like to call to order the special school board business meeting for June 4, 2025. Tiffany, can you please do the role? Johnson here. Roofy here. Peterson here. Smith here. Aldridge here. Valdez here. Zedic here. Sha here. Michelle, please join me in the pledge of allegiance. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Good evening everybody and welcome to the uh special school board meeting for June 4. Next on our agenda is um item three, the consideration of the agenda as presented. So moved. Second. The motion by Brophy, a second by Aldrich. Any discussion? Seeing none, all those in favor? I opposed. Motion carries. Next on our agenda is the purpose of our meeting tonight, the district financial outlook. Um, and here to present is Dr. Redmond, our superintendent, and our director of finance and operations, Bill Manazi. Gentlemen, thank you, Chair Smith, and uh, thank you to everyone who is present this evening. We really appreciate you taking time out of your busy schedules and being here with us. We've kind of got a threepart um setup for our presentation. Bill and I are going to go through a series of slides and share information pertaining to our district's financial outlook and then we have a a designated section for questions and answers. However, and this certainly includes the board as well, if there's something Bill or I are talking about that you go, hey, I'd just like clarity on that point or maybe for you to go a little bit deeper, you know, kind of raise your hand or back here, you know, cough or something to get our attention. We're happy to do that rather than continuing on and you've got a nagging question. And then the the third and final part is a public comment uh with uh public comments in regards to this evening's presentation topic, the the district financial outlook. So with that, we'll jump right in. Um you know the school board uh in the next few weeks uh will be determining uh a plan for the district's financial path forward regarding the challenges facing the school district in fiscal year 27 uh which is the 2627 school year. So, we're not talking about the coming school year, you know, that that starts in September, the 25 26 school year. We're actually talking about the year after next. And um we certainly, you know, have there are some budget challenges next year. We were able to deal with those with the financial resources on hand for for next year. However, our budget becomes imbalanced for the 2627 school year. And then also you know consideration uh for a plan also needs to be initiated for you know fiscal year 28 and beyond. Uh some of the you know some of the challenges definitely continue into the next the the following school year the 2728 school year in Minnesota. Our state legislature does school funding uh in a bianium. They're uh in the process of wrapping up their legislative session this year, which is a funding year, which it will be our we will have our we will know our funding when they're done for the next two school years. Uh certainly the bienium that follows the the fiscal 29 and fiscal 30. The uh early projections for that are are um not overly optimistic either. So, we're certainly trying to take stock of where we are as a district, where we're heading, and uh do the best we possibly can in terms of uh coming up with plans and the school board uh voting on those and and presenting things to the [Music] community. Want to jump more or go a little bit deeper into the context of that financial outlook or our our financial situation or challenges. We think a good starting point is to say this is not a shakabe problem alone. Um it is a there are financial challenges in nearly every school district across the state of Minnesota. We highlight on on what you can see on the uh the the uh projection behind me and above me uh a projection for our 11 comparison districts. the districts in our area that uh we compare ourselves to uh in terms of how we operate, the services that we provide. And you can see in in many nearly all of those districts, well, all of all the other 11 have made budget cuts either uh for this current school year that's wrapping up or for next school year. Um many of them are projecting out with budget cuts beyond that. Uh and you can see for those 11 districts and again this was self-reported by the districts. Things change as time moves on but at the time of the report it was a total of 98.5 million dis uh in budget cuts across the 11 districts. There is a little note on the bottom uh in regards to shaky we did do some enrollment where we have decreases and enrollment does you know kind of automatically make some adjustments to our expenditures. decreases some of those, but uh we have not engaged in largecale budget cuts either for this current school year that's wrapping up tomorrow uh or for next school year. And you know, I think the, you know, as as we've talked about this at schoolboard meetings and other places, leadership team meetings a lot with uh Bill Manazi and uh other folks doing the finance work in our district. You know, the the question really becomes, well, what's what's going on and uh why why why are all these budgets making really significant budget cuts? And we point to there's really two major reasons. And the first is driven by inflation. And this I'm not going to go through every uh month of this inflation grid. Uh but you can see, you know, looking back into I I believe it's April of 2021, you know, where inflation jumped above 4% and stayed, you know, above that for quite a while and is still um you know, we have some inflationary challenges. But when we look at the the inflation compared to, you know, what what our school funding has been in that same period, uh this graphic really tells the story. And the orange line is our general education formula allowance. Uh which uh in just sort of a you know regular terms, this is the main source of funding the state gives to school districts in Minnesota. uh it's a per pupil, you know, amount in state aid. The orange dotted line on this chart shows what we've received in terms of per pupil. And you know, and you can see the trend is is upwards. However, when you get to 2021, you'll notice the gap between the orange line and the blue line really be that gap begins to grow in years, you know, 22, 23, 24, 25. Well, the blue line is showing what school districts in Minnesota would have got in their basic formula allowance per pupil. Had that formula allowance kept pace with inflation, it would have been significantly more money for Shakapei and every other school district across the state of Minnesota. Um, had our state funding kept pace with inflation, which it did not. Uh, and that gap between what we were rece what we've been receiving from the state and what we would have received had it kept pace with inflation has actually grown. uh that difference has increased between what we're what we're