Board of Education Committee of the Whole Meeting - December 6, 2021

001i hereby call to order this committee of the whole meeting it is monday december 6th to 2021 and the time is 8 03 am will the clerk please call the roll amy palin here jones he's ready here ann hart here bonnie kim here frank van zico here lisa schneider faves aaron stone here i seek a motion to approve the november 8th 2021 committee of the whole and executive session meeting minutes i moved to approve the november 8th 2021 committee of the whole and executive session meeting minutes may i have a second second the motion has been made and seconded board members are there any comments errors or omissions to the minutes okay uh [Music] will the clerk please call the roll john cesaretti yes can hart yes any yes spring fan zika yes perrinstone yes

002yes motion carries so we'll begin with facility development committee mr panzika good morning uh so today we'll uh have an update on this summer's projects and start talking about uh projects in the future so i'll hand it over to corey all right thank you um the first thing this morning uh joe from nicholson associates will walk us through the bid opening results for the harper project and then since our last meeting we've had some budgetary cost estimates updates for mackenzie and ramona and then after that i'll uh share our kind of our updated five-year timeline so take it away joe oh one other thing in the in your for the board members in your uh on your physical packet you should see the sheet that i've shared as well good job good morning thanks corey

003i will start with harper elementary school we did have our bid opening on november 23rd we did have a base bid and an alternate one harper was broken up into three bid packages so general trades hvac and electrical as you can see on the bid tab um you'll see that lodestro was highlighted in red they had made a mistake in their alternate number one bid so they had asked for uh withdrawal of their bid without penalty so it's been recapped with monarch being the low responsible bidder for bid package number one but taking into the basement and alternate one into consideration our total cost of construction is two million eight hundred thirty seven thousand nine hundred dollars now within that number there is a approximate four percent uh contingency so about a hundred and twenty

004thousand dollars um within that within that value overall we're extremely happy with just the coverage the competitiveness it did come in under budget which is great that that's going to allow for some some capacity especially on mckenzie which i'll go into afterwards but overall um we have great contractors great bids um so yeah we're happy is there any questions with regards to harper just uh with regards to that bid opening okay great uh moving on to mckenzie we recently earlier this month completed our 60 percent construction document budget assessment right now we're tracking just north of 2.1 million that is that is higher than our preliminary budget assessment just due to existing conditions we have quite a bit of removal and replacement existing structure is generating pretty extensive structural reinforcement and then also acoustical treatments

005up at the chiller area at the roof just based on existing configuration we have more acoustical treatments than we typically would do just via screening but nevertheless uh we're just over that 2.1 figure at 60 cd stage right now we have 85 cds that have been distributed and i expect that back that budget assessment complete uh in another week or so so the week of the 13th is when the 85 cd assessment will be distributed and reviewed by the team just sort of as one of the last check and balances before we go out to bed just to set that expectation of where we think the scope of work is as well as current market conditions also on mckenzie we are looking at doing sort of a pre-purchase of certain equipment similar to what we

006did at the junior high so right now design final design information related to equipment has been distributed to multiple vendors we have finalized the value and submittals so similar to the junior high the order will get placed based on the commitment letter from district 39 which will be forthcoming hopefully later this week with the built-in date that the order can be canceled without penalty and we've established january 25th so that's the day after potential board approval so if for some reason court of ed chooses not to approve the mackenzie project the following day the previously placed order for the equipment can be cancelled without penalty so um it worked out really well at the junior high with with the lengthy lead times um this is this process is highly recommended so i do i do

007not anticipate any issues um at this point are there any questions with regards to mckenzie um with regards out to bit just one more comment um we're planning right now checking to go out for bid after the new year with a bid opening later in january prior or in anticipation for the january 24th board approval i did have um i did have one question about uh the pre-order is it all or nothing if i mean is there just if we decided to do partial i'm not even sure what that would mean could we like cancel some of the pre-order again not likely but just making sure we understand the permutation it's all or nothing it's uh it's one chiller and a number of unit ventilators that's the extent of the equipment package okay thank you

008are there any other questions on mackenzie all right um and ramona so ramona we've completed the 50 um cd budget assessment we are tracking nicely um with regards to preliminary budgets that have been set so we're just north of 2.1 million for the ramona window replacement project right now 75 cds have been distributed and i had budget assessment to be completed the week of the 13th as well so uh ramona and mckenzie have always kind of run parallel with one another and we'll and we'll also apply for the uh for the bidding phase so our out to bid for ramona is also after the new year um with an anticipation of being prepared for board approval on the 24th as well so that's that's where we're at right now um are there any pre-order issues

009with ramona um as of right now no um but that's part of some of the criteria and information that i expect back with our current um with our current issue and so we're i want to finalize where currently times are with uh with our with our window product so um as i sit here right now i do not have concerns and the bids would be uh fixed price so not uh three yep um so all all projects and in k-12 when when bidding takes place uh pricing is to be held for the duration of the construction phase so that'll be part of the bid that hasn't been as big issue when there is like 0.5 inflation but it might be bigger in the future so thank you um any other questions on the summer projects

