School Board Meeting - June 2, 2026

001Mhm. >> Mhm. >> 2026 number 137 is the Jackson building. Present at this meeting are school board members, Superintendent Tucker Cale and our voting ex officio member and assistant school board clerk Ms. Ann Krieger. Ms. Krieger, will you please call the roll? Director Barlow? >> Here. >> Director Cook? >> Here. >> Treasurer Kaplan? >> Here. >> Director Marvin? >> Here. >> Chair Nathan? >> Here. >> Clerk Whitefoot? >> Here. >> Vice Chair Wilson? The board acknowledges this site and all our meeting sites are situated on the ancestral land of the Dakota people and we honor the Dakota nations and sacred breath of all indigenous people. At this time we offer the opportunity to be able to say the Pledge of Allegiance. >> I I allegiance to the flag of the United States of America and

002to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. >> Our next agenda item is adoption of the public school mission, vision, and values. For members, I would like to draw your attention to the connection between learning and today's agenda. I know it's in our mission, vision, and values, and I welcome your comments on this and any other connections during our agenda item discussions this evening. Uh our vision uh I remember when our action plan for action item on the proposed budget for next year explicitly connects this budget to our RPS mission, vision, and values. The budget translates the district's strategic plan into fiscal terms. Every dollar allocated represents a choice about educational priorities from class sizes and course offerings to student support services and facility maintenance.

003Resources follow the district's educational mission, directing funding to student outcomes while making necessary tradeoffs transparently. Our next agenda item is approval of the agenda. Are there any changes to the agenda? >> Move approval. >> Second. It has been moved and seconded to approve the agenda. All those in favor say I. I. Opposed? The agenda has been approved. The agenda and documents for this meeting are available at rochesterschools.org/assembly. Our next item is comments to the board. The school board welcomes communication from our stakeholders via email, phone call, and here at comments to the board. The purpose of comments to the board is to give community members an opportunity to provide input directly to the school board about issues that fall within our authority. The board and superintendent do not respond directly to the speaker's comments during

004the meeting, but may follow up with the speaker if requested and appropriate. Persons who want to make comments to the board must fill out the online form by 5:00 p.m. the Monday before the school board meeting. It's available on the RPS website and on the Simbli main page. Comments to the board are governed by policy 206 and procedure 206A. And by participating in the public comment period, each speaker agrees to abide by this policy and procedure. Members of the audience are reminded that clapping, cheering, booing, vocalizing approval, or vocalizing disapproval for a speaker is prohibited during the school board meeting, including including during comments to the board. Speakers, when your name is called, please come to this table. If you have written materials for the board, provide provide them to our assistant school board clerk,

005and she will provide them to the board. Choose a microphone to speak into and be seated. Please direct your remarks to the school board. You will have 3 minutes to speak, and the timer will be displayed on this timer in front of me. Please begin your remarks by stating your name. Our speaker tonight is Jared Locker. >> updates. Does any board member have updates from their committees or any other information to share? Dr. Marvin. >> Well, we have been to a number of graduations and ceremonies this last week. The three major high schools will be graduating on Saturday, but there've been so many special programs that we have in Rochester with amazing students and incredible opportunities for these kids. And it's been our pleasure to be able to attend and celebrate with those students as

006they graduate. Um at tonight we do not have a student school board member. Oh, sorry. >> No, go ahead. >> Um Moving on. Um present. It's the end of the school year and they have things to do. Um but I do want to say that our last meeting um and Sarah Louise Henry working with um Mr. Will Ruffin have been amazing at guiding this program this year and uh the students had a chance to reflect on two things. One, the superintendent came in and asked put on a specific aspect of the strategic plan and as always they had plenty of opinions and I just so admire that he really listens to what they have to say about whether it's a good idea, bad idea, needed to be modified. And the other thing that struck me

007as they were uh looking back on what they had accomplished this year and they have come a long way and done some really important work. But the one thing they said is that they were glad that to be on the student school board anybody can apply. You don't have to be an A student. You don't have to be a teacher's pet. You just have to want to make a difference and that because of that we get a really good cross-section of students. Um those who love school, those who want to change school, those who have a lot of ideas, those who want to learn from others and I I hope um and I know that that model is going to continue. >> And I had the pleasure of talking to some of the student school

008board members when I was at Century for another reason and heard also not only their enthusiasm at seeing Dr. Marvin um and talking about the last meeting which they said was just amazing and how exciting how excited they are and I was at they're going to continue on student school board that they weren't graduating seniors. But we also saw them in the context of their multi um lingual learning class. Uh Jen Warnement from Century invited us to attend um an end of the year um uh read uh reading of letters that they had written telling their stories about what they had experienced the past year. Um and they were asked to write it to a decision-maker. So it could be local decision-maker, it could be a national decision-maker, it could be an international decision-maker and

009all of those are represented. Um it was uh it was quite um an experience. Um we went to two different classes. They also illustrated each of their letters and all of those are going to be gathered into a book that is going to be sent to all of us and all of the decision-makers that are involved. And um the fact that they were willing to share such personal stories um of their struggles this past year and some really concrete recommendations for improvements in the school environment and in relationships between students in the schools and in communities and the world, frankly. Um and between going to the graduations of our programs that we went to last week that multilingual learning class and today um Director Marvin and I were on a Zoom call with our MinSync

010guys um ASD students. Uh we pop into their parties quarterly and to see how the teachers are using this technology to serve some of our students with um high needs and the engagement and it in every single situation, the students over these past few weeks they're impressive all year, but particularly seeing it all uh one after another after another, especially those who have overcome challenges to achieve what they've achieved this year, and how our staff is just pouring themselves into supporting their success. Um it was a great way to end our connection with students this year, and certainly is something that I keep in mind. Uh visiting there is something important for me to keep in mind when I'm sitting here. So, thank you to all of you who are inviting us and having us

011come. Keep doing it cuz they're great opportunities. Anything else, board members? >> Dr. McFarland. >> Um so, just to mirror that, uh yes, it was wonderful to be at the graduations. Also, as school is winding down, I just want to remind our families out there that we have lots of community events that are coming up. Uh Juneteenth uh has a couple celebrations that are coming up in the next couple weeks, and it's so good to see young people be involved, which is why I'm bringing it up. We'd like to see continue to see our RPS students at community events. Um and then the date has already been set, I know a little prematurely, for the backpack um event for this next upcoming school year, and I believe that's August the 17th, but you know, that

012just shows that education continues, and we want to continue to be involved with our families, um because that's part of what makes RPS so great. So, I'm looking forward to seeing all the families over the summer as well um in the community. Uh I think those are great opportunities for us to connect, so if you were unaware, please uh check your calendars, and hopefully we'll see our families at some of the social events this summer as well. Any other reports, board members? Then we will move on to the consent agenda. Items 5.1 through 5.5 um are on the consent agenda. Would any board member like any item removed for separate consideration? Point of information from the superintendent. >> Um uh thank you, Madam Chair. I know there was uh at least one uh board member

013who noticed a coffee shop at John Marshall um uh on the the and I wanted to just give a little brief explanation of that. Um that is an effort that will be fully funded by our student nutrition services fund, which has got a significant surplus in it, and the state of Minnesota has only very recently given school districts flexibility to spend some of those dollars on functions that are um related to nutrition services. And uh more to the point of the question I got today, what about um Mayo High School and uh Century High School? And so we're planning to put the same in with the indoor air quality upgrade at Mayo. And eventually we'd like to do the same at Century. So we believe in coffee parity. Um we also hope that the students

014will be able to use it for fundraising and student entrepreneurship, but they will have to follow the healthy snack guidelines. Thank you, Michelle Obama. So but that is the that is the source of the coffee shop. Um and the students are are very excited. They've been very involved in the design at JM, and we anticipate that we'll do that at Mayo and Century as we get around to that. >> Thank you. All right. Um hearing no other discussion, um all those in favor of the consent agenda say I. I. Opposed, the consent agenda has been approved. We will now move on to our prep for action item, approval of the 2027-2028 district calendar. We're scheduled to take action at the June 16th meeting. Superintendent Bicker. >> Thank you, Chair Nathan and board members. Um our

015executive director of human resources, Karl Bakken, is coming up. Karl, once again, ably led the process of developing this calendar proposal that we are recommending that you approve. The uh proposal was developed in collaboration with the Rochester Education Association and the Rochester Principals Association. I want to thank the representatives uh from both of those organizations. We had elementary and secondary representation. They were extremely helpful. Um uh In many ways, this calendar continues structures that we've put in place over the last several years, but to a a that uh we've had at the board table. I am recommending that the holiday of Eid al-Adha that falls on a school day not be a school day in this year because we have seen as Carl will mention significantly higher absenteeism on those days as students are celebrating

016their faith and so that our lawyers tell us is an appropriate reason to not schedule a day because those students we know from multiple years of evidence will be likely otherwise engaged. So, Carl, thank you for bringing us to this point. >> Thank you. Let's keep it further away from you. Thank you for the introduction as as Dr. Bacall said said I'm here to review the 27-28 calendar which it seems hard to believe to be saying those dates, but it's they'll be here before we know it. Um as Dr. Bacall said we have a team of principals, teachers, Dr. Bacall and myself were on the team. We met three times in March, April, and May with this group and they took some of the draft calendars back to their group, got us brought feedback, and

017we made some changes based on that. As you see in the assembly there just to highlight some of the proposals on the calendar back to school week would be the week of April I'm sorry August 16th, 2027. As we've done the last couple of years we would have the step into elementary school on August 23rd as as well as the re-branding of the step into middle school for sixth grade students only and then step into high school for ninth graders. Then our first day of school for secondary would be August 24th with another that would also be the second day of step into elementary school at the elementaries. Um and then August 25th would be the first day for elementary students. The last day for this school year would be May 26th, 2028, which is

018a little earlier than normal. Normally, we push into the first month of June because of where the winter break fell and where the holidays fell within that and the little bit earlier start, couple of days earlier in August. That's why we are finishing before Memorial Day this year as proposed. This is our fourth year going to a semester calendar. We've been on a quarter calendar, then we were in trimesters for a while. This will be in the fourth year with a semester schedule. And then we will continue the plan is to continue to have the four designated curriculum and development days. And those will be on September 29th, November 2nd, January 3rd, and March 27th. And we anticipate these days will be approximately approximately 50% for professional development and 50% for teachers to review data

019and make curricular adjustments. We'll have a professional development day, which we've done traditionally on President's Day on February 21st. And as Dr. Bacall mentioned, new for the 2027-2028 calendar May 5th, 2028 would be a non-duty day for instructional staff and a non-student day due to expected lower attendance of students whose families observe the holiday of Eid al-Adha. Um we've been tracking that student attendance. There's a significant drop in student attendance on the day leading up to the holiday, the holiday, and the day after the holiday. And with that, I'm ready to take any questions. >> Dr. Rader. >> Uh just one comment of appreciation. I know years back when uh students uh initially approached us about the E- uh this uh particular uh day. Um uh I'm I'm thankful that we did the research. Questions

020were raised as to the attendance. Was it up, down, flat? Uh I appreciate the fact that you that the district did its research and it only makes sense to move as this calendar reflects and job well done. And I think it's also important that not that messaging needs to occur, but but I think there's a value to be derived by uh student participation and and for me that's where the impetus for this occurred. And I'm thankful that our students are I can kind of remember seeing it as a brother and sister uh you know who spoke before the board and I just appreciate the fact that and I hope they're still a part of the district or they will hear about this momentous decision. So, thank you uh uh Carl for uh working with the

021union and community to allow this to to occur. >> Just thank you Dr. Barlow. I want to thank Will Ruffin also who was key in bringing some members of that community together for the conversations as well. >> Dr. Marvin? >> Yeah, I just want to echo Dr. Director Barlow's comments about Eid. I think that's really really a good decision. And also thanks to you and to also the Education Association for getting these calendars out so far in advance. We have busy families. They they need to know, employers need to know, and having this calendar ready to be certified now is is really useful. So, thank you. >> And I also appreciate the creativity with scheduling the CAD days. Um that we have them abutting or at the beginning or tail end of some of our

022breaks so that some of the concerns that parents have shared with us about having them mid-week um uh is resolved and can tie into um other plans they might have for that time off of school. Um and I agree having having these calendars out 2 years ahead of time I know uh personally we're being asked to talk about vacations already for 2027 and 2028 so many people are in that same boat so this will be really welcome news for our families. So thank you. Anything else board members? Director Whitehorn. >> Oh, I just want to say again I was going to also mention I like that the that we don't have a lot of days in the middle of the week. I think that'll be good for parents. And I'm also glad to hear about

023the Eid that we were able to find a day. I know that was one of our concerns early on that it's not a set date. So I'm glad that we were able to come to a consensus with their faith that will work for them which we did so. >> Anything else? All right, this will come back to us for action at the next meeting. It's out June 16th. Thank you. Our next prep for action item is approval of the fiscal year 2026-2027 budget and we are scheduled to take action on this at the June 16th meeting. Superintendent Picault. >> Thank you Chair Nathan and board members. You can see our Director of Finance Andy Crockstead is coming up and he will be walking us through a very complex budget proposal one that I think meets

024the needs of the district's educational agenda while also being a responsible fiscal stewards of the public's resources. I want to thank Andy and his whole team for really Herculean work. For the second year in a row as board members are aware we were reinventing the airplane while we were flying it. This year redesigning the central office cost structures that govern how we allocate resources that are not directly in schools for the most part. And last year, the team led the redesign of the budgets in those schools. And so, it has been a full court press for 2 years running, but one that I think has brought us to a good place. There are also difficult decisions in this budget as the board is well aware. So, turning it over to Andy and then look forward

025to the conversation. >> Thank you, Dr. Picault, members of the board. I'm very happy to be here and present this budget. Before we get started though, I would like to again take a moment to acknowledge behind me. As I said at the C-BAC the other day, I may be up here presenting to you, but without a solid team working on this behind the scenes, it wouldn't happen. Just so you know, part of the cost center work required us to go through each and every general ledger account we have, even if it's not a general ledger account being used in this current fiscal year, but in order to provide historical reporting, we needed to update all of those by attaching a cost center. And there's over 90,000 account codes in in in historical database. We're using

026about 19,000 of those account codes in this budget. So, that took a lot of time. It's not as though they had to do one by one, but there was some mass editing, but it took a lot of time. And we're finding some some accounts we still need to move around. And we're going to continue to do that through the course of the probably the next year as we begin to spend some of those funds. But again, my my appreciation to that team. They're an incredible group of people and this wouldn't happen without them. Oh, there it goes. Okay. It looks like the font got a little This was built in PowerPoint and I think we might be using it in Google. The font got a little screwed up, but I think I think generally it's

027going to show up okay. These are just some of the highlights I I want to make sure that we touch on tonight. Of course, I know a question is going to be around the budget gap and we're going to touch on that as well and and how we address that. Um what does next year look like? How do we spend those dollars? So, just some of the key points we want to make sure that we uh land on in our discussion tonight. I know that generally these um discussions are followed with questions. I would have no concern if it would be okay with the chair that maybe questions be asked while we're on a particular slide if that makes sense. That's up to you, but um certainly that's your your choice, but it may it

028may help the conversation as we review individual slides as opposed to maybe going back, but um I I certainly can be interrupted at any point. So, first of all, we're going to talk about the general fund, and of course, this is the district's main operating account where all of our Well, almost all of our day-to-day operations are funded with the exception of uh school nutrition services and the community education fund. That fund uh is expected to generate almost 1,300 or 1,300 316 million dollars um offset with expenses of 322.7. Therefore, that's the 8.3 million-dollar gap that we spoke about previously last July when we brought that forward to you. Initially, it was much higher. It was at 13.5 million. And And we'll review what's changed, but obviously, that was the gap that we needed to

029look at this year for next year. Uh and that was based on an enrollment assumption of 17,441. And I know we've had a conversation about our enrollment uh projections for next year, as well. And we'll get into that in just a moment. Uh but but some of the things that changed, obviously, um the reduction. Why did that change? It's because we had increased enrollment this year, which we anticipate carrying through to next year. And so, those are dollars that we didn't have in this year's budget. They became available to us because those students became available, and we anticipate them rolling forward, obviously. Um we also had, if you recall, our audit produced an additional $2 million unassigned fund balance from last year's fiscal year. And the board decided to also use that $2 million in

030addition to the other $3 million that had been previously committed from the unassigned fund balance to help help um in the fiscal year '27 mitigation of some of those reductions. And finally, as Dr. Bickel mentioned, we expanded the balanced budget model to all of the central office, and we'll get into some of those details. As we all know, enrollment is everything. Enrollment drives all of almost all of our our revenues, um our tax levy revenues are generated are are based on uh enrollment or I should say our operating referendum revenues. Uh our state aid is based on uh enrollment, and so it's really critical that we one, maintain enrollment, two, that we maybe I should have said it the other way, we gain enrollment, we maintain that enrollment, uh and then make sure that we're

031we're uh building upon that to the best of our ability. As I mentioned uh last fall, we came back to this board and and we're happy to produce um or say that we had uh on October 1st almost 500 students more than we had anticipated for this school year. And that in and of itself has generated that additional revenue that we have this year. Again, we anticipate for next year. Those numbers then became the baseline for next year's enrollment projections. We had previously used different numbers, numbers that were almost entirely based off of our demographic study, um or excuse me, our enrollment study done by the former state demographer last spring, Hazel Reinhardt. We had used those numbers initially when we produced the forecast for you last July. But in October of this year, now,

