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Alameda County Office of Education

L. Karen Monroe
Superintendent

May 1, 2017

BOARD OF EDUCATION Craig Bueno, President


Board of Education
Joaquin Rivera
Trustee Area I
Livermore Unified School District
685 East Jack London Blvd.
Amber Childress Livermore, CA 94551
Trustee Area 2

Ken Berrick RE: 2016-17 Second Interim Report


Trustee Area 3

Aisha Knowles
~~\e--
Trustee Area 4 Dear Presid~no:
Fred Sims In accordance with Education Code Section 42127, we have examined the Second
Trustee Area 5
Interim Report of Livermore Valley Joint Unified School District for fiscal year
Eileen McDonald 2016-17 to determine if it complies with the Criteria and Standards adopted by the
Trustee Area 6
State Board of Education, and if it allows the District to meet its financial
Yvonne Cerrato obligations during the current and subsequent two fiscal years.
Trustee Area 7 .,
Based on our review and analysis, we are satisfied that the Second Interim Report
approved by the District's Governing Board on March 7, 2017 reflects the
financial status of the District and is consistent with the State' s Criteria and
Standards. We therefore concur with the District's positive certification with our
concerns outlined below.

Deficit Spending and the Multiyear Projection (MYP)

The MYP indicates that the District will be able to maintain at least a three
percent Reserve for Economic Uncertainties in the General Fund through
2018-19. The District anticipates deficit spending in the unrestricted General
Fund of approximately $1.9M for 2016-17 and $2.0M for 2017-18. We believe
that the District's MYP may be optimistic, as the District includes unidentified
unrestricted expenditure reductions of$450K in 2017-18 and $3.7M in 2018-19.
Without these expenditure reductions, the District will be unable to maintain a
three percent Reserve for Economic Uncertainties in 2017-18 and 2018-19. The
District should implement budget balancing solutions with the aim of reversing or
3 13 W W inton Ave. mitigating the deficit spending and we encourage the District to specifically
Hayward, California identify and implement the expenditure reductions included in the MYP.
94544- 1136

(5 10) 887-0152

www.acoe.org
Labor Negotiations

We remind the District that as part of our AB 1200 oversight responsibilities,


ACOE reviews all collective bargaining agreements. We request that the District
provide us with an analysis of the cost of any settlement and its impact on the
operating budget 10 working days prior to the date the Governing Board will take
action on the proposed agreement.

Importance of Maintaining Adequate Reserves

Adequate reserves are a critical safeguard against future financial challenges. As


the District prepares the budget for 2017-18, we strongly encourage the ongoing
maintenance and growth of a healthy reserve balance.

As pension costs continue to rise, and as the state considers a partial deferral of
June's apportionment, sufficient reserves will continue to play an important role
in the fiscal stability of all districts. Accordingly, we recommend careful and
cautious planning for the upcoming year, especially considering the various state
and national economic uncertainties.

Conclusion

We want to acknowledge and express our appreciation to Susan Kinder and the
District staff, the Governing Board, and the community for their continued
diligence and hard work. If you have any questions or concerns regarding our
review process, please feel free to call me at (510) 670-4140.

L. Karen Monroe, Superintendent


Alameda County Office of Education

LKM:sm

cc: Board of Education, Livermore Valley Joint USD


Keily Bowers, Superintendent, Livermore Valley Joint USD
Susan Kinder, Chief Business Official, Livermore Valley Joint USD
Jeffrey B. Potter, Interim Chief Business Officer, ACOE

31 3 W Winton Avenue I Hayward, California 94544-1 136 I (51 0) 887-0152 I www.acoe.org