001All right, everybody. We're going to go ahead and get started and I'll call the meeting to order at 51 p.m. Tonight, we have a workshop on budget development parameters. I'm going to turn it over to >> trustees, thank you all for being here tonight. And uh staff members, thank you. It feels like we haven't met in a long time, but we have. We just haven't had a workshop in a little bit of time. So, appreciate everybody attending tonight. And again, as always, if you need to keep while we talk, please continue to do so. We wanted to have an opportunity to talk a little bit about budget development parameters this evening and I'll give you some context why in the in the near future I'm going to ask the board to consider adopting parameters for
002the budget development this year and the reason I would ask for something like that is to make sure at the beginning of the budget process for the upcoming year that we're all on the same page and we start and it's uh it's one of those things that uh when we are tight on money which everybody knows in the state of Texas right now we are and uh it gives us a a common starting point to make sure we're all on the same page for that. So tonight in the workshop and others are going to work us through some things about how we set those parameters in order to get the budget development process started for this year and uh allows us to make sure that we're all on the same page at the beginning. I
003want to be clear those things that can adjust along the way just because we might ask for those to be adopted in the future. They won't be set in stone and it gives us a common starting point for this when we know that times are going to be tough regarding budgets. Okay. So I'll turn it over to Mr. Evening everybody. Just a quick recap on seating arrangements. Try to split up around the room. So there'll be an academic uh cabinet or senior staff member at each table. There'll be an operational cabin or senior staff member table and an operational director at each table as well. So just in case you are familiar with some of those directors all these presenters we have Melody here overseeing staffing and then we have overseeing budget and we have
004overseeing financial services she's on your table there are three documents we're you can find the one that says budget parameters of it says work. So, we're going to start this out. And so, that one you'll see it talks about the KPN. It talks about enrollment. It talks about attendance. And there's several lines, right? So, that one that one document is the one that you're going to be using and taking notes on as I present and it'll look like this. The other two documents we'll we'll use once we get into table discussion. So tonight's purpose is just the starting point. Between now and June, we have a lot of budget decisions to make. So this is just a starting point. This is to begin the conversation. So here's just a brief agenda. first 20 minutes is
005going over some of these highle numbers and following the parameters that we have printed in front of you and then we'll break out and spend about 20 minutes talking within your tables and then we'll come back as as a whole group for additional discussions. So for the 20 minute table discussions that's when we do the other two documents. So budget timeline, this is where we're at. It's very brief. The ending point is June 16, 2016. That is when we get off budget. So a lot will happen between here and then. On Friday, we shared a very similar presentation with Canvas principles. Canvas principles saw this. They had an AM and a PM virtual option and then they gave us feedback. on Tuesday at the FFC meeting. I shared a couple of the slides shared tonight
006and I return it with you all. So, we're trying to put the same me the same presentation across everybody trying to get some of the feedback to try to build some. Um, we also have zerobased budgets. We're in the process of reviewing those. We're in the process of getting department staffing and then somewhere along the line we have to draft a budget and then come back to the wall. So, this is a starting point. This is the KPM that was approved by the board in October. There's three numbers that are circled. Reduce the deficit by 33%. Maintain fund balance at 25%. And maintain budgeted expenditures in functions 11, 12, and 13 at 60%. So these three numbers transition over to the next one. There's a lot of numbers on here. So look at the first
007row up top first. The first at the very top is the is the first number from the previous slide reducing the deficit by one/3. So at the very top you see current binium and the upcoming volume right because the state funds us every two years. So it's showing you what you're learning which is the very first table and the next three years that follow. So the strategic KPM is set to to get rid of the budget deficit over three years. So if you follow revenues less expenditures that shows you where our budget deficit is. So that carries over to the second table and then you see what's what 1/3 of that is in blue. That's a 23.3 million. All right. So you reduce the deficit by 1/3. It shows you in red what the deficit
008would be at the end of that year. And then you carry over to the next table the one/3 again. Do the same calculation. And then you carry it over to the last table, the 1/3 again to get rid of the deficit. Now, how does that apply to fund balance? That's the second row in the middle. The first table fund balance 264 million. That that is our current fund balance right now. We're estimating to end the year with about 251 million. So then when you go to the second table, you see in red the number that's being carried over from right above the target deficit, right? We're trying to tackle one third of it. So fund balance will strategically come in to help offset the remaining difference and then that carries over again year-over-year. The very
009end you see what the projected fund balance is going to be. Now the third part of that KPM the 60% is this last table at the bottom expenditures for this year 25 26. So if you take all the money that we have budgeted in functions 11, 12 and 13, it's about 418 million or 61% of our entire budget. What's in those functions? It includes teachers, classroom aids, librarians, instructional coaches, classroom supplies, anything that is supporting what is happening in the classroom. Now there's a there is a there is a row that connects from this table to this statement right here. I don't know what the budget will be in 20 2019. But if you take our current budget right now 685 you divide it by 12 months that gives you a monthly average times 3
010months that's 25% fund balance. You can end up at about 171 which is right above. So this KPM is three years worth of deficit reductions while maintaining an adequate amount of funds in functions 11, 12, and 13 and remaining within the 25%. >> Just a quick reminder too to our trustees, I believe we adopted that policy recently. I think it was in the fall if I'm not mistaken right. Yes. about the fund balance guarantee that we wanted to maintain 25% fund balance in there. So that's why that $171 million over on the right hand side is important. That's the target that we want to maintain. That's 25% according to your local policy that you there's what they note down here. This does not include additional declines in enrollment or additional increases in compensation. So that
011those two runs separate. So here's just the framework. We have the five priorities coming into this box. It's boxed out because those are our budget constraints. It is a KPM. It is a fund balance policy that notion. It is what the state does, right? And it is the budget adoption. You have input variables which is revenues. That's money coming in. You have output variables which is expenditures. You add both and that's your budget. Outside of the budget, there's another variable which is an alternative variable that is bond funding that is set by the board separately from the M summer law. All that translates into what do we have in reserves? What is our first accountability rating look like? And what do our credit ratings look like? So all this comes together around these constraints around
012what we can change on the inputs and the outputs and then we have a on this next one I'm pulling variables and I'm showing just highle examples of how can we change input variables which is revenue and what can we do to change output variables which is expenditures zero based budget evaluating vacancies. Those are things that can be tweaked on this bottom part that ultimately impact the budget itself. I mentioned enrollment and compensation living outside of the AP. So this slide kind of shows you site numbers as to what that looks like. lose a th000 students as an example times the basic allotment of that's a loss in revenue of about 6.2 million we give a 1% pay increase that's that's an increase in expenditures about 5.4 formula, right? So those are going in opposite
013directions. So if we continue to see decline in enrollment and we want to get compensation increases, you got to add both. So that becomes parameter number two on this little on this little test. So should we consider general pay increases? Should we consider health insurance compensation increases? The answer to both is generally yes, we should. Right? The idea here is thinking how can we find money to continue doing that. So, as as I'm presenting, you're going to start seeing these next items come up on the slides. So, we have these for reference. I'm going to briefly go over the input variables. Now, so this is all our revenues. You see a table on the right and I'm showing arrows across the board that are listed on the figure on the left. Property tax collection and
014per capita. That's 48% of 42% of our money. The next one that I have pointed out is earnings from investments and then all of the revenue categories. I excluded TS on behalf statements because that is money that the state contributes on behalf of behalf of districts for employee retirement. So that's not within my control. I excluded federal revenues because that administration any administration has the authority to increase or decrease fun. that is also beyond our code tax rate collections that becomes your next parameter. Here's a graph of our tax rate history and I have the table up top. The M rate is at a maximum. So I have that here we can increase the M rate. So that parameter is set you see at the bottom tax rate collections we're averaging 94%. So it's kind
015of like we saw a decrease and need to find a way to recover the funds. state funding. On the left hand side, you see the basic a lotment. This one has been shared previously. For four years in a row, from 2010 through 2013, the basic a lotment stayed flat. It went up for two years and then for four more years it stayed flat. From 2016 to 2019, then it went up and then it stayed flat for six years from until 2025. This last year, it went up by $55. Then you see enrollment. In 2019, we were right under 60,000 students. As of right now, we're at 51,000 students. We're actually as of today, we're actually a little bit under 51,000 students. So, the next line you see under parameters is save money. Basically set, right?
