[0:31] uh good evening we're returning we are returning from recess and going to move on to our two action items [0:38] um which uh regard our budget for the district um do I have a motion to approve the revised budget for fiscal [0:45] year 2023. is there a second second um I'd like to introduce uh Director of [0:51] Business Services Mark Woodard welcome good evening chair allenberg fellow School Board directors and [0:58] superintendent Stanley um the fiscal year 2023 revised budget was discussed first at the June 1st work [1:04] session and also briefly at the June 12th regular meeting so I'll provide a few high-level highlights about that [1:11] budget and then open it up for action and discussion so the fiscal year 2023 budget was [1:17] crafted in the general fund with a budgeted reduction of about 1.7 million dollars to the overall general fund [1:23] balance please to report that we're going to come in better than that um I'm proposing that we revise the [1:29] budget to reflect a general fund deficit of about 895 000 [1:34] um the reason that we're going to do slightly better than projected is that we serve 66 more pupil units in fiscal [1:40] year 23 than what the budget was crafted with so that's going to be an increase of about seven hundred thousand dollars in state aid [1:46] we also issued the 2023 General obligation Capital notes and Facilities maintenance bonds of that issuance about [1:54] 1.1 million dollars was allocated for technology device purchases and um [1:59] school buses those expenditures were originally planned to be made from existing funds we were able to [2:04] creatively restructure our debt issuance plans to pay for those out of bond proceeds and push those payments out to [2:11] five and eight years so we'll get some fund balance relief in the first year and then pay for those over time and we'll budget for those expenditures over [2:18] the life of those over those items um the construction fund and Debt Service funds were also revised to [2:24] reflect the 14.2 million dollar issuance of bonds to finance the construction at [2:29] Countryside Elementary um and so those are accounted for as well the revised budget is also part of [2:36] the fiscal year 2024 executive summary so those figures can also be found there [2:41] um the ending fund balance and the unassigned portion of fund balance is estimated to be at 6.88 a decline from [2:48] the previous year figure of 7.45 with that the recommended action is before you [2:53] thank you director Woodard do board members have questions or comments about the revised budget for fiscal year 2023 [3:06] great we will now vote by roll call to approve the revised budget for fiscal year 2023 allenberg I [3:15] Aram aye Erdman aye gabler I green I Neville [3:22] I Shaw aye the revised budget for fiscal year 2023 [3:28] has been approved do I have a motion to approve the preliminary budget for fiscal year 2024. [3:35] so moved is there a second second director Woodard thank you chair allenberg so this is I [3:42] believe the fourth meeting where we're publicly discussing the preliminary budget for fiscal year 2024. [3:47] um this process began soon after I joined the district in July really took off in the fall of 2022 so we're here to [3:54] briefly discuss the executive summary which is unchanged with the exception of two items one in the general fund and [4:01] one in the building construction fund which are related and have a net effect of zero on the overall fund balances of [4:07] the district so heading into the executive summary on page one you'll notice that we listed [4:12] out our guiding principles which are all of course very familiar with we thought it was important to lead our budget documents with those guiding principles [4:19] as they are a reflection of our values and what we believe the district should be investing in so it's also always an [4:24] important reminder to the community that those drive all of our decision-making processes [4:29] on pages two and three um depict the governmental fund structure which were required to adhere [4:35] to by the governmental Accounting Standards Board as well as Minnesota state statute Edina Public Schools uses five main [4:41] funds to account for its revenues and expenditures those being the general fund the Food Service fund the community [4:47] services fund the building construction fund and The Debt Service fund um the general fund is the largest and [4:53] most significant fund one that is used to account for the core operations of the school district so Elementary [4:59] instructions special education instruction Pupil Transportation Administration Building facilities [5:05] operations and and pretty much anything under the school district umbrella there [5:10] are also those ancillary funds such as food service and the others that I mentioned that are extremely specific in nature and the general rule of fun thumb [5:18] is that those funds can only be used for those specific purposes so we can't dip into the Food Service fund Beyond [5:23] certain expenditures to bail out the general fund and vice versa if those funds were operating in a deficit we [5:30] would have to bail them out so to speak out of the general fund there's also the object and program [5:35] descriptions that will Aid the user in reading these financial statements the once a revenue or expenditure is [5:41] categorized it's further categorized into those program and object areas as [5:47] an example the object would be the specific item that's being purchased so a staff member salary or a staff [5:52] member's computer and then the program is the depiction of that staff member's actual role so it could roll up into the [5:59] transportation program or the secondary instruction program depending on what they're actually doing so those are some [6:05] fairly basic definitions there's about 14 000 different combinations I've mentioned a few times [6:11] um so that's that makes for some fun reading on the weekend page four is the total governmental fund [6:18] overview so the entire District all of its governmental funds as I mentioned there's only one change from last week [6:24] when this was presented and you'll see that on the general fund and building construction Pages again and at [6:30] effective zero and I'll speak more specifically about those when we get to them The District administration is asking [6:36] the board tonight to adopt an overall governmental fund's revenue and financing sources budget of 191 million [6:43] 222 213 and an overall expenditure in financing uses budget of 196 million [6:50] seven hundred thirty four thousand forty eight dollars so the approximate five and a half million dollar decline is [6:57] planned for and that's directly attributable to the 10 million dollar spend down in the building construction fund [7:04] before I begin to examine each of our funds in detail I'll just remind you [7:09] that about 80 of our revenues are tied to student enrollment and so any changes up or down are going to really impact [7:16] the operations of the district as of today I believe we are registered with about 8 530 students for next [7:23] school year um one for K-12 if you add in our earliest Learners our Pre-K students [7:28] we'd expect to serve about 8 594 students on an average daily membership basis you'll notice that the figure I [7:35] have listed is 8 563 and there are two reasons for the deviation one the school [7:40] board approved the preliminary property tax levy for next fiscal year in December at that 8563 figure also you'll [7:48] know that historically from June and July to the first day of school we'll notice a slight decline in student [7:54] enrollment as families move out of the district or choose other options for their students so we think the 8563 [8:00] figure is going to be within a one percent one percent of the actual number at the end of fiscal year 24. so we're [8:07] quite confident in that figure also for those who aren't intimately involved with the district we're going [8:13] to be adding about 48 students to Countryside Elementary next school year and we'll add about 200 students over [8:19] the course of the next four fiscal years as we build our cohort to a full K5 dual [8:24] language immersion program on page six you'll see the specific figures for the general fund as [8:30] previously mentioned this is our main operating fund and the one that finances the core of our of our mission and our [8:36] vision um earlier the school year we performed a forecast of all of our existing [8:42] programs and staff were we to maintain those staff in the next school year and that exercise resulted in a indicated [8:49] four million dollar deficit above the current year once that information was shared with [8:54] the school board and stakeholders the Berg process was immediately enacted and we developed a process to contain [9:01] District expenditures by that exact figure of four million eighty five thousand dollars [9:06] that process concluded with the school board approving 20 different cost-saving measures resulting in the elimination of [9:13] that entire deficit with 20 just 20 percent of that elimination of expenditures relating to staff that [9:20] directly interact with students so we had a right sizing of our middle school programs and the elimination of [9:25] paraprofessionals added with one-time Federal pandemic funding that made up to 20 reduction in staff [9:32] so that process was concluded in February and at that point we were actually prepared to probably adopt a preliminary budget of course there was a [9:39] 2023 legislative session and that's why we did not do that at that time we were waiting to see the results of that and [9:45] we budgeted very conservatively and um thankfully the legislature did appropriate significantly more funds [9:51] than anticipated most notably the special education cross subsidy Aid increase over the last [9:58] several years that number has been at 6.43 of the calculated cross subsidy next school year that's going to be 44 [10:05] and so that 44 will actually be based on expenditures in the current fiscal year because special education reimbursements [10:12] are always on the prior year numbers and so we'll see about a three to three and a half million dollar increase in that [10:18] funding source um the basic education formula which finances the large portion of the [10:24] district's finances is going from two percent to four percent we had budgeted at two percent the additional two percent is going to [10:31] yield an additional 1.3 million dollars based on our student enrollment um so that's above and beyond what we had [10:37] already budgeted English language learner Revenue has also increased tremendously from 724 per pupil unit to [10:46] 1228 for an additional 240 000 in Revenue um so for very thankful for all the um [10:52] efforts of the Lac for engaging our Senators and representatives and all the [10:57] stakeholders kind of banding together to get those historic funds to school districts [11:03] therefore our final recommendation at this time for revenues is 154 million [11:08] four hundred and forty nine thousand three hundred eleven that includes the additional 4.8 million dollars above and [11:13] beyond our estimates that were appropriate from the state we'll also recommend an expenditure [11:19] budget of 149 million 411 639 that's [11:24] going to result in an increase to overall general fund balance of just over 5 million dollars leaving our [11:29] unassigned fund balance at the end of fiscal year 2024 at 8.7 percent which is [11:35] above the board minimum of six percent um but below the high end of 10 percent [11:41] the school board also maintains a two percent set-aside policy for the committed fund balance which will be [11:47] adhered to within this proposed budget we anticipate our overall general fund balance at the end of fiscal year 2024 [11:53] to be 6 16.2 percent which is a significant increase over the estimated 12.5 or so percent at the end of fiscal [12:01] year 2023 and for more specifics on where those fund balances will be added within the [12:07] general fund those are detailed on page 11 of the executive summary [12:13] I did note that there was one change from the materials that were presented last week and you will specifically see [12:19] that in the other financing uses section on page six there is a 6.3 million [12:25] dollar figure in the bottom right corner last week that figure read 2 million as you know we Finance our long-term [12:31] facilities maintenance program on both a pay-as-you-go basis and on a bonding basis [12:37] for projects that are more than two million dollars at a site for example the high school project that is breaking ground this summer costs that are in [12:44] excess of that 2 million need to be transferred from the general fund which collects the tax revenues and moved over [12:49] to the building construction fund which will account for the expenditures so that's why that's different than the 2 million that was there it's really a [12:55] moving Target as you know construction projects are complete over many years and so that's fairly fluid again no fund [13:01] balancing impact page seven explains the proposed food [13:08] service fund for next school year we're proposing a break even so 3.7 million [13:13] dollars in expenditures 3.7 million dollars in revenues we'll be serving Universal free meals for all students [13:19] next school year so that's one free breakfast and one free lunch we believe that's going to lead to some increased [13:25] participation however at this point we budgeted based on historical Trends and we'll adjust accordingly as we see more [13:31] participation so nothing major going on in that fund with the exception of that new law very healthy fund fund balances [13:38] of more than 30 percent which is not common in school district so very pleased with the performance there [13:46] fund four is our other special Revenue fund one that depends solely on user fees to sustain itself we're [13:53] anticipating the continuance of the great demand we have for our community ed programs particularly kids club and [14:00] so we're anticipating a small increase the fund balance on that fund of about 188 thousand dollars [14:06] so total revenue of 12 million 81 362 total expenditures of 11 892 848. [14:17] again that fund has a very healthy fund balance [14:23] um the building construction fund that's the one that is used to account for our large-scale construction projects ones [14:29] that are not deemed uh maintenance and so we have the countryside Edition and [14:34] that fund we also have the high school project in that fund and also the spend down and completion of the bus garage [14:40] there's some some small items still there to be completed and so we're proposing a revenue budget of 642 [14:48] thousand 886 actually that figure appears to be a typo [14:53] that should be closer to 6.9 million I'll have to fix that actually so that transfer in of 6.3 million dollars [15:01] um is not actually a revenue it's an other financing source so an acquisition on fund balance that needs to be added [15:06] to the to the executive budget that's posted to our website I'll make sure to make that um that adjustment and our [15:13] total expenditures of about 17 million so the deficit of 10 million is planned for we receive the funds to construct [15:19] those facilities in Prior periods and we'll be spending them down in subsequent periods until in theory they [15:25] reach zero foreign ly The Debt Service fund the previous [15:32] fund was the constructional facilities The Debt Service fund is related to the financing so each fiscal year we collect [15:40] property taxes to pay down the debt that we've issued to construct those facilities this fund is only used for [15:45] those purposes at this time it's a great um great to mention that we maintain our AAA Bond rating twice the school year [15:52] I'm very pleased with that that allows us to issue debt at the lowest possible cost for our taxpayers and we're one of [15:58] three districts in the state of Minnesota to hold that coveted rating in one of about 70 to 90 depending on the [16:03] year across the country so that fund we're anticipating revenue of 14.3 million dollars approximately with [16:10] expenditures of about 14.6 million dollars so that spend down is planned as we extinguish our debt to completion in [16:17] 2039 assuming we don't issue any more debt between that time period [16:24] that brings us to page 11 which is the full fund balance report a very detailed [16:29] um specimen that lists every fund balance the district owns and a number of appendices were also added to the [16:35] financial statements for your review and consideration with that uh over to chair Amberg for [16:43] action and discussion very much um I'll turn it over to board members [16:49] for their comments or questions um and I guess first question I have [16:56] um I was going to ask the finance committee if they have any comments that they'd like to make about the budget process or the budget in general [17:05] sure thank you um I think one of the things we've highlighted in all of the conversations that we've had about this [17:10] is the appreciation for the proactive approach to rebuilding our fund balance [17:17] and the importance that that has in the health of the District of fiscal health of our district and just to remind any [17:23] community members that um not only is it important because it allows us to take advantage of a lower [17:31] cost of borrowing money right we we reap many benefits from that and [17:36] alternatively if we did not have that the risk we'd be putting ourselves at not only just having increased cost of [17:42] things but just the risk we would be putting ourselves at is pretty significant so I appreciate the [17:48] intentional work behind that and also wanted to call the attention that you did mention and people can see in the [17:54] board packet where we stand versus other neighboring districts and and what our goals look like so I just wanted to [18:00] share that one piece all right Michael um I think that even [18:06] though you didn't mention it I think that the appendix uh B is also incredibly valuable information for [18:12] people to pay attention to this is the breakdown of actually where our program description and dollars are actually spent [18:18] um when you look at over 80 almost 80.5 percent of all funds that are expended [18:24] within the district are all for actual pupil Services um so we do try to run administratively [18:29] tight ship where possible um we sought to have Administration you still have to have direct District [18:34] support but I think that this is an information if you actually look at the three-year trend from the actually audited results to the budgeted results [18:41] that are concluding here in 23 and then what the budgeted results are for 24. you can continue to see where we are [18:48] having increases in those costs but we're trying to man manage um especially the administrative costs [18:53] while we're still keeping dollars in this in the in the classroom so I think that that's another important element to [18:58] look at as our funding and our expenditures continue to fluctuate over that period of time so all the really [19:05] amazing fiscal management that we're doing enables us to stay focused on that so unfortunately when we then have a [19:11] Burg process how are we able to manage that we're able to go from that standpoint so that's just another part [19:16] that I wanted to call out in the packet thank you director Aaron anything from [19:22] finance committee perspective no I was going to highlight the same okay thank you [19:28] anything director green um thank you director Woodard for this [19:34] um presentation I just wanted to um share my things for another um fantastic AAA rating that we got this [19:41] year and twice um that is no small feat and so I'm just really proud of our operational [19:47] excellence in this area so I wanted to call that out um I have a quick question about [19:53] um our food service um funding can you just explain a little [19:58] bit about um with the passing of universal lunches what is that impact are we [20:05] um like how does that work I I guess in my mind I have a hard time [20:11] um understanding how that funding supports is it meals is is [20:19] it based on how many come through the line or how that all works if you could just give a little bit on on what we [20:24] know thank you absolutely director green excellent question um so the way it works is when a student [20:30] actually goes through the point of sale system and receives a meal that is considered reimbursable so it has all [20:36] the components that are required by the USDA to qualify as a reimbursable meal at that point they are that student is [20:42] tallied we submit those reimbursements to the state of Minnesota they review them and then the federal government [20:48] will subsidize a portion of those meals or all of it depending on the qualification of the student so this [20:54] legislation really impacts the