Like less than a minute to go. [snorts] >> Good evening everyone. Welcome to our general fund budget hearing and um um so I will hand it to Sher Thompson. >> Thank you. Chair 2. So yes, we are here this evening for the 2026 2027 general fund budget hearing. Uh this is an annual hearing uh public hearing that the that we host and this is prior to the board's adoption of the uh of actually the entire budget. Um that will occur on June 23rd. these document. This document is also available on our website um at isdg623.org. Uh this evening we will be discussing just the general fund, the general fund unassigned. We have multiple funds within the district, but this is primarily our day-to-day operating funds. So that's what we focus on for this hearing. We're going to talk a little bit about the budget process. Um we'll touch base with on our revenues and our expense expenditures and then also look at uh a fund balance projection and we will have time for questions and any comments. First thing is the Minnesota legislature sets funding for public schools. So they not only determine how much we're going to school districts get, they also determine how much will come in the form of uh state aid and what will be collected through property taxes. Um again, we we don't have a wish list. This is all formula based. Um and the state sets that up. It's also highly regulated. Um the formulas um are developed that determine our revenue. Most are based on a per pupil amount. Uh again, the state sets the tax policy for local schools on what's coming in the form of taxes and what comes in state aid. And then we also have a maximum authorized property tax levy. Again, that's set by the state because it's all based on formulas. Uh the district's options as far as funding is it's either authorized by the legislature or it has to be voter approved and that comes in the form of um referendums. Looking at our uh budget timeline, I won't read through the whole thing, but our budget is really it's like a living document. It's it's evolving and changing. Um it starts again even next year's budget will start with the or the 2728 will start with the adoption of um our preliminary budget. So we do the preliminary budget um in September uh then we are collecting we collect data and report that to the state a lot of data about estimates for the following year uh for a year out or a year and a half out. So we calculate those estimates. We work with the department of education to calculate a preliminary levy. So for instance in September of 2025, we set that preliminary levy for the 2627 school year based on even enrollment projections that we were doing at that time. Um so we start that work um well ahead of the school year. And then uh and in December uh the board approves the final levy. Again, that's preliminary in September. And in December um it's the final. The board can't increase uh the levy at all. You they can only only have the authority to decrease. Um we then start working both on revising uh the current year budget but also setting parameters of uh for our upcoming year budget. So we look at um kind of timelines. We look at what what do we think's going to happen with costs? What do we estimate our increases to be? Of course the big driver is for us is enrollment um as it is for other districts. So, we look at all of those things to set our parameters early in the calendar year. Um, the board then uh approves mid-year budget revisions in February and around that same time uh they approve parameters and the timeline for the upcoming year as well. We have a f district finance advisory committee um that we uh check in with like four times a year. So we also review that uh the budget with um with our advisory committee and then uh we just update the board um as needed between during those uh spring months and that brings us to um uh our budget hearing and then again the final will be uh adopted on June 23rd. So when we look at our specifics again what we've done this year um the funding bianium is usually every other year in in the odd year. So this was based on Minnesota statutes from 2025. Um uh so there is um for instance our general fund basic pupil unit uh formula it increased by 2.69% this year. Um, so that's up to $7,683. Uh, again, that was set by the legislature uh last year. Um, looking at our operating referendum, we do receive uh operating referendum uh above and beyond the basic formula that's based on pupil units. That also for us has an inflationary factor built in and I believe that went up about 2.4%. So, uh, we are generating $2,93 per pupil. Um, overall our levy, uh, the levy revenue, when I say levy revenue, that those are the dollars that are going to come to us in tax, local property taxes rather than state aid. Uh, that is based on what the board approved uh, last December. Couple more things as far as our revenue goes. Uh, one of our big items is, um, in addition to our general fund basic funding formula is our compensatory revenue. Uh, last year or this year, we generated um about $9 million in compensatory revenue. So, this provides programs to some of our our neediest students. Um, that is decreasing for next year. Uh, that's decreasing by about a million dollars. So, we'll be seeing about $8 million in that category uh for next year. And there is a committee at the state level um that's reworking and revisiting this whole compensatory revenue. Um they've been looking at we've been looking at that I think for the last