016The one after is enrollment. This one's important. So, we had a quality monitor report and they shared three projections, a high, a medium, and a low. We're working on the second demographer report for the spring to have two sets of options. So here, how aggressive or how conservative of an enrollment number should we choose? Choose the higher number at 49,000 900, the mid number at 49,700 or the lower number at 49,000. Last year that project that their projected number was 52,41. We budgeted a little bit more conservative and it was a two and a half% decrease at 52,0006. We actually are below that at this point. Here um on the side with the graphs this is investments and up top you see how much we earn. At the bottom you you see the federal funds
017rate. So when you hear that the federal government is lowering or increasing interest rates that means we either make more money off investments or we make less money right so you see their line graph and it's charted by the same time period and then you see our our bar graph so you see those kind of going along along with the way the interest rate is moving the kicker on this is as we use reserves there's a possibility of earning less in interest If the feds decide to lower interest rates with this new Fed share, then there will be less money coming in with interest rates. On the right hand side is the all weather category. So this is where we have opportunity to come up with different ideas whether it's advertising, whether it's virtual space,
018whether it's attendance incentives, whether it's buying our neighbors to try to bring revenue back in. I'm going move on to output variables. So up top on the left I pulled the same five categories and you're seeing half the staffing department staffing comp and benefits academics and programming and operation facilities. Then you see a table with the major budget categories for the budget that we just one is going to be payroll at 85.6 And then you have certain line items that are being called out separately. Utilities contract appraisal district cost machines recapture payments. Why? These are independent. These you have to pay. And then you see one highlighted in yellow. This is all of the non-payroll costs. And then below you see pupil. So the last three parameters that you see on this sheet have to
019do with this slide. So for cactus funding per pupil right now for this year the funds change those amounts remain unchanged from the previous year. So we're not going to reduce cactus for people funding under department funding. You see a note zero based budgeting methodology implemented. So what's the initial value? We're trying to figure out how much we're going to be able to save through zero based budget. I have a note here that says this 54 million does include other costs like legal costs, like body costs, things that are still necessary. So addressing the deficit is not going to be as easy as we're just going to reduce that in half because there are still departments in that. At the very bottom, you see a beam snapshot of staffing. This is the same time frame
020of the enrollment slide that was previously shared. So in 2019 we had 8,200 employees. As of right now we're staff very similar. A lot of things happened within that. One of those being we received a lot of federal money because of the pandemic to add more wraparound services and more well-rounded opportunities. That money is no longer here. The state didn't come in and increase. We also have a better bill rate through the HR side. So there's two sides to the number, right? It's not just we're at the same level. There was a lot of money that came in. Systems grew into that. We had better hiring rates and now the funding is no longer here to support. Have 11 examples on the right hand side. Vacancies, replacement, hiring freezes. A lot of news articles have
021been out in the last year. Different districts are doing different things. every district is going to be eating and what works for them and what doesn't work for them. So the purpose of tonight as we break out into table section is going to be to using this and using the information you just saw. What are we as Arlington willing to where should the starting point be as we carry these conversations into the development budget? One last slide on staffing. I shared this one with FFC. There was a second staffing report that was done with surrounding high states. So this is all FTEs. We're on the lower end versus districts in the area. There's a key word in here that says inferred, right? The higher the ratio, the the more inferred efficiency. And I use the
022word inferred and I want to highlight that because just because they have less employees doesn't necessarily mean that they're running a lot smoother. They just have less payroll costs to carry based on the numbers they have. There was a ratio on the first accountability report that went away in the year 2014. That ratio was measuring students to enrollment and it had a range. That range for staff was 7 to 14. Seven was a low range, 14 was a high range. If that first indicator were still in effect today, we would be losing points on the first rate. So I want to point that out. >> Can I ask a question about that? I just want to make sure I understand. So, so the the the numbers up top of the bars are the number of
023employees all categories divided by the number or the number of students. The number of students divided by the number of employ. >> Yes. Number of students. >> Number of students divided by number of employees. All kind like everybody. >> Yes. >> Okay. And so the higher the number, the more efficiently your staff, the fewer number of staff you have. >> So in the case of urban, it runs up to eight. For every eight students, they have one employee. In our case, for every six students, I mean, for every six students, we have one. And then the the red numbers >> is the incremental difference between each between each one. >> So if that first rating was still in effect today, our goal would be how do we get into that seven mark to get points
024on the first? >> One thing I'd be curious is going from six to seven that what does that translate in terms of headcount and average salary or cost per headcount? So what would that represent if we weren't able to go into inside that parameter that we used to be measured on? What would that be in terms of total budget saving? >> Total budget savings question is difficult to answer. because I'd have to assume straight up across the board to department >> the number of that is I can provide you all of it in provide you the actual number but the dollar amount will depend on where those Yeah, I'm just trying to fall apart what that would roughly be and say represent in terms of savings for budget if we were to go from six
025to seven. >> When I did it across the board, it's about 40 $41 million to 500 positions. So about half of our budget deficit >> and that makes sense because 85% of our budget is >> so then you add appropriation gaps SRO's spendation there's another 20 25 million in there we're all living through this right we're all experiencing pioneer as we continue there's a lot more competition now application when we do so today's work closing just $23 million so today's work is to begin the conversation if you have some framing questions I got to give kudos to DJ and Shelley and LSL because they came up with me this is like they shared with principles and principles got the same strategies and then they put their thoughts to it. So that's the idea here is
026within tables you have these same questions and you have the same strategies have some conversations and see >> are we ready? >> Who wants to share first? We have some things to share all the recap. >> Okay. So, can I start with our other >> of course we we were talking about the opportunity of expanding our transfer window. Um, our doors should be open wide and we should accept students and rural students because that frankly that's what other districts are doing around us and we don't have to resign ourselves to the rate of declining enrollment that regardless. >> You want to talk about the >> um so what how do you recap this anything? >> Anything? >> Okay. So I'll just tell you our our we talked about each one of them. We kind of
027discussed like the pros and cons and we landed on one. I'll hit the ones. Okay. So, some of the things that we we talked about that we would say to prioritize were zerobased budgeting um within the parameters of >> the wish list doesn't work. You have to also know there's a boundary, right? Um we also talked about ratios um versus not ratios in which was evaluating vacancies. So, really if we have vacancies that have been on the books for a long time can close them or think about how to do without them. We talked about student teacher ratios and class size minimums as a one but we specifically talked as ratio versus a cap like how to distinguish those two parts. Um we also looked at evaluation of class schedules and instructional programs. Um if
028we if we close programs or move programs to really think about ensuring kids can finish what they've started and also really think about class sizes. if you have programs or courses or sections with really low enrollment, redirect those instead of having lots of small classes. Um, and then we talked about maximizing federal funds. Um, master plan school utilization. So, some of the things we've done where we really try to think about how do you give students an ideal experience and at the same time by that consolidation to make those things happen. There is a budget benefit out of that. But it's really the primary reasons for kids. And then the last thing we talked about was as a one was district transportation and travel for students as not really touching up or staff consider as
029a one and then the last one was those are >> great. Thank you. >> Who wants to go next? >> We'll go. >> Thank you. >> Yes. Every We'll just go with what we had to because everything else is pretty similar. We spoke about too uh the student teacher ratios and class size minimums because we wanted to limit the the negative impact potential negative impact on kids. Uh evaluation of class schedules and instructional programs was two uh two also was targeted pay versus salary increases and supplemental pay. And then we actually had three which was district provided transportation and travel specifically for students. We didn't split it out to the class. anything. >> We can go next. >> So, in addition to supporting the evaluation of class schedules and instruction programs is a two. Um,
030we had a three being target pay versus really with salary increases was the part that was a three for us. Um, so salary increases as being something that we considered a a non-negotiable because we feel like being the market leader is something the board values and so we thought don't touch that. was kind of our discussion and then district provided transportation was a three for us as well. >> Everything else was one. >> Great. Thank you. >> We have some we did not get to. Um I'll give our ones because they align pretty closely. So zero based budgeting was definitely a one evaluating vacancies. we have to be intentional every time we have a vacancy instead of just filling automatically. So just taking that time talked about maximizing the use of federal funds even though
031we don't know exactly what that's going to look like. How do we maximize that? Um evaluating um school utilization. We talked as well about a long range facilities plan for that that if we don't get started on it now then it's don't take too much time. Got to get going on that. And then we talked about operational efficiencies and contract redundancies as a one slash two. like we felt like if there are some things where we know that there's some overlap then we could go ahead and >> and I'll just add that we've also looked at the last one shifting the cost of other to other funding sources like to title one but we ranked that a three because that's a zero sum game. If we're going to take some that aren't in title one
032and move from title one, that means we're still going to have to cut and shift uh positions or programs that were in title one to account for that shift. >> And so we thought that was just a zero some game. >> Thank you. Anything else comments from the room? I just really I like your other we didn't ever we didn't even we didn't complete our task so we didn't get to the other but I absolutely agree with 247 open enrollment when we are when every district is wanting every child matters >> I think we have such a good opportunity right now and our enrollment policy honestly it's confusing for a long time and every time I ask somebody gives me a different answer why do we do it this way >> as a parent I
033it doesn't make sense buts Also, as a trustee who's looking at our numbers and budget, it doesn't make sense either. >> Thank you. You can leave your feedback documents through. Anything else? >> Thank you for your time. >> All right. It is now 603 and at this time we will recess and reconvene into close session in board chambers between sections 5511071 through 5511084 and 551109 of the Texas Government Code in accordance with the Texas meetings act of opposite work. >> And