Budgeting For Results Committee - May 26, 2009

[Guest sullinss]

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

May 26, 2009

 

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 Tuesday, May 26, 2009. Chair Malcolm Goodrich called the meeting to order at 5:15 p.m. and led those assembled in the Pledge of Allegiance. Budgeting For Results Committee members present were: Malcolm Goodrich, Paige Darden, Deana Elder, Rod Gottula, Ross Johnson, Bruce McIntyre, Peter Grass, Shanna Henry, Joan Sleeth, Joel Guthals, and Jane McCracken, and Don Stanaway. Members Mary Jo Fox, and Kelly Donovan were absent. Energy and Environmental Innovation Committee members present were Ron Pecarina, Joel Guthals, and Kathy Aragon. Also present were CFO Thomas Harper, Trustee Barbara Bryan, Executive Director of Facility Services Rich Whitney, Executive Director of Elementary Education Kathy Olson, Executive Director of Secondary Education Scott Anderson, and Executive Director of Curriculum Gail Surwill.

 

Communication From the Public

 

No one wished to address the Committee at this time.

 

Chair Goodrich said the first part of the meeting would be a joint meeting with the Energy and Environmental Innovation Committee to listen to Rich Whitney speak about the Federal Stimulus Grant Projects. This item was presented to Trustees at the May 18, 2009 Regular Board Meeting and directed to be reviewed by the joint committees and then brought back to the Board on June 2, 2009. Chair Goodrich stated the objective of this Committee tonight is to consider the Quick Start projects for Board approval.

 

The “Quick Start” Energy Grants Program is administered by the Montana Dept. of Commerce and is designed to quickly implement energy efficiency measures in Montana public schools that provide long-term, cost-effective benefits and enhance job creation and economic development. It will provide grants for energy audits or evaluations and for energy efficiency improvements that are expected to achieve measurable energy efficiency and cost savings for public school facilities.

 

The Montana Reinvestment Act appropriated up to $14,950,000 for Quick Start grants during the summer of 2009 as a reimbursement program. After a grantee completes an approved project the Department will reimburse a request for payment submitted with supporting documentation. September 1, 2009 is the deadline for submitting applications. Any funds not obligated for reimbursement on or before September 30, 2009 will transfer to the Quality Schools Facility Grant Program for competitive school facility grants awarded during the 2011 biennium.

 

Rich presented a revised prioritized list of both Quick Start and deferred maintenance projects to be considered for approval. Quick Start projects require Board approval before the District can submit projects to the Department of Commerce, which is why it needs to be approved in June by the Board. All of the projects came off the master list of $120M of deferred maintenance projects that Rich prepared in January. The revised list is presented as follows:

 

 

 

 

Joel Guthals moved that the combined Committee recommend approval of this project list for the Quick Start applications to the Board. Bruce McIntyre seconded the motion. Discussion was called for.

 

Joel said the EEI Committee discussed many of these items. He urged approval of the Energy Management Systems as computerized central control systems to regulate them to achieve optimum efficiency. The old systems aren’t compatible with current computer software. It is an opportunity to use one-time-only money to improve our systems. Joel urged approval of the Quick Start list project.

 

Don Stanaway questioned if it was realistic to order equipment and complete all these projects by the deadline. Rich confirmed that we will only get reimbursed for those projects completed by September 30th. Rich foresees about five projects completed; and, would not be able to complete the entire list of projects if they were given the full amount of money. Ron Pecarina advised we could get the audits completed this summer and some of the projects completed in the second cycle of Quick Start grants.

 

Chair Goodrich called for public comment on this item. Sandra Abraham from the Miles Avenue Elementary area addressed Committee members calling for improving energy efficiency by keeping our attention on educational buildings vs. improving Daylis Stadium and the Facilities building.

 

Trustee Barbara Bryan addressed Committee members saying if we estimate our District will get $1.5M for Quick Start funding, we need to prioritize projects. Barbara recommends we do not submit projects and spend money on the audits where we’re not going to get the projects approved since that money will come out of our pocket and cut into our energy savings. Barbara is concerned with doing piecemeal corrections without have a sense of what’s going on with our building envelope. In an integrated design you look at your entire building envelope, i.e., your windows, insulation, roof, etc. and fix them before you size your heating/air conditioning equipment so you don’t lose energy efficiency in the meantime. Barbara sees window replacement as a first priority. She hopes the long-term planning process will produce a Capital Improvement Plan.

