Budgeting For Results Committee - Aug. 6, 2007

[Guest sullinss]

Proceedings of the Meeting of the

Budgeting For Results Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

Call to Order August 6, 2007

 

The Budgeting for Results Committee of Billings School District No. 2, Yellowstone County, and High School District No. 2, Yellowstone County met at Lincoln Center, 415 N. 30th Street, Billings, Montana, on Monday, August 6, 2007. Chair Katharin Kelker called the meeting to order at 5:40 p.m. and led those in attendance in the Pledge of Allegiance. In attendance were committee members Peter Grass, Don Stanaway, Joel Guthals, Peter Gesuale, Joan Sleeth, Katharin Kelker. Absent were committee members Mary Jo Fox, Stan Barr, Shanna Henry, Curt Prchal, Kari Altenburg, and Duane Smith. Also in attendance were Malcolm Goodrich, Jeff Greenfield, Tim Trafford, Jerry Hansen, Thomas Harper, Jack Copps, Kathy Aragon, Leo Hudetz, and Laura Tode.

 

Consent Agenda

 

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

1. Minutes of June 11, 2007

2. Addition of Andrew Youlden Performing Arts Memorial Scholarship Trust Fund at West High

Don Stanaway seconded the motion. The motion carried unanimously.

 

Comprehensive Insurance FY2007-08

 

Thomas Harper gave a brief overview of the renewal of the district’s comprehensive insurance for the fiscal year 2007-2008. He pointed out that overall, we had accomplished two items: an increase in coverage with a reasonable increase in premium, and an increase in the deductible to $25,000 form $10,000 which resulted in a premium savings of approximately $13,000. Joel Guthals inquired about what had been looked at in order to find ways to save money on the cost of the premium. Thomas explained that we have visits throughout the year by risk managers from our carrier that will review our processes and recommend area to limit our liability, as well as perform training where appropriate. These steps would reduce our premium over time. He stated that also he reviewed our educator’s liability and the errors and omissions area. Some of these claims are serviced by law firms that must qualify to provide service on an AIG Panel. We have requested a larger group of firms to apply to the AIG to qualify for the panel. This action could ultimately result in limiting a premium increase. Joel asked if there were any other things we could do, such as perhaps increase other areas of deductible. Thomas explained the next step would increase from $50,000 to $100,000. Thomas also explained that we had followed a thorough review process two years ago and it is found that most of those results are still true at this time. Several members wondered if it was time to perform a review again, or what should be the timeframe for reviews. The Chair reported it was her understanding that we had made a commitment for three years with Payne Group, so the recommendation would be to have a review next spring.

 

Tim Trafford asked that during the renewal proposal process, if any of the underwriting vendors had been changed. Thomas stated it was his understanding that the Payne Group had solicited RFP’s, but had not chosen any different vendors. Don Stanaway inquired how our service has been. Thomas replied that we have been very pleased with the service from the Payne Group. The chair stated that the items were presented for information for the committee, and she recommended the item be placed on the agenda again next spring to decide if an insurance review should be performed.

 

Bills Paid – July, 2007

 

Peter Grass motioned to recommend the Board approve the bills paid for July, 2007. Don Stanaway seconded the motion. The motion carried unanimously. Don Stanaway inquired if we pay our bills electronically. Thomas Harper and Leo Hudetz were requested to do some preliminary research about the possibility.

 

 

 

Health Insurance Fund – Financials – June, 2007 (Preliminary)

 

The Committee reviewed the Health Insurance Fund preliminary June 2007 financial reports. Thomas Harper stated that overall, the fund has experienced a positive year.

 

Chair Kelker asked Jeff Greenfield for comments since he sits on the Insurance Committee. Jeff stated that the plan has done well this year, even after experiencing changes in how we handle insuring our retirees as well as noting a move by participants to the higher deductible plan which in turn means the plan collects lower premiums.

 

Joel Guthals asked about the administrative costs and Jeff Greenfield replied that every time we have solicited bids, EBMS has been the low bid by far. Don Stanaway asked if we have good service, and Thomas Harper replied we have been very please with EBMS.

 

Joel Guthals asked Thomas Harper if he was satisfied that the fund was in sound financial status, and Thomas stated yes.

 

Year-End Financial Reports FY2006-2007

 

Thomas Harper presented an overall view of the year end reports, focusing mostly on the general funds of the elementary district and the high school district. He specifically pointed out three highlights:

a) revenue received exceeded our overall projection

b) the year went well as far as expenses

c) estimated reserve levels will increase – a projection of reserve levels through FY2008 was distributed

 

Chair Kelker entertained questions from the committee members.

 

Peter Gesuale asked what was contributing to the unexpected revenue. Thomas stated it was mostly interest revenue as well as tuition that came in higher than projected.

 

Joel Guthals asked what cost savings there had been and to what use those savings were directed. Thomas responded there had been less expended in utilities than budgeted. In the elementary district, the difference was used for one-time costs of reopening Beartooth Elementary. In the high school district, there were costs reallocated for payment of the Nova Net program and certified salaries that were at first slated to be paid by the Adult Ed Fund. It had been determined that these were more appropriate high school costs, as the group being serviced was at risk high school students rather than adult education students. There was also a portion of the human resource department and a portion of the business department that was planned to be paid from the indirect cost fund that was able to be paid from the general fund.

 

Katharin Kelker asked Thomas to review the year with regard to retirement and severance payout. Thomas responded that in the high school fund, the cost nearly matched what was projected in the budget. In the elementary, costs were nearly $350,000 more than had been budgeted. He noted that the average payout increased to nearly $45,000 per person from approximately $25,000 per person previously and that additional information was being gathered to analyze this change.

