BFR Committee - March 05, 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

 

March 05, 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, March 05, 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, Dan Farmer, Stan Barr, Duane Smith, Jerome Chvilicek, Don Stanaway, Joan Sleeth, and Katharin Kelker. Absent were members Curt Prchal, Shanna Henry, Kari Altenburg, and Peter Grass. Also present was Superintendent Jack Copps, CFO Thomas Harper, Director of Facilities Rich Whitney, HVAC Tech Herb Grice, and Jerry Hansen.

 

Communication From the Public

 

Jerry Hansen addressed the Committee summarizing a report he compiled from the last four years of Billings Public Schools audit reports. He stated revenues exceeded expenses in all four years; however, the ratio has been declining steadily. $57M has been invested in the schools in net assets by the community. The unrestricted deficit, under net assets, increased $2.5M. Compensated absences are basically funded on a “pay as you go” basis and exceeded $2.5M last year. The combined General Funds percent revenues of fund balance have decreased from 7% to 4.4% over the four-year period. Capital assets have increased from $43M to $60M in the last four years mainly because of bond issues and the building reserve levies. Jerry would like the actuarial numbers for the health insurance fund incorporated into the District’s financial statement. The estimated liability for retirees’ health insurance will need to be reported on the 2009 financial statements; and, Jerry estimates that to be about $4.6M.

 

Consent Agenda

 

Katharin Kelker moved to recommend Board approval of Consent Agenda items as follows:

1. Minutes of February 05, 2007

2. Addition of Pre-School Special Funds Trust Account at Lincoln Center

3. Addition of Musical Instruments Trust Account at Poly Drive Elementary

4. Addition of Emergency Need Fund Trust Account at Rimrock ECI

Dan Farmer seconded the motion. The motion carried unanimously.

 

Energy Conservation Report/Recommendation for RFP

 

At the last meeting, Energy Education, Inc. addressed the Committee with a marketing proposal relative to energy conservation. Several Committee members were charged with checking references with other school districts who had engaged this company, and report back to this Committee.

 

Rich Whitney explained that typically these companies contract full control over the building management software. Our District has several different systems of building management software. Herb Grice, HVAC Tech, demonstrated the software system used at Lewis & Clark Middle School to manage the HVAC equipment. Newer systems are on the north side of Senior High, West High Academy, 3rd & 4th Floor Lincoln, Arrowhead, Washington, Poly, Newman, Sandstone, Bench, and a couple other schools. There are still 15 buildings with antiquated software systems.

 

Rich recommends making a decision to take advantage of three areas to include: 1) performance contracting with upgrading controls; 2) increased auditing of utility bills; and, 3) a program similar to what Energy Education Inc. provides. Performance energy contracting gives us the opportunity for quick pay-back items which in turn allow us to fund longer-term pay-back items that are important to the District and will improve the educational environment (i.e., windows and other facility enhancements).

 

Kathy reported on her reference checks regarding Energy Education, Inc. The Energy Manager for Laramie County SD in Cheyenne, WY reported over 8 years they have had a 26% cost avoidance savings, much of which was attributed to managing staff behavior and making changes in energy use. Although they accomplished change in 1.5 years, Energy Education, Inc. is a four-year contract. There is a company called Integrated Energy Systems that uses some of the same methodology for a shorter contract period and integrates engineering and people management.

 

Kathy’s report from Pocatello, Idaho indicated over $1M savings; they could have ended the contract after 1.5 years, but the buyout was too expensive. The key to success is the energy manager; and, a district could possibly obtain the same savings without the company if they hire an experienced and talented energy manager.

 

Thomas talked with districts in Washington, Idaho and Oregon. Most of these were new contracts and most advised negotiating the contract amount, and stated the role of the energy manager was very important.

 

Rich talked with a district in Michigan who stated the key to the success of their program was meeting with all school staff and PTA before they started and to clearly articulate their goals and benefits to the district. Other districts comparable in size with ours seem to have a larger Facilities staff to help with maintenance.

 

Dale called Walla Walla, WA, Ogden, UT, and Pocatello, ID districts and received similar reports. The key to success in the energy savings program seems to be a determined, committed, personable energy manager.