students that do not receive pre-reduced lunch currently the state is paying about 12 [21:01] cents for those meals and the federal pays a very small portion so what the [21:06] state is now going to do is they're going to pay us a difference between what the federal government is paying for paid students and what the federal [21:12] government is paying for free and reduced students okay but thank you that's helpful can I [21:19] ask one other follow-up question so let's say a student comes through and doesn't doesn't purchase the full USDA [21:25] approved what is that what happens then so the way it works is um Chartwells who [21:31] provides all of our meals and and they set the menus they craft the menu so that every item is inherently there and [21:38] the tray that the student receives or when they go through the line they are encouraged to take all the components and most comply with that [21:45] um were they to go through with an incomplete meal we would not be able to fully receive reimbursement for those [21:51] meals for example if a high school student came through with just just an A La Carte item just a one of those [21:58] Celsius energy drinks for example that would not meet the qualification therefore it's not a reimbursable meal [22:03] and in fact we have to charge a special price for those items okay [22:09] sorry about that are any students allowed seconds with the freeing reduced [22:14] or not frame reduced but with the universal lunch yeah so students are allowed to take second lunches however they're not [22:20] financed in any way by the state or the federal government so they would need to be charged at the adult rate which is [22:25] going to be a minimum of 4.95 we're anticipating that will increase on July 1st [22:31] um so no second lunches no a la carte items none of those are covered by the national school lunch program okay thank [22:36] you and so just be clear for those parents out there who have students that um [22:41] while yes they certainly can go into the line and get the provided for a meal if [22:47] they end up going through getting something else and so on sort they would still need to have money in their account in order to purchase those items [22:53] or pay cash or whatever the other processes that Chartwells provides absolutely so that's going to be a key [22:59] communication piece for for the district as students transition back to school after three months off in the summer [23:06] director gabler I want to Echo what everyone has said [23:13] about the work that's gone into this and school Finance is not a simple process [23:18] so I always appreciate director Woodard how you educate as well as in your in your presentations [23:25] um and I really appreciate the additional appendix that you added for this presentation I had a question if [23:32] you could clarify for me on appendix C or in appendix C [23:37] uh there's line items of other expenditures and other financing uses [23:44] um can you give me some examples of what would fall into [23:50] either of those categories so the major piece of the other expenditures category are subscriptions [23:57] and membership dues and fees and also items that can't really be categorized [24:02] in other any other place for example we had a recent legal matter um that we had to pay a settlement for [24:09] and so that belongs in that other expenditures category it's one that's rarely used and if you see large variances there they really stick out [24:16] the other financing uses so that's a a depletion of fund balance that is not [24:22] considered an expenditure for example we are sending 6.337 million dollars from the general [24:28] fund to the building construction fund that's not really an expense however it is a reduction of fund balance all else [24:35] being equal and so since it's not categorized as an expenditure it needs to be classified in another way but it [24:41] is a reduction to the fund balance thank you [24:46] director Neville did you have any questions or comments [24:52] one question for director I Echo everyone else's comments in [24:59] praising the presentation the budget information is very clear I appreciate the detail and the and the summary my [25:07] question is to help our board and the community better understand the impact [25:13] of the most recent legislative session it's been a very fortunate session for [25:19] finances for school districts could you please summarize and help us understand [25:25] what we can expect here are some good things that we're able to do in our next [25:32] year budget and some things that we may have hoped for but realistically are not [25:39] able to be put into this budget thank you for the question uh director [25:45] Neville in terms of the positives um stability is always important [25:50] um more predictable funding is always important so we're able to craft our long-term budgeting and and what we deem [25:57] as a district to be worthwhile in investing it's going to be easier to do that all all else being equal I think [26:03] the main win for us as a school district is maintaining some of our excellent programming you'll have noticed in house [26:09] file 2497 there's an appropriation for media media Specialists there's an [26:15] appropriation for additional counselors or