Budgeting For Results Committee - Oct. 12, 2009

[Guest sullinss]

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

October 12, 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 Monday, October 12, 2009. Committee Chair Joel Guthals called the meeting to order at 5:17 p.m. and led those assembled in the Pledge of Allegiance. Budgeting For Results Committee members present were: Paige Darden, Deana Elder, Rod Gottula, Bruce MacIntyre, Joan Sleeth, Joel Guthals, Don Stanaway, Peter Gesuale, Sandie Mammenga, Peter Grass, and Barbara Bryan. Members Kelly Donovan, Jane McCracken, and Ross Johnson were absent. Also present was CFO Thomas Harper.

 

Communication From the Public

 

No one wished to address the Committee.

 

Consent Agenda

 

Rod Gottula moved to recommend Board approval of the Consent Agenda items as follows:

1. Minutes of September 14, 2009

2. Addition of Billings Tech Cadre Trust Fund Account at Lincoln

3. Addition of Peer Support ECA Account at West

4. Addition of Green Team ECA Account at Miles Avenue

5. Addition of Educational Assistance ECA Account at Skyview

6. 403(b) – Approve Authorized Representatives

Joan Sleeth seconded the motion. The motion carried unanimously.

 

Bills Paid – September, 2009 (summary sheet)

 

Rod Gottula moved to recommend Board approval of the bills paid for September, 2009. Joan Sleeth seconded the motion. The motion carried unanimously.

 

CFO’s Responses to Jerry Hansen letter

 

Committee members discussed Jerry Hansen’s letter regarding liability for post employment health insurance benefits and deferred it to the Insurance and Audit Committee. The liability is disclosed and reported under GASB 45 requirements in our Comprehensive Annual Financial Report (CAFR). The $33.5M unfunded liability is being amortized over a 30-year period. An actuarial evaluation is performed every two years on the fund, the auditors agree we are reporting liability accurately by standards, and the Audit Committee reviews our financials thoroughly. Budgeting For Results Committee members are satisfied with the report. Thomas will prepare a general response and post it on the Board’s e-mail.

 

Members Bruce MacIntyre and Don Stanaway joined the meeting at 5:35 p.m.

 

Budgeting For Results:

 

Projections of Revenues, Expenses, & Deficits FY2011 & FY2012:

 

Thomas reviewed the forecast FY2011 and FY2012 of Basic Entitlement and per-ANB revenue. FY2010 the total District Basic Entitlement revenue is $337,483; Elementary (K-6) per-ANB is $4857; and, High School (Gr 7-12) per-ANB is $6218. FY2011 we anticipate an increase in K-6 ANB, Gr 7-8 ANB is flat, and Gr 9-12 ANB declines. We have a very transient school population. The loss of students is not necessarily proportionate to a decrease in cost. It is unknown if we will receive one-time money FY2012. Even with an increase in elementary enrollment, the Elementary General Fund has a deficit of ($842,775) FY2011 and ($2,527,038) FY2012. There is a second round of “Race-to-the-Top” Federal funds. One criterion to receive those funds is that we had to have done something innovative with the first round of funding; and, we must prove we did not supplement our General Funds with money received in 2010. Our District did supplement our General Funds in FY2010. Thomas advised once we have the official October count there is historically a 98-99% mathematical assurance that those students will be here for the February count. Committee members stressed the importance of an accurate ANB forecast. They also discussed the importance and impact on funding by reducing the drop-out rate.

 

Bruce said the State $250M surplus will be gone in the next Legislative session. The Legislature will be starting with a negative education budget because they have to make up for two years of One-Time-Only funding plus what they will add in on top of that. The Legislature put the burden of education on the local taxpayer.

 

Thomas explained high school enrollment continues to decline. FY2011 estimates a deficit of ($733,684) with the effect of ARRA funds; and, FY2012 a deficit of ($2.970,862). We were able to cut $775,684 from the FY2010 high school budget due to declining enrollment. Personnel costs account for 91% of the Elementary and Middle School expenses, and 84% of High School expenses. Decisions on the resolution of the budget shortfalls should be made in November.

 

Chair Guthals asked the Committee if they wish to consider budget resolutions on a year-by-year basis or for multiple years by recognizing trends that we may need to change. Committee consensus was Budgeting For Results goals should be looked from a long-term perspective rather than short-term. Responses included:

• Multiple year strategy going forward

• A progression of successful mill levy voting patterns easier to promote

• Promote retirement incentives

• Reduce high school dropout rates

• May need to change the way we operate

• Change taxpayers perceptions

• Use innovative processes

• Need vision of where we’re going toward infrastructure, technology, etc.

• Ask for the largest voted amount possible

• Need a school board coalition of involvement in future promotion of levies

• Long term planning necessary

• Communicate proactive message of what we’re doing, and what money would be used for

 

Revenue Increases:

 

The budgeted funds subject to public vote to increase revenue are the General Funds, Technology Funds, Building Reserve Funds, and Flexibility Funds. The description and available uses for these funds was reviewed. The history of elections in our District was presented. The need for increased Technology funding was discussed, along with the pros and cons of General Fund levies, and possible investments we could make through building reserve levies for immediate and long-term savings.

 

Mill levy information showing voted amounts possible, taxable valuation, and mills for each of the budgeted funds subject to levy was reviewed. The largest voted amount possible for an Elementary General Fund election FY2011 is $1,809,323. The largest voted amount possible for a High School General Fund election FY2011 is $201,072. The largest voted amount possible for an Elementary Technology Fund election FY2011 is $1,413,822. The largest voted amount possible for a High School Technology Fund election FY2011 is $1,099,459. There is generally no limit on the levy amount for Building Reserve Funds.

 

Rod Gottula moved to recommend the Board run a High School Technology Fund levy election for multiple years. Bruce MacIntyre seconded the motion.

 

Barbara said we need to take a long term look at a strategic plan, but we don’t have one in place yet. Her recommendation is: 1) make a compelling argument of what we’re going to ask for; and, 2) we need to show at the Board level that we’ve done something to reduce costs. Deana believes the Elementary District needs technology funds as much as the high school does.

 

Sandie Mammenga moved to amend the motion to include K-8 and recommend the Board run an Elementary Technology Fund levy election for multiple years. Deana seconded the motion. The motion to amend carried unanimously.

 

A discussion on the meaning of “multiple years” seems to be defined as approximately two years; or, no more than a timeframe we can make definite plans for.

 

The main motion as amended carried unanimously.

 

Don Stanaway moved to recommend the Board run an Elementary and High Building Reserve levy for multiple years. Peter Grass seconded the motion.

 

Bruce is concerned that by asking for too much money and too many levies on the ballot that they will have a difficult time getting them passed. Historically the ballot should be limited to three levies for best success with the public. Thomas explained in FY11 we will expend all the discretionary building reserve funds in the Elementary District; and, the High School District has no funds to use and will require a budget amendment to use reserves if we have a major equipment breakdown. Bruce believes the General Fund is the most critical since you can’t free up enough money in other funds to run on-going operations. He suggests running levies that we can justify, and yet not raise property taxes too high. The pros and cons of running General Fund, Technology, and Building Reserve Fund levies were discussed.

 

Don Stanaway withdrew his motion. Peter Grass agreed to withdraw his second for the sake of discussion.

 

Bruce MacIntyre moved to recommend the Board run an Elementary General Fund levy for the largest voted amount possible. Peter Gesuale seconded the motion.

 

The pros and cons of running the different levy elections were discussed again. The question was called for on the motion. The motion carried unanimously.

 

Barbara Bryan moved to recommend to the Board that in proceeding with mill levies the Board identify uses to be made of funds and rationale, and demonstrate compelling arguments toward fulfillment of the District’s education mission. Bruce MacIntyre seconded the motion. The motion carried unanimously.

 

Barbara Bryan moved to recommend to the Board that this Committee believes the Elementary General Fund and High School Technology Fund levies are of the highest priority and are of equal importance, followed by the Elementary Technology Fund levy. Bruce MacIntyre seconded the motion. The motion carried unanimously.

 

Don Stanaway moved to recommend to the Board that this Committee recommends the levies be limited to three levies on this ballot, mainly the Elementary General Fund, and the Elementary and High School Technology funds. The motion failed for lack of a second.

 

Joan Sleeth moved to recommend to the Board that they not run more than three levies on the upcoming ballot. Bruce MacIntyre seconded the motion. The motion carried unanimously.

 

It was the consensus of the Committee that they would like the Board to proceed with its strategic planning.

 

Bruce MacIntyre left the meeting at 7:52 p.m.

 

Expenditure Decreases:

 

Health Care Expense – Appoint Joint Sub-Committee of BFR & Insurance Committee

 

At the September meeting it was suggested a joint sub-committee of the Budgeting For Results and the Insurance Committees be established to formulate a strategic health plan to help control health care costs. Discussion was held on wellness program incentives, the role of EBMS and Gallagher in the program, and a potential need for independent professional expertise.

 

Don Stanaway moved to appoint a joint sub-committee of BFR and the Insurance Committee to explore options available for wellness programs to help control health care costs for the District. Peter Grass seconded the motion. The Insurance Committee reports to the Budgeting For Results Committee. The motion carried unanimously. Chair Guthals asked for volunteers to serve on the sub-committee. Volunteers were Don Stanaway, Rod Gottula, Peter Grass, Barbara Bryan, and Bruce MacIntyre.

 

Compensation Expense

 

Information was presented comparing Montana AA School Districts on compensation percent of General Fund budgets, negotiated salary increases, and insurance increases. Rod requested information for additional years on these items. An early retirement incentive analysis was also presented. Terms of the BEA contract were presented for information only.

 

Chair Guthals asked Committee members for ideas on what can be done to reduce expenses for employee compensation. Reducing the percent compensation of the General Funds by 2% is big money. Peter Gesuale commented that the AA District comparisons indicate that we are almost identical to the other Districts with respect to the General Fund because of the way we are funded at the State level. Our District gets less Basic Entitlement per student than other districts and less ANB per student than any other district. We do not operate differently than the other Districts; however, we can’t focus only on revenue, we must work to decrease expenses. Rod said there are ways to reduce the budget to gain maximum efficiency without reducing benefits. Joel said the message he gets from the State in dealing with the Legislature over the last several years is that given the circumstances that we have, we do not have a sustainable model.

 

Peter Grass left the meeting at 8:25 p.m. Deana Elder left the meeting at 8:30 p.m.

 

Thomas presented one scenario of an early retirement incentive analysis and the assumptions it was based upon. The scenario offered a $25K incentive for eligible retirees. Discussion included suggestions that there was greater net savings with an incentive and hiring freeze combined, a two-year period seemed reasonable, a definite plans would need to be stated, and savings would be immediate.

 

Peter Gesuale moved to recommend the Board have Administration investigate offering an early retirement incentive plan to its employees. Paige Darden seconded the motion. The motion carried unanimously.

 

Adjournment

 

There being no further business the meeting was adjourned at 9:00 p.m.

 

 

 

 

 

Joel Guthals, Chair

 

 

 

 

Sherrill Sullins, Recorder