[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