getting and what we would have received had it kept pace with inflation to $795 per pupil each year. You know, that that's the number for 2025. And if we were receiving from the state that additional $795 per pupil, uh that would be providing our school district an additional $6.6 million in annual funding. I continue to look at Bill because he can go super deep on any of these and he's also uh and he'll he'll take it away here in a little bit, but uh he's got a much deeper understanding of of almost all of this than do I. Um, the other key factor that has impacted a lot of school districts in Minnesota, we've talked a lot about this in the last few years in Shakape and with the other districts in our area, is nearly every school district in the state of Minnesota has seen decreases in student enrollment, primarily driven by lower birth rates um, across, you know, Scott County, across the state of Minnesota, and across much of the United States and even a a fairly good swath of the world. And in Minnesota, our funding is determined or driven by the number of pupils in a school district. So if if the number of pupils that we're serving decreases from one year to the next, so does the amount of revenue that we get from the state to serve our students. And you can see that change uh from fiscal year 21 or the 2021 school year uh through the end of the 2425 school year. This school year uh that total decrease is about $8.2 million less in revenue from the state for Shakabe. This is a another revenue comparison um between us and and the 11 comparable districts uh in our area. We do adjust so that we're truly comparing apples to apples. We we assign each school district in this comparison the exact same enrollment as we have in Shakabe because with differences in enrollment uh there there's going to be differences both all all the forms of funding shown in this uh chart are driven by enrollment. So equalizing the enrollment uh lets us really look at the you know two of the key revenue uh revenues that we get uh in Minnesota in addition to state funding and those are operating revenue or revenue operating levy revenue let's give that another try uh which is paid primarily by local taxpayers and then something called quality comp compensation or q uh which is primary primarily used to provide professional development or incentive pay to teachers across the districts. And you can see uh that when we look at the 11 comparable districts, um we're the blue, you know, blue shaded line there, uh you can see what we get in terms of additional revenue from an operating levy annually, uh in a per pupil format. And then from Q comp, which we're the only one of the 11 that uh does not receive Q comp funding. Um a few years back, the state sort of stopped funding that. We're on that waiting list. We've been on that waiting list for quite a while. Um it's kind of it's an arbitrary line. Uh we're below that line. If we were above that line, we would we would receive QCOM funding. Um, we've had an application ready to go and we're we're the only one of, you know, the 11 districts we compare ourselves to that does not receive that QC comp funding. And you can see the difference in additional revenue. You know, if we look at Burnsville, uh, and we go to the far right column each year, uh, because Burnsville has a larger operating [Music] levy. Um, Burnsville has a larger operating levy than we do. I think I had this issue at a board meeting about three months ago. Um, kind of the the dry voice. Uh and they also received QC comp uh they actually receive you know from this additional funding $9.8 million every year uh more than shakabe and we just think that's just to help understand our situation. Um you know if we go back prior to the year 2021 we did not receive we re we did not have an operating levy. um our voters approved that uh in November of 2021. That moved us from, you know, dead last number 12 on this list uh to number 10 when we look at this this comparative analysis. And this is a what we've called an anchor spreadsheet. I'm going to turn it over to Bill for for more detail. Uh but I'm going to say a couple things about it. The numbers don't necessarily tie out on this spreadsheet. This spreadsheet is designed to show four different categories of things impacting our school district finances. you know, the primary places where we get our revenue and what that looks like over time, enrollment, uh, employment or employee expenditures, uh, and then categorical, you know, how the Department of Ed has us categorize the expenditures so that we could compare that over time. What areas uh, are growing, what is that, how does that growth compare to other areas? And with that, I'm going to turn it over to Bill. Okay, great. Uh, thank you, Dr. Redmond. Um, and and like Dr. Redmond mentioned, uh, this is a great spreadsheet and that it it really is aptly named the anchor spreadsheet. It it, uh, is a way to pull back the c curtain and look at our our general ledger and our general fund. And so, um, if if people that are watching are interested in doing a reconciliation between the expenditures that are shown on the sheet and what's shown on our annual budget reports, I'd be happy to do that. Uh, but the reason for removing some of those items is just to get an apples to apples comparison by removing things like operating capital or deferred maintenance type expenditures that may vary from year to year to year. So, with that, we can go to the next slide, slide 10. The next four slides uh I have and it's really a deeper look into our actual revenues and projected revenues and then actual expenditures and projected expenditures. So on the last sheet named the anchor spreadsheet you saw a whole lot of information both historical and forward link looking from a projection standpoint and the purpose of these next four sheets is just to unpack that a little bit further. Uh, and I should mention that everything you're going to see here is in the general fund of our school district. There are other funds, our food service fund, our community services fund, and so on and so forth. What we're really focusing in on here is the general fund, which is by far and away our largest fund in the school district. So, uh, starting first with our actual revenues in a look back period starting in 2020 2021 and looking forward all the way to 202425, which as Dr. Dr. Edmond mentioned we're not completely done with 2425 on the sheet named FY25, but at this point we have a pretty good estimate of where we think we will end up uh with the end of this month being the end of the fiscal year. And so we can look at the the main uh categorical areas in our general fund revenue budget. On the top row there, you see our state aid formula allowance. That's really when Dr. Redmond showed that uh chart that showed the structural imbalance between nominal increases in the state aid formula allowance and increases in the inflation rate. That's really the role that we were referring to and that is by far and away the largest piece of the pie when it comes to our general fund revenue budget is appropriated by the legislature in the form of the state aid formula allowance. And you can see that uh uh we've really received small increases there. An annual percentage increase of 0.61% from the state dating back to 202021. The second row is state special education aid. And you can see that the legislator that the legislature in 2023 made an investment in state special education aid which was helpful not only to the Shakabe school district but to every school district in Minnesota that received that additional special education aid revenue from the state. And that has really helped us to this point keep up with increases in special education expenditures uh in our district. Um and then referendum revenue known as the operating levy. As Dr. Edmond mentioned, uh in November of 2021, our community generously supported an operating levy and the first year of that levy revenue was in 2022 23. So you can see that was zero for 21 and 22 and then jumped up to that uh sum of the question one and question two and fiscal 23 and has carried forward from there. And then finally, the bottom two rows, I don't want to spend a ton of time. Our capital projects levy, uh, known as our technology levy, funds a lot of the technology tools and software programs for teachers in the classrooms. And that's tied to changes in the net tax capacity in our taxing district. And you can see that overall that's had a fairly healthy increase, albeit it's tied to technology and technology related expenditures. And then our compensatory revenue on the bottom is really tied to socioeconomic need and you can see where that has gone in the last few years. Um going from actual revenues then to our projected revenues and I really think this tells a pretty good story on that structural imbalance that budget structural imbalance that Dr. Redmond mentioned starting in fiscal 27. So, I talked about the first five columns and so really I'm going to focus in on FY26 which is next year's budget, FY27 which is the 202627 year and then fiscal 28 which is obviously the third year in our analysis here and you can see that state aid formula allowance again the largest funding mechanism if you look at from fiscal year 2026 where we're budgeted to receive received from the state 61.8 million. Fast forward that to fiscal year 2028, we're budgeted to receive 61.2 million. So, as was previously mentioned, those increases from the state are certainly helpful, but they are mitigated when they're paid based off of enrollment. And we're in a period of natural decline in student enrollment. And so anytime you look at your largest funding mechanism and for fiscal 26, 27, and 28, there's a decrease there of $600,000 from 26 to 28. Obviously, that creates some pretty significant budget challenges. And you can kind of see on down the road, special education aid is forecast to increase from fiscal 26 to 28 by 775,000. Uh, a couple of these are held constant. uh the capital projects levy as I mentioned which is tied to net tax capacity is projected to increase about 607,000 and so just doing some quick math here if we take fiscal 26 27 and 28 over that 3-year period and we take the total projected additional new revenue over those three years I'm coming up with 782,000 total not per year total over the three years and so you divide that by three $260,000 per year additional new revenue forecast over the next 3 years on a school district budget that's over $100 million. That is just not a sustainable increase in order to keep moving uh forward. So with that, um I'd like to take a look at expenditures. And again, this this operates the same way that our revenues operated. We'll look at our actual expenditures and then on the next slide our projected expenditures. And so you can see um our actual expenditures from fiscal 21 to 25. Our main spending categories are in the bold there. We spend the the bulk of our expenditure budget as you would hope on elementary and secondary regular instruction. Our budget for this year for elementary and secondary regular instruction is just about 52 million. We also spend a significant portion of our general fund budget on special education instruction. Uh this year the budget for that is 26.4 million. And then under the 700s titled pupil support services/transportation. Um much of that budget is attributed to our contracted transportation service we have with our great transportation partner Palmer bus service as well. So you can kind of see in in giving an overview of where from a program standpoint uh we're spending our our general fund budget. And then lastly moving forward on the next slide um where we're projected to go from an expenditure standpoint. So it it been mentioned in previous meetings and it really holds true and it's not just true in Shakipi. This is true for all school districts across the state. School districts, as you would expect, are people organizations. And if you look at our expenditure budget, about 80 cents on every dollar that we spend is spent on people. And the vast majority of that is spent on teachers. And so the hard truth about being in a cost containment period or in a period of making budget reductions is it's very very difficult to do that without impacting people. Obviously, we look at things like transportation, uh, number of buses, bell times, how we route, that type of stuff. We look at our utilities, making sure we're efficient in every area of the nonwe and benefit areas of our budget. But it's just very, very difficult to balance a budget without impacting people because school districts are such people intensive organizations. So, those are the slides that I have. And with that, I'll turn it back to uh well, actually, you know what? I have one more. Yeah, but I'm going to interject and then I'll bring you back. I'm actually going to move us back a slide. Um because as you were going through the details, uh I believe those details tell a story. And if you go back to when we were working on the operating levy in 2021, um you can see where the the most significant increases in expenditures are. And if you remember, we were targeting moving our teachers in terms of salary and benefits and our support staff, moving them towards the middle of those comparable districts. And then we also were, you know, shortening some of the walking distance and bringing back transportation routes. And and it and as well, we were, you know, bringing class sizes back to what they had been prior to budget cuts. again spending, you know, the spending increases where their largest was on purpose and targeted and part of uh a lot of time and a lot of planning by the school board uh back in 2020, 2021 and 2022. Uh and I think it also exemplifies that the board uh and