0016:30 p.m. on May the 20th, 2025, I would like to call to order the meeting of the finance committee for Lyall Community Unit School District 202. Uh for item two, is there any public comment today? I don't believe so. No. Thank you very much. Item three. Uh so at this time I would like to turn the meeting over to the board president to administer the selection of the finance committee chair for the next year. Mrs. Alman. Thank you. Um I will at this point um entertain a nomination for the um finance committee chair. [Music] I nominate Greg. Okay. Greg, do you accept the nomination? I accept. Thank you. Okay. Are there any other nominations for the finance committee chair? Hearing none, we don't vote in committee, but are we all in agreement as with Greg
002as the committee chair? No. All all heads are nodding yes, Greg. So, I will at at this point turn it back to you as finance committee chair. Well, that was efficient. I appreciate that. Thank you. So, uh, with that put behind us, uh, the fourth item on the agenda are the minutes from the, uh, April 28th, 2025 finance committee meeting. Does anyone have any changes, uh, or questions regarding them? No. Excellent. So, we are in agreement that the meeting that the minutes accurately reflect the finance committee meeting for last month. Yes, we are. Excellent. All right. So, moving on. Uh oh. The uh preview of coming attractions isn't there anymore. Item five is the proposed East Ogden Avenue tiff for the village of Lyall. The information can be found under item five of the finance
003committee packet. Dr. Philippiac, if you would please take it away. We had a chance to meet as a joint review board last week and get an overview of the proposed Tiffar included in your board packet. Um in a moment we'll have it up on your screen. hopefully have your screens on there, but essentially it's towards the east side um around Ogden and 355 and uh if you recall Lockformermer site was there. It had a a lot of soil contamination there. There's a lot of um sewage work that needs to take place there. And so included in the information you got, there's about $32 million of work that needs to occur there. And so the village was being able hoping to be able to put a tiff in place uh on a map that I was
004hoping would be called up on your screen to be able to show an area in which essentially what they're going to do is that entire area any growth in the next 23 years that occurs uh in that tiff area the property taxes for the increase would go to the village and they would be able to utilize that for the um $32 million of essentially um as they have listed cost of construction, public works or improvements. And so, uh, most of the feedback that we had from the joint committee is asking information as to there's a lot of current, um, property within that area. And so, um, the TIFF joint review board was wondering if the village would just be able to cut out just the area that's lock former, generate enough property taxes to be
005able to put in the public works there um, and not have to rely on the other areas that are already developed. And so, we have a meeting coming up in the beginning of June and we'll get more information in terms of whether they can still financially make the project work, just relying on what they anticipate to be the growth within the Lock Former site. don't have a lot of information beyond what was already included in your board packet. Um, they pretty much just walked us through that report, but do you have any questions for me tonight? I had some questions regard the tip. Does it have to be 23 years? It does not. Um, can I follow up on that? What is the rationale for 23 years? Um, according to the village and their consultant,
006it would take 23 years to generate enough property taxes to be able to pay the 32.5 million that's needed uh for the public works in that area. So, if they took that down to just the lock former site, then it would probably take way longer than 23 years. That's information we've asked. We want to be able to see just how much is coming from the LA former redevelopment and how much is property taxes being generated from areas that are already developed there. Just building upon Ry's question um in comparing it to what's there right now, there are some good businesses in some of that area. I'm familiar I think all of us are familiar with this parcel of land. And while I agree there's portions of it, the former lock former site that probably this
007is our best option for, can they break this up into smaller pieces? There's some on the um west side of it there. There's some businesses there that are already there. There's another business on the east side of it that, you know, has been there for a while. I know there's portions of this where that might have a different perspective than some of those pieces I'm seeing on the map. Yeah, I I do believe Bill Kay is fully developed. I do believe there is a self- storage area. I believe there's a gas station. I believe the post office is in that area. There's a big commercial area. I know that at this point it's only rented to one company, but uh that's our big question to see if this still can be done by just focusing
008on the lock former and not utilizing property taxes for the next 23 years um for everything that's already fully developed. Is is there a way they can break tiff up into of existing property because they did mention that several infrastructure improvements need to be done and some of the properties are not in the best shape if they could divide the tip up in tiff into two you know existing property and here it is maybe it's 10 years for that yeah the attorney for the village said that it was less efficient to have multiple tiffs in that area so if you circle just certain areas you would have multiple tiffs and they felt that um it was burdensome and not cost effective ive to have multiple tiffs on that area instead of just one big tiff.