 

Rod agrees we need a master plan, but urged the Committee to approve the list and go forward to start addressing the massive amount of deferred maintenance projects we have. Some roof replacements may not look right to the public, but the public hasn’t passed levies to correct these problems for several years and problems are compounding.

 

Rich stated it may not look good to repair the Facility building roof, but the roof is so rotted that a couple years ago someone was on the roof and actually fell through it.

 

Another committee member requested more information on what projects can be accomplished, how priority was determined, and the amount of savings and payback. Ron Pecarina advised that each project will be approved on an “all or nothing” basis.

 

Chair Goodrich called for the vote on the Quick Start projects and related audit costs without consideration for priority. Voting for the motion was Malcolm Goodrich, Shanna Henry, Don Stanaway, Joel Guthals, Bruce McIntyre, Ron Pecarina, Rod Gottula, Deana Elder, Joan Sleeth, Ross Johnson, and Jane McCracken. Voting against the motion was Kathy Aragon, Paige Darden, and Peter Grass. The motion carried.

 

Rod Gottula moved to remove the Daylis Heating System Replacement from the priority Quick Start project list because if there were no heat at Daylis kids could be bused to and from other facilities for showering. Bruce McIntyre seconded the motion.

 

Joel suggested leaving the prioritization to the Board, when and if the grants are approved. Paige asked if we have to pay for individual audits for each school or if categories of windows, etc. can be grouped under one audit. Ron Pecarina answered that there can be one audit per school, whereby separate projects within that school can be under one audit.

 

Rod Gottula withdrew his motion on the basis that it might complicate prioritization and/or funding should other projects not be doable. Bruce McIntyre accepted withdrawal of the motion.

 

Rich has a design professional working on the design of each project. He plans to submit projects as soon the Board approves them. Ron Pecarina explained there would be an auditor contract to look at all issues; they would provide a report to us and the Dept. of Commerce; and, then we can select which projects from that report we would like to apply for. Priorities can change based on the audit report as well as the specific needs for the school or facility. Decisions will need to be made based on that report.

 

Chair Goodrich said the project list will go to the Board indicating that the Quick Start projects should be granted, and there was significant discussion about priorities. The Board can then reflect upon prioritization with backup data provided by Rich Whitney regarding costs, savings and payback.

 

The joint meeting of the Committees was adjourned at 6:45 p.m.

 

Call to Order

 

Chair Goodrich called the Budgeting For Results Committee meeting to order at 7:00 p.m. The same Committee members were present.

 

Program/Budget Review

 

Chair Goodrich stated Administration will present proposed solutions for the General Fund budget deficits FY2009-10. Questions and concerns are welcome from Committee members, and on June 8th, Administration can return with responses. At this point the BFR Committee can forward recommendations to the Board. The budget must be approved by August 15th.

 

Thomas Harper presented General Fund budget forecasts FY2009-2012. FY2010 Elementary ANB increased by 204 and High School ANB decreased by 100. Thomas reviewed assumptions built into the budget forecast. General Fund revenue will receive a 2% ongoing increase over the biennium. The balance of revenue comes from one-time money. There are lower than budgeted FY09 retirements which allows for some General Fund relief in FY10. Expenditures FY10 include a 3.75% increase for teachers plus a 2% increase for steps/lanes. We are in the final two years of a three-year contract. Health insurance is increasing 12%, Workers Compensation is increasing 8%, general liability insurance may increase 10%, utilities remain flat, expenditures budgeted with stimulus funds in FY2010 will have to be moved to the General Fund or be cut in FY2012, Reading Tutors are included in the FY10 budget, and no new programs are started during the biennium. A factor for inflation for supplies, and fuel, etc. has not been built into the budget.

 

Shanna urged that the Reading Tutors not be put back in the budget. She said Principals agree there is greater benefit to utilizing the Smaller Learning concept in the classroom.

 

Thomas reviewed ANB and enrollment trends, sources of revenue and expenditures. In FY10 our estimated fund balance in our General Funds as a percent of revenue is 5.3% Elementary and 4.6% High School. The estimated shortfall in the Elementary General Fund FY10 is $1.96M, and $1.54M in the High School General Fund FY10. The Administrative recommendation is that we utilize one-time stimulus money and other one-time money to balance the FY10 budget. The Central Office Leadership Team Budget Solutions/Recommendations handed out at the meeting is inserted into the minutes as follows:

 

Central Office Leadership Team

Budget Solutions/Recommendations

Preliminary General Fund Budget FY10 (May 26, 2009)

 

Elementary High School

Type of Change Elementary High School

 

