Budgeting For Results Committee - Dec 04, 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

 

December 04, 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, December 04, 2006. Chair K. Dale Getz called the meeting to order at 5:05 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were: K. Dale Getz, Katharin Kelker, Shanna Henry, Joan Sleeth, Dan Farmer, Peter Grass, Stan Barr, Jerome Chvilicek, Rachel Stagg, and new committee member Duane Smith. Committee members absent were: Kari Altenburg, Curt Prchal, and Don Stanaway. Also present were Superintendent Jack Copps, CFO Thomas Harper, District Clerk Leo Hudetz, Rich Whitney, Jerry Hansen, Jane McCracken, and Ed Graff.

 

Communication From the Public

 

Ed Graff, with Energy Education Inc., addressed the Committee regarding our District’s initiative relating to energy conservation. His consulting company develops proposals to work with people to create an energy ethic to reduce consumption by 15-30%. In seven years he can save us a net amount of $4.2M, based on our facility makeup, and with no capital outlay. We should be able to pay for the investment in the program ($229K implementation fee, plus energy education, energy manager, software, etc. for a total of $303K), and still realize a 98% return on our investment and a higher return in ensuing years. They guarantee it will not cost our District one cent to implement this program. Chair Getz directed this item be placed on the Committee’s January agenda as an action item.

 

Consent Agenda

 

Shanna Henry moved to recommend Board approval of Consent Agenda items as follows:

1. Minutes of November 06, 2006

2. Addition of Ponderosa Second Grade ECA Account Ponderosa

3. Addition of Science Labs ECA Account at West High

Peter Grass seconded the motion. The motion carried unanimously.

 

Audit Committee Presentation – Draft Annual Financial Report FY2005-06

 

Audit Committee Chair Jane McCracken stated the Audit Committee has reviewed the Annual Financial Report of the District FY2005-06 and is presenting it to the Budgeting For Results Committee to review the opinions and findings and follow-up to ensure corrective action is continuing.

 

Jane reported the audit went well this year. The summary of audit results from our independent auditors, EideBailly LLC, indicates we have: 1) an unqualified opinion of the basic financial statements; 2) no reportable conditions disclosed during the audit; 3) no instances of noncompliance material to the financial statements; 4) three reportable conditions disclosed during the audit of internal control over federal award programs; and, 5) an unqualified opinion on compliance of the major federal award programs.

 

Finding #06-1 noted while testing free and reduced applications in the school lunch program that 2 out of 91 individuals tested did not have a current application on file to support being listed as eligible to receive free and reduced lunches. It appears to be a computer software problem used by the contracted food service provider, and they are working to fix the software.

 

Finding #06-2 noted during testing expenditures in the Smaller Learning Communities Grant that two of fifteen expenditures (totaling $208) did not have adequate documentation as a federal grant expenditure as no receipt was available. The new Procurement Card control process will enable monitoring the timely receipt of documentation for expenditures. Expenditures have been corrected in the grant.

 

Finding #06-3 noted during testing expenditures in the Smaller Learning Communities Grant that three out of fifteen expenditures (totaling $525) did not have adequate documentation to determine that they were allowable or within the objectives and goals of the grant. The Director of Secondary Education has implemented additional procedures for oversight and guidance of allowable costs and expenditures with grant funds. The implementation of the Procurement Card control process will also address requirements for timely and original documentation of expenditures.

 

The Management Letter communicated areas for improvement including: enrollment counts, approval of Board minutes within 40 days, and standardizing procedures for procurement of certain items from the District warehouse (especially computers) to include documentation. The District has already started implementing procedures to address these areas.

 

We had a very clean audit this year. This good report is due to the good work of the Finance Office and the Principals at their schools. The Budgeting For Results Committee expresses appreciation to the Audit Committee and is grateful for very distinguished community representatives on the committee with a financial background that insure an oversight of independence to the audit. With our financial challenges, we received unqualified opinions and very small items that appear as follow-up from the auditors. It shows that our financial house is in order in terms of controls.

 

Katharin Kelker moved that the Budgeting For Results Committee accept the responsibility from the Audit Committee to follow-up on items that need to be monitored next year so they don’t become findings in the FY2007 audit. Dan Farmer seconded the motion. The motion carried unanimously.

 

The Audit Committee will present the Annual Financial Report FY2005-06 directly to the Board at the December 18, 2006 meeting.

 

Financial Reports – November, 2006 (Unaudited)

 

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

 

Bills Paid – November, 2006 (summary sheet)

 

Katharin Kelker moved to recommend the Board approve the bills paid as presented for November, 2006. Joan Sleeth seconded the motion. The motion carried unanimously.

 

Health Insurance – Financials – October, 2006

 

The fund balance is $2.8M, which exceeds the Charter recommendation of a $2.2M fund balance.

 

Budgeting For Results

 

At their November Regular Board Meeting, the Board of Trustees expressed interest in asking for a mill levy in May, 2007. This Committee concluded last month that it would be appropriate to approach the new budgeting process from an operational (only) perspective FY2008. Thomas Harper provided budget forecasts through FY2009.

 

General Fund Budget Assumptions:

Revenue: Increase in Per Educator Entitlement of $790

Full Day Kindergarten

Increase in Basic & Per-ANB Entitlements & Special Education funding of 2.76% in FY08 and 2.97% in FY09

 

Expenditures: Cost of Full Day Kindergarten

Cost of Negotiations

Replacing cuts:

$175,000 Activities

$798,000 Deferred Maintenance & Weatherization

 

 

If full day kindergarten is removed from the budget, the Elementary General Fund would still show a $111K deficit. Implementation of full day kindergarten will cost our District $4.1M over what the State will fund. If we open Rimrock and Beartooth schools to accommodate 600 additional kindergarten FTE, schools would still be at capacity. A mill levy is not sufficient to cover this additional cost; we also need startup funds from the State. An additional deficit would occur the first year since we would not receive the ANB for the new FTE until the following year.

 

Rachel Stagg left the meeting at 6:50 p.m.

 

Thomas explained our buildings are an average of 49 years old. Data estimates we spent $39M less on building maintenance over the past 10 years than we needed. We should be spending close to $10M annually to maintain current physical facilities with respect to their age. Rich explained he tracks maintenance and operation costs per square foot compared to regional and national averages. That data indicates we have a $2-3M shortfall annually in our budget. Our custodial staff does an outstanding job of maintaining our buildings with available resources.

 

Thomas presented data on our enrollment as graphed by Larry Swanson. Since 1991, elementary ANB enrollment has declined and high school ANB enrollment has increased. Our General Funds have increased an average of 1% a year since 1991; however, the increase in tax revenue is insufficient to keep up with the needs of the District. The District has done a good job of managing dollars based on revenue received.

 

Plans for moving forward with our new Budgeting For Results based budget process include establishing teams to examine various pieces of our operational budget. Steve Struthers, with PSG, will train presenters and evaluators of budget FY2008 proposals before the end of December. Following this process, proposals will be prioritized, and their cost for service will be balanced against what services are wanted. This Committee may also receive this training.

 

Peter Grass left the meeting at 7:15 p.m.

 

Chair Getz stated next month this Committee must develop a FY2008 budget to present to the Board. Chair Getz will prepare a letter on behalf of the Committee to Thomas Harper and staff congratulating them on the excellent audit FY2006. We have good financial statements with unqualified opinions. Even though we are challenged financially, we are keeping the public’s trust with finances.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:21 p.m.

 

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder