Guest sullinss Posted January 11, 2005 Report Share Posted January 11, 2005 Proceedings of the Business Committee School District No. 2, Yellowstone County High School District No. 2, Yellowstone County Billings, Montana December 13, 2004 The December 13, 2004 Business Committee meeting was called to order at 5:30 p.m. by Chair Malcolm Goodrich. Committee members in attendance were Shanna Henry, Dale Getz, Peter Grass, Curt Prchal, Jerry Hansen, Malcolm Goodrich, and Joan Sleeth came at 5:53 p.m.. Absent were members Patty Lacy, Bob Whalen, and Judy Herzog. Also in attendance were Audit Committee Chair Jane McCracken, Business Manager Thomas Harper, BEA President Allan Audet, District Clerk Leo Hudetz, Auditor Sarah Collins, and Trustee Gene Jarussi. Pledge of Allegiance Chair Goodrich led those assembled in the Pledge of Allegiance. Annual Financial Report FY2004 (Audit) Jane McCracken, Audit Committee Chair, was present to review the Annual Financial Report FY2004. Eide Bailly, LLC completed their third year on the audit contract; therefore, the Audit Committee needs to put out an RFP for a new multiple year contract. The report was accepted with some few exceptions by the Audit Committee. Congratulations are due to the Financial Department for a good audit. We have one Finding this year and the Management Letter. In the past the Audit Committee has turned over the Management Letter and Findings to the Business Committee for follow-up throughout the year. The Auditor’s report on the financial statements is an unqualified opinion which means there is no financial material misstatement. The Management Discussion and Analysis is written by administration as an overview of the District’s financial activities. The financial statements follow this report. The Auditor’s Report on Compliance has no issues to report. There is one Finding dealing with Title II grants not considered material due to the dollar amount of $24,500. One individual in a school misunderstood how grants worked. She recorded time and effort based on time worked in schools rather than time spent in each grant. Our federal grants require specific documentation. In the past we had some difficulty in this area resulting in the school district becoming a high risk auditee. This is the second year of an unqualified opinion on our federal awards program, so we will lose the high risk designation starting July 1, 2004. Next year we will be audited as low risk which determines sample sizes and how many dollars the auditors test. The Management Letter contains discussion from the auditors to our District about things which need improvement as follows: Expenditure Oversight in Federal Programs: two immaterial errors involving an incorrect step up in pay and an incorrect split between grants; and, an amount charged incorrectly to a grant. Response: The District will review unusual transactions to ensure the right amounts are being expended from their respective grants. Vacation Accrual: one employee over accrual limit for three consecutive years. Response: The supervisor will encourage the employee to use excess vacation time. Public Notification of Board Meetings: documentation available did not support 48 hours public notice for one Special Board Meeting. Response: A copy of date of notice of transmission or written note of notice will be maintained with the permanent record of board packets. Extracurricular Fund Testing: two schools did not maintain their own records; one fund custodian did not deposit late fines and lost book fees into the ECA cash account; and, one fund holds inventory for resale but does not track inventory before and after or in between events. Response: Spreadsheets have been set up for accounts; schools will deposit money in the district book fine account; and, they have been directed to account for inventory. Prior year comments are detailed and may require some minor follow-up. Jerry asked if the auditors tested the encumbrance system in the accounting system controls. Auditor Sarah Collins stated they did not test the system as a whole, but tested encumbrance as far as the balance and selected specific encumbrances from that. Jerry is concerned that individual line items in the budget are overencumbered, and he is concerned for control purposes even though the fund total is not overencumbered. Sarah said the auditors look at fund totals and not line-by-line. Jerry asked how the outlying high school only districts would evaluate the performance of the High School District based on the audit. Sarah stated it is the District’s option if they want to do combined statements. The Trustees Financial Report is separated into elementary and high school, but the State wants the audit report combined. The auditors would test the districts separately if it was required by State law. Jane stated there is no stoploss insurance for claims in the aggregate since 1996. It was probably discontinued due to a cost management analysis. We have stoploss coverage for individual claims exceeding $150,000. The Audit Committee is recommending the analysis be reviewed for stoploss coverage in the aggregate for medical insurance. Jane reported this year’s financial report made a prior period adjustment reducing compensated absence liability for the prior year. In prior period we over accrued a liability for compensated absences in the approximate amount of $1.3M. This figure is usually estimated and calculated at year end. Dale Getz introduced a motion to accept the Annual Financial Report FY2004 as presented and forward it to the Board for approval. Jerry Hansen seconded the motion. The motion carried unanimously. The