the rainy day reserve. that's how money makes its way into the city's rainy day reserve and that's not proposed to change at all. for withdrawals from the city, if the city controller projects total general fund revenues for the up coming budget year are less than revenues for any current year or prior year, then up to half of the rainy day reserve balance can be in the city budget for the upcoming year.

and the second frankly is that the decision making process about appropriating funds from the reserve to the district is now resting with the mayor and the board of super visors so certainly that was the intent of the original language, but

that is something that the city has -- you know, the willingness to revisit and change. that's some of the discussion that's taking place now. the possible changes. one is that there would be two separate reserves created so right now instead of having the one plot of funds in the rainy day reserve, that there would be a split of the one reserve into two reserves. one would be for the district and one would be for the city and the city would receive 75 percent of the current balance and the district would receive 25 percent. and then if the say -- if and when the city in any year where they would make an additional deposit to the reserve then the same per centages would apply.

in other words, we would use the funds to avoid lay offs rather than rescinding lay offs and that's proving to be a very process. the second change is who decides whether a draw should

be taken. this change would allow the board of education without needing approval to decide -- to take a draw under certain conditions. the third change is that -- all of this is subject for the board to weigh in on and none of it is set in stone. it's just proposals we're bringing to you. the third is to increase the withdrawal allowance from 25 percent to 50 percent. now, this would be 50 percent of the district's reserve, of the district portion of the reserve. and then here are three, possibly among others, but

three different options for conditions for the withdrawals so one is to -- in a way sort of mirror the current language so to continue to base the maximum draw on a decline in inflation adjusted for people revenues. that's closest to what is in place now. another is to allow a draw based on budget deficits that would be much less restrictive than what's in place now. on the flip side another option is to allow an actual decline in revenues rather than a decline that's inflation adjusted so that would be more restrictive than what's in place now. then finally a concept.

then the final piece of information that you received was just a summary of the three pieces of legislation that were

introduced by supervisors kim, avalos and yee. that's -- >> is there any public comment on this item? seeing none, public comment is closed. commissioner wynns. >> i have a few questions. the first is there is nothing here as far as i can tell, but i haven't read the actual proposed language yet i have to

say that -- we just got it that addresses the link between peef and the rainy day fund. there is nothing here -- all that i want is some language in the -- >> i think the superintendent can respond to that. >> that language is actually being crafted as we speak through the supervisors who have introduced their language. we were going to bring some preliminary language. >> that would be in the p 3 authorization. what it needs to say is for purposes of -- third third money will not count toward calculations for purposes of eligibility for the rainy day

fund, period or something to that effect. >> to that effect, absolutely. >> that's the first thing and most important. i was just wondering why -- because i read through all of these scenarios that you gave us and most of them don't give us rainy day fund. and so i'm asking if that's just conservative, if we're just saying just in case there's no further because the way -- if we're not changing the way money is put into it, we should be -- just when we look at possibilities in e future, it seems to me that we should

be thinking -- there's likely to be growth in the rainy day plan because that was one of the big issues is that there was growth. for us, the issue was that we didn't have any control over how we got the money. and it was -- and the link between it and peef was problematic at best because on more -- these one occasion, maybe really more than one, that was held up. we won't give you access to the rainy day fund unless you take what peef want you to do. so we want to decouple that, but my memory of what happened with the rainy day fund, there were two frustrations -- one,

money was going into the rainy day fund even though they had a budget problem, because the problem wasn't revenue, it was growth and expenditure. they had money coming in, some of which was required to go into the rainy day fund, even though they had to make cuts to meet their budget. in recent years we were actually getting less money with actual cuts to our budget so that's confusing to me. the second thing is -- again, this is only for discussion purposes because theoretically it doesn't matter to us, but still it seems odd if they -- the other frustration of the city was they were not able to access it and that seemed to me the tension between us and the city is that we were able to access the rainy day fund under the rules, and they were not even though we were both facing difficult budgets.

i just really want you to clarify whether my impression is correct. that could still happen. >> i'll try to address as much as i can. i think the first point is that the -- to the extent that there's one common pot of funds now, that in my observation, has been the source of, you know, a number of these tensions political debates and from the credit rating perspective, the critique that the city's agencies have made.

