He's older or did she like dog whisper dog? >> All right, we'll call tonight's organizational meeting to order. Joan, roll call. Director Grisfitch here. Director Hawker here. Director Kellenberg >> here. >> Director Lowour >> here. Dr. Parker >> here. >> Dr. Theander >> here. >> Dr. Sherman >> here. You have a quorum. Great. Stand for the pledge. >> I pledge algiance 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. [clears throat] >> Okay. I will go ahead and make a motion to approve tonight's agenda. Can I get a second? >> I'll second. >> Great. Director Hawker with the second. All those in favor of approving tonight's agenda, raise your hand and say, "I." >> I. >> Opposed. >> Passes unanimously. Okay. Um, we're going to start with our board organization and um, I'll read through the procedures uh, for everyone at home, but I'll act um, as the acting chair until a chair is nominated. Any member of the board can nominate any other board member and nominations do not require a second. Um, if no nominations are immediately received, the acting chair should pause and repeat the call for nominations. The acting chair will call three times total for nominations. Uh, after that third call, if there are no other nominations forthcoming, uh, the chair shall close the nomination of offices. Uh, a motion to reopen nominations may be adopted on a majority vote. Uh, and then we'll conduct polling if there's one. uh candidate for a position, we'll raise our hand and say I. If there are multiple candidates for a position, Joan has paper ballots [snorts] and you would write your selected candidate and then Joan will announce the tallies. Um you may nominate yourself and you may vote for yourself. Um just to make sure you keep that in mind. Uh as I said, Joan will tabulate all the results if there are more than one person nominated for a position. Uh and it when an individual receives four votes, they are elected to that position. Um so there we go. [snorts] And we'll keep voting until four votes per um are received. Okay. Any questions? Okay. So with that, the first um position is the election of chair. So we'll ask three times. Are there any nominations? >> Andrew? Yeah, I'll nominate uh Chair Sherman as to stay in that role. >> Great. Um I will accept that nomination. Are there any other nominations? Are there any other nominations? Okay. Um seeing no other nominations, uh we will vote just the normal way, the I nay. So all those in favor raise your hand and say I. >> I opposed. Okay, motion passes. Thank you everyone. Um, our next spot is for vice chair. And are there any nominations? >> Yes, I would like to nominate Director Felander. >> Great. >> I will accept. >> Um, are there any other nominations? Are there any other nominations? Okay, that was the third and final call. So with that, everyone in favor of um Andrew continuing to serve in the vice chair role, raise your hand and say I. >> I >> opposed. >> Okay, congratulations and thank you for serving. Um now we are going to ask for any motions for clerk. Uh and I am going to make a motion on here. I would like to nominate Sarah for clerk if she would accept. >> I will accept. >> Great. Thank you. >> Okay. Are there any other nominations? Are there any other nominations? That counts as three. [laughter] All right. All those in favor of Sarah as serving as clerk, raise your hand and say, "I." >> I. >> I. >> Opposed. >> Great. Congratulations and thank you for serving. >> All right. And now the election of our treasur. Um, are there any nominations? >> Andrew? >> Yeah. I like to uh nominate director Lowour just with his past committee work I think be a great role. >> Great. Okay, we have um are there any other nominations? Are there any other nominations? Right. Okay. All those in favor of um electing Chris for treasure raise your hand and say I >> opposed. Motion passes again. Congratulations and thank you. >> Thank you. All right. Um, just some business for the next year. Um, I will be sending an email like I normally do with a list of all the committee possible committee assignments and um, just to email me any preferences you have and usually I try to kind of work um, through those preferences and give everyone a little something of what they want. Sometimes we get some other stuff too. Um, but we appreciate all the time that everyone puts in. So, and then that'll be on the next consent agenda. So, um, you look for that email in the next day or two. Okay. So, tonight um we do have a consent agenda, right? Oh, >> you still have to approve on the uh >> organization >> all the other. >> Oh, okay. We're gonna That's off. Okay. So, is that part of consent though? >> No. >> Okay. [snorts] >> All right. So now we're going to do um E through we're going to do there's a couple just kind of cleaning house. So committee assignments and working groups we already talked about. Um now we have the code of conduct. That'll be something we approve. >> That's just a review. >> Um which you guys all have something to sign acknowledging that the designate um district depositories and major accounts. That is something we are approving that you saw on board books. We're going to make one um action to adopt all of this. Um the fax faximile signature and the authorizing administration to develop specifications and solicit bids. Um the electronic funds transfer the official publication authorizing administration to lease purchase and contract for goods and services. Um and then you can kind of see M and N on there as well. >> Is that it? and >> and oh the designation of an identified official. >> So all that was in board books. We're going to make one nomination to get all of that or stuff that um done here. So is there a nomination or a motion to approve? Um >> I'll make a motion to approve G through O. >> Thank you. So now we have G through O and is there a second? Great. Director Lowour