 

Katharin is interested in finding out more information about the Integrated Energy Systems Co. and the performance energy contractors screened by the State. Rich said EEI is willing to work with a company doing performance contracting but believes we need to have our steps lined out before we begin the program since EEI insists on total control including the hiring of the energy manager.

 

Jack Copps said it’s clear that there is definite savings, but he would like an RFP with a contract for less than four years. He likes the idea of performance contracts and believes an outside consultant is necessary to accomplish behavior change.

 

Duane is somewhat skeptical of the cost of the EEI contract. He thinks it would be key to hire a good energy manager that has worked with EEI and knows the software and the program.

 

Dan Farmer is in favor of mechanical systems with software that shows solid results. He agrees it would be necessary to hire an outside contractor to accomplish behavior change. Dan suggests structuring an RFP to address concerns regarding length of contract, measurability of results, and carryover to some kind of a permanent solution perhaps via a permanent energy manager.

 

Don Stanaway prefers learning about a project and handling it internally rather than hiring an outside firm. It’s important to educate and involve all staff to make the project successful.

 

Dale would rather hire an energy manager to accomplish savings rather than hire an outside firm at a cost of approximately $1M for four years. Our current energy monitoring programs together with an advisory group of local experts could assist an energy manager to accomplish the same energy conservation goals.

 

Stan Barr stated many mechanical improvements could be made in our buildings to conserve energy before we would opt to engage in a new program. An example would be replacing eight old large inefficient garage doors at the Career Center and better insulation.

 

Jack said Energy Education, Inc. looked attractive because we have the human resources available to try to conserve energy; whereas, we do not have resources to invest in equipment to realize future savings. He would be in favor of trying to conserve within the district first by utilizing advisors without a significant investment of resources.

 

Duane Smith would rather see the District spend the money on programs to improve the energy efficiency of the buildings since it’s easier to manage equipment rather than modify behavior.

 

Katharin stated the funding for Energy Education, Inc. would be dollar savings rather than cash in hand to spend. Katharin is in favor of hiring an energy manager with advisory help.

 

Dan Farmer noted the City of Billings is currently engaged in an energy policy committee activity. There may be some advantage in checking with them for information.

 

Rich said it seems the number one issue is hiring a full-time energy manager. Energy Education, Inc. could educate that person to provide the best opportunity for success. He believes we would need that support for about 1.5 years, and then could use community resources to sustain the program long-term. Rich supports doing a RFP. Washington, Oregon, and Idaho have a self-help user group with good resources to explore. Rich would ask for an energy manager and two additional HVAC techs to support the additional time required.

 

This committee supports Administration looking first at the option of using our own energy manager for 1.5 years with advisors; and, if that’s not possible, we would go with an outside firm.

 

Katharin Kelker moved that the Committee recommends to the Board that the Administration be charged with evaluating: A) the employment of an energy manager with advice and training provided by local resources; or, B) a Request for Proposal from an energy conservation company not to exceed a two year commitment which would also include an energy manager. Administration will make an appropriate recommendation to the Board. Dan Farmer seconded the motion. The motion carried unanimously.

 

Financial Reports – February, 2007 (Unaudited)

 

The Committee reviewed the unaudited Financial Reports for February, 2007.

 

Bills Paid – February, 2007

 

Katharin Kelker moved to recommend the Board approve the bills paid as presented for February, 2007. Dan Farmer seconded the motion. The motion carried unanimously.

 

Health Insurance – Financials – January, 2007

 

The overall health of the insurance fund has improved from past reports. The District has an annual voluntary health assessment program for employees. A District wellness program is being explored considering additional resources can be found to support it and ensure its success.

 

Budgeting For Results

 

The Committee reviewed data and costs for Compensated Absences (service credit and severance pay) and their unfunded liability. These additional benefits have been in effect in our District since 1989. Prior to FY2006-07 only administrative and certified employees had these benefits; however, currently all full-time employees have these benefits. 50% of the staff are age 54 or older. The average severance pay ranges from $25K-$45K. The only way to reduce future benefits would be through bargaining with all groups. The age of the employees, together with health care costs, and compensated absences present a challenging financial situation.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:30 p.m.

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder