Mr. Steven Kofahl led the Board members and guests in the Pledge of Allegiance to the United States of America (USA).

No public comments were received for this meeting.

Fernando Delgado, CBO, provided his CBO Report to the Committee.

Attendance & Revenue

• Month 3 Average Daily Attendance (ADA): 2,801 students.
• Same period last year: 2,937 students → Decrease of 136 students.
• Estimated revenue loss: ~$1.7 million due to lower enrollment.
• Attendance rate improved to ~95% (from 93.78% last year).
• Improved attendance generates ~$470,000 in revenue, helping offset enrollment loss.
• Funding is based on daily attendance rather than enrollment—both metrics are critical.

New Grant – Assembly Bill 121 (SSPDBG)

• El Camino has been approved for $630,947, with 75% of the funds to be received in October 2026.
• Total grant award: $841,000, with remaining balance to follow.
• Grant is discretionary but focused on:
  • English Language Arts (ELA) development & professional training.
  • Math and ELA framework enhancements.
  • Strengthening teacher recruitment and retention.
• Possible uses discussed:
  • Creating peer growth pathways tied to professional development.
  • Improving onboarding systems (certification, mentorship).
  • Investing in retention programs to reduce turnover and increase teacher support.

Audit Updates

• CSD Instructional & Operational Audit scheduled for December 5 (virtual).
• Required documents due by November 21.
• External CPA Audit (Christy White) in progress; annual audit due December 15.
• Finance Committee will request an extension under Agenda Item C.
• First Interim Financial Report (spending through October + projections) being finalized.

Facilities Updates

• Proposals being collected for cosmetic elevator area upgrades.
• eSports room planned for minor modernization due to outdated appearance.
• Winter Break projects include:
  • Asphalt repair work.
  • Addressing cracks and sinkholes as safety priorities.

Presenters: Fernando Delgado (Chief Business Officer), Bill Thompson (Beacon Pointe)

General Notes

• Report presented is based on quarter ending September 30, 2025.
• Both OPEB and General Account portfolios were reviewed.
• All asset allocations across both portfolios are within policy ranges.

OPEB Account (Approx. $34.8M)

Asset Allocation (All within allowable ranges)

• US Equity: ~39% (modest overweight vs. 35% target)
• International Equity: ~19% (aligned with 20% target)
• Fixed Income: ~27% (slight underweight vs. 30% target)
• Alternatives: ~15%
• Cash: ~1%

Portfolio Performance

• Q3 2025 return: 4.7%
• YTD 2025: 11.9%
• Trailing 1 year: 9.8%
• 3-year annualized: 15.4%
• Since inception (late 2021): ~5% annualized
  (Tempered by significant 2022 market decline.)

Performance Highlights

• International equities significantly outperformed U.S. equities YTD (21.5% vs. 12.5%).
• Fixed income: Strong performance at 6.5% YTD.
• Alternatives: Returned 7.7% YTD; strong across all sub-strategies.
• Emerging markets (Lazard): ~30% YTD return.

US Equity Underperformance Explanation

• Underperformance relative to the Russell 3000 due to:
  • More diversified holdings.
  • Less exposure to the “Magnificent 7” mega-cap stocks.
  • Value-oriented and quality-focused active strategies that lagged in 2025’s growth-driven environment.
• Beacon Pointe remains highly confident in managers (Fiduciary Mgmt, Virtus), expecting stronger performance in pullbacks.

International Equity Notes

• Entire allocation in active managers.
• Mixed performance:
  • Artisan (value) lagged.
  • American EuroPacific performed better.
• Beacon Pointe notes strong long-term track records and maintains conviction.

Alternatives Overview

• Diversified across:
  • Hedged equity (Swan)
  • Global real estate
  • Private credit (Cliffwater)
  • Private real estate (Apollo)
• All performing well and stabilizing the portfolio.

General Account (Approx. $7.6M)

Asset Allocation

• Equities: 30%
• Fixed Income: 70% (more defensive positioning)
• All asset classes are within policy ranges.

Performance

• Q3 2025 return: 3.6%
• YTD 2025: 9.3%
• 1-year: 6.9%
• 3-year annualized: 10.5%
• Since inception: 3%

Key Differences vs. OPEB

• Significantly higher bond exposure.
• Includes a PIMCO Low Duration Fund to diversify fixed income.
• Smaller allocation to alternatives, with only one hedged equity strategy included.

Closing Remarks

• 2025 has been an extraordinary market year, with strong returns across asset classes.
• Some underperformance in active equity strategies is expected given market concentration.
• Beacon Pointe emphasizes the portfolios are:
  • Well diversified
  • Positioned in higher-quality, attractively valued securities
  • Expected to hold up and potentially outperform if markets pull back

Feedback

• The Board Members will prepare questions based on Mr. Bill Thompson’s presentation.
• Mr. Thompson confirmed availability to address these questions during Thursday’s Board Meeting.
• He emphasized that materials are provided well in advance to support coordination.
• The committee is encouraged to reach out if clarification or discussion is needed prior to the meeting.
   

October 2025 ECRCHS Financial Update (Presented by Fernando Delgado, CBO)

1. Discovery of Delinquent Invoices

• Internal process audits revealed significant past-due vendor payments, some dating back to 2023.
• Between 2023–2024, over $300,000 owed to two vendors; overall estimate closer to $350,000 in delinquent invoices.
• Issues stemmed from invoices being entered only at time of payment, preventing proper aging payables tracking.

2. New Accounts Payable Procedures

• All incoming invoices will now be entered immediately into the system by accountants.
• Establishment of an Aging Detail Report for visibility.
• Check runs scheduled every Tuesday and Thursday, ensuring timely AP processing and ACH payments.
• Improved queueing and checkpoints for consistent payment flow.

3. Purchase Order (PO) and Vendor Management Improvements

• Strengthening the PO process so POs automatically generate draft invoices and flag expected payments.
• Team will proactively follow up with vendors when invoices are missing.
• Some vendors previously claimed non-payment despite payments being confirmed on ECRCHS’s end; verification steps strengthened.

4. Fees, Interest, and Vendor Negotiations

• Some vendors attempted to apply late fees/interest.
• Negotiations successful so far — fees waived.
• Discussion raised about why vendors continued providing services despite overdue balances.

5. Impact on Budget & Cash Flow

• Delinquent invoices caused unplanned hits to the budget, financial projections, and cash flow.
• New projection model to be presented at the next board meeting.

6. Examples of Process Failures

• A $500 teacher reimbursement from 2023 was recently found sitting on a desk.
• Concern raised about potential double payments; checks indicate no double payments made.

7. SOP Development & Knowledge Management

• Ms. Ramirez requested SOPs for onboarding new accounting staff.
• Delgado is drafting standard operating procedures due to knowledge gaps and staff turnover.
• Goal: reduce reliance on individual institutional knowledge and ensure consistent processes.

8. Use of AI and Automation

• Exploring AI tools to classify expenses by:
  • Relevant grants
  • LCAP goals and action plans
  • Available restricted funding
• Aim is to prevent misclassification (e.g., when staff forget to mark expenditures properly).
• Focus on using restricted funds appropriately and preserving the general fund.

9. Staff Pushback and Change Management

• Some resistance reported, particularly around long-standing informal practices.
• Delgado emphasizes:
  • Providing explanations and policy references (e.g., ASB manual) to ease transitions.
  • Enforcing rules fairly (e.g., taxpayer funds cannot be used for personal items like plates/forks).
• Leadership supporting the move toward sound business practices.

10. Turnover and Training

• Acknowledged turnover challenges: staff learn systems then leave.
• New hires are trained using SOPs so they can grow with the system.
• SOPs already implemented in areas like Admissions and Attendance and proven effective.

11. Current Staffing Status

• Department currently down two positions but intentionally delaying hiring:
  • Focus on refining processes.
  • Ensure new hires are trained properly with correct practices.

12. Overall Improvements

• Significant progress made within the last three months despite staffing shortages.
• Emphasis on:
  • Stronger internal controls
  • Eliminating redundancies
  • Automating workflows
  • Ensuring compliance and institutional stability

Presented by Fernando Delgado, CBO)

1. Overview of Maturing Investment

• A T-bill that matured in October produced a strong return of approximately 4.8%.
• Current market conditions show declining rates as the Federal Reserve continues to cut rates.

2. Recommendation for Re-Investment

• Recommended reinvestment option: 2-year Treasury Bill at 3.5%.
• Reasoning:
  • Locks in a stable rate for 24 months amid expected future rate cuts.
  • 2-year and 3-year bills currently have similar yields, so the shorter term is preferred.
  • If the Fed cuts further, the investment becomes advantageous since the locked rate will outperform newer market offerings.
  • The T-bill can be sold early if needed, providing flexibility.

3. Alternative Options Discussed

• 3-year Treasury Bill
  • Not preferred due to offering the same rate as the 2-year with a longer commitment.
• Laddering Strategy
  • Splitting the $400,000 into multiple maturities (e.g., $100,000 across staggered terms).
  • Provides staggered distributions and increased liquidity.
  • Not explicitly recommended but presented as an available option.

