Special Board Meeting August 14, 2007

[Diane Blevins]

Proceedings of the Board of Trustees

District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

August 14, 2007

 

Call to Order

 

The Special Meeting of the Board of Trustees of School District No. 2, Yellowstone County, Montana, and High School District, Yellowstone County, Montana, was duly held at The Lincoln Center, 415 North 30th Street, Billings, Montana, August 14, 2007, at 12:00 p.m.

 

Those present included: Trustees Joel Guthals, Mary Jo Fox, Peter Gesuale, Dawn Achten, Malcolm Goodrich, Tim Trafford, Superintendent Jack Copps, and District Clerk Leo Hudetz. Trustees Kathleen Aragon, Katharin Kelker and Sandra Mossman were absent.

 

Registered guests included Jerry Hansen and Jeff Weldon.

 

Communication from the Public

 

The Board recognizes the value of public comment on educational issues and the importance of listening to members of the public in its meetings. The Board also recognizes the statutory and constitutional right of the public to participate in governmental operations. The Board encourages members of the public to participate in and express opinions about issues important to the District. This part of the board’s meeting is dedicated to public comment on any public matter that is not on the agenda of this meeting and is within the jurisdiction of the Board of Trustees. Members of the public may also address particular items on this agenda either now or at the time the Board considers the particular item.

 

Jerry Hansen addressed the Board regarding the transfer of funds from Adult Education to the Flexibility Fund as follows: The requirements to transfer money is at least threefold: it must improve the efficiency of spending, it must save the District money, and the purpose for which it is transferred, because it is a non-voted levy must be the same purpose for which the funds were raised. The District cannot support this transfer because it would not improve the efficiency of spending. The reason there are excess reserves in the Adult Education fund is because the budget process of the District is inefficient and fails to properly predict the expenditures of the Adult Education fund in prior years. The 2007 Adult Education budget of $1,594,000 last year was overstated by $449,000 from actual expenditures of $1,145,000, that is a 39% under spending of expenditures from the budget. 39% in a budget is unacceptable. Taxpayers were levied $449,000 more than what was required to fund the Adult Education fund. I would also remind you that Montana code states “if any appropriation item of a final budget provided for payments of wages or salaries to more than 1 person, the District shall attach a budget and a separate listing for each position of employment with the budget amount of compensation for each position”. I have never seen that done. I would like to also, on page 5, like you to review the activities in the Adult Education fund in the high school district for 2004 through 2007. You will see that the total revenues increased from $618,000 in fiscal year 2005 to last year’s $1,501,000. The expenditures in each of the years with the exception of 2004, there was always a surplus budget and if you look at the fund balances as a percentage of the expenditures, they ranged from 46.8% to 89.69% where it currently stands. The law requires no more than 35%. So the fund balance in the Adult Education fund has increased from $321,831 to over $1,000,000 today. And, in fact, if you look at the proposed budget, which I have in that first column of proposed fiscal 2008 budget, I believe that even with the proposed budget the Adult Education fund will be over funded. The reason for that is that the proposed budget includes the $296,000 proposed transfer as an expenditure and leaves 35% of that, or $103,600, in reserves. So there is excess reserves and it is a result of the budgeting processes, there have been no savings and the budget process has been inefficient at best. Taxpayers have been over charged for Adult Education and taxpayers must receive a credit for these over charges. Now, let’s turn to, can you spend Adult Education funds in the flexibility fund? Adult Education students are those students that are 16 years of age and are not included in the average number belonging. So Adult Education students and high school students are two mutually exclusive groups and you should account for the funds for both groups. I think it would be difficult, while it might be possible, to report and record adult education spending in the flexibility fund. It would be more efficient to allocate individual expenditures in each fund between the adult education fund and the general fund. We do that all the time, utilities are always allocated between the elementary district and high school district, I see no reason why, for instance, the NovaNet expenditures could not be allocated between the adult education fund and the high school fund. Now let me get back to the 35% reserves, on page 7, I do not believe the transfer meets the requirements of Montana law, therefore the $296,000 should not be transferred. Now, let me turn to the flexibility fund. The flexibility fund is monies that the State has left over after they allocate to the general fund. They allocate those to the District and the District may have a voted levy to increase the flexibility funds by no more than 25%. The flexibility fund in the current budget is $188,000, 25% of that is $47,000 so I believe the maximum that you can increase the flexibility fund by is $47,000. This transfer of $296,000 would exceed that limit by $249,000. So let me sum up. There has been no support that the transfer of $296,000 would improve the inefficiency of spending, nor would it result in savings. There would be no assurance that the money was used for the purpose directly for which the funds were raised. Indeed, the excess funds in the adult education fund were the result of poor budgeting in the past. This was caused by inefficiency in the budgeting process and there would be no savings to the District. This transfer would result in the District spending $296,000 more than is currently available in the flexibility fund, that is not savings. Adult education students and high school students are mutually exclusive groups. All adult education money must remain in the adult education fund to insure that they are used for adult education. The District has overcharged the taxpayers $612,000 for adult education in the past years. This full amount must be used to reduce the fiscal year 2008 tax assessment and bring reserves to 35% of the operating budget, the maximum required by law. It would be impractical and inefficient to track and report monies transferred to the flexibility fund to insure that they are being spent exclusively for adult education. Like I said before, joint expenditures could be allocated between the adult education fund and any other fund in the District, that is the way it should be accounted for. This proposed transfer does not meet the requirements of Montana law and the transfer should not be approved by the Board. Thank you.