they can also appropriate to the district in certain circumstances, separate circumstances. that, by creating a split or bifurcated reserve, that would alleviate that because the funds would be mutually exclusive so the city would have control of its portion, the district would have control of its portion, the city would continue to make deposits under the same circumstances as now, but the city has very little interest in what happens with the district's portion of the reserve. a lot of these issues would be alleviated. that has been the tension, in my observation has been around the fact that the funds are comingled, there's one pot that

the city could use but there's also -- >> in if fact -- and i understand that perfectly. and of course the only thing for us to -- which we kind of don't really get to agree to, but we're talking about it anyway, is that in the very unusual circumstances, we could have access to more than what we would get here, but those are quite extraordinary circumstances in theory. as i understand it, whereas we've had a couple of years where the budget was so terrible we got a lot of money out of the rainy day fund, that would be unhikely likely in the future, but it could be likely that we would have access to a more modest amount. first of all, we know what's in the parts and we woebt give you

access to it if you don't do a, b, c, something else, but we can't evening think of -- because that's what happened before. we never anticipated what they were going to be holding us up for. that's a good explanation because what they seem to be proposing are not many changes to the things that we would be concerned about and the main change is this separate fund and if that's their problem and they're fixing it, i don't have a problem with that so thank you for the answer. >> as far as the issue about the length between [inaudible] or the like, we can certainly make that explicit in the language and we'll go ahead and do that. and evening so, even for that language not to be there, you know, per what i was saying a

few minutes ago. the city is very unlikely to care, frankly, about what -- if these two funds are separated, if their interest in the technical calculations for the district's reserve is really made moot practically because they don't have an -- their own financial interest in what happens with the rest of the stuff. >> the other thing is that in the past, the things they were holding us up for are the things we think we're changing in the p 3 authorization, but what we know is these were unanticipated issues and that's our concern is that we just can't think of every loophole that somebody is going to go sit down and dream up so just having the language that says they're not linked would seem to me is the only shortest way

that we can think we solve that problem. if that's done i'm okay. >> any other questions, comments? you mentioned none of this is set in stone, so can we 60, 40, instead of 75, 25? just kidding. my suggestion about this is [inaudible] or whether or not we would be getting [inaudible]. >> not in the materials that i went through tonight, but yesterday i sent an email with scenarios and calculations to you. it's hard to tell because it's speculative. we don't know what the -- among other things, we don't know what the policymakers of the city would do in the future,

including the near future about making draws or appropriations to the district under the current language so it's -- part of this depends on one zone predictions about how likely and for how long the city would continue to appropriate funds from the rainy day reserve to the district so in my view, it is certainly not guaranteed that the city would continue to make appropriations to the district as they've done for the last four or five years, at least indefinitely, especially as our own revenues hopefully will continue to increase as the lcff rolls outs and gets implemented. we could see that each year we'd certainly make the case, but even in bad years we've had very id owe sin cattic

conversations about whether the city would approve a draw and very disconnected things have entered into that conversation such as should we be agreeing to a higher level of services or should we be selling surplus property. i think that's -- >> [inaudible]. >> it's very unpredictable and not a guarantee. it's been very helpful over the last few years that there has not been as much of that in terms of resistance or objections to the city making changes as we've needed that support, but it's been every other year where there's been a random debate regarding the rainy day reserve. >> when talking about contributing to the fund, that they're required if it's 5

percent over, they're required to put this amount of money into the fund so they would be required if they were to have -- the city government would grow, that the revenues would grow, that they would be required to put this money into this fund, but now this fund would be split 75/25 and we would have sole oversight of the 25 meaning they wouldn't be the ones we'd have to go through and this problem you just described would be eliminated; is that correct? >> that's correct. and the numbers i sent yesterday i did include -- >> it was sort of overwhelming so i've just been hearing from some folks that we'd get less money. i'm hearing from other folks that's not necessarily true because they're still adding to the fund, it's just that we would be able to withdraw more

than 25 per isn't of cent of that fund if needed; correct? >> one of the changes proposed is if the funds are split into a district reserve and city reserve, from the district reserve the board of ed could approve a draw of up to 50 percent of the district [inaudible] so that's -- that is one change, but in technical terms, that would be less than 25 percent of the whole balance in the rainy day reserve, but at least there would be certainty about that. >> that's why we think there would be less money. >> thank you. i want to follow up on that. this is where my antenna goes up because i want to make sure we thought through the whole thing. clearly there are people that beyond the rating agency issue think this is a better

