Budgeting For Results Committee - June 09, 2008

[Guest sullinss]

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

June 09, 2008

Call to Order

 

The Budgeting For Results Committee of School District No. 2, Yellowstone County and High School District No. 2, Yellowstone County, Montana met at Lincoln Center, 415 North 30th Street, Billings, Montana, on Monday, June 09, 2008. Vice-Chair Joel Guthals called the meeting to order at 5:15 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were: Shanna Henry, Peter Grass, Joan Sleeth, Joel Guthals, Mary Jo Fox, and Don Stanaway. Members absent were: Dan Farmer, Kari Altenburg, Curt Prchal, and Katharin Kelker. Also present was CFO Thomas Harper, and Trustee Kathy Aragon.

 

Communication From the Public

 

No one wished to address the Committee at this time.

 

Consent Agenda

 

Don Stanaway moved to recommend Board approval of the Consent Agenda item as follows:

1. Minutes of May 12, 2008

2. Addition of Murdock Science Award Trust Fund Account at West High

Mary Jo Fox seconded the motion. The motion carried unanimously.

 

Fire Alarm Upgrade – Career Center

 

The fire alarm at the Career Center caught on fire and is not operable and cannot be repaired. To comply with city codes the District employed guards 24 hrs per day. The replacement of the system is not covered by insurance; however, the cost of guard coverage is. An insurance check has been received for $67,222.90 from Cincinnati Boiler & Machinery.

 

Bids have been let to upgrade the Career Center fire alarm system and Facility Services recommends awarding the job to low bidder Northern Fire & Communications w/Reddi Electric as sub-contractor for $57,107.28.

 

Don Stanaway moved to recommend the Board award the bid to Northern Fire & Communications w/Reddi Electric as sub-contractor in the amount of $57,107.28. Mary Jo seconded the motion.

 

Thomas said the project would be paid from H.S. Building Fund 260 and then finally from H.S. Building Reserves. He estimates we have about $300K in H.S. Building Reserves. Don questioned why Kenco and Billings Alarm did not bid on the project. Thomas will check on this. The District followed required bid procedures. NOTE: since the meeting, Rich Whitney replied that CTA Architects recommended awarding the project to Northern Fire and Communications. Northern Fire and Communications is the only local representative certified to do any programming changes to the installed Fire Alarm System (Notifier). Northern Fire and Communications did receive competitive bids for the wire and conduit portion of the work and they are using the low bidder, Reddi Electric.

 

Don asked what preventative maintenance programs the District has in place for these. Thomas stated we do not have a program in place for replacement. The Fire Dept. inspects sprinkler systems annually; but, it doesn’t tell if an alarm works. Joel stated there is no maintenance program in place to meet modern standards; it would require software and personnel to operate it.

 

The motion carried unanimously.

 

Policy 8415 Energy Management Conservation, Second Reading

 

This policy originated with Energy Education Inc.. It was submitted and approved by the Policy Review Committee. The Board of Trustees approved this policy on the first reading at their June 3, 2008 Special Board Meeting. Policy 8415 Energy Management Conservation is presented to the Budgeting For Results Committee for approval on second reading. Upon approval it will go back to the Board for the third and final reading for adoption.

 

Shanna Henry moved to approve Policy 8415 Energy Management Conservation upon second reading. Mary Jo Fox seconded the motion.

 

Joel explained the Energy and Environmental Innovation Committee has already reviewed the guidelines and procedures and made recommendations to Administration. Administration will adopt procedures and guidelines with input from all bargaining units and under the Board’s objective of 20% energy savings. The procedures have not been adopted yet; it is an Administrative function to carry out the policy. The contract allows 60 days to put policies and procedures in place. EEI hired a Resource Conservation Specialist to begin work this summer. The Board and Superintendent are not involved in how the program works; we’ve contracted with EEI to accomplish this in collaboration with our employees. Support for Program implementation will be through the active involvement of a Program Team that includes the Resource Conservation Specialist together with the Superintendent, Thomas Harper as liaison, Rich Whitney, and one Board member. The Resource Conservation Specialist will serve under the watchful eye of the Superintendent and is subject to the Superintendent’s comments to EEI about performance.

 

The motion carried unanimously.

 

Recap of Board Discussion of Budget Reductions

 

Joel said the prior BFR Committee meeting discussion on budget cuts provided valuable information to the Board for their discussions of budget reductions FY2008-09. The BFR Committee looked at information involving $2.7M in elementary budget cuts that incorporated a 3% wage increase. BEA negotiations resulted in wage increases FY09 of 2.1%. As a result of this, the budget deficit was reduced by approximately $500K to a necessary $2.2M of budget cuts in grades K-8.

 

Final elementary budget reductions are as follows:

 

FTE SAVINGS ACTIVITY

12.0 746,193 est. Teaching Positions

1.0 40,000 est. Library

1.34 40,000 est. Human Resources/Business Ofc.

2.0 80,000 est. K-6 Specialists (art, music, health)

250,000 Textbooks (retains $30K)

235,789 Board Contingency

8.80 192,736 est. K-6 Reading Tutors

150,000 est. Middle School Activities

218,513 est. Rimrock Closure

Total 1,953,231 est.

 

The balance of the reductions will come from some budget reconciliation at year-end and one-time-only money which will allow us to fund our reserve level to 5%.

 

Trustee Aragon made a plea to save part of the Reading Tutor program and cut Extended Studies a few days a week to balance it. Joel and Thomas said the decisions have already been made and are being implemented. Joel said there was balance in there between Extended Studies and saving the Early Literacy and Read 180 programs.