4. Settlement, Timing & Process

• Investment options shown from City National Securities.
• Rates are subject to daily fluctuation, so earlier action is beneficial.
• Question raised whether the reinvestment can occur immediately or must wait for the board vote.
• Reinvestment would essentially be a rollover of the previous matured $400,000 T-bill.

5. Clarifications & Notes

• Discussion on whether there are specific denomination requirements for purchasing the T-bills.
• Confirmation that last year’s investment was a $400,000 T-bill, which is the same amount involved now.

Presented by: Fernando Delgado, CBO

1. Overview of Total Payments Issued

• Total payments issued across all accounts (General Checking, ASB, Fundraising, General Account) for October 2025 amounted to:
  $1,000,675.58
• Data displayed in the updated dashboard register for board reference.

2. General Checking Account Summary

• Total ACH payments: 444
• Total checks issued: 176
• Total number of payments: 620
• Check register now includes:
  • Check numbers
  • Payment dates
  • Descriptions
  • Department fields (added as an improvement based on prior-year feedback)
• Majority of payments relate to payroll and operational disbursements.
• Board members were invited to ask questions regarding the checking account activity.

3. Board Member Request – Document Formatting Improvements

A board member requested adjustments to improve readability:

• Do not center-align numbers or names; align all text to the left.
• Consider using a table format with alternating row shading for visual clarity.
• Accounting team acknowledged the feedback and committed to updating the layout.

4. ASB (Associated Student Body) Trust Account Review

• Total number of checks issued: 4
• Departments and activity areas clearly listed, including:
  • Football
  • Girls Volleyball
  • Softball
  • Band
  • Baseball
• Future enhancement planned:
  • Add a template summarizing total dollar amounts per trust/department (e.g., how much Band spent, how much Baseball spent).

5. Fundraising Account Review

• Only two payments issued for the month.
• Typical expenses include:
  • Food catering
  • Chartwell’s vendor charges
  • Vehicle division expenses

6. General Account (Recurring Payables)

Recurring and required monthly payables issued from the General Account included:

• Health and benefits vendors (e.g., Texas Life, Cancer Insurance)
• EDD payments
• California Department of Tax and Fee Administration remittances
• Payroll-related liabilities and statutory filings
• Accounting team added the general recurring-payables section for easier monthly reference.

7. Continuous Improvement Efforts

• Accounting team emphasized ongoing enhancements to:
  • Improve formatting and visibility
  • Provide clearer department-level reporting
  • Streamline monthly check register presentation
• Commitment to refining the process based on board feedback.

Fernando Delgado, CBO, presented the October 2025 credit card charges prior to the Vote to Recommend Approval.

October 2025 Credit Card Activity (Mr. Hussey’s Card):

• Total charges for October: $12,324.56
• A major credit of $20,005.402.51 was received on 10/31.
  • Credit will appear on the next month’s statement.
  • Credit was for a canceled ROTC 29 trip originally scheduled for March.
  • Refund successfully obtained from Southwest Airlines.

Discovery of Unclaimed Refund:

• The trip cancellation refund had not been previously pursued.
• Identified during the review of trust balances with departments.
• ROTC confirmed the trip never occurred, prompting the successful refund request.

Ongoing Trust & Expense Review Process:

• Finance team is coordinating with all departments to confirm trust balances.
• Ensuring accuracy of recorded expenses and identifying any similar overlooked refunds.
• Emphasis on cleaning up historical discrepancies.

Concerns Raised:

• Noted that several years passed without proper oversight or auditing of these accounts.
• Team expressed concern over the lack of consistent historical review.

Fernando Delgado’s Credit Card Summary:

• Total activity: $35,587
• All purchase orders verified and approved.
• Receipts are being uploaded systematically.
• Transactions are being allocated correctly to their departments or funding sources.

Board-Approved Expenses:

• Large ticket items align with previous board actions.
• Occasional returns are processed to recover funds as needed.

Closing Note:

• Appreciation expressed for the ongoing cleanup and verification efforts.

Presenter:
Fernando Delgado, CBO, presented the request for an Extension for the 2024–2025 Audit prior to the vote.

Reason for Extension Request:

• Ongoing federal government shutdowns have caused delays.
• The district’s auditors (Christie’s team) recommended filing for an extension.
• Delay is due to the OMB Compliance Supplement Report, required for all schools receiving over $750,000 in federal funds (the district receives more than this threshold).

Impact on Audit Reporting:

• The December 15 deadline applies to all districts.
• The missing OMB compliance supplement directly affects the completion of the federal single audit required for the 2024–2025 audit report.
• Auditors cannot finalize any audit report involving federal single audits until the 2025 OMB supplement is released.

