Todd Lile, Superintendent

Arelis Garcia, Chief Financial Officer

In order to offset the fiscal impact of COVID-19, the State’s 2020-21 Adopted Budget deferred $12.9 billion in aid to school districts, community colleges and offices of education (“LEAs”) expected to be paid in 2020-21 to 2021-22. In response to this, California State Treasurer Fiona Ma has created a new Statewide working capital financing program to help LEAs manage the financial impacts of the deferrals. The California School Finance Authority (“CSFA” or the “Authority”) was created in 1985 to aid LEAs by providing access to financing for working capital and capital improvements. The goal of the CSFA State Aid Intercept Notes is to provide LEA’s with a streamlined and secure process that minimizes the impact of the deferrals on their operations.

By passing the resolution before the Board, our District will have the opportunity to participate in the Statewide Working Capital Financing Program sponsored by the Statewide Working Capital Financing Program.

Through participation in the Statewide Working Capital Financing Program, our District will be able to issue a tax and revenue anticipation note as part of this cost-effective pooled structure. An overview of this cash management concept and the Program is provided below:

Tax and Revenue Anticipation Notes (TRANs): TRANs are short-term debt instruments issued by school districts throughout the State to create an additional reserve to the general fund. In our District, this reserve will act as a cushion to the general fund in the event that we experience temporary cash flow needs. These cash flow needs may occur as a result of the timing mismatch between the receipt of revenues (generally received in an uneven fashion) and the expenditure of general fund moneys (generally paid out in a more level fashion).

The Program will result in a significant benefit to the participants. The highlights of the Program are as follows:

• Participants benefit from a cost-effective and administratively simple method to issue their TRANs

• Documentation is streamlined for governing board approval

• Participants benefit from year-round administrative assistance

Statewide Working Capital Financing Program Process:

The Statewide Working Capital Financing Program involves the following key steps in order to participate:

1. Adoption of Resolution: Adoption of the resolution does not obligate the District to participate in the Program. The resolution simply delegates to the administration the right to decide on participation.

 2. Cash Flow and Credit Background Process: Participants submit a completed credit questionnaire and financial information (including audits, budget, and second period interim cash flow report) that is used to develop an initial pro-forma cash flow statement for 2014-2015. Participants review, revise, and approve their cash flow statement. The cash flows are reviewed by Orrick, Herrington & Sutcliffe, the Program's Bond Counsel.

3. Pricing: The pricing of this issue is anticipated to occur in early January/February. At that time the interest rate on the notes will be locked-in. Our District is not obligated to participate until it acknowledges issuance prior to the sale of notes.

4. Closing: Closing of the issue will occur in late January/February. Our District will have access to the proceeds of the TRAN available to meet our temporary cash flow needs.

The Governing Board shall regularly communicate the district's financial position to the public and shall use financial reports to determine what actions and budget amendments, if any, are needed to ensure the district's financial stability.

The Governing Board may accept any gift, grant, or bequest of money, property or service to the district from any individual, private agency or organization, or other public agency that desires to support the district's educational program.

The Superintendent recommends that the Board adopt the resolution. This will allow administration to proceed to the next step in the process and take part in this beneficial program for schools.

Once again, our District is not obligated to participate as a result of resolution adoption. The Resolution simply delegates to the administration the right to decide on participation prior to the time of TRAN issuance.