001Good morning everyone. Let's try one more time. Good morning everyone. There we go. We have a full house. The Durham County uh commissioners and Durham public schools board of education quarterly meeting is now in session. At this time we wish to extend a warm welcome to everyone who's joining us this morning. The interpreters for our meeting today are valued members of the DPS Multilingual Resource Center. Thank you all for taking the time to join us. The next item on our agenda is agenda review and approval. >> Move approval of the agenda presented. >> Been moved by Miss Byer and seconded by Mr. Lee that we approve the agenda as presented. Is there any other discussion? All those in favor say I. >> I. Any oppose? passes unanimously. The next item on our agenda is the
002approval of meeting minutes from November 19th, 2025. >> Move approval of the meeting minutes from November 19th, 2025. >> I'll second. >> It's been moved by Miss Harold Goff and seconded by Mr. Lee, Dr. Lee, that we approve the minutes from November 19, 2025. Is there any other discussion? All those in favor say I. >> I. Any opposed? Use the same sign. Passes unanimously. The next item on our agenda, we're going to get into the meat of our meeting. We have um capital improvement planning process. We have presentation from DPS and then we'll transition to the county. Dr. Lewis, I'm going to pass it over to you. >> Awesome. Thank you so much, Chair Mstead. Good morning, everybody. We are here to um share with you an update on our capital improvement planning process. um
003team has been meeting for quite some time and uh came up with some just some thoughts, some ideas. Uh draft drafted this form to to share. No decisions have been made final. No decisions have been made but uh given the um data that they received and the brainstorming and the thoughts that they came up with, wanted to just kind of share a an update. This is just an update of where we are and some of the things um that they learned during that that process. But there'll definitely be more to come after this. Again, I'll reiterate, no decision has been made. These are just thoughts and ideas at this point. Thank you. I'll turn it over to Ken Barnes. >> Good morning, board members, county commissions. I'm Kenneth Barnes, the chief operate operating officer for
004DPS. Uh, today we have a brief first draft presentation of our 26 CIP update. Our community is rapidly changing, so our school system is as well. So please keep that in mind as we look through the information that Devon Mitchell is going to present um today. All right. Thank you. >> Good morning board members. Good morning Dr. Lewis. Thank you for having me. Um we're here to share some ideas, some thoughts um based on all of the input we've received for our capital improvement plan uh for 2026. Um as mentioned, this is a draft. Um it it does come with a tremendous amount of thought and a tremendous amount of input. Um so we'll share with you some some ideas and thinking surrounding the improvement plan. Next slide, please. So, what I'd like to do
005is start with just the assessment, just a general overview of where we've been, what's brought us to this point, talk about some of the objectives um that we uh set out for in our task force and where we landed with those. Um also want to talk to you about increment one of the capital improvement plan. What are the ideas that are on the table? Um and how have we arrived at those as being priorities for the district? and then finally talk about um timeline and the report and and where we are um at this moment and where we're headed. Next slide. All right. So um back in September and October, we convened a task force for the capital improvement plan. Um that task force met in multiple sessions to take a look at every property,
006every school, every support facility within the district and to make some determinations about those facilities, where they are in terms of health and what we think the trajectory is for each of those. After that point, um from November through December, um we went through a second round of vetting. That round of vetting included um validating information that we received from the task force and we did that in multiple ways. Um we engaged members from our maintenance and operations team um wanting to make sure that things that land on their top priority list were things that were also landing on the task force priority list. Um we also met um with planning. So within our planning department group, we talked about enrollment. We talked about areas of the district where we have overcrowding, areas where we're
007underserved. Um, we also talked about what the long range trajectory looks like for the next 10 years. Factored that into what we think about when we think about the plan. We also have consulted with a number of financial experts, right? Um, both in the construction industry as well as architecture teams to talk about what is a digestible plan for the district. how much could we do as a district at one time in terms of construction or uh maintenance and repair projects as well as what is the actual construction climate out there today? What do our projects cost? What does it look like? Um and so we've we've looked through a variety of lenses to arrive at where we are today um in in uh in this process. And as I mentioned, it has been uh
008very thoughtfully um crafted. Um next slide. So um in the task force we talked about a number of thoughts and ideas. We looked comprehensively at issues within um our schools um is issues with surrounding size of schools um surrounding uh boundaries uh for our schools. Um and we arrived at a number of objectives, a number of priorities that we're thinking about when we think about um all of our facilities. The first one of course is being aligned with our strategic plan goals uh 5A and 5C. um the strong need to address failing systems and infrastructure within the district. This is an ongoing issue for us um uh dealing with failing systems. Um rebuilding significantly aging facilities. So when we met as a task force, we talked about facilities that are 50, 60, 75 years old
009that have been upgraded four or five times that are still failing and the need to begin to refresh assets that um the cost to repair versus cost to replace doesn't make good financial sense. Um we talked about prioritizing safety and resilience. Um this is something that um certainly came out of our discussions within our community um when we went through our educational adequacy discussions. Um there are a number of things related to safety that we want to make sure get folded into our plan. Um next was right sizing district schools. So we have uh a number of schools within the district um that are uh small schools and I'll talk about that in a few moments. Um but trying to um begin to rightsize our portfolio. Um resolving long-term overcrowding. So we do have areas
010of the district that are experiencing growth. Um we do have schools in the district that have been overcrowded for some time. So adding those schools into our plan um and thinking about what we want to do to make adjustments for those schools. Um preparing for changes in enrollment. I'll talk about enrollment projections in a moment. Um ensuring equity-minded investments. So as you know we've been on a campaign to upgrade and refresh schools for some time. As a result of that we have some disparity uh among schools. We have some some schools that are new and fresh with amenities and specialty program spaces. And then we have older schools that haven't been touched. And so um bringing that uh bringing all schools up at the same time is important. Prioritizing schools that maybe haven't been touched
011is important um so that we're all getting equal access to the same kinds of resources in our schools. And then finally, resolving closed school sites and potential consolidation sites. starting to make some determination about those and trying to uh to make plans for those within uh within the uh asset group. Next slide. Uh and then just a reminder here on our strategic plan goal 5A by 2028 DPS will provide healthy, safe, and technologically current and environmentally conscious facilities for 100% of DPS properties. This is a goal that we uh are actively working on. Um and there are a number of steps we need to take um when we think about our schools to achieve this. And then goal 5C by 2028 DPS will increase K12 student enrollment to achieve 100% of utilization of seat capacity
012at all school levels. Um so just a reminder of those that those are part of our uh north star here on the project. Next slide. All right. So many of you should be familiar with this. Um but just as a refresher um our task force um as we went through each and every facility um every facility was given a classification um when we reviewed it um uh school or a support facility was deemed a maintenance and repair project which would be just a fix what is broken um uh type uh construction project. We uh looked at facility modernizations and comprehensive modernizations. Those include fixing what is broken and upgrades within a school or um additions to a school. Um we also uh had a category for new construction. So historically we might have thought of
013new construction as something um where the district is growing and we need to add a new school but it also includes schools that are aging out where it doesn't make good sense financially to keep investing. So new construction is on the table for those projects as well. Um no work. We do have uh some projects uh some schools in the district that don't require work at this time. Um so that was a category. And then um our you know if we want to close any sites um consolidate any sites or sell any sites there's a category for that as well. Next slide. All right. So just a reminder about the current state of our facilities. the overall maintenance and health of our facilities currently. Um 36.5% of facilities are in significantly poor or critical condition.
014Um you can see those on the two red bars. Um we have to think very carefully about um maintenance and repair projects. Many of our projects um include things like um replacing mechanical systems, um replacing things that sit above the ceiling, things that sit on the roof, um dealing with waterproofing, um sometimes there is complexity involved in how we phase construction. So just because we're pla replacing units on a roof, um if we're also need to replace roofing, that needs to happen at the same time. So just just simply um handling maintenance and repair it does involve multiple disciplines and it does involve um some complexity usually. So um thinking about um how to fold in and have these uh modernization projects going side by side with our maintenance repair projects are is a very
015important uh component. Next slide. All right. So taking a look at these two um graphs. The graph on the left is a facility investment classification chart. So, as I was just um explaining, we had a number of categories that the uh task force could choose from for a school. And on the left, what you're seeing is the result of that. So, all facilities having been assessed, we have 35% of our facilities were chosen for maintenance and repair. about 15% of our facilities were chosen for either facility modernizations, new construction, or no work. Uh 15% each. Um and then we also have a small percentage for um either consolidation or closure. Um and that's at 7%. And I'm going to talk a little bit about um uh facility closure and what that might look like in
016a moment. Um the uh graph or excuse me the uh graph on the right um shows maintenance and repair only. So in one of our or in multiple of our past sessions we've talked about the cost for maintenance and repair currently in the district. Um previously we've spoken about a number around $965 million just to do maintenance and repair. That does not even include a coat of paint. That is simply taking care of what's broken. Um that number we have been um having a external cost estimating team doing some additional review of our numbers. Um that number is probably higher. Um I don't have the total number at this moment but um we we certainly are in that range. Um of that uh 56% is needs to happen within the first five years of our
017plan. Um these are things that are failing have failed um or are in significantly poor condition. Next slide. Um I won't spend a lot of time on this slide but um just to give you an idea about kind of the scoping of things. This is uh maintenance and repairs required just for MEP on our top 10 projects. We have very significant needs related to MEP. Um we have already um uh earmarked our money and are submitting for the last of our ARPA funds. Now um we also uh are targeting the lottery funds and the capital funds that are still available to us um to spend on maintenance and repairs but the needs are quite um deep and quite extensive. Um so when so we want to be very thoughtful about when and how a maintenance
018and repair happens and how it gets phased um within the larger structure of a project. Next slide. All right. All right. I also wanted to just talk about enrollment for a moment. So the uh line with the blue dots, that is our enrollment projection districtwide um looking forward. So what you see is generally flat um with an anticipated steady or small loss until around 2035. Um so we know that birth rates have declined. uh the voucher program was initiated and um we've seen a flattening of our projections for the future. Um and while growth may flatten um we still uh what that really says is that we don't have a need for new schools, but we certainly have a need to continue to invest in our portfolio and to continue to um to bring all
019of our schools up to modern learning uh standards that meet with our guidelines. All right, next slide. So, here are the here's just a general outline of the projects that we're thinking about in the 10-year outlay. Um, this includes some changes in the complexion of our facilities to be a more nimble um for a time of uh reduced enrollment. Um it also is an excellent time for us to reinvest in our portfolio because we do not have to spend as much uh of our focus on new schools. We have an excellent opportunity to work on the schools um where we have significant needs. So, this is an excellent opportunity for us from a facilities point of view um to uh to look at getting our schools adequately sized um and to also work on upgrades
020related to uh repair work. Next slide. So, let me just talk for a moment about small schools. So in 1992 we had the city and county schools merge. Um as part of that um we inherited many small schools in our district. And let me explain what a small school is. A small school an elementary school which is what I'm talking about today is a school that would have less than 450 students. And generally these schools sit on sites that are less than 10 acres. So um they become difficult to enlarge or expand um on such a small footprint. The department of public instruction has a minimum uh elementary school site of 10 acres. Um so many of these schools don't qualify for an adequately sized school site. Um it does not what it does not
021mean is that these schools aren't adequately enrolled. Many of them are fully enrolled. They just happen to be small schools. But it becomes very difficult when you talk about things like consolidation, which is something we hear commonly across the United States. And when you consolidate, it's not as simple for us to simply move some students from a school into another school that absorbs them and we close the school. And the reason why is because throughout all parts of our district, we have schools that have less than 450 students and we don't have great places to simply move them to another school. So the the thoughtful anticipation of how we would address anything related to consolidation involves more than one step in order to achieve that. Um, so when you look at this uh chart, I've
022identified two school projects that could fall in increment one of our capital improvement plan. The rest of these, we're calling them on a watch list. Um, and I believe we have around 16 schools here that fall into the small school category. Um the watch list is really to continue to watch enrollment to continue to assess and evaluate the health of the schools and to make a determination about them at a later date. Um we certainly could not uh consolidate and trade up schools and do that universally as one project um because we have such great maintenance and repair needs as a district. But we could certainly begin to take incremental steps to change our portfolio to be more efficient to um offer new kinds of resources um to put these schools in line with a
0237 to 800 student school which is our district standard and to give them the amenities that those schools have. So um there's a number of efficiencies and benefits from from using that for using this as an approach to part of our plan. Next slide. So, let's talk about the ones that um have been earmarked as possibilities for increment one. The first uh on the top is Club Elementary School with George Watts Elementary School. These schools are located 1.5 miles apart. Um if you look at all four of the schools, you'll see there's a red tag on the side of those. That's the facility condition index. that tells you the health of the school and on some level um tells you something about the level of investment that has to be made to the school in
024terms of improvements. Um these schools are very high on the list in terms of having uh significant maintenance and repair needs. Um both of these schools are 75 plus years old. They've had uh four to five modernization and improvements and they still continue to be in uh poor shape in terms of maintenance and repairs. Um some possibilities for these two schools um would be to um combine the student populations from both schools and um because this is in the central region and we have a wonderful asset of the Durham School of the Arts site um this is a project that that could potentially move to the Durham School of the Arts site um uh and be a great uh close location um where you could join these two school populations. Um the second opportunity is
025on the bottom that is ye Smith Elementary with Eastway Elementary School. These schools are about a mile apart. Um Eastway is one of the schools on the list that happens to have um good acreage. It has 14.5 acres. Um and could we could bring the We Smith Elementary School students to the Eastway School site. Um, this would however require an expansion to Eastway in order to accommodate the student population and to bring the adequate resources for a school that would hold 7 to 800 students. Next slide. We also looked at key investments where we could consolidate in terms of our central services and support facilities. Um so uh one area uh that is a possibility that we're considering is the combining of the Fuller building and the staff development center. Both of these projects are
026have poor performance in terms of maintenance and repair needs. There is the added possibility that you could combine uh the Bacon Street facility as part of a consolidation of our central services. Um this would certainly provide the district with better collocation of staff, better opportunities for collaboration. Um it would certainly help with inefficiency in terms of time traveling between facilities. Um and and the and providing an overall consolidation of many of our central service facilities. Um this consolidation um could take on a couple different uh aspects. One would be that we could consolidate all and have a long-term lease on a commercial office building. Um, another option would be to modernize part of our Durham School of the Arts site and move this portion of our central services to that site um as a new
027location. So um those are items on the table for uh for possible consolidation as well. And then on the next slide, other types of investments that we're thinking about. So in terms of maintenance and repair, we have one school, Bethesda Elementary. Um we have two facility modernizations, one at Southern High School and one at Little River. Two comprehensive modernizations, one at Githan's Middle School and one at Eastway Elementary School. Eastway being the um potential site uh for consolidation. So it would be growing. Um, and then new construction. Um, Jordan High School, um, is on our list for, uh, significant maintenance and repair needs, consistent overcrowding and portables at that school, um, and the need to, uh, to build new, as well as a possible new school for um, our uh, DSA site. Next slide. In
028terms of current sites that we have closed, um we have the old Lowe's site. Um our current status on that is that we are have just begun the feasibility study for that site. Um Old Northern High School. Um, we have an appraisal underway for that site with thoughts on the table to either uh demolish and sell or to uh retain the gym and the athletics facilities and look at other types of joint use opportunities for that site. Um, we may also uh conduct a feasibility study for that site as well. Um, and then also Durham School of the Arts which I've mentioned um we have an appraisal under the way underway for that site right now. Next slide. All right. In terms of timeline, um you're seeing here because we have given every facility a
029classification, you're seeing an overall roll out for all facilities, but we have five increments. Um the first two uh increments, increment one, we would anticipate in two phases. So this would be two groups of four projects each. um four projects um depending on scope, but in terms of what DPS can handle at any one given time as well as what the general construction climate could handle at any time um for projects seems to be uh uh a a good place. Um and then you're seeing a dashed line there um right through the yellow arrow. That is our 10year mark. So, while we've called out 12 possible projects um running over the next 10 to 12 years, um we do want to at the 10-year mark reconvene and relook at our capital improvement plan. That is
030um certainly an industry standard. We want to make sure that we reassess, re refresh, look again at our enrollment, um review our portfolio again at the 10-year mark. So, um really looking at that first outlay as our increment um that we're thinking about now. Next slide. Okay. In terms of the report, um the area that you're seeing in the black box, that's where we are now. Um we've completed phase one and phase two. Um so, we're wrapping up the report now. Will be complete in April. There will still be some collaboration happening in April um to make that happen. We also still have our cost estimating underway. So, we'll be prepared in April to come back and actually talk about what some of these things cost uh and actually talk about um where we've landed
031with final decisions for what will be included in the increment. Um and then that sets us up well for um collaboration uh with the county and the school district from May to October, giving about six months for us to retool in any way that we need to to make sure that we're lining up with um the the plan and the the goals of the county. Um and that may require um uh some work to uh to make sure that we're aligned and to make sure we have the right projects that line up with funding. So that's the current status. And then the next slide is just a potential roll out of how we would see an increment one. So um looking at uh beyond voting uh priority one funding available uh perhaps in March of
0322027 that would give us a chance to get ahead of any um work that we need to do with consultants or to do any additional studies um before we roll out a product project, excuse me. Um and then design design selection in quarter 3 or quarter 4 of 2027. Um and then the uh beginning of design and permitting March of 2029 with a midpoint of construction of March of 2030. So there is uh certainly some time ahead to to actually realize these items, but um just so you understand the amount of time that it takes to actually um get our projects launched. So with that, I think that's the end of my deck. So, I'll open it up to any questions, comments, thoughts, um, from the team. >> Miss Mitchell, I'm gonna ask you to
033hold on. We're going to have the county do their presentation and then we'll circle back to questions. Okay. Beautiful. Thank you. >> Thank you. Um so the county come on up. >> Good morning. Um Keith and I will share highlights on our capital planning process. We did give an update to our board of commissioners um guess at the last meeting and um we didn't talk as much about the numbers and projects but process because of the complexities of how this season is right now. Um, for an example, last night we had an item that we took to the board last I guess the week before it was quoted a number because of the supply chain issues and conflicts now happening in the Middle East. The aluminum price went up significantly and um we had to
034quickly close that contract deal. Right now, pricing and cost are uh in places we've not seen before. So, we're moving cautiously in how we think about planning. But we also know there are pressures with aging systems, aging infrastructure and the need to address enrollment um for various reasons because although it may not be growing, we have a lot of facilities that were just shown not only at the schools but also at the county um supported school um programming that need repair. Um tricky timing, but we we will figure a path forward. So Keith will walk through the slides and share the framework. Um and uh one of the things that I will say is that we have always partnered with all of our um partners that are out there. Um whether it's Durham public schools,
035the community college, museum of life and science, those that we have supported um in a larger way in our capital improvement plan. And this is a season that we'll have to um walk together um knowing we're going to get across the finish line, but the timing may fluctuate based upon our ability to pay and what the market looks like right now with supply chain issues. So Keith, >> thank you, Manager Hager. Uh good morning to all the elected officials sitting at the board, Superintendent Lewis, chairs, and other folks. Um lovely to see you all. Uh it feels like I was just here a couple of days ago. Uh can we get to the next slide, please? So, we're going to kind of go over briefly the county's CIP process overview, sort of the steps involved
036with our capital planning, and then we'll end up with some key upcoming dates where we're moving forward, and then look forward to having some discussion and answering questions. Next slide, please. Um this is hard on my eyes to see. Let's see here. our capital planning essential. I had to look at the big screen here. Really, it's a multi-year plan. We look out 10 years, not unlike what Devin just pointed out for the for the um board of education and DPS. Uh we have to prioritize by importance projects by the level of importance, essentially how essential they are to the county. Like our detention center is not something you can just ignore. That's a 30-year-old building. That's actually not a capital project, but it's a wonderful example of of sort of the level of essentiality that
037we might have to choose from versus other projects that we have in mind. And then the long-term need across the county. Ultimately, a CIP is a is a a document and a plan put in place so you don't have surprises. What what do I mean by surprises? You don't have something pop up that, oh, I need to find a $100 million tomorrow. You see it coming and you plan accordingly. So ultimately after all of that there's a a strong emphasis at the county level in in general of of the timing of improvements. We cannot do everything in the first three years even though we have identified many many needs that need to happen now. We just can't chew that much food at any given time to use a metaphor. U but after that we have
038to blend the type of funding sources that we have. We have to figure out how we're going to pay for particular projects and what type of funding we're going to use to pay for them. You all at the board of education are used to general obligation bond referendums where we go out to voters and we ask for their approval to issue a type of long-term debt instrument. Geo bonds generally have the lowest interest rates of any choice we can make because voters have said in their approval of geo bonds that you are allowed county to raise the tax rate no matter what happens high enough to pay the debt first. So before anything else happens if we were to have some sort of catastrophic event in in the county we would still have to pay
039the debt on those geo bonds first before we spent money on everything else. that kind of gives comfort to people who buy these bonds, which means we get lower interest rates. But there are other long-term debt instruments. We have lobbs, which is sort of a long-term debt instrument, 20-year payback schedule, but you don't have to go to the uh citizens to ask for that funding, but in to get that funding, the trade-off is you have a little higher interest rate. Then there are other types of funding, bank financings, payo money where we just pay cash in support of certain things. So, we have to blend all of those financial instruments. we have and balance them out to try to keep our AAA bond rating to meet some financial uh statistics that bond agencies and people
040who we lend to like to see. Are we overextended? Are we under? Can we pay for it? We have a financial advisor we use to do that. But all that blending has to take place along with timing of projects and essentiality of projects and what projects need to happen first or or the most important. So after that we have to we have to separate our operating and capital resources it in a large CIP like this because every project we take on also has additional annual operating costs. We carry an annual an operating budget now that's $800 million if you include all funds. We just passed a billion dollar for the first time as a county budget in 2526. But we also pay inside that budget annually upwards of a hund00 million dollars in annual debt
041service. I don't remember the number exactly, but it's significant. Of which DPS related debt service we pay on things that you've already done or in the process of doing is around 60 or $70 million a year. Here's a little factoid you might want to remember. For every hundred million dollar in debt that we issue, the county has to pay roughly 10 to 11 million a year for the next 20 years to pay that off. So you can think of it, every hundred million is $10 million plus a year we have to pay. So heard Devon say $965 million in viewed or assessed operating costs. That's not even building new buildings. So what would that be? That would be $96 million in new funding the county would have to find every year. What's one cent on
042the property tax rate is $8.8 million. So you're talking an 11 cent tax rate increase just to to deal with those types of numbers. That may not be financially feasible. It may not be politically feasible, but those are the numbers we're talking about and we have to consider. Can we go to the next slide, please? So with all of those issues in place, we have to we start every two years when we update our CIP in general. We try to start with a facility needs assessment or a refresh of that where our engineering department goes out and talks with a contracted company and they go assess the needs. How many EMS stations do we need? What's our population growth? What are some of the key areas of growth? if we need an uh an adjacent
043uh uh detention center somewhere else in the county and then we include talking with Devon DPS and other things like that then we start the process of project prioritization and sequencing which is just that same thing what's essential what needs to happen now what can we put off a couple of years then we take all of that information from where projects are located over a 10-year pro um scan and then we try to say how much is it going to cost us to do the projects as we have it estimated there. We look at that financial cost and then we eval evaluate the affordability. Oh, that may mean a 5-cent tax rate increase in one year or it may mean a 10-cent tax rate increase and that may not be acceptable. So, we spread, excuse
044me, we move projects around a little bit more to try to mitigate pressure on affordability issues. And then ultimately we bring that updated CIP to our board of county commissioners for them to review and update and assess and ultimately approve. Next slide, please. So where are we in the capital project plan development process? Well, there's four phases to this. There's project request and project prioritization. Phase two is complete the cash flow projections. I would say right now, manager Hager, we are in the middle of phase one and phase two, more in the phase two area right now. We're going to once we get that flattened out, we will then present, we'll move to phase three where we take our CIP and more importantly our financial plan on how to pay for our CIP. We'll take
045it to a financial consultant. You all have heard and seen Doug Carter. He's come to this uh podium any number of times, and we still work with him. He's a a fine person to work with and he will at Doug Carter Associates, expert at the financial side of this, assess our viability. How viable is this plan that we have while also keeping our AAA bond rating, which is a foundational issue and concern that we have with every CIP update we have. After he sort of okays it and talks with our commissioners, then hopefully we'll approve a CIP in phase four. Next slide, please. This is too small for me to see, but manager Hager asked for this from our engineering department. Uh, this is a list that our department, our engineering and project management department
046uses, what we call shovel ready projects. An issue we have with every major project we have is the timing that's estimated to build the pro to complete the project and the actuality of how long it takes to do that. So we have created a process through this form where we go through and say how close to shovel ready are is this project ready to go? Have you done all the the I forget all the technical terms but there's all sorts of testing you have to do and approvals you have to get and architectural designs and those often can take 18 months. I think manager Hager we've discussed >> and and this is uh part of the reason we um included this and we do have the handout in normal size in your attachment so that
047everyone can understand the rigor that we uh go through before we say this is a project we can include this as something that we move forward as a part of our geo bond um group of projects or for limited obligation bond. One of the things that we go through for the financing is a review with the local government commission and they um ask for lots of information prior to you moving forward with your debt financing. And because of lessons learned, we have um put more uh emphasis on our shovel redness because for the county side, we've had projects we've moved forward and we didn't quite have some components as synced up and you get through the project and you don't have enough money. So where do you find the money from? we have um those
048same similar issues that have occurred with some of our DPS projects. And so if it's bond supported, that means the county has to figure out, well, how do we close that gap? And there are only a few ways we do that. And of course, as the partner, you can look within your dollars that are there. When there's not enough, we then have to figure out together, well, how do we close that cap? So trying to um do projects that are shovel ready is important. Uh we had great examples with uh the two elementary schools um last year with the bond program whereas 18 months out we had allocated funds for um PL for programming for design work and when the bond was passed immediately construction happened. It was seamless. It was just a perfect example
049of shovel readiness because we made the dollars available um prior to the bond dollars, the GEO bond dollars, and we were able to to move quickly. So, that's an ideal situation. We know sometimes it may not happen as seamlessly as that, but on the back end when that is not vetted to the extent that you would anticipate, you can run into some shortfalls um budget-wise because it wasn't fleshed out as much and not because of market conditions or supply chain issues, but because the planning on the front end just had not moved along enough. So, we can go to the next slide. The ultimate in effect of not being shovel ready is that if it takes any amount of time with prices increasing monthly, quarterly, annually, we find that the county, we've had county departments
050on county projects as well as some DPS projects come back and go, "Oh, there's additional funding that we need." And that's no small amount of money. It's not an additional 2 million. It's usually in the 20 30 40 $50 million range. And again, getting back to a CIP, those types of dollar amounts are not ones that we enjoy being surprised by because it's really hard to adjust to those types of increases. Next steps, phase two and three highlights, March through July of this year, we will continue the project list uh review, which management and my office is doing right now. Uh and then in March 26, we will assess the shovel readiness. we will turn around and ask DPS on their phase one, I forget the term you use, but the phase one four projects
051plus and how close you are already of that. And then in April 26, we will talk about if a general uh obligation bond is recommended, then market assessment is going to occur to gauge public support. But I do want to also note that we don't necessarily have to have a general obligation bond referendum. Depending on the amount of money that we can afford to take on, depending on the projects identified across the county, including DPS, we have options. It doesn't always have to be a general obligation bond referendum. So that's the timeline. Next slide, please. This is a little small. Uh hopefully you can see it better on your computers or a piece of paper. This just shows you the growth in the amount of debt that top graph uh that the county is taking
052on over uh key years. What I if you look at the top set of numbers, I believe in 2026 it talks about related debt service costs to our CIP is $131 million and I think by 2030 that number grows to $188 million. So that's another 50 plus million dollars annually that the county is expected to take on in the next four years. And I can tell you that our revenue growth, our natural revenue growth is not increasing enough to take care of an additional $50 million in debt service or capital improvement plan related dollars without a tax rate increase. So there's a tax rate increase built into those numbers. And part of that is fully paying for 2022 geo bond referendum dollars that have need to happen plus additional projects that we are already pacing
053that we see out in the future. It does not necessarily include $965 million in operating. So it would make that $188 million annual payment go up even higher. These are the type of financial issues that we have to face. The bottom part of this graph or the second one below just shows the funding sources we use to pay for our debt service. And really there's only two major ones. There's property tax and there's sales tax. And all I'm showing you in that red circle in the bottom is more and more of our capital improvement plan is put on funding by our property tax. That what does that translate into? It means that a higher property tax rate is going to be needed to pay for debt service. That's just one side of the equation because
054we've got to talk about the annual budget as well. And that's also paid for with property tax. So there are limitations financially, politically, and reasonably for citizens about how much we can raise the property tax rate in any given year or over a couple of years to support this funding for a capital improvement plan as well as the annual budget. Next slide, please. Some important reminders. Say it again. A balanced affordable CIP is something that we hope that supports political desires and definitely reinforces AAA u debt designation or AAA bond uh designation. Try to limit the property tax rate increase as much as possible or at least balance it out. You have slow growth. What we try to avoid is to have a massive tax rate increase in one year of 10 cents or 5
055cents or 7 cents. So, we try to balance it out and that limits the amount of projects you can put in any one year. Once a recommended CIP is finalized, it will be vetted by our financial consultants uh to ensure the county's financial capability and stewardship through bond ratings while also keeping a close eye on regional economic political factors. They may in influence the willingness to pay. So, it's we can plan it out and hope for the best, but we have to be conservative and look out in the future. The environment, the economic environment, which honestly doesn't look particularly great, at least as compared looking backwards over the last decade of Durham County growth. The the next decade is a little more fuzzy, um, a little more chaotic. So, once the CIP passes, there will
056be a stringent financial vetting process. Once it passes that stringent financial vetting process, it's going to be sent to the board for more intensive discussion. It should be noted that we have uh lost some occupy tax revenue that we had by board policy put towards the uh CIP support debt service support, but we did that in hopes of a long-term gain. We have moved that occupy tax over to the sports commission because we're trying to find new revenue sources that will support us in the next 20, 30, 50 years. And one way we can do that is to attract other people to come in to the county and pay sales tax for services used at ball fields and whole all sorts of different sports related issues. That's what that occupy tax revenue is hopefully going
057forward in the future. But the direct effect of it is a loss of support for the capital improvement plan which again just puts more pressure on the property tax revenue to fill in that difference. Next slide please. Key upcoming dates. I think we talked about this. March through July, continue capital project evaluation and evaluate the shovel readiness of projects. March 10th, we will have a CIP overview at this meeting right here, which we are doing right now. April 6, we will have a board work session where we talk about the more in detail and you get fantastic graphs and numbers about the financing update related to the CIP. Next slide. questions, concerns. >> I'm sure we've got all of the above. I'm going to have Miss Mitchell if you can come back up to the
058podium. So, we have questions for both of you all at this time. Board members, commissioners, questions. Uh, Commissioner Burton. Thank you. Um, Chair UMstead, I think the question that I had and I guess it's going to be in the reports when you were talking about the consolidation with regards to um like we Smith Club and George Watts. I I imagine you're going to put in that report what would happen to those buildings, things like of that nature, because I know the community would be very interested um in what those facilities what would occur with those facilities and how they would be used and things of that nature. So yes, I I would agree that would happen. Um right now we're still in the determination phase if we'll be um selecting those projects. um they were
059selected because they are the um with the strongest need. That's how they landed at the top of those consolidation projects. But yes, we will um absolutely be considering what happens with those sites. >> Commissioner Jacobs, >> thank you. Um I do have a number of questions. Um, first of all, I appreciate having this joint meeting and I appreciate all the work that is happening. Um, I just want to preface some of my questions or comments with the fact that we are really in unprecedented times for many reasons. um not just the financial constraints that we're under, you know, with locally, but also with impacts from the state, the federal government, but also looking at the enrollment trends for Durham public schools and the number of charter schools we have now, vouchers, and knowing that we
060know policies that are happening at the state level that we don't have control over. So we have to deal with what we have. And um I I think that for me there is a particular urgency related to enrollment. And I understand that some of this planning is kind of in the future related to consolidation and what the you know what what is being proposed. And for me, I'm I what comes to mind is does there need to be any interim steps because we're just going to be facing certain financial realities that we h we have to deal with. And so I guess one of my questions is are there even the possibility of interimm steps uh related to the issue of consolidation of schools? Um I I would like to see understand better around the
061enrollment with you know elementary, middle and high school. Um what that really looks like. Um I know the numbers that you show I assume those were capacity but understanding like what is the current enrollment now. Do you see the possibility of even looking at things that can be done more quickly as an on interim level knowing that it's going to take time to possibly add on to a facility or build a new facility? Just wondering about that. That's my first question. So, we do have um some complexities in in our schools in that we don't have great places to move 300 students. So, moving a group of students and closing a school to in the interim uh alleviate some of our overhead and expenses um is not not easily doable. Um, I think if you
062were going to look at an interim, you know, some other interim type solution, and I was trying to think while you were speaking, I think that's something where you would be having to take a school population and move a portion of them to one place and a portion of them to another. That is not something we have looked at at this point. um uh as an interim solution. Um I you know I it could be something that's on the table, but that's the only thing that really comes to mind for me that maybe we haven't studied and I'm not sure. We would have to have some discussions around if that's you know in the best interest of our of our schools and if that you know how that works in terms of um you know
063moving partial groups of students you know with the impacts of that I think would be uh very important for us to think about. Well, I would say that I think it is something that we do have to look at based on just the economic realities that we're facing and I think really everything has to be on the table. >> Um, so I just want to put that out there. Um I also would like to know how you are currently working with the planning department on you know we see what's going on with I mean enrollment trends we're down at what we were 25 years ago I don't know and you know um we know that our population is aging birth rates the impact again of other types the schools in Durham, but also just looking
064at where uh residential developments have been approved. Um, and also our hopefully we'll be soon adopting our new LDO land development ordinance, but that will also help us understand that where we're going to be expecting future development and growth. Um I'm just wondering how that is also because I didn't hear you talk about that. >> So we have given separate presentations on enrollment. Um we do look at um where we see housing and the types of housing. All of that gets factored into our enrollment projections. The areas of the district where we do see um change is in the southwest. Um we see continued growth in the southwest portion of the district and some in the uh southeast east area. Um so those are the areas that we you know are watching. Um but right
065now our projections take into account the knowledge that we have today on what's out there in terms of construction that is planned or permitted. Um it's very hard to track you know things that are planned that may or may not happen in the future. Um, but we we always uh, you know, collaborate on getting that data from the county and from the city and making sure that that's included in in the forecasting. Um, and I'm also wondering about the impact of growing together on the realities of, you know, the facilities and again the costs. You know, I also wonder about even the cost of implementing the growing together plan. Um, and again, I mean, that's also just kind of a bigger discussion about funding and budget. Um, again, these are very difficult conversations. Um, but
066I I have to raise them because, you know, we've the past two years there have been about a 13% budget, I mean tax increase on our residents. That is not sustainable. Um, and we see that the impact that the reval has had on on people being able to afford to pay their taxes, stay in their homes, um, all the other economic pressures we have. And so, you know, again, this really means we have to take a hard look at things. we see what's happening at the state level with these committees because of obviously complaints that are happening. So that's I these are really hard things that I'm bringing up but we we have to talk about them. So I'm just wondering about the cost of implementing that. Uh what I can tell you about um
067growing together is that um we do have a working group that meets uh monthly to go over uh impacts related to enrollment and specifically related to the roll out of growing together. One of the tools in our toolbox is um boundary adjustments. So boundary adjustments are on the table for the future to adjust areas where we have growth um issues or where we need to balance out uh uh student populations as a result of growing together. So that is a uh an item that remains in flux and something that we're um you know beginning that evaluation process of. So that's you know certainly one thing that we can engage with. Um I can't speak directly to the costs of growing together. I wasn't here at the implementation of that to be able to speak to
068that, but I can speak to, you know, the results of it, which we're currently um continuing to u monitor and we I'm sure we will see some adjustments um in the future. >> Okay. Thank you. Mhm. >> Um and then in terms of uh when you were presenting around plans for different properties, I I just want to emphasize one of the assets that Durham Public Schools does have is that you have very valuable properties in um different locations. And even, you know, if it comes to closing some of the small schools, a lot of them are located in downtown in places where there's a lot of redevelopment potential. I think that's a a a positive thing. and what's happening with Lowe's Grove and working with the development finance institute and looking at public private partnerships.
069I think again this is this is a bright spot. Uh especially looking at you know Northern High School and DSA. Um I I want to make sure because I see you know there was mention of like you know appraisal demolishing that I hope that everyone will stay open to again looking at some other again the model with um Lowe's with those properties um because also the idea of housing for teachers you know the teach house model uh for DPS staff a way to leverage some of those properties to meet other needs that Durham public schools has. The issue of teacher retention, especially with new and early educators, um that we just keep a comprehensive look at all the all the challenges that we're we're dealing with um and how we can use the assets that
070Durham Public Schools has to meet some of those needs. So, um, I just wanted to put that out there. Thank you. >> Can I Thank you, Commissioner Jacobs. Dr. Lewis, can I have you speak to what the board has asked for you to do with those other two properties, the old, excuse me, Old Northern as well as Durham School of the Arts. >> Yeah, absolutely. Very similar to the work that um Deon Mitchell mentioned in terms of um what we're doing in terms of a feasibility study with Olo's Grove. Uh thanks to our partners at the county, we are uh have engaged with the um UNCC school of government. Uh they will also be doing a feasibility study of um Old Northern and what will become old DSA. And so they are working um um
071and then we had some conversations a couple of weeks ago. Uh so they will be doing this uh similar work that they're doing with Old L's Grove with Old Northern and what become old DSA as well. So a lot of community engagement uh around that. >> That's great news. I do I do think we should update our slides to make sure it reflects that because it might feel conflicting. I'm watching in the community thinking that we're planning to demolish or do something different in there. So, I think we should make sure we update those slides so that we have that information correct. I'm going to go over to Miss Byer. I want to be mindful of time because we have um presentations on the budget coming after this. So, um, Miss Mitchell, I want to
072lift up your leadership on this really complicated work and and thank you for all that you've done. I want to thank, uh, Commissioner Burton and, um, Miss Harold Gooff and Mr. Tab who served on this task force as we wrestled with this impossible, wicked problem. Um, I think we, um, understand the financial pressure that the county is under. It is not, we don't see hope coming from the state on behalf of our facilities or our folks. We're so appreciative that Governor Stein, you know, released a critical needs budget kind of conversation yesterday, but um we know we are putting pressure on you for our people and our facilities. And I think as a collective, these boards, we need to wrestle with, are we going to do bigger regular bond issuances? And I I'm asking y'all
073and and Mr. Lane, are we going to do regular four-year bond cycles or are we going to space those out to six years? Like that that to me is the question that that we need y'all's guidance on. But it in the meantime, we have a billion dollars worth of not exciting work, but repairing places where students are learning right now so that they don't fall down around them. Like we're not exaggerating that need. We we know that that's probably only going to increase. Miss Mitchell is that >> absolutely. >> Um and and then these consolidation kind of conversations and right sizing kind of like Chapel Hill is having those are going to be nearly impossible conversations for this board and future boards to wrestle with on behalf of families and the community impact. Those are
074the least palatable conversations to ever have in education spaces. But um I feel like we sit here and and have to wrestle with how how we do that together. And and I don't know if y'all don't run a bond this year if I think that number actually just will increase. Like we can't continue to defer maintenance. We can't. Um, and so I don't I that's what I think I'm struggling with in this space is is how we do that together with y'all's wisdom. That's a great question. And from where I sit, it is whether it's a bond referendum or a limited obligation bond or other financing type. It is how do we get the money that's needed to move forward in those critical areas. Timing wise, we're not ready for a bond. Okay? We had
075it programmed for a bond, but when I talked about shovel readiness and checklist, those things are real. And so when we look at what cash we've spent since the last bond, al we also look at that actual cash spent since the 2022 bond is about a hundred some million dollars although it was for $460 million. So from a cash flow perspective, if about a 100 plus million has been spent since 2022, there are ways that we can make sure reasonably how do we continue at least on a similar pattern. Um so I I would say our intent is to make sure that based on actual cash spend projected need we come up with a strategy that we can move forward timewise we have to finalize if we'll do a referendum by June to meet the
076timelines that are required to get it on the ballot. it has to be done by um July and there are there are many steps prior to that. From a planning perspective, I I don't know if we'll be able to hit that target right at this moment, but we do have on our um our list to sort of vet where we are. There may be some things that could be carved out, but from a process perspective, we will get push back um just based on spend. If it's too high and we're not showing evidence, we spend at that level. In the past, sometimes that has been the barrier for us not having um not moving forward as quickly as desired. From where I sit, it is I know that there is a two billion dollar need
077that's there. The question is from a cash flow, how do we map options to get us there? Even if we don't do a referendum in 26, what does that look like with using limited obligation bonds, which we have done for the schools? And that is an option. Um we all are um we know that we all know the importance of addressing these pentup needs and so that is in the forefront and and we will do our part to to help us get there in a way that's affordable in a way that we know that um we can get across all the finish lines when it comes to actually getting approved for those things. Just as a followup, do you have any It's I hear you strongly leaning away from a geo bond this year. I
078hear it very strongly. Um, and I heard you switched to if language in our most recent previous meeting. So, do you have any sense of the capacity that you might have if you're doing lobs? Well, let us come back. like we're not ready to have that conversation at this moment because there are two things happening right now. There are projects that are underway that we know that may have the potential of of um having cost overruns. Um I'm sure you'll see that in some of your current projects. So we really have to go back and and recalibrate what's down and in the pipeline what's available and then in smaller increments be very strate strategic in in addressing those most pressing needs. We're hopeful to come back to our board in April with a little bit
079more conversation in May um just sort of what that looks like. Uh we've just been we've just had a lot of um unusual um things that have increase cost for existing um projects which is is unfortunate but it is a reality. So let us come back and say well what does this look like? And we've, the superintendent and I, you know, have talked about trying to identify what are the most pressing and figuring out what does that look like um from a cash flow perspective and prioritizing the most pressing issues. Thank you. I'm going to go to M Dr. Lee. He had his hands up first and Mr. Tab. Then I'm going to move us forward. I'm looking. Um, hold on, Commissioner Burton, because I want to make sure if anyone else had questions before
080I circle back to you. Go ahead. Go ahead, Mr. J or go. Sorry. Go ahead, Dr. Lee. Then we'll come to you. >> So, I had a question. You had a um slide up that it was a pie chart that said 58 58% was immediate, 42% was 10-year need. um with the consolidation plan that you have does that change those percentages at all? So say we consolidate watts and club um would that consolidation move that percentage. So >> so yes if we select those it will change those numbers because the consolidation if we are not reusing those schools we would no no longer require the maintenance and repair for those. So we would see um a savings in that. Yes. >> Okay. And then then just really quickly, the I saw Lakewood Monastery Middle had
081310 kids. What's the capacity for Lakewood Mon? >> Yeah, that school is is maxed out. >> So 310 is the most again. >> Yeah, it's it's a very full school. Yeah, there is the possibility that that school may uh grow in the future um as the YMCA moves out of their um lease um in the future. So, we may be able to expand that school, but it still sits on a very small site. It is sign significantly smaller than a middle school site should be. >> Yeah, it's a it's a very small school. I just saw the small number >> and you were talking about small schools. So, there's nothing that can happen there. Not that I'm saying it should go. I I don't think >> Yeah, it's a very successful school. >> Yes, it
082is. >> Yeah. >> Okay. Thank you. >> Thank you. Thank you for both bodies um for the reporting. Um just a quick observation um me just being on the outside now being on the board, we come to this point each time that we have to deal with the budget. So my direct question is what do we need to do that's different in the approach so that we don't end up in the same place each time of trying to figure out what we need to do because this is like recycles every year of a budget conversation. So I would like to hear more about what we may need to do that's very different so that we can start those kinds of conversations. One thing I one I need to correct uh something that I said earlier.
083Our spend the DPS spend is closer to 200 million versus the 100 million. So I wanted to correct myself. I always have to back check. Um so to correct that I I do feel as though we're doing a lot of things right. We've had a convergence of shifts federally, statewise, and in so many other areas that have incrementally caused us to be in a very tough space from the standpoint of enrollment shifts, which impacts how much money you get from the federal and state side. um the supply chain issues which happened co when once COVID hit all your construction costs went up tremendously. They've they've come back down. They normalized and then um probably about a year ago when there was some policy shifts, labor chain supply chain issues, costs went up again. So we're
084we're dealing with um a convergence of a lot of different things with in on the operating side plus capital. Good strategy and planning will get us where we're needing to go. And I gave the uh the example of how we got it right with the last bond program when we did the the prep with the design build work or the the design for 18 months and then by the time it came on board for us to to do the referendum we could pull that trigger. So from my perspective, if there are projects that you're looking at right now that are new construction and you you know without a shadow of a doubt there's a need for a new high school, for instance, the county could make available dollars for that design work, which is is
085usually about 7% if not more that you would allocate for that and for a project. looking at that's a pretty significant number. So, we would work to do that and then planning for when the referendum happens. But and if that didn't that we have would have a backup plan. I I would just say we're doing a lot of things right. Um we learned from Northern um back in the 2016 referendum. I remember that so well because we we the the number probably wasn't enough. It was about 96 million, but based on our spend, that's why it was in that range. We passed the referendum. It was 50 million set aside for Northern. Probably about four months later, we realized that it was not the right number. So, I I feel I feel as though we've
086gotten a lot right since then. And so we're in the the right direction from that perspective. We just don't have enough money. I think that's the that that has been the the challenge. Um but we I do feel as though the county and um the schools are coordinating a lot differently and which is is helping us in these trickier times. Um but to your point uh going forward we need to be truthful to ourselves about process and also our realities on all sides of it. and but making those really hard decisions from a prioritization perspective because it it will be very difficult to afford all that's out there um that's needed not only just from the schools but also other priorities that the county has to um underwrite from a debt perspective. >> I think
087Mr. T from our point um and um Mitchell mentioned it on slide six moving from a place of being um reactive to to be proactive in terms of how we operate as a school system. Um you know we have been operating at a break fix standpoint. Um and the example I always use is uh HVAC. If we know the life expectancy of HVAC system is 7 to 10 years then if school A gets a replacement this year 7 to 10 years they need to be on the list to get a replacement of that same HVAC system. And so, um, being proactive when it comes to, um, how we're maintaining our facilities. >> Really quick, Commissioner Burton. >> Very quick. I just wanted I know um, County Manager Hager mentioned about the schools got 460 $460
088million bond. 200 million has been spent and the we want things to be shovel ready. I was wondering if we can get a list of what the schools have spent the money on to help facilitate making sure things are shovel ready when a bond is done so there's no money left over things like that. That's all I had. Dr. Lewis, that something staff can make sure that we get over to the county. >> All right. I'm sorry to push us forward, y'all, but we're way over time. So, we have our two budget presentations coming up next. Um I forget which group We'll start with Mr. Teter, Durham Public Schools, and then we'll go to the county. I'm going to ask folks who are giving presentations, if y'all can keep it tight so we can keep
089it moving. >> Okay. U Good morning, uh, school board, county commissioners, Dr. Lewis, County Manager Hager. um got the pleasure of sort of presenting an update as well as a forecast of sorts uh for Durham public schools uh where our funding is concerned. And so I will do the bulk of the talking and and at various points Dr. Lewis is going to um insert and and make some remarks and comments uh where appropriate. And so we are okay to progress to the next slide. U we just want to start with celebrations. Um and so County Manager Hager and Mr. Lane. Uh we're here for our most recent meeting where we were able to provide updates just sort of on the the fiscal stability of the district uh and the work that we've done in the
090past 16 months uh to stabilize Durham public schools finances. And so on the next slide, we sort of um lift up our celebrations that uh the finance team in Durham completed two audits um in in one year of time and and brought Durham public schools back current uh on the audit cycle. Uh and so uh it's so important for us to have that work done so that we can accurately convey where we are. Uh and so we've we've had lots of lots of calls for transparency uh in Durham. And so we really didn't have anything to be transparent about. And so now we have a framework to operate from with with audited current financials that we can talk about. Um, and it's the first uh the the 2425 audit that was just presented uh was
091the first one completed on time in Durham public schools since uh fiscal year 2021. So we're very thrilled about that. Um and so in the course of that um you know so this administration came on board sort of midstream in the 2425 year and there was only so much we could do about certain things and they were going to be findings no matter what. Um but we were very glad uh to reduce the findings in that audit from 7 to four. Um we know that three of them we corrected mid year um when I got here in in November of 2024 and we expect them to fall off uh in the next audit because we got those corrected and and on track. Um and then there's one that showed significant improvement uh in the second
092half of that 2425 year compared to the first and high likelihood that that will fall off. And so for the 2526 audit, we're sort of preparing for a reality of of one or zero uh findings uh for that report. Um and the compliance work for 2526 is already underway and and auditors are on site next week looking at our activity through February. Um we also had uh in Durham a number of management letter comments uh from 2324. So they weren't worthy of a write up but just recommendations to tighten things up. And there were six of those in 23 24 they dropped to two um in 2042 and looking forward to zero uh in that space as we continue to tighten things up uh in finance. Uh in the midst of all that work uh
093we also um did some work to move to a new ERP. So, a new financial and payroll system. And so, Durham had been using the same payroll system since the mid 90s. Um, and that technology is sunsetting in the near future. Um, and we were in a space where our financial system was operating in a different environment from our payroll system. We've brought the two together. They're operating in the same space. Um, and so we've joined a cohort of about 89 other school systems that use the software that we've brought on board. So, um, very pleased, uh, to be in that space and and use the software that I'm comfortable with. Um, and then in the meantime, we've been busy updating standard operating procedures for our folks throughout the district and and we've made our
094first updated finance procedure manual since 2017 to sort of bring folks along um, with how we're doing business now. And and that helps us to mitigate um, those audit findings, right, with just current current procedures and and and active training. on the next slide um is something that we're particularly proud of. Right? So, we're looking at ourselves in the context of the largest 12 districts in the state of North Carolina and looking at fund balance usage in 2025. And you can see that we're one of two districts in the Big 12 um that added money to fund balance rather than spending fund balance. And so there's um really just sort of a testament to the hard work that we did to transition off of the reliance of ESSER funds. Uh right and that's been a
095challenge for a lot of school systems that made some very um expensive decisions when they had esser money or COVID relief money. And so we did a lot of hard work uh when we got here to just sort of reorient Durham's reality. Um and you can see two of our colleagues in the Big 12 um do not yet have a published audit in the clearing house. Uh and so they're um the deadline for North Carolina was by the end of December. The federal uh government requires them to be done by the end of March. And so um we were on that hamster wheel when I got here and very glad that we're off of that now. So um so we'll we'll provide an update when we hear about those other two to to give context,
096but just want to lift up our budgeting practices and and what we're doing here. Um on the next slide um is just some further information on the fund balance sort of history for Durham public schools. And so um a couple of years ago uh the district consumed nearly $9 million of fund balance uh largely connected to classified pay issues um that unfold and I won't um carry you back through. Uh and so we we've been very sort of proud to start to restore some of that. Um and for all the very good reasons for why uh we like to have some fund balance on hand. I'll also share right you see a bit of a disconnect between total fund balance and then the amount that's available. Uh and so we've um we're in a in
097a position where over the last couple of years um Durham public schools um loaned money to our school nutrition program. That's sort of the biggest aspect to that. And so they um owe us $8 million. Um but um positive news in that space uh is that in this current year we have not had to loan them additional money. Um and that and they have actually uh made a little bit of money as a program this year to the point where uh we'll be able to start recouping what they owe us and restoring that uh to our local fund balance in in lie of them having that uh liability against us. So, just want to lift that up and and and offer that context. Um, on the next slide, um, we we start to move into
098some challenges that we had to contemplate and wrestle with and and hopefully all of my other colleagues in K12 have been thinking the same way. Um, and so in the next slide, we've got some very sort of specific situations we had to contemplate. And so, um, when we came on board, um, folks will recall the press conference that happened in this room with Dr. Lewis and myself as we unpacked what Durham's budget reality was. Uh and then we found that there were a number of positions, 315 to be exact, um that had not been properly budgeted for uh in the school systems budget and we did a lot of work uh to to bring that under control. Um, so that had a value of about four and a half% of our of our personnel budget
099in that in that reality, which is far more e even in scenarios where we're comfortable with assuming lap salary, that's past my comfort point um to have it 4 and a.5%. Um, in the current year that that target shifted, right? So um it was 18.6 million before, it was about 7.7 in the current year, which is 1.6% 6% um of our personnel budget. So a much better target. Um and at this point in time, we have built a proposal moving into the new school year where we do not depend on lap salary and we get out of that practice of depending upon lap salaries to balance our budget in the school system. Um and so a lot of that is just really following our existing models, our existing allocation models for personnel in the school
100system. Um, in tandem with that, we know that the state of North Carolina is going to react to our declining enrollment. Uh, and so we we're expecting 7.2 million or so less in state resources next year. We're also bracing for um two new charter schools opening next school year and and the potential migration uh of a thousand students uh to those charter schools and that will increase our responsibilities to them by about 6.6 million. And so three things that we had to wrestle with very carefully uh and make sure that we were in a position to handle. Uh and so far we have run a very tight staffing aotment position control process for the year ahead to make sure that our school staffing is in alignment with with all these realities right that are on
101the screen. So um could have had a real mess if we didn't prepare for that. Um on the next slide um uh we start to talk about sort of our continuation costs and um really just in this environment right of you know and and and it's been this way my whole career that the the school system sort of goes first in in in determining what a budget will look like we we get a request to our partners at the county and then you all formulate u what you can or can't do for us with the resources that you have which I absolutely do not envy um what you have to do and so I would rather do what I do. So, um we then um we then also um in in in recent history um
102do all this in the absence of of a state budget or a clear state budget and what they might do. And so we've um we've seen some proposals just yesterday uh from the governor in his efforts to persuade the general assembly to take some action for the current year. But again, we just we don't know. Um and and then also it goes without saying the federal uncertainty that we've had to wrestle with uh as we plan uh for our time ahead. So all that to say um on the on the next slide here as we start to contemplate continuation scenarios, we have to sort of prepare for what are the most expensive scenarios possible based on on our historical knowledge um of of North Carolina school systems. And so we do um we're we're preparing
103for a 5% uh assumption um for for personnel uh costs u from the state of North Carolina that would then in turn put pressure uh on on our obligations for locally funded employees. Um the governor's proposal that came out yesterday was sort of a blend of those things. And so um he's asking the general assembly for the year that we're in now uh to contemplate a 5.8% 8% average increase for teachers and then 2 and a.5% for other types of state employees. And so he's got to um I don't know what will happen with that. Um and so that's just something that we're also watching and we may have to do something as a school system in the current year if there's any kind of action over the next couple of months. Um we know
104that there are retirement contributions and our health insurance contributions increase every year. Uh we're preparing for a slight increase with the retirement rate. Um, with all the all the headlines we've seen with the state health plan, uh, we're anticipating probably a pretty high increase of about $600 per employee um that the state treasurer may ask us to contribute. We're still getting used to the new state treasurer, as I'm sure the county staff is. Uh, and so we're um just trying to develop a rhythm um with the new state treasurer and and how he thinks about uh those various funds. Um and so all that uh all that to say right we're looking at 6.1 million or so that we need to contemplate. Um on the next slide again I know that uh you all think
105about this as well. Um in addition to those salaries and benefits um just rising utility costs. Duke Energ is always pursuing um increases and we don't know where that's going to land. Um and so we prepare for worst case scenario there uh should their wishes be honored. Uh and then also we monitor very carefully our property insurance market, auto insurance, general liability, things of that nature. Um and then um we we've applied onto those pressures um our true up or what we would have to share with charter schools um in the event that we uh received additional funding to accommodate continuation needs. Um, as we roll into the next section, um, you know, I'll just remind sort of everyone in the room that we have two more schoolboard meetings, a work session and a meeting,
106um, where the school board will continue to ask questions of Dr. Lewis and myself as we, uh, work through expansion items and and what new things that we may ask for in this process. And so, um, just know we're not in final form, but letting you could just kind of see some things that are on the table that that we're thinking about. And the microphone, >> I think it's a good point to interject to have how how the board and community has seen this um recommendation evolve over time as we have had more and more opportunities for community input and so we try to respond to um what we hear before we get to a a final product. >> Yes. Um so all that to say I think we started with a much more um
107conservative proposal um for expansion uh in this process and we've just received quite a bit of feedback in in different ways um particularly where uh compensation's concerned and um and then the sort of the new pressures that we're seeing also with Duke University's announcement uh with their new minimum wage. And so if we want to progress uh a couple of slides. Um all right. So uh one thing I wanted to talk about just sort of is the classified pay uh in Durham public schools. And we had to do some work. Um there were three different firms that came through Durham. And I won't call them by name uh because I don't want to be sued. But three different three different firms that came through and did uh did a variety of of analysis um on
108on salary schedules. Um and um the salary schedules that we sort of walked into were a little bit um perplexing and they conveyed an hourly rate, a monthly rate, and an annual rate of pay um for our employees. Um and so Durham as for more classified employees than not, a healthy majority of our classified employees, they earn a monthly salary. Um we've got a couple of segments of classified employees that are paid on an hourly time sheet uh such as our bus drivers and our before and afterare uh employees. And so um and I'll go into this a little bit on some future slides about the arithmetic of those schedules um and how some folks computed hourly rates in the past um just for some additional context that I hate that I even have to
109explain. Uh but nonetheless, um we've uh received um just sort of a lot of attention and and and feedback about the desire for us to align our minimum wage with the county government minimum wage of the 1922. And um and so that would be just a slightly greater than 12% kind of shift to that bottom floor. Um and and when we think about that, there's a couple of different ways, right, we can go about that. Do you raise that minimum wage and just address the folks that are at the current minimum wage and and you don't deal with the compression that creates or do you flesh flush that raise sort of throughout the table to to mitigate compression? Right. And so in that model of making that kind of movement as a as a collective
110initiative, it would be a little over $13 million to do that in Durham. Um we didn't want to lose sight of the continuation figures already assume some degree of raise and we didn't want to duplicate uh those numbers there and so we backed that out of of what that cost would be and so it would take an additional 10 and a half or so beyond um what the uh request is in continuation for for compensation. Um and I just want to lift up right that this is something that came through um through a lot of public a lot of public feedback through hearings as well as the meet and confer process u with the educator association. Uh on the next slide um we touch on just that arithmetic that I talked about earlier. And so
111if you look at our salary schedule from the previous year like on our our our scales range from NC1 to an NC19. And so NC1 being the lowest scale. And if you were to look at that scale, it was reflecting an hourly rate of $18 and some change per hour. Um the folks who developed that schedule, um they just um they did the math quite not quite the right way for calculating and they did it in a way that reflects 48 weeks in a year versus 52. Um and so uh we went back behind that and did sort of the appropriate math of assuming 20080 work hours in the year and and did the construct differently and and then that established based on the monthly rates we're paying to our lowest uh earning employees at
1121715 an hour in Durham. So, um, on the next slide, we just show, um, another example of of of how that varies and and that, um, translation box always kind of covers up, um, what I'm saying, but um, it makes a difference, um, in in terms of of how that math lands. And so, uh, it's it's a difference of 48,000 a year and 52,000 a year for our employees if you do those rates correctly. Um, so just, uh, would reiterate that we've not paid anyone incorrectly. we're paying them on those quoted monthly salaries that are on our schedules. Um but just the the the depiction of what the hourly rate equates to had not been right in the schedules that we walked into. Um on the next slide um we talk about talk about that
113further. I won't belabor what I just said for sake of time. So we'll move on to the next slide. Um and we'll talk about our transportation safety assistance. So, in the in the last budget cycle, um the county commissioners made available to us the funding to pay for a bus driver supplement and $200 a month and and we appreciate um that investment. Um and um I have not heard that we have ongoing transportation issues like we did before and so we feel good about the investment that we've made uh in our bus drivers. And so we've received a request um through through our meet and confer process um the uh to include safety assistance and and we got the request to look at 200 per month and administration is is suggesting only a hundred so
114that we can differentiate between bus drivers and safety assistance um and where that's concerned and so that cost is a little over 86,000 for that particular initiative. Uh on the next slide, um we have received a tremendous amount of feedback uh from our occupational and physical therapists. Uh and so those are employees that are technically classified employees um throughout the history of school systems. They some years they were treated as certified employees in North Carolina. Other years they're classified. And so they've been in the classified space for quite some time. And what we have um a after hearing the feedback um at just about every schoolboard meeting um you know we've done some research um in in terms of how we compare in our uh payment practices for that population uh compared to other school
115systems. And so a lot of our urban districts um still treat them as classified employees but pay them in a manner that's consistent with other licensed um related service providers like speech uh pathologists and aiologists and trying to bring them um in concert with one another. Um and so we've um developed a scale for them um that's a little over um a little over 269,000. and then also um wanted to benchmark our occupational therapy assistance uh to be in alignment with them in a way that's consistent uh with what we see in other spaces. And so that's an additional almost 33,000 uh to to uh make a new scale for those folks. Um when we originally contemplated this right as we're in the working phase, we were looking at a potential 5% increase across the
116board for classified employees. And so my team is going to do some work to go back and re-evaluate this particular element uh and see how that lines up um in the model that looks at that 12%. So we may as we work through the next couple of board meetings at the school system, you may see this slide tweak a little bit um as we resituate this in that context. Um on the next slide, I think we're almost done just lifting up um you know the charter school share if if we were to receive um the funds necessary for those expansion costs. There's 3.8 million that would float um to the folks at the charter schools. Um next slide uh is sort of the capital outlay space. Um and so I know we've had conversation about
117capital outlay uh in here. And so on the next slide, we just lift up um the desire for the county to continue that current commitment um of the $5 million for capital outlay needs. Uh and so that um in tandem with uh with other resources that we receive such as lottery um and repair and renovation fund from North Carolina uh able to um able to make things work there. Um and then lifting up um a technology plan request that we received and and really wanting to run that through uh capital outlay to mitigate having to share those funds with charter schools. Uh and so the the original request um that we received was for to refresh 25,000 Chromebooks. And so we've um knocked that down to a little over 17 um to allow time for
118administration to further evaluate uh what the delivery model looks like in the K5 space. And so just some context around that. Uh and then about 13 years ago, the district made investment in some interactive panels of sorts. Uh and so looking to do some sort of refresh for that in our classrooms, I think, as well as installing it in some classrooms where they currently don't exist. Um and so um looking at 1,786 of those devices, um that we would manage um on a lease. Um and so so looking at a total capital outlay of a little over 7.8. Um and I think last the last couple of cycles the school system requested 8 million for capital outlay. And so this is a little bit less than that. Um on the next slide I think is
119just lifting up that trend. And so I believe this is my last slide before questions and comments. Um and so, you know, it's not um lost on us that the historic investments um that Durham County commissioners have made in Durham public schools and um my colleagues and other school systems are all very envious um of of the reality that I get to work with in Durham compared to theirs. And so we um wanted to too also u recognize what you're what you're wrestling with and and that we don't envy what you're wrestling with. and and at the same time we're also still balancing that with sort of lifting up um what we see as priorities for for moving our work forward and supporting our staff and and um look forward to on the next slide
120just sort of the call for questions and uh happy to support however we can and um just a reminder uh that we've got two more meetings that we're going to work through before we make a formal request and and uh I think now we'll take questions for real on the next slide >> I'm going to have uh Mr. Lang go first and then we'll take do group questions for both presentations. >> Thank you Mr. Teter. Don't go too far though. >> Keith and I will tag team again and we'll get started. And many of the slides I will skip because we did talk about them at the um board meeting last week and our board meeting also with our retreat. So we if you'll skip to the next slide, but we will give some overview
121of u some key points as reminders. The guiding principles will not go into that, but that's in your document as a handout and there's a slide there. We'll also um note the context for shaping the 2627 budget process, highlight some expenditure revenue turns and outline next steps. So next slide please. This is a itest that we all will flunk. um but that is in your document but it's the guiding principles for developing the budget and we've had these in place and we've refined over the years but they have kept us in the right framework as we tried to keep a sound um fiscally um organization. Next slide. The development framework we we did this year some things that were a little bit different. We did go through a base budget review that was quite rigorous
122starting in the fall and we have continued looking at um reoccurring dollars as well as those that are one time. Uh we've asked departments to look at what's required by general statute and local mandates as well as board priorities and looking at those different buckets so we can isolate how we manage going forward when we're in a situation that there are limited dollars. We'll not go through all of these and uh we are continuing this process and review which will be ongoing through the next fiscal year. Next slide. This slide just shows what we are obligated to do legally and then some examples of optional services that are u legally required or um by or or we have the authority to do. This is one list that departments are using to help crosswalk. How do
123they fit? And um as you will note there are many departments that are there that may not be on the list but they are priority because of our community. Next slide. Our budget is a billion dollars with all funds um of which about 700 million as you know is for our operating budget. Uh most of our dollars come from property taxes and sales taxes. um our sales taxes is an area that um is economically um sensitive and so um when folks aren't spending or there's some confidence issues with what the economy is doing, sales taxes go down. So when we talk about debt service operating that being 18% of our our fund um the that presents more pressure for us. Next slide. Personnel you and educational costs comprise about 75% of our budget with some
124of the larger departments being social services, sheriff, public health, etc. Durham public schools, Durham Tech, and our prek funding is the um sec is is the um second largest area within our budget. That particular functional area is about 10% higher than um the state average. So there is a tremendous commitment within dorm and has been for years to support our educational infrastructure. Next slide. This slide just shows some highlights of key areas and I know often when we come here we focus on um Durham public schools but wanted to just remind everyone of some of those other areas that we support. We support about 130,000 of our residents um with our DSS operations. some of it through Medicaid funding, some um food and nutrition services, etc. Public health is about 12,000 of our uh residents
125that use public health for services. That number increases to about 30,000 when you're talking about the educational workshops and educational services that they do and other um non-clinical kinds of things. won't go through all of these, but we felt it important just to highlight those. And next, Keith will um go into some of the the more detailed financial fiscal outlook. >> Thank you, manager Hager. Um next slide, please. And I think you can go past this slide. Next slide, please. Uh before I start, I do want to uh I think uh board member Tab said feels like we go through this every year as it relates to the CIP and even the annual budget, but that is I think that is a part of the process that we all need to learn to enjoy as
126we try to deal with a world where we've got nearly infinite needs and finite resources to meet them. So we're always in constant pressure. There's always constant pressure to discuss a CIP even though it may go out 10 years every year or every semianually and obviously the annual budget. I would say for Durham County, our office that we're trying and the information we're trying to convey to management is that we are we are cautious. I don't even know that we're optimistic. We are very cautious, a little bit pessimistic. The world right now feels a little uncomfortable. the near future economically economically is is is concerning and cloudy. It is uh not as bright as it was 5 to 10 years ago and we're having to face that. I'm also concerned that we're at a bit
127of an inflection point and I'll point that out in a few minutes why I'm concerned about that at least just financially and it's just a math inflection point. Why the caution? There are jobs that we have lost in Durham County uh that are high-paying jobs. We are an intelligence-driven uh economy and we are also a public adjacent economy. And what do I mean by that? Eight of the top 16 employers in Durham County are either public entities like Durham public schools, Durham County government, the city of Durham, EPA that ha get a lot of money from federal sources and state force sources. And those two entities have not been really kind to local governments in in North Carolina over the last couple years. And I don't see them getting any nicer. and I don't see
128additional funding loosening up anytime soon. So that has real pressure on Durham County e economically. Next slide, please. Just a few other headlines. I won't go through them. More RTP layoffs at Lenovo, National Institutes of Health, things of that nature that cause us concern about the expected continued growth economically that we hope to have in comparison to what we've gotten used to in the last decade. Next slide, please. I just noted some of the key areas of e uh the key industries in Durham County. There's life sciences again that sort of public adjacent um a tech and and financial techni and healthcare and education. healthcare being one of the dominant ones. On the one side, health care tends to be the area where there is some job growth, but not necessarily in Durham where we're
129much more researchoriented around health care issues and that is funded largely with federal dollars and some state dollars and I don't see that funding continuing at the pace it once was. Next slide, please. So, all of those are econ economically concerning issues happening. This is just job growth trending over the last couple of years. And what you see in the last half of 24 25 and and through 25 is actually even stalled job growth or net loss. This is nationally but it's indicative of what's happening here. And it's that job growth and income growth that powers sales tax growth for us. It powers the buying of houses. It powers the ability to pay property tax. It pay it powers the ability to pay higher property tax. higher property tax then turns around and funds DPS
130and the nearly infinite needs the county has in other areas. Next slide, please. So, some areas of loss of revenue that are concerning to the county right now is uh ARPA dollars are going away for the county and we had applied approximately $1.8 8 million of ARPA funding for some preK support, direct preK support, indirect preK support through DPS of 500,000 and some school health nurses. That ARPA dollar is going away and we have to make a decision. Are we going to fund that? And I know prek support is very important to our county commissioners. So, we'll have to find that additional 1.8 million. Public health is going to experience some losses from this big, beautiful bill, if you will choose to call it that. um some SNAP funding. We lost $1.4 million for a
131dine program that's been in place for 30 years that educates children, educates parents. That's 13 FTEEs that we have to make a decision about. Uh state grants, there's some money lost to from child health. It's a $737,000 reductions. Some HIV related partner services, that's a $200,000. So you're looking at, you know, close to $2.5 million or something like that if I'm doing my math. $2.3 million loss in potentially in public health. Next slide, please. Department of Social Services, again getting hit on the federal side of things. The federal reimbursement for SNAP administrative costs, this has already happened and will happen is decreasing from 50% to 25%. What that means is the county has to make up that 25% loss of revenue from the federal government. And uh I forget exactly what that number was, manager.
132It's on the next slide, but we'll tell you. But there's also potential $2 million decrease in reimbursement based off of uh significant changes to work requirement for non-citizen eligibility that potentially could happen through some of the federal changes in guidelines for our social services area that will have to pick up the cost or decrease the amount of services that we provide to our 133 direct and indirect thousand citizens of Durham County. Next slide, please. So this complicated, but what it boils down to is there's an error rate that in DSS when we work with SNAP benefit or sub SNAP benefits to citizens and the federal government has decided that that error rate is too high. And if it's too high in the near future, they will penalize Durham County or Department of Social Services. If
133you look at that circle, our error rate right now is 1.2% 2% in Durham County, but the federal government is recognizing it at the state level. The state error rate on average is 7%. If it stays at 7% that error rate, it is estimated that Durham County would lose $3.6 million. If it went up to above 10%, Durham County would lose $11 million. Even if Durham County's error rate was 1%, it's still at the state level. The federal government would not give that money to every county in the state. and the Durham County would indirectly lose 3 million maybe 7 million depending on the error rate. Those are real dollars that we have to pay attention to in just the uh intergovernmental revenue sources that we have. Next slide please. Just a reminder in case
134you didn't know, board members, the state law says for Durham public schools and school funding, counties have to provide support for uh maintaining school facilities, capital, basically the capital issues and operating capital issues. However, we can support current expense funding, but I underline at the bottom there, that's within the financial resources that we have and is consistent with the fiscal policy of the board of county commissioners. We currently fund DPS at $225 plus million dollars, I think, if I'm rounding it up, in current expense funding annually. along with that. We talked earlier about $60 million of our $90 million in debt service is paying for DPS related buildings that we've already dealt with either built or or renovating and we're paying the debt cost on that. So, it's a significant amount of funding. I will
135just to give you an idea of the size DPS is as a part of our budget. The next biggest general fund department we have is the sheriff's department. In terms of straight county costs, it's in the $50 million range. So Durham public school funding is four plus times the size of every other department we have in the county. So as your requests grow and your needs grow it, think of it as four times the amount of money that Durham County has to find to consider roughly compared to every other department we have in the county. Next slide please. Local per pupil funding uh comparisons. This is some benchmarking we do annually. These numbers came from DPI, so they may be a little different from their methodology, but it just is something you already know. You're
136well funded comp to uh in comparison to our other county districts and the ones in particular we compare to. I think Orange County always is a little bit ahead of us. I think we're number five in to school districts throughout the state in local per pupil funding. Just wanted to note that. Next slide, please. This slide shows you actual expenditures by county, state, and federal funding roughly. And the trending here, and what I want you to note is that yellow line at the top is state funding. It's flattening out. We're losing students. They haven't been as generous as we would all like them to be in general. Federal funding has dropped off a cliff. That's largely ARPA dollars u or esser dollars as you may say them. Uh but look what has taken up the
137slack and look at the slope over the last three years of county funding. The the issue with that, the inflection point is can that level of growth continue every year from Durham County? And what I mean by an inflection point without a tax rate increase, property tax rate increase, that is the inflection point we're at. Next slide, please. This just shows the percentage of school personnel supported by funding source. And I think what ultimately what it shows is significant amount of funding, local funding supporting DPS positions. The only one that's comparable to us, I think again, is Orange County because we're wellunded county. There are significant number of DPS positions supported with local dollars, more so than many other comparable districts. Next slide, please. Just as a reminder, the county property tax rate the last
138two years has gone up 6% each year, the property tax rate increase, and those are the last two years have been the two highest tax rate increases Durham County residents have experienced in the last 30 years. You add on the city property tax rate increase and it's a 20 cent tax rate increase for every city resident in Durham County over the last 3 years. And that doesn't include the effect of revaluation on many folks. The question, the big question for everyone is, is that type of increase sustainable for any number of reasons? Next slide, please. Next slide, please. So, well, let's get real quick in the 26 27 budget estimates. What we're looking at, thanks to David 80 is back here, deputy budget director. Um, we are looking at property tax rate, trying to assess
139natural growth in property tax uh revenue and sales tax revenue. What do I mean by natural growth? Natural growth is every year we have a growth in the amount of property tax revenue we get without a tax rate increase. And it's that revenue that funds a lot of things automatically. Salary increases, benefits increases, uh inflation related increases. But we'll we'll get to that slide in just a minute. But what I want you to note here, this is education cost. This is DPS, DTC, and preK funding combined. And look at the first five years starting 201617. See that green line? additional funding going to those three areas was 6 million, 7 million, 7 million, 5 million. But look, starting and I can't see underneath it, but I think it's 2021, something like that. You see that
140number jumped to 19 million, then it was 12 million, it's 14 million. Two years ago, it was 28 million. That included some ARPA funding. Last year, it was 16 or the year we're in right now, 256, it was 16 million. There's a 20 million asked from the table on the table right now from DPS. That's a profoundly different level of additional funding each year over the last 5 years compared to the five years before inflection point. Can we afford that that type of increase every year over and over again without putting ourselves in a position to consider property tax rate increases every year? Next slide, please. This is a concerning graph. This is pupil. This is ADM average daily memberships. Uh I've get this information from DPI for Durham public schools, charter schools, private schools,
141and home schools. What I'm focusing on right here, that red line is the second month ADM historically all the way through the current year we're in right now for Durham public schools and comparing that mainly to the green line which is charter school growth. But what I want you to note and what we are concerned about is that the number for second month for the current year is down in the $29,000 29,000 pupil range. I can't see that number this far away. But it's lower than the per pupil ADM number from 2002 or as far back as I can go. There are less students in Durham public schools now than there were almost 25 years ago. There are obviously more students in charter schools. There's been some growth in private schools and some growth in
142home schools. But that is a concerning number. Next slide please. Because where is that going in that since 1415? That was the high water mark for Durham public school ADM numbers. I think we have lost a net of 700 students. That includes growth in charter schools. I think it's a loss of 1300 plus students maybe more 3,000. I can't remember the number but a significant number of loss in net students in charter and public schools. While Durham public school current expense funding has gone up $und00 million in since 1415 annually. Again the question mathematical question is can that type of growth continue without a property tax rate every year and I feel like we're at an inflection point. Let me say this bluntly. I do not think it is possible to continue considering that type
143of growth. Next slide please. So, our revenue issues, economic growth, we have slowing growth in sales tax revenue, and I think I'll show you a slide on that in just a second. It's practically been flat over the last three years. Why is it flat? We have more more people moving into the county, but much of their dollars are taken up already in things that aren't sales taxable. Gasoline goes up, insurance goes up, house payments go up, rent goes up. Those things take money out of the system. They're not buying shirts and shoes or whatever things that are taxable. Remember, manager Hager pointed out our two biggest revenue sources make up almost 80% of our revenue. Property tax revenue and sales tax revenue. If one of those sales tax revenue is flat over the last three
144years and growth essentially, where are we finding new money to pay for salary increases for county employees, to pay for DPS salary increases, to pay for vehicle replacements, to how about paying for a whole new uh EMS staffing of an ambulance that we need to deal with population growth. all of these considerations, local property market, uh we had a great revaluation from the standpoint that we captured finally captured what the true valuation of buildings were, but it put a lot of pressure on a lot of residents and in actuality there are a lot of appeals happening now. Our tax administrator can attest to that. So, while the valuation went up initially, it's going back down just a little bit due to hold backs and some appeals process. All that to be said, that is going
145to be putting continuing continuing stress on citizens and businesses in Durham County to pay property taxes on a significantly higher valuation. We've lost our oxy tax. We talked about that for earlier about why we're doing that for hopefully some long-term investments, but it's a real loss in revenue. We talked about the intergovernmental revenue loss for public health DSS and things like that. And ultimately, we have really significant growing revenue variability. While I talk about what we got used to when Durham County was the little engine that could that was growing, we were growing consistently every year. It was always this magical, oh, we've got an extra $3 million in sales tax. Oh, we've got an extra 10 to12 million in property tax without needing a property tax rate increase and our expenses growth was a
146little bit slower, so we could fit a lot of things in. That whole concept has changed. There's more variability in our in our revenue sources. And nothing about the near future has convinced me that our economy is going to settle down and start growing at a pace we were used to in the last decade. Next slide, please. This is where I want to point out the flatness of sales tax growth. If you see those blue columns, that that's a delta number. That was new sales tax growth in a given year that we could account. We could take into account and we could help support DPS request. At one point, it was $13 million just a couple of years ago, but look at the last three years. It was $1 million. It actually went negative in
1472526. And we're estimating a massive, and I say that sarcastically, $770,000 increase in sales tax. That doesn't fund a $20 million requested increase in DPS. Next slide, please. Property tax. This looks like a complicated graph, but it's not. The orange line is just an indication of a property tax rate increase that happened in any given year. The blue part of that column is the key number. That's natural growth in property tax revenue without a property tax rate increase. But what I want you to note then the green part of the column is the additional property tax revenue from a property tax rate increase. What do you notice the last two years or the last three years? Property tax natural growth in property tax revenue without a tax rate increase is higher than the previous six
148or seven. Great is growing. As we get bigger we should get more prop but it hasn't been enough. What have we had to do the last three years? We've had to have a tax rate increase each of those three years to meet DPS needs. Not only DPS needs, but to meet EMS needs, to meet salary needs, to pay for our benefits cost for the 2,300 employees that we have. The question is, are we at an inflection point where it has to happen every year to meet all those needs? A property tax rate increase. That's the fundamental issue we have. Next slide, please. What does one cent on the property tax bring in? David 80s, I'll put it on you personally because he does these amazing estimates. Has estimated that 1 cent will bring in $
1498.8 million. So that's how you find $20 million or $30 million. Do you simply divide 30 million by 8.8 and that's the tax rate increase needed. But remember, we also talked about the capital improvement plan. It has built into it a known tax rate increase that we're going to have to do over the next couple of years just to pay for the 22 geo bonds that we have to issue. So there's a 2 3 4 cent tax rate increase needed on that side of the equation that has to happen. Plus you're considering annual budget tax rate increases needed or you've got to figure out how to pull back on the expenditure side or find other revenues. We're limited on both sides of that. Next slide please. So, this isn't the entire budget. We uh our
150office tries to pull out key expenditure increases and key revenue increases. And when we sum it down, simplify it down, we have about $13.5 million in identified growth needs and expenditures for the county and only $8.7 million in revenue, new revenue without a tax rate to pay for that. So to put it in frame for DPS, you all have asked for $10 million plus in continuation needs just to continue what you're that's not a single new dollar for any new request. That's already more than we have available revenue to support. That means not considering any benefits cost increase for Durham County, not considering any requested need for a Durham County Department. What's not included in this budget yet or this $13 million that doesn't include the 20 plus million dollar request from DPS? It doesn't
151include an expansion yet for county departments. Doesn't consider any increase that they may need for personnel or salary or equipment. And it doesn't include a salary increase for any county employees yet. So if we were to add all that up, that's another 30 $40 million on top of the 13 million with only $8.7 million in new revenue without a tax rate increase available to pay for it. We are at an inflection point. We have to make some hard decisions. Next slide, please. Key takeaways, slowing revenue and quickening expenditure growth. feel like I have beat that horse a little bit too much, but I hope you hear it from me. Economic indicators uh point to further challenges. We're going to have to need to we really need and I think this is where manager Hager tries
152to stress it and does a great job. We have to consider long-term sustainability. We have to find our way through this year, next year, and we have to set ourselves up for reasonable success six, seven, eight years later. That's an important part of everyone's job here. have to begin prioritizing early. What can we do? What's the most important? What do we not do? What's the return on investment of programs? That's part of what we talked about when the manager showed you mandated services versus non-mandated services. Difficult decisions are coming for all of us. We have to begin those strategic discussions now. Uh as part of what the uh county is doing, we are monitoring quarterly reports for any early warning signs for anything more that can indicate that it's going to get worse. Um, we
153have to limit our midyear fund balance amendments. Oftent times the the manager and the board are asked in the middle of the year every month, we need a little money for an emergency this or unplanned for need that and we dig into our fund balance and and try to help those people out. But we're going to have to consider that limiting that to support our long-term sustainability financial s sustainability. And then we're just, it says it again, prioritize long-term fiscal sustainability. Cannot say that enough. We're not just making decisions for this year, but we're trying to set up a a decision-making process in place that will help support the county and keep it fiscally viable for years to come. Next slide, please. Headwinds, and there are a lot of them. Durham County has an ERP
154implementation. That is no small process. What's an ERP system? That's a that's software that runs our HR, our purchasing, our budget, and our finance system. So, you get one shot at replacing that and if it doesn't go right, it is painful for years. So, we will have to invest in terms of time, personnel, and cost to make sure that process happens correctly. ARPA backfill, we talked about the $1.8 8 million and I'm sure there are going to be a number of nonprofits that pop up that had gotten used to some AARPA funding that say they're just getting started with doing good work and they need money from us to continue that CIP related property tax rate increases. I talked about that. That's part of the long range CIP plan or capital financing plan. But we
155also have to maintain our fiscal foundation, our fund balance and our AAA bond rating. We're limited in what we can do to maintain that fundamental foundation. state and federal changers, particularly at the federal level. They are not a bunch of folks yet that I think we can count on for the next couple of years to say the least. And so, how do we deal with that stagnating revenue growth? We have to find new revenue sources, maybe go to the state legislature and and beg them, I don't know, figure out protest to them the need for new revenue sources for the county to find and support. Mission creep. What are we doing that's mandated versus non-mandated and how do we consider paying for those in the future? Obviously, we have to pay and support our mandated
156services, but what about our non-mandated services? And then we have to pay attention to macroeconomic changes, inflation, and how we deal with that and population growth and that disconcerting trend of having population growth in Durham County, but continued slow um decline in pupil growth. We are going to be I did do a little bit of research. I think in the next 30 to 40 years, you're going to see a 10% increase in the 45 to on up age group in Durham County and a corresponding 10% decrease in the 0 to 45 age group. We're going to get older just like everybody else in the mayor, particularly in Durham County. Why are we attracted to older folks? There's a wonderful health system that's going to attack attract retirees. And how do we deal with that? Next
157slide, please. budget calendar. I think we're having this discussion on May the 10th and next key dates the uh sorry on March the 10th key dates through the rest of this month starting tomorrow the manager and the budget office and departments will begin having budget request meetings where she will hear the needs from many different departments all the while knowing there's literally no dollars to fund it. So those should be interesting meetings. Uh and then in May the 11th, she will present her manager's recommended budget to the board of county commissioners. There will be discussions between at the tail end of May and early June where the board uh discusses the manager's recommended budget and makes changes as they see fit. Hopefully, we will get a board approved budget on June the 8th and we'll
158go from there and then we'll start the process again. Next slide. I think that's it. Ah, last little thing there. Uh the manager asked our office to provide you with some additional information we gave to the board of county commissioners at a budget work session. And if you use that QR code, it'll take you to our legisar system and you can link on those blue links. There are many different documents you can look that hopefully support the discussion and presentation I just gave right now. Next slide, please. That's it. And how joyful a presentation it was. Any questions? Uh, I'm sure there are plenty of questions. One day you will bring some joy into our space, Mr. Lane. Um, all right. So, I'm gonna try to go around and check for folks who haven't spoke
159yet, but I have you, Commissioner Burton, and make sure if they have questions. I'm going to go, uh, Miss Chavez, I'm coming over to you. >> All right. Well, thank you both for those somewhat conflicting presentations. Um, I, um, one thing I wanted to address was the charter school growth. um that is, you know, just sitting with us. Um as Mr. Teter has pointed out numerous times, we have very fertile ground for charters given our um our generous county funding. And um so on um on our uh side, we are working to um more aggressively address some of the um the charter school growth. And I just wanted to invite Dr. Lewis or Miss Cooper to share a little bit about what how we're working to address those concerns um around charter school growth and
160uh because that is something we are or Mr. or whomever. Um that is something we are well aware of and uh we have new you know charters opening up and we need to I I personally think we need to be more aggressive and I think our public um affairs office has done a a good job at really marketing us because we are in a um a situation where we need to market ourselves in order to um you know get people back. there are still misconceptions about what DPS offers and even sometimes ideas that we have more um that like for instance the bus transportation crisis definitely was a crisis and also there were other schools there were you know at least one charter school dealing with a similar problem so it's we're not the only
161ones who are dealing with issues but sometimes it's a there's a perception that we Durham public schools are um so but Yes, I would invite our administration to share. >> Yeah, I'll I'll start and definitely Miss Cooper can can jump in. I I do think just coming in as there's an opportunity. It was very similar to to this in Kansas City where a lot of family and community members assumed that charter schools were private schools. And so just educating the community that charter schools are indeed public schools. And then the second misconception is that um charter schools are outperforming uh your traditional um neighborhood schools from the school system. And that's certainly not the case. and we have the receipts to show that uh as well that they are not outperforming us. And so the
162more that we can continue to educate our community, but also um listen to our families as it relates to why they choose to leave DPS and then go to charters and then they come back to to DPS. But uh some folks have said that the money is not in their backpack when they come back with with us. Um and so some of the things that we've heard from some of our families is, you know, just the turnover sometimes in our our staffing. And so we can address that by increasing our staff salary. uh also the the culture of our buildings is is as as well. Um and so we're working with our principles too and some of our principles have already reached out to um some of these charter school families because we know when
163they leave us where they're going and then we can contact them and they come back um to us. And so the grass is always not greener on the um on the other side. And so when you think about the amount of money that we have to send to charter schools, mo most recently in the amount of $51 million that uh one of my parents um so eloquently put it that we're paying $51 million in child support, you know, uh for those um charter schools. Gina, >> good morning. Yes. Um the Office of Public Affairs has been very focused and intentional regarding its marketing efforts specifically over the past two years um in engaging various niche audiences and making sure that we have a pipeline for students enrolling in Durham public schools. A lot of that
164work actually starts when our families in welcome new stu new u children to their families. We've engaged with organizations to make sure we're getting information uh to those families when their children are first born, sharing information about our district, early childhood readiness so they can be prepared to enter Durham public schools. We're hosting focus groups. We're sharing um information with various parent groups about Durham public schools. We have ambassador programs um to increase our reach among families because we understand that families trust other families and they want to hear other parents' perspectives. So that is why we are equipping those individuals with information and resources. Um as you know marketing um we can be very nimble but it does take some resource and that is financial resource to ensure that we are broadening our reach
165to engage more families and share all of the great things about Durham public schools. But you'll certainly see in our public spaces now we are um taking more control over that narrative to be more proactive and sharing the great things that are happening in DPS and we are starting to see some return on that investment. So we will continue to do that um with more robust activity to showcase the um excellence that is happening within our schools amongst our staff amongst our students showing how a DPS education can really transform lives um through various other initiatives. And so we will keep doing that. Um we'll keep being as um as resourceful as possible with our partnerships and with the financial resource that we are given and we're excited about expanding that in the future. >>
166Thank you. >> And in that spirit to sort of augment uh what Miss Cooper discussed, right? So there are um we we have been made aware through our um sort of um sister and brother school systems in the greater city schools consortium um that there are vendors that have had success in other states with helping public school systems attract uh charter students back to their doors. And so we've um done some due diligence with that. Uh and so we're um we're releasing an RFP this week. Uh, so we just finished legal review um of an RFP um to to see what it would look like uh for a company such as that to work with us to augment the marketing efforts um from Miss Cooper's department and and leverage their strategies uh on on um
167making that outreach to help folks come back to us. So it's I think we would be the first in North Carolina to leverage it, but there has been success um with some of these vendors in other states. uh and and the cost to us um per student returning is far less than the dollars that would follow them uh from our state and federal funding sources. Uh so we're in in sort of that early exploration um looking forward to the responses we receive and and unpacking those um as a senior leadership team. >> Thank you. Were there any commissioners who hadn't spoken yet? I'm coming to you Miss um that had questions. Commissioner Valentine. >> Yeah. So let me begin with a comment. So, oh, I'm sorry, Madam Chair. Is that good? Okay, thank you. Uh,
168let me just begin with a comment, and I guess this comment is to my colleagues on the county commissioners uh board. We just came out of a re-evaluation period where our residents received uh bills that uh they've never seen before. And so now we're in a situation where we may have to go back to them um in the form of a a uh a tax hike. And I'm asking that uh my colleagues think hard and long about what that looks like for uh our our residents. And so I don't want to put uh any more pressure on our residents uh than needs to uh occur. And so I'll ask you to to consider that. At the beginning of the briefing today, someone talked about 100% utilization of seats in the school system by 2028. And
169then later on uh in one of the presentations, I heard there was additional um loss of seats of uh of a thousand students. I think was related to to the charter schools. Nonetheless, that seems to be pretty aggressive for us to get to 100% utilization by 2020 2028. So, I'd like to know, you know, what that looks like and how to rec reconcile that information. And my second question is there were three figures given for um the money that charter schools received. And so, if you can reconcile those three amounts, one was in amount of 6 million, the other was in 2 million and the other was in 3 million plus. And so if you could help me out with that or help me understand that, that'd be helpful. Thank you. >> I will um
170take the charter piece and then defer to some colleagues about the seats. Uh and so throughout the presentation as we look at different spaces where we are any anytime that we seek additional revenue, uh we layer on the additional that we would need to pass on to the charters at that per pupil share. And so in the presentation there were a we sort of put in a couple of subtotals um for that proportionate share, right? And so it would um if if the if the full request were funded, we would need the sum of those. But um we just try to as we go through various sections just we try to keep it in the forefront those implications. And the 100% utilization uh was a goal or is a goal in our current strategic plan
171that was developed in 2023. Um and so regardless of the number of buildings that we have uh in our inventory, a goal at that time was to ensure that there is 100% utilization. So utilizing all of our spaces to the maximum extent appropriate. >> Also add doesn't necessarily mean the school is full enrollment wise. utilization wise sometimes is a little under so that we can make sure that there's flexibility as students move into the area. Right. So that and for the uh lunch spaces and some of those other spaces that within a school. We can talk a lot more about it though. Uh I'm going to go to Commissioner Burton then Commissioner Jacobs. >> Thank you. Um Chair Umstead um I have a one brief comment then some questions. Um Mr. Teter, when you were
172up there around discussing the pension cost and the health insurance cost, I think it was like 6.156 million or something like that. That is for local positions, correct? >> Correct. >> Okay. Because we have to meet that cost what state uh state paid positions are made, right? Because they're Okay. And I really want to hone in on that a little bit because as a former DPS employee, public school employee, we don't see those costs being paid for us, right? Those are costs that are being paid. They're not coming out of our checks, but they still have to be covered. You don't see the benefit of those pension costs being paid for you until you retired. So, that's something I think that can be explained better to the general public. Um, the other thing that I
173want to ask about the $51 million to charters, that's just the local part, >> correct? Okay. But then the state puts in their part that goes to the schools. >> How many employees in DPS are paid less than $20 an hour or how many are being paid $17.15 per hour? I would need to and I can pull that information today. Uh I don't want to misspeak uh trying to guesstimate. Um but we can u we can pull that information and I will share it with Dr. Lewis to relay by the end of the day today and uh that way you have that. >> Yeah, that would be great. And I just want to say because one of the things that we get as county commissioners when we go out into the public, people ask us,
174well, why are so many of the costs for Durham public schools keep going up and up and up and the enrollment is coming down a lot is labor cost. the cost of hiring people, retaining people, um making sure they're paid good wages, things of that nature that we're trying to make sure we keep good people into the buildings. Um and so when people who work for the schools or people who work anywhere, they're not looking at these macro economic forces or what the state is doing. They're just looking at their paycheck and they don't understand why their pay is going up. So, a lot of it is trying to keep people in the building, good people in the building, and they're doing work that matters, but it's not maybe necessarily right directly in the classroom.
175So, I just wanted to say that because I we get a lot of that and I just wanted to make that comment. Thank you, Chair Upset. I'll start with the good news. Congratulations on all of the progress that has been made to put Durham public schools on a solid financial grounding. I mean that that is just critical because nothing can happen if Durham public schools is not budgetarily and fiscally financially strong. So, I want to congratulate you and to your team for what you've accomplished in a very short time. >> Thank you. >> You know, related to the audit and putting in a new ERP system, having a fund balance, the these are huge achievements. So, um I'm just going to follow up on a lot of the comments that I had before that we
176have tough decisions to make. Um, obviously what could be coming from Durham public schools, it's not fundable and I I know that there's a lot of demands on you all that have come out of the meet and confer process. Um, but there we also have to be realistic and as you can see it's just literally not possible. I guess one of my questions is is the framework around meet and confer grounded in the information that was presented from the county. So, and and is there a way going forward to ensure that the meet and confer process is grounded in that information and that knowledge? That's one of my questions. And how can we help with that? How can the county help provide that and ensure that? >> I love that question. Um I think there's
177an opportunity for us. You know, obviously this was our first year going through the meeting confer process and I think as we reflect uh what additional educational opportunities for the entire meeting confer committee in addition to the work that we're doing with the community around educating them. Uh and so to answer your question, I think maybe maybe some um um maybe some sessions with some county officials uh with the meeting confer committee during especially during the budget development process, I think will will help um it will be a good attempt to help um folks understand the grim and current reality of of where we are. Uh that will also help um temper some expectations. I think we need to educate everyone, the entire DPS community about, you know, what we're all facing and what we're
178all going to have to get through together. Um, I think it would also be really helpful for us to get follow information about where are you all cutting costs because, you know, we have to look at and I know our county manager can talk about this, but we're also having to look internally around how we are cutting costs. Um, because where do we find the money for these things? We, you know, one way is to reduce our expenditures and we and for the county and Durham public schools, our biggest costs are related to personnel as Commissioner Burton said. So, I mean, this is what we are going on, what we are going through internally and what I would suggest that you all unfortunately have to look at as well. Um, especially with declining enrollments and
179the money coming from the state that are associated with students. Um, we absolutely need to increase the pay for our classified staff. I mean, that that is a no-brainer. We have to figure out a plan how we do that. It may take us several years to phase it in, but again, you know, one way to do that is to also find some money internally within your budget. One thing that does concern me is around the locally funded positions. And again, these are tough conversations, but I would like to better understand who what are those locally funded decisions positions because those are expensive. 24% of the staffing being um supported by local funds, that's a lot. And it's the same thing with our budget is most of our budget is taken up by personnel and we
180know the cost of benefits. So just want to throw that out there. Um the Chromebooks um again I'm we have to think I think we're going to have to think outside the box if that is something that is really needed. I mean, I know some teachers are moving away from that because of, you know, um trying to get kids less dependent on things like AI, using AI to do their work, things like that. But if that is something that's determined, is there a way to work with the DPS foundation, the chamber? Is that's can we find other sources of funding for some of these things? We are not going to be able to when we look at the spending that we have done over the last few years. You know, we stepped in in 2020
1812425 because there was a crisis that was not to be meant to be sustainable. So, we're going to have to get creative to look at how we try to fund some of the things that we're doing. So, um, I want to add a positive point because Keith likes to be gloom and doom, which we appreciate, but I will tell you on the county side that we are when we look at our county compared to other counties, we are very fortunate and the things that we are doing together like our education to jobs pipeline with Durham public schools, Durham Tech, the private sector, like for the biowork certification for life sciences jobs with the bulls what we're doing with um with Duke again the pipeline for health sciences job trade jobs these are things we have
182to continue to stay focused on and the from our perspective our board is going to continue to focus on these highpaying jobs so I just want to put that out there we're looking at ways to keep investing in our tax base. Um, so we still have a bright future, but we're just going to have to get through some challenging times. >> Sher alone. >> Thank you, uh, Chairstead. I want to say thank you, Mr. Teter. Uh, also want to echo comments made by Commissioner Jacobs. I'm really glad the work and effort y'all have been putting in to get the DPS in good strong financial grounding especially moving away from the lap salaries um a dependency is really really significant. So thank you to you and your team for doing that work. Um, I know we
183talked about this maybe like several years ago, but wanted to bring up a conversation again around when it comes to some of the salary positions and to um, board member Chavis's question around when it comes to charter schools, especially the requirements that exist because of the state that we can't get around, but certain positions and roles that we have shifted to the county like some of the nursing positions. if there are other avenues that we could look at that reduce um the amount of resources that we have to put in to charters because they can be positions that are housed under the county um that are still providing services like general services and maintenance positions um more of the nurses positions positions that there would be a strongou with DPS that would open up resources
184to provide the classified salary raises that we need. Um wondering if that's something that we could explore more thoroughly as the budget seasons get tighter and tighter. >> We can definitely explore all options. Um and we will talk about that in next year. >> All right. Appreciate that. Um, I just want to close us out in this budget conversation with a couple of notes. I appreciate we're kind of naming that doing school every year is going to get more expensive even with declining enrollment because salaries is the largest part of our budget. I think the other thing I want to note is that the funding is going to DPS and charter schools, right? Durham County funds Durham public schools and it goes to Durham public schools and to the charter schools. So, when we're having
185conversations about declining enrollment at DPS and inclining or um increasing enrollment in charters, remembering the pot of money is going to all of those schools. And so, I just think we think we talk about it a lot as like DPS and charters, but the money is going to all. So, I think that's something for us to remember. And so, even with less students, we're paying more for health insurance, retirement, utilities, salaries, and we should continue to do those different things. And as students leave our system, the money is following them, right? and we're paying for that through new money that's coming to and about that 51 million and increasing as those students go. So your funding is going to all of those different places funding I think about all of Durham children who are going
186to public entities in our system. We're funding that. So I just think that's an important note as we continue to have these conversations that that funding is going to all of those. I think y'all brought up a lot of really good questions around what we're doing with our funding around locally funded positions. I think we can follow up with that. So many of those locally funded positions are the state doesn't all lot an assistant principal, so we're adding an assistant principal or counselor, some of those roles that are really supporting our students. And so continue to think about how do we um we've been working on a lotments, right? And how do we continue to get closer to the state aotment while not um compromising what's happening in our school buildings every day. So appreciate
187this conversation. We've got more coming up. Um the work session this week, Durham Public Schools will be reviewing phase two of the superintendent's budget with a goal to finalize that budget at the um end of March at our meeting so we can send that over to you all. And we know we'll come over to y'all to have more conversations around the budget and hard questions. Um it's a grim time, but I think it's important time for us to have these open and honest dialogue. Also want to appreciate Manager Hager and Mr. Lane who came to Durham Public Schools meeting a couple weeks ago to present this. So, we had that um for the board as well as the community who was watching that meeting. So, we can do more of that. Commissioner Burton. >> Yeah.
188I just want to say chair umstead, I'm glad you said about how DPS is funding positions that the state won't fund, but I also think and I also think that that needs to be fully fleshed out with our commit with our community to fully understand that okay, at a school like I'm just using Morehead um may not get a full-time AP position, but DPS because we know a full-time AP position is needed there, we fund that to make sure the support is needed for our kids. I think these things need to be I know the issue around transparency. Those things need to be explained fully around what the state funds and what we're doing as a community to fill in those gaps. So, I just wanted to put that comment there. >> I'm going to
189go to Miss Byer and then I'm really going to close us out and Miss Carter because we have another item and we are way over time. I think um just as you all continue to wrestle with this on our behalf um particularly the living wage issue is going to be so critical for this community. You've already seen that the city is moving ahead of what you all can do for your own employees. Um but I think and and and there is this gap that our folks are feeling that that you all are starting at 1922 and we were we are nowhere near that and it takes years of advocacy on on our folks behalf to even approach that. Um, I think y'all know that as y'all have given raises, maybe did you say Commissioner Burton
190to me that 4% last year to your employees, our folks have been frozen like the state has given nothing and we've had to hold this massive group of classified folks steady. And so that's where a lot of that frustration is coming from from our staff. they will be coming to you and and they come to you in the spirit of understanding the trend has been that the city has been able to take care of their folks. Y'all have mostly been able to take care of your employees with with steady cost of living adjustments and our folks have sat kind of frozen as we've tried to push for them. Um, and so we are so appreciative of anything y'all can do on on their behalf, even if it's a multi-year plan, because I think that's the
191frustration that um, our folks are feeling. Thanks. >> Can I just add though, we have to look at how that's being paid for on the city side and last year they had a very big tax increase. So again that raises the question is that ex is that also sustainable on the city side because the residents are paying for that per just for the city workers. Um, I don't want to take much more time, but I just, and I know this is already in everybody's hearts and minds, but just a reminder that when you educate your population, well, what you're doing is you're providing people with the skills and the abilities to go out in their community and get the jobs that they need to build a successful economy. You're making them healthier citizens that will
192rely on health care services less. You're making them less reliant on things like SNAP benefits and other social services. you're going to eventually reduce your jail population because you have people who are now in the workforce. So, I really appreciate that you all continue to fund the education system at the level that you do. And just a reminder that that's from my perspective and I think most of us the way that it should be. This is the foundation for a healthy society and a healthy economy in the long run too. also for looking at why our families are choosing or not choosing Durham public schools if their kids are sitting in classrooms with long-term subs or without the aid that they need for children with exceptional needs or in classrooms that are over 80 degrees
193or at 55 degrees. These are real things that are happening in our schools. I don't think it's a surprise that they're choosing other schools or if the bus can't come get their kids, right? So, it's all the the marketing and the communication about the amazing things we're doing. And it's providing safe learning environments that are what we really want for our children that are going to build this society that we want that's safe and sustainable for everybody. So, I really appreciate the hard decisions that y'all are having to make. This is a dark dire time and just want to put this reminder into the space before we close this. All right, that concludes um the budget portion of our conversation. The next item we have is a prek enrollment update. I'm actually going to ask
194for both bodies if we can defer that update until our May joint meeting. we'll have more data that have a more complete and robust conversation if that's okay with our bodies. I'm looking for information there. Um, Miss Carter, we I just have a request that we put that at the top of the agenda if that's possible. That always gets put at the end and we always pass it. And so, if we're thinking again about foundational things that get our kids ready for school and a good start, that is where we need to be spending our time as a joint body talking about prek. We can do that. Uh, Dr. Chappelle, did you have anything that maybe you could email us as an a preliminary update for today? All right, we can do that. Uh, Commissioner
195Jacobs, >> could we just reiterate some of the follow-up information that has been asked for? I I have a list, but I don't know if you have one. >> Do you all have a list? I have I took some notes too, but I don't >> Yeah, what I have is a um um a list of what has been spent in the 2022 fund. Um how many employees are paid at the at that um $17 an hour and then how many in um what are some of those locally funded positions? Did I miss anything? Yeah, I think there's a question around um what cost cutting measures is Durham public schools looking at >> and then other >> locally Oh, go ahead. >> Locally funded positions. What positions are locally funded? >> I said that. >> Okay.
196So, I apologize. Um further conversation about shifting roles from Durham public schools to Durham County. That's a longterm I think goal. And I want to say, Commissioner Burton, you asked about what projects are shovel ready. >> Yeah. Just figuring out how we can best utilize our money, like what's ready to go. So if we do do a bond, we know what is ready to go. So money's not sitting. Did I capture? I have one more was just I wanted to get more detailed information about the enrollment. um not just the capacity cuz we had just seen capacity for all the schools. Okay. All right. The next item on our agenda is Board of Education Board of um County Commissioners. Thisou hasn't been reviewed for many years and we need to take a stab at that
197process. Um, I'm wondering if we could assign a couple folks, maybe the chairs can get together and assign a couple folks from both bodies to take a stab at reviewing thatou so that we can have a draft at our May session if that feels okay. All right, I see some affirmations. So, we'll do that so we can hopefully have a draft of the May session. The next item on our agenda is general public comment. Do not have any folks that have signed up. And so, with that, we are ajourned. Thank you all for being here.