Current Auditor Update:

• Fieldwork is progressing.
• They are unable to finalize the audit without the 2025 supplement.
• There is currently no timeline for the federal government’s release of the required document.

Next Steps (With Board Approval):

• Fernando will contact the district to formally request an audit extension.
• The organization will wait for the federal government to resume operations and issue the required compliance supplement.

Discussion on District Response:

• If delays were caused by internal issues, the district could deny the request.
• However, since the delay is beyond the district’s control, there is no expected reason for denial.
• All districts are in the same situation due to the federal shutdown.

Mr. Wright stepped out of the meeting at 6:31 pm and came back at 6:33 pm.

• Presenters:
  • Kevin Thurow, Band Teacher (unable to attend but collaborated daily)
  • Ryan Guinto, Director of Technology
• Background & Funding:
  • Related to the Arts and Music Instructional Materials (AMIM) Block Grant approved at the previous board meeting.
  • Funding allocations approved, but any purchase above $50,000 requires board approval per FPP.
  • Teachers were reminded that AMIM purchases over $50k must be routed through the Board.
• Purpose of the Refresh:
  • Many instruments are over a decade old and require replacement.
  • Rationale provided by Mr. Thurow includes:
    • Educational value
    • Equity and access across all ensembles
    • Clear justification for each instrument requested
  • Long-term program growth, fiscal responsibility, and impacts were documented.
• Vendor Selection & Pricing:
  • Multiple vendors were contacted through an RFQ process.
  • Sweetwater selected as the winning vendor (described as “the Amazon of musical equipment”).
  • Pricing reflects the lowest quotes received.
  • High-quality brands (including Yamaha) selected for durability and long-term cost efficiency.
• Equipment Management & Planning:
  • Administration requested:
    • Defined life cycle of existing and new equipment
    • Identification of instruments needing repair or reconditioning
    • Estimated annual maintenance costs
    • Full inventory system for new and old instruments
  • Plan to integrate instrument tracking into the existing textbook check-in/out platform
    • Will allow tagging, assignment to students, and accountability for loss/damage
  • Mr. Thurow has been responsive and cooperative throughout the process.
• Instrument Refresh Proposal:
  • Total cost: $74,197.21
  • Represents a complete refresh of priority instruments across all ensembles.
  • District leveraged educational pricing and package discounts.
  • Instruments come with multi-year warranties and are built for long-term use.
  • Refresh expected to reduce repair costs and provide long-term savings.
• Instruments (total of 35):
  •  Baritone Saxophone (Yamaha YBS-480): 1
  • Tuba (King 2341W): 1
  • Euphonium (Yamaha YEP-321): 1
  • Saxophones (YAS/YTS-480): 7 (4 alto; 3 tenor)
  • Trumpets (YTR-4335GSII): 4
  • Trombones (Bach 411 w/F-Attach): 2
  • Flutes (YFL-362): 4
  • Clarinets (YCL-450II): 4
  • Violins / Cello Bags: 9
  • Bass Amplifier: 1
  • Zildjian K 18” Crash Cymbal: 1
• Confirmation that some old instruments will be reconditioned for continued use.
• Board acknowledged quality and longevity of selected brands.

Presenters:

• Fernando Delgado, CBO
• Ryan Guinto, Director of Technology

Background & Funding:

• Part of the IMI Grant, previously approved.
• Purchase amount over $50,000 requires Board approval per FPP.
• Funds are already allocated; this presentation is for notification and approval due to the amount.

Purpose of the Refresh:

• Replace outdated teacher laptops and computer lab devices.
• Current computer labs include machines from 2017, past their typical life cycle.
• Refresh will standardize devices across the district for performance, reliability, and warranty coverage.

Vendor Selection & Pricing:

• Three vendors were solicited: Lenovo, Harry Jones, and GST.
• Devices are ThinkPads with identical specs; quotes were compared “apples to apples.”
• Recommended award to GST as the lowest cost vendor while maintaining standardized product and warranty.
• Total savings: approximately $12,000 compared to other quotes.

Warranty & Coverage:

• Devices will include 5-year extended warranty with accidental damage coverage.
• Standard 1-year manufacturer warranty supplemented with additional coverage purchased for long-term reliability.

Quantity & Scope:

• 198 (175 Teachers + 23 Staff) laptop devices to be purchased and deployed.
• 123 Computer labs: 82 M70q Think Center Desktops + Monitors; 41 Lenovo Legion T5 + Monitors
• Includes laptops for teachers and computer labs.

Recommendation:

• Board approval requested to award contract to GST for the teacher device refresh.
• Standardization ensures longevity, reliability, and cost-effectiveness.