year and a half. So, that that is like to be determined on the future on that and how that will work. Uh something new for us this year and I want to point out this isn't in our unassigned I we'll talk about more more about this at the end of the presentation. It is within the general fund but it's it's dollars that are set aside thanks to the generosity of our community. Uh the community approved in [clears throat] November of 2025 a $6 million annual uh levy that will help offset the cost of our technology salaries, hardware, uh safety improvements in our facilities and related communications uh and software. So, and we will we have that in a separate bucket per se, uh, a separate fund that we will continue to report on out on on where those dollars go. So, they're not part of the unassigned. They are in the general fund, but we're reporting that out separately. Then moving to our expenditures, uh we're always as far as our priorities go, we look at focusing our resources on equity and student achievement. Uh our staffing is ma matches enrollment changes and aligns with our class size targets and we'll touch on those a little bit. We haven't changed our class size targets. Um however and I think this is one of the difficult things whether you work in education are a parent a community member um for all of us is you know we have seen as of other districts we've seen some decline in our enrollment and as a result we then have to experience some right sizing as far as our staffing goes. By no means are we overstaffed. Um but as we see um the student enrollment uh decline or it's stagnant um and our costs continue to go up, we have to make some adjustments uh so that they're in alignment. uh something that we added back in 2022. Uh as a part of the operating referendum um at that time uh we continue uh to support uh provide supports for mental health and social emotional learning. So we look to continue to maintain that. Uh other things that we build into our model, we estimate our salaries and benefits. um for per contract negotiation. So we include that when we project our budget forward. Uh we look at utility costs and we look at base um multipleyear average usage and then we give consideration to current rates. So we are looking at some increases um especially in our fuel costs, our contracted transportation costs. Uh that's one of our largest costs. Uh aside from as far as single vendor um aside from medical insurance, our contracted transportation costs are estimated to increase uh due to an increase in in our contract. It's like 3% this year, a 3% increase for the next year. And then um we also have seen an increase in the number of students that uh that we are transporting uh as well. So um then we have what's referred to as mandated reserve expense categories. We're not going to touch on those a lot tonight. We obviously are going to we spend those in compliance with statute. These also fall under the general fund. Um these are things like uh staff development where we're required to spend x amount of dollars or x percentage on staff development. Uh our health and safety or long-term facility maintenance. Uh that also comes through the general fund part of that. But again, it's in its own reserve account. So we're focusing more on the unre um unassigned fund balance when we talk about um this budget. Um, I mentioned a little bit about average class size targets. So, this is just kind of from a historical perspective. When we look back to uh 2018, 2019, uh, well, actually all of the years with the exception of kindergarten, we went through a period of time where due to budget constraints, we were increasing our class size. And I'll use grades 1 through three as an example. In 2018 2019, our class size target, our ratio was 27 students. Going into 2019 2020, again due to budget challenges, we increased that um to 27.5. And again, these are just targets. Uh the following year in 2021, uh we increased that to another half a student to 28. uh we were at 28 and 2122 for the 21-22 school year. In November of 2021, we passed the operating referendum and we were able to bring those class sizes um we were able to bring those class sizes down and we have remained with these class size targets um ever since that time. Um, looking at enrollment, again, as I mentioned, enrollment is a big driver for us for revenue. Uh, so looking at, and this really just kind of takes a look at what we've been experiencing this year and looking forward to next year. So um our enrollment projections for 2526 uh when we set up our enrollment projections um uh last spring we had budgeted uh 7,040 students you can see that you know most we were down at many levels particularly at the elementary so we had budgeted for 7,40 students uh and we start for looking at the next school year. We always February 1st has always been a good date for us that typically that will align for beginning a year of enrollment for the next year. We know we have some inflow um of students especially like at 9th grade, right? We know which grades we're bringing students in and maybe sometimes which grades students may leave. So, um, we had, uh, right now as of or as of February 1st of 2026, uh, our enrollment was at 6,968. And we also made some budget mid-year budget revisions. So, that's down 72 students from what we had budgeted for this year. So, we revisited um, our enrollment. We not only revisited our enrollment in February, we looked at it again in April. Um