okay good evening everyone we're going to go ahead and get started thank you all for coming out for our annual Town Hall we usually do around this time as we discuss budget um oh I'm not helps if I turn this on huh test test there we go test test all right I apologize about that technical difficulty user error didn't get the power so thank you for coming out for our annual Town Hall um we usually try to time this right around uh our initial opening of our budget uh season if you will and then we also will try to have another one later on as we get closer towards completing the budgeting process um some of familiar faces that usually come out every year so thank you for that and some new ones um we also have some refreshments that we typically bring thank you Tammy for providing those I know you didn't cook them but the store did a good job um and if you uh are feeling so inclined to break your New Year resol solution and get sweets It's all it's all yours for the taking um so our Executive Director of Business Services Tammy fron will facilitate the conversation tonight um we have a presentation that we'll share and then we'll open it up towards the end for uh questions and answers um for the presentation as well some of you that dialed into the board meeting we at the board meeting on Monday it's follows that we kind of repeat that during our town hall and synthesize some of that conversation for you as well so again thank you for coming in and I'll turn over to executive director F thank you Dr Thomas welcome everyone uh some of this information if you've attended these before it may be repeat information but I know we have a lot of new people that are interested in kind of our um Finance process so if you'll bear with me I'll go through um some basic slides for you uh the money that we get from for our Revenue comes from three basic ources so the state of Minnesota and that majority of it is the general fund formula uh for next year it's set in statute it'll be $746 per P um that's the biggest portion that we get there also are categorical AIDs that we receive and those also in statute U formula based and they have to be used for very specific purposes we can't use it for anything other than what's stated in the stat you and then we have partial reimbursement for our special education program we also get local taxes which are uh come in the form of the property taxes that you see tax statements and then we also have a voter approved referendum um that right now we currently have $624 per student um I think you all are aware that November is we asked for an increase to that in the um voters voted no on that so we are currently still at $624 per student and then we also get money from the federal government most of it flows through the state um so the state receives it they'll pull out whatever administrative fees they want send it to the districts and then it um things like every student succeeds act which is probably know it as Title One or some of the title allocations and then the individuals with Disabilities Act as the federal doll we get from for special education we look at our state funding formula which as I stated next year will be um $746 this current year it's $728 and if we look back to when they started doing this in 2003 um if we the funding formula and statute had C up with our inflation rates we would be receiving $864 per student um which is $1,364 per student difference and if we take that multiplied by the number of um students we have in the district that's a difference of an additional $1 million that we could have seen in the district the impact of enrollment is most of the money that we receive is based on enrollment um there are many funding formulas that specifically talk about enrollment when we talk about enrollment there's two two different numbers that um you'll hear kind of talked about the enrollment is measured in average daily membership so if a student is enrolled on the first day of school and the last day of school they count as one average daily membership or ADM but for funding uh the adms are weighted so for voluntary pre kindergarten if uh a 1 ADM actually counts as A6 pupil unit and then students in kindergarten through 6 a 1 ADM counts as one pupil unit and then all the students in grade 7 through 12 1 ADM counts as a 1.2 pupil unit so when you're calculating the formula for instance $746 General CL formula allowance the K through 6 would be $ 7,646 per student but the 7 through 12 you multiply that by 1.2 uh Minnesota statute allows for open enrollment or school choice um students have every opportunity to attend another District if they choose to do that and if we look at our enrollment over the past 5 years the first line in each of the years that kind of teal colored that's how many Resident students we serve in our district that rust colored um bar is the number of students that choose to leave our district to open a roll in other districts that green bar is the number of students from outside the district who enroll into our district so that blue line is the net effect so it's the green line minus the orange plus the green or the teal color minus the orange plus the green equals that blue line so you can see we've been benefiting from students choosing our district for at least the last 5 years we look at our projected enrollment moving forward when we look at enrollment we usually use uh there's several different methods you can use we choose to use a three-year weighted average so basically you look at um the past 3 years of enrollment you wait the uh current year with the most and then you calculate the weight at average I also want to make sure that you're looking at the grade progression so um for instance in 2024 the first graders the 81 first graders next year will be second graders so you just got to make sure that that age progression looks reasonable and again you can see that um the projection for the next few years is that we have declining enrollment which kind of corresponds to the declining birth rate in our district when you're putting together a budget um the budget is of your planning tool to monitor all your revenues and expenses for the school year um it's based on Pro jeed revenues you just want to make sure that for a structurally balanced budget that your expend expenditures don't exceed your uh revenues but we do have U ability for the board to approve use of fund balance and our board fund balance policy is to maintain an unassigned minimum of at least 8% so when we look at developing a budget there is a state statute that says a budget has be adopted by the school district prior to June 30th of the um fiscal year and because the revenues and expenditures aren't really totally known until the end of the year there are many things that happen during the year that you may not anticipate so there are final audit entries done at the end of the year we have to use some assumptions um the first one that is pretty much given is the uh formula allowance which we know is going to be $746 per student next year then we also look at uh this is a legislative funding year we don't anticipate any additional Revenue coming to the districts but there is a possibility they could do something with formula allowance and if they do we have to adjust our projections based on that uh the staff salary that we have uh is based on our negotiated collective bargaining agreements we have to make sure that we're following those um agreements because we do have several unions in our district um we're assuming that the weather patterns are going to be the same so if you look at how you budget for utilities kind of look at the 5year average what did we spend over the last 5 years and you're assuming one year was hot some one year was cold one year we had snow one year we didn't so if you take that 5year average and then if you know what um rat the utility company is considering increasing it by then you can kind of get an idea of what your each cost would be we also assume that those student supports are going to be consistent in the previous year so we don't want to see if there's more kids we're going to have um the same support staff we have to just kind of take that into account we also are going to assume that the categorical funding that we have is going to be used for the purposes that it was intended um any of the revenue that we budget for the current year is intended to be used for the students that year so any legislative changes we have to follow so um as the legislative session has been happening we get updates daily on what's going on what bills have been introduced what potential impacts they may have on our uh revenues or expenses we have to follow those and make adjustments accordingly for the contract and supplies we're going to increase those by a reasonable inflation rate unless we already know what the vendors are um anticipating for an increase in the contract we always work contracts um kind of in the spring everybody's looking to finalize their contract for the next year so a lot of them will know what what the increases are and then we're assuming that enrollment is going to be close to what we projected so if any of those things don't happen then we're going to have to um possibly look at a revision on on what our projection was if we look at the Last 5 Years this and looks kind of hard to read but um this is our revenues and expenses um that we had for the last 5 years it shows you the amount that we paid in property taxes and perent what that is and then the additional uh State funding Federal funding and then um the Department of Education divides our expenditures into these categories the administration District Support Services um Elementary secondary education those we are required to report that way to the Department of educ we don't have an option so there are account codes that are associated with each of those and you can see our percentages that we spend in each of those categories has been pretty consistent over the last 5 years but we have been using um fund balance to balance our budget other than the year that we had Co when we had um significant amount of federal dollars come in and not as many expenses so that 2122 um um you'll see we added the fund balance because of all that U federal revenue so what is the revenue we have um all the money that comes into the districts are a combination of State collected taxes which are sales tax and income tax and then locally collected property taxes the general education Aid is the largest um kind of pot of that money um it's intended defund the basic educational needs in every District there's the categorical Aid again is very specific on how you're allowed to spend those and it is in statute and then the property tax levies December the school board approves those property tax levies and then there is a voter approved referendum at whatever time you um are required to have that go to the vote um the categories are authorized in legislature so so again they're they're very specific categories with very specific BS some of those non-categorical so when we say non-categorical it means we're allowed to spend these dollars any way that the district feels is best supportive of our students the basic general for Education formula kind of gives you the minimum level that that um school districts have um the extended time Revenue there are some students that will attend school over the summer or um have longer days we get extended time revenue for that it's not a lot of money but it it is additional dollars there's a declining enrollment formula that basically takes your general education formula times 28% times the number of students that you have them declining the number of fewer students there's a pension adjustment Revenue because the state has changed pension percentages they give you um some additional dollars to kind of compensate for those change U contribution rates the transportation sparsity it's based on the number of students that you have per square mile again it's not a lot of money for us uh the local optional revenue is a mix of Aid and Levy and it has basically the same General Uses that the general education formula allows uh equity revenue was intended to kind of help the disparity in revenue from those highest to lowest districts uh kind of in the area the transition Revenue it pretty much saying that we're going to guarantee you're not going to get less money than you had in fiscal year 2015 and then of course the referendum money um so all of those essentially you can put in that call the non-categorical funding pot and use it for whatever you want some of that categorical Revenue that we have gifted and talented Revenue again this is not a lot of money $13 per pupil unit um so we get about 125,000 the basic skills or the compensatory revenue is how you usually hear it it's based on the number of free and reduced lunch students there's a list in statute of 12 things that you can use those for um the state does have a report that's required last year I think it was the first year that they required this you have to show the state how you're spending those dollars to make sure that you're using it for one of those seven categories English learner Revenue obviously for our English Learners the operating Capital has to be used for repair and maintenance of facilities purchasing leased equipment or purchasing textbooks that's it there is nothing else you can use that money for special education Revenue self-explanatory it's using to educate and support our special education students the American Indian education Revenue supporting our American Indian students the Q comp Revenue was developed um several years ago as a way to encourage districts to adopt an alternative structure for teachers and you have to use it for um professional development for teachers the governor in his budget proposal this year is proposing to eliminate that uh Revenue Source it may or may not make it through all the way through the final bill uh if it does in fact get taken out that's about 2 $2 million for us the long-term facilities maintenance you have to use for deferred maintenance health and safety capital projects or increased accessibility to schools you have to submit a 10-year plan to the Department of Education the commissioner of education has to approve it after the school board approves it um you have to um kind of adjust that every year so while you have a 10-year plan you have to update it every year there's career and tech ed Revenue which obviously has to be used for our career and tech ed programs um achievement and integration Revenue um was intended to improve the rational economic integration increase student achievement and R reduce academic disparities the literacy incentive Aid the calculation is actually based on how well students read in third grade versus how much they improveed by fourth grade um it's a little over a million dollars for the school library Aid again self-explanatory we have to use it to support our libraries and schools nonpublic pupil Revenue we have to it's kind of a flow through money it comes from the state we have to send it to our non-public um schools for those students the student support Revenue was um fairly new I think this is the second year third year um that is used to support student Personnel like counselors social workers school psychologist chemical health dependency workers um so those you have to use it for those dollars the safe School Revenue we use it to pay for our school resource officers and then again the referendum so if we look at how much is categorical versus how much is just are we allowed to spend about a third of the money that we get is categorical which means we have very specific purposes that we can spend those dollars for so if you look at the non-categorical revenue which has to fund everything else um if we look at things like utilities which we spend about $2 million a year Transportation which we spend about $7 million uh special ed the cross subsidy so we spend more than we get for from aid for special education to support those students is about $5 million there's a Learning and Development um require that you have to spend U $2 million supporting the teachers in kindergarten through sixth grade the professional development we have to spend 2% of our budget which is about 2. half million so that's 18.5 million that we have to just take right off the top that we are required to spend for U non from our non-category goal you we have to pay our light bills and get the kids to school so of that 80 million 18 and app of it has to come right off the top for those um items so if we look at the state aid um these are all the categories of state aid that we get there are several reports on the Department of Education website that you can go on there's a levy certification report that shows the formulas um I've kind of summarized them all here so when we look at our Revenue projections in all of these categories we get about $97 million if we look at the levy again that's approved in December by the school board there are very specific categories with very specific formulas this has already been approved in December um because it's already out to the taxpayers it's about $18 million so what is our Revenue projection for next year if we look at our state aid the levy and then we also get other fundings like investment earnings some grants uh third party billing donations other things that um other re miscellaneous Revenue that we get it's about 5.7 million so we're projecting our revenue for 2526 to be 120.4 million so what do we spend our money on we have for this current year 122.8 million in our expense projection 83 3% of that is supporting students it's salary and wages plus the materials that we send to the classrooms 14% is spend on purchased services so for transportation utilities any other contracts that we have um software and then 3% on Capital expenditures so the majority of what we spend money on is Staff we're very much um tied to our people if we look at the funding formula versus how much we spend per pupil the state funding formula of 7,465 per pupil they actually changed the legislation to tie that to inflation but they put a cap of 3% on it so in the future unless they change the legislation in this session we will never get more than an increase of 3% this next year they increased it by 22% then we spent about 13, ,000 to educate our students and again this is looking at the general fund expenses um and this is as of the 2023 they haven't updated the reports for uh 24 yet and the state average is about $1,731 per student again that's in the general fund it's not taken into account The Debt Service the food service or the community ed funds and while we try to spend our tax dollars very care carefully we honestly lack the funding that we need to address some of those priorities that have had been identified as top priorities in our community we look at general fund expenditures and this is taking out the capital funds and those can't be used for anything other than capital and this is just a comparison to some of the surrounding districts that we have so we are spending Less on per pupil than um several of the other districts in our area this is a um 5year forecast that we're projecting and based on the enrollment projections that we saw before the state AIDS and levies that we anticipate seeing and then building in those increases we have 85% of your budget going to salaries and you have collective bargaining agreements most of those collective bargaining agreements have in salary inrees already built into the agreements