ALL FUNDS FINAL BUDGET. A description of the educational plan and resources to support the plan

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1 ALL FUNDS FINAL BUDGET PURPOSE OF THE BUDGET The purpose of the Budget is: A description of the educational plan and resources to support the plan A financial plan outlining proposed District actions An accountability tool A public information document The Budget serves as both a policy document and a practical day-to-day guidance tool; it is an expression in dollars of the District s education program. More specifically, the Budget serves as an outline for the estimated revenue and expenses for the fiscal year. FINAL BUDGET AB 1200, effective January 1, 1992, requires school districts to adopt their final budget on or before July 1 (single budget adoption cycle) or on or before both July 1 and September 8 (dual budget adoption cycle) of each calendar year. The Newport-Mesa Unified School District Board of Education has selected the dual budget adoption cycle thereby requiring adoption of the District s Budget on or before July 1 and again on or before September 8. Revisions are made in the Budget document between the two adoption dates. The All Funds Tentative Budget, representing the initial review and adoption of the District s financial plan, was adopted by the Board of Education on June 28, Revisions to the budget have been made between the initial adoption and the final adoption. Public comment and input on any aspect of the Budget is encouraged and welcomed. GENERAL DESCRIPTION OF THE DISTRICT The Newport-Mesa Unified School District is located in the second largest county in California, in terms of population. The District covers square miles and includes the Cities of Newport Beach and Costa Mesa as well as other unincorporated areas. The District began operations as a unified school district on July 1, Currently, there are twenty-two elementary schools, two intermediate schools, four high schools, one alternative education center, a Middle-College High School and one adult education center in the District for a total of thirty schools. In the gross assessed valuation (excluding incremental values of redevelopment agencies and homeowners exemptions) of the District is $38,070,142,369. This valuation represents a percent increase over values. The District is governed by a Board of Education, the seven members of which are elected to four-year terms in alternate slates of three and four. The District employs approximately 1,625 certificated employees and 1,398 classified employees. The pupil-teacher ratio is a maximum of 20 to 1 for Kindergarten and grades one through three and averages 29.5 to 1 for grades four through twelve. The District's Governing Board also serves as the Governing Board of the Newport-Mesa Unified School District Community Facilities District No and the Newport-Mesa Unified School District Public Financing Authority. Section I General Information 1

2 ALL FUNDS TENTATIVE BUDGET STRATEGIC PLAN During , the District embarked on a process to develop a new strategic plan. The initial draft of the strategic plan was presented to the Board of Education on June 22, On July 13, 1999, the Board of Education adopted the following vision statement: Our Shared Vision For Every Child Every Day The vision of the Newport-Mesa Unified School District is to provide a world-class education for every child, every day. We will accomplish this through our dedication to: Providing a challenging, nurturing, and active learning environment for all our children that ensures educational success, a life-long desire to learn, and personal and civic responsibility. Establishing an environment in which everyone is valued and treated with dignity and respect. Offering continuous learning opportunities that are useful, timely, and engaging for all district employees and parents. Forging productive school-family-community partnerships. Creating a collaborative organization that is open and committed to quality customer service. Accomplishing this vision ensures that our students become responsible, ethical citizens who will make meaningful contributions to a multiethnic, global community. Our graduates will exhibit the academic, interpersonal, and technological skills required for success in higher education and in their chosen careers. The following belief statement was adopted: This We Believe We BELIEVE our first responsibility is to provide a quality educational program that meets the needs of all students in the District. We BELIEVE that we teach the whole child. We expect academic achievement, personal responsibility, honesty, cultural sensitivity, and respect for people, property, and the environment. We BELIEVE that all children can learn and deserve equal access to a quality education. We BELIEVE that children learn best in a safe, clean, caring, and aesthetically pleasing environment. We BELIEVE that when we come together as one community, we are enriched by our cultural diversity. 2 Section I - General Information

