making the right motion and you don't wind up having to make two. >> Right. So then under discussion information add a C. Um yeah, each update

581
02:47:10.560 --> 02:47:57.120
and then under action item would be the resolution. Um yeah, I think the other the other thing um you have been discussing with with M um was around the um

582
02:47:57.120 --> 02:48:13.680
facilities use agreement. Mhm. >> Um and I know as a board we've been discussing updating that. Um the current contract that or the most recent most recently executed contract did did

583
02:48:13.680 --> 02:48:32.080
have an expiration date of July 2025. Um >> June 30. Yeah. >> Was it June? Yeah. Sorry. Thank you. Um and and you know there was a prior one to that that had a a date of of um 2027

584
02:48:32.080 --> 02:48:49.200
>> and there's some um discussion around that. Uh in any event, we are running up to when that would be needing to be renewed. um whether we're operating on a month-to-month basis right now, which I think is what we are

585
02:48:49.200 --> 02:49:06.000
operating on, or or whether the contract that was executed earlier that has a 2027 date is is still in play. Either way, we need to get that going so that we again aren't in an 11th hour

586
02:49:06.000 --> 02:49:22.880
trying to to make this decision. Um I I know we've had um some some u work done on that based off of what the current FUA looks like. I do think adding an agenda item or an executive session to

587
02:49:22.880 --> 02:49:40.479
kind of go through some of that would be prudent so that we can have our ducks in a row and present something to merit for their review and I presume to send it back so we can have you know a good >> um you know debate and and negotiation

588
02:49:40.479 --> 02:49:56.960
period before anything would need to be signed. Um, so I I would make that recommendation that we we add an executive session for that purpose, review, and I don't know what the proper language would be, but review and discussion of

589
02:49:56.960 --> 02:50:15.920
contract. >> Yeah. >> Are you fine with that being at the end of the meeting? >> I believe so. There wouldn't be any action after that. That's >> just being an attorney. Um the other thing, you know, we talked

590
02:50:15.920 --> 02:50:30.880
about doing the energy audit um and um the um I had some conversation with one of the people that had had given proposals um the Snider Electric

591
02:50:30.880 --> 02:50:47.439
and they um they thought maybe they were supposed to be at this meeting in August and present to us. >> Yeah. And so and and he said it would only take about 15 minutes. >> So I would I would think it'd be good for us to go ahead and add that in

592
02:50:47.439 --> 02:51:03.600
there. Do we want to add them earlier in the meeting so they don't have to sit through everything or do we want that as discussion item? >> Um canvas where's the most appropriate place to put that in the discussion? We

593
02:51:03.600 --> 02:51:20.880
could change it to be a >> Yeah. And so be the energy audit, but it was Snider. >> Yeah. And I um Jason David may have have um somebody else as well. I'm not

594
02:51:20.880 --> 02:51:37.040
sure, but I'm but I'm I'm sure that Jack from Snyder Electric >> was wanting to come. I know if we were following the same protocol we used for June's meeting with staff and students not being back in school yet that we

595
02:51:37.040 --> 02:51:54.680
weren't doing the district community spotlights. But was there an on wings of equals something? >> Okay. So we're good the way that top part is right. >> Okay. I just want to make sure >> any like policy review

596
02:51:54.880 --> 02:52:11.920
>> my meeting in July. So >> was that you guys were going to do a at the board retreat was a big was going to be a huge time focus on your board policies right? >> So did you want to wait to start know

597
02:52:11.920 --> 02:52:28.560
that might put us a little behind on that review calendar, but I didn't know how >> I think I think there's I and I don't have it in front of me. I think we should be reviewing some in August but but at the at the work session generally and then generally voting

598
02:52:28.560 --> 02:52:45.040
>> in September. >> Yes. So it would be on the >> policy would start. >> I think that would be correct. >> The other thing that was thrown out to me. So, for that fall board of education retreat location and date, I know we had talked about September, but then um

599
02:52:45.040 --> 02:53:00.399
Ginger had mentioned to me September is she had recommended September, but then when she was looking at everything that was getting planned, something to just consider is maybe if it worked for you folks, the end of August. Just something to think about

600
02:53:00.399 --> 02:53:15.359
before we get to August 12. Mhm. >> Um since September is a >> busy >> it's a heavy hitter. Yeah. So just not we don't we're going to talk about it at the August 12th meeting. >> I Yeah. Did you need