the district leadership did exactly what they said they were going to do in that time period. Yes. Thank you. Um so so with that we're we're going to sort of transition to the next part of the presentation talking about options and and Dr. Edmond mentioned for the 202526 school year which is next school year starting in September um we are projected to remain at 10% fund balance. We've worked very very hard to get to that mid-range of the school board policy and we're projected to remain there for next year. So, we're really talking about the 2026 2027 school year, which would obviously start in the fall of 2026. So, we've talked about three options for financial decisions that need to be made for that fiscal 27 school year. Uh, one would be budget cuts. So, reducing the expenditure side of the ledger alone in order to balance that budget. Option two would be the ability to increase revenues. And as we talked about previously, um there there would not be a way outside of working with our elected officials to increase the state aid formula allowance. Any real revenue increase is going to come in the form of a local effort uh from from the community. Or three would be a combination of budget cuts and revenue. In other words, a combination of options one and two. I'm pausing a little bit on purpose if there's any questions in terms of clarity on anything up to this point. as we talk about the $79 million budget challenge that exists for the year after next school year, the 2627 school year. Um, we've we've begun uh to to work on that uh with some smaller pieces but still significant pieces in terms of reducing expenditures. Um, we've talked about it at other board meetings, uh, but we're we're doing something somewhat unique for school districts in Minnesota. Uh, we've contracted with a a group, uh, a company called Schoolie Mitchell, and we open up our books and our expenditures across all kinds of different areas in our district to them. And they look for cost savings for us, places where we might be spending um, more than other school districts on things. and and they make their money by finding those cost savings uh and we share in the savings that they find. So it's a no risk approach to us. Uh but to have somebody go through and you know they found a few smaller type things to this point. Um but I I just you know I think it's worth pointing out that we're always looking at our budgets. We're always trying to scrutinize. uh one of the most important roles for a superintendent and a director of finance in a school district uh is to be excellent stewards of the taxpayer you know funding that that provides services to our students uh and our community. Um we've also you know we we continue to make some adjustments to teacher staffing and other areas in our district due to decreases in enrollment. uh we have put off hiring um for a couple positions where we've looked and said there's a high probability that uh you know for the 26 27th school year that if we were to hire those positions for next school year there's a high probability we would have to lay them off just one year into their tenure uh and have decided that the the most prudent course of action is to not do the hiring um even though it was you planned or projected, but looking looking at a different financial outlook, um we've decided, you know, to save that revenue, not expend that revenue. Uh and think that that's a prudent course of action. Uh and then some of our services, it wasn't primarily to save money, but uh we've we've done some work in terms of one one part of training, which is very good, but also very expensive. uh we're replacing with uh what we think is an equivalent form of safety training uh that saves about $16,000 per year. As we look at the 2627 school year, um the suggestion to the board is that uh we should strongly consider making at least 3 million in permanent expenditure reductions. uh some of that will be continue, you know, we we're still projecting uh decreases in student enrollment. That pace of decrease or declines has slowed some recently. Uh we would also, you know, with with fewer students, um you know, we always look at reducing the number of bus routes. And I want to be really clear. We're not talking about changing the walking distances with this, but if we have fewer students, it it makes sense that we should have fewer total buses uh bringing our students to and from school and we we do that anytime we have decreases in enrollment. We always analyze that. So, we would continue to do that. uh and then reducing you know expenditures in some areas uh to make sure that they don't exceed you know state provided revenues for those specific in those specific funding areas when we look um you know just in general and Bill alluded to this when we talk about expenditure reductions or budget cuts you know in in a public school district um if they're going to be of a significant nature. Uh they have to involve the reduction or the cutting of positions or people. And this diagram shows that you know 90% of our general fund expenditures go to purchase services uh salary and benefits. Typically in a school district if you contract for uh busing services we spend about 80% of our you know general fund expenditures on people. Our largest group, you know, if we take up out of that 100% of total general fund expenditures, roughly about 60% goes to teachers in terms of salary and benefits. Uh, and 20% to all the rest that support staff, administration, and people. Districts that provide their own transportation typically, you know, about 5% of the budget goes to that. For us, that's a contracted service. And one other uh consideration for the school board when we go back to those three choices, you know, cut expenditures, increase revenue, which is the only real path uh an operating levy is the only real path to increasing revenue or a combination of both. Uh there exists um a a somewhat unique opportunity for what would ultimately be considered a tax neutral operating levy. Uh in their next calendar year, the year 2026, uh we are as a community, our taxpayers will have paid off some of our construction debt, you know, for the building of buildings. Uh we've got about $5.16 million of taxes coming off the tax roles in calendar 2020 20 calendar year 2026. Uh if an operating levy were to be approved by the voters on November 4th of 2025, uh it would generate $5 million in new revenue by shifting the community taxes from paying for the construction debt that they had been paying in calendar year 2025 to paying for operating expenses in 2026. And this is where I turn it back to Bill in a minute. U but I want to give Bill and uh his finance team and the school board. Pay them a great compliment. This is this is a diagram that shows the structure of our debt for our district, our primarily construction debt. Uh and you'll go, "Wow, that is really neatly organized." And