situation for them. so i mean, i haven't -- i have to confess and i haven't read through your whole memo that you sent us so you may have done this, but it just seems to me, like, if you could play out the scenarios of the last few years -- i mean, i understand those conversations were very id owe sin cattic -- but if you look at the city had this much in the fund and this is the amount that we were -- the gross amount we were entitled to regard less of what we actually agreed to or negotiated, i wonder if we should do some comparison that way. do you know what i mean? >> i do. and that is part of the overwhelming set of information i sent yesterday. one thing i will say to provide some reassurance about process. the process for this

discussion, if -- and hopefully there will be an introduction of legislation regarding all of this that would be introduced at the board of supervisors. that too would be referred to committee and there would be discussion in committee which would take place in june. so there is time for all of the commissioners and the public for that matter, to study the implications of these changes and i'm hoping -- i just have not found a really easy way to avoid some of the technical information so, you know, i apologize for sending you so many different schedules, but that was what i was trying to provide, to depict, what might happen under the current language versus these proposed modifications. and there is time to study that and haven't had any mark ups in

the rules committee at the board of supervisors. >> it may be that if we ever hit on the perfect way of playing this out that we end up with a little less money and that may be okay because we may prefer to have 100 percent control over less money than no control over more money. i want to make sure we've played through all the different angles. >> i think what you just said is the essence of the financial aspect of this. aside from the lay off, which i think is beneficial in any case, but the bird in the hand ver susz sus two in the bush. >> i think it would be a trade off a little bit. the things we struggle with

each year, and then the other thing is that we have to then sort of do the [inaudible] to the city to make sure -- it would eliminate all of that. i think that what i would like to see is what commissioner norton said sort of you under the scenario how much would we be getting. instead of 25 percent of 25 percent, 25 percent of 100 percent. isn't that what we're looking at? you mentioned earlier that the deadline for this is next tuesday. is that something you need to report tonight to give you direction? >> well, the only thing i'd need to know is if the board is not comfortable with something being introduced, then i certainly -- that would be relevant information to know

because we would change course. [laughter] but if you're comfortable with legislation along these lines being introduced, then that's the direction we'll pursue and we'll keep you informed. and of course if you have any questions i'll be glad to go through it and/or if there's an interest in proposing any amendments to the language that is introduced, then there's time to have that discussion. >> thank you. >> if i understand correctly then, whatever legislation pertaining to the rainy day fund that is introduced by may 20 would still be subject to the 30 day holding period and would still be subject to

amendments, correct? >> that's correct. >> commissioner maufus. >> so along that thinking -- and maybe you mentioned it in your comments and i sort of see it here alluded to. regards to the amendments that are expected to be taken up on june 12 and 19th, are those amendments happening in sort of an ongoing discussion way and then they come forward fully formed as an amendment at a rules committee meeting at the board of supervisors, or is that rules committee meeting meant to have that commission formulate and come forward and have that sort of process broken down there. and by the time that meeting is over, those recommendations will go on to the full board? >> commissioner, my honest answer is we don't completely

know, but i suspect that there would at least be some preparation going into the committee meeting or the committee deliberations about these measures. if there's an interest on the part of the board or community members or the mayor, i mean -- i suspect that some work -- it would only behoove the stakeholders who have an interest in seeing some of the language change versus what was introduced on april 29 to go through the task of identifying some specific edits or mark ups to propose at the committee whenever it takes place. >> and then as a part of our preparation process for input, it is along the lines of what you're informing us here and

then the possible changes. they are -- this is an ongoing conversation but the last large bull et point regarding withdraws in your presentation, that is on ongoing conversation, or you're here to get the temperature of the board? these are concrete changes we'd like to see and like you to take that forward and the board of supervisors as part of our preparation. does that make sense? >> yes. the legislation that's been drafted, which you have in your packet, that reflects everything that's on this page on page 6 and of the three options that are listed on page six, options for conditions for withdrawals, it reflects the first one of those. continue to base the maximum draw on decline and inflation

adjusted per people revenues, and one specific comment that commissioner wynns has made tonight, which i think is one that we should try to change to the version that you have before you is to explicitly said that the third peef revenues will not be included as part of the calculations in the decrease or change in revenues. that we can change in the legislation that we propose that the mayor and individual supervisor introduce next week and from that point on it would be referred to a committee and be subject to future amendments. >> thank you, and i support that. thank you for articulating that. >> i