3 ALL FUNDS FINAL BUDGET We BELIEVE that people are our most important resource and should be treated with respect and dignity. We BELIEVE that we need parents as partners with the school and District in sharing ideas and giving input to major decisions affecting their children s education. We BELIEVE that we have a responsibility to demonstrate the effective and wise use of money and resources. We BELIEVE that we serve our students and our community best when we work together as a team. The following commitment statement was adopted: Fundamental To Our Vision Is Our Commitment To Always make decisions based on the best interests of our children. Channel all our resources (people, money, facilities, time, and energy) to support our beliefs and shared vision. Prioritize existing funding and acquire new funding sources to make our vision a reality. Demonstrate respect for people, cultures, individual contributions, and one s right to his/her opinions and ideas. Hold ourselves accountable to the highest standards of performance and service which improve and support student learning. The following success indicators were adopted: Success Indicators To achieve individual student success, the Newport-Mesa Unified School District will demonstrate continuous improvement in Student Achievement Attendance Rates Graduation Rates Dropout Rates Family/Student/Staff/Community Satisfaction Responsiveness to those we serve Involvement of Stakeholders Family Involvement Honoring Diversity Budget Alignment The process to complete the action plan portion of the strategic plan continued through the early months of leading to the adoption of specific goals and priorities. The goals have served as the cornerstone of the District s efforts to continue and improve 1) quality student learning, 2) opportunities for continuous learning, 3) an attitude of respect and dignity, 4) a focus on customer service, and 5) partnerships within our community. On March 22, 2002, the Board of Education Section I General Information 3

4 ALL FUNDS TENTATIVE BUDGET adopted goals and priorities for the fiscal year which were almost identical to the goals adopted in 2000, allowing for further implementation and evaluation during the fiscal year. There were no changes to the goals for the and fiscal years as the District was in the process of updating the Strategic Plan Strategic Issues, Goals and Actions were adopted for the fiscal year with the continued emphasis on the vision of the Newport-Mesa Unified School District to provide a world-class education for every child, every day. BUDGET RESTRUCTURING The adoption of the goals represented a significant milestone for the District. Adopting goals early in the budget process provided for an important paradigm shift by establishing that the Strategic Plan and the annual goals set the road map of the District instead of the Budget. Within the goals and strategies of the Strategic Plan is a requirement that the Budget be aligned to the Strategic Plan in order to identify the resources necessary to carry out the Board-adopted annual goals. The goal of the Strategic Plan-Budget alignment process is to build a budgeting framework that will foster an organization that effectively responds to the expectations of its constituents, performs with the objective of meeting specific measurable standards, promotes accountability and encourages continuous improvement. The process is designed to incorporate the following attributes: Universally applicable and comprehensive; methodical and objective; measurable standards and reporting mechanisms; rigid enough to ensure continuity, yet flexible enough to adapt to anomalies; based on empowered stakeholders following the tenets of the Strategic Plan. The budget development process started with a series of thoughtful and interactive discussions by various stakeholders to identify strategies and resources available and needed to accomplish the goals. Priorities were assigned to the goals to ensure success within the limits of the existing and new resources that are available and under the control of the Board of Education. Goals were analyzed to determine what resources were needed and what resources were available. Resources were restructured to ensure that the highest priority goals were funded. While greater attention was paid to the highest priority goals, other goals were not ignored or left unfunded. Existing departmental resources were realigned or tagged to acknowledge that many current activities and efforts support the goals. The restructured budget development process requires that every budget account include a meaningful and understandable written rationale, and that every account fall into one of three categories: 1) Support of a Board-adopted Goal, 2) Legally Mandated, or 3) Discretionary. 4 Section I - General Information

5 ALL FUNDS FINAL BUDGET GOALS AND PRIORITIES Board-adopted goals are as follows: Goal Ref. No. Goal Category Excellence Goal Description Advancing student achievement in all areas. 1A Excellence Meeting the Needs of All Students: Expand after school and summer programs. Expand career preparation training. Develop plans to reach the potential of students with unique needs including English Learners, Atrisk, GATE (Gifted and Talented Education) and Special Education. Establish Family Resource Centers. Devise opportunities for students to think critically, research and solve problems. Incorporate multiple assessment strategies to evaluate student learning and progress. Provide an exciting, challenging curriculum responsive to needs, learning styles and individual interests. Ensure mastery of the grade level California adopted standards. Ensure equal access for every child to the core curriculum. 1B Excellence English Bridges to Opportunity: Expand community school concept (preschool to adult education). Collect more in-depth assessment data at enrollment. Improve customer service to incoming families. Address the needs of English Language Learners at the secondary level. 1C Excellence Preschool Access for All: Expand community school concept (preschool to adult education). Collect more in-depth assessment data at enrollment. Improve customer service to incoming families. Address the needs of English Language Learners at the secondary level. 1D Excellence Visual and Performing Arts: Make the visual and performing arts an integral part of school life. Expand coordination of district funded arts program. Study creating a magnet arts school. Expand course offerings in arts program. Infuse visual and performing arts standards into core curriculum. Expand collaborations with existing visual and performing arts organizations. Provide additional visual and performing arts opportunities in the after school and summer school programs. 1E Excellence Inquiry-based Science: Create consistency in program delivery. Integrate science across curriculum. Implement hands-on inquiry based science. Ensure quality science instruction on every site. 1F Excellence Professional Development: Provide training opportunities for professional growth, multicultural sensitivity, and positive customer service. Maintain an environment of continuous life-long learning. Implement sustained staff development. Seek funding mechanisms for new initiatives. Create a teacher training center and demonstration school. Create manageable teacher workloads with built in planning time. Create opportunities for staff to meet with district personnel. Devise opportunities to reduce teacher stress. Provide teacher training in instructional methodologies and techniques. Develop a teacher training program that is focused on preparing teachers to interact and communicate with families. Provide training to families about the educational process, how and why it is changing and how to support classroom instruction. Review service Section I General Information 5

