Lodi Unified School District Construction Projects Status

1. Lodi Unified School DistrictConstruction Projects Status Board Study Session August 19, 2008 Prepared by: Douglas Barge Art Hand Y:\Business Services\Financial Modeling\Construction Planning\Waterfall - Round 7\B08-19-08 District Construction Projects Status.ppt

2. Executive Summary • As with any program the Measure “K” Construction has evolved into it’s final stages. • This evolution will require a change in strategy: • Placing a greater focus on cash in conjunction with budget • Rapid completion and filing of all applications and reports required for State funding • More detailed reporting to the Board as part of project approval • To relieve the current cash pressures the District would: • Use existing capital project reserves • Maintain original project start up schedules • Restructure existing COPs repayment strategies • Recapture balances from projects that are completed or nearing completion • Other strategies outlined in the report

3. Table of Contents DESCRIPTION PAGE # 1 2 3 – 8 9 10 11 - 13 14 - 17 18 Opening Comments Problem Statement Measure “K” Projects State Projects Measure “L” Projects Cash Problem Solutions Recommendations Appendix i

4. Opening Comments With the passage of Measure “K” the District embarked upon an aggressive construction program to increase capacity within the system, get the District off of the M.T. calendar and modernize existing facilities. The program required the infusion of cash early in the program to be successful. This was accomplished with the sale of bonds and use of accumulated development fees. This infusion of cash was augmented by the State’s contribution to the programs. The State’s contribution would propel the program into the next phases of projects. In the past we have referred to this process as the “Waterfall”. The purpose of the “Waterfall” was to leverage the District’s cash position to allow for the rapid completion of the construction projects. Now the District has entered the final phase of the Measure “K” program with the sale of the final series of bonds last year. This will be the “Pond” phase of the program. Don’t fish until there is water in the pond. Water being “cash”, in this case. 1

5. Problem Statement Construction of new facilities within Measure “K” is slowing. The program has entered the Modernization phase. This phase of the program will rely heavily on State funding catching up with the needs of the District, or the program must be slowed to match available cash resources. It is now important that all Measure “K” projects be viewed closely in terms of available cash and not just in terms of budget. With the slowing economy and student population growth it may, also, be time to review the pace of the Measure “L” program. To be clear, the “Waterfall” program will still work for Measure “L” if there are supporting resources Developer Fees. Finally, the Tokay High and Lawrence repairs have been completed. That program was supported with Certificates of Participation (COP’s). With the delays in State resources and cash needs of Measure “K” it is appropriate to revisit our strategies for repayment. 2

6. Measure “K” Waterfall #7 ii

7. Status of Measure “K” Projects • Several projects have exceeded the original program budgets as previously outlined in Board reports: • Tokay Repairs • Tokay Modernization • Tokay Addition • Lawrence Repairs • Lodi High Addition • Lockeford Addition • To complete these projects funding was diverted from other projects. Our Facilities Department estimates additional State resources will help backfill a portion of the additional cost. However, State funding has yet to arrive for most of these projects including Lodi High Repairs. 3

8. CAPITAL FACILITIES MEASURE “K” - Series #1 $50,000,000 MEASURE “K” - Series #2 $50,000,000 Series #3 How the Waterfall Worked STATE 4

9. CAPITAL FACILITIES MEASURE “K” - Series #3 $9,000,000 Moving to the Pond Will Work STATE 5

10. What Have We Done? Measure K State Dev. Fees /Other • Three Additions COMPLETED ($ 2,938) • Six New Schools $ 115,876 ($ 99,083) • Total Completed $ 112,938 $ 0 ($ 99,083) NEW SCHOOL SITES • Podesta ($1,609,533) • Gantner • Remaining (80,024) • Total New Sites ($1,689,557) $ 0 $ 0 6

11. How Are We Doing? Measure K State Dev. Fees /Other • Lincoln CURRENT PROJECTS ($ 3,702) • Mosher ($1,630,804) • Woodbridge 1,717,573 • McNair $3,914,157 2,759 • Total Current $2,283,353 $ 0 $ 1,716,630 FUTURE ADDITIONS • Additions – Four Schools $688,208 $ 0 $ 5,673,583 7

12. What Are We Going to Do? Modernizations - Continued Measure K State Other Funds REMAINING MODS. • Lodi High $2,213,000 $ 124,015 (4,322,519) 801,299 $2,025,422 • All the Others * ($2,109,519) • Total Remaining $ 925,314 $2,025,422 $ (714,577) • GRAND TOTAL $ 925,314 $9,316,552 * Includes Lawrence Elementary & Tokay High School projects. 8

13. STATE PROJECTS iii

14. Summary of State Projects PROJECTS Funds Needed • Tokay Repairs $2,177,732 • Tokay Science Additions 3,773,164 • Total State Projects $5,950,896 9