009How is it not cost effective? It's a docu legal document that they write. He didn't expand upon that. That's just what he had shared. Okay. I mean, efficiency of just having two tiffs versus one. I'd like to understand that. Yeah, we'll be sure to to ask that at the next meeting to see how much how more cumbersome it would be to have multiple tiffs in that area instead of just one. And in a portion of this is residential. I'd be curious why there's residential property included. Um, we were told that the village would like to generate enough property taxes to do the 30.5 million of um, public works or improvements in that area and that they feel like you would have to include the property from all of those to make it financially work. So
010Keith, the term blighted no longer obviously no longer applies. Um certain areas if you looked at the report are blighted, other areas are conservation I believe was the category. And so um it appears that the threshold to make something tel eligible is pretty low. Um but at this point the village we'd be focusing on both blighted and conservation areas. I just building on I think Dan makes an excellent point. What would be the cost? I mean, could we get like a breakdown of that as well as what the breakdown would be for the district? Um, you mentioned there are some businesses like there's a medical group there, there's a car dealer there. I I would assume there there's tax revenue that comes from those businesses. um you know what would you know the removal of
011those tax dollars be compared to the cost um the legal document piece of doing um you know maybe two tiffs you know I like I said I think we're all familiar with this map I agree there's some areas where that would be very beneficial especially this center section but I think the whole piece is a lot and we already are there's a second tip that already has passed correct for the downtown. Am I remembering that correctly? Oh, there is a tiff in the downtown. Yes. In the downtown. Yes. Okay. So, there's our we already have one tiff. So, just how many tiff? You know, it it the more we do it adds up. And so, when we had asked, could the project be broken up? We were told no, they don't have enough revenue from
012property taxes to generate $30,500,000. And so, we asked for a detailed breakout to show how much of that 30 million is coming from the lock former site or blighted areas. and how much is coming from currently developed areas. So, we hope to be able to share with that with you after the next meeting at the joint review board. I'd be interested for the residential property something similar to what we did for FNC saying if we experience this many students then we would get this I think that's a legal requirement for TIFFs at this point. If a TIF includes a residential, there's a carveout for or hold back as they call it for any new students that come from that area. And so we'll be in if this continues and it's approved, we'll make sure that
013the document follows the way that it did for the downtown TIF that if there's any new students from areas within the TIFF that the school district would have a hold back and have access to that money. Great. The the reason that they like 23 years bothers me and I get they need to make up $32.5 million, but that really doesn't that $32.5 million come from every other taxed parcel because it's it's increasing the taxes over. We all know basically our our taxes go up by inflation every year because that's pretty much what we tax too. So they're frozen. while our budget goes up because of inflation, which means we pass that on to all our taxpayers. So, they're frozen while everything the burden shifts to every property that's not in the tiff. And they're not
014necessarily frozen. Um the school district would still collect whatever the current property values are as of whenever the TIF comes into place and any increase in property values goes to the village. So, they'll still see the same increases as if they didn't live in the tiff. So the the increased property value the village gets that but not the school district or library correct or park district unless we have these stipulations where we get to call some of that back because of increased number of students. Okay. We're still trying to unpack working with a consultant to better understand does the district through their normal CPI increases have money go to the tiff and not to the school district or does the tax burden get shipped to the rest of the community and that increase also happens
015within that tiff area and goes to the village. So we're still having them unpacked so we can fully understand the financial impact whether there's a tax shift or whether or not there's more money being generated within Lyall because of certain areas designated as a tiff even though it might be current property and not new property. And so looking at the past 10 to 10 years or so, what I've noticed is that tax burden shift going to residential because residential property values have been steadily increasing at a faster rate than non-commercial. So that non-residential, that's your commercial and your commercial industry, railroad, and farm. So by putting 23 years in there, we're actually not helping that situation because we and I get it. they do all this, the property values of all these commercial properties should
016go up at a at a faster rate historically and therefore mitigate that shift we've seen, you know, I've been seeing, but for 23 years, it just seems like now we're going to go through 33 some years of this tax shift burden. So, it's not that I'm against against the tiff. I think it's good to attract the business. All our neighbors do tiffs to attract businesses, but we've seen enough of that shift and all our residents were saying residential property saying we would like to lower our taxes. Well, you only do that if somewhere else in the community has a value go up substantially faster and is the tiff for those properties attracting business? Yeah. For those properties. So, so for the joint review board, I think although we didn't vote on anything based on our
017discussions, we're very supportive of the lack former site being a tiff. We see that um the property taxes could go directly towards the improvements in that area. I think we're struggling a little bit with area that's already improved. Um having their property taxes being deferred from this taxing bodies to go towards the again, it's the public works of that area. So, we will give more information after we get more information, but we're just trying to get a breakdown at this point to make sure we all fully understand so we can bring it to our boards to get feedback from you as to how you would like for us to vote whether or not to support the tiff or not. And even if it doesn't pass the joint review board, the village can still move forward.
018They just need a super super majority vote for it to pass. But indication from the mayor is that she would like to work with us and would hope that we would support the project. and if not, what would we support? So, that's why we're getting more information. One more quick question on slide five of this. I was just thinking, um, Dan, I think you brought some great points up. Um, slide five, you have the parcels on there or they have the parcels on there. Are we able to get like a a tax? There's improved parcels. Those are the ones I think we're all referring to that we have some know and Lyall businesses on. Is there a breakdown of what uh the tax revenue looks like from those parcels, just the the ones in tan,
019the improved ones, and if we agree to the tiff, what the impact would be on our budget? That's what we've asked for. We want to know of the $30,500,000, how much is being generated from what we'll call the former lock former site and how much is being generated from current property that's already developed. Mhm. Now, today we're not making decisions on this, so we're expecting we'll probably make a a decision the next finance committee meeting in June. Yes. Okay. All right. Well, are there any further questions or concerns? Just also for that June meeting, you said you guys have a a joint review board. Are we able to hear the feedback of if other boards have concerns? Right. because all the groups are there, park district, library, etc. We can share. We're able to share
020that just in case they think of something we haven't discussed here. I'd like to hear their insight. Sure. Our meeting is on June 3rd, 3 p.m. Okay. Well, if there are no further questions, uh we can move on to the next item. Thank you, Dr. Philipak, for that summary. We appreciate it. All right, so come on. There we go. All right, so moving on to item six. This is the uh past financial performance and future financial projections report. That information can be found in item six of the finance committee packet. And uh Dr. Philippia, if you like to kick that up, we'd appreciate it. If we can move on to slide number two, uh Dave will take us into a lot of the details, but over the last at least 10 years, we've only included
021on this graph here, we've saved about $2 million per year. Uh in terms of revenue over expenditures, that's about 6% we've saved. So we spent about 94% saved 6% for things like Lyall Elementary um large portion of Lyall Elementary big building renovations specifically the junior high recently and so but we've always had about $2 million and you can see revenue has increased over the last 10 years an average of 3%. And expenditures over the last 10 years has increased an average of 3%. So we've always pretty much had that about $2 million in between those two. Unfortunately, we're at this time that we can't predict as well as we once did. CPI is up, CPI is down, interest rates are up, interest rates are down. Do we get our federal funding? Do we not get
022our federal funding? What's the state going to prorate? We've seen a influx in enrollment. Then we started to see a slight decrease in enrollment. So, there's just so many moving parts. It's really hard for us to be able to predict what's going to happen in the next 5 to 6 years, but that still means we want to make our best effort. And so every year we make our best effort. We're usually relatively close on a lot of the numbers, but when it comes to looking to the future, this isn't like a doom and gloom presentation. Like worst case scenario, this is what we realistically think as of today. And so Dave will get into some of the details, but it appears that interest rates are great now and we're generating quite a bit of money
023for it, but we just don't know if that's going to happen long term. We know that we used to get a bunch of error money from COVID uh that we're at the final stage of. We know that the staff has asked for uh increases more than what we've seen in the past, but better reflect what inflation has been. So they're, you know, they used to be around 4% every year. Now they've been closer to 5% every year. And we've seen a spike in the number of staff if we saw that bubble of enrollment. And so we're nervous that if we continue the course we're on now and we don't change things, we think we have a balanced budget for the year we're about to start, but then after that, if you looked at the final
024pages of the presentation, expenditures exceed revenue and then they start to exponentially receive re exceed revenue. And so we want to share with you how we've come up with this presentation and then our plan moving forward so that at no point do we actually have expenditures exceed revenue. At this point, I think I'll turn it over to Dave who'll get into the nuts and bolts of how it was calculated and then we'll finish up with what we view as the next six months and areas that we need to focus on. Uh thanks Keith. That was uh really an excellent summary of what the projection report you have uh in your finance packet uh kind of goes through, but we did want to share a little bit of the details just so that everybody on the
025committee could have a kind of a good understanding of what we're seeing in terms of the numbers over the last five years. Um what we're seeing the year we're currently in as we kind of finish up this year. And then again um you know this this is a working document. It's something that uh we look at twice a year as a finance committee. We look at it typically now around April or May and then we come back again in September to see kind of what's changed. It's not necessarily a full update of the projection, but some of those variables might have changed even in four or five months. So we we take a look at it again. But um as Keith mentioned, it's getting really hard because you have kind of the COVID years and
026the year after which expenses were down as we had the the shutdown in hybrid learning. Uh interest rates went way down during that time period. And then all of a sudden you come out and and interest rates start going up to 5%. And the cost of labor, the cost of services starts accelerating at a rapid pace. you have increases in uh special ed students. You have increases in homeless uh that we've seen through some of the reports in previous months. And so this working document um you know we kind of project out what things are looking like right now, but that is very different than what they looked like just two and three years ago. Um and so again, things are constantly changing. um this isn't, you know, the the final sale in terms of
027what what it's going to look like in the future, but we continue to review those assumptions and uh update those on a regular basis. One thing I I also want to mention is that again when we get to September, we'll kind of do that update. And a big piece of that update is we have the results from the year that we're currently in from fiscal year 25. So I I went through this time kind of function by function, line by line, trying to get an idea of uh what where we're going to finish this year. One of the the challenging aspects is uh now that we're on the cruel basis of accounting um kind of our first two months of salaries and salaries expenditures and benefits are really low for the first two months because