psychologists those are areas with where this district is historically very [26:22] well staffed above and beyond many districts that are compared to the district so we'll be able to maintain [26:27] those programs more comfortably than those in the past [26:33] um so that's the main win in terms of enhancing The District programs again we have many of those [26:39] features already in place however this will allow the administration and board to better plan for enhancements and and [26:46] be able to meet our fund balance policy again our fund balance generally is going to be about 16 at the end of next [26:53] school year assuming we don't deploy any of these additional funds that's a vast improvement over over where we have been [26:59] historically the last three to five years but still one that keeps us behind some of our neighboring districts and so [27:05] it's important to keep in mind as well thank you [27:14] any other questions or comments um the only comment I wanted to make and I think uh director Neville your [27:21] question was a segue to the comment I wanted to make was [27:26] um although the investment from the state is very much [27:31] appreciated I think that um right now we are still parsing [27:37] through the information to know also what is required of us from an investment perspective with a lot of the [27:43] um requirements that went into this session as well and so [27:49] um I think that if I could describe this budget I would describe it as [27:55] putting a lot of money in a savings account until we have a better idea [28:00] of what our requirements are um from the state and what they are going [28:07] to ask us to do with this money because we are still learning exactly what is [28:14] going to be required of us and once we know that um if we can make enhancements to our [28:21] district we will be discussing that at a later date in the fall so I just want the [28:27] community to understand that we're very grateful for the additional money [28:34] um we are still working through exactly what that [28:39] means and we still have a necessity to add money to our fund balance for years [28:47] past that we've taken money out of it to keep operating our district but if we [28:52] are able to do enhancements that that will come at a later date is that an accurate way to describe sort of how [28:59] we're trying to approach it from a process perspective yes chair Elmer that's absolutely an [29:05] accurate depiction of what's happened and to be more specific about some of those impacts first I would encourage [29:11] anyone viewing this session to view the Lac recap recording that occurred I [29:16] believe last week so there's three main components that school districts are concerned with at this time that would be the school term employees or those [29:24] who are off from June to the end of August those those individuals being [29:29] eligible for unemployment benefits for up to 12 weeks um so that's number one the school district has between 250 to 300 [29:37] employees that would be eligible for this funding and where all of those individuals to [29:43] claim their benefit that they have a right to now that would cost the district about 1.2 million dollars of [29:49] course not all those individuals are going to claim benefits how are we budget conservatively and figure that [29:55] they will the state has appropriated a one-time pot of money of 135 million [30:01] dollars to last for the next four years actually a recent amsd survey the [30:06] association of metropolitan school districts indicated that the average school district will see a 229 dollar [30:12] per average daily membership cost Associated until that 135 million dollars in my opinion would be depleted [30:19] before that four years so that would be something the district would have to maintain in perpetuity [30:24] something else the district will have to pay for in perpetuity beginning in fiscal year 26 would be paid medically [30:32] for all employees up to 20 weeks the way that's going to be funded is a point seven percent [30:38] premium allocated to all taxable wages and so that's going to be about a recur recurring eight hundred thousand dollar [30:44] expenditure from fiscal year 26 onward again no additional funds appropriate for that at this time I might change in [30:50] the next biennium however we're we're also budgeting conservatively for that [30:56] the third and perhaps most important component is the addition of the loss of [31:01] certain inherent managerial rights as part of terms and conditions of employment the cost of that totally [31:07] unknown at this point and we'll figure that out over the next um two to four years so [31:14] thank you and thank you for all your work and your work Dr Stanley on this I appreciate it [31:19] anything else great um we will now vote by roll call to approve the revive the re you know the [31:26] preliminary budget for fiscal year 2024. [31:32] um allenberg oh that's me I Aaron hi Birdman [31:39] aye gabler aye green aye Neville hi [31:44] Shaw aye the preliminary budget for fiscal year 2024 is approved [31:51] Yay good job you made it thank you very much [31:57] um that takes care of our action items so we're going to take another recess and move into closed session so thank [32:03] you everyone