>> it feels like deja vu a little bit with commissioner maufas and my old colleagues. we are happy to have parents, community organizations, the president of the teachers' union, administrators from the school district here. we have someone from the comptroller's office as well that can shed light on the public enrichment fund that can explain a little bit about the process for repaying the amount of money that was deferred over the past four years. i wanted to say that the impetus of this hearing was the city's announcement that, in the night -- in the nine month report, there were about $43.3 million

of unexpected funds. now there are also announcements of additional tax money that was announced. i know there is an ongoing parallel, a budget process that will probably go on into the night. it was a timing to call this hearing so that we can show this situation, the dire financial crisis in the school district. i applaud the school district for approving the budget on tuesday night. i know it was not easy. $567 million for the 56,000 students had a number of really good things about it. i know that there were some tremendous cuts, from reducing the school year by 4 days if it goes forward. also, if the state revenue measures do not pass, the $88.3

million deficit in the next two years could balloon to close to $120 million. it is a dire crisis that not only impact the shortening of the school year, but increases in class sizes and potentially more layoffs and other issues that impact the district so heavily and parents and children. i know that i am strongly supportive of reoffer rising prop h, the voter-initiated measure that passed in 2004. in 2013, that is a top priority for many of us, to reauthorize prop h. also, the rainy day funds that the city provides. that is helping the school district. i think it was 53 -- i think it was $5.3 million this year and

is projected for $4.7 million next year. they are at $77 million annually. we have to do everything we can to step up the support to schools as the state is failing to do so. the lowest income kids in the hardest-to-cheek schools usually face biggest falling behind when we make the cuts. the achievement gap that is is a thin in our school district is a critical, strategical to reduce those gaps. in good years, when we have additional revenue, i am not sure if it is a really good year for the city right now, but as people wrangle over the amounts of money that we will have for this year and next year in the city budget, my hope is that

this hearing can open up a conversation about how much more we need to do for schools. on my list of revenue priorities, i included a number of measures that will help the school district and children and families. if the city has deferred payment of prop h funds to about $40 million, we should be paying some of that back now and not waiting until 2015 for writ that is an issue i want to open up for this discussion. we will have some presentations on the financial situation in the school district and that will help us. a number of additives from the school board to community-based groups have been saying reducing the number of furlough days might be one place. it would cost $3.5 million per day to reduce just one.

one furloughed they would be about -- furlough day would be about $3.5 million. reducing it by three days, i support that effort. i think we should be thinking about that as potential support for the school district, there is also placer that the city can do more. some applicants and members of the school board have been saying and equitable approach would be to support the effort to create requirements, capacity so that high school that have hundreds of students that will not graduate at least have a seventh period so that they can be ready. so we will have fewer students that do not graduate. so as many people as they can can graduate and go on to use these skills.

there are a number of other things that have been brought forward. as a city, we can advocate for more support for the schools. as a former member of the board of education, we do not have control over what the school district, the superintendent, and staffed due. i want to do everything i can as an ally on the board of supervisors to support the financial crisis. that is my intent moving this hearing forward. i want to say, first of all, we will have a couple of presentations from the school district and the city comptroller's office and then we will open up public comment, where a number of people will speak. i went to first introduced monique from the deputy city comptroller and matthew from the san francisco unified school district, the executive director of policy and operations.

i would like ask if nancy can come and present on the financial crisis. >> good afternoon writ -- good afternoon. i am happy to present an update on the school district's budget for you. what you have in front of you is a pretty thorough update. i would be glad to respond to any requests to move along a little more quickly if that is something you would prefer. i just wanted to start by letting you know the guiding principles we have for our budget process. we are looking to fight for long-term solutions, considering our students with a high as the, prioritizing things that directly impact students. we are willing to change the status quo where we need to move forward in a better way. we are planning thoughtfully,

keeping our district as healthy at -- as healthy as possible and in gauging the community. a quick recap to the state budget. governor brown propose a budget for this coming year that had a gap of $15 billion. there were significant cuts to k-12 education. about $6.3 billion statewide. he is counting on the measures in november to pass. if there is not passage of those measures, there would be an additional cut for the school district. for us, that would be the equivalent of about five f urlough days. a significant cut if the budget does not pass in november writ it would hold our budget flat

this year. we have had several cuts in place over the past school year. 4 furlough days and these would be maintained under the current scenario. as you can see at the bottom of the slide, the trigger cut would be -- it has gotten a little bit worse in the coming days. -- in the last few days. when we look at our budget, we have some positive signs from where we were in january. there is state transportation funding that came back in may, about $7 million. we recently sold one of our surplus properties and that is resulting in a reduction of debt service of about $875,000