it is. it. Uh I've been here almost 7 years. Uh 8 years ago it was not neatly organized. The other thing that Bill and his team have done in addition to working through and making sure that we we had a deep understanding and a wellorganized debt structure, uh, is they have renewed many if not all of our loans at some point over the last 5 years or so and have saved the taxpayers of our community by refinancing. similar to refinancing your home mortgage from a higher interest rate to a lower interest rate. We've done that as a school district uh under Bill's leadership and we have saved the taxpayers a total of over $8 million by doing that. And I mentioned, you know, we've saved the taxpayers the benefit of that refinancing the loan. None of that benefit comes directly to the school. We don't get any of that savings. That is all 100% of that when we write refinance our loan rates like that it means less in taxes for our communities. So again I think it's another example uh of really working hard to be good stewards of taxpayer dollars. Okay. So on the next slide, this is this is basically just a visual representation of what Dr. Edmond was mentioning before. There's a lot going on here. Uh but for purposes of our conversation, uh I'd like to focus on a few on a few of the numbers. You the way that this reads is looking at uh tax impacts of different classifications of property. And so you can see in blue uh is residential homestead. We have commercial industrial apartments and then agricultural on the bottom. Agricultural homestead. For purposes of our conversation tonight, we will really focus in on the residential homestead. Specifically highlighted in yellow, the residential homestead market value at about $400,000. So that is to say the home valued at about $400,000. And you can see on the top reading from left to right, Dr. Edmond mentioned we are paying off uh 5.16 million of our current bond debt. And so that would be money that is coming off of the tax roles. And so going from left to right, if uh it was decided that a new operating referendum was to go in place and it would be tax neutral, the amount would be approximately $620 per pupil. And you can see that on the top row referendum and increase per pupil would be about 600 would be $620. And then uh in order to get that calculation of the 5 million, we take into account our estimated pupil units, which is a way that the state department of education counts students for fiscal 27, which would generate a referendum revenue increase of $5,52. And you can see then down below on a residential home valued at $400,000, the decrease per year of paying off that bond debt in calendar year 2026 is a negative 209. That is to say, your your school portion of property taxes attributed to the debt service levy in calendar year 2026 on a $400,000 home would decrease by $29. We would then seek to backfill that with a $620 per pupil operating levy and increase the taxes by $29 such that the net increase of the debt service levy decrease and the general fund increase is zero. A tax neutral operating levy. And as Dr. Redmond mentioned, essentially what we're doing here is shifting the taxes from the debt service levy because we would be paying off those bonds and moving the taxes into the classroom for ongoing operations starting in fiscal year 2010. Another conversation, another opportunity that we would have uh would be the idea of going to the cap. Okay, so um there are a number of school districts when Dr. Dr. Redmond showed our comparison districts from a revenue standpoint that are at the state approved operating levy cap and that cap changes every year uh at the end of June the cap projection for next year. And so currently we're we're not at the cap even with that $620 per pupil, we would not quite be to the state approved cap as it sits today. And so this analysis looks at what would the potential t what would the tax impact be if we if we sought to go for the cap. And you can see on the far right the additional uh which would amount to most likely a question two to reach the cap would be an additional $288 per pupil. Okay. The same pupil units obviously as as would be in question one would generate an additional 2 million2,322,65 and the tax impact on a $400,000 home would be $97 per year. So, just to sum this all up, the taxes on a $400,000 home because we're paying off that debt service levy are going down by $29 in calendar year 2026. If question one uh was on the ballot, it would backfill that with that same $29 such that it would be a tax neutral operating levy. If question two was approved, seeking to go to the state approved cap, which a number of our comparison districts are at, the overall tax impact for question one and two on a $400,000 home would be an additional $97 per year. And before I flip to the next slide for you, I do want to make sure that we understand what what we're sharing here. These are ideas under consideration. Nothing's been decided at this point. Everything is on the table and again it all goes back to whether it's budget cuts uh increasing revenue or a combination of both. And so this is more just answering questions that have been raised on our journey thus far as we look to uh try to figure out what is the best path forward for Shaki public schools when it comes to finances. Okay. Um, and then lastly, we get back to the what if comparison that was showed earlier in the presentation. Uh, and so this this what if comparison shows our same 11 comparison districts. Uh, and where Shock would be if the voters approved an additional operating levy adding $620 per pupil to the current levy. In other words, the tax neutral operating levy that we referred to earlier. So the operating levy per pupil then would increase to 1,980, which is the sum of the current operating levy plus the $620 additional. The operating levy annual revenue for fiscal 27 would be 15.8 million. We're still in that comp revenue situation where we're the only one that doesn't have that comp revenue. And obviously then the total annual revenue is 15.8 million. So that that helps. You can see where we are in comparison to our comparable districts and where they are at today. Right? Who knows what's going to happen moving forward. And then lastly, we do the same comparison if uh the decision was made to ask the voters to go to the cap. In other words, the additional $288 per pupil, bringing the district to the state maximum or cap. Um we would increase to $2,280 if that was approved. Uh our operating levy annual revenue would increase to 18.22 million. obviously the QC comp situation. And so our total annual revenue is 18.22 million. Again, we jump ahead a little bit, but we're by no nowhere near the top of our 11 comparison district. So that's a a visual representation not only of the tax impact, but also how we would compare to the 11 comparison districts that we often compare ourselves to. And again, we're focusing primarily on the 2627 school year. We're certainly, you know, whatever we do for 2627 impacts fiscal 28, fiscal 29 and beyond. Uh and certainly, you know, we're we're always looking uh out into the future and that that's, you know, part of the consideration as well for the school board and and district leadership. Um this is um if it's okay with Chair Smith, we're we're just going to move on to agenda item number five, which are questions from the audience uh in or the board pertaining to our district's financial outlook. So when it comes to uh talking about potentially you know not filling those teacher positions that you think will likely be cut, what constitutes a position being likely to be cut in district size? Um the question was you know what constitutes a position likely to be cut? Uh and actually those were were positions within our uh learning, teaching and equity department that were going to be districtwide uh and going to provide support more in the area of kind of professional learning development and those type of things. And it it's that picture when you look out and you go we have a 7 to9 million budget challenge in in the c in school year 2627. um their positions that we know would provide value, but we also know when we take a a really serious look at that 7 to9 million deficit being projected uh that those new positions would likely to be rescended a year from now. And so we we decided the prudent path was not to move forward. That uh it made sense to save, you know, I think on the slide it was roughly, you know, approximately $250,000. If we save $250,000 next school year, that's $250,000 in a fund balance moving forward. Uh knowing that we still have a lot of work to do on the 79 million, but it just seemed, you know, I continue to use that word prudent. And I I think it's absolutely that and it's responsible. One more. Sure. Um have you had the chance to look at any other districts that have faced similar issues of this scope in the past and maybe look at their examples of success they had any what was I'm sorry. Will you say the last part? if if any of if there are any districts that have had you know stories of success navigating similar budget issues have you had a chance to look to those yet kind of ask around yeah the question is do we do we spend time and I'll paraphrase a little bit and uh do we spend time looking at other districts and how they they have handled or are handling similar situations and the answer is absolutely yes and uh we we actually spend a great deal of time you know how do people manage that would cause that? What are the shortfalls? Um what are the priorities in different communities? Um one of in one district I worked at as a principal um getting to be a while ago now. Uh we had a lot of practice uh in that district. We were made we made significant budget cuts uh for an extended period of time. And uh there were things on the list that after a while it it just it's every everything on a on a budget cut list in a public school district is providing value. Uh it typically involves people. So all of those cuts are hard. Uh in that district uh it was really really unpleasant work. Uh but also in my current role and and other leadership roles prior to this uh in a in an odd way it was really important training for how do you this may sound odd but uh how do you take care of budget challenges in a responsible professional highquality thoughtful manner and and that's really really important work. uh nobody goes into education to do that work, but unfortunately when state funding doesn't keep pace with inflation, um we we're forced to make those tough choices. And so I have great confidence in our school board, our district leadership, uh and and the rest of our school district to do, you know, when faced with these challenges, we we will work very hard to make what we think are the best decisions. Uh do that in a very transparent, open way. uh and continue to move forward and uh and ultimately never take our our sight off of doing the absolute best we can to serve students and our community uh no matter what the the financial situation is. So, thank you for the question. Yes, J does have a question. Um I don't know. We have a public comment setting up, but no. Go. I I'm okay if uh I'm only the board chair. How's that? Are we okay with that? As as long as it's relevant to our our topic tonight. Yeah, it is. Yeah. So, I'm Dave Bring res. I have two students in the district at Middle School for one more day high school in the fall. Um so, just two comments. One uh in appreciation of the level of transparency um putting putting your budget and what we have now or believe in the future state up on the screen out there for everybody to see um speaks volumes how this district operates now and as a parent I'm a taxpayer I'm very grateful for that from school individual working with them up to this this open conversation um that that gave me a lot of confidence as a resident here second thing um I'm so grateful for the the unique opportunity you present with the technology levy coming off the possibility for an operating levy that would not only address your known budget issue but proactively put the district in a position to withstand the unknowns in fiscal year 28 29 30 and beyond. Again as parents taxpayer I appreciate the the transparency and forethought and I hope um district leadership and the school board will seriously consider the options out here for that. Thank you. And I'm going to I messed up. I should have had Jake come up and use the microphone for public comment. So if if as we move forward when we're doing the public comment or when we're doing public comment, I'll make that correction. I apologize for that. Dr. If I could just one so well said we use so many terms it um and because there's some technology staff here it's the debt service levy that's decreasing not the capital projects levy um other than that it was fine just one more question um hey you said that last time yeah I promise it's the last one um how much are the mandates for the last omnibus bill pass at the state level contributing to these budget issues. I think if and I'm going to give Bill a little time to think. Um I don't know that we're going to have that dollar figure off the top of our head. Um that that's a really complicated question in legislative year 2023. Repeat the question. Oh, thank you. Yeah, the question was how much are the uh the legislative mandates from I believe 2023 legislature um impacting or exacerbating this budget challenge. Is that fair enough? And that's a really complex question because there there was a lot of work done by the 2023 legislature. If we take, you know, the mandates away, there were significant increases in the special education cross subsidy. Um, there was, I believe, in a, you know, there was a a decent per pupil formula increase that year. Um, and there were a number of other pieces of things where programming. Um, you know, some things that great value to school districts. Um but also you know you know there was some increasing costs moving forward and so that is not the major factor. Um the major factor would be that diagram we showed of you know the the main part of state aid which Bill alluded to that per pupil general allowance just simply not keeping pace with inflation. And you know certainly there are some areas where our costs went up due to those mandates but that is that is not driving that is not a major driving factor. Um it it would be a smaller factor. Is that please please help? No I think you and that was a great question by the way. We did questions. Yeah you can ask questions. I got a quick one for you, Dr. Edmond. So, the the tax neutral one of the scenarios that we presented tonight was a tax neutral levy of approximately $5 million and $3 million in budget cuts to solve the current situation. If we went to the second proposal of the CAP, an additional $2.2 $2 million. Was it safe to say or just fair to say that that would reduce our need to go from a $3 million budget cut um to something like zero to 1.5 million depending on enrollment or I think that that would be a discussion for the board to have um because we we still have that 1 to4 million in fis you know the following year the uh I'm going to mix my years up the 2728 school here to take a look at and also what what we were you know if there were any specific targets that we might choose to uh use let's say the question two the $288 per pupil but it would certainly it certainly provides more in the way of operating revenue uh which gives us flexibility in terms of how we how we attack the challenges and solve the problems you are going to ask a question. No, no. Or have a comment. Great. I I was just going to add on to what you said. I think flexibility is the key word. Um I think, you know, going back to the previous question, there are so many moving parts to what's gone at the gone on at the state level. And for example, uh funding to cover unemployment benefits was extended. Therefore, it's not impacting our budget, but it could in the future. Um you know, we also are are still lacking clarity at a federal level that could play into it. So, I think the whole piece about a second question would be it would just put us in a more flexible position and more able to respond to what I see as just a a rapidly evolving situation. That's Jim Mccclaus, our assistant superintendent, by the way. Not previously introduced student, so want to make sure to do that. Chrissy, um, I've got a lot of scribble notes, so more of them are comments than anything, but um, I just want to address a couple of things. Um, the index for inflation, I think that's been really, really helpful for school districts across the state. Um, it allows us some flexibility in our planning and our budgeting knowing what that number is going to be. Um, because I think that number is determined in February of every year if I'm correct, something like that. Um but I don't think that if you look historically at what the increases in the uh general aid or increases in the formula have been I don't think that the intent was to just have the inflation index and not have the additional increases on the formula. If you look at the chart that you presented with the rapidly expanded um gap in the inflation and what our per pupil funding is from the state, you're not going to reduce it if you don't continue to put that additional increase in percentage on the formula. If you just give us the inflation index, that's not going to help school districts across the state. So, I think that's a really good point to make. Um, that might have been missed because I know just with stuff that I've been working on at the capital a couple years ago when this came up, that was not the intent was that was going to be a replacement. That was going to be addition to, but now we're in the financial situation that we're in and now it's a replacement. So, that's that is that hurts us. um you know if it's historically been 2% on the formula and if we would have had the 2.74% on top of the 2% that's almost 5% increase and school districts may not be making the cuts today if we would have had that. So that that's just one point to think about. The other thing I wanted to bring up is Q comp. Um, I don't know how many people follow along with what's going on at the capital, but Q Comp actually was on the that program. Um, had um it was actually on the chopping block in the governor and the Senate's education budget proposals. Um, and so that would have removed it from every school district. It would have been phased out. Um, but we did have some support from our local representatives to get us off the wait list. And we've been working on that for a few years now to get us off that weight list because we know that is a competitive disadvantage to us as the charts show against our other comparable districts. And I also know that um the schoolboard association did a lot of work to try to get that weight list um removed for this year, but it's hard to do that when it's on the chopping block in other people's budgets. And then lastly, Christie, can I add one thing there just with Q count? I I would even add we last legislative session uh we actually had folks from our school district test testify in front of education committees and I think there's general acceptance of we have an arbitrary line that determines funding for some school districts if you happen to have applied before that line was put in place and then a whole bunch of other districts like us that don't have access to that you know that quality compensation, that QC comp funding, and our our local legislators were have been very supportive of that. And I think your point of, you know, with this year's legislative session, uh I know they're still willing to support that. But in terms of all the other work being done this year, it it just really wasn't ever a real possibility. But certainly um assuming Q comp is still around, which it looks like it's going to be, uh we will continue to work with with our legis with our local legislators and others to uh to try to get, you know, that that line moves so that any school district that wants uh to apply for that funding, including Chaki can do so. And I think the last thing that I want to bring up just as a something for the board to think about as we grapple with this decision that needs to be made soon. Uh the last slide that talked about the future projections. Um so I think that's 28 and 29 and beyond. I know we're focusing not on those years, but with state funding projections for those years show that there is going to be nearly a a billion dollar decrease and it's close to $500 million in education funding um for those out years which would be you hear the tales for the next bianium um and with what 250,000 I think um earmarked to be cut out of special education and cuts again our most vulnerable students. So I while we're focused on you know a couple years out um and the cuts that have to be made I don't think we can ignore the potential of what devastation could be happening two years later um and three years later get that second bianium if those cuts really are made. Um so I just want the board to think about that. Um obviously nothing's been approved at the capital yet. I think the education bill is going to go through the way it's presented right now, the way it sounds, but they're all big pieces to the puzzle and that makes this decision pretty I guess maybe easy to make as far as what what we might need to do and ask our community, but I know we have a lot more discussions to make um than have in regards to this topic before that decision is But there's a lot that needs to be taken into consideration. Thank you, Chair Smith. If it's okay, I'm going to try to see if anybody wants to do the public comment part of this. Just, you know, we had had that as an agenda item. And if anybody wanted to, you're you're welcome to come up to the microphone, introduce yourself. if you just wanted to in essence share one directional comments for the board and district leadership. I want to make sure that we're asking if anybody wanted to do that and then I'm okay and I'm sure Bill's okay if uh you wanted to continue to kind of discussion or if there are any other questions from the audience we certainly um happy to do that as well. I did have a question. So if we go the operating levy direction, what other positions could be supported from the funds besides the teach besides positions of teachers? Are we looking at potential counselor adats um janitorial staff admin? I want to sorry I want to make sure I understand the question. Um and tell me if I don't have it right. If if we approved an operating levy, are we talking the 620 per pupil for you know which is about 5 million on top of 3 million in cuts? Yep. Yep. I think the that would and it's why we talked about that gap earlier. It's a great question. That difference just you know in terms of our main funding per pupil funding and inflation over the last 5 years is now a 6.6 6 million, you know, it's expanded by $6.6 million or the gap is up to that much per year. So, what that would do, uh, by making those cuts, um, and adjustments, and some of those are, you know, the enrollment adjusted things that we do anyhow, that would in essence allow us to continue to provide the level of services that we're doing today. Um because otherwise, you know, we have that $7 to9 million shortfall projected for 2627. Um the 3 million in cuts plus the $5 million from an operating levy hits right in the middle of that. Uh and that projection would then say that our district, our class sizes, our transportation routes, all those pieces could be left in place. We certainly I think you know with with an eye to the future uh might look for you know some you know possibly other reductions in other areas or greater efficiencies like the schooly Mitchell. Uh but in essence that allows us to continue to offer the level of programming that we're currently offering. Did I nail that hardly? Yeah. Thank you. I'll just add um this this is the the the uh last opportunity to to interact uh with Dr. Redmond and uh Bill Bazi, the finance director. Um when we get into public comment, that's going to be a oneway if if there anybody wanted to do that. It didn't sound like anybody did, but that's one way to the board. Um, and then and then we're going to conclude the meeting after that. So, uh, just want to make sure everybody knew there weren't like exciting things ahead that we're we're getting close to the end here. So, if you have questions, please ask them. I I would just um you know applaud and thank the board for the idea to do this. I think again this is a special schoolboard meeting. We've not done one quite like this. I've been here nearly 7 years and I think ultimately the goal is we want to connect with the community. We want to talk about, you know, where we're at in terms of our our financial outlook. Uh, and I know the board is incredibly committed to listening to the community, to understanding the challenges deeply, to weighing, you know, really all the plausible or potential solutions, and ultimately, um, you know, trying to make the best decisions. Uh, there's timeliness in terms of some of these pieces. you know, the June 23rd meeting coming up, school board meeting, uh, in some ways is the date really the final date other than if we had a special board meeting in July, uh, but the final date if, uh, the board were to choose to put some form of an operating levy on the ballot for November 4th of this year. So, uh, we've been doing different financial updates and discussions at our board meetings. Uh again, I just think, you know, great idea. Um you know, and I I appreciate the effort of the board and the folks who are here this evening. Uh this is something really important and it's, you know, uh I know that everybody in this room uh feels like, hey, this is it's worth giving up uh some free time on a on a beautiful Wednesday evening. So, I just appreciate uh the effort and the opportunity for for Bill and I to attempt to share information as as best we can and try to help people understand uh our financial challenges moving forward. Thank you, Dr. Edmond. Uh since we have nobody uh um indicate that they they wish to participate in public comment, I'm going to move on to the next item on the agenda. That's item seven uh upcoming meetings and important dates and uh while while that's happening it hope everybody knows that the high school graduation is this Saturday. So that's going to be uh at Grace in uh Eden Prairie and we're all looking forward to that. It's uh one of the favorite things we do as a school board members um uh to participate and and see our um you know the work of all our teachers over you know E through 12 and and the uh the great adults who are sending out into the world and uh get to hand out diplomas. Just one of the best things we get to do as schoolboard members. Um, and you can see some other items up on the from the board there. Um, and then, you know, this agenda is online. You can click through and and look at those items as well. Uh, is there anything anybody else would like to bring attention to for upcoming meetings and events? I would just I would just add TLC graduation tomorrow at 10 a.m. Takata Learning Center tomorrow morning. Thank you for bringing that up, Jim. It's also a great event to participate in. and that's uh at their their um uh school location near the district office. I'll make a motion to adjurnn. Second. We have a motion by Peterson, a second by Brophie. Any discussion? Seeing none, all those in favor I post. Meeting adjourned.