6 ALL FUNDS TENTATIVE BUDGET demands and staffing levels annually. Offer employees opportunities for second-language acquisition. Innovation Redesign the way we do business for students, staff, families and the community. 2A Innovation High School Redesign: Continue to design our high schools to meet the changing needs of our students in the areas of curriculum, scheduling, environment, instruction and community involvement. 2B Innovation Provide teacher training in instructional methodologies and techniques. Develop CFAST (California Formative Assessment and Support System for teachers) and Documentation Model FRISK (Facts, Rules, Impact, Suggestions, and Knowledge) training for all principals and assistant principals. Implement new teacher induction programs; technology training for teachers and administrators. Implement staff development in the California Standards for the Teaching Profession; new teacher induction and certification. 21 st Century Skills Using current technologies, prepare students and staff to access, manage, integrate, evaluate and create information. 3A 21 st Century Skills Technological Literacy: Integrate technology tools into all facets of the curriculum. Provide equity and access for students and families. Implement greater access to online data and resources. Establish opportunities for all teachers, staff and administrators to acquire technology skills. 4A Communication and Collaborations Communication and Collaborations We will seek information from and respond in a timely fashion to concerns, ideas, and opinions of students, staff, parents, and community members Improved Communications: Integrate and implement the Family Friendly Schools Program in a manner that ensures advocacy and language that is family friendly. Reach out to the media and community. Produce proactive outreach materials. Create user friendly District and school websites. Establish a network of site based communication liaisons. Create District, staff and site level list-serve s and message board. Use a common language-avoid acronyms. Reward exceptional customer service. Develop a process and attitude that ensures that employees at every level of the organization are equipped with the skills and strategies to create consistently positive service interactions. Continue a Districtwide customer service training program that builds appropriate service skill levels of each member of the District staff. Develop a community and employee input program. Establish processes for open and honest communication with all staff and community members. 4B Communication and Collaborations Effective Collaborations: Establish a District business collaborative to fund Partners in Education. Establish a community non-profit collaborative. 6 Section I - General Information

7 ALL FUNDS FINAL BUDGET 5A 5B Facilities and Infrastructure Facilities and Infrastructure Facilities and Infrastructure Preparing the buildings, services and connectivity needed for the functioning of an organization in the 21st Century. Facilities for the 21st Century: Maintain and improve the facilities and infrastructure of all NMUSD properties with pride and respect. Study parking and drop-off areas across the District. Implement greater security physical and data. Study the options of 7-12 campuses. Study and make recommendations for the completion of all priorities under Measure A. Create facilities to provide equivalent opportunities in athletics, visual and performing arts and science laboratories. Technology Infrastructure: Provide timely and effective technical support. Standardize operating systems, hardware and software. Create a formal process to analyze proposed programs. Expand and strengthen the IT (Information Technology) Infrastructure. 6A Mandate Legal Mandate 6B Discretionary Discretionary REVENUE LIMIT VERSUS BASIC AID School districts are funded as either Revenue Limit districts or Basic Aid districts. A district is considered to be a Revenue Limit district unless its revenue from local taxes meets or exceeds its calculated revenue limit; then it automatically becomes a Basic Aid district. Conversion from Basic Aid to Revenue Limit and vice versa is automatic and viewed as positive. Chart 1 below depicts the difference between Basic Aid and Revenue Limit funding. REVENUE LIMIT VS BASIC AID Revenue Limit Basic Aid Calculated Revenue Limit $5,253 Per ADA State Aid Excess of Property Tax Over Calculated Revenue Limit Local Property Taxes Local Property Taxes Chart 1 Section I General Information 7

8 ALL FUNDS TENTATIVE BUDGET Newport-Mesa Unified School District was a Basic Aid district between and The District converted from the Basic Aid funding mechanism to the state aided Revenue Limit funding mechanism during and continued in Many factors worked together to move Newport-Mesa from Basic Aid status to Revenue Limit status. These factors included dramatic decreases in local property tax revenues, enrollment increases at a rate close to twice the state average, and augmentations of state funding for K-12 Revenue Limits. However, these factors began to turn around, and in the District converted back to Basic Aid status by a mere $9,200. The District has continued its Basic Aid status into How is Calculated Revenue Limit determined? Newport-Mesa s Base Revenue Limit per ADA of $5, for the fiscal year is based on last year s revenue limit plus a flat amount per student adjustment for cost of living (COLA). Although COLAs are generally described as a percentage increase, i.e., 2.41 percent, they are actually applied as a flat dollar amount per student. For , unified school districts are expected to receive $211 per student for COLA. For the year, the State has applied a deficit factor of The Base Revenue Limit is multiplied by the District ADA and then adjustments are made for various items such as Unemployment Insurance, PERS Reduction, Class Size Penalties, and, previously, the state applied deficit factor. The final figure represents the Calculated Revenue Limit for the current year. Local property taxes are subtracted from the Calculated Revenue Limit and the remaining amount is what the District would receive as state aid. In previous years, the State provided the District with a constitutionally guaranteed $120 per ADA. Beginning in the State discontinued honoring the constitutional guarantee as in the past and therefore, the District will incur a loss in excess of $2.6 million. The Calculated Revenue Limit for is projected to be $5,253. The recent economic upswing has resulted in the District s assessed valuation growing at more than 10 percent which is higher than the rate of growth for the combined elements of student growth and cost of living adjustments through state funding for K-12 revenue limits. This growth rate for assessed valuation represents initial estimates from the Orange County Assessor s office. Because assessed valuation is the basis of the computation of tax revenue, the reported growth in assessed valuation will be somewhat indicative of the growth in tax revenue. The final estimated tax revenues for will not be available until November, STATE BUDGET The State Budget Adoption includes the following provisions: Proposition 98 Rebasing. In the prior year the Governor promised to limit cuts to education by no more than $2 billion, which resulted in the rebasing of Proposition 98. The Governor has since indicated he does not support restoring the cuts or the Proposition 98 base. All programs are expected to receive growth and cost of living adjustments (COLA) which are designed to help school districts keep up with enrollment growth and monetary inflation. The statutory COLA is 4.23 percent. Additionally, the Governor proposes to reduce the revenue limit deficit factor by 1.23 percent resulting in a deficit of percent. The Governor has included $38.0 million to reduce the impact of PERS Reduction. The Deferred Maintenance program will be fully funded for Elementary Class Size Reduction will continue with full funding at $967 per enrollment for all K-3 students in the full day program. SB311 (EC5214) provides flexibility by phasing the 8 Section I - General Information

9 ALL FUNDS FINAL BUDGET penalty for class sizes over Districts will now have the option to staff closer to 20:1. This legislation which was passed in September 2004 remains in effect through Special Education is proposed to receive a 4.23 percent COLA and growth is funded at $ per ADA. Special Disability Adjustment is also funded. One time funding of approximately $7.99 per ADA is being provided to help Special Education pupils pass the high school exit exam. Mandated cost reimbursement is expected to be almost entirely deferred, adding to the $1.2 billion already owed to school districts. Only $60.6 million is allocated to fund the oldest claims not subject to audit. Mega Item The transfer caps remain the same to programs included within the mega item as in percent out / 15 percent in. Instructional Materials Total funding for is projected at $55.98 per prior-year CBEDS. AB2756 requires multi year projections to be provided with budget, interim reports, and upon settlement of union contracts. In addition, district CFO s and Superintendents must certify the affordability of labor settlements. AB825 / Categorical Flexibility The Governor signed into law on September 29, 2004, AB825, which offers flexibility to school districts by consolidating over two dozen existing categorical programs into six thematic block grants. These block grants, effective in , are generally based on funding levels received in adjusted for COLA and statewide growth. The Governor did not restore the $120/student constitutional basic aid funding. However, the Basic Aid Categorical takeback is being reduced to zero accordingly with deficit reduction New Programs The Governor s budget includes mostly one-time funding for the following: Supplemental Instruction for High School Exit Exam - $87.9 million to provide additional supplemental instruction to pupils, inclusive of Special Education, who have failed, or at risk of failing the High School Exit Exam. These funds are to be used as a supplement to existing Supplemental Instruction Program Funds. Low Performing School Enrichment Grants - $49.5 million provided to deciles 1-3 schools to improve the educational culture and environment. Fruit and Vegetables for School Breakfast Programs - $18.2 million to increase the amount of fruits and vegetables served in the School Breakfast Program. Section I General Information 9