annually. you mentioned the rainy day reserve, which we are clearly thankful for. that helped reduce the gap by about $27 million. on the other hand, we do have the midyear cut which could be coming our way. and we have a number of districts around the state that are in a negative or qualified financial position, meaning they are not able to show that they can have a positive balance for the next three years. we are doing our best to avoid that. when we look at our unrestricted general fund, which is the money that we used to cover the basics of all of our operations in the district, on slide 7, it gives you a little bit of an outline. we are starting the year with about $46.2 million in the bank. we expect revenues of about $331

million. but we are spending about $362 million. as you can see, it puts us about $30.4 million over revenues. our ending balance will decrease. we require reserves that are part of the ending balance, meaning we will end the year in june of 2013 with more than we are required to end the year with by state law. that puts us dangerously close to a negative or qualified financial position. the multi-year projections show the need for additional cuts. >> could you repeat what you just said about the numbers you just gave? >> our revenues that are coming in this year are about $30

million less than what we are projected to spend next year. if you look at what we have coming in, luckily, we have a beginning dallas that will allow us to cover that $30 million. but we end the year with only $230,000 more than the very base necessary we need to meet a positive financial status. that is with the cuts that the board of education adopted on tuesday of this week. it is not level of spending we would want to be, including the furlough days and other parts of the budget. the other revenues, and we mentioned a few of them, are the city's rainy day fund, which we are counting in this budget. we are happy that the sales tax is projected to increase. we do not have the federal jobs fund any more.

it is no longer funding we will have coming our way. we have mandated cost revenues that are accounted for in the state budget but we do not have a budget line item for them. they are not projected to come in for this coming school year. we do not have funding there. when we think about our expenditures, we are reflecting a number of reductions. the 4 fou -- furlough days, we have made cuts to sabbaticals, cut teacher services. we do not have the support from previous years that we would like to have again. we have reduced professional government, summer school, and general education transportation. we also have some cuts to the english-language arts adoption. as well as special education and health and pension benefits.

we have made a number of cuts to make sure we are able to squeeze within the dollars that we have. education as a specific area, the unrestricted general fund contribution is increasing because of our student population. we have stagnant revenues from the federal government and state government but our personnel costs continue to increase because of the natural growth of employees' salaries. we have non-public schools and agencies that were under- budgeted and continue to grow. we also need to add professional development to make sure we are covering the needs of our students. and to have investments in data analysis so that we are providing the services we need. delving a little bit into the details, there is a group of programs from the state called tier 3 programs which are

programs that were once restricted and dedicated to certain services for children that have been made flexible. we looked at that group of spending and identified $18.5 million that we are able to use in other ways to use our or -- to reduce our overall deficit. we have redirected those funds to the general fund in those categories. we have a number of programs receiving funds for the original intent of those specific line items. the biggest one is the targeted structural improvement block grant, which is a grants specifically targeting underserved students. as you mentioned, supervisor mar, concentrating on a-g, credit requirements. we have a number of different people working on that in different ways and we are

thankful for the city's contributions to those efforts. >> is there a quantifying of how much it would cost to provide the additional 7th period support for the identify high schools so that as many students graduate with those requirements as possible? is there a number that it would cost to pull funds out? >> there is. i do not have it off the top of my head right now. but we could certainly get you a number to quantify that. as we look forward, we always want to make sure that we are assessing the equity of our spending. we are continually doing that as we make cuts to our budget and balance it in a way that focuses on the board's priority. looking a slide 14, this gives us a summary of the multi-year projections of our budget. you can see in the second

column the amount of dollars i just went over earlier, starting with the beginning balance of $46.2 million. after we go through our expected revenues and expenditures, we would end the year with an undesignated reserves of only $230,000. we're going into fiscal year 2013-2014 in a very precarious position. we would begin the year with $15.7 million, most of that designated reserves in the prior year. and we would end the year with a $38.4 million negative balance after accounting for the required reserve. it is something we are very concerned about. we would have to have additional cuts in order to maintain a positive financial position. i'm going to stick our next

slide because this is about the passage of the budget, which the board did on tuesday. lastly, i want to give you a little bit of information about where we are in terms of our per-ada revenue in terms of where we should be given our projected amount we should have gotten under proposition 98. this chart looks a little bit like an alligator. in 2007-2008, we got about $5,076 per ada. if it remained flat, we would be in the same spot where the purple line is across this diagram. if that had been increase based on the requirements, looking at the cost of living increase, we would be at the light blue line, which is $6,697.