15. Measure L Bonds First Series iv

16. CONSTRUCTION MEASURE “L”Summary of Sources – Series 2007 Bonds Description Project Measure L State Dev. Fees 1. Podesta Ranch 2. Delta Sierra 3. Morada 4. Bear Creek 5. K-6 & K-8 Sites 6. Middle School Site 7. High School (small) 8. Safety 9. Reserves 10. Total New Schools $22,900,000 3,200,000 3,200,000 21,500,000 26,190,000 4,875,000 16,900,000 800,000 $99,565,000 $10,300,000 3,200,000 3,200,000 17,000,000 8,545,000 2,437,500 800,000 4,517,500 $50,000,000 $9,000,000 4,500,000 13,095,000 2,437,500 8,450,000 $37,482,500 $3,600,000 4,550,000 8,450,000 $16,600,000 * * * May include Developer Fee Credits 10

17. The Cash Problem But the Budget Worked? v

18. Problem Statement • McNair still faces cash shortage problems related to the City of Stockton which still owes the District an estimated $4,171,397. • Because of the need to borrow resources from Lockeford to support the Lawrence repairs project pending receipt of State funding. The Lockeford addition needs $5,111,270 to move forward. • Resources for purchase of future school sites have been moved to support other projects pending receipt of State funding. • The various Tokay projects are waiting State funding. • Funding for Gantner is predicated on receipt of State funding and an agreement with the developers on fee credits. • The combined impact of these events has caused a budget and cash strain on the District’s construction program 11

19. Sample of the Budget/Cash? Budget Actual Cash • Beginning Balance REVENUES Sample $1,000,000 $500,000 $300,000 • Measure K 500,000 500,000 500,000 • State 500,000 0 0 • Development Fees 200,000 0 0 • Other Revenues (60,000) 1,000 1,000 • Total Completed $2,140,000 $ 1,001,000 $ 801,000 EXPENSES • Project $2,140,000 $1,500,000 $1,500,000 BALANCE $ 0 ($499,000) ($699,000) 12

20. Summary of Budget/Cash Needs 13

21. Solutions vi

22. Internal Project Re-Alignments SOURCES Amount • Measure K $ 714,577 • State 69,825 • Development Fee 176,744 • Others (513,505) • Total Project Re-Alignments $ 447,641 14

23. Certificates of Participation • The State will be funding a major portion of the work on the Lawrence and Tokay projects. Funding by the State will be on a reimbursement model requiring the District to front the cash. • To bridge cash needs, $13.5 Million of Certificates of Participation (COPs) were issued. • The program was designed to allow for a payoff of the debt to be made at any time. • State funds to be directed to payoff of the notes as soon as possible. • Annual payments are being made from Routine Restricted Maintenance resources. • After all of the State income is received the repayment will be reduced to approximately $244,000. 15

24. COPS DEBT 16

25. Options for Funding Existing Obligations 17

26. Recommendations • In recognition of the natural evolution for the Measure “K” Construction Program, all future project approvals will include: • A financial plan included in the documentation requesting approval. • A cash flow plan showing that cash will be available to support the project before there is a demand for the cash. • Staff Recommends changes to the construction program as outlined in this report to cover cash needs pending receipt of State funding. 18

27. The End vii

28. Appendix • State Funds - Status • Measure “L” - Detail Description Page A1 B1 – B2 viii

29. STATE CONSTRUCTION FUNDSStatus Project CDE DSA SAB Funding Yes Pending Yes Pending Yes Yes Pending Yes Yes Pending Pending Yes Yes Yes Pending Yes Yes Yes Yes Yes Yes Pending September 2008 November 2008 September 2008 2009 October 2008 October 2008 November 2008 September 2008 September 2008 November 2008 January 2009 November 2008 January 2009 October 2008 2009 December 2008 December 2008 January 2009 November 2008 November 2008 January 2009 March 2009 a. Bear Creek High b. Delta Sierra Science c. Lawrence Addition d. Lockeford Addition e. Lodi High Mod f. Lodi High Addition g. Morada Science h. Podesta Ranch i. Tokay HS Rehab & Modernization j. Tokay HS Science A k. Elkhorn Mod A1

30. MEASURE “L” CONSTRUCTIONSummary of Future Bond Series Description Costs Measure L State Dev. Fees A. NEXT SERIES OF BONDS $9,769,000 8,434,500 12,016,000 $30,219,500 1. K-8 School 3. Elementary School 4. Middle School 5. Safety 6. Reserves 7. Total 2nd Series $31,250,000 28,161,000 41,124,000 1,200,000 $101,735,000 $21,481,000 15,076,500 22,508,000 1,200,000 (4,517,500) $55,748,000 $4,650,000 6,600,000 $11,250,000 * * * May include Developer Fee Credits B1

31. MEASURE “L” CONSTRUCTIONSummary of Future Bond Series (cont.) Description Costs Measure L State Other B. FINAL SERIES OF BONDS 1. Academy High 2. Total Final Series $20,900,000 $20,900,000 $8,300,000 $8,300,000 $6,000,000 $6,000,000 $6,600,000 $6,600,000 C. TOTAL MEASURE “L” $222,200,000 $114,048,000 $73,702,000 $34,450,000 B2