because in particular we're seeing our kindergarten uh our incoming kindergarten um looking at our census file then and the actual enrollments we're receiving um are less than what have have been in in recent years and we have kind of seen that trend and others are seeing that trend. Basically our outgoing graduating seniors those classes are much larger than our incoming kindergarten. So we um addressed that uh projection and now we've come up with um we are projecting 6,883 for next year which is like um 85 students less uh than our actual enrollment for February 1st. So, here's just a quick peek at some of our um as far as uh our revenue goes. Um I'll touch base on this like looking the first items like the source numbers 1 through 15. You'll see the subtotal of local taxes. We're estimating that our local tax, our property tax revenue uh will be decreasing by 541,000. There's a few factors that go into that. One of them being the fact that we when we estimated enrollment even last fall or last summer, we are estimating that that enrollment would drop a little bit for the 2627 school year. um other local revenue, um fees, um some donations. Um we received funding for medical assistance for some of our students. Um and we're looking at an increase there for of $200,000. And then just other miscellaneous local revenue. Again, that's donations. Um that can also be fees, miscellaneous revenue. So, we're looking at um an increase there of about $151,000. Moving uh forward then on this next page, uh probably the big item here is um our state aids and grants, right? So, um we have our state aids and grants. Um we're looking at an increase here of $2,963. Uh the biggest change comes in the form of special education and that's uh $2,185. So um otherwise it's pretty flat. And again when we look at our enrollment projections that's a big driver there uh as far as why. And then the items um at the bottom some of our federal aids we're seeing well we are seeing reductions there. We're seeing reductions overall, not so much in special education, but we're seeing redu some reductions in our title programs as far as uh federal aids and grants go. So overall, looking at our total general fund, um we're looking at a 81% increase from the current year to next year. So a lot of times you know there's confusion also about oh you know even if you look at our basic funding formula if it increased 2.6% that doesn't mean our overall budget increases 2.6%. It's just that one component that basic funding formula. So, um, so it can be confusing, but we're look, so we're looking overall at an increase of 1,86,000. And then looking at Okay, so how does that how does the pie slice up here? So, I'm going to start in the blue section in the upper right, that 18%. So, 18% of our revenue comes from local property taxes. 1% comes from other local again that's that donations participation fees admissions um the big piece is uh state aid 79% um comes in the form of um state aid uh which is is significant um and then the 3% is uh uh local taxes property taxes so that's what that's how our uh general fund breaks down. So then I'm going to move from the revenues and look at the expenditures. Um so we break things out and again these are by programs. So um when we look at um I'll I'll go through and give you a little bit of a description on these as far as the programs go. administration. When we look at administration, uh that is um the superintendent's office, the school board, the principal's office, uh those type principal secretary, those types of functions. So, we're looking at an increase there of about 4%. Um administrative support, that includes the business office, it includes human resources, it includes central enrollment. um it did include some of our technology information system staff. You will see that we have a 14% reduction there. And the reason being is we've moved those technology information staff um salaries. We've moved those to that tech and safety levy. They're going to now move to the re that reserve. So that's why we haven't cut 14%. It's being funded by that separate funding source. So, I wanted to point that out. Um, our regular instruction, regular instruction is just regular classroom instruction. We're looking at a 3% increase there, uh, with salary and benefits. Um, so an increase of about $1.6 million. Uh, our vocational education instruction, uh, we've just got a a slight, actually that's pretty flat. It's $11,000, but we spend about $2.5 million on VOED. And then we move to student services. So, this is our the student services is our special education. So, again, it's still classroom, still supporting the the students, but it is uh special education students. We're looking at a 6% increase there or about a $1.8 million increase. Um, moving to instructional support. Instructional support includes our media centers. It in actually does include some of the software and computers that we buy for students and we have a little bit of technology information salaries in there. So this is another one that we're moving some of those expenses. So you see that reduction of 6% that also reflects that movement to that safety and technology uh levy. So we're not actually cutting there. Um, but we're moving some of those into that fund. Um, looking at pupil support, our pupil support includes uh our nurses, it includes our social workers, it includes probably the biggest piece here is also our transportation services. Um, so we are looking