 

 

Preliminary Budgets – Other Budgeted Funds FY2008-09

 

Thomas presented estimated budgets for the Other Budgeted Funds FY2008-09 as follows:

 

ELEMENTARY OTHER BUDGETED FUNDS HIGH SCHOOL OTHER BUDGETED FUNDS

110 Transportation 3,364,198 210 Transportation 1,832,174

113 Tuition 300,000 213 Tuition 300,000

114 Retirement 8,200,000 214 Retirement 4,561,250

117 Adult Education 408,030 217 Adult Education 1,481,582

128 Technology 133,010 228 Technology 63,909

129 Flexibility 294,436 229 Flexibility 380,830

150 Debt Service 31,000 250 Debt Service 0

161 Building Reserve 0 261 Building Reserve 305,000

 

Thomas said the Transportation, Tuition, Retirement and Adult Education funds are permissive (non-voted) tax levies. He has tried to be frugal in managing these funds to levy only to cover expenditures, with very little cash carryover to the next year. Building Funds and Building Reserve Funds have been used to cover any huge unanticipated facilities related major repair projects. The five-year Building Reserve levies have expired, and the High School Building Reserve Fund levy election in 2006 failed. We still have some one-time Deferred Weatherization and Capitalization money to cover some unanticipated projects in the Elementary District; however, there is none left in the High School District to cover major problems. We have $300K available in the High School Building Fund from the sale of some land at the Career Center. In July, Thomas will make a recommendation to increase the Transportation Fund budgets to cover fuel increases. The Reading Tutors were funded from the Flexibility Funds, and since they are being cut next year, other General Fund expenditures will be moved to the Flexibility Fund budgets. As of June 30th the $10M four-year Elementary bond is paid off and our High School District is also debt-free.

 

Budget Amendment to Elementary & High School Retirement Funds for Unforeseen Retirement Costs

 

A school district may amend a budget for any unforeseen need of the district that cannot be postponed until the next school year without dire consequences affecting the safety of the students and district employees or the educational functions of the district (20-9-161, MCA). The Retirement Funds are for the purpose of financing the employer’s contribution to the Teachers’ Retirement System, the Public Employees’ Retirement System, Unemployment Compensation and Social Security. They are funded by a countywide permissive levy.

 

We need to do a budget amendment to our Retirement Funds FY2007-08 to cover payroll costs and TRS Option 1 retirement costs. Compensated Absence is comprised of sick and vacation time. Employees also have Service Credit (2.5 days X every year employed X daily rate) retirement payouts. In addition, teachers have the Option 1 payoff whereby the District must match that dollar amount to TRS. The District has about $70M of unfunded liability. Retirement costs are paid on a year by year basis.

 

The Finance Department is asking this Committee to recommend the Board approve a budget amendment to the Elementary Retirement Fund 114 in the estimated amount of $200,000; and, to the High School Retirement Fund 214 in the estimated amount of $250,000; the source of funding to be the Elementary Retirement Reserve Fund and the High School Retirement Reserve Fund.

 

Shanna Henry moved to recommend the Board approve a budget amendment to the Elementary Retirement Fund 114 in the estimated amount of $200,000; and, to the High School Retirement Fund 214 in the estimated amount of $250,000; the source of funding to be the Elementary Retirement Reserve Fund and the High School Retirement Reserve Fund. Mary Jo Fox seconded the motion.

 

 

Don Stanaway moved to amend the motion to say a small portion somehow be set aside to start a trend to fund the unfunded liability.

 

Thomas said legally that would require some changes in legislation. If you raise the retirement budget so you never have to do another budget amendment, it would be unfair to the taxpayers. Don withdrew his amendment to the motion. The original motion carried unanimously.

 

Risk Management Insurance Coverage

 

Thomas gave Committee members an update on our risk management program. Workers Compensation and Unemployment is with the Montana School Board Association. Workers Compensation premiums have increased over the prior year and Unemployment premiums have decreased. We have a safety committee that should perhaps be more proactive. As a part of our annual renewal process, we looked at the MTSBA product for general liability insurance. Payne Financial provided a comparison of services for us and determined MTSBA would be $100k more than what we are currently paying. We expect a 2-3% increase in premiums FY2009.

 

BFR Committee Membership

 

The membership of each standing committee expires on June 30 of each year. Anyone may apply for or recommend appointment of committee membership. We are actively seeking additional community members for this Committee. Membership applications were made available to members and they were encouraged to reapply.

 

Bills Paid – May, 2008

 

The Committee reviewed the bills paid for May, 2008. Mary Jo Fox moved to recommend Board approval of the bills paid for May, 2008. Peter Grass seconded the motion.

 

Joel questioned the travel expenses charged to the PCard. Thomas said they were probably paid for with grants. Thomas offered to produce a report for the Committee detailing the travel expenditures by fund. He explained very little travel is expended from the General Funds, and all travel originates with a leave request subject to the approval process.

 

The motion carried unanimously.

 

Financial Reports – May, 2008 (Unaudited)

 

The Committee reviewed the Financial Reports for May, 2008. Thomas reported we will not need to do a budget amendment for the general funds, but it will be tight. We will need to cover the deficit incurred by the CARE Academy. Their license was recently approved by the State which enables them to receive daycare payment from DPHHS. Thomas expects the program to be more financially stable next year.

 

Health Insurance – Financial Statements – April, 2008

 

The Committee reviewed the Health Insurance Financials for April, 2008. The fund balance is $4.3M. The implicit liability of post-employment retiree benefits is $1.5M. Tail-end claims at year-end are estimated to be $1.3M.

 

Kathy Aragon and Thomas discussed the possible merits of having an insurance adjustor with health care background evaluate the charges for services we receive versus what we negotiated in our contract for health care.

 

 

 

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:25 p.m.

 

 

 

 

 

 

Joel Guthals, Vice-Chair

 

 

 

Sherrill Sullins, Recorder