 

Transfer Between the District High School Adult Education Fund and the District High School Flexibility Fund

 

Trustee Goodrich stated the reason we are here at this Special meeting is, because this is a component of our next budget and it will determine how the budget gets to us for the final approval on Monday so we make a decision today, either yea or nay. The budget will have to be changed to conform what we agree to today. In order to finish up that component part of the 07/08 budget, we have gone ahead and scheduled up this Special Meeting.

 

Superintendent Copps reported, as there is a question as to whether or not this is legal, whether it might be wise to confer with our attorney to provide that. The Chair stated we could because at some point we will have to establish a link between the legal basis for being able to do it and the rationale for doing it and see if it does conform to statute.

 

Jeff Weldon, District legal counsel, made the following statements. In fact, as maybe an introductory note, it seems to me in working with boards, when boards sometimes get cross ways with themselves or patrons, it is when they don’t really understand the framework before them, and so, I am glad that you take this moment to kind of figure out what your decision making framework actually is in the context of the statutes that govern the funds that you are all responsible for. So, let me provide that framework, I’ll try to distinguish between what are legal queries, and which are political queries. That is a very important distinction, I think in this particular process. So, in your packet, please turn to page 5 of the packet, which is the text of a Montana statute, regarding transfers between appropriation items, or transfers from fund to fund. Montana law does expressly provide that you can transfer monies between funds. In this particular case, the question is can you transfer money between one budgeted fund, your adult education fund, and another budgeted fund, your flexibility fund. So, let us look at 20-9-208 Sub. 2, and then more specifically, Sub. A i. Except as provided below, which we will talk about, transfers may be made from one budgeted fund to another budgeted fund. Let us stop there. There is no question that your adult education fund is a budgeted fund, nor is there is any question that your high school flexibility fund is a budgeted fund. We are talking about two budgeted funds so we are in the right framework. So jumping to, ‘whenever the Trustees determine’, so that is the next element, there has to be a Board determination which is the purpose of your meeting today. ‘In the Board’s discretion’, that is a very important point here. It is your discretion to decide whether or not these elements actually exist. So, we will meet the precise elements of the legal requirements, but ultimately, in my opinion, there is a political decision that needs to be made. Now, why is that important? Because, if ultimately, this is presented to a District Court judge, the District Court judge is going to look at this and say ‘OK, this was a discretionary move on behalf of the Board, the question here is, did the Board ever abuse its discretion in this particular process’. My experience is that District Court judges do not like to second guess other elected officials or trustees. I have not had this particular question before a District Court judge but I have had other discretionary decisions before District Court judges, and that is always the question, it is well, show me the evidence of some sort of abuse of some sort of discretionary authority. That is the third element I wanted to point out. So, it is your discretion to decide if the transfer of the funds is necessary to improve the efficiency of spending within the District. Or, if an action on behalf of the Board and District resulted in savings in one budgeted fund that could be put to more efficient use in another budgeted fund. There lies the decision you all have to make, whether one or both of those conditions actually exist. Because if they do, it is your discretionary authority to transfer funds between one budgeted fund to another budgeted fund. Now, the final element I want to point out, and this is where we get down to the details that your administration can provide, is the next sentence that says ‘transfers may not be made when funds approved by the voters or with funds raised by a non-voted levy unless the transfer is within or directly related to the purposes for which the funds were raised’. Your adult education funds are raised by a non-voted levy. Non-voted, correct Jack? I think that is correct. So, we have that element present. So what happens then? That means then that the use of the funds once you have transferred it to your flexibility fund, has to be within or directly related to the purposes for which the funds were raised. So, the question is what were the funds raised for? Mr. Hansen made one observation concerning adult education, they are raised for ‘adult education’. The definition for adult education is found on page 4 of your packet and that is ‘the instruction of persons 16 years or older and are not regularly enrolled full-time pupils for ANB purposes’. Your high school population and your adult education population are not mutually exclusive, in my opinion. You may well have a population and do in your high school program who actually meet the definition of adult education. When you look at the use of the funds once you have transferred them to the flexibility fund for your high school program, per that requirement that was back in Section 208, you have to use those funds for the purpose they were originally raised which is the education of people who are at least 16 years or older and that are not regularly enrolled, full-time pupils in your District. That is your decision-making framework and hopefully that makes a line between what is the legal requirement and the political requirement of this particular process. If you have questions, I’ll be here throughout the meeting.