at an increase here of about $767,000 or 4% increase. um our operations and maintenance. We've moved some things around there. We've made a few reductions in certain areas. We've increased some of our utilities. So, we're looking at about a $21,000 increase or it's about it's pretty flat. And then the other item we have here is our property and liability insurance. And we have seen um some reductions uh there. So, um, we're looking at about a $210,000 decrease. So, overall on our expenses, we're looking at a 2% increase or an increase of $2.9 million. Again, this um this breaks it up um kind of in that it breaks it up as far as percentage. I won't go through each one of them with you, but again, it follows that same it's by program. So, you know, there's the administration, the administrative support, our regular instruction, vocational ed. It's really just the um the chart for um the overall expenses. Um, one thing that has not been, again, this is that safety and technology restricted [clears throat] fund. It's not in our total numbers. You'll start seeing this when we present the full budget to all in um in June. And we will start reporting it out then as a separate um appropriated fund or designated fund under the general fund. It will have its own line item uh own um number. So, we're generating $6 million uh as far as um revenues go for this next year. Um and then we have it broken up into categories. Um communications, some of our communications, communications as far as software goes, uh communications with our families, communications, even our Zoom. Um many different forms. Um as far as communications, we're looking at about $900,000 there. And again, this is preliminary budget and we're um spending a lot of time filling uh figuring this out as as we go through and look at all of these expenses. Uh $2.4 million in infrastructure and cyber security. Uh infrastructure is, you know, a lot of our network servers and whatnot. Um also cyber security. Uh we have uh the cyber security costs, the cyber security insurance. We are also have launched cyber security training for our staff. Uh so we're looking at about uh $1.8 million um or I'm sorry uh the $2.4 million there. And then student learning of uh 1.8 million. And again that's some um that's even some of the software that the students use and some of uh their devices. And then uh the last and then the last thing we have is uh building safety and security. So that's where we're adding additional cameras, additional fobs on doors um uh is in under that category. So we're looking at $6 million total. And also I should point out under that infrastructure and cyber security that 2.4 4 million. Probably about 1.5 of that um is salaries from tech uh out of that 2.4 million. So then how does this all break out? As I mentioned, you know, we're really focusing on the unassigned. Um we have some dollars like staff development and compensatory some of those things that we uh where we need to spend money in fact we spend in excess of what's required so that usually the revenue comes in what's required to be spent we spend in excess so we don't run negative fund balance so it zeros out under so in that lower portion where we have the restricted but our unassigned fund balance that's where we full discretion. We um are actually uh looking well last year we ended the uh that's not the one >> like this is too high. I'm sorry. >> Yeah, I was like Okay, >> you're trying to adjust it really quick. >> Everyone has the handout. >> Okay, >> we'll adjust it online. So, um >> Oh, so the handout is correct. >> The handout is correct. >> Got it. >> Um so, yes. So, we are looking at >> and I was like, I don't have that handout. Yeah. >> Should be this one. >> Oh, yes it is. >> Okay. Yes. Cuz I was like, nope, it's about a 6.5%. Okay. So, we are begin we are estimating that we're beginning the school year as a with an unassigned fund balance of 12.2 uh million. You can see our unassigned um uh revenues and expenditures there. Uh we als we will have def deficit spending of $3.9 million being our um uh our expenses will exceed our revenues. So we will be drawing the fund balance down to about 8 uh250,000 which is around 6.5% of the fund balance. So we are drawing that fund balance down. Thank you. the fund um balance policy, the board policy um uh calls for a minimum um of 6%. Um so this is where we are for next year and then we will start that work um next year early next year on how we continue how we keep that um present a balanced budget going forward so that we are in alignment with that. That's all I have. I don't know if there are any questions or comments. >> Thank you. >> This is will be online. >> This will be online. >> Yes. >> Well, thank you, Sherry. um for the comprehensive kind of presentation. I always learn something. Uh so thank you so much. And I know Pete, you your your contact information is on the slide deck, correct? People can contact you. We'll have the updated version online. Where would they find that? >> So it's on um isd623.org. they go to our website and if you look at even departments there's a business and finance [music] >> okay >> section there where we have other audits and other financial data. >> Okay, great. Thank you so much. >> Thank you. So we'll um now close this meeting uh the hearing unless there are other questions for Sherry and we'll close it and then we'll >> maybe three minute yeah to start our schoolboard meeting. >> Okay. Thank you everyone.