10 ALL FUNDS TENTATIVE BUDGET COLLECTIVE BARGAINING AGREEMENT On May 25, 2004 the Governing Board approved a compensation agreement with the Newport- Mesa Federated Teachers Association (N-MFT). The agreement includes a stated on schedule increase of 3 percent. Subsequent to the agreement with N-MFT, the Board reached settlement with California School Employees Association, #18 (CSEA), Supervisory/Confidential and Administrative groups including a stated on schedule increase of 3 percent. In July 2005, the Governing Board approved an extension to the agreement for all groups providing an additional 2 percent on schedule increase in each year for and A provision of all agreements is an increase to the Health and Welfare distribution rate from $9,156 per FTE to $9,990 or 9.10 percent. MEASURE A On June 6, 2000, the voters of Newport-Mesa passed Measure A with a 72.1 percent favorable vote. Measure A provides for the levy of a special tax to support $110 million in General Obligation bonds for facility modernization throughout the District. When coupled with an estimated $61.5 million of State School Facility Program funds, the total amount of funds available over the next five to seven years for facility modernization will be $171.5 million. The ballot measure followed a two-plus year process wherein detailed analysis of the District s school facility needs was performed by community members, professional architects and school planners. A Facilities Advisory Committee ultimately developed an Educational Facilities Master Plan (dated December 1999) which provides the basis for all modernization work to be completed. In October 2001 the Board of Education approved the Measure A School Facilities Improvement Program Implementation Plan (Implementation Plan). The purpose of the Implementation Plan is to provide a comprehensive implementation strategy and schedule that will serve as the execution plan for the planning, design, and construction of the Program. The Implementation Plan has been prepared to reflect both the spirit and the letter of the Master Plan. The Implementation Plan represented the next step in an ongoing process of refinement, elaboration, and detailing of the specific scope of work anticipated in the Master Plan document. The Implementation Plan describes the overall Budget and Schedule for the Master Plan improvements along with the individual site-by-site scopes of work, site budgets and schedule and the methodology used to develop the budgets and schedules. In August, 2003, the initial group of schools was moving toward the completion of construction. The 28 school sites included in the Measure A Program were divided into four groups, so that approximately seven schools would be in the process of modernization at one time. The first seven projects (Woodland, Whittier, Kaiser, Mariners, Newport Heights, Harbor View and Monte Vista) were initiated in the school year and were completed in the fall of Group II schools began construction in November The remaining schools, in Group III and Group IV, are currently in the planning and approval stage. Construction of these schools will begin later in the program. All construction activity under the Measure A Program is expected to be completed in The initial offering of General Obligation Bonds to support Measure A occurred in December The initial bond sale was $40 million and provided design and construction funding into In the District authorized the issuance of an additional $70 million in bonds. 10 Section I - General Information