032this school year, in October, when that enrollment was up, we made a determination that that became the new baseline. And so, what that allowed us to increase our revenue projections for fiscal year '27. It's still a decline. We're still expecting a decline over our enrollment what it is today of about 340 students. But, that's still significantly higher than what we had anticipated having for enrollment next year because of this modeling. What we did do with the enrollment from October 1st, as we projected out for next year, we did continue to use what I refer to as the attrition rate, just basically the change from day one to the end of the school year. That is about 2% at the K through 12 level. So, for every 100 students we have on October 1st, we'll lose

033about two of two of them at the end of the year, therefore affecting our revenue. We also then for kindergarten used the enrollment study because we felt that that time it was still the best numbers we had for kindergarten enrollment projections. Of course, though, those are the most fluid at this point in time. And you can see where we expect to be. Where we are this year is that that top line. You can see we went up slightly from last year's 17,581 up to Excuse me. I'm I'm having a hard time. 17,358 up to 17,441. And then, the box is where we expect to be. Now, the decline is still the trend that is projected in the enrollment study. However, we are hopeful. We're not certain, but we are hopeful that our October 1 numbers

034this next school year may be similarly improved. And at which time we would likely, and we may likely anyway, want to do an additional or do another enrollment study to say, "Maybe we maybe the curve has been bent. Maybe maybe the decline may not be as steep or maybe we will see begin to see an increase in enrollment as as opposed to a decreased enrollment as we're projecting right now. But just understand those years further out are still based on that enrollment study and have not been remodeled based on any current enrollment numbers in this school year. So, the budget gap. As you recall when we came to you in July, that was about 13 and a half million dollars. In January, we came back to you with those other um uh additions of the

035$2 million, some additional revenues, and therefore that reduced it to $8.3 million. And again, this is really more of just a snapshot of of how things changed from a year ago to this January to where we are today. So, it was really the January forecast that we built our budget from and used those numbers as um as our baseline for uh the balanced budget. I should note um that that point below, again, we did not think a single year of enrollment increase created enough of a certainty in our budget projections that we should use those numbers in perpetuity. And so therefore, we continue to use uh our past enrollment projections. The board did authorize uh strategic use of fund balance. And as we think about the unassigned fund balance specifically, those are the dollars this

036board has to use at its discretion. And so this can be used in any purpose you so choose. They're not restricted in any way other than by law. And so therefore, we had previously agreed to $3 million, uh the additional $2 million. In addition to the unassigned fund balance, the board also did approve the use of reserved restricted dollars. Now, although you approved the use of those dollars, those particular expenses automatically get charged to those restricted accounts. And so, what you'll see in the budget is we actually are using more restricted reserved than what was authorized. And I would say authorized, we really used that 2.2 as a mechanism to balance the budget knowing we would draw from the reserved and restricted dollars in some way. That was our best estimate at the time. In

037in reality, we're drawing more restricted and reserved dollars for those very specific purposes in this budget. What that does then is lessens the amount of unassigned fund balance use that we have in this budget. And so, you can see we we still project a very healthy fund balance into the future even with the use of these dollars. This is the unassigned fund balance here as a percentage of our general fund expenses. And we we we expect it to stay again very very solid and healthy, well above the 8% that the board has authorized. A little deeper into the reductions. And so, we categorize the reductions into two buckets, learning sites and cost centers. Really following the model of the balanced budget model. And so, therefore, in terms of the overall budget for fiscal year 26,

038the year that we're in right now, we simply said, "What's the percentage of that budget that's been allocated to the learning sites? What's the percentage of the budget that's been allocated to cost centers?" We took that same approach then in terms of the reductions. Those same percentages were then used and backed into the $8.3 million. And you can see here where we've come up with some of those savings. I would add at this point that the C back had some conversation about vacancy and budgeting. We've chosen to use historical vacancy essentially at the bottom. Essentially, what does it look like if we bring it off the bottom? And there was some discussion about perhaps that shouldn't even be considered, meaning you shouldn't even add those dollars into the budget to begin with. There may be

039some conversation about that in the future, but we maintained this philosophy this year because one, we started it last year and we do think it's prudent. And what I'll I'll say about those particular positions is we we have the principals chose positions, central office chose positions, cost center managers chose positions, but we know historically not every position will be filled 100% of the time every single day of the year. And we have that history. We do those calculations each and every year to determine approximately how much of every position that's requested will actually come to fruition. And so those positions at the learning sites, so we're talking about general education staff, ESPs and teachers, there's about a million 75, 1.75 million of unass- or excuse me, unfilled positions throughout the course of the year. That

040doesn't mean it's a position that goes all year long, but it's the aggregate value. It's the total value of unfilled positions or what I would say vacancy throughout the course of the year. I'm just going to hop over to the cost center side and talk about that for a minute. On the cost center side, remember that cost centers include uh positions that are determined and allocated from a cost center from a budget manager at the central office, but those positions go out to the sites. They serve the sites. So special education, health services, uh advanced learning. Those are examples of positions that are determined in terms of quantity and location. That determination happens with a central office budget manager. But those positions go out and work into the sites. And so we've broken those numbers

041out in the memo. I don't think we have it in here, but it is in the memo in terms of cost centers how many FTE are what we would deem central office. So that would be really district operations. And how many cost center FTE go out into the buildings. It's it's certainly much larger. I think it's about 11 I I'd have to look at my Actually, I do think there's a slide. We'll get to it in a minute. Capital projects and so let me I'll finish on the cost center historical vacancy first. That that primarily or large part is special education. And Mr. Bocking can also speak to the fact there's a tremendous there's a really a a tough it's tough to fill some of the ESP positions in the special education world. Certain other

042special education positions become more difficult to fill as well. And so historically there's been a large amount of unfilled special education FTE remaining at end of year, which means we have budget that we've not used up. We also have certain positions within our maintenance and our operations teams as well that again through just normal churn those dollars are available or I should say are unused. Now, I'm going to head back to the learning sites because those two things go together. I wanted to make sure we touched on those together. Middle school staffing ratio adjustment. In year one of the balanced budget model, we determined that through the reallocation of title dollars middle schools became along with high schools, basically every school became eligible for title one dollars. In addition at the middle school and at

043the high school, we also adjusted their staffing ratio. So what is that student to FTE ratio both at the middle school and at the high school? At the middle school and high schools, what we do is we take that enrollment, we divide it by that number, and we say, "Principals, here's how much FTE you have to fill your course schedules or to to accommodate your course schedules and the other needs that you have from a teaching perspective." When we did that work with our middle schools in year one of the balanced budget model, it became clear that the reduction of the student-to-FTE gave them an advantage at the middle school level that none of the other level that the elementary and the high schools did not have because of the addition to the of the

044Title 1 dollars. High schools uh continued to be very, very tight, and we had one that um was was really tight in meeting their staffing needs last year, and and this year again a little bit better, but that was not a concern at any of the middle schools in year one. And as we looked at how much FTE they had available to them, and um some of them actually had unused compensatory dollars at the end of the budget process, um the balanced budget committee, uh made up of Dr. Braquel and several others, this was one of the recommendations we made to the board in terms of how in terms of how we are um are making the reductions. And so, these two two two particular items on the left side were recommendations from the reduction

045um budget reduction committee that was formed in the fall to look at the learning sites. Wrapping up on the cost center side, capital projects alignment, essentially that's just taking our expenditures and aligning it to our revenue. And in doing that, we have less revenue available to us through the um LTFM levy next year in the general fund uh than we have had previously. So, that meant we had to reduce our expenditures that use those revenues. And therefore, that was ultimately a $1.3 million reduction. That $1.3 million reduction was in the forecast. And And because it was in the forecast, we had the ability to pull it out without impacting our operations. There just simply isn't matching revenue. Now, one of the reasons why that's occurring is because we are bringing in additional We are issuing

046additional bonds and taking on additional debt out of our construction fund to do some of these really large IAQ projects. And so, in order to maintain a fairly stable tax impact to our our community, we are adjusting what goes into fund one under what's called paygo. Essentially, we get the money in that fiscal year. We have that fiscal year to to use those dollars versus the dollars that go into our paying off our debt service. Those are both levied dollars. They go in They They have two different uses. One pays for projects in the year for the year. That's paygo. The other one is the other larger amount is the debt service. And in order to again to maintain that tax impact, the the philosophy has been we're going to adjust those two numbers to

047keep that impact as as flat as we possibly can. Accounting for tax tax value growth and its other other factors. >> Uh budget manager adjustments came up with several others. Again, out of 53 cost centers, they were able to arrive at another million 46 in cost savings. Uh various various things. It It was It's salaries Not salaries. It was supplies, materials, contracted services. In some cases, we cut some We're able to reduce some software subscriptions, things of that nature. Nothing that was essentially FTE driven. One thing that we did do though, um in some of the sites were able to do some of the budget managers were able to do is make some adjustments by utilizing restricted source funding for some of our, um, our FTE in the cost centers. And so therefore that lessened

