Can you hear me? Good evening everyone. Uh we have our annual general fund budget hearing today and it will be presented by our amazing um executive director of business services Sherry Thompson. Please go ahead. Why thank you Dr. Chu. So yes, this evening we are here to discuss uh the proposed 2526 general fund budget. Uh our agenda includes we're going to talk a little bit about the budget process. Um cover some school funding basics, what our timeline is for developing the budget, the parameters that are used. Uh we will have an overview of our re proposed revenues expenditures and then look at um fund balance projection uh over the next year and there will also be time for questions or comments. So, uh, first of all, as far as school funding goes, the Minnesota legislature sets our school the school funding per for public schools. Um, we don't have a wish wish list, not only are the formulas, that is the amount per pupil determined by the legislature. Um and then they also determine how those funds are are collected uh in from whether it's the state uh the uh property taxes uh etc. That's all determined um by the state legislature. Um our funding is highly regulated. Uh the formulas that determine the uh the revenue and that's the majority of the funding that we receive uh is set by the state. as I mentioned also tax policy. So they determine uh how that uh funding will come to school districts and then uh there's always a maximum uh authorized property tax levy and again that involves the formulas uh as far as the school districts go based on pupil units etc. And um so they give us a maximum amount based on those formulas. We can underlevy, but we can never overlevy. Uh funding for school districts basically has to be authorized by the legislature or approved by our local voters. Um here's just an overall timeline. Uh this actually goes back, you know, we start working even on this budget. It starts a year ago. Um it starts a year the 2425 uh budget was approved. um last June. Um we then begin working over the summer estimating what our enrollment is going to be not for the upcoming school year. We need to submit to the Department of Education what we project our enrollment to be a year and a half out because that's how the levy certification process works. We work on things um because of our timeline. Our fiscal year runs July 1 through June 30th. uh unlike uh our counties and cities that run on a calendar year. So while we're busy working on things for a year and a half out, they're busy working on their budgets and collecting their data for the year that begins in a couple of months. So we do a preliminary levy based on those formulas set in um September. Uh the board then approves the final levy um in uh come December after um projected property tax statements have been uh sent out and then we take a look uh administration um we as far as once that levy set our audits come in then we also start looking at the current year revised budget. What did we have to revise from the current from the uh year that we're in? A lot of times like in the spring we're estimating we think we'll have x amount of teachers, we think we'll have x amount of students. We project a lot of items, but then once we get into the school year, then we tend to know. We know who's employed here, we know how much the salaries are, what the salary and benefit co costs are, and we have a better handle um on our enrollment um as we're into the school year as well. Um so again then looking at this year after we do the revised budget um we the board adapts parameters. So we bring parameters forward making assumptions how much we think X is going to increase how much utilities are going to increase. Um so we put we include that in our parameters. uh and then also um uh update our budget timeline. The district also has uh we're fortunate to have a finance advisory committee uh which consists of three schoolboard members and then also uh several community members. So we check in with that finance advisory committee too uh periodically throughout the year uh especially in budget development and um uh also audit updates. Uh then as we move through the spring uh we update the board as needed on any kind of budget development or any kind of changes that are needed. Uh that brings us now to um the May 27th uh the general fund budget hearing. Um again this is um the general fund is the majority of the expenses of the district. It's the day-to-day operating expenses of the district. The only thing that we don't include which is a restricted component of the general fund at this time is we don't include long-term facility maintenance um and then also our operating capital because it can be confusing a little bit to the operational costs. We'll bring that in when we do the we'll include that um once we do the uh final uh budget approval in uh June later in June June 24th. So um I think when we look at our budget assumptions, one of the biggest things to consider right now is that the uh Minnesota um the 20 I guess I got ahead of myself. the 2025 Minnesota legislature, not 2026, has not completed their their budget um for for the next bianium, which actually does include fiscal year 26. So, in in the interim, we are using um the the parameters that are listed here. Uh we do know um because of something that was set into state uh leg or legislation two years ago that our proposed per pupil basic general education formula is set to increase 2.74% over the current year. So that increases uh to $7,281. Um our operating referendum, we do have an operating referendum that runs through 2032. Um uh we that is al that's based on a per pupil unit. Uh so it's based on our enrollment and we do have an inflationary factor built in there. So our um operating levy for the 2526 school year uh will be $2,34 per pupil. Um that is uh again based on our 2526 certified levy that was approved last December. Uh the one area that we where we do see a decrease uh is in our compensatory or what's known also as our basic skills revenue. Uh we saw a reduction or are seeing a reduction uh of about 300 just under $370,000 um this year. And just to give you an idea, we get about $8.6 million in compensatory revenue. So, um it's a sizable funding stream for us. Um looking at our expenditures, uh as far as our assumptions, we always uh first off, uh frame this is focusing our resources on equity and student achievement. that come that comes first as we look to um designate our resources. Uh staffing adjustments will match enrollment changes and align with class- size targets. We have class-sized staffing targets for different grade levels. We are not making any changes in those class size targets at this time and we'll touch base on those very briefly as well. Um due to a slight uh decline in our enrollment, we will we are experiencing some right sizing. What we call right sizing, it's for um adjust um of adjustments and reductions. The reason being, you know, if we have um less students um and uh in the current year, we actually were underenrolled. So we were we had staffing at a higher rate uh than what our enrollment actually came in as. And again it's you know something that we project as far as our enrollment goes. So we're we're just becoming a little bit more conservative in that area. Um our mental health and social emotional learning. uh that was a big part of our 2021 uh operating level, our operating levy and that was a commitment that was made at that time and we continue to maintain um that um that commitment as far as the operating levy goes. Uh we have included estimated salary and benefit settlements for upcoming contract negotiations. uh salaries and benefits are over 80% of our budget. So, anytime we're looking at making adjustments um in our budgets uh similar to every other school district, uh we're going to find those savings in in salaries and benefits. Again, added costs also salaries and benefits because we are in the people business. Utility costs. We do look on um at multiple year averages. Also consider usage um and weather. Uh when we look to adjusting current rates, uh contracted transportation costs are estimated to increase due to both an increase in contracted costs um and specifically an increased number of homeless students. In the last couple years, we have seen an increase of like 350% in the costs of transporting our um our homeless students. So, we expect that not to increase at the rate that it's been, but to continue to to increase. Uh looking at our overall transportation costs from this year to next year, we're looking at about a 4% increase uh in our contracted costs. And as we get into next year, we're also going to be looking at how we can um more efficiently uh route some of our transportation so that we can recognize um additional cost savings moving forward. Uh we have different mandated reserve expense categories. We have a reserve for staff development, health and safety. I touched on like the operating capital, safe schools. Those are all just dollars that we need to um spend uh in compliance with statute and obviously um we are going to do that. I talked a little bit about um class size targets. So we this is kind of a historical perspective. If you look at the different grade levels um uh going down the the left side of the page there, you can see the class size ratios that were used. Um, for instance, back in uh 2018 2019, I'm just going to jump down to grades three, we were at um 27 students. I think that was the first year that we had increased. We had increased from 1718 uh or possibly 1617. So, we had our uh ratios up um they were at 27 students at kinder or grades 1 through three. The following year in 1920, we increased that to 27.5. Again, if you look at other grades, you'll see that same increase. Um, and then 2021, we went up to 28. Uh, 2122, we were at 28. And with the passage of the operating levy in the fall of 2021, we were able to bring those down uh by two students um at each grade level. and we continue to uh stay at these ratios. Uh talking about enrollment, um I touched on that a little bit. So looking um and again this is broken down by elementary and then uh some of our secondary schools are actually bro broken down individually. So if we looked at our enrollment projections for the year that we are finishing, going back a year ago, we had estimated that enrollment would be 7,229 students. As the year started, we were underenrolled. Um we looked at where we we had we revised the current year budget that we're in right now. But then February 1 is always a key date for us. So we had um projected 7,229 students. We found ourselves on February 1st with 7,95 students. Uh the majority of that re reduction really um was at the elementary. Uh so we were down 134 students. So we adjusted our revenue for the current year. Um, and now we are looking at um, uh, looking at our projections for next year, we're looking at further slight declines. So, we're looking at 7,040 students. So, you know, it's only 55 students less than what we had in February, but if you go to where we thought we were going to be, um it would have been the 134 that never came this current year, plus another 55. So, we are closely monitoring um our enrollment and again uh similar to what um our neighbors um are experiencing throughout the metro. um looking at our our um our revenue budget um overall um and again this is based on the enrollment that I had shared with you the 7,040 um we are seeing I'll just touch on a few um high points here we are seeing our um maintenance levy or our oper or actually it's just our overall tax levy will be in uh increasing $991,000 um next year. Uh so our total of um local taxes uh looking at that um will be increasing um uh slightly uh to uh $25.2 million. Uh that's because of increase in what we had projected as far as enrollment goes. Um and then also increases um in in various categories or even adjustments by the state and how much will come from the state uh versus how much comes from the county and the tax collections. Um and then excuse me moving down um in this area we collect a lot of different fees from our students. Uh we also uh we receive fees from students in participation. We um receive other usage fees. Uh we receive funds also for um some of our medic uh Medicaid uh claims for some of the health care services that are provided by our staff uh and run through insurance. Uh we rent out our school facilities, so there's some some revenue there. and we also receive um gifts and bequests. So overall in all of those various local revenues, uh we do receive just under $1.5 million a year. That includes parking fees, transportation fees, all all sorts of different student fees, excuse me. And then moving into uh the state aid portion um of our uh revenue uh we are seeing an increase here even though we you know we've talked I've touched a little bit on um uh some of the decline slight decline in enrollment at the same time we are seeing an increase in the funding formulas as I've mentioned or even the operating levy so um we are seeing an or we are expecting an increase of about $825,000 in our um regular uh general education revenue. Um literacy incentive aid, that's something that can vary from year to year. Uh our preliminary data looks like that that will actually be declining a little bit uh to $187,000. um state aids and grants that that includes part of that includes the compensatory revenue um and then also um uh some of our uh achievement and integration revenue. So we are um we are seeing that there. And then um our um MLL so multi- language learners we um we've seen a slight increase there in um basic skills aid. Uh looking at our our special the state uh special education aid, we are anticipating uh right now an increase of about 513,000. Much of that increase is actually even due to the increase in our um transportation uh for our special ed students. And under that same um bracket that state aid or the special education aid uh that's actually how they fund us for our um homeless students as well is through that program. So while they're not special education, that's where the funding flows through. So we we see that variable there. Um some small miscellaneous state grants. Um we're looking at an increase of about 17,000 there. Uh so not not a huge increase. Then as we move into federal aids and grants, I just want to clarify on this. So we're anticipating a reduction of about $91,000. I want to be clear that about $600,000 of this is money that we were receiving in COVID money that went into like September of last year. We had it for the first few months. That CO money has sunseted. So, a big portion of what appears to be a reduction here um is uh because the the CO funds, the CARES funds sunset it. We are typically we do start the year um a little bit conservative. I mean we are estimating that our title one will be down slightly um and some of our other title programs uh because we don't get the final allocations on those until this summer. Um so we're not seeing we don't have any information that directly tells us we are losing federal funds. This is again typical of our budgeting process. So overall then looking um at our revenue for the general fund, we're anticipating an increase of about $1.6 million over the current year uh for a total of 134 million498,000. Um, looking at our budget, uh, again, just as far as where do where does our funding come from. Uh, the majority of it, 77% comes in the form of state aid. Uh, our federal funds um is uh 3% that's about typical of what it was 3 to 4% precoid. Uh, that number of course jumped up uh for the four years in between, but about 3% is our typical. And then um just under 20% 19% comes from our local property taxes and 1% comes from other local gifts, donations, fees. Um so that's just the breakout of our revenue. Moving forward then and looking at our expenditures. Um so when we look at this um we're we break things out like administration uh administration includes includes the schoolboard. It includes um also um district administrators. It includes our principal office offices principal offices and the the principal secretaries. We see an increase here. Um, when we look at this, we're looking at an increase of about $33,000 or 5% increase. A key part of this change or at least a third of the increase in this cost is due to the investment that is being made in looking at future programming and design at Harambe Elementary. So, um, that's part of we cost that to the admin the administration. Um so I I wanted to be uh clear on that and that's where that comes from. Um administrative support uh administrative support includes things like it includes the business offices, it includes human resources, it includes our central enrollment. So again it includes technology support. Um