028we just acred those all into the previous fiscal year. So, I got to kind of predict what's coming down the road in July and August that we're going to be pulling back in where we didn't have to do that previously. We were on the cash basis. It was very consistent. And so, we kind of uh joke in the accounting office and the finance office upstairs that, you know, we kind of long for the glory days of cash because cash is king and you could follow that. So, there's some nuances there. We try and project out as best as we can this year. You know, there's always bills that are coming in at the end of the year for transportation, for special ed students. You might have someone that enrolled through the course of the year,
029but we pay SASID upfront. So, we don't get a bill for that student that might have come in during the course of the year until after the year is over. And so, I'm anxious to see how this year finishes up. Um, originally we my the budget was, you know, about a $600,000 surplus. As we'll see later on, I'm projecting about 1.5 million at this point. But where that ends up could really also significantly impact what this projection looks like because if it ends up being better than what I'm projecting that goes for the next five years and there's a compounding effect of that. So just wanted to kind of qualify that this is a snapshot in time. It's a working document and uh that's why we look at it twice a year so we can
030continue to to see that. For today's presentation, uh the focus is really on our operating funds. Um you know, that's where the bulk of the district's financial activity is. If you want to see kind of all funds for reference, that is included in the in the report that's in your finance packet. I will kind of go through these. Sometimes I I I I gloss over this slide, but I'll probably run through it a little bit here just for those that might be newer to the board. Maybe it'll be a nice refresher uh for some that have been on the board for a while, but it will help as we kind of move through the rest of the presentation tonight. And so, um you know, the education fund, again, we're looking at the operating funds on
031the lefth hand side there. The education fund is is really our largest fund. It covers all of our instructional costs for salaries, uh, benefits for our teachers, for our instructional staff, and then also, you know, curriculum materials, classroom materials, software, those kinds of things are all included in our education fund. That's our primary fund. When we look at the operations and maintenance fund, kind of as it's described there, that's for the upkeep and ongoing repairs and maintenance uh, for the facilities themselves within the district. Whoops. The the transportation fund. Uh you'll hear about that a little bit as we go through the night tonight. That's our busing costs and that includes both our regular transportation costs, our special education transportation costs, and then extracurricular transportation, uh transportation for students in transition. All those kinds of
032things are within the transportation fund. And then we do have a little bit of a uh cash reserve in our working cash fund that we can draw upon if there would ever be any uh short-term cash flow needs uh that we we would run into. Outside of that, there are a few non-operating funds. There's the debt services fund which um is used to make our bond payments. That levy is established when we actually issue our bonds. Last time we did that was back in 2019. So that levy has been established as long as those bonds uh are outstanding. I am refining social security fund that covers our pension obligations, our social security obligations. Uh there's a separate fund set aside for our levy for those dollars to pay those costs as we go throughout the
033year. And then within the context of tonight talking about our operating funds primarily the capital projects fund really isn't that significant of a factor here because we're doing most of our nonrecurring facility improvements through that capital projects fund which is a non-operating fund. I think Keith kind of touched on this at the beginning, but when we look at kind of the last five years, the picture for the district has been one of, you know, financial health, that kind of $2 million surplus we've seen from from one year to the next. We did see as as Keith kind of uh touched on in fiscal years 22 and 23, we had a little bit of a a larger surplus. Uh one of those factors was uh the COVID bailout funds through ESSER and and ARA. Uh those
034helped increase our revenues. And then also uh corporate personal property replacement taxes which come from the uh income taxes of the state and are then distributed to the taxing bodies. We saw a huge increase in those coming out of COVID and we've since seen declines in that. But we did see those bumps for two years. Now we've started to see that taper off, but as we look at kind of the last year on this chart, fiscal year 24, we had a significant increase in interest income. So that helped provide a surplus there in the last year um that's on the chart. It is worth mentioning also that that during that 5-year period, we have transferred about $7 million out of the operating funds over to the capital projects fund. Some of that was for, believe
035it or not, Lyall Elementary School there in the first year, fiscal year 20. It seems like a long time ago, but it's still on the chart. And then we've been making some transfers for other uh improvements as well as some of the costs to start the junior high renovations that we um recently completed this past summer. kind of another good overview and refresher for everybody is is kind of the composition of the operating funds both on the revenue side and the expenditure side. Um, as you can see, property taxes are by far our largest source of revenue at at 80%. Um, state and federal sources combined account for about 11% of that revenue. Um, again, this consists of from the state our evidence-based funding amounts, which is kind of our general state aid. Uh, we
036also have title one funds for our low-income students on the federal side. We have IDA money for um, special education. And then transportation reimbursements. We get reimbured for those costs from the state. Although we have seen those prorations increase as all districts costs have gone up, but the state still has the same amount of money kind of available for um all of the districts. interest earnings is about 5% a little bit higher as we've seen those rates go up and then the remaining 4% comes from uh other local sources such as those CPPRT receipts uh rental income from Sassid and and Chesterton over at the Shiser School uh and then also lunch receipts and the the I would call the athletic fees that we still collect for some of those activities. did want to take
037a little bit more time this year and and hone in on a few of these uh particular groups. The first one would be our our property tax revenues shown on the chart that's on the screen. And um what you'll notice is that you know over this time period you can kind of see that trend line and our property taxes have been increasing by uh about 3%. It's kind of what we'd expect. If you look at CPI over that same time period, the CPI was about 3.1%. So, we're tracking right in line with what CPI would be. Why are we a little bit lower? If you recall, during some of the earlier years on this chart, there were some abatements of our debt service levy that went um back to the community. And so, we had
