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Budgeting For Results Committee - June 14, 2010


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School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

June 14, 2010

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 14, 2010. Committee Chair Joel Guthals called the meeting to order at 5:20 p.m. and led those assembled in the Pledge of Allegiance. Budgeting For Results Committee members present were: Rod Gottula, Joan Sleeth, Charlie Loveridge, Bruce MacIntyre, Don Stanaway, Joel Guthals, Barbara Bryan, Paige Darden, and Tom Bick. Members absent were Peter Grass, Sandie Mammenga, Deana Elder, and Kelly Donovan.

Also present were Connie Wardell, Lindy Graves, Thomas Harper, Shanna Henry, Rob Rogers with the Billings Gazette, Erick Forseth with Rimrock Trailways, and Brandon Kieson and Ken Herman with Coach America.

 

Communication from the Public

 

No one wished to address the Public

 

Consent Agenda

 

Bruce MacIntyre moved to recommend the Board approve the Consent Agenda items as follows:

A-1 Minutes of May 10, 2010

Don Stanaway seconded the motion. The motion carried unanimously.

 

Bills Paid – May, 2010 (summary sheet)

 

Rod Gottula moved to recommend the Board approve the bills paid for May, 2010. Joan Sleeth seconded the motion.

 

Bruce MacIntyre commented that the District, knowing it will face a huge shortfall in a year from now, should exercise a little more responsibility and question what spending is essential and what is not. An approved budget tends to become an entitlement. The May warrants show $60k spent in travel and entertainment.

 

Chair Guthals directed Thomas Harper to review this item with the Superintendent. Thomas Harper stated the District has spent no more than $50k for travel in both General Fund budgets with the remaining travel expenditures funded from grants or activity funds.

 

Don Stanaway suggested the District examine their policy on leasing equipment. Don believes the District could save money by not leasing copiers, etc. Thomas said a recent study has been completed on printers, copiers and computers, etc. and may be on next month’s agenda. Thomas explained that 101 and 201 are the General Funds and 115 and 215 are grant funds. The bills paid for the month were reviewed and authorized in accordance with District regulations and financial controls and comply with school, state and federal laws, policies and procedures.

 

The motion carried unanimously.

 

Financial Reports – May, 2010 (unaudited)

 

Committee members reviewed the Financials. Thomas Harper explained Yellowstone County collects and invests our money. Most large school districts pulled their money out of State investments and invest locally. The interest yield at 1.48% is down from last year and earned $10k for May. The year is 91% complete, expenditures are on track, and the three teacher payrolls are paid in June.

 

Thomas reported the State is considering reducing school districts’ funding next year in the Flex Funds 129/229, any General Fund excess reserves over 10%, Indian Education For All funds, Transportation and Retirement Funds, and all day Kindergarten. Our only funding source for Flex Funds is an optional grant for $170k. Thomas said we might have about $250k in the Flex Funds at year-end.

 

Thomas reported the Financials show no significant variations and we will end the year close to budget estimates. The Elementary General Fund will end the year with a surplus.

 

Health Insurance Financials – April, 2010 (unaudited)

 

Thomas reported the Insurance and Budgeting For Results Committees and the Board voted to reduce the insurance claims expenditure budget assumption from 12% to 6% FY2010-11. The Health Insurance Fund continues to break even. Total revenue less expenditures is $673k year-to-date. Total Liabilities and Fund Balance is $4.2M. The final picture depends on claims incurred but not yet billed. The last date to incur a claim in a fiscal plan year is June 30th. A claimant has one year to submit a claim incurred in a fiscal plan year. We have an individual stop loss coverage level of $160k rather than stop loss on the overall plan. Stop loss refunds are carrier reimbursements for claims over $160k. Rod asked for information on retirees and how long they might be on the District’s insurance plan. Thomas will provide him with a Post Employment Retirement Benefit report. Chair Guthals stated we have an independent audit group and an Insurance Committee active in monitoring the health insurance plan and monetary aspects of that plan.