Business Committee will follow up on the Management Letter and the Finding throughout the course of the year. Budget Forecasts FY 2005-2006 This is an ongoing process to gather and build the 2005-2006 budget and budget projections. Future items such as legislative input and pupil counts will affect how the budget evolves throughout the year. Administration and the union have agreed on FTE currently being paid. There is a difference between actual vs. position budgeting. Thomas revised the 2005-06 budget based on the October student count and its affect on ANB. The forecast for elementary students increased from 9840 to 9965. This determines our largest voted amount possible in the elementary district to be $315.188 and takes us to the cap. Administration believes they can hold the line on expenses next year. Salaries and contract changes are in the revised budget, but other budgeted items such as utilities are kept at the previous year’s level. Curt said there are 13 fewer people this year in the District compared to last year at year end. Those unfilled positions were held in the position budget. The September document said we had 1137 FTE and presently we are at 1124 FTE. (We were at 1122 FTE in November, but two more persons on long-term assignments were hired on for the rest of the year.) Chair Goodrich suggested one area for consideration might be a hiring freeze to limit the capacity to fill those 13 positions to maintain that dollar level. Dale said if we get 125 more kids and have 13 less positions, it is not logical that we need less staff. Jerry said the Elementary District student count in October was 10,117. Last year the High School District was 5,601 and this year it is 5,599. We are down about 1,000 students in the Elementary District since 1993, and they will funnel into the High School District. Jerry predicts the High School District may go down to 5,300. Thomas said in the High School District we are projecting an ANB of 5,515 students for the 2005-2006 year which is down 89 students from his original projection of 5604. His revenue projections do not include MAC money. So far we’ve received $464,000 MAC money from the last quarter of the preceding year. Nothing has been received to date for this year, but we anticipate receiving approximately $500,000. The High School largest voted amount possible is $1,943,578 which takes us to the cap. Now that the FTE is agreed upon we can run projected costs with raises. Allan Audet said it was important to put in a freeze before we get back up to the 1137 FTE figure we had last year. Curt said the 13 positions are ones more difficult to fill like OT’s, nurses, special education teachers, and those with extended contracts. These positions have been unfilled for several years. Malcolm asked if we would freeze hiring by numbers of people or position or as of a certain point in time. Curt said they went through this last year. At the end of fiscal year 2003 we had 1102 FTE. At the end of fiscal year 2004 we had 1137 FTE. Most increases were probably due to increased services and new program initiatives. 20 FTE were services being provided in support for teachers as well as students, but they take FTE out of the classroom. Options may be available to reallocate present FTE to fill needs. Committee member Peter Grass left the meeting at 7:00 p.m. Chair Goodrich said a freeze is the Board’s decision and that all committees would have to consider the issue. Our budget forecast shows that our budget next year is a negative amount, so if we freeze FTE we need to recognize there may be a need to fill a particular position due to a federal mandate, etc. Chair Goodrich asked for a sense of the Committee on the freeze. Shanna asked if it would be positions or people. Malcolm said he could see both because positions would freeze so we don’t have further positions that have to be filled, and freeze numbers of people because that’s what keeps our actual expense down. Jerry said he was not against a freeze for the current year. He asked what happens if you have people retire and others move out of town – are we freezing positions so they couldn’t be filled. Malcolm could see holding expense down by not hiring new people and let attrition decrease expense without cutting people out of positions. Curt said perhaps there could be a ceiling number - for example, in a cluster situation there are ways of providing the same level of services with fewer FTE. Jerry wants to make sure we keep our expertise in the classroom for the students and you need to be qualified to teach the class. Shanna understands that under a freeze if a classroom teacher leaves and a new one would be hired, it still maintains the level of FTE. Jerry asked for an example of new program initiatives that increased FTE. Curt and Allan said that Reading Recovery is one example where a teacher would be pulled from the classroom, someone is hired to replace them and after three years the new hire is tenured. Jerry asked how many positions in the 1122 number are funded with federal dollars. Thomas estimates about 200 FTE in the Title programs. Jerry doesn’t see how replacing a federally funded FTE affects the general fund. Dale Getz said that given we still face budgetary problems and realizing that this is an ongoing process and that we do face a shortfall at a minimum of $700,000 in the high school and maybe $200,000 in the elementary he moves that the Business Committee recommend to the Board that: 1) all School District No. 2 positions be frozen as of November 22, 2004; and, 2) move that the Business Committee recommend to the Board that the number of School District