Net Change in Revenue: 1,740,915 270,947

Net Change in Expenditures: 3,699,556 1,813,429

 

Budget Shortfall: (1,958,641) (1,542,482)

 

Recommendations

• ARRA 716,573 577,000

 

• Medicaid Administrative Claiming Reimbursements 35,000

 

• Eliminate 8.2 positions/attrition 475,684

 

• Indian Ed. For All 325,055 44,367

 

• Deferred Maintenance 200,000

 

• Budget Savings/Retirements 300,000 175,000

 

• Overcrowded Aides K-6 129,000

 

• Textbooks 100,000 100,000

 

• Career Center Supply and

Equipment Reduction 200,000

 

• Kindergarten Start-up Monies 69,000

 

• Budget Reconciliation 119,000 _____-0-

 

 

BUDGET RESOLUTIONS: 1,958,628 1,607,051

Difference: + 13 + 64,569

 

 

 

It was questioned what the cost would be to operate Rimrock Elementary. Kathy Olson estimated $500K. It was questioned if any portion of this budget was attributable to overcrowding in terms of kindergarten pressure in our elementary schools that we could save by reopening Rimrock Elementary. Kathy Olson responded it was not; over the last two years there has been an increase in enrollment of over 100 students. Nine teachers were cut last year, and now we need to add staff to meet classroom needs. We will still have 55 classrooms over accreditation next year in grades K-6.

 

Don Stanaway believes we need to increase public awareness of the critical needs of the District. He also questioned what the District is proactively doing to effectively lower our Workers Compensation rates and to promote wellness and lower health care costs.

 

Paige suggested it seems confusing to show some enrollment numbers and ANB as K-6 grades one time and K-8 at other times; and, also said we don’t get ANB for preschool, yet we show them in our enrollment. She questioned accreditation numbers and asked at what point we look at changing boundaries vs. priorities for neighborhood schools. Kathy Olson has addressed the classroom enrollment issue for next year, and said the Planning and Development Committee will be looking at boundary issues.

 

Scott Anderson said we have six retirements in the High School District this year, and we are cutting 8.2 FTE. He understands the declining enrollment and is trying to reduce staff where appropriate. In the future, elimination of electives is a probability. He is examining rigor, establishing a reasonable class size, while still providing opportunities for all students.

 

Ross agreed that schools need to prioritize what classes we need to offer. He also believes when we renegotiate the next union contracts there’s going to have to be participation on the part of employees to give up something, perhaps a portion of their benefits or other items rather than just focusing on mill levies and program cuts.

All factors need to be considered together.

 

Paige wants to discuss increasing expenses and declining enrollment and where does this point intersect? She asked how many teachers can we afford and how many facilities can we afford? Thomas responded that we are required to balance the budget. We have an option to ask the public to spend at the same level as the previous year, or we would have to make cuts to balance the budget.

 

Discussion was held on the effect of the stimulus money and the QZAB money available to offset expenditures. Thomas said General Funds are not available to utilize all of the QZAB funding available. Ross thought if the public were asked to vote to provide funding for QZAB money to pay off non-interest bearing borrowed money they might approve it; which would be different than asking them for a bond issue.

 

Peter personally surveyed some high school students on effectiveness of a substitute. Results were that 85% of the time they were told to read books or sent to study hall. Since $200K is dedicated to substitutes in the high schools, Peter asked the possibility of just sending students to study hall rather than hiring substitutes. Scott responded some teachers cover for others, but space to send all the students to study hall is a problem.

 

Paige commented on lack of consistency - that we have a Facilities Plan with a list of projects without criteria of why they’re listed. They just went through a process of identifying McKinley and Broadwater with $16M of renovations; however, they are not listed on the Facilities Plan. The Berkley study of facilities identified Beartooth, Arrowhead, and Alkali as poor environments to teach in because of their open-design schools. Beartooth and Arrowhead are listed on the Facilities Plan for improvement; however, not because they are poor schools to teach in. Paige has budgets from September to the current date and budget numbers differ significantly. Lack of consistency gives a poor appearance to the public; we need a vision and overall plan.

 

Chair Goodrich requested Committee members to make a list of questions and send them to him. They will be forwarded to the Elementary and Secondary Departments who will return to the June 8th Committee meeting with their responses.

 

Adjournment

 

There being no further business, the meeting was adjourned at 8:30 p.m.

 

 

 

 

 

Malcolm Goodrich, Chair

 

 

 

Sherrill Sullins, Recorder (prepared from tapes)