 

Charter Trip Bus Transportation Bid (Activities)

 

Thomas Harper said historically a five year contract (renewable each year) has been awarded for charter trip bus transportation for sports and activities. A subcommittee of District staff reviewed proposals submitted by Rimrock Stages and Coach American for the contract. The committee evaluated the proposals based on service requirements stated in the RFP. References were checked, and a customer service survey was completed with sponsors, coaches, and principals. The committee said there was much to recommend from both vendors. Rimrock Stages have contracted with our District for about 20 years. There were complaints with Rimrock subcontracting with Sarpy; however, the State of Montana will be funding three new coaches for Rimrock Stages which would address this issue.

 

Brandon Kieson, Operations Manager for Coach America, spoke to the BFR Committee. Coach America is the largest privately owned provider of coaches in the U.S. They would not use outside vendors. They have a good safety record, they are DOT certified and do 120 hours of safety training with drivers. They have 50 coaches in the area and can provide up to 20 at any given time. Their 55 passenger motor coaches were built in 2004 to 2008 and have bathrooms. They have an office in Billings with 25 employees and a manager on site. If a bus broke down they would have one available within a few hours. They provide services for colleges, the Mustangs, and area mines. They have three mechanics and a repair coach and can be on site within an hour and a half. They have a 99.9% efficiency rating with Stillwater Mine in the last six years, and their charter buses have had zero breakdowns.

 

Barbara asked Thomas if the impact of fuel surcharges had been compared. Thomas said it had not been compared.

 

Eric Forseth, General Manager for Rimrock Trailways, spoke to the BFR Committee. They started charter services in 1982 and have contracted with the District for about 20 years. They have 14 coaches, 6 of which are used on schedules. They are adding three buses via the stimulus program for scheduled use which would free up three more buses for charter services. They are in a better financial situation today than they were 5-10 years ago. They are now in a position to upgrade so they don’t have to sub contract out as much. Mr. Forseth said he needs to be advised if there is a problem, so it can be fixed. They have a good track record on breakdowns . They use seven charter coaches which is usually enough to cover except in tourist season. Their buses were built in 1984 up to 2001, are in excellent condition and are DOT certified. They have 33 drivers statewide, three mechanics, three bus cleaners, and 7-8 office staff. Headquarters are in Billings with 25 staff. Drivers have two years required experience, and they attend safety programs through videos and road training. They carry standard $5m liability insurance per occurrence.

 

Thomas Harper advised we do not have a limitation in the contract regarding subcontracting. Thomas said we are going to initiate a process to obtain feedback reports on activity trips from the drivers and sponsor’s perspective. A rate comparison analysis determined very little difference between the bids. Charlie Loveridge noted his coaching experience involving use of Rimrock Stages’ buses was good; and feedback he got from other people using Coach America indicate they were very satisfied with that company also.

 

Bruce MacIntyre moved to recommend the Board approve the agreement with Rimrock Stages, the reason being they are slightly higher on the base rate; however, fuel surcharge could add up substantially with Coach America. Tom Bick seconded the motion.

 

Committee members questioned the risk of the cost of the surcharge. Thomas explained there is no requirement to accept the low bid; it should be based on quality and price and total consideration. This Committee and the Board can accept either of these bids.

 

Chair Guthals called for the motion. Voting for the motion were Rod Gottula, Joan Sleeth, Charlie Loveridge, Bruce MacIntyre, Don Stanaway, Barbara Bryan, Paige Darden, and Tom Bick. Voting against the motion was Joel Guthals. The motion carried.

 

Barbara Bryan requested that Thomas present an estimate of the cost of surcharges to the Trustees at the June 21st Regular Board Meeting.

 

Chair Guthals asked for clarification on the motion since the Committee that studied the bids recommend that if Rimrock Stages is awarded the bid it would have a stipulation that it subcontract Sarpy Transportation as its last alternative. Bruce MacIntyre amended his motion to include that stipulation. Tom Bick agreed to the amendment. Voting for the amended motion were Rod Gottula, Joan Sleeth, Charlie Loveridge, Bruce MacIntyre, Don Stanaway, Barbara Bryan, Paige Darden, and Tom Bick. Voting against the motion was Joel Guthals. The amended motion carried.

 

QZAB, QSCB and Build America Bonds (BAB)

 

Barbara Bryan said this item was fully discussed and voted on at the Special Joint Board Meeting of the Board on June 7, 2010 with the participation of this Committee. Committee members present at that meeting agreed they were not “straw” poll motions. Rich Whitney is preparing project lists that meet the bonding criteria discussed at the Joint Board meeting, and these projects will go forward to the Board.

 

Preliminary General Fund Budget

 

Chair Guthals stated the Preliminary Budget FY2010-11 will be finalized in July. This Committee examined different ways to change District operations and reduce expenditures which are educationally acceptable and gave recommendations to the Board.

 

With the passage of the Elementary General Fund levy, Superintendent Copps is asking the BFR Committee to reconsider their motion of December 14, 2009 for Elementary General Fund budget reductions FY2010-11. Superintendent Copps would like to buy back the following recommended budget reductions totaling $559,000 since he believes the decisions were made before the Board decided to use one-time money as a budget solution, cutting housekeeping and nursing services is unsustainable, the elementary levy cited these reductions IF the levy failed, and the June 1st deadline for non-renewal of teaching staff has passed and they have contracts for next year:

 

Title II coaching Positions 3 FTE $135,000

Special Ed. – Centralized Nursing Care 2 FTE $50,000

Facilities – Housekeeping 12.725 FTE $284,000

Fast Track 2 FTE $90,000

TOTAL $559,000

 

Chair Guthals said FY2011 revenues are known, and now we need to review recommendations on expenditures FY2010-11. The Board approved use of ARRA funds of $1.1M in the Elementary District and $317K in the High School District. We will also use the Flex Fund Grant of $170k in each District to offset expenditures. As a result of the mill levy election the Elementary General Fund budget is balanced with a surplus of $81,264; therefore, the budget reductions that this Committee previously recommended to the Board will be a confirmation that we support going ahead with these cuts to impact the huge deficit we expect in the FY2011-12 budget year. Committee members confirmed they wish to cut the 12.67 FTE in the H.S. District for $805,503. Elementary budget reductions included: 3 FTE Title II coaching positions for $135k, 2 FTE Sped. Centralized Nursing Care for $50k, 12.725 FTE Facilities for $284k, .33 FTE TOSA Curriculum Assessment, and 2 FTE Fast Track for $90k. These cuts result in an Elementary General Fund balance of $1,964,818. Lindy Graves asked if the State would be taking this surplus. Thomas replied the State would not. Chair Guthals stated the Committee could recommend the Board go forward with those cuts and save that money. Bruce MacIntyre stated that the Committee never addressed these reductions only “if the levy failed”; we addressed balancing the budget. Joel agreed the cuts were non-conditional. Bruce would like to see the cuts this Committee identified go forward to the Board. If the cuts weren’t sustainable, Administration should not have recommended them knowing we’re looking at even larger budget deficits in future years. Chair Guthals stated Administration made recommendations that did not affect education.

 

Rod asked if the surplus funds would be carried forward to the next year. Chair Guthals stated the General Fund surplus could be put in reserves; and, if State funding did not come through, we would be able by Board resolution to use reserves to balance the budget in 2012. Our General Fund reserves are not at risk to lose to the State since the statutory limit is 10%, and if we put this money into reserves it would be a little over 6% which is a long way from the 10% limit.

