In terms of the General fund operating margin, operating reserve, and change in fund balance ratios, following the FY2020 AFR analysis, the District noted an issue at the County level with tax levy funds being incorrectly appropriated between UCO and M&O. Corrections to fund balances from FY19 and corrections to revenue distributions for FY20 were made to remedy this. In an effort to reduce spending to be within current-year revenues, the District has taken cost savings measures in the last two fiscal years. These efforts have a combined savings to the District budget of $162,875, and comprise the following a restructuring of District operations that led to a reduction in force (RIF) of 2.0 FTE, and changes in both internet provider and health insurance carrier. In the current fiscal year, cost savings measures have resulted in a savings to the District’s budget of $329,385 and are comprised of a RIF of 5.0 FTE and the shift from full-time to part-time contracted food service management. Looking ahead to FY22, the District plans to continue to be proactive to ensure that the General Fund operating margin, operating reserve, and change in fund balance ratios continue to improve. The first strategy is to consider any needed reductions in force based on the 100 day student count. Also to be considered are a reconfiguration of grade levels combinations and classroom structures to maximize utilization of FTE. There is a hiring freeze in place for FY22 staffing. All openings will be evaluated on a case by case basis to determine whether the position(s) is essential to District functions.

In terms of student counts, the District recognizes that ADM has been declining for the past 8 fiscal years. Exit interviews during student withdrawals did not reveal any specific reasons that could be addressed or mitigated. Historically almost half of these withdrawals have been W-1s or summer drops. One event that can be quantified occurred in FY19 when the loss of 42 ADM resulting in a reduction in force of 3.0 FTE for a savings of $167,179. The District was expecting slight growth in ADM for the current fiscal year due to the opening of two large manufacturing plants within Pinal County. This did not materialize for the current year, and the District will continue to monitor potential increases to ADM as a result of these new places of employment. The District contributes lower ADM to the pandemic that it is currently operating within. This pandemic and its latent consequences make it difficult to project what enrollment will look like in the next two fiscal years. However, the District plans to project a 5% reduction of ADM from the 100 day count while planning for FY22 as well as FY23. As required, adjustments to staffing by reduction in force will be implemented.

In terms of the M&O BBCF and UCO unexpended balance being in decline over the last 3 years, the District would like to note that traditionally the M&O BBCF has held steadily at around 4%. In the last two years, unexpected expenditures have caused the District to carry forward less than 4%. These expenditures included tuitioned-out placement for District enrollees and fluctuations in ADM mid-year after contracts for staffing had been issued. The District has a very large BBCF for M&O of $314,821 for FY21 as a result of grant funding related to the pandemic. Moving into FY22, the projections for BBCF are again at or above 4%. It should be noted that the VW Bus grant that was originally allocated from UCO leaving $60,968 as BBCF for FY21 and has since been adjusted through journal entry to code $110,000 to the grant. The District had also identified several planned expenditures within the last two fiscal years. Planned one-time UCO costs totaled $667,865 and addressed issues related to school improvement efforts and deferred preventative maintenance. Currently there are two Building Renewal Grants on file with the School Facilities Board to ensure district facility project costs are not being borne by the District. These include a water main restructure and repair and roofing replacement.

Additionally, it should be noted that there are discretionary funds available to the District in the event that there are unforeseen expenditures. These funds are not used by the District for day to day operations:

• Tax Credit and Auxiliary funds (Currently at $27,413 and $35,082 respectively)
• PrePaid Account with the Trust (Currently at $177,177 per October 2020 statement)