1-27-2026 Appoquinimink Board Workshop - Finance Training

001All right. Good evening everybody. uh those here uh virtually uh we this is the January 27 Aquinamic schoolboard workshop to discuss uh financial procedures and issues. Um we are holding this via Zoom due to the weather conditions but we do have an anchor location at uh the uh schoolboard uh room itself but I think everybody is here virtually uh because of the driving conditions and parking lots and things like that. So welcome all. This is also being recorded. And with that, I will turn it over to our superintendent, Matt Burroughs, to kick us off. Matt, you're up. >> Thank you, Richard. Welcome, everyone. Thank you for joining us tonight. Uh, this is our part two of our financial training for the board, uh, being done by, um, Chuck Longfellow and Scott Kessle. Uh we had

002a had one um I believe back in November, maybe it was October. Um and we're having our second one tonight. So I will turn it over to uh Dr. Chuck Longfellow and Scott Kessle at this time. >> Uh thanks Matt. So um we did we did get partway through this last time. U last session uh we had some um conversation about where the district was to date and the recommendations and then we then we started this um sequence and we got through some of the read aheads and we'll continue through those. I'll just briefly touch on those read aheads that we've already um talked about just to kind of give you the um you know just the big picture of what those were about. uh the the points we wanted to make for the um

003read aheads include uh let me bring up our notes. So we have a notes page that we'll speak from. Okay. Hopefully that's big enough. Do you see do you see the notes page? It should say read aheads for this session. Good to meet you. >> It's there. Thank you, >> Doc. It looks good. >> Okay. Good. Good. On my screen, I don't see that you see it. But um all right. So, we wanted we wanted to make various points. Uh we want you to uh just to recommend to you that when you ask questions about the uh financials, you ask questions about the key financials and the money's impact on learning and other outcomes. And we'll talk about what some of those key financials are as we go through. um get familiar as board members

004with the research and the levers that improve student outcome, the big picture stuff. Uh program and evaluation and return on investment analysis is essential. It's not quite the same ROI as you would have in a business. There are other um softer factors that that um that um count as return, but uh we we should have some kind of program analysis periodically so that we know that the programs that we are paying for are working and um that they're worth continuing either expanding, shrinking, getting rid of, replacing, um and so forth. Look at the other Delaware districts and beyond outside of the state. um ask the financial and um other uh district leadership staff for the reports etc that you need. And just a point that board policy and document board policy sets and documents the

005expectations for the reports and who does what in the financial and program evaluation areas. We touched on this last time um but I want to emphasize it again uh today. Uh the board's role in this thing is policy and governance. I know you all stepped into a situation where um there were some details that that that um caught up with the districts, some financial the trends weren't weren't um trending the way that we need them to in order to have a um adequate carryover at the end of the fiscal year. That's not necessarily something a board can catch. We'll give you some tools so that the big picture you can maybe get some hints and maybe have some um some some of the bigger questions that you can ask. But really um I think that

006what we need to do is is uh figure out how to rely on uh for example our financial advisory committee a little more strongly so that they can they can really pick these numbers out and ask the hard questions that need to be asked um to make sure that we are on track. Um we do trust but we got to trust but verify and I think the verify part is extremely important. So again, I know um it's it's like we say here, it's very difficult to see it coming from a board seat. Um you can as you as you develop and enhance your policies, you can try to put some things in that will um guard you from it in the future, but um again, it's the strength of strength of your staff and your

007systems that are going to um stop it in the future from happening again. Um unfortunately we hear stories um all across the country nationwide about um you know financial difficulties and so forth. So it's not it's not just Aquinamic, it's uh other places. We we um have put things in place through our preliminary budget to make sure that we do have um the uh carryover needed in order to stay out of financial financial recovery. And as we build the um the final budget, we're um take we're checking the pulse on those things just to make sure that that's still our trajectory. the brief brief reads we gave you. Um the first one just to touch on was something from the Brookings um Brookings Institute where um they reported on a um edenomics lab study where

008they went and listened to recordings of the budget sessions of 174 school districts. And what they found is that um these are the percentages of budget work sessions where these topics were raised. multi-year financial impacts, which is super important to talk about um sustainability only 36% of the time. And I know that um we need to work on that as a district. We typically will go one year out and talk f in a fuzzy way about the next year. You know, how can we get to where we can do some multi-year looks? Um that's where we that's where we need to get. time. Um, you know, we're working with the Aloe View system that that has forecasting uh capabilities. Student outcomes only 23% impacts on key student groups and so forth. You can see here

009that some of these key topics aren't raised. So, you know, take keep this in mind and maybe even ask these questions and talk about them and maybe even if the staff can't answer them on the spot, make them um agenda items that are ongoing and ask the question and and figure out how you can get the answers to those over time. Um potential questions to raise at budget deliberations, we have some here in this in this packet and um I think we'll make sure you get this this notes packet so you can refer back to it. But um this is from the reading some things where board members can ask um some of these questions here. The next one was just something that we all know but it has to be said again. Special education

010is consuming a growing share of the public school dollars. It's a trend we're aware of. Um there's a graph here that um show the number or the u cumulative percentage change of students with disabilities in schools um compared to the cumulative change of um total public school students. Nationally student counts are declining. Nationally student counts of students with disabilities is going up a lot more than that. One big finding of that study was better reading instruction for all students was associated with better reading outcomes for students with learning disabilities. So keep that in mind as you fund programs. The next thing we talked about was um something that the Edenomics lab put put called the grid, a framework to explore budgeting choices. And this is something to just kind of go back and look at.

011Um we have strategies such as looking at the investment the major cost factor impact number of students served. Not everything is necessarily about the most the most students serve. Sometimes there are things you have to do for small or low incidence populations. We know that. But cost per desired outcomes risks um frameworks. There are different frameworks out there to uh to frame these discussions. and we ended here on October 28th. And so I want to continue with um and >> yeah, >> I apologize for interrupting. I just wanted to ask a clarifying question. I mean at the beginning you just talked about >> other districts and this situation with the board. Is it your when you looked at the documents, you looked at things, is it of your understanding that with the documents and the

012information that the school board and the superintendent were provided, was there a way for them to pick up on where the budget was trending at the at that time? >> Not. Yeah, that's a good question. Not really, because the the documents were very cursory in nature nature. So, um, one [clears throat] of the things, some of the things that we put in the recommendations, such as a monthly, excuse me, a monthly, um, cash position tracker, a monthly salary tracker. These are some things where you can you can pick out some trends and take a look. Um, even at your level, you could you would notice, hey, wait a minute, why did this spike upward? Why did this spike downward? Ask the question. Again, not that it's not that it's your day-to-day duty to do that,

013but the more of these things that you have that you can glance at, I think the the the better the the chances we have of avoiding things like that. The cash position tracker is probably the the best tool. You want to know where are we compared to um this year compared to last year. And um also the the budget to actual sheet. And I know that some of these things um they had been provided in the past and they were discontinued. Um you the financial advisory committee told us about some of that. We reinstated some of those. Um and I know that um Miss Stewart is working on some additional tools that that she [clears throat] thinks might help uh give a clear picture as we go through and we tell you well even this

014this right here. One of our points when looking at the Christina budget is they had so they have something in their budget, an executive summary page where the CFO gives an analysis and says explicitly where they need to be as far as their carryover and then you have a five-year actual or in in the case of a preliminary budget, one of these will be a projected. They show you a five-year actual so you can see what's my trend as far as carryover goes. Um, this is a good thing looking back. We would like to even have it going forward. One thing to point out here is in Christina's case, um, 2019 they carried over, uh, 10 $10.9 million. The next year, 10.7, this is where they had their referendum, 2020. They they know that when

015they're down at this level, that's referendum time. They're in super austerity mode. They're riffing. They're doing the things they need to preserve cash. You can see here in their tuition fund it's down. This is running on fumes as well. They passed the referendum and here they are 22 36 43. I don't know where they are now, but when you have something like this with a history, you'll kind of know what your referendum cycle looks like. The one thing talking about the situation that we had um in fiscal year 25 that led to us being in austerity this year. Um that's kind of that's your current view. So you you do need a look back. What's your current view and a future um with your current view? You want to know how you compare to same

016period pri prior year or same payroll in prior years. These are tools that are um that are super valuable for you. So, uh, >> so Chuck, let me ask a follow-up question here because I mean I will say if you know I mean I know you don't haven't been attending our board meetings uh regularly uh >> but we always at every board meeting throughout 2024 well as long as I've been on the board and throughout 2025 every financial report that we got once a month showed what our expected carryover was at the end of the year and you know at our May need it in 2025. Um the projected carryover was more than sufficient to satisfy the state requirements. The problem that we later discovered was that the CFO had been I was you know

017using the wrong funds to pay certain expenses and when he realized what he had done and made the corrections the um suddenly we didn't you know didn't have this the we weren't projected to have sufficient carryover plus he in making his estimates for year end if we're going to have, you know, sufficient carryover at the end of the year, he underestimated payroll because he forgot that May had three payroll cycles, not two, and he left out eers and made some other mistakes. So, I mean, I think we've always been focusing on the carryover and doing what you say and asking those questions. The problem is that, you know, we're not there to, you know, double and triple check every entry that goes into his assumptions. And so that's the issue that we faced. Um because