048the amount that lessened the impact on the general fund. And so in some ways there was a trade-off, but ultimately it did impact the general fund positively by moving certain expenditures that could qualify into some of those, uh, restricted uses. And then finally the one that, uh, the the reduction that the board made, um, a month or so ago with the central office leadership reorganization that accounted for, um, a little under half a million dollars of reduction as well. So, uh, that's a that's a a long explanation, but I think it was important for us to focus on how did we get to the $8.3 million? Um, and, uh, and I think this, uh, this lays it out. >> Dr. Whitehorn. >> Quick question. So, with the middle school ratio adjustment, that just kind of

049puts us level with the other schools. You said the elementary and the high schools are about at this level. >> There What it does actually, and I should have mentioned this, it puts the middle schools back to where they were. So, 2 years ago they were at 24.75. They went down to 22.86. We moved them back. So, it wasn't a it was a 1-year increase, and then we just put them back to where they were. They also did retain the Title 1 dollars on top of that as well. So, they still did get that additional Title 1 funding. We just re-stabilized their FTE to student ratio. >> And I guess my question around that is just around class size because we've had so many discussions about it and so many of the studies brought forward.

050I just wanted to know is there going to be any impact on that or is are we not really going to see much? >> Superintendent. >> Um, yeah, thank you, Dr. Whitehorn. Um, at the middle and high school levels due to our contract with Rochester Education Association, we actually don't staff out class size in the same way we do at elementary. It's each teacher can see um the 260 students. Did I get that number right? >> 160 160. >> Let's raise it further. I'm kidding. Kidding. Kidding. I don't I want it lower, too. Um Now, there is a class size, but it's not we allocate more by number of uh students per each teacher. Essentially, what this change did, I mean, we would always like more money at every level. Essentially, what this change allowed

051I'm confident that our middle schools are all able to fund their core program, um including Dakota, um with their more innovative program, which they were nervous about being able to keep, but we were able to work with them to make sure that they could still maintain it. Um At the high school level, we might have had some significant challenges to uh because we also uh made a change last year where we couldn't keep double funding them for post-secondary options. As you'll recall, we allocated teacher positions to the high schools like the kids were there, but the kids were at RCTC or University of Minnesota Rochester, and we were essentially paying twice. We had to back out of that. That's not how PSEO was designed. For most of our high schools, that was about 7 FTE

052last year. So, the high schools were really tight. We really couldn't go deeper in the high schools. The elementary schools, as you correctly note, class size is an existential issue there, and so we didn't want to change things there. Um I think this was an acceptable uh adjustment at the middle school level. Would would I love to have kept them where they were last year? Yes, um but in the big picture, I think that um our leaders made it work. >> Thank you. >> Moving on now to um the balanced budget model. Just talking a little bit about that. Of course, that's our kind of North Star in terms of our budgeting. How How do we do this within the district? In year one, uh I know we've talked about, but just to review, it

053really was focused Well, it was all focused on our learning sites and working with our principals in establishing uh that uh process at our our learning sites. Year two, now this year, um obviously we've talked about the cost center establishment. We'll get into that a little bit more in a moment moment, but what it it allowed us to do with the establishment of cost centers is really provide uh hopefully transparency to those budget managers, who each cost center now has a budget manager. One, they can see exactly how they're spending, where they're spending, and they're making the decisions on where to allocate their dollars. So, the way the process worked is we, finance, worked through the reductions and cost center by cost center provided a target number for them to do or to make, rather.

054The reductions at the cost center was ver- were very similar to how we handled the the whole shift, and that is a cost center, what is the cost center's percentage of their overall cost center budget? So, what's their prorated portion of all cost centers? And that was the percentage we asked them to find, to the best of their ability, reductions within their cost centers to that to that number. And I would say they all did a really good job. For for year number one, I would say they all did a really really good job. They took it very seriously. They came up with some great ideas. Um I know that next year we're going to do some things a little bit differently. Uh always a learning opportunity, but frankly, um I'm really happy with how

055year one uh transpired with with all of them. The other thing that we did this year, and I know we've talked about this, so I'm not going to talk about it a whole lot. We made a couple of changes with the supply budgets and moving some of that into the principals' decision-making authority at the time that they're doing their staffing. Also then, the compensatory revenue reallocation. We talked about this at a couple of different board meetings as well. So, um I just wanted to remind you of what this did. Essentially, it allowed us to take some compensatory from schools that had that had a lot. One could argue it's appropriate. I'm not going to make a argument one way or the other, but they had a lot and we had certain schools that had very

056little to none. And so, what we were able to do is take some of that 20% that the district is allowed to retain, we reallocated that back out to some of those sites that did not one qualify for title, and number two had very little compensatory dollars because we know they have the needs as well. They have students that can't read well. They have students that are struggling as well. So, so that was again another one of the components that the BBM committee determined was appropriate. We also then were able to with the retainage of that some of those 20% dollars at the district level, we gave back the sites general fund money. That was one thing we heard last year. If you recall, we had this conversation earlier where they had these compensatory dollars,

057but because of the restricted uses in statute, it really handcuffed them in some ways. We gave all sites back some general fund money that just kind of opened up the horizon for them and they could use those in any way they wanted to. We then figured out how to use up the those those compensatory dollars that that were left at the the district level. So, those were sort of traded dollars, but principals really appreciated that. I know at the high school level and the middle school level, especially where they have assistant principals, that's one category that's not permitted along with clerical. And we know that there's more of that staff at the secondary level than at the elementary. And so, this was a much appreciated and I think this went over very, very well. A

058couple of the schools that I can, without naming names, that that were some of those low compensatory earning schools, I I heard nothing from them in terms of problems meeting their staffing needs. That was different a year ago. So, this this I can tell you worked. Let's talk about the revenue side of the general fund now. Um we obviously uh plan to earn about 350 almost 316 million dollars. As you all know, the vast majority of that or the vast majority a huge percentage of it comes through our state generally and other state uh funding including including special education and some categorical aids. Uh our local dollars account for about 21%. That's made up of our operating referendum and our other property taxes that we generate for other um board approved levies. What rounds out

059then is the uh federal uh at 3% and and a little bit of other local. The other local dollars are going to be things such as um uh sports fees, registration fees, just monies that we earn, interest, things like that. That's those are local other local dollars. On the federal level, let's touch on that for just a moment. Uh the federal level um we Congress as you you likely know did appropriate similar levels of funding in the title uh and special education areas. We We have received our allocations for title uh from MDE because all those dollars flow through MDE and they were similar levels as past years and so therefore um we were able to adjust our revenue target our revenue up from where you were a year or excuse me in January even

060we adjusted it up because we received those allocations from from MDE since uh the forecast in January. We had originally planned on about a 20% reduction in the federal funding and so little therefore we we essentially uh trued that up to about 100% of where we've been in the past. And so, although it's not um the largest share, it certainly is impactful at over $9 million. And so, it's important that we continue to receive those dollars. Anecdotally, I will say there seems to be there seems to be at least generally in terms of the at least title one and special education, pretty broad support for those particular programs within the administration, at least from what we can gather. On the expenditure side now of our general fund, it should be no surprise that staffing is

061our number one cost. That's about 80% and we're expecting that to go up almost 3%. That's about what we put in the budget. Actually, on average we put in a 3% salary cost of living adjustment, but then certain categories of folks go you know, are a little bit higher, a little bit lower, but as a whole that equates to about 2.9%. Excuse me. I did want to point out the benefits though. Obviously, I know we've had some conversation with all of you as well in terms of some of our benefit costs. Benefits in this category aren't just health and dental benefits or life insurance. It also includes anything that's a payroll tax. So, our FICA, workers compensation. So, as our salaries go up, those are all percentage based and so, those are going to go

062up as well. It's paid family medical leave or the new state program. So, those things go up as well. But a large large percentage of this increase is directly tied to all our health care costs. Not exclusively, but but a pretty large share of that. We are currently as a finance department, our employee service led by our employee services division, Laura Holman, we're in the process of looking at everything. And one of those things that we're doing right now is is actually we've been um working with four different insurance brokers. These are the folks that go out and help us find the carriers and we're interviewing them. We're trying to see who who can provide us with some additional ideas and concepts and theories about how we can um make some changes within our health

063uh plan costs without changing benefits or or anything like that. And so, we're going to have a larger conversation about our health care, you know, in the in the coming uh months, especially as we close out fiscal year 26 and understand uh what our fund balance looks like. But, I I just want you to know we're working on this. Um we have we have some things that we're thinking about how we can address it. But, we're not any different than anyone else. Uh no other school district is you know, is is solvent Well, they're solvent, but no everyone is experiencing similar issues nationwide. The trend right now, um we we learned this morning uh is anywhere from 8 to 11% increase um for next year in terms of just costs. And so, what does that

064mean for premiums? That's yet to be determined. And then you'll see where we also will have some additional um our purchase services, supplies, etc. and where we've made some reductions. Um you may ask the capital, and I'll just touch on that real quickly. That was simply a movement of some debt that was considered that that was coded as capital uh expenditure within general fund. Uh that debt moved over to our debt service fund. And so, that happened this fiscal year uh and uh is incorporated into next year's budget, and this was part of our our levy as well. We discussed that during our levy uh certification uh earlier this year. Or I guess it was Uh the time all runs together. When was that? December? >> Yes. >> So, these are these are the high-level

065categories of our our general fund expenditures. Of course, there's more details in the the memo. >> Uh just quick question. Director Whiteford. Um so, there has been talk about the state taking over the health care for the educators, would the numbers still look the same and have we considered that in the projections if that were to happen? I don't know where >> We're not right now because it's it is still just a bill and bill language and um frankly we don't know when or if that will occur. Um there there's uncertainty around what that will look like for us. There's there's the proposal includes language in terms of of course all of us contributing and that a portion would be paid by the state. That would be the challenge. How is the state going to

066come up with some additional funding? Obviously we would still have our district contributions. Um we know of of it, we talk about it. I will tell you that the three consultants that we've been working with or talking to in the last couple of days, this hasn't I wouldn't say it's not on the radar, but it's not something that's imminent. We know that we have probably at least a couple of years for sure because that program would take some time if it it was if it was even approved or passed, it's going to take some time to roll that out. So we have some of our own work to do in the health care space before that would ever happen. But we are aware of it, we're following and monitoring it. Our employee services manager Laura

067Holman has has attended a couple of webinars on that. There could be some positive for us, there could be some negative for us. I think it's right now just a little too fluid. >> I'll refrain myself cuz I'll take a stab down the rabbit hole, but I'm glad you're watching this. It's a very very important issue and um an under appreciated reality of the discussions in the last session is that there was bipartisan support for this. Um it's a major priority for our friends at Education Minnesota, which I understand. They did have Republican support for it. So I think it's very much something for us to be watching for. In any scenario it would be a massive increase in the total cost of funding for health care. The big question is who pays for that

068increase? The proposal suggests that the state would kick in for it. The fear is that they do so by reducing our general fund allocation for teaching and learning. So, I'm glad you're watching this. It's going to be a very big deal next year. >> As we've said, there's still only so many dollars at the state level to spread around. And so, what does that mean for our other funding exactly? >> And I just had another question. Um and I I may have asked this before, but I'm not sure and I know I'm going back a couple slides, but with a compensatory funding, um is there is there a use by date? I don't think I've asked that. >> No. No. No. I mean, we we allocate out to them and we allow them to carry

069that over. There is a restricted fund balance for compensatory aid. And so, therefore, we calculate that. If they don't spend it, we give it to them the following year. >> Okay. Thank you. >> Let's get into our staffing levels now. And this budget is proposing 2,622 total FTE. That's across all of our funds. And so, that's going to include community education. That's going to include our school nutrition services group as well, even though they're not funded out of the general fund. So, this is everyone district-wide. And as I mentioned, you can see those first two blocks are the cost centers. So, together there's a you know, about 1,450 FTE in cost centers. So, those budgets that are cost center allocated budgets. But, the largest share of those folks are going out to service students in

070the schools. Again, I mentioned that previously what those folks what those employees are. The rest of them then, the 11,100 1,174, those would be FTE that were allocated to the sites as part of the balanced budget model and the formulas included in the balance budget model. And then it would also include those FTE that principals um directly chose based on the uh the dollars the the al- um we're trying to change the normal the district allocated dollars. So, the district allocates dollars and FTE. And so, those that number includes the combination of the allocated FTE plus the uh again the positions that principals choose on their own. And uh again, it's it There's There's more detail in here. There's a cost center breakdown in the memo. There's a learning site breakdown. There's comparisons year over

071year for the learning sites because it was year two for them. We were able to do some of that comparison. As a whole, it's a 27 almost a 28 FTE reduction from where we are today. Um it's important to note that's not That is different than where if we compare year over year. But, we added positions throughout the course of the year based on some grant funding and some other revenue sources. And I'm not suggesting those positions necessarily being redu- reduced, but as a whole, the entire district um will be down about 27 almost 28 FTE from where we are right now. >> I guess I'll ask that question. Um So, the the those represent people who were in positions. Um of that 27.7 FTE, I try to ask this question every year and I

072never know if I get it right. How many of these people did we lose from RPS or were some of them able to find positions elsewhere because there was an opening somewhere else? >> Uh it's in flux. >> Okay. >> Actually, because this is looking ahead to the next year. So, right now at this point, we can just tell you that it's that it's a couple dozen FTE. Um, as we have the full staffing uh, process, it's complete. But, for us to do that analysis, people the transfer process has just finished. And so, the the the dominoes are still falling into What dominoes is a bad Dominoes falling is bad. What what whatever metaphor is of things falling into place are still happening. We can certainly provide that for you. As Andy notes, there's a

073there's a certain signifi- significant share that we're pleased we're able to find other employment. Um, but there also are some difficult reductions in in here, and I want to be um, obviously clear about that. We know that's very difficult for the people who are impacted. >> Thanks. >> Next, I want to talk about site-specific and this kind of um, uh, really focuses on them and the balanced budget model. Um, I I I flipped these slides around from our CBAC, so those you know, um, those uh, board members who are at the CBAC, I I felt it was important to talk about this first. And let me talk about this particular slide. As I mentioned, we we are able to calculate and allocate dollars from the central office to sites for them to then make their

074site-determined decisions, site-based decisions. This year, we're able to increase that number across all sites by a little over $3 million. And you can see how that broke out by by level. And this leads directly to the next slide, so I thought it was important to stop here and just make sure that we we focused on this first because this FTE count that is that is um, funded, the FTE that's funded by this amount is directly included in these numbers. And so, you can see as a district-wide total, uh, as part of the balanced budget model, some of this is enrollment based. There was a reduction across the system of 2.2 FTE. So though though again that would be the allocated portion that is given to the sites. Now however, because we were able to increase

075by over 3 million dollars, sites had additional dollars to use for site determined or site based decisions. That increased that number was 12 a little over 12 FTE. Therefore, accounting for an additional total across all three levels of 10. And so yes, a little bit of reduction on the FTE because of those additional allocated dollars. And so the model of balanced budget drives the allocated FTE. So that's that's formula based and that's what enrollment says and that's how that's determined. So once we make that determination, we now know how much that's going to cost and we're able to say, "Okay, now we know how much that's going to cost, how much we have to spend." We had a little bit more money to give to them then for some of the site based decisions. That

076actually is met with with great Sites like that. They they enjoy that additional flexibility. They use these for ESPs especially, other support staff, um intervention teachers, reading teachers, really the supports. There is some added classroom teachers at the elementary level. There were just a handful this year. And so they're using in a broad a broad swath. There's a there's a lot of ways in which the the sites are choosing to use those dollars. Um but we're they're making the decisions. We give them a budget number for each position and they do the work of saying, "Okay, how much can I afford with the allocation that I've been given?" And they make all those decisions. >> Good night. >> Um uh, thank you and and um, this came up the other night at the community budget

077advisory committee, um, and directors, um, McLaughlin and Cook were there and I'm grateful that you were. Um, there are certainly, we didn't take a vote, but there's certainly a significant number of members of that committee that are urging us to go further with this model and provide additional site determined flexibility. Um, while I think Andy's correct when he says that, um, they, uh, like this flexibility, it's probably fair to say that principals like this flexibility and we have had some pushback from some other groups. We have a very important discussion awaiting us next fall to, uh, come back to this conversation and so I'll be bringing a recommendation to you about this. Um, I just want to also own the tension that there are some folks, as you'll remember, school counselors I had initially recommended,

078uh, making a site determined, uh, position and then concluded as we received some feedback about the very ambitious post-secondary pathways work we have going on that I could not adequately uh, explain how that work would be moving forward, um, if there were more site determined flexibility. I didn't say I was never coming back with that recommendation, but I took the point that we had more homework to do and that's just one example of it. So, I think Andy's absolutely correct, there have been many positive aspects to this, but there's an inherent tension and I think next fall, um, earlier than later in our process will be a good time to bring you as board members some, um, analysis of what Angie's Andy's just doing off the top of his head. How have sites used this?