601
02:53:15.359 --> 02:53:32.080
>> Here's here's I I don't know maybe maybe I don't know if you guys are comfortable with this but when we're just choosing a date for something >> um it's not really a a violation >> no

602
02:53:32.080 --> 02:53:48.479
>> to to do that through email I would recommend just because all of our calendars also get busy um it might be good to go ahead and start that you know, maybe throw out some proposed dates. >> I can feel that,

603
02:53:48.479 --> 02:54:04.720
>> you know, to us. And then I don't think you don't really have to BCCS on that. I think it's okay if we're picking a date, it's okay to reply all. >> It really is. Um, and if you're not comfortable with that, you can throw out dates and we can respond to you with the

604
02:54:04.720 --> 02:54:20.319
ones that don't work for us. >> Dates and times. You know, I know I I have a daughter that would like my help sometime in August and I would plan around this if I knew I had a time. >> Okay. So, >> to start I'll do that um on that day.

605
02:54:20.319 --> 02:54:38.399
>> Yeah. >> Were you looking at me about like the >> financial we had discussed till D was a >> Okay. And then circle back. >> Yeah. So, the fiscal

606
02:54:38.399 --> 02:54:54.560
advisory committee wouldn't start until maybe end of September, early October. I think I don't know what what the timeline for that is. >> I know they wanted to try to do it. >> Yeah, >> but is that

607
02:54:54.560 --> 02:55:15.520
by this meeting or is it September last year was the B the DAP was approved in October and it was two, right? But am I remembering right or was it September >> and then the beginning was like it was really late. >> It was Yeah, it was like boom and then

608
02:55:15.520 --> 02:55:33.080
boom. >> Yeah, we'll have to look at I mean I could look at the >> Yeah, I don't think it could be in August because school hasn't started or services to the audit process which is now like we should already

609
02:55:36.800 --> 02:55:55.120
I think that was the problem was it was approved in last year and October the committee the DAC committee was and sack were approved by the board. So it was so close. So if we could approve them in September I think was what Ginger was

610
02:55:55.120 --> 02:56:11.880
saying. Yeah, do green. That would be a better process. >> That would really help. >> Which just means we need to like get the the um applications in sooner. >> Get back now. >> Yeah. >> Send out applications now.

611
02:56:15.680 --> 02:56:32.479
Yeah, it looks like the first meeting was October 16th. >> Yeah, it was late. It's after the first quarter. >> Yeah. I'm actually wondering if we could approve our stack members that same time, but then they

612
02:56:32.479 --> 02:56:51.399
would just select their back one after their first meeting to come in. So, because we have the application already drawn up, it just lives.

613
02:56:52.080 --> 02:57:08.720
The other thing was Karen, did you want to speak to this? >> Karen had two requests for action items and she'll just share a little bit quickly. >> Yeah, these are really just minds pieces. We have two forms that are very

614
02:57:08.720 --> 02:57:24.399
out of date with the state. Um, one back from 2015 with Kip Bowman and Brian Gustoson. Um, some things that are coming out. It really is time to refresh that and it's they want our count like our calendar,

615
02:57:24.399 --> 02:57:40.319
but they do need a board action that it's been approved um that we're going to require attendance and things like that. And then the other one is for the um Every Student Succeeds Act for our title grants. Um it says um supplement

616
02:57:40.319 --> 02:57:56.160
not supplant and we have to have an action plan. Well, not an action plan. It's really a staffing model. And this record, it has the middle school and Gateway Elementary listed here. And of course, those no longer exist. Our

617
02:57:56.160 --> 02:58:11.279
staffing model as a district is out of date with our title grant assurances. So I don't have a fresh one for you. Nothing controversial to see action. >> Okay. Are you fine if it just goes right to

618
02:58:11.279 --> 02:58:28.000
action that both of those items would be listed? >> Would you like to see the copy? So that >> yes well >> like previous >> yes I'm just trying we have

619
02:58:28.000 --> 02:58:53.359
>> obviously there are times sensitive things to to consider generally speaking we're trying to make sure things are present >> like I feel like this is a housekeeping things. I don't I don't know that we need to I think I think things that the

620
02:58:53.359 --> 02:59:09.800
community wants to be informed of >> and give feedback >> and give feedback and have a voice that it's really important to do that. >> I don't see that. I I just feel like that this is just our job.