11 ALL FUNDS FINAL BUDGET In addition to funding a portion of the Facilities Master Plan, Measure A contained several other provisions, including: Performance and Financial Audits Project Management Services Citizens Oversight Committee Facility Repair and Replacement Program Facility Repair and Replacement Reserve Details associated to the above provisions may be obtained from one or more of the following resources: Educational Facilities Master Plan (adopted December 1999) Board of Education Resolution No Ordering a School Bond Election, Establishing Specifications of the Election Order, and Requesting Consolidation with Other Elections (adopted February 29, 2000) Board of Education Resolution No Establishing a Citizens Oversight Committee and Site-Based Project Review Committees (adopted April 11, 2000) Board of Education Resolution No Establishing Guidelines for a Facility Repair and Replacement Program and a Facility Repair and Replacement Reserve (adopted May, 2000) Board of Education Resolution No Declaring the Results of the School Bond Election Held June 6, 2000 (adopted July 11, 2000) This information is provided as a summary and quick reference only. Investors and other interested parties must read all relevant resolutions, plan documents and Official Statement(s) to obtain complete information essential to making an informed decision and opinion. Official Statements related to bonded indebtedness authorized by Measure A are available by contacting the Business Services Department. DISTRICT DEBT School districts as legal entities of the State of California are empowered by law to borrow money in the public market place. Generally, the funds borrowed fit into one of two categories: 1) to build, renovate and maintain facilities; or 2) to temporarily cover the ebb and flow of operating funds during a single year. Additionally, the District may enter into long term leases for facilities. All debt must be approved by the Board of Education. The debt vehicles available to a school district, however, are limited. General Obligation bonds, such as those in the Measure A Modernization Program, must be authorized by the District s voters. At the same time the voters accept a new tax to repay the bonds. Other forms of debt, however, must be paid for by the District s General Fund, and therefore require specific budgeting within the District s annual budget. Certificates of Participation (COPs) are more limited in scope and need only be authorized by the Board of Education. Tax Revenue Anticipation Notes (TRANs) are limited to short-term operating costs and require the approval of the Board of Education and the County Board of Supervisors. Additionally, if the school district has formed another specific purpose entity, such as a Community Facilities District, there may be special issuances of debt apart from the General Fund in the form of Special Tax Bonds or CFD Bonds. This sort of debt is not secured by the school district s operating budget itself, but by a special tax paid by the property in the defined entity, which is usually a sub-set of the school district. Newport-Mesa has one such entity in Community Facilities District No. 90-1, which encompasses much of the Newport Coast area. This entity funded the creation of the Newport Coast Elementary School. Operation of the school, however, is covered by the District s General Fund, as are all other schools in the district. Section I General Information 11

12 ALL FUNDS TENTATIVE BUDGET The Newport-Mesa Unified School District had outstanding debt on June 30, 2005, as follows: 1994 Certificates of Participation (COPS) Refinanced 2002 Issued to provide funds for the 1) construction of the District Education Center and 2) acquisition of the Heating, Ventilation, and Air Conditioning (HVAC) system for Corona del Mar High School. The Certificates represent interests in lease payments made by the District pursuant to a lease-leaseback agreement with the Newport-Mesa Unified School District Public Financing Authority. Original Principal Amount: $2,655,000 Issue Date: July 28, 2003 Maturity Schedule: Annually on November 1 through 2009 Interest Rate: % Yield: % Source of Repayment Funds: Any source of legally available moneys. The District currently contributes $220,000 per year from the Capital Facilities mitigation fees. The remaining annual appropriation is from the District s General Fund. Repayment Terms: Semi-annual interest payment (May 1 and November 1), annual principal payment (November 1). Total annual principal and interest payment is roughly $449,674. Original Rating: Standard & Poor s A ; Private Placement - unrated Financial Advisor: Fieldman, Rolapp & Associates Bond Counsel: Orrick, Herrington and Sutcliffe Special Tax Bonds, Series 1998 (Community Facilities District No. 90-1) The bonds were issued pursuant to the Mello-Roos Community Facilities Act of The bonds were issued for the purpose of 1) to defease and refund the Newport-Mesa Unified School District Community Facilities District No. 90-1, Special Tax Bonds, Series 1996, 2) to pay the cost and expense of acquisition and construction of certain school facilities, 3) to fund a portion of the reserve fund for the Series 1998 Bonds and 4) to pay the costs of issuing the Series 1998 Bonds. These Series 1998 Special Tax Bonds and the previous 1993 and 1996 Series were used to renovate and open Lincoln Elementary School, to acquire the land for Newport Coast Elementary School and to fund a portion of the construction of Newport Coast Elementary School. The notes and interest thereon are not payable from the General Funds of the District but are supported by a special tax levy on certain residential properties within the Community Facilities District. Principal Amount: $20,735,000 Issue Date: June 1, 1998 Maturity Schedule: Serial Bonds annually on September 1 through 2021 Interest Rate: Varies by Bond from 4.00% to 5.00% Yield: Varies by Bond from 3.65% to 5.11% Source of Repayment Funds: Special Tax levied on certain developed property within the Community Facilities District. Repayment Terms: Principal and interest at maturity (September 1) Rating: Moody s Investor Service Aaa Underwriter: BancAmerica Robertson Stephens Financial Advisor: C.M. DeCrinis & Co., Inc. Bond Counsel: Orrick, Herrington & Sutcliffe LLP Disclosure Counsel: Orrick, Herrington & Sutcliffe LLP Trustee: Dai-Ichi Kangyo Bank of California 12 Section I - General Information