079What have the implications been? Um, cuz I think next year I would submit is probably, I hope, our last design year for our budget model. At some point you got to land the plane and you and you just have people know the rules and so that last year might be the, I mean, nothing's ever permanent, but that last year might be the last year we'd be making major design tradeoffs and I think this would be at the top of my list of things to come back to you with. But I but I have I agree with Andy, I've been pleased with how sites have used um this in the big picture relatively modest flexibility, but it's been meaningful, I think. >> Yeah. >> I mean again, it is total is 30.5 million, 30 and a

080half million dollars. So, that's a lot of money uh in this in in on the grand scheme of of the general fund, that's you know, 10%. So, it's it's it's meaningful, though. And and and it's incredible to see how principals are making these decisions and they're really doing these tradeoffs and uh if I get this and that position costs this much, I can get this or I trade this for that. So, there's a lot of thought that goes into that. Um and uh we're there along with them to make those decisions and also uh Eric Johnson and Jackie uh Peterson were tremendously supportive in that process and frankly, they did a lot of that work day in and day out with these principals trying to balance and get them within the framework of their allocation.

081>> And I know it wasn't part of the requirements this year, but are we starting to see principals talk about their current skips as they were making these considerations this year? >> Yes. >> Absolutely. >> Great. >> Not uniformly. >> Right. >> Absolutely. >> So, let's wrap it up with the total budget because as we obviously come forward to you in 2 weeks, you'll be approving the entire budget. We spend most of our time talking about the general fund, but obviously there's an entire budget to to approve. And and here are the numbers. And you'll can see again where we are expecting to use about 7.4 million dollars of fund balance. If everything uh played out exactly as we budgeted, we know that's not going to be exactly the case. Uh you know, there were

082there will be um three budget revisions done um like we do now. There'll be three budget revisions for uh essentially, they really budget revisions really should be and this is something I'm really focusing our team on trying to make sure that our budget revisions are driven by new revenues. So, if we have new revenues, we add that. That means we have some additional expenditures that we're able to put in the budget as well. Um and so that's the focus of of of our team and and how we handle those revisions. Uh but anyway, uh again, we expect there to be that particular fund balance use across all of our funds and you can see fund by fund where some of that uh use is going. Uh in total, um you know, we're expecting $475.8 million

083of revenue with the $483.1 million. And so it would be that $483 million that we're going to be looking for an approval um from you uh in 2 weeks. Well, finally, uh I know one of the things that we put into this memo this year uh was sort of anticipating some of those questions that well, and they're not even anticipating questions where there are certain questions we hear as well. Obviously, number one was uh you know, why are we still having to make reductions when we had the referendum? And I know Dr. Pichel has some some thoughts about this likely as well, but just honestly, uh the the cat the cuts would be catastrophic without that additional nearly $20 million. So, you know, think about that in terms of the $8.3 million. Add almost $20

084million to that. That's what we would have been looking to make reductions in this now for next year without those dollars. And so uh I know the commitments that we've made in that referendum are still being I mean, we're still making those commitments and we'll be be providing that information um like we did last year uh line by line and and ensuring the public that we've continued those those um those promises. Uh but again, um I I think it's important to note uh that as we think about our enrollment and and where it's heading, we hope that it's going to be going up. We don't know that, but uh in case it's not, we better we we you know, we need to take some some measures today. And so I don't know if Dr. Pichel

085has anything to add on this particular topic. Okay. What about facilities? Um, you know, the group this group will have a presentation next week about a a facilities report, some additional changes at the facilities level. Um, frankly, we're working through. Um, we've identified funding strategies. We have a little bit more work to do in terms of fine-tuning that funding, uh, but we know how to do it. Um, we just have to get a little bit more detail around the nuts and bolts of that. And, um, I don't know that that will be coming to you next week. Uh, but the plan I understand as it exists in sort of getting a lay of the land, so to speak, of of what changes would be proposed um, would be part of that uh, that discussion next

086week. And we will highlight broadly the funding sources, um, but we think there's a probably some additional detail that this board should have before moving forward with final decisions in terms of the funding mechanisms. >> And then In any event, they would not be uh, expen- expenses for the 26-27 school year. >> No. >> Right. So, we're not presenting that to you now because it's not in this year's budget, but we'll talk about that um, next week. I'm looking forward to the discussion. >> And just to remind the board, there there was $6 million allocated into a a committed fund balance, which means it has to be spent at your dis- We as finance can't use those dollars. You determine how those dollars are used. And so therefore, those dollars remain uh, tied primarily or

087sort of earmarked for facilities and technology. We anticipate using them a lot of a lot of them for facility work. Cross-subsidies, that's a question that's asked as well. And um, we in 20 fiscal year 27 will be the first year of the English learner cross-subsidy. We refer to it in a district as multilingual learner. MDE continues to refer to it as EL, English learner, but this uh, this budget includes that first year of that cross-subsidy reduction aid, and that is about a million dollars. So, um, we're getting a million dollars back uh based on our expenditures um both in or in the um our EL uh services. And of course, then we continue to have the special education cross subsidy. And that did increase in fiscal year 27 from 44% to 50%. Now, we do

088know there's a blue ribbon committee studying special education and reducing special education costs across the the state. Where that lands, we are not sure yet. How this cross subsidy may be impacted, we are not sure yet. Um next legislative session, of course, is a budget year for the state, and I think a lot of this is going to be um dealt with, well, we hope that some of it is at least dealt with and we have a little clarity on where they anticipate this going. Uh but certainly, those are things that we keep our eyes on because those are areas uh we know the state wants to make some reductions, and those would have a direct impact on on our budget without a doubt. And then, fiscal year 27-28, um and I'm just going to

089go to the next slide, and that really looks at um future years. With the context around this is still based on FY28 and beyond is still based on the projection that we did in July. And so, we will do another projection after October 1 numbers this year. We'll do another projection for both next year and then 4 more years after that. And that enrollment, again, I keep coming back to enrollment. There's obviously a a pattern here, right? We want to see what that enrollment looks like, and that will uh drive what our forecast looks like um for those those out years. But ultimately, we have not changed these projections for the future. We we we we still anticipate needing to make some reductions. Even if our enrollment grows, it would be hard to imagine it

090would grow to the extent that we wouldn't have to make some reductions still in the future. Uh we hope that they're less, though, and that's what we're hoping for when we see those numbers in July. Excuse me, October. And so here's just a summary slide. I'm not going to go through it. I mean, it's basically just summarizing everything we've talked about. Uh but that is that is my presentation. And I I'm happy to take any additional questions. >> Dr. McLaughlin. >> Um I hadn't really thought about this before, but the budget managers that you talk about, are those in people in the finance department or are they spread throughout the district? >> They're spread throughout the district. They're primarily those Well, they are all those that are uh closest to the programs they serve. And

091so uh special education director, uh our advanced learning coordinator, and that uh that director over that area. So we purposely and and rightfully the budget managers are the closest to the programs and know how those dollars should be spent. >> Um and a little bit different question, the compensatory revenue reallocation. It occurred to me that the timing of that might be an important part of this process that I don't understand. That if the principals are working on their balanced budget model and creating budgets, what is the timing of that compensatory revenue reallocation? When does that happen? >> That was included in this year's budget. And so therefore, when they did their planning in January and February, that was in there. >> They already had that. So it just it doesn't come like midstream or something

092like >> That's included. What they will get later on in the year is basically a true up. So, you know, if they had $500,000 of compensatory allocated to them by MDE and only spent $400,000, we're going to give them another $100,000 to be used as they deem appropriate and allowable by statute. But that's already included. >> Okay. And then one final question that I think I asked this in our Q&A question about the purchase services. It jumped out at me that tuition obligations to out-of-state education institutions. I'd never heard of that before. What is that? >> Well, we pay we do pay and and I think actually I probably should have Not only is that an an increase, so we pay for students who are placed in out-state um facilities sometimes for treatment treatment programs.