018I I do think we focus we've always focused when you were here as our CFO and after you were here as our CFO. I mean, we have always been laser focused on the carryover, our planning when we go to referendum. Um, in the times that we've gone to referendum, we've always shown what the projected carryover is going to be. It carryover starts high and then it goes down over time as costs increase and the tax rates stay the same and then you, you know, you go out to another referendum when your carryover starts to get too low. I mean, I think all that planning was there. I think the issue that we had this year was that there were errors and assumptions and what was being presented to us. And so what I'm particularly interested

019in is the processes we put in place to try to catch those errors. I had always assumed and still believe the reason we have a financial advisory committee is because our CFO puts together his report. It then goes to the se to the financial advisory committee before it comes to us and then it comes to us. I'm not sure how any of the members of the board or superintendent were somehow supposed to divine that in making his presentation and preparing his reports our former CFO had left out a pay period or had left out including Epers in his projections. Um, so what can you tell us about Am I right in those statements? What can you tell us about what we should be doing in that regard? >> You're right. Um, a board's a board's

020job isn't necessarily checking every number to to see that they're right and going in the books and and all that stuff. Even a superintendent has too many things going on for that. That's why he has people working for him. Um, but some of the systems that you put in place such as uh signoffs. So, is somebody else reviewing the budget before it goes to the financial advisory? Is the financial advisory getting enough of the backup documents that they need? And um some of the stuff that we're going to show you tonight that Scott's going to actually show you some of the detail is stuff that you could do, but you probably nec wouldn't necessarily ever do in your in your positions. um it's something that a financial advisory or a finance team would do. So

021um multi-level multi-level reviews and signoffs, that's something that's pretty common in the accounting world. And that's the kind of stuff that we recommend. And I still see something says, am I still sharing my screen? Do you all see the the screen share still or no? I'll reshare it. >> We see your background. Okay, let me Oh, yeah, that's not it. Let me It moved on me. Okay, back over here. Screen share. Okay, that should be it. Okay. Thanks. All right. And um like we said, they they'll do explanations. We started doing that in this this budget, giving more explanation. That's what you need. And read that stuff. Anything that doesn't look right, question it. Um they might not be able to answer you on the spot, but they should be able to answer you in

022short order. You shouldn't have to wait another full meeting for the answer. Just make sure you ask the superintendent, hey, I want, you know, can you get me this answer within a few days and it should be doable. Um, Cape Pen opens budget, we also put that there just to kind of let you know what they what they do is they have different reserve accounts that they that they um set aside things for. They have many different ones. Construction, instruction for uh textbooks, etc. transportation, ban uniforms and equipment, tech, security, furniture, and um several districts throughout the state do that too. It's not something that APO can necessarily do right now because of how close we are to um to our amount that we need to um stay out of review. But over time um

023as that builds back up, then this might be something to consider. They have on here amended. they they when they changed their budget, they repro they represent it to the board as an amendment. And that's one thing we didn't see going on toward the end of last fiscal year was um presentations of amended budgets. So, um you know, if there the board authorizes the spend, the board the board approves the budget. Um there's no um unless it's in board policy that the staff may do this or that with the budget um then it needs to be presented to you all. The last thing was the the DOE financial responsibility training. It's a video. Um it's a highle view. It's not really it doesn't really tell you what you necessarily need to know. It attempts to

024kind of um educate you on the state funding system in general, which um I know that the state is working on trying to improve it. I don't think they're going nearly far enough. This is my opinion. um the they're they're going to retain the unit system which is going to lock us into um some of the the the bad that's in our state funding system um into the next um into the next the next formula. Um most states when you get state funds, you get a block of state funds and you design your programs to fit within that block of state funds. Um they're not telling you what flavors of what kind of staff you can have with those funds. And so that's going to continue. But um you could do this. There's also a

025charter one which is interesting. I mean the charters were supposed to um inform improvements to the districts and um I think there are some things that we could do that charters do as districts, but we don't have the flexibility to do that. So, um, I'm not here to to whine about the, uh, state funding system, but I want to make you aware that, you know, that there's still a lot of room for improvement, even if all of the suggested changes that are going on into overpass. Um, also, there was a time in Apple's history, I don't know how much you all know about this one, it was in the mid 90s where the district actually did get in a position where they couldn't pay payroll. Um there were board members and and I think some

026others who actually wrote personal checks to float payroll and got reimbursed. That is not cool. Um there's there's other districts in in time that have had that kind of thing happen. Um APO's original financial advisory committee was created after that happened and then the state mandated these committees a decade or two later. So again, for you for you all the for you all as board members, you want to provide great governance, set solid policy, and rebuild trust with the community. Um, so we're going to we're going to show you some detailed stuff, but again, it's not necessarily what you all do, it's what you all will set the groundwork for other people to uh to do and keep track of. We also asked uh in general like what what people wanted to know on a

027monthly or more frequent basis. Where is the monthly financial report missed the mark as a board member? And so some of the things that we heard were for um facilities um understanding that many of the districts not districts districts building are newer um how are we planning for cost of repair versus replacement over time? I know that the district in the past and I assume they still do do a 10-year um facilities plan, a lot of that um may be centered around growth. I don't know. Um but that's something you know you can ask the the district the district uh senior staff is how are we planning for um maintenance and those um intermediate term um uh needs? What's our what's our deferred maintenance costs? I mean, every district every district has stuff that they

028need to do or want to do but can't get to. So, those are things you can ask uh your staff. Uh, somebody mentioned accelerated or AP classes. Are we allocating the same amount of resources to advanced learners relative to five years ago? Excuse me. I don't know the answer to this, but that's good because that's right up there in those kind of questions we were talking about um in the um you know, the programmatic questions. reports to continue or add salary tracker and some additional things. Special education spend, capital spend, um what are the largest spend categories? That's a good one to know. What are we spending our um largest amounts on? Um and how did our forecast prove out? How did we forecasted, we projected, how did we end up compared to that? What's

029our track record on that? So for for a board, what do you need to do to provide that great government governance and rebuild trust? Cash flow is the lifeblood of a school district, especially in Delaware. Local cash flow, local discretionary, tuition, some other minor funds might be cafeteria, and some of the um definitely debt service and the um and the match taxes. The big two, the big two are um your state and local discretionary and your tuition funds. Show me, trust, but verify. Now, I heard I've heard in these meetings several times, you know, the thing about being from Missouri and show me. That's a that's absolutely true. You nailed it when you said that. Um what do I verify? How do I verify? And the other thing um this goes to kind of what

030um Dr. Burroughs and Mr. enforcement we're saying is who verifies them and that's set forth in your in your policy and your expectations. So you verify the carryover balances and we have this thing called a daily validity report DLG060. Um Scott's going to show you some things in that what it looks like. Uh when I was with the district, um I used to send to Matt every I think it was every month I sent this uh a copy of it with certain things underlined with um with [clears throat] the the 98,000 and the the 9105 which is the local and tuition and some of those funds underlined. Um so make sure that you know th make sure that those are those kind of things are flowing. Not that necessarily he needs to look and check,

031but um it shows that somebody's looking at it. Um so this is this is a big a big this is for the CFOs in Delaware. This DGL060 is kind of like the checkbook. Um we could give it to you and we'd have to show you really how to read it and Scott's going to show you how to read a couple of the lines today. Um, it's it's complex, but I don't want to say it's so complex you can't understand it. I think if you if if you wanted to understand it, you know, we could we could get you there. Absolutely. >> The projected >> How do we I mean, I get the cash flow is the lifeblood of any organization really. >> Yeah. But again, if the errors that that occurred, I mean, the error

032that happened in May is we were told we were going to have enough carryover and it turned out that the projections were wrong and then it turned out that some of the way expenses were being paid were paid from the wrong pots of money. And when the projections were corrected and the funds were reallocated to the proper pots, suddenly our carryover was going to be deficient. And so I mean, if we get a daily cash flow report, but the funds are coming from the wrong accounts, I don't know that the daily cash flow reports going to catch that. Am I correct about that? >> Yep. Yep. You'll see that in the budget. If the budget is um if the board approved budget is reflected in the reports that are being given to you, then you

033should be able to see a percentage expended to date and be able to compare to the >> but the budgets were sorry but the budgets were confounded too. One of the things that Scott and I found when we were untangling what I'm going to call the mess from last year is that there was not really a lot of discipline on what got charged to what budget lines. It was it was kind of like the budget was being used as a reporting tool rather than a planning tool. There is no way there's no way that that budget and that that the expenditure to date would have triggered anything for any of you. It was such a mess. So um >> right. So that I I appreciate that and I think that's right. And the other thing

034of course is you know in March, April, May when we're looking at endofear projections, none of those projections have happened or the actual expenses haven't happened yet. So to the extent that the CFO was making errors in his projections um and therefore saying, "Oh, you're going to have more money than you need," which is what he was telling us. That's not something that's going to get captured by our current cash flow, right? Or our current accounts necessarily because if his projections are wrong, >> it could be perfectly accurate today, but then as time goes on, that's when the error becomes more apparent. Correct. So we need to not only be monitoring daily cash flow, we not only need to be making sure that the spending is allocated to the proper accounts. We also need to

035be making sure that his projections are accurate and that somehow we're not going to overlook the fact that there are three pay periods in May or three pay periods in June or whatever month it happens to fall this year. Um, so I know we've hired another finance person um to kind of assist in all of this and we actually had done that I think last February. It was just not in time to catch these errors before they caught up with us. Um, but that's I think part of the issue too is not only do we have to make sure that cash flow is being properly managed and that charges are being properly expensed, but we got to make sure our projections going forward are accurate. >> Yeah, that's that's absolutely correct. And um budget to