038to make some transfers out of our operating funds over to the debt services fund to make the payments um for those bond payments that we uh abated back to the community. I think it was a total of about uh $2 million over that period of time. state and federal sources is not quite as uh uh you can't really narrow that down specifically to a trend line uh primarily because you notice for example in fiscal year 22 that's when we started to get the COVID relief funds. So that's why that those blue boxes are a little bit bigger there in fiscal year 22. And then you see them start to taper off in the last two fiscal years on the chart. And our final uh receipt of those COVID relief funds happened in this year. We're
039currently in fiscal year 25 and we got about $160,000. So starting next year, those uh dollars will be completely gone. state revenues. We are seeing those increase uh a little bit here. And again, that's the transportation reimbursements to help offset some of those increased costs for our uh student transportation. Last one is investment earnings. Uh there's been some fluctuation and ups and downs here over the last five years. Uh the first year we were getting interest income of about 700,000. Uh that was based on I think rates that were about 2% which is kind of what we're used to. That's more of the norm, more of the averages. Um and then it went way down during COVID and we were effectively getting almost no interest income. And then we saw these huge spikes to the
040point where this year we're just finishing up or I guess the the year we had before just last year was almost $1.7 million. Any questions so far on the revenue side of things? Moving to expenditures. Again, this is the year we just finished up looking at the operating operation funds. As most of you are aware and we know, uh running a school is a staff inensive um ordeal. And so, uh, between salaries and benefits, that makes up almost, uh, 70% of the the costs that we have. Purchase services, which we'll talk about here in a little bit, is at 16% now, and it's actually increased from where it was a few years ago, where it was more like 14%. So, that's that um, inflationary persistent pressures that we've been seeing as we've kind of gone
041through the last few years. What is interesting and worth noting is that um supplies and materials, that yellow box, which I don't know why Google won't put the percentages on all those, but I guess it runs out of room and you can't fix it. Uh that's actually only about 4% of our overall costs. So, um we've kept those under control. They haven't really increased all that much over the last 5 years. Hopefully, that will continue. You never know with tariffs. We get a I guess a threat from a vendor every single day that tariffs are coming. You need to get your orders in now. But again, that's one of these uncertainties right now that you just don't know. Um, and then lastly, other objects there, that 7 12% that really is primarily our tuition. The
042tuition we pay for outplace special education students. And that's a really tricky number because that can go up or down depending on whether one student moves in, one student moves out, two students move in, two students move out. So, it really um is just one of those numbers that's hard to get a a a a grasp on as you're looking at trying to project out the next five years. What's not in there though is again debt service payments, payments on our outstanding bonds is not included in that number on this chart because that's not in our operating funds. That's in its own fund. Again, just to get a a feel for some of these specific groups of expenditures, um I wanted to touch on kind of the the the ones that are a larger portion
043of our overall budget. Salaries makes up uh more than 50% of those costs. But what is interesting here is that again, salaries have increasing, if you look at that trend line, by about 3%. I mean, that's what our revenues have been doing. We just look through that on the property tax side. And so there's been some um kind of retirements along the way and things like that that have um even though some of the raises have been in the neighborhood of 4% overall we're still trending at that 3% increase over the last 5 years. Um, obviously as we start to look forward with some of the uh inflation pressures and and some of the requests from staff and trying to maintain being competitive with the other districts that we compare ourselves to, those increases have
044started to go more up towards the 5% uh area and again that 5% then is projected out over the next 5 years and has that compounding effect. So, so far the last 5 years it's been that 3% but we are seeing that trend line move up a little bit as we move forward through the projection. Um, I thought this one was kind of interesting employee benefits because for a number of years we were we participate in EBC. It's it's a co-op of near 100 100 plus school districts and it kind of helps to spread out our risk amongst all those other school districts. So we don't see these big swings uh in our in our insurance premiums based on having a good year or a bad year in terms of claims history. And so I
045think if you look kind of back 5 years or so, uh, 5 to 10 years, I mean, we were getting, you know, 3% raises, 0%, 4%, I mean, they were really, um, competitive raises that that allowed us to kind of keep those employee benefit costs low. But as we've uh kind of came out of COVID, there was there was a really low year during COVID and then uh people weren't going to the doctor, people weren't getting services. And then as we came out from CO, a lot of people starting to go to the doctor, a lot more claims, and we really started to see those costs start to increase where these last few years, we've been seeing 8 n% increases uh to our employee benefit costs. But so far, that hasn't really impacted our overall
046costs. If you look at the trend line, it's still at about 4%. But I'm not sure if that's going to continue. And so when we look at this projection, we're projecting out at almost 6% because that's what we've seen over the last 5 years. So it's another one of those scenarios where like is that going to happen? Is that going to take place? This is this is you know what was it 16% of our budget and it's being projected out at 6%. that may or may not come to pass, but that's how we've historically done this. We've looked at the five-year averages, and that's what we've used as the methodology, and I was just continuing that methodology throughout this projection. Um but again that that's um just a caveat there where things get a little
047bit more interesting and you've probably heard me saying this a number of times over a number of finance meetings recently but on the purchase service side that's where we're really starting to see the impact of inflation. Again purchase services is our transportation our food service costs. It's the um people coming out to service our HVAC systems to make repairs when we have challenges in the you know things that that break in buildings and grounds. And um you know I I to kind of help I guess I should take a quick step back. You'll notice that I added one more column on this chart. I asked I added fiscal year 2019 into this particular chart as opposed to just going back to fiscal year 20. Why is that? Fiscal year 20 was uh finished basically in
048June of 20 which was when we had the shutdown from COVID. And so between that year and the next year, fiscal year 21, that's when we were in remote learning, we were shut down. And so a lot of these purchased services such as transportation and food services, those costs were much lower in those years. So we really can't compare to those years because they're the anomaly. So, I actually went back one more year to fiscal year 19, and that's where you can see costs were about 4.2 million where we finished up last year was over 6 million, which is almost a 45% increase just in that 5-year period. Um, one of the struggles there is what can we control, what can we not control? If a student requires special ed transportation, by law, we're required
049to provide that to them. And that's expensive. And we've seen that. We've seen not only the cost of providing the transportation go up, but we've also seen the number of students go up. Um, you know, when one of the HVAC units breaks down and we need to get it repaired, you have to get it repaired because you have to have air quality and you have to have heat and air conditioning and all that kind of stuff. So, those are the kinds of costs that that make me nervous and are hard to control. And those are the ones that we've seen, as you can see by the trend line there, we've seen kind of those that 8% increase over the last five years. Um, the other piece within purchase services is also our insurance costs. So,
050we're talking about our property insurance cost, our liability insurance costs, and workers compensation. another thing where um you've probably seen a lot of the weather events that have been going on in the world. Um a lot of the uh lawsuits that have been filed and so ultimately our insurance carriers have had a what they call a hardened market and we're seeing those increases as well. Even though we do again participate in a co-op, we're with a number of other districts. I don't remember how much are in our how many are in our our uh liability insurance co-op, but it's it's again significant 60 plus districts to help kind of smooth out those increases and manage some of those costs besides the special ed costs under purchase services. Is the McKenna Vento cost also included there
051in terms of transporting the the McKini Vento students? Yes, that's that's also within that same um purchase service category. Yes. And then one more I just wanted to touch on. I I talked about it a little bit earlier. That's our other objects. Again, this is um really made up of our tuition payments. It's a little bit smaller portion of our budget, but um we do see some swings there. I think overall the trend line has been about 3%. Um, but in general, you can kind of see that last bar, that fiscal year 24, we're seeing a little bit of a jump up. Um, uh, in in the final year, and I I would expect to see a similar um, if it not necessarily an increase, but I would expect to see it stay the same
052at that level as we finish out the year that we're currently in. Um, that could go down in the future. It could continue to go up, but that's another one that that we're watching closely and really trying to get a a handle on on what makes up those costs. That would be our cost to SAS, our special education cooperative, but then also uh tuition for students that are are placed in private facilities. Try and go through these uh relatively quickly. Um you know the biggest driver on the revenue side is our property taxes. Um this slide focuses on those assumptions. Uh again um for purposes of the projection we've used the 5-year average which has been uh 3.5% uh for our uh CPI growth. So that's what's projected out through through the rest of the
053the the projection here. Um I did get a question on the new property EAV. You can see there that in that bottom left chart, the new AV we're anticipating is about a million dollars. And the question was, you know, is our new EAV, our new property AV, has that been declining since 2023? It's certainly lower than it's been kind of over the last 10 years. I I think we've been very fortunate where we've saw some robust new property, new EAV growth within the district. If you look kind of in the 2018 to 2020 range, we had the Mark on main property in in downtown Lyall that came on the tax ro. So that really boosted up our new AAV. If you go back even further, uh for those of you who are on the board
054a little bit longer, 2013 2014, that's when we had the the DuPage Medical Group uh building over there on Warrenfield Road that came on the tax roles. We had the Arboritum Landmark. And so we've really seen some big large properties come on the tax roles. But then if you kind of go back to 2010, even before that, that's where we saw like a million dollars of EAV. That was a little bit more the norm. So, I'm not sure I can say it's necessarily declining, but it's definitely on the lower side of where we've been over the last 10 to 15 years because we've seen that that million-doll new AV that's been on our last two or three levies and that's kind of become uh the new norm at this point. So, um investment earnings, I
055I did want to touch on that. Rates are currently at about 4%. If you've been following the the uh news at all, the the Fed did cut rates twice um relatively recently, but I think this last time they held things steady and so they're still kind of watching inflation. Is it going to go the other way? Is it going to continue to fall? So, we haven't seen those continued rate cuts that they were originally anticipating. And we're in a little bit more of a holding pattern. So, still holding that that rate at about 3 and a half% for the second year of the projection. And then again using the five-year average um for the last four years. On the um expense side, the biggest thing is is our salaries. And so um we obviously know
056what those contracts are for the next two years for our certified staff. So we can use those figures in the projection. And then for simplicity, I just use the five-year averages uh for the rest of the for the classified group because we're currently in negotiations with them. And um and for the remainder of the projection, I also I look at what upcoming retirements we have. Those are all factored into the projection. So there are some savings there that we see um through that process. And then we talked about employee benefits, purchase services. We already know what our transportation contracts are going to be over the next three years. We just did a bid with Westway Coach. Um, and so that was that's the price we're going to pay for transportation. I mean, we did a
057competitive bid. We had three biders. Two of them were really close. And so, we know that we're paying the market for those transportation services. In 3 years, we'll go through the process for special ed and go through the bidding of that with our co-op. But for now, we've entered into um another three-year agreement, a three-year extension with them at 4% increases. So, those are again all factored into um this projection. [Applause] And so, um, kind of taking a look at how those factors play out in our projection. Um, I know there's a lot of numbers on this slide. I just want to highlight a few of them. First of all, you'll see in fiscal year 25, the year we're currently in, um, projecting a surplus of about 1.5 million. That's a little bit, I would
058call a stronger performance than our budget was originally anticipating of 600,000. So, we'll be looking closely to see how the rest of this year finishes out. Um, you'll also notice that next year we have a um effectively a balanced budget according to the projection. We'll be working through the budget over the course of June. We'll have the tenative budget for you at the next finance meeting and then we'll make refinements until we approve the final budget in September. Uh the other piece is that second line there near the bottom, the other sources and uses. That's always been our transfers to the capital projects fund. You'll notice that for fiscal years 26 through 30, those transfers aren't taking place. Um that's okay for now because we did this large $3 million transfer uh this year in
059fiscal year 25 which was really a advanced transfer of a few years to help pay for those junior high renovations upfront. But that is again something that we will need to monitor as we get further down the road because if we want to continue saving for those facility improvements and have money available for those improvements, we'll need to start saving maybe not 750 but maybe $500,000. Some amount needs to be set aside because we're no longer doing those capital projects in our operations and maintenance fund. We actually set those aside and earmark them within our capital projects fund. Um, so again, the the first deficit shows up about fiscal year 2027 as Keith mentioned. That's when the the lines kind of cross, but that's assuming, and this is a big assumption, that the current inflationary
060trends hold true. Dave, real quick question. When's the next time do we reach out to the architects to get an estimate of our capital needs over the next seven years? Because the 750 was based on a 7-year projection from them of $7 million. So was a million a year and we put 750. So do you recall when the next time they'll do that? Well, so the last time we did that was when we went through the life safety survey process. As part of that, we also did this um capital outlay study. Uh the life safety survey process is actually taking place this year. We're currently talking to Perkins and Will about a proposal for that. What is it going to cost? We have not asked them to do a full uh capital projects evaluation. Part
061of that is because the elementary school is still relatively new. I I'm not sure necessarily if that's worth the investment at this time. Uh we'll have just done a bunch of improvements at the junior high, so most of that stuff will be taken care of. So, we'd really just be talking about the high school, which I think is still in in pretty good shape overall. There is potentially some roofing items that may or may not need to be done. We have them on the on the facility plan, but obviously we're going to evaluate those roofs when the time comes to see if it really needs to be done. But at this time, we weren't we weren't contemplating doing a full-fledged um uh capital projects review primarily just because of the cost of that. Could would
062it obviously cost us to hire them to do that? Could we do a mini one internally potentially? I I like the idea of saying here's our seven-year projection to come to that. I mean, you threw out a number 500,000. I know you're just guessing at this point, you know, but is it more of a objective way of coming to that number? I I really appreciate how we did that before. Yeah. And it's something we can easily explain to our constituents going this is why we're transferring X dollars every year because we know these are upcoming costs just like a you know, homeowners association would do. So, and so I do have that spreadsheet internally. Okay. Um, obviously it's it's more based on what our maintenance uh professionals are seeing out there as they kind of
063work in the buildings. What's what's giving them problems? What are things that that they're concerned about? Um, when they have those items, it goes on that list. Again, we're talking about large items, $50,000 or more. And then I also, you know, anytime we do work, I say, okay, the estimated useful life of this roof is supposed to be about 30 years. So 30 years out, it's on the chart chart. I'm not sure we're going to get there, but um I am I am keeping that list internally, but you're right. If we went through the process of having an architect come out, it would be a more detailed list than what I have on my own. Is that sheet you have the same sheet they use to generate the facilities review every year? It is correct.
064Perfect. So you can kind of take that and do that analysis. Excellent. Thank you. Yeah, I was going to say just building on that, maybe as a first step, could facilities master planning committee like go over some of that stuff as a first step to see if we need the architect to come in. I I don't know that we do something like that in committee. I mean, we can talk about it, but usually we it's presented by administration of what these are the specific and and just want to be clear, David mentioned this is the year we do our 10-year life safety report and that's where the architects will go through all of the buildings and give us a list of things that they think need to be done in the next 5 to 10
065years. Oh, they're doing that this year. Oh, okay. Perfect. Yeah. Oh, I thought they weren't doing a detailed. No, life saving. A life saving. Okay. There's a lot of overlap, but basically they come in for a day or two. They walk the entire building. They'll give you feedback to say, "This roof looks like it only has five more years. This boiler is well beyond its expected expected life. Uh your parking lots look like you're going to have to repair them in the next 5 to seven years." So they'll they'll focus on the the big items just to make sure that uh they file with regional office and make us aware that when they think things the very big things are going to run out of life expectancy to your point I'm not there I am
066um that would be presented to the board or to the finance committee rather than in committee. Oh that that works too rather than facilities committee it comes to finance. Yeah that works too. Yeah, just um but if they're coming out anyway to do the life safety, it sounds like the the high priority items will be evaluated definitely the big ticket items and they'll they'll also do an evaluation for the portion of the building that we lease out to Sassid because it is still considered a public school. So we'll they'll also be doing that. Okay. Okay. Thank you for clarifying. Probably December, I think, is when we're targeting they're going to do the work. We don't have a specific time frame yet. Okay. I thought we had until December to finish our negotiations with them, but
067uh more information to follow. Okay, not going to go through this slide. It's just a visual representation of what we talked about on the last slide. And then um kind of the final point here is that um this looks at what our cash balances will be. Not necessarily our fund balances. I know we have a fund balance policy, but this is our cash balances in particular. uh just to make sure that kind of over the course of the projection period we have cash available to make payroll and pay our bills. Um you can see that it it kind of gradually declines a little bit here over the the time period, but ultimately we're still above that 3 months cash on hand even under this projection scenario. And so that's, you know, still uh healthy from
068a uh kind of what ISBY looks at in terms of uh when they do our um estimated financial profile score, we're still above that 25% and in that range. So um with that, I will um pass it over to Dr. Philippi to just kind of um wrap things up for this evening and and summarize a little bit of what we've talked about. This is going to say like cash balance like your f the 2025 is 160 days and this is the last page of the packet but note that by the time you get year 2030 it's 52 days but that's the steepest decline I've seen in that number or your projection. Correct. Yep. But I think our strength that we always do is review this every single year adjust our assumptions and absolutely and as
069as Dr. Philippia pointed out to start the um presentation, the year we're finishing up and entering are still balanced. So, we have time to have those conversations, which I think he's going to touch on here, and make those adjustments if it becomes necessary. So, our goal is to have a plan put together by the end of this calendar year with some recommendations as to ways that we can decrease what we spend. Our effort is going to be to try and as much as possible not increase headcounts. We'd like our class sizes. We like the supports we have in place, but that may not be realistic. But we're going to talk to you regularly, particularly the finance committee. I don't know if it would be the entire finance committee or maybe a smaller group, but walk
070through, you know, in transportation. What are some choices we might consider consolidating to have fewer routes? Students will be on the bus a little bit longer, but it's not unreasonable. Okay, this is the amount that typically we spend on renovations. Maybe we'll hold off on a few of those for a little while outside of the capital expenditures. Um, be able to look at our insurance. Maybe we can get some quotes to see if we modify our current plan. We'd of course need to negotiate that, but um, you know, just some of the bigger ticket items. We're not going to spend our time on things that are a,000 here, 10,000 there. It would really be areas that we would be able to hopefully hold the staff numbers in place and then maybe hold off until we
071can get a better picture as to whether this is the new norm or whether the previous norm becomes the new norm again. But um we've got a yearish before we need to start making some really hard decisions. But we want to get all that information to you so that by hopefully the end of this calendar year, maybe the end of January, you have an idea of our thoughts and where we can make cuts hopefully on the short term to ensure that fiscal year 2027 is also a balanced budget. It's not going to be easy work. It's not going to be fun work, but we don't want the staff, if they're watching this video, to think suddenly we're going to eliminate a lot of positions. That's not true. We're going to hold headcounts as there currently
072are. and try and maintain them as much as that we can. More information to follow and we'll look at the projection again in September to see if some of these variables have changed. I just want to emphasize that point that we've just been through a very tumultuous, I think I use that word correctly, time period here. And so maybe some of those um variables will kind of smooth themselves out over the next few months. Dave, just one last quick question. You mentioned the tariffs earlier, and that's I think part of what you're talking about, Keith, is looking at other sources. Are we looking at other sources that wouldn't be impacted by tariffs on some of the products? So, I want to make sure I answer your question. Um, I don't know what prices are going
073to do in the coming months and whether the tariffs will go through, but we would look at to see what we could cut in terms of things that we buy even if it's deferred to try and get that expenditure number to only increase 2% in total. Is that answering your question or Yeah, I'm just thinking, you know, looking at different options because there will be products, right, that aren't impacted by tariffs, like things that are made locally. So I you know there's manufacturing here so some products won't be impacted by the tariffs. So true the thing that worries us I think the most is if you recall the pie chart in terms of 80 some% of it is labor and then the other biggie is transportation the other biggie is food service. I mean there
074those are the ones that may or may not be impacted by tariffs but those are the ones that we may need to focus on in order to generate a million dollars less of expenditures. I'm just thinking even if it's a small impact, small impact is is worth looking at. Definitely. Any other questions? There's a lot to take in tonight. We didn't mean to scare you, but this is what the projection looks like. As much as I wanted to fight Dave in terms of No, I don't agree with that. I I think I have to be realistic in my positivity that just because I'd like to think interest rates will continue to be 4%. Dave is right. Let's look at the last 5year average. You know, as much as I'd like to think, oh, inflation might
075go up. We'll get more property taxes, Dave is right. Let's look at the last 5 years and what that looks like. And so, I think that Dave has done a really good job balancing between being too conservative and too aggressive. Uh, I think he said close to 50 hours went into putting all this together. And so hopefully he's narrowed it down to a very, you know, succinct message. But uh a dot on a chart takes hours for him to calculate because he's very thorough in making sure it's just not taking last year and multiplying times a percent. So thank you. But Dave could also be wrong and he doesn't have a crystal ball. And I I do want to mention like I followed the same methodology I've been using for the last four or five
076years. I didn't change it because oh wait, I don't like the way this variable looks. I need to make it look better. I didn't do that. I followed the same process using the five-year averages. And so that's what it looks like now. But again, I if I mentioned one thing tonight, it's that could change. So thank you for the remarks. So Dr. Flip, that's why we look at it every six months. So it'll be a regular conversation. is a different world in which that we haven't lived for the last 18 years. But we have the financial resources that even if we have a few bad years, I mean, we would hope to never bring you a non-balanced budget, but even if there's cuts that we're not comfortable making, we have the financial resources that we've
077saved in those those past years that we talked about that we can dip into in the short term. But it's not a long-term strategy. is you can see how it quant it exponentially grows each year that you're in deficit and expenditures go up four to 5% revenue only going up 2%. Once you cross that line it's hard to get back and you're usually within 3% every year. So we could resurrect that analysis. Thank you for bringing that up. I didn't compared to my projection and that could change just over here like a 2% difference 1% is like $2 million. So um it doesn't take much. Thank you. All right. Thank you very much for that assessment. We really appreciate all your hard work uh Mr. Wilkinson on this. Um but we need to uh move
078on. Uh so item seven is followup on public comments made on the April finance committee meeting. documentation can be found under item seven of the finance committee packet. If you would summarize, Dr. Philip, I did reach out to Tom Hmel, I believe was his name, uh, on the phone and then we finally connected at the actual um, joint review board. So, he had a chance to talk to both Dave and I about sharing some of his concerns. Thank you very much. All right. Uh, item eight, agenda topics for future finance committee meetings. Does anyone wish to uh, enter a new topic at this time? No. Okay. Good. All right. So, with no other agenda items, I will attain uh entertain a motion to adjurnn. So moved. Second. So that's Miss Hallman and Miss Foster. Very
079well. The finance committee meeting is adjourned at 7:31. Thank you very much. Thank you. I think we need a fivem minute break to set up for the projectors. So um the regular board