 

Malcolm Goodrich, had a couple of questions. I noticed that the Statute 20-9-208 talks about a properly noticed hearing, is that anything other than the standard notice that we give of 48 hours? No 10 day? Jeff Weldon responded no, that you give adequate notice for a special Board meeting when you meet the statutory requirements of a special Board meeting, which is what you are having today, which is a 48-hour requirement. Malcolm Goodrich asked his next question – on 20-7-701, it talks about adult basic education and that is the over 16-years of age. The anomaly, I think you pointed out, my son for instance was a senior in high school and graduated was 17 when he graduated so we definitely have people over 16. I am a little concerned, though, as it says in 20-7-705 ‘a separate adult education fund must be established when an adult education program is operated by a district and community college district’. Does that imply that the 16-years of age or older references a people who are in a specific kind of a adult program as opposed to 17-year olds being in high school? Jeff Weldon replied that the adult education fund describes your adult education program or funding for that particular program. When you overlay that additional statute you are talking about, the transfer of funds between budgeted funds to other budgeted funds. The legislature contemplated using funds raised within one fund to fund another, so that is why, I think, they reference back to purpose that they were originally raised. My conclusion is the purpose they were originally raised was to offer education to people who are at least 16 and not regularly enrolled. Malcolm Goodrich stated I understood your argument completely and I am not saying I necessarily disagree with it but I am somewhat concerned that the definition of what constitutes an adult is within the statue you are talking about in adult education funds and programs as opposed to a general definition of what is an adult within a high school district. Jeff Weldon – right, now the question, as I understand it is whether or not an adult education program can only be housed in this particular district, in the Lincoln Center Adult Education. Malcolm Goodrich – or whether it is a separate and distinct program as opposed to having 17 and 18-year olds in high schools going to regular classes. Jeff Weldon – Right. I think that you have a framework to design a program for kids who are not regularly enrolled and then the legislature said they have to be at least 16-years old and here is one option as to how to educate them in an adult education program. When the legislature said you could raise funds in this particular program, transferred to another budgeted fund like your high school program, the legislature is giving you the authority to use funds raised in one place to do a similar function in a fund for another program, a high school program. Does that address your question? Malcolm Goodrich – yes. Does anybody else have any questions regarding the legal issues?

 

Peter Gesuale – Jeff, in the 208 statute, where you were reading ‘in the discretion of the trustees’ transfers necessary to improve the efficiency of spending within the district or when an action of the trustees results in savings’, on that second part on ‘when an action of the trustees results in savings’, we really haven’t taken any action as a Board that resulted in these savings, so are we relying on the first half of that? Jeff Weldon – Not necessarily, I think you can question, I am not a historian of your adult education program, but it seems to me that if you have the authority to raise funds which you have, and you did not spend them, as you could have, then that is the action of the trustees that results in savings. Does that make sense? Peter Gesuale – Yes.

 

Malcolm Goodrich – anything else from Jeff? We may call on you again once we have some of the information from the District. Superintendent, can you give us information as to why this is necessary and what it will be used for?

 