instead, we have had a series of cuts, bottoming out in 2009- 2010, and we are now at the orange line, projected to be $5,204, significantly less than the $6,797 that we should be at. we are losing 22 cents on every dollar from prop. 98 that we should be receiving. if the measures on the november ballot do not pass, we would be at the level of the black line, or $4,764, taking the even bigger cut to our budget and the educational services that we were able to provide for our students. >> that is about $500 less per student for the 56,000 students in the district if the revenues do not pass? >> that is correct. it is just shy of that.

a significant blow. in addition to this amount that is in excess of $75 million between the blue line and the orange line. lastly, just to give you a little bit of contact nationally, you in the far right that we are significantly below the average for national funding for schools. california funding per student has continued to decrease over the course of the last few years. leaving us less and less able to do what we need to do to provide services. i would be happy to answer any question that he might have or provide additional information as needed. >> i really appreciate the thoroughness of the report. the experts are sitting across

from supervisor olague and i. sorting through the difficult process of cuts year after year in the school district. my hope is you have provided some leadership of what funding the city could provide in difficult times like this. if there are no comments, can we ask monique from the comptroller's office, who i think was your earlier -- it looks like she may not be here. we will wait. proposition 8, -- h, is an important support that the voters supported for the schools. over the past four years, because of the city's financial crisis, instead of paying roughly $40 million per year to the school district plus $20 million to pre-k for all, it has

roughly been about $30 million per year, so there has been about $10 million deferred over the last four years, meaning roughly $39 million has not been paid to the schools. according to prop h, that money is supposed to be paid back in 2015 at the end of the prop. h funding. . my hope is it is revised by the education community. until that time, if we have additional surplus funds or other types of resources, we should be paying some of that back right now and not wait until 2015 given the dire economic crisis within the school district. that is some of the questions we were to be asking to money from the comptroller's office. -- monique from the comptroller's office. we will wait until she arrives. i would like to invite members

of the public, not community groups, and teachers. i will ask the first couple of speakers to be the representatives from the youth commission. we have the president and vice president, so welcome. >> hello. good afternoon. the use commission heard this hearing on june 18 and we supported during request. we are really excited to be here and seeing that the city is taking a commitment to our public schools in san francisco. one of the things that are commissioners came up with was how was this money going to be spent in the school district? a few things came up in our discussion. we understand that sfusd is facing a lot of cuts from the

state. we just hope that, with the additional funds, if the city does decide to do this, that these funds would go towards student-supported services, that the money would go not necessarily to the administration, but that the students will see it. a lot of the cuts will affect the students. for things like credit recovery, that is one thing we thought of. adding a 7th period to the schedule would help students and a lot and they would see the benefit of these funds. that is where we are at. we thank you for your time. >> hello, supervisors and commissioners. i just graduated from high school and i am going to harvard

in the fall. to reiterate what she said, last meeting, the use commission has a really overwhelming question about how this money will be spent and what kind of authority the city would have. from my own experience, i really support the school district to receive the money. give the money to the school district because they face such a huge deficit. we do not want any more furlough days. if the city does decide to give the money to the school district, i hope will be spent on helping out the most vulnerable students and schools that have the least resources. when i first entered the school district as a 10th grader, i was

an english language learner. compared to my later years, regular classes or honors classes, i really felt immigrants or students do not have a lot of resources. i do not feel like there are a lot of meaningful after-school programs. i did not feel my classes were really challenging. i went to thurgood marshall and transferred my junior or senior year. different schools have different kinds of resources. i hope the schools without as many resources could get more of this money. the school the struggle the most will learn more if they got more resources, not more ap classes, after-school programs,

that kind of thing. i really hope the school district gets this money. thank you. supervisor mar: thank you. we now have money -- monique from the comptroller's office. the main issue is the money that was obligated for the public enrichment fund, prop. h. if the money is deferred by $10 million over four years, what is the process of the city to fulfil its obligation to pay that money back to the school district?

and i know how busy it is for the comptroller's office, so i really appreciate your presence here. >> good afternoon, commissioners and supervisors writ i am the -- i am from the comptroller's office. the comptroller has a responsibility to manage the budgeting for the public education enrichment fund and we are required, on an annual basis, to receive the plans from the school district, review the plans, how the money will be spent, what the performance measures are, what the actual performance is, and to make a recommendation to the board of supervisors to accept those plans. for the public, just as a matter of background, the public education enrichment fund was created for the charter in 2004. one-third of the funds goes to

the first five commission, also known as the children and families commission for universal access to preschool. the other two-thirds goes to the school district. one-third goes towards sports, library, arts and music programs. the other third is to be used as the district for furs. in prior years, the second one- third was used for teacher salaries or for other teaching- related activities. the fund expires in 2014-2015. in order to continue it, it will have to be reauthorize and proposed to the voters. the mayor himself will be working to begin that process for the reauthorization of the public education enrichment fund. it also ir