093And so, we pay for those programs out of our general fund dollars. Uh in addition, that particular object code 394 is also used for PSEO. And we know PSEO costs are rising as well. So, I should have probably included that item in the memo as well as I reread that today. Uh but that's that's um the out-of-state You know, we have some place in in Wisconsin, for example, and that's just how MDE requires us to code those expenses. >> Okay. Thank you for the clarification. Um I wanted to ask a question about um the stability in the expenditure projections. Um your base uh you're basing them on our historical and then in increasing them by what you think they might cost. How many of them uh like we through the the food contracts and the

094milk bids and all that. So, that's a certain because we have a contract. >> Mhm. >> How much of our expenditures are that known because we have a contract amount or we have a contract amount with inflation versus we know we're hearing about increased costs in the economy for various factors. >> Mhm. >> How much of our expenditures could be affected by that? >> Not as large as you might think simply because of our staffing, how much of of our costs are staffing related. And for example, our teachers contract is in place for next year. So, we know exactly what each teacher at each step in each lane is going to make. So, we can factor that in um exactly. Um I I wouldn't say to the penny. We do a little rounding, you know,

095but to make it to make the math Not to make the math work, but just to keep it simple. But those particular costs um we can we can really clearly hone in on. Um contracts that are not yet settled, again, we have a we have an inflation factor that we build into. One of the areas, and this is one of the reasons we did want to include our contingent or increase our contingency allocation next year, is transportation costs. There is a a fuel escalation clause in our contracts, and obviously if the fuel costs continue to be increased and high as they are right now, we would be paying more for our contracted services beyond what's already in the contract. And so we put additional dollars in there in contingency to cover that along with utility

096costs. So those are probably the two that really are kind of unknown. Transportation is a huge huge I I shouldn't overemphasize. It's a large dollar amount. It's not the hugest, so I don't want to overemphasize, but it's a large dollar amount. And of course any fuel escalation on top of that would would would be impactful. So we feel like we've saved those dollars for that purpose and and and are fairly comfortable with our our estimations. Of course we're only, you know, we only know what we know today. We we hope that we would had have adequate contingency to cover in those cases. But otherwise the vast majority of like our contracted or excuse me our software subscriptions, that's another large. We know that they generally go up about 4 to 8% a year. So we

097put that cost in there. Some go up a little bit more, some go down a little bit more, but in the whole they they they balance out. So I would say the vast majority of the things we're able to really get close. >> Superintendent >> Um which I'm pleased about the the one exception to that also that I don't know if you mentioned is health care in the sense that I remember a couple years ago when we had a big increase and I sent out a note trying to explain it and I noted we have some people who take their health care from us who have very very serious and very expensive medical conditions. And I am thrilled as actually someone who had a spouse terminal diagnosed with terminal cancer with young children that we

098are able to support them. But they are often six-figure costs. And when I sent that out, I got a good amount of angry uh messages back saying it seems like you're shaming them for that. And I said that's the last thing that was my intent, but a lot of people don't understand that the uh cost of the treatments that individual employees um receive, which we are pleased to provide, shows up in our premium increases quite directly. And so, it's kind of explaining that hard reality to folks. And uh it's something that um is going to be part of this discussion that um Director Whitehorn was uh forecasting about a statewide pool. Because the bigger your risk pool, the less the impact of two dozen employees with expensive conditions has on a system even of our

099size. >> I would I I should have in included that as well, right? We are The budget includes about a 19% increase in healthcare costs for fiscal year '27. Um this year, the premiums went up 17 and 1/2%. I see no I don't see any way in which it will be less than that next year. Um simply based on where the spending is to date and the the unfortunate negative fund balance we're running right now in our health trust. And so, therefore, it's possible it could be higher than 17 and 1/2%. Um that decision will be made later in the year. But again, those are all the strategies we're trying to um to work through with um potentially a new insurance consultant. We're going through that process. We're trying to just flip over every rock

100and and turn over everything to see what we what we can do. We have our geographic location, obviously increases our healthcare costs. Um utilization is way up. And and Dr. Picquelle touched on the the high claimants. That's exactly what it's for for them though. And but we know that that does have an impact on on the health trust and ultimately our total cost. And we do have a larger share of those premium increases than we did 4 years ago. >> Um both in the slide deck and in the memo you mentioned um that looking ahead to next year that you're going to be using zero-based budgeting for our cost centers. Can you just >> We hope. We hope. You know, we we have historically as long as long as I've been here when we've had

101to make reductions, the process has been starting at your top and saying how much how how what do I cut out? What do I cut out to meet a to meet a a target? I think the better way to do that is saying here's your target, how do I build up to that? How do I have everything that I need or as much as I think I need or every resource possible to get to that number. Um it's a philosophical shift frankly. Um it may not be something that we can do immediately across the board, but I think ultimately it's about building a budget and not breaking a budget down is the philosophy I really want us to get to. And ultimately we need our budget managers to also think at a very granular level

102account by account by account as opposed to this large massive cost center. And that's going to take us some time to train them and get them to that level of understanding. Um and so when I say we're going to roll it out, I think it's going to be in bits and pieces. Um but it's also it's ultimately just looking at everything within a cost center both staffing and otherwise and non-personnel expenses and determining is it appropriate, isn't it appropriate? And if not, we put it aside for now and then we we work on what is and then we bring these other things in depending on what our level of of um our capacity is yet based on our our target. >> And my last um I guess comment question um well you talked about the

103Blue Ribbon Commission and the the legislative $250 million cut special education when the superintendent asked board members for feedback about what they wanted on the ABCD for next year. I asked that we have either a study session or agenda item where we really dig deep into what our special education funding looks like. It's very complicated. I was on a Zoom call with MSBA this morning. I everyone is terrifying when I talk about when they talk about the subject and the very limited um the very limited ways that are available to avoid some serious consequences of these cuts. But I thought that maybe once the Blue Ribbon Commission comes out with their recommendations, we can really dive in so we understand what those implications are prior to the legislative session because I think once the legislative

104session happens, things are going to start happening very fast. You'll already be in your budget um discussion and we may need to pivot on a dime depending on what the legislature does with that. So, I I have we have that on our list. And same with compensatory funding, I I would assume. Dr. Barlow. Quick question. Um The FTE by billing contract groups background information you provided um I had hoped to perhaps see the uh change from year uh I have received and I'm sure other board members have received um letters of concern regarding uh some of our uh uh non-teaching third covered by contract group but uh not necessarily teachers and uh reductions um and I was I suppose I was looking to see where those would appear, but perhaps they aren't This particular budget

105isn't designed to show that. And I'm okay with that, but I was nonetheless just curious um to see what the actual impact uh what the actual numbers were. Uh and and maybe I can just talk privately about that. I'm not sure this is a forum designed to to bring it up. >> it may be in the memo that I see Andy pointing out that we may need to point it out for you. >> Yeah, there is some Dr. Barlow on page 20. And on page 20, that that particular table again looks at what the budget includes in one column and then both a comparison with where this year's budget started and where this year's budget is ending. And so um ultimately, if you take a look at the the very last column in terms of

106where we are today, you'll see there's have been a reduction of one cabinet, we know that. There's been a reduction of two .7 clerical um 24 and 1/2 ESPs. So, that is from where we are today to where we will start the school year. It's 24 and 1/2. And if you move down, you'll see operations professionals, there's a decline of 2.8. Um SNS went up 3.2. Again, there's a different fund for them. Um they monitor their growth closely, but there's some additional needs and you can see then the teachers. And so, there there was reductions kind of broadly across the board. >> And if you're Dr. Barlow wondering about a subset of any of these groups, I I'm guessing teachers, um that is something we could provide you with. >> Yeah, well, actually, um social

107workers >> That's I I assume that that is what you're thinking. Um Uh as as >> That I think is in one of the one of the attachments as well. There's an FTE detail. >> It's it's one of the really >> detailed list that will have >> ones. >> Right. >> It will >> It's detail, it's called. >> Yes. >> Okay, thank you. >> You know it's my favorite one. Yes, actually. >> She did that just for you, Charisse. in there. >> Your wisdom is proven cuz I said, "Kathy, no other board members ever wanted that." And look what I was wrong about. >> Yeah. >> Thank you. >> You've been redeemed. >> Yeah, no, you Yeah, and if you have other you know, we are coming back in 2 weeks. So, if you have

108other questions, I'd be pleased to answer that. I get some of those emails, too, and I recognize that we need to have responses to that. >> Any other questions or comments? Anything to share from our CEBAC board members? About how that process went? Feeding into the budget? >> It could be perilous to try and summarize cuz we didn't ask the committee to vote on anything. I mean, it was I think it was it was a very productive discussion. It was standing room only this year. The group, I think, agreed that they want to dive deeper into a limited number of subjects next year. And so, we're beginning to think what that might be. I don't know if Director Cook or Director McLaughlin has a has a different opinion, but you know, I I myself would

109be nervous about characterizing the opinion cuz it was very much individual. >> But it was useful in the development of the >> extremely useful. Um and I think the group has learned a lot, and so I think we will get to the point next year where we ask them to take votes on stuff. Um we haven't been at that point uh with their learning curve and with our understanding of what would add value in my recommendations to you, but I can see us getting there next year for sure. >> Um my feedback was that I thought they were very engaged, um which I wasn't necessarily um expecting. Yeah, to that level. >> It's an engaged group. The The one thing we haven't talked about at length uh this evening that the the CEBAC committee definitely

110spent some time on was uh understanding the enrollment projections and the uh the ramifications of a a deviation from the Reinhardt study um in kindergarten next year and how that would sort of play out in terms of these budget numbers um and the 371 roughly uh student reduction that is forecast in terms of the the revenue side. Um but I I think most of the rest of the conversation has already been reflected here. It certainly is an engaged group of uh uh valuable perspectives that are represented, so. >> That's great. >> I would add to that, too. It seems like perhaps the future value that they can add is as community members, their reflection on the assumptions that we're making about enrollment. I think they may have things to uh assist us with there from

111their perspectives. >> Well, if nothing else tonight, board members will have at one more chance at this when we take action at the July 16th or June 16th meeting. And I would say, "Thank you, Andy, for your service." But we know you're up again next. >> Yes. >> Our next agenda item is an action item. Approval of issuance and awarding the sale of 33,800,000 general obligation facilities maintenance bonds series 2026A. >> Thank you very much. Uh I'm sorry, did >> Go ahead. >> Okay. I didn't know if Dr. Kill had an intro. I'm sorry to jump in there. >> Uh we we um as as the memo states, we um had a bid opening today for bond issuance. Uh we had some some very good uh bids and some good results. I'm going to turn

112it over to the expert, Jody Zesbaugh from Ehlers. She uh is the expert. Uh I'm not As long as I've been here, Jody, it's usually been Aaron. And so, I appreciate Jody I appreciate Jody being here and we we love Jody and we love the Ehlers team. They've been incredibly supportive of everything we're trying to do in terms of our finance uh funding and financing needs. And uh again, she can walk through everything that you will be voting on tonight and um we can ask questions after that. Thank you. >> Great. Thank you so much. Nice to be here again even though I haven't been here since Andy's been around, so >> But that hasn't been that long. >> Yes, okay. So um these bonds are being issued as part of the long-term facilities maintenance

113program. You approved the plan, a 10-year plan as part of the program by July 31st each year as required by law. So to finance the projects that are included in your 10-year plan, there are three different revenue sources. One is the bond proceeds, the second is your annual levy. We often refer to that as the paygo levy which is included in the levy that you certify each year. And then the third is state aid, so you do get about a million dollars of state aid as part of the program every year, which is great. There are a lot of districts that don't qualify for state aid, but you do. So that is the way that the uh the projects are financed, so we'll talk about the results of the bond sale that we had this

114morning. As Andy mentioned, things turned out very well. So we're financing health and safety and deferred capital maintenance projects that are included in the 10-year plan. Um we did go through the rating process, which is required every time you issue bonds, so that's with S&P. Um and Andy and Andrew participated in that program and did an excellent job of representing you and the school district, so thank you for all of your work as part of that process. There's a lot that goes into it and you kind of feel like you're in a little bit of an interrogation session, I would say because they're firing questions and so the two of them really did a a great job, so we appreciate that as part of the process. Um the Minnesota state credit enhancement rating that is

115issued by S&P as part of their process is the highest rating that they give, which is a triple A. That is the same rating that our state has, so under the state program you get that triple A credit enhanced um rating. There's no cost to participate in that program, but they do guarantee the payment of your debt should you not be able to make a payment. So, that's why you get that nice high rating. Your underlying rating is also very high at a double A stable, and that was affirmed. So, that's the same rating that you've had and will will have us will have us part of this bond issue. You received eight bids. We generally like to see three, so when we saw eight bidders signed up, we assumed that was really good news.

116You can see the rates that we received. The low bidder was Mesirow out of Chicago. Their low bid was a 3.87, and the high bid was a 3.95. So, very close, all under 4%, which was nice to see. Uh the estimate that we had in our pre-sale report was 4.30, so we are under that. And the lower interest rate resulted in principal and interest payments that are about 1.1 million lower than what was in our pre-sale estimates, and I think Andy went through that report with you at your May 5th board meeting. So, we have a resolution prepared by your bond attorney for your consideration tonight, and I will just walk through some of the attachments that are included in the report, and I assume you're all seeing it. Oh, perfect. Okay. So, the first

117attachment is the bid tab, so that's a couple pages long because of the eight bids that we received. So, again, Mesirow out of Chicago was the low bidder, and then you had bids from New York, Dallas, Texas, a few bids from New York, Minneapolis, Piper Sandler of Minneapolis locally, and then Baird out of Milwaukee, and then the high bidder was TD Financial Products out of New York again at that 3.95% rate. The next schedules are the same schedules that were included in the pre-sale report, just updated with the results of the sale today. So, we have our sources and uses schedule that shows the amount that will be available for financing your projects. A detailed debt service schedule on page four. Our detailed long-term financial plan on page five. It kind of looks like the

118levy report in about size four font, but it's just um showing all of your existing debt, your uh this current issue, and then our future funding, which we Um if you turn to page or if you look at page six, the bar chart, our goal is to keep your tax rate for your debt and capital levies nice and level, and then we do have a couple drop-downs um later in the schedule to provide some future capacity. The final attachment is the rating report, and I'll just point out a couple of things on that. Um in the credit highlights at the bottom of sale day attachments page seven, mentions the district's strong financial track record, its sophisticated management with robust long-term planning, and its economic strength due largely largely to the presence of the Mayo Clinic.

119And then um there's some more detailed information throughout their report, and finally, you'll see on our attachments page 10 some metrics that they track with respect to the district. So, that is everything that we have. We're certainly um very pleased with the results, and we certainly appreciate the opportunity to be of service to the district again, and I am happy to answer any questions that you might have. >> I I am a little curious if uh um if you could tell us something about the the entities that place bids for these bonds. Um if there's any qualifications in order to hold bonds of a public school district or if there's any diligence done on the purchasers or if we know anything at all about them. Just wondering. >> Yeah, so we do see these underwriters

120very regularly. So um most often they are um underwriters that are um active in bidding on municipal bonds. So um they are required to sign off on a couple of things as part of the proposal form which I think um the chair and clerk will sign off on tonight too, but um otherwise there's you know it's kind of an open bidding process, but we we do generally see kind of the same group of bidders. Um they don't often bid we don't often have as many as we saw today, but certainly these are all firms that are that we recognize and that have been around for a long time. >> Thanks. >> And I should have mentioned too that we did have rates that had kind of jumped up for a while. Rates have been a

121little volatile, but they've been coming down over the last week or so. So the timing worked out pretty well in terms of the the rate that you received today. >> And what do you attribute the increase of bidders to? >> I think there's a lot of demand. There has been a lot of demand and maybe not as much supply in the market lately. So I think they're interested and generally when there's a little more unrest in terms of the stock market and that sort of thing we do see more bidders on municipal bonds because it's a nice safe investment. So >> Thank you. >> Mhm. Anything else board members? Before I read the resolution? Dr. Cook? >> Yeah, as long as you're here, um because this the the school district strategy is to continue to

122issue bonds that are similar in scope generally on a sort of annual basis to finance some of these long-term uh facilities projects. Um is there anything in particular that you would uh counsel the school district to focus on in terms of our finances in order to receive uh favorable results like this in future offerings? >> Absolutely. So, there are some things that are within your control and other things that are part of their rating methodology that are outside of your control. So, certainly maintaining the level of reserves is something that they focus on. We talk about that a lot. Um you'll notice in the detailed credit opinion that they mentioned your operating referendum. So, that was a credit credit positive for you for sure to have that support from your local community and know that

123you have that additional funding now secured for at least 10 years. Um so, that was positive. And then, outside of your control is really the local economy and some of those indicators that you see on the metrics. And, you know, not much you can do about that, but you're you're really strong. So, um I don't think there's any concerns or any worries going forward. But, really from a school district perspective, keeping your eye on the um reserves is a is a big deal to them. >> And if you read the ratings report, um you will notice that there has been some uh downgrades with cert- with some districts in the state recently. And so, we are in a very positive situation here um within our own district and our our community. So, um I'm happy

124for that. >> Very true. Yes. >> Thanks again. >> Anything else? All right, then I will read the resolution. Be it resolved that the school board of Independent School District 535 does hereby authorize the issuance, awarding the sale, prescribing the form and details, providing for the payment of $34,788,694.50 general obligation facilities maintenance bonds, Series 2026A, and authorizes the execution of documentation relating thereto as provided in attachment two. >> Move approval. >> Second. >> It has been moved and seconded. Any final discussion or questions? Hearing none, all those in favor say I. >> I. >> Opposed? The resolution has been approved. >> Thank you very much. >> very much. >> Thank you. >> Next, we move on to other business. Our ABCD, the current version is available in the agenda item for reference. And upcoming agenda

125items for June 9th, we have our school and program relocations and changes. Uh that's uh study session. On June 16th, a prep for action on our social studies curriculum adoption. Our school and program relocations and changes is an action item. 2027-28 school calendar proposal and 2026-27 budget proposal. Any other items board members would like to raise for consideration for future meeting agenda? Hearing none, our upcoming meeting dates as I mentioned, June 9th a study session, June 16th, July 7th, and July 21st are all regular meetings and they all begin at 5:30 p.m. And hearing no other business, this meeting is adjourned at 7:12 p.m.