001Recording in progress. The siren board of trustees returns to open session. The time is 6:35. >> [clears throat] >> Um item 6A, discussion and action to approve a resolution declaring financial exigency. Is there any discussion or presentation, please? Thank you, Mr. Martinez, members of the board, and Superintendent Grill. I am Sylvia Reyna, and I am a TEA conservator for this school system. And tonight, I bring forth just a little bit of understanding of what we're asking, or what I think is the explanation here. Um the definition of financial exigency means that the district is in a financial position that such that the resources are insufficient to support existing academic programs of the district and unable to finance the full compensation of staff for the current succeeding school year fiscal year. This is part of your
002legal definition for your policy. And just to give you a little bit of clarification on that. We have found that um the funds are not they don't exist to be able to support the system as it currently exists. So, as uh it's the reason that we come forward is to say to you all perhaps we need to look at what is called declaring a financial situation financial exigency, which means here's a case, we need to do something differently. Perhaps that's cut our expenses, perhaps that's looking at personnel, perhaps it's looking at programs, departments, campuses, etc. Why is it that perhaps we need to look at our revenue streams and also what our expenses are. So, that's what we're doing. And so, we need permission for from the board to be able to bring forth recommendations
003as to how we're going to meet our financial obligations of this school system in a way that supports the school system, knowing that we are student-centered, knowing that we want to be fiscally responsible, and that we want to do the least harm to the school district and still meet our obligations. So, financial exigency is literally asking you all for permission to apply to to Texas Education Agency to declare the state because when you declare the state, then it gives us the leeway to be able to make changes to the system, of course, with your approval as the board, but to make changes to the system that will reduce costs, increase opportunities for students, and through redistributed funds, and also meet our financial obligations should there be some outstanding obligations that we have, which we do.
004So, I just want to share with you that there is a specific form, and that form is declaring that because our enrollment has decreased by more than 10% over the last uh 3 years specifically, uh that has caused for a reduction in the amount of money that is coming into the school system. Therefore, our expenses are higher than what the money is coming into the system. So, we this is the first step in an overall plan. It's a we've created a step-by-step procedure that we want to follow such that we're looking at everything very diligently. We're making sure that we are um that every single department is efficient, but also remains effective. And that's everyone. That's think about every aspect of the school system. School systems are like mini cities in and of itself. We
005do absolutely everything from feed students to teach students to to take care of students in any other way. We are a a huge organization in the sense of all the functions that we we try to accomplish. Many times we need the support of finances, and they're just not here at Crystal City. So, I think that the superintendent and others have gone forward to the community to state what the situation is, and now this is one way that we can start a remediation of the situation. I don't know if there are any specific questions. We The process is that you would adopt a resolution tonight that would allow or declare financial exigency, and then after that, there are other processes that come into play so that we can in fact get started with our work. I
006do have a question, just for clarification. So, so financial exigency is in relation to the attendance reporting for the past couple years? It's related to that because that's one of the options that provided for us in in law. So, that's one of the cleanest ways for us to be able to declare financial exigency, but it's also a main source of revenue for the school system. It's not the only source of revenue to a school system, but it is one of the main areas. So, we want to be sure that we are exploring opportunities to correct that, but then also look for opportunities to to we have to cut expenses, and so this is going to you have to declare that before you start looking at any kind of reduction in personnel or programming or campus
007changes, etc. We have to have that that declaration by the board because that is actually a legal policy. So, it's based on actual drop in enrollment, not a projection, but an actual drop in enrollment. Okay. Thank you. Does anybody have any more questions or anything? It's a recommendation of the district. Yes. Do I have a motion? Motion. To approve the Motion made by Mr. Grayson. Second. Second. Second. Seconded by Mr. Guzman. All in favor? All against? Discussion closed. Any discussion on the motion? Do we have to say the whole motion approved >> No, this is No, this is for 6C. We're just We're just going to say What about to say we're taking action on 6A? Any discussion? Motion passes 7-0. Item 6B, discussion and action to approve the declaration of financial exigency and authorize
008submission to the Texas Education Agency. >> [clears throat] >> It's a recommendation of the Is there Is there any presentation, Mr. Reyna? No, I just It's the formality of it. A recommendation of the district. Yes. Motion. Two motions. No, it's one more motion. Motion made by Mr. Houston. Second. I'll second. Mr. Davis and Mr. Second. All in favor? All opposed? Discussion, anybody? Motion passes 7-0. Now, item 6A, um the posted agenda item number oh, number 6C refers to approval and authorization of superintendent to initiate a reduction in force. Um at this meeting, the board is considering a preliminary resolution authorizing [clears throat] analysis under district policy and direct administration to return with recommendation at a subsequent meeting. Uh no specific program change, affected employment area, or personnel action is being approved tonight. It's a recommendation
009of the Yes, it's my recommendation. Whoever makes the motion needs to read this entire paragraph. I move that under the board agenda item number 6C regarding approval and authorization to the superintendent to initiate a reduction in force, the board approve a resolution authorizing the superintendent and or designate to conduct a preliminary analysis under applicable district policies of potential staffing reductions in the light of the board's approval of the the separate financial exigency resolution to evaluate potential program changes in any affected program areas, employment and or positions, actually turn to the board with recommendation for further action if appropriate at a subsequent subsequent board The resolution authorizes only a preliminary review and recommendation process and does not approve any specific program change, identify any affected employment area, or authorize any final non-renewal termination or adverse personnel
010action with respect to any individual employee. You have a second? Second. Discussion. Any questions? All in favor? All against? Motion passes 7-0. Now, I move on to item 7A, discussion and action to authorize the superintendent to secure a loan from financial institutions to address operational and financial needs of the school district for the 2025-2026 school year. Okay, so uh uh Mr. Balderas and I have met with both uh from uh Robert We met with uh both the Balcones Bank and also with uh Prime Bank. The loan with Balcones is 1.4 million. The two sheets of conversation Prime Bank is 3 million, so that'd be a total of 4.4 million. That should get us through payroll through August, which is the end of our fiscal The main thing that we're stressing with our administrators and directors
011is we've got to stop spending money. So, we talked about the field trips and activities. So, they haven't needed classroom supplies. As far as this late in the school year, they don't need classroom supplies. We're We're 4 weeks later in the in the year. We want to make sure we make payroll. We want to make sure we're paying our bills. Those are our priorities for this end of the year. Management is solid. Robert can answer any specific questions you might have about the loans themselves and the terms of the loan. I'm going to hand something over to you, which is application letter sent out to the both banks. One is the letter from the bank, the other is The other is the letter from the bank. The two proposals that have been offered to me
012and that is from Prime Bank. Thank you, Robert. Yes, ma'am. Thank you. Last year, about this about this time, maybe a little later, we uh entertained the Balcones Bank for 1.4 million, which the board approved. Uh we made good on that loan. Uh they were eager to entertain us for another Uh but it wasn't sufficient. It isn't sufficient to meet their uh the obligations that the district currently has and and these items that Mr. Guerra mentioned. So, we entertained also Prime Bank and they were very happy to provide and they provided the letter that's on there. The first letter has the letter from the bank and the application we submitted. We did not do an application. We met directly with CEO of Prime Bank. He came on board and uh we responded with the letter
013that you see. Do you all have any questions? Overall, how long does the loan go and what are the interest rates? Yes. We met our obligation. We said we would finish it by end of February and we came through. Now, will this 3 million dollar loan be able to help all of us get [clears throat] us through the year? Both these documents, these loans are short-term loans. They need to be paid within a 12-month period, which is a 12 short-term loan, which will be paid from next year's budget or comp funds, uh such as the one that happened this last year. These dollars will bring us right at the threshold of August 30th or 31st. And uh again, primarily obligation is payroll, the first obligation. And then we've got other uh obligations as well, such
014as utilities and things of that nature. Just to to meet the deadline of the time frame. Uh I have a question, sir. Uh I understand I noted that the the Prime Bank has asked me that that we pay back with taxes. All of it will be paid with taxes. And capital so I want to know They're called tax notes. They're general obligation notes, which are for our maintenance and operations system. That's why you don't have to It's not something that we have to advertise or No, it's through the financial notes. Oh, okay. And we checked out. So, they're also called tax anticipation notes. So, we're anticipating receiving state tax dollars in August and September. So, when we receive those funds from the state, then we That's how we make our payments back to the bank.
015So, it's not an actual tax increase or anything like that. We This is state funds, which are tax based money. Does that make sense? So, we're looking for a total of 4.4 million in loans. Correct. Now, be clear on one thing. This does not repay back the 2.7 million plus that we owe in M&O. The district borrowed from M&O. So, that obligation is still out there. And Robert, do you feel comfortable that we have the collateral to take care of It The impact will be a a solid assignment of these funds plus the cost of financing it, which is your interest and maybe some administrative fees in next year's budget. So, by that amount plus the amount items that I mentioned, will reduce the effective budget Okay. next year. We did that this last time
016around with the 1.4. This is higher, but it'll have to It'll have to do and as Dr. Reyna mentioned, there'll be some adjustments different areas. And many more. So, let me just maybe add to that to Robert. So, when we build next year's budget, we're not looking at having a balanced budget. We have to have what's called a surplus budget. We have to have in surplus a 4.4 million added to this year's budget. That's the 2.7 million M&O plus the interest. So, we're looking at having to build a much smaller budget. We have to have that much of a surplus in state and local revenues to make the payments back for these loans to the M&O and the interest owed on both. You see, so it's Just want everybody to remember when we bring next
017year's budget to y'all, it's not a deficit budget like you've been accustomed to. It's not a balanced budget like you wanted it to be. This is a surplus budget. We have to have less money in the budget than we predict we're going to get in the revenue. So, just keep that in mind when we're having our budget workshop document the budget next year in August. When When are we going to start working on the budget? I want to see you As soon as we get this financed right, cuz it's the end of the year, we'll start. What we up to the uh tomorrow? That's it. So, late May, early June, we'll be starting on it. In fact, we're already looking at just doing revenue projections. Yeah, but it's too late, I mean. What's the latest
018we can be waiting till then, uh August? It is too late, I mean, to start so late, I mean. Well, we're going to start here in probably about 4 weeks. On actual building? This budget development's going to be uniquely different because we're building top-down instead of bottom-up. Usually, you start with your zero-balanced budget process. You start out with your zero dollars and have the principles work with their staff to build the budget. This time around, we're going to tell them, "This is how much you get." Because we're We have We have to build with this surplus money. It's not an easy task, but it's it's less complicated to put together because there's not as many people involved in developing the budget. And it's not the way you want to develop budgets in the future, but
019it is because we're in a survival mode right now. >> [clears throat] >> Does anybody have any more questions? Just if if we do pay back in the full 12 months, so I mean, how much is it looking for the 3 million dollar loan with Prime Bank? Those are some items we have to discuss with the bank for the terms. The last loan we got on the 1.4 was about $60,000 in interest and fees. You know what I mean by the Wall Street Journal time? That's the standard rate that's going on that we see in the news. They all They add They add to the banks borrow from from the feds and they add a slight increase for themselves, cost of of doing business. We won't know that until we close the deal and we
020have the time when we go and what the market is looking like. Pretty much like the price of gas. We don't know the interest rate, right? Correct. And I'm just going to predict the interest rate's going to be higher just because of our financial rating. Um I think they'll pay a higher uh interest rate on the loan. So, we just need to be prepared for that factor cuz we have an F rating on our finances. Any other questions? Thank you, Robert. >> [clears throat] >> This time, our recommendation to the district Yes, I'm seeking your approval We have a motion? I move to authorize the superintendent to seek a local financial institution for the short-term loan and financially for the school district for 2025-2026. >> [snorts] >> Motion made by Mr. Mata. Second. By Mr.
021Guevara Salinas. Uh discussion? All in favor? All opposed? Motion passes 7-0. >> I make the German You have a Motion by Mr. Nofal. Seconded by Mr. Mr. Nofal. Uh all in favor? All against? The motion passes 7-0. 7-0. 7-0.