and you're seeing a slight decrease there because we have shifted some costs that um some of the costs that were previously in administrative support but um under technology we're you uh shifting some of that to operating capital. We've done that in the past too. It still says under the support. It just helps us kind of balance out uh where our funds are. um regular instruction. Uh this is another key uh key area. We're looking at about a $700,000 reduction in expenses. I want to be clear on this on the regular instruction. Um this is um almost 12 FTEES full-time equivalencies that were reduced as a result of kind of our right sizing. Right? We lost one section at each elementary school because of our our minimum at each elementary school because of our declining enrollment. In addition to this, it's also under regular instruction. For years we had um we had guaranteed subs multiple at our buildings from teachers on call. We have re we have not eliminated those. We have removed them from the secondary schools in each elementary will have one for next year but that was also a cost savings and that's under regular instruction. So again going back to the right sizing we are not increasing class sizes. Again, this is more related to the shift in in our enrollment. Uh, vocational education. So, that's our CTE classes. Uh, so we're seeing about a 3% increase there is what we're projecting. Uh, student services. Student services, we're projecting um just under a million dollars in that area. Um, and again, we're seeing the needs increase there. Uh we're seeing a 3% increase is what we're projecting, which isn't out of the ordinary. Uh our instructional support, instructional support, we're looking at about a 1% increase. Instructional support includes uh our media centers, it includes professional development. Um it includes some student technology instructional support. So we we are seeing um a 1% increase there. Uh our pupil support pupil support includes um our social workers. It includes our transportation. It includes our guidance counselors. So anything outside the classroom that provides support. So and again we're estimating an overall increase there about of about 3% or $545,000. looking then at um our operations and maintenance. So that's our buildings and grounds support. Uh we're estimating a 6% increase there um to increase that to about 440 or by $445,000 um in in this next year. And then insurance and some of our other costs. uh we're anticipating a slight or well double digit increase of 11% taking uh those costs from 748,000 to 832,000. So um and again it kind of reflects like the market and we have been working really hard as I should say our agent has been because we are seeing increased challenges uh as several other industries and even homeowners as far as um our property and liability insurance. So overall, we're looking at increasing uh the expenses from 134.7 million to 136.4 million, an increase of 1.6 million and a change of 1%. So there again I've touched on some of these categories um uh as far as what is included in those um are you know our regular instruction um if you look at our regular instruction our vocational instruction and our student services or special ed instruction that that totals 65% of the expenditure budget. So, and those are services that are uh provided directly in the classroom. And then you can add on the additional instructional support again um media centers, professional development, um pupil support, another 14%, guidance counselors, transportation, again those things that um directly support the instruction. Um and then the insurance is 1% and administration. uh is about 4% and adorn men support is 3%. So then what does all this mean? Excuse me. I'm going to focus on the top top half of the spreadsheet. We talk a lot about um unassigned fund balance and what that unassigned fund balance um we look at budget targets. We look at fund balance targets. We have built our reserves up um in recent years knowing that um at some point we would be drawing uh against those reserves as well and really trying to best manage um the re our resources. So, we are ending we're estimating that we'll be ending the uh the fiscal year as of June 30th with a fund balance of about 14 uh $2 million and that was just over I think uh 12%. So, and then rolling this unassigned moving the revenue and the expenditures forward uh that we had just reviewed, we would be looking at deficit spending in this unassigned area of about $1.9 uh million. So, we would draw that fund balance down from 12 million or to 12,350,000 approximately. that would still um keep us uh above that fund balance goal, that target goal of 6%. So again, we'd be at about 10% uh realizing that we've drawn it down 2% um in order to uh do our staffing for next year. And this is something that we can continue to monitor. we'll continue to look at. Um and again, we also need to um hear hopefully it's before June 30th. Um hopefully uh the legislature will complete their special session and we will update things accordingly once they do. So any questions, comments. Here's my contact information. Should anyone want to reach out, it's there. And yes, this help presentation will be on the website. I was going to ask that. Yes, it will be posted on the website. Yeah, great. Thank you so much. Thank you. Yeah. Thank you, Shar. Thanks. So, we will adjourn this part portion of the presentation and um she would take a quick see. Wow. Let's take three minutes. Three minutes break and then we'll come back and start our schoolboard meeting. Thank you, Sher. Sure. You're welcome.