March 10, 2021 Budget Update Highlights

Second Interim Budget Update March 10th, 2021

Executive Summary & Compliance Update FY21-22 Our initial budget largely resembles that presented at the first interim without any major changes By the end of the year, we are looking to meet our 17% reserve target In addition to that, we are also looking to fill Fund 17 with reserves of $xm this is the surplus that we are planning to spend down over time FY22-23 We expect to become a Basic Aid district next school year o Given our declining enrollment and rising property taxes, we will likely switch from LCFF funding to Basic Aid funding. This means that we will be funded at a similar level over time until our enrollment reaches a certain threshold (adding ~450 students). We have met with budget owners on their SY22-23 budgets, and are aiming to have a working draft budget in the next couple of weeks to begin hiring for positions 2

SY21-22 Budget Update Agenda Multi-Year Forecast Next Steps & Process 3

SY21-22 Budget Update Our budget has remained relatively in-line with our initial projections and first interim- adjusted budget, minus higher than expected spend on Paraprofessionals Category Initial Budget First Interim Second Interim Comments LCFF Sources $24,142,094 $25,023,120 $25,023,120 No change ~$700k of stimulus funds arrived sooner than expected Federal Revenue $6,098,862 $6,299,309 $6,971,622 Received funds for the ELO Planning grant Increase in ASES Funding (also on the expenditure side) Other State Revenue $3,767,916 $4,074,916 $6,043,895 Increased REF funds to account for RTA raises and rental revenue from La Scuola Other Local Revenue $13,679,628 $14,979,628 $15,979,626 Total $47,688,501 $50,376,974 $54,018,266 Note: In June (the last month of the school year), there is usually a spike in expenses of about 2x the normal rate. This is attributable to us paying any outstanding amounts to vendors and departments using the remainder of their budget that will not rollover into the next school year. SY21-22 percentages are calculated with the budgeted amount as the total Source: Internal Data

SY21-22 Budget Update Our budget has remained relatively in-line with our initial projections and first interim- adjusted budget, minus higher than expected spend on Paraprofessionals Category Initial Budget First Interim Second Interim Comments Certificated Salaries $12,223,718 $13,530,289 $13,530,289 No change Increase to account for hourly and OT time over what was budgeted and greater than expected Paraprofessional costs Classified Salaries $5,398,331 $5,457,531 $5,997,531 Employee Benefits $8,491,869 $8,491,869 $8,491,869 No change Added budget to account for greater spend on maintenance supplies Books and Supplies $3,316,052 $3,769,121 $4,019,121 Greaterthan anticipated spend on building maintenance / repair and ~$200k of solar panel charges to move to Fund 21 One-time increase in ASES Services and Other Operating Expenses $12,253,642 $12,081,914 $13,108,106 Other Outgo Transfers of Indirect Costs $760,209 $760,209 $760,209 No change Total $42,443,821 $44,090,934 $45,907,126 Note: In June (the last month of the school year), there is usually a spike in expenses of about 2x the normal rate. This is attributable to us paying any outstanding amounts to vendors and departments using the remainder of their budget that will not rollover into the next school year. SY21-22 percentages are calculated with the budgeted amount as the total Source: Internal Data

SY21-22 Budget Update So far, current expenditures line up with historical spend through the end of February Actual SY21-22 Spend in Comparison to Historical Spend Percent of Annual Spending 70% SY15-16 Our initial budget forecast had us saving ~$5m at the end of the year; based on our spending year to date we are on track to meet that 60% SY16-17 50% SY17-18 40% 30% SY18-19 On average, at the end of February, we have spent 58% of forecast year end actuals 20% SY19-20 10% SY20-21 0% SY21-22 7 8 9 10 Month 11 12 1 2 Historical Average Note: In June (the last month of the school year), there is usually a spike in expenses of about 2x the normal rate. This is attributable to us paying any outstanding amounts to vendors and departments using the remainder of their budget that will not rollover into the next school year. SY21-22 percentages are calculated with the budgeted amount as the total Source: Internal Data

SY21-22 Budget Update Agenda Multi-Year Forecast Next Steps & Process 7

Multi-Year Spending & Saving Plan Starting next year, we will be a Basic Aid district for the foreseeable future Basic Aid and LCFF in the RCSD Context What is happening? We receive the greater of either a per-pupil amount from the state (LCFF) or our share of local property taxes (Basic Aid) Our enrollment has declined AND our property tax base has increased This has automatically triggered a shift into basic aid 50 2500 45 40 2000 Per Pupil Funding (LCFF) 35 30 1500 Implications The district has now hit the funding floor our revenue will only go down if property tax revenue decreases in EPA/Menlo Park We have higher overall levels of funding Taking on new students means more cost, but no new funding; losing students means cost savings, and no change in funding 25 Property Tax Funding (Basic Aid) 20 1000 15 Enrollment 10 500 DRAFT FOR ILLUSTRATIVE PURPOSES 5 0 0 8