so we have to pay those so this is just showing if nothing changes and I want to stress that this is just a forecast it's not a future budget it's just a forecast if nothing changes we are going to be taking a significant amount of money out of our fund balance and you can see by 2728 which by the way our Levy um our referendum expires in 2728 so that's why in 28 29 you'll see see the property taxes goes down U by almost $6 million that's assuming that our levies is uh our referendum is going to expire there is a u statutory um provision in legislature that our school board can increase that Levy exactly as it is without voter approval but it has to be exactly what it is now so that would be $624 per student um as you can see we are going to be be taking reductions out of our expenditures for the next several years we are looking at $4 million coming out for the 2526 and 4 million every year at least for the next several years so when we talked about the levy back in November before the vote um we had um two different kind of sets of data that if the levy was approved here's the things that we were hoping we could do based on the surveys from our community and we were very clear that if it didn't get approved these are the things that we were not going to be able to do um anymore um I think these were out everywhere they had them on our website there was mailings there was um every community meeting we had these were discussed at that those meetings so as we're looking for next year's budget what what are we going to have to do for next year to reduce our budget our expenditures by $4 million those first three items um increase class size targets at elementary level by two the middle school cap on minimum class size and um some elective changes and then also streamline electives and and class sizes at the high school those were discussed at the board meeting in in December and because we had to start enrollment um by the end of December we needed a decision on if those were going to be um kind of green light to go on and the board did kind of give a thumbs up so those have already been implemented we've got those already in the enrollment uh projections and adjusting those as we move forward the rest of these we actually had a discussion at the board meeting on Monday night for these things um we're proposing some par professional reductions in special education um our director Michelle Chuka feels that she can make some adjustments within her staff and accommodate this that um we need to look at U some changes she's more than willing to um kind of fit those in her plans we're moving the mcaps program to the high school uh we did find out that Farmington voted last night Monday Monday night at their board meeting that they do not have the budget to continue the partnership with us so they have pulled out of the mcaps program so we will just be serving our students and we're going to be moving them over here actually into deod um we've looked at the cost of how much it will take to move equipment and all of the program and um we feel like our facilities has has reviewed all the space and we think that will be um a fit that we can manage um it'll reduce some of the transportation cost and then by doing that the there are currently four um assistant principles here at the high school we would be be reducing one of those we talked about eliminating the online program we don't have a lot of students in online and we feel like we can accommodate those needs at our ALC uh over at Bridges and then eliminating our third grade Sage program uh we're talking about reducing iPads in elementary K1 uh taking out the desktop computers for staff and eliminating edgy climber contract some of the other reductions that we're proposing is our Q comp allocation we exceed what we get for Revenue so we're proposing to uh reduce two peer coaches so that the revenue that we get doesn't um it matches our expenditures we're going to eliminate the fitness committee expenses there's a fit committee that know pays for some um benefits that for all of the staff in the district so we're going to eliminate those and then because we voted the board approved two less student contact days in the calendar for next year that will save some Transportation um the staff that don't have to work on those student release days and the um teachers on call sub rates will save two days of that we're going to close a pool at Twin Oaks that will save about $75,000 however there is some very high maintenance costs that are anticipated needed at that pool so those long-term facilities maintenance dollars will be moved to some other needs that we haven't been able to meet and then we're going to do some adjustments to some of the administrative assistance and that will be reducing three admin assistance throughout the district there are a couple other things that we're talking about to optimize resources it's kind of cost neutral we currently have an employee assistance program that we're paying for the vector program software it's kind of a training module where we have uh required training like blood pathogens and and some safety and bicycle training that was free for us um they have notified us that starting July it's no longer so we're going to eliminate the employee assistance program because now we have a similar program with blue Blue Cross Blue Shield which is our new health provider and just switch those so that we can pay for the vector software and then currently we have a couple building Subs at our elementary sites that go between buildings when they're needed we um by doing that we end up having to pay for teachers on call Subs so we just thought we could just assign one building sub per building and we would save those um teacher on call Cost it would be kind of cost neutral so those are the things that we presented to the board I think that's it um R through those kind of quickly but there's questions we will certainly entertain uh Tam Tammy before we go to questions if I may just give just a few more pieces of context um and one of the things that uh we're also looking at I mean there'll be some other reductions that our team is currently processing the budgeting process is an iterative process we will eventually come to the board with a preliminary budget in may like kind of that almost final budget and then June by the end of June by Statute we to present a final budget to the board for them to um take action on we've got time to work through some of these other factors and uh so we're we're continuing to review