13 ALL FUNDS FINAL BUDGET General Obligation Bonds, Series 2001 (Measure A) were issued in 2001 to support facility modernization projects. Principal Amount: $40,000,000 Issue Date: December 1, 2001 Maturity Schedule: Serial Bonds annually on August 1 through 2026 Interest Rate: 4.75% Yield: 4.85% Source of Repayment Funds: Annual levy of taxes on property within the District subject to taxation without limitation of rate or amount. Repayment Terms: Principal and interest at maturity (August 1) Rating: Moody s Investor Service Aa2, Fitch AA Underwriter: Stone & Youngberg LLC Financial Advisor: C.M. DeCrinis & Co., Inc. Bond Counsel: Kronick, Moskovitz, Tiedemann & Girard District Counsel: Parker & Covert LLP Trustee: BNY Western Trust Company General Obligation Bonds, Series 2003 (Measure A) were issued in 2003 to support the renovation and improvement of school facilities. Principal Amount: $70,000,000 Issue Date: November 4, 2003 Maturity Schedule: Serial Bonds annually on August 1 through 2028 Interest Rate: 2.50% % variable Yield: 1.10% % Source of Repayment Funds: Annual levy of taxes on property within the District subject to taxation without limitation of rate or amount. Repayment Terms: Principal and interest at maturity (August 1) Rating: Moody s Investor Service Aa2, Fitch AA Underwriter: Lehman Brothers Inc. Financial Advisor: C.M. DeCrinis & Co., Inc. Bond Counsel: Kronick, Moskovitz, Tiedemann & Girard District Counsel: Parker & Covert LLP Trustee: BNY Western Trust Company Various capital leases maturing on various dates between 2001 and 2006 and compensated employee absences totaling approximately $5,000,000. The Newport-Mesa Unified School District anticipates the following outstanding debt on June 30, Certificates of Participation (COPS) as refinanced in 2002 and described above will remain outstanding. Special Tax Bonds, Series 1998 (Community Facilities District No. 90-1) as described above will remain outstanding. Various capital leases maturing on various dates between 2002 and 2006 and compensated employee absences totaling approximately $1,200,000. Section I General Information 13

14 ALL FUNDS TENTATIVE BUDGET In addition to the debt listed above as of June 30, 2005, the District has the following debt outstanding during the period July 1, 2005 and June 30, Pooled Tax and Revenue Anticipation Notes (TRANS) Issued to provide cash for operating and working capital needs during the period July through December when cash receipts are minimal. The notes are a general obligation of the District. The principal and interest on the notes will be paid in full on the maturity date. Principal Amount: $20,000,000 Issue Date: July 1, 2005 Maturity Date: June 30, 2006 Interest Rate: 4% Pooled TRANS: South Coast Local Educational Agencies Pooled Tax and Revenue Anticipation Note Program, Note Participation Series 2005A, $86,500,000. Source of Repayment Funds: Pledged Revenues are certain unrestricted revenues which are received by the District for the General Fund of the District and are attributable to Fiscal Year Repayment Terms: Set-asides of principal and interest are February - 40%, April - 30%, and May - 30%. Set-asides are held in a Guaranteed Investment Contract. Rating: Moody s MIG 1 Financial Advisor: Tamalpais Advisors, Inc. Bond Counsel: Orrick, Herrington, Sutcliffe, LLP Disclosure Counsel: Hawkins, Delafield & Wood Trustee: U.S. Bank National Association The District has consistently demonstrated its commitment to the municipal financial markets by meeting all of its interest and principal payment obligations on time and in full. To assist the Board of Education in evaluating proposed debt structures, the Board of Education has established an Investment Advisory Committee. In addition to selected District staff, the Investment Advisory Committee is comprised of five community members with extensive background in portfolio management, public accounting, securities law, and banking. This information is provided as a summary and quick reference only. Investors and other interested parties must read the entire Official Statement(s) to obtain complete information essential to making an informed investment decision. Official Statements related to the outstanding debt are available by contacting the Business Services Department 14 Section I - General Information