with a second. >> All those in favor raise your hand and say I. >> I opposed. Okay. Now that passes. So that will conclude our organizational setup for the year. Sorry about that. Okay. Now that we have consent and we have two items, A and B and I will go ahead and make a motion to approve the consent agenda. Is there a second? >> Director Kelzenberg with the second. All those in favor of approving consent, raise your hand and say I. >> I. >> Opposed. Consent agenda passes. And now we're gonna have um Marie come up along with our special guest, our auditor here. She'll introduce. So um this is an annual uh retrospective look a sort of postmortem on the last year's last school year. So we are here to receive the audit um ask any questions regarding the audit and approve it. So again, this is for we we kind of toggle back and forth between what's looking forward and what's looking backward. This is a retrospect kind of a postmortem again on the on the last year. So thank you. With that, I'll turn it over to you. >> Thank you. Good evening, Chair Sherman, members of the board, Superintendent Funk. So this evening I have Erin Nielsen from uh LB Carlson with us to give you the report of our uh fiscal year 2025 audit. And um I will just have him start and then um as we go through the report um feel free to ask any questions and um we'll just take it away from there. Okay, perfect. >> Well, thank you very much. I appreciate the opportunity to be here this evening. As mentioned, I'm Aaron Neielsen, the partner on the audit for this past year, ended June 30th, 25. So, we are excited to be completing the annual audit process. I'm sure not even as excited as your staff to get out of three years of operations and get down to just working with two and and then the future. But um there's three reports you received this evening. The financial statement audit that act for the annual comprehensive financial report, the special purpose reports, and then the management report document. And I'll just uh make my way through this presentation. I'll let you. So, the presentation I have before you is simply some slides that I pulled out of the uh management report document. Um, so really no new material or surprises for you that was not included in the packet, but uh just to facilitate the meeting. So, I grabbed slides that we commonly find our presentations prefer to include. Um but if there's anything you want to talk about in the documents that are before you tonight, I'd be happy to answer those at the end too. Our role as independent auditors is to provide that opinion on the of the financial statements for the district audit. Uh the we also issue our reports on internal controls is required for the financial statement audit under government auditing standards and then the state laws and regulations for the office of the state auditor. So with that, I'll get right to it with the results of our audit for this past year end. Uh we have issued what is known as an unmodified opinion or a clean opinion. What exactly what you're looking for with the basic financial statements. Uh we have a couple of paragraphs in that audit opinion this year. Uh the first one uh emphasizing the implementation of another new Gazsby standard this year on compensated absences. So, a change in how we account for compensated absences for local governments. Well, all governments because it's a government auditing standard. Uh, and then we had a change for a couple of items with long-term facilities maintenance, LTFM, and then unearned revenue that we uh emphasized in the opinion with regard to your audit under government auditing standards, which is required for you for a couple of reasons. You receive in excess of 750,000 of federal awards. Well, beyond that, um, so your audit has to be under government auditing standards, but in Minnesota, they also require them for our school district audits to be under government auditing standards. So, we're pleased to report we had no material weaknesses or instances of non-compliance to report this year. The Office of the State Auditor provides a legal compliance guide that we have to follow. There are seven broad categories within that guide and then many questions within that guide. Uh one of them is considered miscellaneous provisions. So it's a catchall uh for certain statutes. They want us to provide extra testing and monitoring of uh and we're pleased again as you can see we reported no instances of non-compliance with the testing and the various areas for the office of the state's legal compliance guide. The one area we weren't able to complete was with regard to the federal single audit. So, uh, due in part with the government shutdown, but the single audit compliance supplement wasn't issued in a at in time for us to be able to complete it with the annual audit process. So, it has been issued. It was I think the weekend of Thanksgiving they issued that report. Um, so we will complete our testing of the single audit and issue that separately. But uh fortunately the single audit isn't due until March 31st. So there's a we still have three months to go before that will be due. But we don't see any problems getting that completed within the time frame there. So that really completes this portion that uh independent audit completes the rest of my slides here we utilize for the presentation. share with you some historical information and I guess everything is because we're looking backwards but u provide you a context for the past 10 years of your enrollment. You can see uh your enrollment has been kind of up and down from year to year. Uh this past year, the adjusted ADM or adjusted average daily membership amounted to 8,223 students served this past year. Um which was a decrease slightly of about 42 students from the prior year. Uh we include that graph because one of the major funding sources is driven by the number of students that you serve. So we'd like to keep that involved in our presentation. The next slide we have here is looking at some key financial indicators or key points. Um as you look at the cash and investment balances, unrestricted fund balance for the district, uh you can see it's been pretty lean in recent years here. Um we like to see that graph kind of trend with the size of the operation which we use expenditures to drive that. So you can see um a slight decrease in each of the cash and investments balance and the unrestricted balance. The next slide we have a little more detail breaking that down. So uh the components of fund balance or equity for governmental funds uh is further broken down between non-spendable which would be dollars that have been spent for prepaid items. So they haven't been exhausted yet. You're still holding them. So, their assets to the organization, but they really serve that purpose of what the prepaid item is for. Um, restricted fund balances that would capture long-term facilities maintenance, capital, uh, LTFM and well, long-term facilities maintenance, LTFM, operating capital, basic skills funding. So, a variety of categories, but they have to be used for that specific purpose. And then remaining is that assigned category is assigned by the board or the superintendent for a specific purpose and then everything else falls to that unassigned. So the percentage we've included here is as a percentage of the actual expenditures for 2025. So there are probably slight differences. If you even looked within the financial document, there's one that's under the state auditor's SOD calculation. So there's a little bit of difference where they back off some of the restricted components or restricted expenditures. So hopefully trying to alleviate any confusion as to why there's differences, but uh I know the goal of the fund balance policy is to strive to hit that 5% level. So, uh as you can see, it's been below that for several years here, but a good point um to try to meet that policy and have that as part of the plan as you move forward. I have a couple more slides for the general fund. So, as your primary operating fund, we spend most of our discussion tonight with the general fund. Uh, the general fund revenues this past year amounted to 153.8 million. So, uh, just to give you a gauge in the size of the organization that we're talking about with Still Water Area Schools, uh, this past year, your revenues came in close to what was anticipated in the budget, about 1.1% over budget compared to what was anticipated and with an increase over the prior year as anticipated with funding improvements on basics on basic formula allowance, uh, special education funding. Uh the other comment I'd like to share and we I do it with all of my school district presentations and yours is no different to that concentration of your reliance on the state for funding and financing the general fund operations and educating students and then followed by property taxes for your school. Um state sources make up about 66% and then followed by about 29% 28.9% of property taxes. So you can see basically 95% in just those two sources and federal funds now kind of back to where we are used to them the COVID dollars the pandemic related funds uh uh exhausted and past their time of allow availability for you and then other captures investment earnings fees and all these other components everything else on the expenditure side we have a similar graph looking at budget to actual ual to prior year spending. Uh in the financial statements, you'll see we focus on the programs of various programs, admin, elementary and secondary, regular instruction, special education, pupil support. The graph we have before you here looks at the object categories, the components, salaries, benefits, purchase services, these broad categories. Um this past year total expenditures in the general fund was about $155.9 million. uh coming in a little bit over what was anticipated in the budget about two and a half% more than what was expected and uh as you can see an increase over the prior year and then just a couple more slides to cover that I wanted to touch upon here the other operating funds we would say uh the food service special revenue fund the community service special revenue fund uh both of these funds reporting uh improved financial position over the prior year, both ending better than anticipated. Uh the one comment I'd like to share with these is the importance of them being self- sustaining so they don't become a burden on general fund dollars. Uh also monitoring that fund balance position and the food service. There is a limit uh that's three months operations using a 9month uh window. So about we look at as 33%. Uh there are exceptions to that and the MDE monitors that the Department of Education they'll reach out to you. I know they'll provide uh exceptions and reasons you're you're saving resources to purchase capital dollars and that was one of the reasons for the favorable variance waiting for capital um purchases to come in so you could actually spend those dollars and they were delayed. So, um, there are various reasons that are acceptable to be over the percentage. [snorts] I don't have a slide for some of the other funds. Obviously, you're in the middle of a very large construction phase here. Uh, so you're seeing spend down of the governmental funds with the construction spending ongoing. You can really see that on that top line when we talk about governmental funds and the equity in the governmental funds decreasing by $32 million. And that's because when you're spending dollars at the governmental fund level, the focus is on what's available for you for programming and spending. And so capital outlay is reported as an expenditure and not capitalized as in private industry. At the entitywide level, we get the dual perspective. So then they are capitalized. And you can see that's the second line. So the top half of this table here, we're we're taking what's how your governmental funds are reported and then bringing them to a full acrruel long-term perspective. And you can see that then capital assets more than made up for why the decrease your spending dollars in the general fund for through operating capital long-term facilities as well as your bond proceeds that are in the capital project fund um on capital purposes and that were capitalized and will be depreciated over their useful lives. Um before I finish off this slide here I wanted to comment about it on the fundbased level. You also are self-insured on your internal service funds and that is utilized by the district for your dental as well as your health insurance operations and um from time to time you'll see wild swings in that depending on activity and cost changes in that industry and you know we're we're encountering it with our own business. So um the last couple years you've seen a decrease in your internal service fund. this year your health fund actually got to a deficit position. So also um probably uh adding strain to the budgetary process or will be and and something to be managing and monitoring as to was it a one-time issue or or a short-term and we're going to come out of that. But I wanted to make sure we pointed that out. It's not typically a table we show in the management report, but with it being in a deficit position, I wanted to make sure I commented on that. So, but overall looking at the district on that long-term perspective, you can see there was a decrease on the entitywide statements of $4.3 million. The top half walks us through the governmental funds to the governmental activities entitywide. And then the lower half shows you which components of that net position that uh fell to. So that net investment in capital assets, you see a $15.5 million increase, which is great. Um but those dollars are locked up in your infrastructure. So they're not available for you for spending in your programs now. Um, so you can see that and what that would tell me is you're you're adding to the infrastructure, investing in it, and paying off the debt related to the infrastructure at a faster pace than they're depreciated. And that'll happen for a couple years certainly with uh while the building phase is going on and you're we're putting it into CIP and we won't start depreciation until the actual assets completed and put into service. uh restricted. That goes right along with the increase we talked about in the food service fund, community service fund, debt service fund, and then some new state funding restrictions that provided new dollars to the district this year. The Reed Act is an example of that. Um and then everything else fell to the unrestricted. And this is where it stands out with that $20 million decrease. And that is largely driven by the emphasis of a matter paragraph. I started our presentation off with simply how we're changing or how we're required to change how compensated absences are recorded. And so I want to make it clear it wasn't that you know that liability increased significantly. Yes, but it wasn't because of an a change you made in a benefit or anything offered. It was always that way. It's just how it had to be accounted for. So in the past we only captured the liability for compensated absences on those that would be paid off at retirement or if vacation and so the big change is uh sick leave and sick days and and now it captures the teacher group obviously the largest group. So they get sick days and they can be used in the future but should they not need them you don't pay them out upon retirement. a very very limited group now that's left with that that's been um grandfathered out of the contract. So it's really I wanted to point out it really is a change because of the accounting format of it not in how you made a one-year move with benefits. So with that, I know I went through a lot of information really quickly and I do want to thank your staff and uh we get well beyond the finance offices with the ACER with the single audit and other areas. So a lot of people involved in putting that I it's more than 126 pages. I know because some of them are in Roman numerals and they would be on top of the 126. So, um, a large document there, a new standard implemented this year and so I we really appreciate the timeliness of helping us get through that information. >> Yeah, we're always so appreciative both your efforts and Marie, you and your team. This is all consuming for a long period of time. So, thank you for that. Um, I'll open the floor up for questions. Questions? Um, I I just wanted to thank you, Marie, because I know um I'd asked you some questions and it was just really helpful to have that conversation um with you. So, thank you for your time on that. Um, and I appreciate all the work here and I'm sure we will all continue to be digging through this over the next several weeks and I always find this to be such a helpful tool like the entire year to go back to. So, thank you very much for that. and board if you have questions after the fact you can always go to Marie. >> Yeah. Erin, is it okay or just coordinate through Marie if board members have questions? >> Absolutely. >> Okay, >> that's a good way and then the message can come back for everybody. >> Right. >> Great. Okay. Um, so tonight >> Oh, yes. >> If you could just accept the report or >> Yeah, we'll go ahead and make a motion to ac Yeah. Um, I'll go ahead and make a motion to accept this year, last year's audit. Um, is there a second? >> Second. >> Director Theelander with the second. All those in favor of accepting the audit findings, raise your hand and say, "I." >> I. >> Opposed. >> Great. Thank you. >> And that's it. >> Right. >> Yeah. >> Yeah. That's it. We're adjourned.