other reorg reorganizing structures uh curricular structures things of that nature so there will be additional reductions that will be bringing forward in conversations um as we work through the process simultaneously um we are going into a legislative process as you all probably are watching on the news it's been quite the uh launch um we'll see what happens there eventually in terms of how they you know figure out the rules of the sand boots but I will say that um many of the superintendant in the Metro I'll just say across the state of Minnesota were not alone in this situation um we're we're in a really structurally challenging space as a state and um the one thing that I would encourage many of you to become more active in as as you can is at that State level um advocacy we have um as you saw the um base funding formula is predicated on a uh a reality that's not really uh taking effect right now we have stagnant enrollment at best we have declining birth rates the Minnesota demographer um projected by the year 2030 will we will have doubled the amount more than double the amount of people 65 and older so we're not getting as many babies uh as we typically have seen over the many years um so that funding formula is something that we want to continually press upon to ask the state to figure out what they can do about that I would also say that another significant issue that many districts are facing is uh twofold one the continued cross subsidies of two primary areas special education now I going to be very clear I appreciate our legislature taking action and funding us to the tune of about 45% it comes woefully under funded by the feds the state historically has not done much of anything but this past session they did put 45% into that formula so that does help while simultaneously our sped referrals continue to go up across the state across the country quite frankly as well so at some point that's going to be up underwater again and then another big cross subsidy happens to be English language Learners not fully funded from the feds not fully funded at the State and it's put upon the local communities by way of usually our taxpayers to say help with this cross subsidy okay so th those are two other areas that we want to be mindful of and then lastly um there were a lot of mandates that came out of this last session and when I say a lot I mean a lot um we are in in we are tracking about 60 plus mandates um there are there are a lot more there's probably about 100 more mandates not every one of them come with huge um unfunded or underfunded lines but there are a couple that I want to just bring to your attention that from a community advocacy standpoint it will be critically important for us as a community to bring our voices to the capital and many of us and some of our board directors who are here this evening um we belong to Advocate the Minnesota school boards Association The Association of Metro School districts and Michelle chuga belongs to mace which is our special education Emily Emily belongs to our food service advocacy group so a lot of our administrative group we belong to these advocacy organizations that really try to bring our voices to the capital to advocate for change I'm just a superintendent often times I can be a talking head with legislature with with the legislature as parents your your voice carries weight and so as we go into this session my ask of our Collective Community if there's nothing else is to ask for no new mandates and revise or repeal the mandates that came under or unfunded from the last session um we are looking at things that are costing us in the neighborhood of about a million to a million5 it's even higher if we can't continue to do the act training through our our through our teachers contracted dat just to put that into perspective we uh you saw our calendar has been aligned so that we have well this year we have early release listening to some of the feedback from our families if there's a way that we can streamline that and not have it spread throughout the year and just it's easier to program from a family standpoint from one full day release versus multiple half day releases Etc so next year we'll be doing a two day um kind of combine them all into two full days um in the first semester and second semester that allows us to bring all of our professional development that's statutorily required for redact into the teacher contract day if we weren't able to have a calendar like that um and and we don't know what will happen with successive requirements with reac um we would be on the hook for about a million dollar to cross subsidize the funding that we didn't receive from the state of Minnesota to pay our teachers for professional development okay now again we're one of a few lucky districts and I'm thankful appreciative of our board and our community and I understand that's a sacrifice from a family standpoint to not have that day but you know we also have requirements to meet to train our teachers you know in the science of reading and and a variety of other things as well um we have earned safe and sick time we have summer unemployment mandates um that is covered through 2026 and it's highly projected it's going to be done in 2026 and then we'll be on the hook for that state mandate and one of our colleagues in education when we were all test many of us were testifying a couple weeks ago and you know the challenge that we are pushing to our legislature is that you're bringing in all these mandates um and if we're going to be on like a report card to say how are we doing you know if it's about earn safe and sick time 100% of people who apply for that and qualify for that we're going to deliver on that and M STX Char we have to pay it A+ Sumer unemployment anybody who applies for that we have to deliver on that and give that to them A+ Universal meals leaving no kid unfed um we got 200 million in K12 education A8 plus but when it comes to the things that actually matter that our communities will say are you educating our kids unfunded okay so this is the challenge that we're in right now so your Collective voices will really help our community um to ensure that as we go into this session that we are able to bring our story our reality our perspectives to help influence the legislative changes that need to be made so that we don't find ourselves continually behind the aall so just want to give that some context as well um as we go into that so um open it up for some questions that you might have um around our budgeting process yes