036actual should tell you a lot as long as your budget is is built right and that the actuals are the what the actuals that are supposed to be in each budget line. Even even right now we we had just um got done making sure that people are in the correct kind of unit kind of state unit that um supports their salary um and cleaned up uh where that is being charged to. But there's still a lot of um we redesigned the the budget to some degree so that we could keep the discretionary stuff together and the non-discretionary stuff out to make it easier to say all of the discretionary stuff is in these operating units and um so that's what our spend is and when that way the trends mean something. You don't have different

037kinds of different flavors of funds mixed up which was happening before. So we're still cleaning that up. Um and um that's just it's a it's a process to do that. But once we're done with that, you should have a um a budget that's designed to um you'll see you'll see it where the discretionary fund stuff will all be together in certain operating units and it'll aggregate to a number. That's the number of the budgeted spend for this for the year. And you should be able to take um depending on what the monthly report does, it should be able to pull the expendited to date for those operating units um divided by the budgeted amount for those operating operating units and that should be your um your um expended to date. So even even what we

038had last year was not um was not clean enough. What we have right now isn't clean enough. if we just know which lines to pick out. And um um I think Scott's going to even show you um one example. You're you're going to show them the um operating unit program code report, right, Scott? And like the Oh, >> you're going to show them the the percentage thing. Yeah, the thing about the large number. Yeah. Okay. >> Yep. >> so Chuck Chuck, can I ask a question? >> Go ahead, Norm. So I [clears throat] have been on this board since '09 and for whatever happened to the prior year that we ended up in the mess. You just said that you and have and another person have spent the last year still cleaning up cleaning it

039up. [clears throat] So moving forward, whatever we roll out or whatever we come out with, I don't want people to be under the impression that we're all going to have to now become accounting wizards that it's, you know, the expectation, if I'm saying this right, that we're going to have to go into the checkbook, we're going to have to go into the unit count, we're going to have to go into every resource that's that the finance department uses to doublech checkck and triple check them. I believe that is beyond capabilities without 6 months sitting in that chair. So, however we move forward, and dummy down is not the right phrase to use, but somehow, wherever we're moving to for us to be able to go back and back check has to be extremely logical. And

040I might be out of bounds by asking that by saying that, but I know there's a lot of people upset that this has happened, but at some point, I'm not an accounting major. I'm very good with numbers. I followed this budget since ' 09. I can pretty much follow it. But to know when somebody's putting it in the wrong budget, using the wrong account code, using the wrong thing and I'm looking at a projection sheet that tells me our end of year balance is $8 million or $9 million when it's not there. That's to I guess hammer back part of what Richard said is it's given to us. We do have to rely on the professionals to do their job. Maybe I'm saying it wrong, Chuck. I mean, you and I, we go back a

041long ways. So, >> I mean, you know what it was. You know what it was like when you were here, >> correct? >> And we've gotten away from some things. Maybe we'll get back to where we were before, but I I do have access to the checkbook as the financial advisory committee member. And if we have to go down to that level, I guess is where I'm coming from. I mean, you gave me access as, you know, as the board member and financial advisory to look at things. That's extremely complicated to try to teach the five of us to use that to doublech checkck everything. Well, this job just became 20 hours a week to 70 hours a week. >> It is. And so, no, you're not um you're not I I understand you loud

042and clear, and I hope I'm not coming across as as saying that board members should be diving into this level of the books. We're just trying to give you a flavor of the stuff that needs to be checked. And so, I think that as a body, the things that you all do is set the policy and the expectation. Do you expect, for example, do you expect that by the time a budget gets to you, it's signed off by three people who certify that they have reviewed certain aspects of it, or do you expect certain processes have been done by the financial advisory committee and when you get it um they're they're somehow signing off or certifying that um at least certain major aspects because they're they're the same they're in the same boat. they they

043do have expertise um and capabilities. Um and I'm not saying you all don't. I think I think you all have some sharp people. Um but they they don't have this isn't their 247 job either. So, you know, what kind of things are expected? Is that something you want to put in a policy or do you want the district to write a procedure for it? Um you got to operationalize this stuff. I'll even admit like when I was in the seat, you know, I didn't have enough people to review what I was doing before it got to financial advisory. I mean, there's certain there's some there's sometimes when a number a number wasn't right and it moved forward and then we caught it during the year and we fixed it in the final budget or we

044caught it. Um because I mean as long as as long as you do have staff looking at hey why is this over or why is this trending you you know why monitoring uh budgeted to actual or actual to actual spend to budgeted um as long as you have people monitoring that you'll see hey wait a minute but and you'll see it earlier so um you know I hope I'm making sense there >> no yeah you are and I guess I'm just trying to add the sense to that if If you're having two people or three people sign off before it makes its way out of district office, then maybe that's the safeguard we go with. I mean, I just I to Richard's point exactly. If anybody looked at what was presented to us in May,

045there was there was no red lights flashing. And you know, the five of us, including Dr. Burroughs, have taken a tremendous amount of heat for what had happened. And again, as a board member, we'll take full responsibility that it was missed and mistakes were made. But, you know, moving forward, don't want to complicate the process and make it harder for us to do our job. Trying to get it right and make it easier so we can do our job. >> Right. Understood. >> Okay. That's all I just want to just but I just think if we have to if we're going down to the checkbook level that's too far for I believe because I've been there I see it and I do look at it to have to do that on every expenditure every budget

046every detail everything well I'll never go we'll never get our work done >> right >> thank you >> and probably not and definitely not you not necessarily you guys but somebody's got to go to some level in order to check this stuff before it before before it goes to production. And so what's that process? You know, that's that's just the thing. >> No. And and as a board member, I take the responsibility on, but I just want to make sure as we move forward that we're not adding 17,000 more things to the plate that there's nothing. We'll wake up in the morning and all we all we do is 16 hours a day. It's this, >> right? Yeah. >> So, Yeah, you're you're welcome. Thank you. So, over to this the financial position report and

047and corresponding with what you're talking about here. These are some look fors. These are some things we could discuss. It could be a checklist that maybe maybe part of the procedure is that there's a checklist that they go through. Um fill in how many how many payrolls are left between, you know, whatever. Um you know, uh put the pay write the payrolls down. And this is stuff not you not what you do but maybe you or the financial advisory committee receives it. Um you know there's different ways to calculate the salary expenses. You can go trends or remaining budgeted or take all the employees or escalate the prior year. There's all kinds of different ways you can do this stuff, but um have you know have them say how did I project these expenses and

048um and that way that way they are deliberately disclosing that and somebody along the way who um reviews or checks maybe financial advisory knows okay so does it make sense to do this method um is this a that you went on what's remaining budgeted but is the rem is the budget um proper is it trending correctly and so forth. So these are these are just some potentials with the financial position report. Um you've heard this from us before. Use conservative revenue and worst case expenditure assumptions. It assume that revenue is only going to come in at what we projected in the um in the um uh the budget or the the tax warrant. Um, even though we know that APO typically grows each year and you typically bring in more than what was projected at

049the tax warrant, this year might be different because, you know, it seems like the county is granting a lot of um appeals. So, we'll see where we end up. And worst case expenditure to me has always been assume that all of the budgets are spent out 100%. Which isn't always the case. Usually you end up with some scraps or more left in the left in the bin at the end of the year, but you don't plan for that. I mean, you can't you you could say, "Well, typically in a typical year, 90% of our budgets are spent out, so I'm going to assume that 90% of our budgets are spent." I don't think that's the healthy way to do it. We um we typically assume that all of our budgeted expenses are going to be

050spent out. um compare budgeted to trends and of course be aware of the three payroll months. If you do if you do have a procedure or something um with a checklist that the checklist could have explicitly state which are the three payroll months um [clears throat] revenue projecting projecting um revenue and the budget. How is that number projected? Um, one thing to note, this is this is part of the the the education piece. This is the one of the few things that really it's we're just doing it for your awareness. Um, the budget is always the current BUD ref, which is the year that the money was appropriated. There's more than that. We're still spending 2025 money. Sometimes there are some appropriations that are from the state that are 2-year or 15month um appropriations. So,

051right now there there's some budget lines that are still on the books for 2025 that are being spent. Those don't worry me so much because those are those are typically state appropriations where you can only spend what's in there anyway. That's not typically discretionary funds, but be aware of it. Same with federal um federal funds last um I'll ask it's about what two and a quarter years, Scott? Is that right? Something like that. about two and a quarter years. So there's times when you're spending two year old money, federal money. So um just to make you aware of that. >> I always tried that I always try to keep it only one two years there, you know. I always try to correct that third get rid of that third year. >> I try to do

052uh FIFO, first in first out, you know, spend the oldest dollars first. Um there's another revenue report, the DGL114, um that you know we we we use to um do our monthly report and I think that the financial advisory um committee has started to receive this report. And so again, I know a couple of you are on the financial advisory. if at any point you ever need um us [clears throat] to come and and um you know just help you explain like how these reports work and what they mean, you know, that's we're we're here for that. Well, maybe not Scott. Scott's got other things going on, but I'm here for you. Um so again, expenditures are planned, budgeted, and actual. um in the monthly reports, you know, look look for what's uh look for

053the percentages, follow the breadcrumbs if they give it to you, and the expenditures by operating unit and um program code report, I think, is the best thing that you have on the expenditure side. It tells you your budgeted to actual what's encumbered. It gives percentages, and [clears throat] I don't know if this is the one that at the top has the percentage of um the fiscal year elapsed. Um there are two percentages to look at with fiscal year. There's one that is the number of days elapsed. Um which is you know if you're if you're at the end of July in a 365 day year it's 31 over 365. That's your percentage of the days elapsed. There's also payrolls elapse. So if July is a two payroll month it's two out of 26. Whatever that

054percentage is. If it's a three payroll month, it's three out of 26. So you'll see us sometimes when we do these reports, we'll put percentage of the year elapsed um or percentage of payrolls elapsed. And some of the data service center reports have that on there. That kind of gives you a quick thing to look at. And that's something that the financial advisory should be looking at. And definitely absolutely the finance staff should be looking at and the budget and the program managers of each budget line should be looking at and watching their budgets as well. So um talked about multi-year. We would like to get to multi-year um tax warrants. So, some of the other some of the other things that that a board will be encountered with other than the budgets and the

055cash flow and so forth, you'll you're going to see a tax warrant every year. Um, when you're given the tax warrant, you know, if you're given just a just a sheet with rates on it to sign and say this is the new tax, this is the new tax rates or whatever, um, that's not I I would say that's not that shouldn't be acceptable in your um in your world. You should have spreadsheets with breadcrumbs and backup to know what's behind those rates. How did we get those rates? What are we including? You know, what what bond if it's in the budget? Are there is there a um is it just a number or are there bonds listed out that back up? And I'm not saying you all have to calculate those to make sure they

056all match up, but you want to get a good sense of um what's behind these numbers that they're asking us for taxes for. The um setting the tax rates is probably um you know, one of the um it's one of the things that you only encounter if you're a five-year board member, you only encounter it five times. So, um make sure that you get the information that you need to make your decisions. It can can be high stakes. It is a heavy lift for the finance shop. So hopefully they're giving you a heads up. And I know that Dr. Burroughs instituted this when when I was when I was in service there um he started having um meetings I think in May or June to start talking about tax rates. I think in June to

057start talking about tax rates ahead of when the tax warrant was due. Um so that we could have discussions and start talking about where the numbers came from. I think that was that was probably my fault that we started that because I remember my very first board meeting in July because you get sworn in at the July meeting and one of the first things on the agenda was setting rates. Now, we only set the special ed rate and some other minor rates. I mean, for the operating rate and for construction, you obviously have to go out to referendum, >> right? But I I did not like kind of being presented all this information that night and not being able to ask, you know, detailed questions that might require follow-up. So I know the next year

058starting the next year we had a board workshop in June where the information would be presented to us initially and that left all of us time to ask questions and you know figure things out and make sure we were comfortable in in doing what we did when we issued the tax warrant. But I agree wholeheartedly and and the good news is we haven't been waiting till the last minute now for the last 14 years. Good. Yeah. Yeah. Keep that up. Um so, um and just just for um refresher for everybody, the the um current operate, there's four major rates. Current operations rate, it's um it can only be increased due to referendum or um in the case of this past year, um if there's a reassessment. And I know there's legislation out about that, but

059um but that's that's um that's the current operations. The another the next one is debt service and that is to satisfy the bonds that we have outstanding, bonds and notes that we have outstanding. And even though the referendum doesn't set the rate, it what it does is it it gives the board the power to borrow and sat and to levy a rate to satisfy the um the principal and interest on those borrowings. So the board does set the rate, but just to the extent to um to make sure you have enough money to pay off those those bonds and notes. And then there's match tax, which is certain categories um as allowed by law. you can um you can adjust those tax rates and the the board does get to sit th set those but

060it's very prescribed what you can use that for and how much you can raise. So it's not really like you know you get to set that um to your heart's desire. It's it's really it's really um pretty restricted. And then there's the tuition tax rate which is for certain [clears throat] special programs um as allowed by law and to support um special education needs of students who are in prek intensive and complex and the board does set that based on the needs the needs of the districts and the cost of meeting those needs. So that is a that's a heavy lift for everybody. Um, so we, you know, we we're going to start um we're going to start working on that, you know, probably as we turn spring break, we start working on the the

061easy stuff like debt service and all that. And then as we um zero in on the end of the year, we we we do the rest of them. Referendum ask calculations. This is another big deal. Um you want and this is again this doing a root cause. This is part of the um issue that we found with what happened last year is that it really wasn't clear um that the cost that the that the true full costs of the prior um some of the prior year ref prior referendum promises were built in to um to the to the numbers there. And again, like like has been said before, you're not supposed to be necessarily accountants who figure all this stuff out, but there needs to be enough backup and clear backup so that um so

062that at least at least we're um feeling confident that the calculations were done and that um there there's been multiple eyes on it to make sure that they've been done correctly. going to use conservative revenue and worst case expenditure assumptions. Um I would advise not working in assessmentbased growth because it's not guaranteed it. Will it happen? Probably. Um but it's not guaranteed. Um don't use hope as a strategy. Don't hope that you're going to grow kids and assessment base and units and all that kind of stuff. It's not guaranteed. So, make sure that there's not a hope factor built into the cost of a referendum. Ask um CBA cost. This is a big deal. Now, this is one um >> Oh, wait, Chuck, just before you move on, though, I will say I mean, you

063know, you were here and took us through several referendums. Eric did the same. I mean, I I I think some of what you're saying here is I'm going to say just general good educational advice, but I mean, we do these we we do exactly what you've been saying here in terms of being conservative in our revenue estimates, >> and we do not use hope as a strategy. Um, >> good. Good. >> Well, you were here and you saw that, so I mean, I'm not telling you anything you shouldn't know. Um but uh you know the assessment base is going to grow because Middletown's a growing area, but we do not try to guess what that growth is going to be and then factor it into our referendums because you're exactly right. Um the growth may

064be delayed. We could have another recession. >> You could have a big property tax appeal hit. Uh years ago in the 90s um General Motors had appealed the tax assessment for their uh factory when it was still producing cars. >> It took took several years for that appeal to play out but when it did >> um there was a big drop in revenue for Red Clay and um >> in the 2010s aquinamic u >> yeah in the 2010s aquinamic got hit with part of a big Verizon. Um there was I don't know if it was a result of a suit or a settlement or whatever but a lot of the Verizon infrastructure got um reduced in um in taxable assessed value and so that was that was unexpected so it happened right again I'm not

065saying I'm not saying that we do that well I know we don't but resist the temptation to if you ever have a a CFO want to do that or if you ever have a fellow board member suggest doing that or somebody, you know, say that say Matt hits the uh Megaillions and leaves you and then a new superintendent comes on, you know, just resist that temptation to to try to build that in to squeeze to squeeze more in. Um >> on both of those, the referendum and the CBA cost, we just didn't really find some real good detail on that. I I mean I if do you rec you recall that correct? >> Right. Right. We had a hard time figuring out um how those how the how those impacts were calculated. We found some

066there were some places where um for example like constables of safety and security I think there were good calculations and then there were nebulous calculations on other parts of it that we saw. >> Um CBA costs collective bargaining agreement those come up every few years. um just make sure that when um those are calculated that we're not just summing the figures. For example, if you've got um and you and you want to ask the question and I know you do because you've asked me this question in the past, what is the impact on the reserve? What is the impact on the carryover this year, next year, the year after? And that's perfectly the question to ask. Um keep in mind that a a two two and two isn't a six. It's not. It's two this

067year, which carries forward two more years, and then another two next year, which is four next year, which carries over to the last year, and then it's six the last year because you got the the twos stacked up. It actually ends up being a 12.16 and change because of compounding. So, there's kind of a little pyramid that goes on there. And um there have been districts in Delaware that have been in trouble because they didn't pyramid. They they thought that the calculation was well 22 and two is 6%. So that means that if I'm paying um you know 100 million in salary now I'm going to be paying 106 in uh three years from now and it only would have cost me this. But no it it cost you it cost you two plus two

068plus two. It cost you more than that. Plus, you also have the step raises, right, Chuck? So, you've got to factor those in as well. >> Every year, a teacher salary goes up based on their years of experience. >> Correct. Correct. And um you when I've modeled salary, I tried to build in something for the step. What what tends to happen is you'll have people step up and then you'll have people leave and then you'll have new people come on. But new people can also come on in the middle of the scale. New people can come on at the top of the scale. So, I know that um when I was with APO, we would factor in a 2.5% factor for steps in the budget, but yeah, there's steps and sometimes sometimes um during negotiations,

069you might add a step to the end of the scale. And so, for everybody who that that impacts, there's a cost for that. And then it also has a cost for the people coming up to it that that you me didn't necessarily have before. You have to figure out what what's truly an impact. What impacts the reserve? Um, this is super important. Things that sometimes seem to be non-financial can have a financial dimension. You know, if I give you an extra planning period, it seems non-financial, but how am I covering that extra planning period? I need to do it with more staff, right? Because I have a finite I have I have a schedule and I have kids and the kids need to be somewhere doing something. So, um, you know, in Delaware, this is

070a Delawareism. It seems like a lot of the leg work happens before the boards get to weigh in on the contract. And I'm not saying that that's right or wrong. A lot of other states, board members are at the table. I'm not I don't know what's right or wrong. It's just um, you know, however it works there. So, especially if you've got newer board members who haven't been through the process before, um, you may get briefings um, during the process. Um, but really you don't you don't really necessarily see all of what's going on until toward the end of the process. And I'm sure it's frustrating for board members. Um, also some financial aspects of a CBA cascade to other CBAs or the salary policy. Um it's typical in Delaware districts to have the to