Superintendent Copps -- Once again, I want you to think about the definition of an adult student and it would be of 16-years of age or older and it would be a student that is not regularly enrolled full time in school. The question is, do we have students that fit that category? Very obviously, we do. Let me, before I talk about those students, let me talk about what brings us here today. The adult education program has decided to discontinue some services at the recommendation of the Office of Public Instruction, and discontinue some services that they had previously provided. And the question is, whether or not we should continue those services outside of the special education program. We have students again who are 16-years of age or older who are not regularly enrolled full time, in fact, we could describe them as being eradicately enrolled. We could describe them at serious risk of dropping out or already dropped out. We could describe them as students that are under long-term suspension. We could describe them as students that may be temporarily not enrolled in school. We have a program, for example, that is called a Transition Program and I likened it to another group this morning to kind of a halfway house. It is trying to help students understand, giving them one last chance, this is to help you understand the importance of education. You aren’t regularly enrolled in school, you are eradicately enrolled in school, you need to make a decision, we want you to make a decision based upon all of the information that is available to help you do that. In this district, we have long-term suspensions. Last year, I think we had about 80 long-term suspensions. That seems like a lot but when you break it down, that is less than one-half of 1% of our student population. That is still a lot. When we do long-term suspensions, those students are no longer enrolled in our schools. They are un-enrolled. In most of the cases, they are in that 16 to 17 age range. They are at great risk of dropping out. We need to provide some services if we possibly can to help them make some decisions to find their way through the long-term suspension and hopefully to re-enroll again. Is there a payback? There is a significant payback. Think about this, we have 80 long-term suspensions. If we keep 20 of those students, just 20 of them in school, the first year alone, they will generate $120,000 from the State. And then if they stay in school for an additional 2 years, suddenly you are at $240,000. And so on, and so on. I have said for some time that we just need to consistently think about those students who are at great risk and we need to do whatever is necessary whether it be a dropout interview to see if we can pick up the pieces and bring the kid back, whatever it takes. But when a student is eradicately enrolled, when the student starts to drop out, when a student is on temporary suspension, we need to do something about that. And that is the reason, I think, these funds should be considered for transfer. Obviously, it is important that we not do this if it is not legal. That is your decision, you have to make that decision based upon counsel. But if it is legal, I would recommend to you strongly that we do this, we will get great mileage from this. We even have the potential with these resources to actually not only sustain some of the programs that we have in place but we will also have the opportunity to enhance some of the programs, to actually have some people who will be working directly with these students in a greater contact than we already have at this particular point. In the flex fund, the monies carry over so it isn’t a race to see whether or not, how fast we can use the money or we aren’t even putting it in a situation where we need to decide how we will use all of the money that year. We can pace our time and we can figure out how we want to do it over 2 or 3 years. I am very concerned that we will lose some of our funding for NovaNet for these students because that is the way we help students in transition. And that is the way we help some of our eradicately enrolled students. And those programs have been very successful though this does not qualify for this particular program, as I mentioned previously, in our summer credit recovery program, which is NovaNet, we had over 400 semester credit hours recovered just this past summer. And I would argue at great length that we actually prevented students from dropping out by providing them with an opportunity to make those credits up and actually stay with their class. In fact, I said again this morning, the poster child is the one who said, ‘now I can stay in school, now I won’t drop out’. We need to do whatever we can do to keep students from dropping out. We need to do whatever we can to take students who have dropped out or are temporarily out of our system to get them back into the system and that is what the money would be used for. I realize Mr. Hansen’s concern about keeping track of the money as it is in the flex fund and I sense that when this money is transferred, it will be monitored very closely and we will need to be very strict in terms of how we use this money in making sure it goes to the right individuals with the right services.

 

Malcolm Goodrich – Just to clarify my understanding, this money is going to be used for people who would be defined as an adult under 20-7-701 in that they are kids who are over 16 years of age but who may be sporadically enrolled certainly not enrolled full time in one of our high schools? Superintendent Copps – Yes. Malcolm Goodrich – and that the money is not going to be used for kids who are over 16 but who are full-time enrolled? Superintendent Copps – Correct. Malcolm Goodrich – and is there a way then to earmark the flex fund itself so the money is segregated and kept there and used only on an as-needed basis for this category? Superintendent Copps – There is. Malcolm Goodrich – Is that something that we can monitor, that not only we can monitor, but the general public can monitor on an ongoing basis? Superintendent Copps – Yes.

Malcolm Goodrich – Does this, because this is an unvoted levy, mean that we have to consider this adjustment in going forward in the budgeting process for adult education, in other words, it sounds to me like we are just transferring some of these funds over to the flex fund to take care of the need that we have within the District as a whole rather than in a specific program, but the next year, are we going to be levying the same sort of money or are going to have to change that? Thomas Harper – There are a couple of things here – if we had done this prior to June 30th, then this would have been a direct transfer from the reserves – since it is after June 30th, we are now into the FY08 fiscal, this is an operational reserve. It is a technical term but at the end of the day it has the same impact. Malcolm Goodrich – So I am not asking you to commit on a budget that hasn’t been produced yet but, I guess, theoretically, all things being equal, assume relatively equal income and expenses may be adjusted for inflation or whatever, it sounds like the adult ed non-voted levy amount would probably be less for the next fiscal year budget. Thomas Harper – Yes, the next year’s actual budget will likely go down.

 

Malcolm Goodrich – Does anyone else have any questions? We’ll go Joel, Mary Jo, Peter and Tim. Trustee Guthals – I have a couple of questions. First of all, I wanted to clear up the relevance, if any, of Section 20-9-544 having to do with the flexibility fund levy. Now my question could either be for Jack or Thomas or Jeff, are we dealing at all with a flexibility fund levy? Thomas Harper – No. I think the State has to allocate the money to the flexibility fund. How we have funded it, at least in my opinion, is with an optional grant that we actually have the choice of putting it in the general fund or putting it in something else. Getting back to Mr. Hansen’s term, I don’t think that comes into play at all here basically because it is not a levied amount. Joel Guthals – Jeff, do you concur with that? Jeff Weldon – Right, Mr. Hansen’s concern goes to the amount that you can levy for the flexibility fund. Transfers are extraordinary, they are outside that realm, so yes, I agree. Joel Guthals – So we’re not dealing with the flexibility fund levy here of 25% limit, is that correct? Jeff Weldon – Correct, those are the rules that govern how much you can levy for that fund. Joel Guthals – All right then, the next question I’ll throw it out for whoever would like to answer it. It occurs to me that we have a situation that because of, first of all, Board action taken with respect to the adult ed budget and action or recommendations by OPI that we can no longer efficiently utilize the funds in adult education, that can now be officially used by the high school district to take care of the needs of these children that are 16 years of age or older who are not regularly enrolled, full-time pupils. Do I have that correct? Superintendent Copps – Yes. Joel Guthals – So that would seem to meet the first criteria of the statute, or exercise of trustee discretion, that the transfer of funds improves the efficiency of spending within the district, do I have that right? Superintendent Copps – Yes. Joel Guthals -- Ok, then, the next criteria for the exercise of discretion is that this action, action of the trustees results in savings in one budgeted fund that can be put to more efficient use in another budgeted funds. So we have actions that have resulted in savings in the adult ed fund which has resulted in basically extra funds available in adult ed and now those funds can be put to more efficient use in another budgeted fund, namely the flexibility fund. Do I have that right? Superintendent Copps – The savings already occurred in the adult education fund and we would be using those savings to support services that previously existed and to enhance some services. Joel Guthals – Ok, so this would be using those savings in a more efficient use, than just letting it go to waste. Superintendent Copps – Right. Joel Guthals – Then, the last thing I wanted to ask about is that over the course of the last couple of years I have had the opportunity to observe the NovaNet system, both as used in the high schools and as being used by the adult ed department, and including the recovery program the one that was recently instituted and put into place at the Lincoln Center, for the at risk students, and what I want to make sure is that those programs that I observed are the programs that you are talking about continuing to fund with this money, is that what we are talking about? Superintendent Copps – Yes, some are and some are not. When it comes to the freshmen and the credit recovery program for those freshmen, first of all, the chances are that those students are not 16 years of age so we are talking about the continuation of those programs to the secondary students. But there are other programs, it could be the Transitions Program and it could be some of the assistance that we could be providing for students who are temporarily unenrolled because of suspensions and that sort of thing. But it is the NovaNet program that you are talking about and the bottom line to all of this is that what is really in jeopardy is the NovaNet program. Because what the NovaNet program has been providing, is a very highly valued program in our system for at risk students and that includes students that are, of course, under 16 and not regularly enrolled or regularly enrolled as well as the other students who are over 16 and what we are trying to do right now is protect the students that are over 16 that fall in that category. We still have another issue, and that other issue is frankly those kids below 16 and we spent 45-minutes this morning in just trying to talk about how we are going to cover those expenses for those students under 16. But the NovaNet program, I mean the evidence is already in and it is clear, it is one of the best things we have going for at risk kids. Joel Guthals – That is all the questions I have, thank you.

 

Mary Jo Fox – Jack, Superintendent Copps, could you tell me if the funds that would be transferred, would they go partially to the summer program, in part of the summer program that we just had? Superintendent Copps – Only if we had, it would only go toward the summer program if we had students who were over 16 and were not regularly enrolled, so it would probably be somewhat unusual that we would run into that situation in the summertime. Mary Jo Fox – Do you know how many kids that were in the summer program were under 16 this year? Superintendent Copps – I don’t have the number, I would guess the majority of them are, probably 80%. Mary Jo Fox – 80% are under 16? Superintendent Copps – Yes. Mary Jo Fox – So how do we make sure that these funds would not be spent for kids that were below that threshold? Superintendent Copps –Well, the reason we would be able to make sure because when we apply the NovaNet program we actually had, you can’t use the NovaNet program without identifying the students that are using the program. Mary Jo Fox – So we can make sure that those funds that we transfer will not be spent on kids under 16. Superintendent Copps – Right, we would make absolutely certain those monies are not used for under 16. Mary Jo Fox – Are the students in the summer program currently counted for ANB? Superintendent Copps – Yes. Mary Jo Fox – So they are regularly counted then. Superintendent Copps – Yes. Mary Jo Fox – So, I don’t have anything against, I have everything in favor of the NovaNet program, but one thing that trips me up is when the language says that these are regularly counted for students in our system, and they are counted for ANB, then how can we say that they are, but they are not? Superintendent Copps – First of all it is a summer program. It is not during the course of the regular year but we know is that those students were, full time enrolled the previous year. We do have some indications that there are some students who simply are not going to come back and the numbers are small. I am just saying that the numbers are small. Let me take this one step further and tell you how we would implement this kind of program for students over 16. We had a discussion this morning about actually having evening classes for students over 16 who are not regularly enrolled in school and providing them with opportunities to recover credits to regain their position, to actually come back into the school system. It would probably be a setting entirely different than what you see in the summer time. We actually talked about using these resources to contract with places like Tumbleweed, where we can deal with some of these students who are in circumstances that we are not prepared to deal with. So we can have counseling services available to actually provide those services. We would actually be able to even provide the NovaNet services on site at Tumbleweed if we wanted to. But we have a lot of options before us at this point as to how we would do that and how we would protect those resources so that they would go to the right place. But in the end, they will be well documented. Mary Jo Fox – So the NovaNet programs would go on throughout the year, during this school year, for those kids who are currently counted as ANB students. They would not be qualified to receive programs paid with the transferred Adult Education funds? Superintendent Copps – They would not qualify whether they were 16 or not. Mary Jo Fox – Ok that is all of my questions.

 

Peter Gesuale -- Let me see if I understand this right. If this money stays in adult education fund, it doesn’t roll over into the following year, right? But if we move it over then we have access to it from the flex fund, as provided under the statute. Superintendent Copps – If the money stays in the adult education program, it would be returned to the taxpayer. Peter Gesuale – Right. So we do not have to look back to the NovaNet or at the students that were enrolled this summer or a history to determine whether this money qualifies for spending on students that are 16 and older and not ANB because that is actually going to happen in the next fiscal year. What we have to do is assure ourselves that we are going to spend that money in that way, is that right? Superintendent Copps – That is correct. What we are doing, we are doing two different things. We are trying to find a way to sustain services that we have been providing for students over 16. And we are also looking at the possibility of actually enhancing those services. Peter Gesuale – It seems to me, in a district our size, $300,000 can easily be spent on students that are 16 and older and not fully enrolled through our programs. I guess the main question I have and it doesn’t even go the to determining whether or not we should do the transfer but why aren’t we budgeting that in adult ed, especially going forward so that we have access to those permissive funds to continue the programs. Superintendent Copps – I am not sure I know exactly how to handle that. We have a new director at the Office of Public Instruction and she has very specific guidelines in terms of what we can do and what we cannot do and if there is any hint that we might be mixing services or combining services, she is not interested in that. She believes that they ought to be very separate functions and we have been mixing and I should add, not only have we been mixing, but we have had previous approval from the Office of Public Instruction for what we were doing. But there is a new director in town and she is different. And that is the reason. And so, let me give you an example. A lot of school districts have resources where they can take potential dropouts and the actually go find them and do exit interviews to find out exactly why those kids are dropping out. Sometimes that takes awhile to find those students and find those families and figure that out but in the process you end up saving some kids, the adult education role is not that. But the role of those same resources in our hands could provide that because the student is dropped out, the student is over 16, we want to know why and eventually we want to get that student back in school. Peter Gesuale – In just going forward, basically we are presented with the problem in the following fiscal year of not having the funds to do this because it won’t have been re-levied, so to speak, in adult education so we need to think about if we want to continue those services another year. Superintendent Copps – Yes, that is a great question. Let me tell you, we talked about this in our COLT group too. What we will be doing is considering using $50,000 from at risk money from each of our high schools to maintain these programs going forward after this coming year. At this time, we have $300,000 in each high school and it is at their discretion how they use that money for at risk. They have already determined how that money is going to be used for 07/08 and everything is in place but for the following year we could actually dedicate $50,000 at each school and cover those bases. Peter Gesuale – Just one final question and that is the next year’s adult education levy, that calculation will come from our budgeting process or does it come from the previous year? Thomas Harper – It comes through next year’s budget. Peter Gesuale – So we won’t, basically we won’t be including these funds in next year’s budget, the money that we didn’t spend in adult ed. Thomas Harper – That is right, the budget will move to a new lower level and so I would expect the mills, the number of mills to go down. Peter Gesuale – To be reduced in adult education? Thomas Harper – Right. And the budget itself also will probably be lower. Peter Gesuale – I guess just a final comment to the Board. I am in favor of jumping through any loophole we can to use money more efficiently, especially for students at risk. I think we need to be really, really diligent whenever we deal with permissive levy funds but I think, to think in the following year that we can’t efficiently use $300,000 to benefit students who are at risk, that are above age 16 and not fully enrolled, I think we would be amiss not to take that opportunity and I don’t think we should go forward looking for that money in adult ed unless we are going to set that program up in adult ed but given the circumstances I think we should take this opportunity to target at risk students next year. Superintendent Copps –

Mr. Chairman, if you don’t mind me adding to that, there is also a real benefit to society, or to the community in general. You know as we put students in the situation where they determine themselves what kind of a future they are going to have and that future is a self-supporting one. We don’t have to worry about what is going to happen to the kids, because we know what happens, we know what incarceration costs and it is a good time to invest in students.

 

Tim Trafford – Through this whole process Jeff Weldon made the point that we needed to lay out the legal groundwork for the decision-making process and some of it pre-dated me. Jeff did a good job in connecting the dots. I think we are legally defensible if that is an issue. I think the end result of all this is noble. I believe to move the money into a very similar program to affect the results that Jack described is a very good thing. But I am worried about the political sensitivity to this. When money is allocated to the District by the legislature or by vote, it is pretty clear what it is for. When we take, as a Board and go down the road to a permissive levy, I think we need to be more careful than anything else we do. So based on that, I’ve got some questions. Have we done any similar transfers like this in the last couple of years, from any permissive levy? Thomas Harper – In 2004-05, we actually did a transfer from the high school transportation fund to the high school flex fund. We also did a transfer from the elementary transportation to the elementary flex fund. A very similar process and a lot of the same issues and questions. To answer your question Tim, yes we have done this before. Tim Trafford –In those cases, were there sub accounts to track the money separately from the general flex fund? Thomas Harper – Yes. Tim Trafford – The next question is, during the budgeting process in prior years, which caused an excess, or caused this excess, let me back up and do a little scenario thing. There is two ways you can count savings. When I hear ‘a penny saved is a penny earned’, I think that if you were working a deal or buying something and you didn’t have to pay full price for it, you save some money. As opposed to, I earned $1,000 and in my budget process I set aside a $100 of that for my savings. Those are two different savings in my mind. In this process here, what did we do to reduce what we had intended to do to equate the savings as to opposed to did we over budget with the intent of having savings and I think Peter headed down that road at one point. What did we do actionably after the budgeting process to come up with excess in the permissive funds. Malcolm Goodrich – I’ll let the Superintendent answer but I guess my understanding is that the OPI directed adult ed not to provide services in a manner that was budgeted and so that has resulted in the savings. Superintendent Copps – I have mentioned before that previous administrators and OPI have approved the activities at the adult education. Some of those activities are now not acceptable to the current director. Because there we were working with at risk kids both in the adult education as well as in our school system, we had a pretty close working relationship with adult education. Adult education decided to enter into a contract with NovaNet and to do so over a period of three years at a very substantial savings of money. But the three year contract was $300,000. And then the new director from OPI and decides that some of those services that are being received from NovaNet do not qualify for adult education services. And so some of that burden, if you will, is now going to fall upon the high school district and that is why we are trying to find resources. It is also obvious that some of those services that were actually being directed specifically to kids who were either dropped out or temporarily dropped out or in transition, some of those kids are no longer going to be able to be served through adult education funds. What we are trying to do is cover bases if we can at this particular point. But there is a $300,000 contract out there. Tim Trafford – I support this 100% if I know, in fact, that this money in the flex fund is not going to displace things that are already being paid for. In other words, that we are not shuffling shells so to speak, so that this is something that has never been paid for out of the flex fund before. The money that is going in is going out for brand new things or things that were paid for under the adult education. Does that make sense? Its not really a question but I’d like to say a yes. Superintendent Copps – I can’t say its all new. Tim Trafford – I don’t mean new programs but programs that weren’t normally paid for by the flex. Superintendent Copps – Yes, not normally paid for by the flex, absolutely.

 

Malcolm Goodrich – Just a couple more clarifying questions. It is my understanding that this is a one-time action? Thomas Harper -- That is correct. Malcolm Goodrich – Then Thomas, you will remember last time we did the one for the transportation reserve where you cautioned that it was a one-time action and that it should not become standard operating procedure. Thomas Harper -- That is correct. Malcolm Goodrich – And so I think that the constituent’s question here that somehow this will become part of the non-voted levy budget from hear on out. From what I am hearing, this is a one-time deal and that that next budget would have to rise and fall on its own merits. Thomas Harper -- That is correct. Malcolm Goodrich – And that any money that goes into the flex fund as a result of this transfer is not required to be spent within the next fiscal year, it is just that it will be there for spending on programs as they arise. Thomas Harper -- That is also correct. Malcolm Goodrich – Jeff, could you please come to the mike for a moment? Jeff, now that you have heard the colloquy and the various questions and comments, have you heard anything that changes your mind that might say, what is being contemplated here is an improper transfer from a legal standpoint. Jeff Weldon – No, but the only thing that you might want to clarify, it seems that in the discussion, remember there were two things that you could choose from or you could choose both in your discretionary authority here. And I drafted the resolution with the conclusion that the Board concludes that it was both necessary to improve the efficiency and that the action resulted in savings. I can’t tell from the conversation if you concluded both of those things or just one of those things. It is my suggestion is if it seems that you are concluding only one of the two options, let us modify your resolution slightly. Malcolm Goodrich – I think that is a good point, Jeff. Joel, my recollection is your question and your answers, that you got answers that both grounds existed. Joel Guthals -- Yes. But I don’t see Jeff’s proposed resolution. Jeff Weldon – On page 10 of your packet. Malcolm Goodrich -- If somebody makes the motion I would like to give somebody some time to make the suggestion, if anyone is inclined to make this motion, I might just suggest as my own comment, that the third paragraph from the bottom or some other place that is suitable, that we also specify that the transfer would be on a one-time basis and that the administration would be charged to provide a separate accounting for the use of the funds subsequent to the transfer to insure compliance with legal requirements. Does anybody have any more questions of Jeff while he is up at the podium. Are we ready to make a motion at all?

 

Joel Guthals – Yes, I am prepared to make a motion. Malcolm Goodrich – Ok, Joel. If you are contemplating using page 10 as a template, please specify any changes that you are making to it but I think we need to reference the full text and make sure that that is noted for the record. Joel Guthals – Before I make the motion, would it be acceptable rather than to read the resolution, the motion and resolution in full, to make reference to the printed motion as set forth on page 10? Malcolm Goodrich – Absolutely, just as long as we make sure that you identify any changes. Joel Guthals – OK, very well. Mr. Chair, I move to approve the transfer of funds between the high school district adult education fund and the high school district flexibility fund pursuant to Section 20-9-208 as set forth on page 10 of our agenda with the following changes: in the paragraph which is the third paragraph from the bottom of the page, that that paragraph will read as follows – That the Superintendent is hereby directed to transfer $296,000 on a one time basis from the District’s Adult Education Fund to the District’s Flexibility Fund and the funds thus transferred be accounted for. Malcolm Goodrich – OK, do we have a second to that motion. Mary Jo Fox – Second. Malcolm Goodrich – It has been moved and seconded. Any further discussion.

 

Joel Guthals -- Yes, for the record, I want to state that as I have heard the presentation of information today and the questions by the trustees, we have a demonstration that this resolution and the transfer of these funds is in accordance to applicable law and further is a proper exercise of discretion by the Board in order to provide for the educational services that are necessary by the District but which because of change in administrative interpretations by the Office of Public Instruction, cannot be performed by the adult education department but can be performed by the high school district. Malcolm Goodrich -- Thank you Joel. Any further discussion? I will call for the vote.

 

Those voting in favor of the motion were Mary Jo Fox, Malcolm Goodrich, Joel Guthals, Tim Trafford, Dawn Achten, and Peter Gesuale. The motion passed unanimously. The resolution is as follows:

 

Billings High School District 2

Board of Trustees

Resolution #1

Dated: Tuesday, August 14, 2007

 

Transfer of Funds between the High School District Adult Education Fund

and the High School District Flexibility Fund Pursuant to MCA § 20-9-208

 

Whereas, Montana statutory law provides that “transfers may be made from one budgeted fund to another budgeted fund . . . whenever the trustees determine, in their discretion, that the transfer of funds is necessary to improve the efficiency of spending within the district or when an action of the trustees results in savings in one budgeted fund that can be put to more efficient use in another budgeted fund.” MCA § 20-9-208(2)(a)(i);

 

Whereas, both the High School District’s Adult Education Fund and the District’s Flexibility Fund are budgeted funds. MCA §§ 20-9-201(2)(a) and 20-9-543(3); and

 

Whereas, before such a transfer can occur, the Trustees must hold a properly noticed hearing to accept public comment on the transfer and that such a hearing was held on August 14 2007.

 

Now, therefore, be it Resolved:

 

That the Board of Trustees determines that it is in the best interest of the District to transfer funds between the District’s Adult Education Fund and the District’s Flexibility Fund, as provided for in Montana law;

 

That the Board of Trustees determines pursuant to MCA § 20-9-208(2)(a)(i) that the transfer of funds between the District’s Adult Education Fund and the District’s Flexibility Fund is necessary to improve the efficiency of spending within the District and that action of the Trustees resulted in savings in the District’s Adult Education Fund that can be put to more efficient use in the District’s Flexibility Fund;

 

That the Board properly noticed and held a hearing on this matter during its special Board meeting on Tuesday, August 14, 2007, to accept public comment on the transfer pursuant to MCA § 20-9-208(2)(a)(i) and ARM 10.10.320(2);

 

That the Superintendent is hereby directed to transfer $296,000.00 on a one time basis from the District’s Adult Education Fund to the District’s Flexibility Fund and the funds thus transferred be accounted for;

 

That the Clerk is hereby directed to enter this transfer upon the permanent records of the District pursuant to MCA § 20-9-208(3); and

 

That the Clerk is hereby directed to notify the State Superintendent, the Yellowstone County Superintendent, and the Yellowstone County Treasurer in writing and within thirty days of this resolution of this transfer pursuant to ARM 10.10.320(11).

 

 

The meeting adjourned at 1:10 p.m.

 

 

 

 

 

Malcolm Goodrich, Chair

 

 

 

Diane Blevins, Recorder