BFR Committee - January 08, 2007

[Guest sullinss]

Proceedings of the Budgeting For Results Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

January 08, 2007

 

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, January 08, 2007. Chair K. Dale Getz called the meeting to order at 5:30 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were: K. Dale Getz, Shanna Henry, Joan Sleeth, Dan Farmer, Peter Grass, Stan Barr, Jerome Chvilicek, Rachel Stagg, Duane Smith, Kari Altenburg, and Curt Prchal. Absent was member Katharin Kelker. Also present were CFO Thomas Harper, Jerry Hansen, and Bridget Ekstrom, Vice President, Public Finance, with D.A. Davidson & Co.

 

Communication From the Public

 

There were no public comments.

 

Credit Rating Process for Bonds

 

Bridget Ekstrom, Vice President, Public Finance, with D. A. Davidson & Co. in Bozeman was invited to present information regarding marketplace trends that influence bond issue ratings. They work with schools to collect information for the rating process and help with things that make the bond issue marketable to the underwriter to secure the best interest rate possible.

 

Montana has a competitive sale process whereby in selling the bond the district cannot go directly to specific companies to set the interest rate. Instead, they go through a competitive sale process where a prospectus with all credit information is sent to a list of potential bidders. On a specific date bids are received on the bond issue, and whoever bids the lowest interest rate is awarded the sale.

 

By State law every school district has a debt limitation based mostly on our ANB enrollment figure. Our District has an estimated debt capacity of $111M in the Elementary District and $131M in the High School District. The current estimated State share of a bond payment for reimbursement would be 44.11%, or $192K in year one in our Elementary District; and, 38.18%, or $1M in year one in our High School District. The Elementary share would be higher once our 2004 year bonds are paid off. Estimated mill levy impacts on proposed general obligation bonds were presented as a point of information.

 

A good credit rating helps secure a lower interest rate on bonds. Rating agencies examine past audits and trends and capital improvement plans. The ending fund balance as a percent of expenditures should be in the range of 8-10%. Rating agencies like to see districts implement policy regarding maintaining/improving reserve levels. Our High School District’s fund balance at 2% and our combined Elementary and High School District fund balance at 5%, would probably cause our rating to be downgraded from A-1 to A.

 

Chair Getz reviewed the chart on district-wide maintenance of property, plant and equipment which estimates our district to have net deferred maintenance actual and projected expenditures through 2008 in the amount of $73M. Most schools in the State are in a state of disrepair.

 

Consent Agenda

 

Peter Grass moved to recommend Board approval of the Consent Agenda item as follows:

1. Minutes of December 04, 2006

Dan Farmer seconded the motion. The motion carried unanimously.

 

 

 

Financial Reports – December, 2006 (Unaudited)

 

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

 

Bills Paid – December, 2006 (summary sheet)

 

Rachel Stagg moved to recommend the Board approve the bills paid as presented for December, 2006. Peter Grass seconded the motion. The motion carried unanimously.

 

Health Insurance – Financials – November, 2006

 

The fund balance is $3.1M, which exceeds the Charter recommendation of a $2.2M fund balance. Thomas explained retirees pay the full insurance premium; however, active employees subsidize the retiree premium. Next year the financials will reflect the liability of post-retirement benefits which is approximately $2.2M. The level of overtime for the Insurance Technician was questioned. Thomas will follow-up on this; however, he explained we recently implemented a new retiree insurance plan.

 

Budgeting For Results

 

Thomas explained Budgeting for Results training for submitting program offers will be provided for all Budget Managers in operations. Completed program offers may flow through this Committee for review before going to the Board for approval. Questions were raised regarding how to complete the forms and if it was based on sites or programs, and how it applied to their area. A copy of the Results & Indicators will be sent to Committee members. Chair Getz summarized that we need clearer instruction and consistent guidance to the sites; and, this Committee wants to be involved in the process. The objective is to start at the site level to budget for what they are trying to accomplish based on what the community has requested us to do; establish the cost and build a list to prioritize programs.

 

Thomas reviewed the General Fund Budget Forecast FY2007-2008 with different assumptions including the Governor’s proposed budget and all-day Kindergarten.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:20 p.m.

 

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder