001Mr Hopkins hi hi I okay you stand and join me for the plge of allegiance to the flag of the United States of America and to the repblic for which it stands one nation God indivisible liy and okay and the only thing on the agenda for this part of the meeting is the budget hearing yes Mr President uh members of the board this is a public hearing to present the fiscal year 24 budget revision for the AO Unified School District number 15 all districts are able to revise their adopted budget by December 15th of each year as Allowed by Statute a RS 15- 905 the district should post the standard 24-hour advance notice of the board meeting and hold a public meeting this is a budget hearing for the 2024 budget revision there is no
002board action necessary at this time however we do have a Mr Tyler Moore from True professionals our Consultants here to present to you and those in attendance and listening at home the budget revision for fiscal year 2024 more thank you you Dr good evening president Hopkins members of the board um tonight I'll be presenting the budget revision as Dr clo said get it up running um each district has the option to revise their Budget prior to December 15 um pending um a letter from ad in regards to um uh when they reconcile the adopted budget versus current year expenditure so uh if you go to the next slide please I'll cover um first the the revised budget explanation why AO revising the budget at this point in time I'll go through the two changes the
003main changes are on the emino budget and the capital budget as you know those are the only budget controlled funds the district has the that's a number of different other funds that are cash controlled and Grant controlled those are not um statutorily within the budget that ad authorizes so are separate buckets um that are authorized to different entities whether the cash Etc so and then I'll talk about upcoming budget conversations with what's going on the legislature the State deficit um and some of those 2025 budget conversation so you go to the next slide please um so this again this uh budget revision is pending um is when basically there's two reports that ad um plls one the district adopts a budget which we the AA UniFi did in July um every every school district is
004operating on a current year uh kind of budget cycle so in July we make some assumptions on what enrollment will be we also make some assumptions on what the disal end their um ending balance will be for that fiscal year um and so what ad does is they reconcile those reports um with the budget 25 report U that report takes um again what the district adopted and then Compares it to how the district is performing in the current years um if the district is 1% under that that what they adopted then it triggers basically a letter to the district asking them to do a rision so um AO triggered the 1% test on both the ML and da budget and I'll explain why um but again that 1% is 42,000 so what you adopted in
005July again is off by 42,000 remember you guys have a 3.2 million operational budget and a you know worth a million dollar capital budget that's a small margin so it was easily triggered um through the test that ad did so again I'll explain a little more on that but the other report is the budget 75 report so that reconciles the annual financial report that I I present to the board in October um in financial report explains the year ending balances after the district has reconciled the whole fiscal year if you remember that report was in October and I we adopted the budget in July so again we make a lot of assumptions in July based on how that's going to end um and you'll see later sometimes that's not always correct right and we have
006some variances and savings um between what we adopted and what we finished the year on so that also plays a factor in this revision so so we get to True up both um on current year ADM and what if the what the AO ended the year on with the anal report so that's what we're doing tonight so if you go to the next slide um on the revised budget we're going to look both at the m and capital budget the ml budget how this reads is we have the budget kind of categories the adopted budget is the next column so that's what we adopted in July the revised budget is what we're revising to um is what we're recommending to board revise to on Wednesday and then I show the difference so if you look
007at the first category the base level amount so that's a per pupil amount that that school districts get without any additional level uh weighted funding right there's additional Group B funding for your students fed eligible ell eligible I kind of collaps that formula into a simplified model so typically you don't see any changes in the middle of the year with the base level support that's typically set um in the K12 legislation and it's set for the whole year so you'll see that's why there's zero difference there ADM so this is your average daily membership or or basically your student count um through the first 40 days um you'll see what we adopted was 370 um you're actually running a little bit ahead you have about just over five kids more than what we adopted so
008that's going to help right um You can take that plus the 4900 that's going to be additional budget capacity if you look at the revenue control limit you'll see there's a decrease and I'll explain why you think well why is there a decrease the ADM up on like I said there I collapsed this formula but on the adopted budget um we anticipated a lot more Group B weight students so what that means we anticipate a lot more um students with uh fed related disabilities elll Etc right now you're you're operating um um with less than what we anticipated so um again that's how that total formula shows a difference of 45,000 from adopted to Revis if you go down the budget balance carry forward um we anticipated in July a $724,000 m&o budget balce carried
009forward um you can see we we were very conservative in that number and we ended the year actually on the AAR with 1.2 million M for $50000 difference so that's an increase um in budget capacity um directly related to how much carry over the district ended on on the anal repard um again I was very conservative in that number in July on the adopted budget no my first year in the district there's some liabilities in there that I didn't know if it going be expensed or not so I took a conservative approach knowing that we can always add that budget capacity back at this point in time so the add-ons as I was explained to Dr add-ons um are prop 123 funding um that the state um sales tax on the state trust land there's
010also um that if you recall there was a one-time state aid supplement that the government added this year um it was 300 million districtwide ao's portion of that was 133,000 so that's in that add-on piece um just reconciling those to actuals I was just off about 3,400 so that's a benefit to the benefit on this division here so you take all those out um and run them down we're actually revising from your July M budget revising up 469,000 to 4.8 million with 1.2 million being your your new kind of unallocated contingency um and M&L so we go to the next slide let talk about capital capital is a little simpler formula um again it kind of reads the same way the columns we have a bu of categories adopted budget in July revised budget today
011um the adjusted da or Capital this is your capital budget so annually um the district would get what we adopted what we assumed we would get is 303,000 um I was a little high in that uh adoption number the actual true up cost is 284 ,000 on the revised budget that 284 is that that's your annual appropriation of capital um then you get to add on your budget chry for again I was conservative in that number that we adopted in July um what we actually ended the year on for last year was 163 budget contingent carry forward for Capital again that's going to be your your contingency number um and the number that I I talked about before um Dr so has been putting together some Capital initiatives on he been funding um some of
012those include the had the cheerleading mats scissor lifts in the works um so we're we're being able to kind of replace some of those outdated pieces of equipment enhance some of your programs for that money and I know that plan will continue to be robust as we continue to work through some of those priorities for for the board in AO so um that's an increase 66,000 from the adopted to the Revis um the add-ons the only add-ons for this is interest you can actually capture budget um capacity with interest earn um so with a million dollars sitting in the now now you're set on what Pima count is you know um giving you for interest rates you're not get getting the the good interest rates but um you know 50 5600 interest earnings I I
013assumed it was 65 but that's a little high um so 5600 interest earnings and that gives you a total capital budget that for that we're revising to of 1.1 million which is about 46,000 increase from the adopted budget in July any questions on those two budgets before I jump into kind of like upcoming budget conversations no so overall very healthy um it's gonna give you guys some leverage when we start looking into fiscal 25 and some initiatives that you plan to do so the next slide just looking ahead um some of the big things in that are going on but the Statewide U minimum wage increase starts January 1st 2024 1435 an hour Al was pretty um good of being proactive in this um the minimum the the lowest ver is 1485 correctly right yeah
014so um you guys are ahead of the curve on this um initiative and so one of the things that we've discussed is trying to continue to be ahead of the curve so um as we go into fiscal 25 looking at um staying ahead of the needle and um prioritizing moving uh your classified hourly up to stay again ahead of that inflation Factor because that's going to continue to go up with Arizona's formula um you may have heard that Arizona State um has a budget deficit that they've been operating under um they're continuing to underperform um what they've been projecting in terms of State revenues um some of that has to do with the the Statewide flat tax that Governor duy implemented some of it has to do with esas vouchers are outperforming what they originally
015budgeted for um there's a number of different things kind of contributing to that um which kind of creates some unknowns for the next bullet point which is the fiscal 25 K12 budget um as you know K12 education the biggest one of the biggest pieces of Pies in the state budget represents just over 50% of the state budget so when you see the state budget having a deficit you kind of get concerned because they have to cut that somewhere um and so um right now there there's a lot of unknowns out there um a couple things we do know they have to fund is inflation increase at a minimum of 2% that's in that's in in statute and then um they have to continue to increase Capital because that was an initiative passed in 20 2021
016Governor du a three-year Capital increase so that is anticipated to be 4.6% so those are the two I know but there's a lot of uncertainty with how they're going to balance the budget with that deficit um and one of the reasons why kind of we're recommending to to hold on to these contingencies until the first of the year to make some um better decisions budgetarily that will be able to be sustainable um for the next year and ongoing rather than make some some changes mid year on this revision so um we do have to by Statute do another budget revision by May 15 um and that Tres up to your 100 day ADM town but outside of that um that is all I have for this budget revision so there's any questions that have Mr
017President members of the board also had talked about earlier Mr Mo and I health insurance increases also has to fit in there because that just continues to go up so we have a very healthy Reserve but health insurance increases going up quite a bit coming into this year they're going to keep doing that so it's good to have that healthy Reserve to help us be ready for all those changes one question I have is kind of only somewhat related and that's with the minimum wage increase been my understanding that the original plan was to increase it every year until it hit $15 an hour so this next one could be the last the one after the going up to 1435 could be the last one I'm assuming because so there was no actual limit put
018in the stat okay okay states do not have a cap okay it's based off pretty complicated formula it's based off like growth and sales tax there a there's a number of different things that it's face up but there's no cap okay okay so this can go can get every yeah it's definitely a concern for wage compression right um sometime yeah maybe you can move the needle up the bottom but now you're compressing up you know any everybody up the the salary schedule so now you're creating wage compression and it's a it's a concern when you have somebody doing a job that that is higher up in the scale and now you have to bring up everybody at the bottom and what's the incentive to work yeah any harder when you can when the wages are
019are being compressed like that so it's an issue across the state um with not only school districts but like businesses trying to keep the incentive for and scalable across positions so but that no there is no cap okay okay thank you does anybody else have any questions good okay thank you very much a always very cleor thank you okay and at this point I guess I ask for a motion to adjourn the budget hearing I'll make a motion during the budget hearing I'll second Mr Kur Reesa I Mr Hopkins hi Miss olon hi M Rodriguez hi Mr Guth 5 Zer 5 Zer and for folks that are here we have to wait until 6:30 because that was posted time for the start of the next meeting so play cards on your phone I went to
020I went to gavo day District day the other day I was that's what I I mean that's just what I had heard when I moved North Carolina is still under $8 an hour South car