071have the teacher contract negotiated because it's the biggest and then the other unions will [clears throat] kind of key off of that. So if you gave say if you did like a one one two and two and a $500 bonus to the teachers then the other groups will come looking for a one two and two and a $500 bonus as a start probably. Um but look for things like your um ben you know benefits contributions and stuff like that. Administrators typically get their um salary escalated based on roughly what the teachers get. So um those are just things to be aware of. And then the state versus um local share. Wanted to talk about that for you. Um, this is not something that you all have to memorize, but it is it is something that

072comes up, especially when things get so tight that you're faced with possibly cutting staff or you get to the end of that referendum cycle and you may maybe one doesn't pass and you're looking at, okay, in order to survive next year, how much money are we going to have to cut? What does that mean in staff? And there a lot of times people people do the math there in the audience and they're like wait a minute this doesn't make sense. Um you're telling me you got to cut a million people but I mean a million dollars but it's um it's 27 people. That doesn't make sense when the average teacher all-in salary is like 130 140 that should be like eight people or seven people or something like that right? Well no we'll we'll kind

073of show you why. Um, so some employees are paid uh 100% out of a federal grant, a state grant or tuition tax. Um, we try to avoid 100% local um full-time employees out of discretionary state and local because that's a that's a budget killer there. Sometimes you can't avoid the other the other ones. That's that's what that money does. So an example median teacher um out of a teacher unit out of a state what's called a state unit for um off of the fiscal year 26 scale is at um master step 11. State share is 53732. Local is 26342. So that total salary is um 80,74. That's your median teacher in the district. master step 11, but that's not what the teacher costs. The all-in cost you have to include um well, you can include

074EERES, but we typically don't with this calculation, tuition reimbursement, longevity, other bonuses. Um but to get the to get the the all-in cost of somebody who's not getting EER or tuition reimbursement so [clears throat] forth we have something called um other employment um costs OEC's that's pension unemployment uh workers comp social security and that altogether is about 30 it's it is 33.43% of the salary. So, for every for a full-time employee, a teacher, a parah, a custodian, for a full-time employee who's on the pension plan, um, for every $100 in salary or wages I I pay them, we also pay out another 33.43 $3343 to cover these other things like pension and social security and so forth. Our share of it, there's also an employer share of health. Chuck, are these percentages the APO percentages

075or are they statewide average? >> Statewide. Oh, the the um the OEC percentage is statewide. This is administered by the state and and we're they charge it on their portion of the salary and our portion of the salary and aggregated at the state level. This these numbers are APO numbers. The masters step 11 and so forth, the 80 those are APO numbers. The 33.43 is state numbers. Um, so a little a bit about what a unit does. If a staff member is supported by a state unit, then we have the ability all we're authorized to charge the state. There's a big pot of money. You'll see the state the state salary money we get in appropriation 00137. The state puts that money in there and we draw from it. it. Um we we take the

076state sheriff's salary, the state OEC um portion out of that. And we also are allowed to pay for the employer share of health benefits, which is great. We um that that's a good that's a good benefit to have. I'm glad the state picks all of that up. 100% of the employer share. We do um in Apoquinn I think in our contracts we do have where we um defay a small part of some of the local share or provide some local benefits. I'm not sure. I think the cost is like,760. Oh, it's right. It's in here. It's in here. Okay. So, um the employer share of health we say it's the family plan is up to 339024 a year. If you've [clears throat] got a um a staff member only plan or or employee plus kids

077or even no health because you're on somebody else's, then the state saves money on you, which is um which is great. That's good for them. Um but they'll cover up to the the the on the state share. They'll cover whatever the top plan is. Family I think is $33,9.90. So, um, being conservative and calling that what the cost is going to be because we have a lot of people on that plan. Oh, there's also local benefits 1760. So the state cost overall what the state pays for that master's step 11 teacher is [clears throat] um is the salary the 53732 plus the OEC plus the health that's worth about the local share is the local salary plus the OEC on the local salary plus the local benefit which for that teacher is depending on what

078employee you are whether you're a custodian or um you know administrative assistant or administrator or a teacher or a pareducator um these numbers will change but the mechanism is is roughly the same. So, the all-in cost of this teacher is 142,593 less if not the most expensive health plan. But if we had to cut a million dollars in discretionary funds because we ran out of money, it's referendum time, whatever, it threatens the ability for us to fill 27 of our state units. It's a million divided by 36908 is 27.09. So, for every million in order to to survive, we'd have to cut 27 people. Um the um in most states, >> just so we're clear about that, Chuck, right? I mean, the reason that you're doing the math that way, dividing a million by our

079local share, is because the state does not essentially allow us to say you qualified for 27 teachers. We understand you're only going to hire 24. Uh we're you're only going to hire you're going to hire fewer. I mean, if we can't pay our share of the teacher salary, the state doesn't let us essentially take money they would pay on a teacher and use it to make up the difference on another teacher. We have to pay our share for every teacher. And if we don't pay our share for a teacher, the state won't pay its share for that teacher either. >> We don't get the share for that teacher. No, we don't. Now, if you're a charter school, you do get it, which is great for them. I'm not saying, "Hey, that's that's bad. Don't do

080that." But please, I mean, pass laws so that we can have the same thing, too. If we don't fill a we don't fill a position, give it to us. Uh, we've got this crazy $26 million giveback thing that we do, which kind of We're trading in the state share of some people for for that, but that should that should go away someday. Um, but we it would be great if we actually got the money for that and we could if if we did get 27 of these 105 684s or even the 53 times whatever here. If we get if we got 27 of those, well, shoot, we could probably, you know, scratch out 15 people out of that, just guessing. But no, it's it's it's zero. We don't get the money, which stinks. So that's

081why it's not logical. It doesn't make sense. >> Well, so when people talk about this the state funding formula for school districts being broken, I mean, the money is there. The problem is what like one of the problems is what you're showing us right now on the screen. It's given to us with so many different strings attached. >> Yes, sir. >> It's hard to be nimble. It's hard to be um quick. Um you can't adjust to circumstances from year to year because you're really hamstrung in how you're able to spend that money. And so, yeah, if we needed to save half a million dollars, one of our options would be to lose, you know, 13 and a half teachers, let's say, but we couldn't use the save the state would give us less money if

082we cut teachers is another way of putting it, which doesn't make sense. They should give us the money and let us figure out how best to spend it. >> Absolutely. Yep. And then if you want to count hold us accountable for results, hold us accountable for results. But I guarantee you if we had more flexibility, results would get better. But so um so that's the that's the state and local salary part. And you guys are going to get this notes page. So if you ever need to refer back to this, you could. The numbers will change every year. Um so what cash flow to watch the flow of. Somebody's got to watch the flow of. Um restricted funds, not so much. For most of those, you get what you get. um you can't really spend

083more than they give you if you don't use it. It's not like they can give it to you and it'll be flexible. You know, stuff like education or um career technical education funds, you know, those kind of things. Um some transportation funds and so forth. I mean, you get what you get and when you go over it, that's the asterisk. If you go over it, you will cover the overage with your state and local discretionary funds. If you go under it though, you don't get to keep what you didn't spend. Another unfairness, you know, you you save the state money. You don't get a piece of the action. They they get they get all the benefit from that. And >> but you you always want to make sure that there's no local expenditures that that

084could be used for this. But isn't one of the problems as I understand it then and this highlights it. In other words, if our former CFO was charging expenses to restricted funds that those expenses weren't allowed to be covered by those restricted funds. Um that would then show our unrestricted funds and our carryover higher than it should have been. And I think when that those errors were discovered after our May meeting, um that's when we realized that suddenly our carryover or that's one of the reasons we discovered our carryover wasn't going to be what we all were told it was going to be. >> Right. I think that had something there was a um summer school situation or something that might be in that category. Yeah. Um, so for those you you'll budget for those

085restricted funds, you'll typically budget to spend exactly what you receive. Um, sometimes sometimes there's a um a carryover like some of the um the match tax is one exception to that where that's that's tax money that we're getting from the taxpayers. If we get, for example, technology match tax or extra time match tax and we don't spend it all this year, we get to carry it into future years, the state is not going to take tax dollars and and and and scrape them back. Um, which is good. Um, nutrition is another one. If the nutrition fund, if they don't spend everything they've budgeted, then that's more for them to carry over next year. These are just examples. Um, so couple of the biggest risk categories are state and local funds and tuition tax funds. That's

086why I said um of the two balances to really keep your your eyes on as a district, not necessarily that the board um has to always look at this stuff, but somebody does and procedures need to be in place to ensure that somebody does and it's reported. Um, these are the two that Scott and I recommend that we um that that you all keep a um keep the pulse on. What do we need to carry into next year to survive? These are our recommendations for just discretionary state and local. You want to bring the carryover um plus so well your carryover plus revenue that you get from July 1 to mid-occtober from the bulk of taxes or to when the bulk of taxes typically arrive. That's mostly equalization and so forth minus the salary and

087non- salary spend through mid-occtober needs to be at least one month of local payroll obligations. That's that's what the financial position report says. what am I bringing over plus what am I going to get minus what am I going to spend is that equal um one month of local payroll obligations or more that's the minimum test the state test to stay out of financial review districts interpret this as two payrolls um if you do end up with a three payroll July um or or something early on in there just kind of make sure that you do have that money um squirreled way. We we say um we're saying that for Apoquin, you should have a $5 million carryover in discretionary state and local funds as at a minimum just as your operational goal. Um right

088now, we're just trying to make sure that we have the one month of local payrolls, the two the two local payrolls. That's our goal is to make sure that we have that to stay out of um financial review from the state. But um ongoing as you plan for future years, the outy years um we think that at least 5 million is is going to get you there. You want more because you want you want a healthier number. You the referendum cycle it goes up and it comes back down. But in Appo's case, when it comes back down, it's heading toward five. That's that's referendum time. Um, tuition, we we recommend that you carry over 4.5 million at a minimum and that's go that's down the road as you can build that up um over time.

089You have a carryover and you do bring in money at the beginning of the year. You have expenditure at the beginning of the year, but you don't get equalization money the same way you do for the operating funds. So that's why you've got to have um that cash sitting in there to meet your payroll obligations. If you don't, then it it goes negative pretty early in the year. So these are our recommendations just just to for you all to have um in your pocket. And there's just a couple things on what tuition tax covers is allowed by law. Special school and program placements in other districts. So, there's times when we will send um we we we and another district such as maybe Christina with the Delaware School for the Deaf will agree that the

090appropriate placement for a student is in that district and then we're on the hook to pay um local share of the cost of educating that student on a um prata basis of all the kids in that program. Um special placements as determined by the ICT. This is where you'll have uh students who cannot be necessarily served best in the uh local district or another Delaware district or program and there's an outside program. Sometimes these are out of state that educates students and we're on the hook for um if it's ICT approved which means that the state and different agencies throughout the state including the school district approves it then the state picks up 70% and we're on the hook for 30%. If the kid is award of the state, then the state pays 100%. Um,

091payments to charter schools for needs-based unit funding. Um, so that's that's part of our charter bills we pay is um some tuition funds. And then internally, local share and excess cost of educating students in certain funding categories, intensive needs, complex needs, and prek uh basic needs. Those are the allowable um uses for the tuition. So, at this point, I mean, anytime you can ask me a question, but at this time, we've got um Scott on here, and he's going to show you just some I mean, some of the things that are more like even a post-mortem of of what we discovered. Um, but what either y'all or the staff or the financial advisory or somebody um can can see in these reports. um and things that that really we should be building process and policy

092around to make sure that um that these things are looked at. All right, I will stop sharing and then I know Scott you've got some things you >> but I think Steve Steve's going to pop up the reports and um so you guys you do have a few reports at your disposal that you get and [clears throat] obviously we've learned that the financial position report is is a pretty important one. Um, uh, I'm going to start with that, uh, and Steve's going to show us, uh, that that report. This should pop up on the screen here. So, this is this is the report. Um, if you all can see that uh, this is the famous one from March uh, the end of March in 2025. So, I'm going to go through this is this is

093my way of doing this and this is a report. This is something actually could be done even monthly, but I but when this was due on March 31st, I typically had this done in the first week of April. So it, you know, it's it's possible to have it available that early in my opinion. So I'm going [clears throat] to show you how I went about getting these numbers. So the numbers that get input into this uh and feel free to stop me at any time. Uh the I've labeled the columns. Those are the ones that we have input on. One, two, three, four, and five. So the first two are the uh the first one is actual unencumbered balance as of 331 and the second one is the encumbered as of 331. And Steve, if

094you can go down to page two that those two figures we get those from the um daily validity report. That's the one that uh Chuckle's talking about. This is kind of what a CFO looks at pretty much every day. It's the checkbook. So, this is March 31. This is the March 31st report. And if and I'm focusing I should should have said this before, but I'm focusing on just the one line because I think if if you guys you get a lot of different reports thrown at you, but if you pay attention to this one line, I think that that is like most of the battle. So if if you see FY25, I've underlined the line FY2598000000. That's where the bulk of your funds are sitting. So if I I go to pick these numbers

095off this report. This this is number two. This is uh you see number two, that's the second column. And Steve, if you go over to the right on that line, so that's the third. So there's 13 million remaining in the line and there's 829 encumbered. So if you jump back up to to that first page, Steve, so you see the 13 million and under number one and number two 829. So those are good to go. So So those were done correctly. So the next three three, four, and five we can uh there's different ways to come about these. >> Real real quick going back to item two. I just want to make sure I understand because again part of what I have understood the issue to be with what happened is that there were expenses

096that should have come from that that should have been charged to that line or to that amount and and instead were charged to other things that didn't go into our unencumbered line meaning that that number was inflated. Am I misunderstanding what we were told? I mean, my my understanding is there were summer school expenses that were charged to the wrong line item that should have been charged to this. And so that number >> that that uh Rich that really uh was around the tuition funds if I chuck correct me if I'm wrong, but like if you you're talking about the summer school, it was probably it was charged to a federal fund and then it was deemed that it wasn't supposed to be. So then so then it had to be charged to tuition funds

097which ran tuition funds down. >> So that that that is whatffect affected the tuition funds. So here here the and if I I'll go through it and let let's see where we end up. Chuck, did you have anything did did you have anything about that? I because I just >> No, you you covered you covered it. >> This is this is generally how I do it. I'm I I don't really want to do the postmortem. I want to really kind of show you how to look at it. But let let me continue and we get to the end, we can talk more about that. So let So if you look at column three is the projected income from April to uh from the April through the end of June. So this listed here is 652.

098The way I get that number is I use the data service center which is a great tool for for a CFO to use and run a query on the database. So um Steve if you go down to the third page. So you'll see this is what comes out of the report. We set the conditions here. The the the parameters and you'll see the important ones here are the appropriation 980000 is always going to be your is is the important fund and in the payroll system they use 00001. I want to catch anything that's related to that to that and that's the appropriation numbers you use. And for pay and for um not payroll [clears throat] for for uh uh revenue all of the account could start with a four. So you just put 4,000499999 and

099it's going to give me all of the revenue. So if you go down to the next page, Steve, >> um Scott, before you go, note the budget year on here. So I think what Scott's using is Oh, thanks. >> He's using the same period prior year method kind of to forecast one of several methods, but this is how he's doing it, >> right? So I >> this this illustration. >> Yeah. So I thanks Chuck. So I looked to see what happened in from April. So we're projecting out. So I looked it back and looked at what happened last year. So this is this is what the revenue was last year. And typically that's that it's a good bet unless there's something strange that happened. So if you go down and I would compare year to

100year to see if that happened. So keep going down a little bit more. So when you you have Oh, right there. Go up a little bit, please. So you can see that bottom box there. That's where all the That's where all all of the different document types are summed and it came up to close to a million dollars. So, if we go back up to page one, which is the financial position report, you'll see column three there is listed as 652,000. So, if I'm looking at that, I see it it ran about a million dollars last year. I'm okay with that. 652 because it's a conservative number. So I would just leave I I mean I'm okay with that. So now if we go to the next column, this is where we start to find

101some of the problems. Fourth is projecting the salary from April through June. So the way I did that is I looked at uh um the last payroll. So let's go let's go down to page five. So, I there's a couple ways you can look at last year's and do escalation based on the CBA or, you know, anything like that. But what I chose to do was I'm going to look at the last payroll because that's a good indication of what future payrolls are going to be. So, if you look at the conditions here, I just looked at uh if at the top of the report, if you go up, you'll see the dates. Keep going. So, I ran it for 21 to 215 because I know that's going to pick up one payroll. That's February.

102That's from the month before. So, if you go down, I picked the appropriations, same appropriations, the accounts I used. Those are the accounts that pick up all the payroll, that range. And if you keep going down to the next page, when you run the report, it sums it up by document type. And there you see the total payroll. Keep going down. the total was two 2,190. So I said that's 2.2 million and we have we know there's seven payrolls. I multiply that out and I get 15.4 million. So if we go back up to to the financial position report, remember that 15.4 million. We go page one and look at what's in number four that had the 11.7. So, I think we all know that was where the where the error where the big error

103was. So, it's 15.4 versus 11.7. That was a about a $4.2 million difference. So, now I'm moving over to column five, which is another projection I need to make for non- salary from 41 to 630. >> Scott, before you leave column four, real quick, does that include does that include special ed >> salaries as well? It's not special ed. number didn't include special ed money or >> not not tuition special ed. This it does include special ed salaries for division one units. >> Okay. But that's not paid for with tuition tax either. So So this is not picking up the tuition tax at all. No, this is this and and uh we've even discussed this. This this report could be, you know, you could put a oneliner in for 9105 and do the same report

104to get the uh to, you know, to figure the same thing out for that. So, you can get the same projections. Um but that's not currently required from DOE. So, they don't do it, but it's not doesn't mean that we can't do it. So, um I'll go to uh column five. And so so the other important one is is the non salary projection. So this one I chose to take a look back at last year for that same period to see what was spent. So to do that I go Steve you can go to page seven and that's another query that I ran out of data service center and you look at the top it's 4124 to 63024. That's last year same period. So, yep. So, you go down and look at the what I

105I included. Same appropriations and those are the accounts that that's the range that picks up all of the non-salary expenditures. So, if you go down, it'll sum it up by by um document type. And the total of that, keep going down a little bit. There you go. Came up with 2 basically $2.4 4 million. I actually went back and looked at what the actual was and it was 2.9. So, it's good to overestimate on on expenses. We always do. So, like even this I probably would have gone with, you know, something a little bit higher, but it was it actually was 2.9. So, three would have been a better estimate. But if you go back up to the the first screen again and look at column five and see what was there, the estimate was

106if you zoom on that a little bit, the estimate was $325,000. Pretty pretty far below what the actual was and what and what what the projection would have been if you use last year. So the difference in those two numbers from last year was uh 2.4 4 and that was basically.3 that's $2.1 million. So those two columns there were underestimated by $6.3 million. So if you go down um Steve to the bottom right of this this page, you can see that the the the 7.9 7.88 that's what was estimated. If you back out the 6.3 it's down to 1.6. And if you recall, we did some cutting back in June. We actually ended up at 2.1. So that kind of validates, you know, the process. So um you know those that's the method if those

107are the kind of the that's how this is done from a CFO perspective and it's not it's not that hard to do. Those queries only take a few minutes to run and uh from month to month you can do this. Um so that that is a tool that you can use. Do you guys have any questions about that? And Chuck, do you want to add anything? >> No, not not to this. No. >> Okay. So, so if you don't have any questions about that, you see how this is done. Now, all of these all of these other lines, if if you look at the overall on this, it's still the it doesn't add that much to it. most of these uh uh funds below don't add a whole lot to it. So, so the big

108So, if I'm a board member, that line that I've highlighted is the one you want to pay attention to. So, the next thing I have is page nine, Steve. This is this is the the Apple Quinn make monthly report last year. It's for the >> one question before you move off this page that's up on the screen now. Um, I understand that he that he missed on the payroll projection. We have always known he left out at least one payroll projection, but going on the other the the column five to go from he he had 300,000 in the actual number. Well, by your method, it should have come in maybe around 2.4 2.5 and the actual was 2.9. I mean, that's a huge >> order of magnitude. I mean, do we have any way of

109figuring out why he only reported 325,000 there? >> I'm not I I don't really know why that would have happened. Um, and I it it could have something to do with what you were mentioning before. There's some some major recoding that had to happen and that may be where it was. >> Oh, okay. But I I mean I and the other and the only other answer I can give you is trying to make it look good. >> I'm just curious. Maybe maybe he you know I'm just speculating. Maybe, you know, he left out two of the lines that were the big items or something, but we'll never probably come up with a perfect answer as to how those mistakes occurred other than >> recoding. Yeah. But but really my my purpose in showing this is

110really to show you how that you know this is the this is the important line and and to give you an idea of how how you you estimate those numbers. And it's it's really not too complicated for to be able to ask that question. How did you get those numbers? You know, show me. Just like Chuck was saying before, show me. >> It's pretty easy. Another red flag on this one that now, you know, I've looked at these things for a long time and I I pick right up on it. You guys probably wouldn't catch this, but some, you know, people with a with a a financial background would probably ask the question, how come we've got 829,000 encumbered as of March 31st and we only have 325 projected to be spent? Some of that

111right is probably encumbrance and some of it's probably not. But you would expect that most of what you have encumbered on March 31st would be um expended. Those those incumbrances would be liquidated by the time you hit June 30. Not all of them, but so even if even if the that's the real number, I'm wondering why it's not more like five or 600,000 just looking at it, not even having that report. But that's why that's why we need more more eyes on this stuff. >> Yeah. You know, always ask why. All right. Uh Steve, you want to go to page nine? And this goes to uh what Chuck Chuck was talking about earlier about like the timing of the year with the So this you're Are you still doing this Chuck with the the monthly

112reports? >> Uh Alisa is doing the monthly reports. >> Okay. So, so like this particular one, March is 75% of the year. So, most of your operating funds, you're going to be you're going to be looking at you're going to the expenditures anyway, you want to see that they're, you know, at least under 75% and if they're not, that's that's where you ask a question. I'm sure you do. So, this one has the the percent of payrolls complete is 73.1. So, this is this this report is your other major tool. You get a monthly report and we have the financial position report. So, if you go down, Steve, to to the expenditure page, it's page 10. And I just if I'm a board member, I am going to zoom right in on the biggest numbers.

113And then and that this is the equivalent of 9800. If you look over Yeah. So, go to the left a little bit. So, we'll start from the left and move over. This four 4000 is division three local salaries. It's the biggest number. So, it's an easy one to look at. So you see the 55 55 million is what was budgeted. If you move over to the right a little bit and we see the 41 million is expended. You can stop right there. The 75.4 is the percent spended of what is budgeted. So you saw the 73.1 75.4 the difference in those two numbers. If you go down to the bottom I did a little calculation there down to the very bottom. So 75.4 minus 73.1 is 2.3% times 55 million is the budget. $1.3 million

114is what that line is over. So that's why I would I I always look at that as the first thing I look at every month when I'm the CFO running this report. Now this report was done that probably was run by through DSC and a lot of the numbers were copied into a spreadsheet. So, there's there's room for error whenever you do that. Um, uh, before I get off of this page though, I just wanted to point out I underlined the wrong one. This 89.2%. It says over here 104.9. Can you go over to the left, Steve? That is the utility line. So, anything like that is a screaming red flag. It's over it's 75% of the year and it's 100 over 100%. That's your utility line. And we know that that ran over by

115a million dollars as well. One thing that you that you can't see in the in this report is uh if you go up just a little bit was the and we'll we'll see this again and and the special education line. You stop there. 211050. It has 3.5 million in it. If you go over to the right and you'll see there's there's it's only it's only about 50% spent and we'll see. And I think Chuck, did you did did you change the methodology with the federal funds? Did you pull them out? >> Yes. Yeah. >> Okay. So, that that should not be a this should not be a problem this year. But I'm going to if you go down to Oh, I'm going to open one up. I'm going to share my screen if that's okay.

116Steve, can I just share over top of you or Okay. Uh let's see here. I think this is while he's doing that. So, those monthly reports, they they come out a couple months after the fact. I mean, you you're you're getting stuff in March based on, you know, who knows, January numbers or whatever. Um there are some reports that can be given like this one he's about to show. Um you know your your April report is pretty much ready you know like May 2nd or 3rd. So if that's something that the fact or the board wants that's something that you know just make clear um and the finance staff can get that stuff to you um sooner rather than having to wait a couple months for it. Hey, real quick before we go to that,

117um I don't need to go back to the last screen, but when you're looking at percentages of the year versus percentage paid with salaries, EERS plays a part in there, right? Because that's paid twice a year. >> So if it's 75% whether Eers was paid or not would matter if that 75% is over or under, correct? >> Yes. Yes, it does. Um, and then the other the other thing is sometimes summer school, like I know in um in Christina, we would run hot percentage-wise at the beginning of the year and we wouldn't really kind of normalize until sometime in October and that's because we had a lot of summer school that was going on paid out of some of these funds. So, um, especially out of the tuition fund, we had a lot of summer

118school coming out. So yeah, knowing about those things is um is is key um as well. Yeah. >> Yeah. And I I mean I was laser focused on what I thought my my monthly my uh pay period pay was going to be. I I always wanted to be as accurate as possible on that and and to take taking the eers into effect. Usually you have the big you have a big one in the in the first six months and you have big one uh you know kind of similar ones in the second second half of the year. So if you average them out that's kind of where where we end up. Like when I I didn't show another one I downloaded all the payroll transactions into a a pivot table and and and and just

119told it to tell me what it was every pay. And then if you just take the app it was like eight it was eight months worth. And when I highlighted and look, it was a spreadsheet. Highlight it. It tells you the average right at the bottom. It was right around 2.2 million. So, I mean, it's there's a few different ways you can do it. Uh, but they all came out pretty much the same. So, and and that's been my experience. You know, if they if you keep doing these things over and over again, you get to memorize these numbers and and um and it's pretty reliable. And and you usually know as a CFO when something strange happens. that same spreadsheet. I always I always put it I always had it come out by uh

120this the payroll by different account codes and I would see if a every you could see across each payroll it' be even the little ones 20,000 20,000 22,000 then all of a sudden it jumps to 80,000 you immediately go what's that you know that's that's how that's what your CFO is supposed to be doing looking at that detail that's not something for you guys to do but that's what you want to see So, so this this report comes directly out of the data service center. So, that's what I was talking about when I when I started in both districts that I worked in, they were they were copying this, I got to the point where I made sure that everything that I had coded hit one of these lines so that I knew it was

121captured in here somewhere. So even if it was even if it was miscoded, I still had it captured in there somewhere. And I could I I had a way of finding things that were miscoded, too. But um so if you ever get to that point, that's where that's where you want to be where you can just run this thing out of a system because the system captures it. When you got when you're copying it over to a a spreadsheet and you're making adjustments in a spreadsheet, that's when you can have some mistakes made. That's my opinion. So this one is the overall sum and what I I wanted to show you here what Chuck was talking about there are previous this one does show you >> hey >> previous year budget >> Scott could I

122ask you a question? Yeah, >> I >> through all of this um since it started last year up to the date, I think Richard highlighted it maybe three, four months ago and Miss Stewart also had mentioned it in multiple fact meetings and in a presentation about copying and pasting and transferring numbers between spreadsheets. the new software that we're looking at, does it automatically cross populate, if I'm saying that right, between the spreadsheets? So, there is no longer copy and pasting. >> Yeah, it's supposed it's supposed to do that. Um, they're they're working on setting that up now. Okay. I mean, one of the tenants we have and and um if there is a couple seconds at the end, I got this one little bullet paragraph here to show you, but as far as trusting but

123verified, part of the trust is system generated reports. And so the new system is going to take the same file >> um I believe that you that feeds this data service center >> data service center. >> Yeah. >> It's going to feed Alo view and it'll come up with similar reports. that also come up with uh dashboards and things that will make a little more sense to people rather than just a table full of numbers. So, um that that's something they're working on. >> Okay. [snorts] I just that was just a question because that has come up a lot about cross or copy pasting numbers >> and I know Richard asked a question and I'm just following up just if it's in the works great. I apologize for stopping me. Yeah, that's that's great if

124it if it does that because that is that is definitely one thing where where where mistakes can be made. Um, so this this is the summary report which is what you all typically get. I don't know, Chuck, if you're if they've started getting any detail, but I don't know if you want to see all that because um this this is one where there's like here's an example like you have the curriculum line is just one line on the other report. Here's all the detail and you know we don't have to get in this one has all the the federal funds mixed in but I just wanted you to see it just so that so that you know there is a system generated report that that >> this comes from the data services center Scott >>

125correct correct >> and how is it though that if this is this is more current than the report that we actually get in other words the report that you put up before this was as of March 30 but I thought I heard you say that this information from the data service center is available April 30. So is there a reason why we've been getting essentially information at the May meeting that's from March 30 when we could have been getting information from April 30. >> I don't know if that's a timing issue with your with your board. I that when I first looked at this, I thought that was a long time. And >> yeah, and it is a long time. And it's really just a request. If it's something if this is something that y'all

126want more frequently or more currently, you know, you just make that request to to um Dr. Burroughs and and Miss Stewart. And I mean, right now, today is the 27th. We could crank out one that's current as of the 26th, >> right? So really I mean this comes out the this this gets generated every day >> right it's it's it's up yeah it's daily >> so it's something like >> going forward going forward if the financial advisory committee meets the week before that we before we meet so they meet the first Tuesday of every month I mean this report could be generated as of you know the last day of the month or the first day of the month last day of the previous month first day of the month and then it could go

127through the financial advisory committee and then come to us. I mean I get I I've always understood that the reason we meet at the May meeting with a March 30 snapshot is because it took that long to gather all the information, get it vetted and get it to us. But if it's possible to get it uh you know at our May meeting and get April 30 data then obviously I think we would prefer the more timely more current data because it it gives us more time to react. I I can tell you, Richard, when I when I did this at a district that my monthly reports were done within a couple weeks at after the end of the month, >> right? Within a couple weeks, you can do that. Um the DGL114, which is the

128revenue report, that only comes out once a month and that's the system generated report we use for revenue. And that's so sometimes that doesn't come out till the seventh or eth. And you want to be able to give your committee, you know, you want to try to give them as much lead time a week if possible. So that doesn't always work out that way. But you could if you're giving them a month behind pretty much on the report, there's not really any reason that you can't also give them a if I'm if um if their meeting is a week from now and I'm sending them this is whether this is um January. If I'm sending them I guess December stuff or November stuff. I I don't know what I'm sending. I don't send them December

129stuff. I could send them the December report, but I could also send them this as of January 26 just so that they have both to look at. There's no reason I can't >> Chuck that the revenue the that that revenue report. That's why I never use that because it I I wanted to do it immediately when the when the month end. I ran the I ran a DSC query on last month on the second day of the month and and I used that number >> and >> that's another way to do it. >> It's always close enough. >> You can do that. It's It's close enough. I always wanted exact and I always wanted the systems report. So >> you were exact. I wanted >> Yeah, I got you. So it depends on what the

130board wants. >> Yeah. >> It depends on what the superintendent wants as well. >> Yeah. So I guess we're, you know, there are options and and it can be a little quicker. So in my opinion, so >> or everybody can move their their meetings one month one week later throughout the year so that we can uh get it done on time now. So that's that's really all I had if you guys u because I I just think those your monthly your mo the board members main control mechanisms. Well, there's the budget. There's the budget. We didn't really get into that too much because Chuck's still still working on that, but it's the budget which is tied to these monthly reports, and we found errors with that because they weren't tied to it. We're going to

131make sure that they're tied together. The budget with the monthly reports, that's your big control mechanism. And those financial position reports. And and I and I do think that you could do those financial position reports more frequently. They're they're a little bit different formatted. There's three different ones because one wants to make sure you have enough money after the big tax load. But but um you know those are just my suggestions. >> So my immediate reaction is again keep thanking you guys for all the help and assistance you've been giving us. But if I had to kind of paint with a broad brush, it seems to me the problems we experienced last May and June arose from two main culprits. One, expenses, some expenses were coded to the wrong category, uh causing things to look

132rosier on our carryover than if they had been coded correctly. And that's a problem. And then the other problem is the one that you just highlighted where the estimates for the balance of the year were off. Um, and so, you know, even if our financial data as of March 30 or April 30, whatever snapshot we're getting is 100% accurate, we still need to make sure that the estimate for the balance [clears throat] of the year is accurate as well, or we're going to have an overinflated carryover projection. And so it just strikes me that in terms of trying to structure more controls and more checks and balances, you know, we need to do a better job of of keeping track of where expenses are going. And I think you guys have given us a good

133framework for that. And then we need to do a better job of I'll say double-checking those projections, particularly the payroll projection because you do it wrong and suddenly you're out $6 million. You have $6 million less than you thought you were going to have. Is that kind of a fair cliffnotes version of of the work you all have been doing? >> I think so. >> Yeah. Yeah. Yeah. >> Yeah. I mean that >> the real key is how do we make sure that we catch those mistakes or potential mistakes so they don't happen again. That's that's really what we need to >> Yeah. And it's it's systems. I'm just going to share this last little this last little nugget here. So um you know again it's show me trust but verify. And like you all

134have like like you all have alluded to it's not your job to get deep into the numbers. It's really not. But to the extent that we can set up systems that will um give us the best chance of success in this area, that's awesome. System generated reports always um are outrank um Excel generated reports. So to the extent that you all or the financial advisory committee or senior leadership of the district can get stuff that's pumped out of a system, that's um that's good. openness of staff to be questioned. If you start questioning people and they and they're not open to that um or they're not getting the answers back to you, that's a red flag. Just make sure that um we we watch for that. Um allow them to get back to you though.

135Um you know, I know that when I try to do math on the spot, look, I have a my my bachelor's was in math, but when I try to do math on the spot in front of a school board and in an auditorium, somehow my my brain doesn't work right. So, um, you know, give give them a chance to get back to you. Um, goes both ways, you know, don't don't, um, if you can, um, I don't know why I put goes both ways in there, but, um, you know, if you can, if you see something in between a board meeting or a FAC meeting or whatever meeting, cabinet meeting for the senior administrators, you know, let's not let's not whip it out during the meeting. Let's let's communicate ahead of time and ask the

136questions. And I know y'all are good at that. Um don't get so far into the detail that you can't see the big picture. Um boards again, your job is governance. Your job is not accounting. Um your job is is policy. It's not necessarily a detailed procedure. Um you've got these big giant learning goals. And if you go back to some of the the read aheads, the stuff um those big picture questions, the the ROI, the program success, the um the strategic goals, the strategic financial picture, those are those are things um to definitely hit. Establish great policies. And then this [clears throat] is the this is the push pull that especially those of us in the finance world um in school districts find ourselves in. You know, we know we're in the learning business, not

137the finance business. And when people say, "Well, these resources are here for kids, so we've got to, you know, we've got to spend these resources and maximize what we do for kids." You know, there's very few of us in the district whose main job is to make sure that we've got the carryover and the financial health and all that kind of stuff to uh make sure that the district remains solvent and able to meet students needs in the future and to um not always be um going back to the till. So, um you know what we're watching is cash flow. Cash flow is the lifeblood of the school district and um as the finance community, we just need everybody's support to help us maintain that that cash flow um in support of the students. Um

138so, uh thanks. I'll stop sharing and if there's any other comments or questions, let us know. Or any other needs you have for us to um put something together to explain something, etc. I want to make sure that everybody has a chance, everybody on the board has a chance to ask questions and I know I probably hugged too much time, but Michelle or Toshiba, if you have any question, do you have any questions that you want to ask now? >> I'm good. Thank you. Great job, guys. >> Thanks. >> Shea, did you have anything else? >> Dr. Graham had to jump off. Oh, I'm sorry I missed that. Norm or Tim, anything further? >> No, not nothing. I can't we can't just uh touch base with it another time through emails or whatever. It was

139a great Thank you so much for your time. That was great. Um, learned a lot the process and I appreciate you guys doing the work. >> Yeah, I just pick up on Tim's comments, Mr. Force, and that I just want to thank Chuck and Scott for all the work they're doing. I know they're thrown into a difficult position. So again, thank you for all your help. >> Thank you. >> Right. Well, again, yes, thank you gentlemen, both of you. Thank everybody else for taking the time tonight and following along. And um I guess Alisa, is there any final comment that you might have uh before we adjourn? >> No, I do not. >> Okay. Well, if I had >> pardon, >> I didn't even know she was there. If I had my gavl, I would

140bang us adjourned. Thank you all for participating and we'll be back in two weeks, right, with a regular schoolboard meeting. Thanks everyone. Nice guys.