 

Don Stanaway asked about the unfunded retirement liability that he understood to be approximately $18 million and wondered if that was reported and if we set aside anything toward paying for that cost. Thomas replied that we budget for one year of retirement cost and the unfunded liability is a part of the audited financial statements that are prepared each year.

 

Peter Gesuale asked about the change in the average retirement payout and that it should be determined if this was a one-time occurrence or a trend that would continue and something that would require a budget increase.

 

Peter Gesuale also commented that he noted that there were variances in various budget areas with some overspent and some underspent. He wondered at what level of review is required to approve the budget changes – is it at the administrative level, or at this committee level, or at the board level.

Jack Copps commented that the administration had made some determinations and decisions regarding the Indian Achievement funds, based on some long-term goals.

 

Chair Kelker stated that historically, there has not been a rule about budget changes. In the past several years, it had been the board’s operational process to make some tough decisions at year end about spending or not spending of year-end funds. This particular year has been helpful in that the mill levy passed to make funds available to fund costs and the board has not had to make decisions and pick and choose. Peter stated he just wondered at what point we require a variance approval. Katharin stated she believed it would be a matter of policy and requested that Thomas find out if there might be suggested policies from other districts that we could review or something from MT School Board Association. Joel Guthals stated that it might be helpful to the committee to have a policy that would define a “material” variance.

 

Malcolm Goodrich commented that he recalls that in the past there had been numerous times that this committee has had to spend considerable time going over options and recommended decisions about year-end spending.

 

Preliminary Budgets FY2007-2008

 

Katharin Kelker noted that the committee had been presented with a packet with proposed general fund budgets for elementary and high school for FY2008. She commented that during the development process, the Budgeting for Results concept was applied to the operational costs, not personnel costs at this time. She also noted that the process is attempting to have a realistic budget and address actual costs.

 

Thomas Harper presented overall assumptions of revenue projections for FY08 and FY09 and spending authority projections for FY08 and FY09.

 

Chair Kelker stated she would like to open the discussion to any questions.

 

Peter Gesuale said he had several questions. In the revenue area, he asked if were changing our projections based on previous increases. In expenses, he asked about the increase in cost over the previous year in elementary special education. He requested that perhaps Thomas could review this item and report to the full board. He next asked about our process for budgeting for lane changes. He stated his concern that has seemingly caused confusion when we show an amount in the budget, but this is not where the actual spending appears. He wondered if there was a better process.

 

Next, Peter wanted to confirm that the amount shown in the budget for high school board contingency is the amount intended to be used to increase reserves and is not an amount available for spending. He also commented he would like to see the printed line of number 9002 no longer appear on the reports, as it is a zero and no longer a relevant matter. Lastly, he asked about the high school facility services budget and why it is reduced to nearly no budget. Thomas Harper responded that the cost of facility services is being paid from deferred maintenance money. It was also noted that outside contracts would be hired and paid from deferred maintenance money. However, we already employ the persons to do the work such as plumbers, carpenters, electricians, so we do not have to pay outside contracts. Instead, we can use the deferred maintenance money to pay the facility service budget.

 

Katharin Kelker stated it is possible we could examine our past practice of how we account for the budget for steps and lanes.

 

Joel Guthals notes that we could use these reports to analyze what result we expected and this is a methodology the committee could move toward. Next, he wondered if we are able to not spend all of the money budgeted in FY08 – would that place the unused amount in reserve and make those monies available for FY09.

 

There was discussion about the future use of funds saved from a previous year. It would require a budget amendment and the general consensus is that the practice is not recommended but could be used in an extreme and unusual situation.

 

Joel Guthals asked if there had been any amount identified in the budget for resource conservation management and use of those savings. Thomas commented we had not gotten that far along in the process.

 

Joan Sleeth asked about the projected enrollment used in the revenue projections.

 

Don Stanaway asked about using unspent money to be set aside in a fund that would help pay the unfunded retirement liability. It was noted that there are limited options available such as having reserves at a maximum, or as a way of funding the compensated absence fund. A long-term solution may have to be developed over time. Don Stanaway suggested there may be legislative changes that may have to be developed.

 

The Chair asked if there were other questions. Joel Guthals inquired what process would be followed to move forward with the Budgeting for Results. Katharin understands that specific questions should be directed to administration and final questions would come to the Board meeting on August 20th. Katharin requested there be a summary provided for the August 20 Board meeting that detailed what uses have been specified for mill levy funds.

 

Tim Trafford asked if there could be some way all committee members could benefit from questions and responses of members to administration. He stated he was not comfortable with the process where only one member is asking a question and not all committee members are a part of the response. The Chair suggested and it was agreed that questions could only be emailed to either the Superintendent or Thomas and they could reply to all committee members via board email.

 

Thomas Harper stated he had another item for discussion, which was the transfer of reserves in the High School Adult Education fund to the High School Flexibility fund. He stated the purpose would be to facilitate paying ongoing costs of the NovaNet system, which is being used more by at risk high school students than by the adult education program. He stated the process would require a recommendation to the Board, then a hearing to be held during a board meeting.

 

Peter Gesuale stated he was somewhat uncomfortable with permissive levy funds being transferred to another fund and that he would want to have a clear understanding as to where the funds will be spent. Jack Copps stated that the proposal would be clear that the funds transferred into the flexibility fund would be used only to serve this at-risk group.

 

Chair Kelker stated that if there were no objections, she would present the matter at the agenda setting meeting.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:50 p.m.

 

 

 

 

Katharin Kelker, Chair

 

 

 

 

Jeri Anton, Recorder