Budgeting For Results Committee - Nov 06, 2006

[Guest sullinss]

Proceedings of the Budgeting For Results Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

November 06, 2006

 

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, November 06, 2006. Chair K. Dale Getz called the meeting to order at 5:31 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were K. Dale Getz, Katharin Kelker, Curt Prchal, Stan Barr, Dan Farmer, Joan Sleeth, Rachel Stagg, Kari Altenburg and Peter Grass. Member Shanna Henry arrived at 5:47 p.m. Excused from the meeting were committee members Jerome Chvilicek and Don Stanaway. Also present were Superintendent Jack Copps, CFO Thomas Harper, District Clerk Leo Hudetz, Suzette Fox, Debbie Wagner and Jim Watson with Payne Financial Group-Hoiness Labar Insurance, and Chuck Turner with Payne Financial Group Inc.

 

Communication From the Public

 

There were no public comments.

 

Consent Agenda

 

Dan Farmer moved to recommend Board approval of Consent Agenda items as follows:

1. Minutes of October 09, 2006

2. Addition of Washington D. C. Trip Fundraiser ECA Account at Will James

Katharin Kelker seconded the motion. The motion carried unanimously.

 

Commercial Insurance Coverage

 

Debbie Wagner, CPCU, CIC, with Payne Financial Group-Hoiness Labar Insurance provided a premium and loss recap for the past several years. Total premiums were higher for three years following the 09/11 terrorist attack. The market has softened and the premiums FY2005-06 were considerably lower. This year they changed our company from Argonaut to Zurich and they improved our terms enough that they were able to get AIG to include our Errors and Omissions under our $9M excess; so, in addition to our $5M professional liability limits, we have a $9M excess over that. Our program is reviewed regularly for continued enhancements. The future market indicates premiums will hold steady, but they do increase our property exposure each year.

 

Chuck Turner, General Counsel/Alternative Market Advisor, with Payne Financial Group Inc. explained that a captive insurance company is a form of self insurance whereby the insureds would create their own fund and pay their own losses. Captives are typically set up for long term liability coverage and not usually property coverage.

 

Advantages of Captives are: reduced operating costs, investment income and underwriting profit, broader coverage, pricing and coverage stability, direct reinsurer access, increased control, immediate reward for reducing losses, and enhanced risk management perspective. Disadvantages of Captives are: internal administrative costs, capitalization and commitment, dependent on service providers, inadequate loss reserves and potential losses, possible taxation problems, some insurer/broker resistance, and increased cost of other insurance.

 

Thomas explained in the past we have taken the difference between the premium and the amount budgeted and shifted that to a different fund for reserves. At year end we had about $250K in reserve which is normally applied to deductibles.

 

 

 

The Price of Government

 

Suzette Fox presented a compilation of information from the book “The Price of Government” together with our District’s budget data. The Price of Government equals taxes plus fees plus charges paid to all government divided by their personal income, which is influenced by revenue and economic trends. Historically, taxpayers have been unwilling to pay taxes above a certain threshold and will not vote for more taxes when their budgets are suffering from other economic forces. Nationwide, all taxpayers are paying about 35% of their income for taxes. Nationwide, we are paying $.08 for every dollar we earn to State tax and $.06 to local tax. Montana’s price of local and state government indicates we are paying $.11 for every dollar we earn to State tax and $.05-.06 to local tax. In 2002-03 Montana taxpayers were paying a bigger percentage of their personal income to taxes than the national average. It appears when State taxes increase; the taxpayers wouldn’t approve local taxes

 

Even though taxes for our District have decreased due to the expiration of our bond and building reserve levy, the taxpayer is not realizing tax relief due to city and county tax increases. Local taxpayers have voted down every school mill levy since 2002 except for one elementary bond issue in 2004. The percentage used to calculate Taxable Value of Property is decreasing. Total Taxable Value is increasing, which means fewer dollars paid by each taxpayer to raise the same amount of revenue for government. Schools are funded based on ANB counts for student enrollment the previous year. As our high school enrollment decreases the school budget will diminish accordingly. The fixed costs of operating the schools will not decrease because we have fewer students attending classes. Taxpayers must vote to increase our budget for school district expenditures.

 

Superintendent Copps pointed out that the Governor’s plan includes a full-day kindergarten program. If this program becomes a reality, we will add 500-600 new full time students. The benefit of this program is early education. The problems we have are lack of space and economic support at the local level. The District is looking at the big picture of how kindergarten will fit into the schools. We need to make sure the educational infrastructure expands as the city expands, and we need to decide what we want as a community.

 

Budget Book FY2006-07

 

The Budget Book FY2006-07 was distributed to Committee members. Thomas indicated it would be submitted to ASBO with hopes of obtaining a meritorious budget award, and it was also designed as a tool to communicate information to the public.

 

Financial Reports – October, 2006 (Unaudited)

 

The Committee reviewed the unaudited Financial Reports for October, 2006.

 

Bills Paid – October, 2006 (summary sheet)

 

Katharin Kelker moved to recommend the Board approve the bills paid as presented for October, 2006. Peter Grass seconded the motion. The motion carried unanimously.

 

Health Insurance – Financials – September, 2006

 

The fund balance is $2.4M, which exceeds the Charter recommendation of a $2.2M fund balance.

 

Budgeting for Results

 

The new Budgeting for Results process is intended to be fully implemented over a three-year period. The timeline for the budget development and adoption cycle was discussed. Some challenges faced by our District for budget year 2007-08 are:

 

 

 

• Legislature convenes in January

• State forecast will end April 30th

• Last date to call for mill levy is March 29

• Negotiations

• Precarious High School Reserves

 

Committee discussion generated the following perspectives:

 

1. Regarding the Mill levy:

• Decide now on calling for an election

• Identify why levies haven’t passed

• Evaluate price tags and process through Budgeting For Results

• Promote with donations and use expertise

• More transparency on District financial status

• Stress positive messages and communication with the public

 

2. Regarding the Budgeting for Results Process:

• Don’t short-cut this three-year process; this first year is a pilot year

• FY2007-08 pilot a portion of the organization for BFR

• FY2007-08 focus on operational results rather than instructional

 

Katharin Kelker moved to recommend to the Board that we do a pilot version of Budgeting For Results with emphasis on the operational side of the budget as opposed to the instructional side for budget year 2007-2008. Dan Farmer seconded the motion. The motion carried unanimously.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:38 p.m.

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder