Special Business Comm. Mtg-March 09, 2006

[Guest sullinss]

Proceedings of the Business Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

March 09, 2006

 

Call to Order

 

The Special Meeting of the Business 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 Thursday, March 09, 2006. Chair Dale Getz called the meeting to order at 4:15 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were K. Dale Getz, Curt Prchal, Jerome Chivilicek, Joel Guthals, Tim Cranston, Jerry Hansen, and Joan Sleeth came at 5:10 p.m. Committee members absent were Shanna Henry, Kari Altenburg, Katharin Kelker, Randy Durr, and Peter Grass. Also present was Business Manager Thomas Harper, and Superintendent Rod Svee.

 

Work Study Session on the Budget 2006-07

 

Chair Getz stated the purpose of this meeting was to take the budget model from the sub-committee meetings and further develop the numbers to see where we are on the base level. He reviewed the principles/assumptions developed at the sub-committee as budget guidelines FY2006-07. Curt and Tim expanded the expenditure building block model as a means to approach the budget process and facilitate public understanding.

 

Thomas provided instruction costs for the model with no distinction to funds. These numbers include grant requirements but do not include administrations costs. This is a work in progress and he will refine this further to include non-instruction categories.

 

Superintendent Svee said FTE in the primary grades is limited by “Classroom Reduction” because if you use Classroom Reduction money you agree you will not have more than an 18-1 student ratio which is lower than accreditation. Curt said there are “discretionary spending budgets” which is money needed because we bought into “Smaller Class Size”, or the Neighborhood School Concept, boundaries, or the physical size of the buildings all affects the way we staff. Superintendent Svee said the State funds on a district-wide basis and we need to examine dollars by site due to transportation or other requirements.

 

Tim suggested the budget model should be broken down further into more layers:

 

 

 

 

Discretionary

 

Local/Strategic

 

Grant

 

Contract

 

Requisite

 

 

Jerry wants to see what it’s costing the District to not have multiple grade classrooms or cluster schools. Superintendent Svee said when we talk about being “structurally balanced” these philosophy items come up for discussion. The Superintendent presented the Committee with “structurally balanced” FY2007 General Fund Budget Worksheets for review.

 

Tim was excused from the meeting at 4:37 p.m.

 

Dale and Joel want to see the discretionary costs broken out from the base level State accreditation requisite costs on the pyramid model. Curt urges caution in this approach since it requires assumptions and may send undesirable messages. Dale asked Thomas to take the four major instruction units and break them down by percentage for a better idea of what is required by accreditation. Thomas was asked to add administration costs and also cost out support by requisite and discretionary. Jerry clarified with Thomas that, for example, federal money for reduced class size for instruction would be not be in the requisite block because it was not required for accreditation. Thomas will have this information developed by March 27th for the Board work study meeting. After the expenditure model is completed, they want revenue, student numbers, and FTE overlaid on the model.

 

Thomas said we also need to work on various scenarios. If we’re going to have a “structurally balanced” budget, how do we balance the budget for 2006-7 given the unknowns of bargaining costs and insurance increases? Once we adopt a budget amendment and spend the reserves, how do we rebuild them? He was hoping the budget model process would give us insight into how to develop the scenarios.

 

Rod said the key is the “structurally balanced” budget concept which is a change from past Board’s direction. To be structurally balanced you need to have contingency funds. The Board may philosophically decide that we cannot afford to be balanced at this time. Past Board direction was to maintain existing programs and “business as usual. “ Joel is concerned about getting too “structurally balanced” and forced into making cuts and adjustments; he hopes for flexibility. Dale believes we won’t be structurally balanced, but the Board will be able to see the costs to guide them through difficult decisions.

 

Jerry said State law requires we have a balanced budget. We’ve been spending our reserves and the General Fund in the audit reports show only one year in the last six that we had a balanced budget. We have 3.8% General Fund Reserves and we need 8% to get a decent credit rating on bonds. We need to get structurally balanced and replace our reserves. Jerry believes we need to build in contingencies for unexpected costs and if we don’t need it, it can go into reserves.

 

Joel expressed hope that some of the $2M+ dollars from the State for deferred maintenance and weatherization be allocated for current programs instead of all new projects. Rod has a list detailing allocation of “at risk” money in the Elementary General Fund and the enabling legislation and requirements within the law so the Board will understand what those dollars can be spent on. Rod gave examples of items that could be offset to free-up some General Fund dollars. The money was put into the budget as a lump sum of $355,000; options will be presented and the Board can philosophically decide how to allocate.

 

Thomas reminded the Committee that this is one-time money and is a short-term solution for a long-term problem. Joel sees the money as a problem solving tool rather than putting things off.

 

Joan joined the meeting at 5:10 p.m.

 

Joel asked for further explanation on how next year’s budget could be in the “red” with all of the extra money we are getting from the State. Rod explained the scenario given to the Board was based on the budgets with “structural balance.” This removes flexibility and creates the picture of the budget being in the “red.” Thomas added in the last few years revenue is growing 1.5-2% and expenditures are growing 5%. Dale added it’s a compounding effect of neighborhood schools, contractual decisions, and the number of schools we have. Joel asked if the $2M+ weatherization and deferred maintenance money was considered in the budget. Thomas said other than salaries there is no maintenance budgeted in the General Fund. If you offset it with this one-time money you are just deferring it another year. The Building Reserve Levy sunsets this year. Curt does not want to see repair and maintenance increased in the General Fund budget because then something else would need to be cut to maintain balance; however, he believes this money will give us flexibility. Rod said you can move some General Fund expense over to the new money this year, but not in a “structurally balanced” way because you’re moving out of the General Fund to a budget that sunsets in three years. It does not mean it is not a good idea, because some other funding may be available in three years. Curt said “business as usual” did not work; we need to do current programs “better” and not take on more load that increases the time we effectively have to teach kids. Curt said if something comes on board, something has to go financially and because of time consideration restraints put on us by growing our services.

 

Dale hopes this budget model will enable us to be more informed and more selective and understanding in what the implications are. There will be no way to avoid difficult budget decisions this year.

 

Joel asked about the $1.1M money we’re receiving from the State for Indian Education. Rod explained we are doing minimal programs now. Those dollars are deposited into the General Fund and a miscellaneous programs fund. Miscellaneous programs dollars can be carried over to the next year.

 

There being no further business, the meeting was adjourned at 5:30 p.m.

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder