Budgeting For Results Committee - Sept 10, 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

 

September 10, 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, September 10, 2007. Chair Katharin Kelker called the meeting to order at 5:35 p.m. and led those assembled in the Pledge of Allegiance. Committee members present were: Katharin Kelker, Shanna Henry, Kari Altenburg, Peter Grass, Don Stanaway, Dan Farmer, Duane Smith, and Joel Guthals. Absent were members Peter Gesuale, Mary Jo Fox, Joan Sleeth, and Jodi Stugelmeyer. Also present was CFO Thomas Harper, and District Clerk Leo Hudetz.

 

Communication From the Public

 

There was no communication from the public.

 

Consent Agenda

 

Dan Farmer moved to recommend Board approval of Consent Agenda items as follows:

1. Minutes of August 06, 2007

2. Addition of Student Council Extracurricular Account at Bitterroot

3. Cancel Outstanding Payroll Warrants

Don Stanaway seconded the motion. The motion carried unanimously.

 

Bills Paid

 

Shanna Henry moved to recommend Board approval of the bills paid for August, 2007. Dan Farmer seconded the motion. The motion carried unanimously.

 

Financial Reports – July & August, 2007 (Unaudited)

 

Thomas Harper stated July and August Financial Reports are not available at this time due to a software problem in getting the budgets to roll over to the new fiscal year. Thomas said there is nothing significant in the Financials to report. The Chair will advise the Board the Financials are “unexamined” by the Committee.

 

General Fund Budget & Forecast

 

The Chair said last year the Board’s budget assumption to increase the high school reserve level became part of the mill levy proposal that was successful. Another assumption the Board made last year was a process to “true-up” the budget. There were recent opportunities given by the Legislature to move certain costs out of the General Fund budget into other Funds like the Flexibility Fund to relieve pressure on the General Fund budget at a time when we were receiving no increases from the Legislature. This allowed the Board to continue to keep class sizes small and keep the teaching staff as large as it is. That is not a great way to perpetuate the budget, so the Board started the process of putting the expenditures into the General Fund budget that are the responsibility of the General Fund budget. Past decisions were made to keep smaller classes through budget changes. The consequence of “truing-up” the budget may be laying-off teachers.

 

Thomas was asked to present information to allow the Committee to make recommendations to the Board for Budget Assumptions for the 2008-09 budget. He stated key factors such as the “neighborhood schools” concept and “smaller class size,” impacts operational costs and requires increased resources, staff and space.

 

BUDGET FY2009 ASSUMPTIONS & FACTS

 

1. Enrollment for ANB purposes will remain flat or declining. The three-year rolling average of ANB that determines funding will have minimal impact on our budget this year and next year.

 

2. Revenues are projected to increase 1.9% in the Elementary District and 2.4% in the High School District over the current year.

 

3. The Elementary District maximum voted levy amount is $899,305; the High School District maximum voted levy amount is $221,929.

 

4. & 6. Prior Legislation gave us Deferred Weatherization and Maintenance funds in the amount of $2.3M ($1.5 Elementary and $800K High School). In order to balance the budget we moved a significant amount of facilities costs into this one-time money in order to maintain core instructional programs. The last Legislature gave us additional DW&M funds ($1.2M Elementary and $240K High School). At the end of FY2008 we will have an estimated balance of $916,716 in the Elementary District and nothing in the High School District. We need to bring back High School facility costs to the General Fund next year. In an emergency, we will also have available to us the proceeds from the sale of Crossroads and Career Center property.

 

Committee discussion on this point included the need to develop a capitol improvement plan; a long-term facilities plan and a way to finance it that would result in well-maintained facilities. A Committee responsibility might be to recommend the Board ask for a Building Reserve Levy from the voters for larger projects. Smaller routine maintenance costs should be built into the budget. Rich Whitney will be invited to the October meeting to review the status of the five-year old building reserve project list.

 

5. The health insurance fund is in good shape. Health insurance costs are projected to increase 5-10% over the current year. There was a request for the Health Insurance Committee to investigate the MTSBA Health Insurance Program.

 

7. Projected retirement (vacancy) savings are $500K in the Elementary District and $200,000 in the High School District.

 

The Chair added another Budget FY2008-09 assumption:

 

8. Only one-year contracts were signed this year with bargaining units. The BEA Agreement accomplished an increased hiring starting level for new teachers.

 

Joel added another Budget FY2008-09 assumption:

 

9. Increased costs at the rate of inflation, or higher. Joel noted the current year’s negotiations resulted in equivalent benefits between bargaining units which will have a significant impact to on-going liabilities.

 

Committee discussion noted that past budget assumptions emphasized smaller schools. If we change budget assumptions for next year, i.e. emphasizing building maintenance, etc., other aspects of the budget will be impacted. Budget assumption decisions need to be made with consideration of their affect on other budget assumptions.

 

Compensated Absence & Benefits

 

Compensated Absence was $19,523,503 as of FY2006. Estimates for FY2007 are not complete. Historically, Compensated Absence was made up of accrued sick and vacation pay. Our District has another component called Service Credit. In FY2006 Service Credit applied only to administrators and certified staff members who worked for the District more than 10 years. Effective in FY2007 the Service Credit component applies to all employees with 10 years of service, retroactive to their start date.

 

Thomas said we began budgeting $1.3M the last two years for this cost. The Chair stated the Board has charged the Superintendent to initiate ideas to halt increased future Service Credit costs. The Superintendent thought the most likely thing that would be successful would be a change in Montana law.

 

Thomas stated this liability is footnoted in the audited financials. Thomas also explained that this year’s financials will reflect another $2.5M increase in our unfunded liabilities from recognizing Other Post Employment Benefits as a part of a new auditing standard. The standard does not require us to fund it; only to recognize it as a liability. This may force us to develop plans to begin to fund these liabilities since it may affect interest rates on future bond issues.

 

Future Committee meetings will discuss ideas to limit unfunded liabilities, budgeting for liabilities, and costs of routine maintenance and possible building reserve levies.

 

403(b) Regulation Changes & Impact to District

 

The IRS finalized rules for 403(b) regulations. It will operate more like a 401k which means that it becomes a District plan. We currently have 100+ vendors that may each have 1-2 clients for which we administer salary payments. Under the new regulations the District will be responsible for due diligence on vendors; so, we may downsize to two vendors. Our goal is to have a plan document in place by January, 2008. Leo Hudetz will oversee a Committee for this implementation.

 

PaySchools Program

 

The MT School Boards Association and MASBO have entered into a partnership with a program that allows a school to put a link on the District website that would allow parents to pay for items like student lunch tickets, class fees, activity fees, yearbooks and everything else that the student may have to bring money from home for. They select the items they want to purchase and pay for them using credit cards or electronic checks. The payments are automatically processed, and the money is transferred to the school’s bank account.

 

Thomas explained that our District has a huge check collection/cash handling system in the schools at a level of $2.7M. We hope to have the PaySchools Program in place by the end of next year via our website. There will be a 3.5% cost per transaction, but the benefit will be efficiency for the user and the schools. This will be an optional service for individuals.

 

Adjournment

 

There being no further business, the meeting was adjourned at 7:17 p.m.

 

 

 

 

Katharin Kelker, Chair

 

 

 

 

Sherrill Sullins, Recorder