 

The Committee discussed the effects of the cuts and the June 1 deadline for notification of rehiring. Members expressed concern regarding public perception that Administration provided a list of cuts, this Committee agreed to them, and now the Superintendent wants to put them back in the budget since the mill levy passed. They discussed the importance of looking forward to 2012 budget year savings if we can afford to eliminate these positions. Some members questioned the hiring for positions when the budget decisions had not been finalized. Chair Guthals clarified that the Board had not yet approved those budget cuts; the decision was deferred until after the mill levy election.

 

Bruce MacIntyre moved that this Committee continues to recommend the reductions of the Elementary and High School General Fund budgets as originally voted on which included:

 

ELEMENTARY GENERAL FUND BUDGET FY2011

BFR REDUCTION RECOMMENDATIONS ON DEC. 14, 2009:

Title II Coaching Positions 3 FTE $135,000

Special Ed. – Centralized Nursing Care 2 FTE $50,000

Facilities – Housekeeping 12.725 FTE $284,000

TOSA Curriculum Assessment .33 FTE $17,500

Fast Track 2 FTE $90,000

Total BFR Reduction Recommendations $576,500

 

HIGH SCHOOL GENERAL FUND BUDGET FY2011

BFR REDUCTION RECOMMENDATIONS ON MAR. 08, 2010:

12.67 positions through attrition/elimination $805,503

Office of Development & Advancement $25,000

Building Supply Budget $56,800

Technology $57,000

Total BFR Reduction Recommendations $944,303

 

Don Stanaway seconded the motion.

 

Shanna Henry pointed out that the Elementary K-6 District made their budget reduction recommendations to this Committee before the Board approved the use of one-time money; whereas, the Middle School and High School District made their budget reductions after the Board approved the use of one-time money to help balance the General Fund budgets. Shanna said there may have been fewer Elementary recommendations for budget reductions if they knew they had one-time money to use.

 

Comments from most Committee members included: the Elementary District received substantially more ARRA money than the High School District; concern about the credibility with the public if cuts are not made; the importance of budget savings due to huge projected deficits in future years; if we have opportunities to make cuts now to save neighborhood schools we need to do it now; we should have had the High School District make a larger list for cuts; and, we should stay the course. Rod Gottula indicated as representing people of a bargaining unit he will need to vote against the motion.

 

Thomas Harper reviewed three Total District General Fund budget scenarios for year 2011-2012:

1. No changes in assumptions, 3% State base increase ($5,144,496) shortfall

2. No 3% State base increase ($6,810,420) shortfall

3. No 3% State base increase and State does not make up One-Time money

($10,763,476) shortfall

 

Bruce urged members to consider scenario #1 as a best case scenario for funding based upon the budget shortfalls the State is forecasting.

 

Voting for the motion were Charlie Loveridge, Bruce MacIntyre, Don Stanaway, Joel Guthals, Barbara Bryan, Paige Darden, and Tom Bick. Voting against the motion were Rod Gottula and Joan Sleeth. The motion carried.

 

Connie Wardell believes not all the cuts proposed by the State will happen; however, we have an obligation to make our Legislators aware which items do and do not affect our District.

 

Tuition Rates 2010-11 School Year

 

State Law allows each school district to charge tuition for students coming in from another district subject to approval of the trustees per Board Policy. The Office of Public Instruction has set the maximum out-of-district tuition rates under MCA 20-5-323 and ARM 10.10.301 for the 2010-11 school year at 20% of the per-ANB entitlement.

 

Rod Gottula moved to recommend the Board approve the maximum allowable tuition rates FY2010-2011 to be $500.30 per student for Pre-K and ½ Time Kindergarten, $1000.60 per student for Full-Time Kindergarten and Grades 1-6, and $1281.00 per student for Grades 7-12. Bruce MacIntyre seconded the motion. The motion carried unanimously.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:35 p.m.

 

 

 

 

 

 

Joel Guthals, Chair

 

 

 

 

Sherrill Sullins, Recorder

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