Multi-Year Spending & Saving Plan In order to keep per student spending at current levels, we will continue to take short term measures to pave the way for long-term success Our district has received / is set to receive ~$14m total of stimulus funds. Instead of spending them all in one school year, we are planning to spend them down gradually over a 5 year period Stimulus Funds Spending Plan Year Amount SY20-21 $3.0m SY21-22 $4.0m SY22-23 $3.0m SY23-24 $2.5m SY24-25 $1.5m Total Stimulus Spent $14m 9

SY21-22 Budget Update Agenda Multi-Year Forecast Next Steps & Process 10

Next Steps We have met with all budget owners and are working to organize a draft budget in the next few weeks December January February March April May June Forecast enrollment and generate school allocations Budget owners review and revise SY21-22 budgets for following year Work together internally to identify areas of little change / alignment Work to realign district office Finalize preliminary budget to begin hiring Allocate to specific funding sources Finalize budget by June

Process: Revenue Outlook We project $35.9m of base revenue for the district in SY22-23, a slight decrease, mostly driven by our switch from LCFF funding to Basic Aid District Base Revenue, by Funding Source (Excludes Stimulus, ELO Grant, & REF Funding Allocated to Salary Raises) $40m $36.5m $35.9m $5m REF placeholder $30m Other Peery Grant Rental Revenue Federal & State Funds REF LCFF / Basic Aid $20m $10m $0m SY21-22E SY22-23P

Process: Revenue Outlook There are additional funds available, but some are already earmarked for certain initiatives like salary increases Breakdown of District Revenue, by Funding Source $50m $43.2m $38.9m Stimulus Funds ELO Grant REF Compensation Funds Other Peery Grant Rental Revenue Federal & State Funds REF LCFF / Basic Aid $40m $35.9m $30m $20m $10m $0m Base Revenue Including Stimulus Funds Including "Solve Itself" Grants We are focusing on the base funds, for now

Process: Bottom Line Outlook After combining all budget requests, we are ~$2m over our base allocation as of right now SY22-23 Projected District Base Revenue vs. Estimated Base Expenditures $50m $40.8m $38.9m Stimulus $40m Other $30m Peery Grant Rental Revenue $20m Federal & State Funds $10m REF LCFF / Basic Aid $0m SY22-23P Budget Owner Requested SY22-23 Expenses We have a clear plan towards resolving this by the time the budget is completed don t worry!

Closing Thanks to extensive work on behalf of the Business Services and C&I teams, RCSD has seen a meaningful improvement in compliance results Category Prior Most Recent Period Small deficit SY19-20 Modest surplus SY20-21 Budget Bottom Line X 17% SY20-21 Reserve Percentage SY19-20 4 0 Number of Audit Findings SY19-20 SY20-21 $1.6m in reversals, 26 findings (63% of all Federal fund expenditures) SY19-20 $0.002m in reversals, 2 findings (0.03% of all Federal fund expenditures) SY20-21 Federal Program Monitoring Reversal

SY21-22 Budget Update Agenda Multi-Year Forecast Next Steps & Process Appendix 16

SY21-22 Budget Update Given the projected revenues and expenses for this year, we expect to run another modest surplus to subsidize future learning post-stimulus funding Net Balance, Using SY17-18 as Base Year H F $60m $30m $50m $25m $40m $20m $30m $15m $20m $10m $10m $5m $0m $0m SY17-18 SY18-19 SY19-20 SY20-21 SY21-22P Revenue Expenditure Net Given the natural variance in net balance at the end of the year, we are predicting a ~$500k net swing in either direction Note: Only includes revenues from Fund 01 Source: Internal Data

Multi-Year Spending & Saving Plan In order to keep per student spending at current levels, we will continue to take short term measures to pave the way for long-term success Stimulus funds are expected to be used on an unrealistic timeline (by SY22-23) We have been following an intentional strategy to: o Invest record amounts per pupil in our students o Strategically use our stimulus funds to build up reserves This allows us to significantly extend the timeframe we can use our stimulus funds helping us avoid a fiscal cliff We have put these additional savings into a special fund differentiating between those funds and our general reserves for economic uncertainty 18

Executive Summary & Compliance Update Thanks to extensive work on behalf of the Business Services and C&I teams, RCSD has seen a meaningful improvement in compliance results Audits Every year, the district s financials are audited. Should the auditors discover any significant findings, the district begins a costly and time-intensive process to rectify any discrepancies Historically, here is how we have fared on audits: SY16-17: No findings SY17-18: Two significant findings SY18-19: Four findings (one significant) SY19-20: Four findings Thanks to our revamped purchasing process, additional work around budgets (and budget codes), and tireless work from the Business Office, the auditors have reported back with no findings for SY20-21 Federal Funds Reversals Every year, a certain subset of districts are selected to undergo an audit of Federal Funds (i.e., Title Funds) by CDE. Ravenswood has been selected 5 times in the past 7 years for auditing. In our last review in SY19-20, we were forced to reverse $1.6m in Federal Funds purchases, causing us to dip into our reserves and creating a backlog of Federal Funds that we are still working through. However, due to similarly tireless work of our C&I team and our Compliance Coordinator, Alison Gibson, there have only been 2 findings in SY20-21 which have resulted in only $2,200 of reversals 19