621
02:59:10.319 --> 02:59:29.359
>> Maybe you can email it to us ahead. >> Sure. >> Which is so we have some time to >> look at. Do you want it before the board packet goes out? >> It's up to you guys. >> I think that's fine. >> Just do the board packet with an actions.

622
02:59:29.359 --> 02:59:50.120
>> Yeah. >> Oh, well, David did confirm that. Well, we already talked about >> about the errand action for the resolution. cover that a little in the very beginning. So, we're good. >> Yeah.

623
02:59:50.319 --> 03:00:07.640
>> Anything else we need to have this meeting? Although, I'm going to be honest, the length of this meeting presently seems really nice, but it won't be a six-hour meeting and I'm off with it.

624
03:00:09.040 --> 03:00:30.160
That's my help. All right. Well, if anyone thinks of anything else, of course, you can send me an email and we can look at adding other things on there, but I think for purposes of this evening, that is sufficient.

625
03:00:30.160 --> 03:00:48.720
Uh, that's the last thing on our agenda for tonight. So, unless anyone has any other items they wanted to bring up before we finish up, that point. >> Did we get Rob back or did we just lose

626
03:00:48.720 --> 03:01:04.000
him? >> He's here. >> He was just a drop out for one second. I'll just go ahead. >> All right. Excellent. You have anything you want to add? >> No, Cassidy covered a lot of the uh the

627
03:01:04.000 --> 03:01:22.240
points that are frustrating to to us as a board. um just kind of disappointed we couldn't get the team approach from the merit board. Um they still have an opportunity to work as a team. I'm hoping that they show their ability to

628
03:01:22.240 --> 03:01:38.600
do that and come forth in front of the community to work as a team know that being opposed to a teamwork approach. So let's just hope that they can they can work with us well in now and in the future.

629
03:01:38.640 --> 03:01:54.720
I just also wanted to I meant to jump in when you're talking about the FUA, but I um in the meeting just to just to validate kind of what you said. We did present them with the um with the uh the legal analysis that we had received regarding the FBI as you

630
03:01:54.720 --> 03:02:10.399
mentioned that the conclusion of that was that it had been expired and there was just a I think mutual sense of consensus with both parties that we just needed to start the negotiation process regardless quite honestly and that um uh just to be thoughtful too about getting

631
03:02:10.399 --> 03:02:27.359
something in place before the start of next budget year at an absolute minimum. So I think that um what we have posed in terms of the continue and the one of the biggest questions that was raised by Matt was like what do you want to see different and we said we don't know yet. We have not yet answered that question.

632
03:02:27.359 --> 03:02:42.800
And so what our commitment was was basically to say we're going to evaluate the FUA. We're going to consider sort of the general current practice of cont mutual contract compliance on both parties and also consider what would be a priority for the district in a future

633
03:02:42.800 --> 03:02:59.359
iteration of that agreement and that we would come back to the table to discuss it soon. Yeah. >> So I think that is in keeping with our commitment that we made in that July 11th meeting as well. I think um one of the the things

634
03:02:59.359 --> 03:03:14.080
regardless of whether you know it's decided that the current the most recently executed contract is still current or not. Um is that because the charter agreement charter contract was

635
03:03:14.080 --> 03:03:30.880
updated after that was executed the facilities use agreement was executed. There are some in um inconsistencies between the FBI and the charter agreement >> that need to be addressed as well in this new version to make sure everything

636
03:03:30.880 --> 03:03:54.479
is kind of running in the same direction >> or the contract needs to be adjusted. >> Right. Right. Yes. >> Something needs to be >> right. Was there did she say that we would have to take action to approve that

637
03:03:54.479 --> 03:04:19.920
settlement in August or she didn't clarify? >> I think so. >> Yeah, I think we do need to add that as an >> Yes. Thank you. >> Good remembering. >> Well, I was actually looking back at something else, so I won't take credit.

638
03:04:23.840 --> 03:04:44.439
is nine. Feel like we have covered things. Um so need a vote here since it's our informal work session. So everyone's good then I meeting

639
03:04:54.479 --> 03:04:58.319
What was >> the sandwich? >> The sandwich.