No. 2 employees be frozen as of November 22, 2004 except for certified staff. Jerry Hansen seconded the motion. The motion carried unanimously. Trustee Jarussi asked why we wouldn’t also freeze teachers if we’re trying to hold bodies. Are we saying we want to fill the other thirteen slots? Dale clarified his motion saying that if a teacher leaves, you would want to replace them. Malcolm asked Dale to clarify part one of his motion where all School District No. 2 positions be frozen as of November 22, 2004 as to which number he froze it at. Did Dale freeze it at 1137 positions or 1124 FTE? Dale said he was thinking the positions equaled FTE. You don’t go above that 1137 positions and keep the bodies the same except for certified staff. Malcolm asked if Dale would consider clarifying his motion to provide for a freeze at the 1124 level subject to replacement in situations of attrition. Dale said that was fine – he was trying to leave some flexibility. He’s saying the body count is frozen at that level and if you have some attrition, for all employees. Malcolm said really what we’re talking about is all School District employees. Malcolm asked if Dale would be willing to amend his motion and Dale said he would. Dale Getz moved through amendment to freeze employees, in general, for School District No. 2, at their levels as were current on November 22, 2004. Jerry Hansen seconded the motion. Malcolm stated the motion as amended freezes all positions and all employee numbers as of November 22, 2004. The motion carried unanimously. Leo was asked to determine how many employees hired under grants were retained when the grants ended. Leo said the bulk of grants are Title programs that continue year after year. These grants are growing at a rate of approximately $2M per year. Leo did an interview process rather than an audit process, but he has been assured if a grant ends they are not picked up as extra employees but may fill a vacancy elsewhere. Leo is examining our Indirect Cost Rate which is set by OPI from our financial statements to see if we are receiving all allowable costs. Thomas said the rationale on keeping a low Indirect Cost Rate is to keep our direct program funding higher. Dale Getz introduced a motion to recommend the Board direct the Internal Auditor to examine the Indirect Cost rate factor to see if it’s appropriate given our situation. Joan Sleeth seconded the motion. The motion carried unanimously. Leo said we have a head count of 1933 total full and part time employees in the District. 840 of those employees are eligible to retire. The total of the average salary and fringe benefits of this group of people is $50,502. The School District is supporting a legislative bill for early retirement incentive to be paid from the Retirement Fund. Currently the Retirement Fund can only be used to pay FICA payroll taxes and retirement contributions for employees. The State allows a 35% reserve in the Retirement Fund and a 10% reserve in the General Fund. Leo was asked to break down his data by bargaining unit and report back at the next meeting. The Committee reviewed the plan for the textbook adoption cycle and associated costs. Committee discussion included concern for implementing new curriculum FY2005-2006 when costs are not broken out on a per year basis. Thomas was directed to find out the costs of these programs FY2005-2006 and report back to the Committee at the next meeting. The Committee discussed the cluster concept (sister schools). Clustering can save about $1M, but bussing would cost about $1M. Unless we can save money, even though it’s educationally beneficial, they do not want to pursue it. It was questioned why we would have to bus. Clustering was discussed at the time of school closures and parents were against it because a family could have children in several schools. Dale Getz introduced a motion to table the cluster concept at this time. Joan Sleeth seconded the motion. The motion carried unanimously. The Maintenance and Operation Cost report was discussed. Thomas said SD#2 salary costs may be understated in the report since we have professionals (plumbers, painters, carpenters, etc.) on staff and those salary costs are not reflected in the report. Jerry said the report reflects general fund costs, only, and no retirement costs, etc. Chair Goodrich asked Jerry Hansen to be on a subcommittee with Rich Whitney to rework the Maintenance and Operation Cost report and report back to the Committee. That subcommittee will also examine energy conservation savings. The Skyview High School bonds will be paid off in June, 2005 leaving a balance of approximately $650,000 in the High School Debt Service Fund. We can transfer this money to the Building Fund, General Fund, or Technology Fund. Thomas recommends that money be earmarked for the Building Fund for maintenance purposes. Financials – Reporting Process Leo reported that by eliminating 100 pages of financial reports for meetings we could save about $6000. The Board has stated they would be satisfied to see a summary revenue report, total expenditures by fund, object cost analysis, and a detailed report on revenue. Only the most recent month will be included in the financials. Dale Getz introduced a motion to accept Leo’s recommendation for a revised reporting process for Financials as outlined. Curt Prchal seconded the motion. The motion carried unanimously. Adjournment There being no further business, the meeting was adjourned at 8:42 p.m. Malcolm Goodrich, Chair Sherrill Sullins, Recorder Link to comment Share on other sites More sharing options...
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