010thank you welcome all right so then the next item up is just taking a look at our five-year kind of plan for for capital projects um what a couple of reasons of why i wanted to share that with ever this one particular sheet today um yes we're later on we're doing the five-year projections um i think i would focus more you know we spent a lot of our time talking about three projects for 2022. i wouldn't spend a lot of time or really worry too much about the order right now for the projects that are listed or shown in white on this document um and the main reason for that is as part of our strategic plan we'll be spending a good bit of the rest of this fiscal year uh working with nicholas and

011str to identify you know scope and cost estimates updated cost estimates for these projects and identifying um you know an order as part of that strategic plan process so we'll have that hopefully in the spring for everyone but i think it's important to see this document and see how it see how the projects might fit into the to the annual five-year projections and then another thing that leads into our next topic is if you look at the top of the sheet you see in fiscal year 23 we have a line item for debt certificate refunding which allows for potentially 4.5 million in new money um which as we consider these three these three good sized projects for the uh you know this this particular refunding is important which is why um we'll have this present

012on what our options might be so with that i'll take any questions otherwise that would be it for facilities i just have one question um where it says under air conditioning says harper what ed harper would specifically be air conditioned do we know so that particular one um i've just kind of got a placeholder in there i think depending upon how how things shake out that could be as you know as we're aware the project for this upcoming summer it allows for upsizing of the pipes at harper to prepare it to be ready to add air conditioning to remaining classrooms um so i just wanted for harper a little bit of a placeholder in there or it could also you know be a large space item as well which i think if i remember correctly

013the next large space thing that harper was supposed to be so it could be either one of those okay thank you can you remind us again i know that harper bids came in substantially better than anticipated can you remind us of that figure it was about 700 000 compared to our last estimate i had a question about the capital projects list sure that line been there for as long as i can remember um and various reasons in the past we've decided to do other things with it so probably a little bit of a backlog of items but also that number has been 600 000 for probably 789 years now and i guess the question is since that is kind of the running background maintenance things um [Music] should could we adjust the 600 000 number

014should that be 650 700 going forward since it's been probably 10 years since it's been 600 000 and i think that if i'm remembering correctly um that number had been reduced for a little while um in order to account for some other projects and then we we brought it back to its original figure so you're right it's been at 600 000 for a while or less and so i think your point is a really good one it was 600 000 and it was repurposed for the learning cup so technically we still kind of carried it at 600 and other things but but i i mean i know it's used for you know just general you know a wall that that got water damaged and has to be fixed and it's just a lot of those

015type of things and the number really hasn't changed a very long time and especially you know if there's we've had almost no inflation but if you have any inflation then that number starts deteriorating even in a five-year budget so so corey would would you have a recommendation 650 700 what would you think as a running five-year number or do you need to study that i think one thing would be we need to take a look at that we will as part of our strategic planning process for all these other projects we'll include that in there i think the one thing that makes it a little bit difficult or a little challenging um even if we could bump even if money didn't you know was it was easy to come by and we were able to

016bump that to eight or nine i think the one thing that is challenging for us is how much we use our buildings between our programming and the park district so it does make in allowing our all of our custodial staff to get through the entire building and do their routine summer cleaning um so it does limit that and then the other thing that makes some of the things that we try to tackle is that in some buildings there are things that we would like to have done a long time ago but there's asbestos and so you know like if i want to replace carpet in say six rooms in a school i can do that while the park district's on the other side if there's no asbestos but if there is then i've gotta wait

017so um i'm finding out that there's a lot of kind of unique little challenges or quirks that um even if we were to bump that up it would it's tough we have to be pretty strategic about it um if i get to the point through this planning over the next three to six months i think that it's warrants that in a given year i definitely bring that back we've identified some specific needs we think it might make sense to go to 650 or seven or eight um but if not then we will hold strong at 600 and keep tackling the projects that we can yeah that what you just said i mean first off uh i'm not sure everybody we haven't talked about this in a long time since it's kind of like petty cash

018so it's the little projects that instead of having to come back and do them as a big capital project it's like we need a little fix up here and a touch up there um so yeah your recommendation on whether that number should be moved or not but what you just said also brought up another topic um if there are potential bigger projects that wouldn't fit into this in particular you mentioned projects that might touch asbestos issues then we should probably have some kind of line item in the projects category so that we again we don't get stymied that says you know we have a carpet that's you know 30 years old but we can't touch it because it's asbestos um and we didn't budget for an asbestos removal which is a bigger project so if

019if it doesn't look like we need more money in the projects list then maybe it's worthwhile line-iting line item identification of some asbestos projects below the bigger projects did anybody else have any other comments on this person you might have said this corey but when you you were saying the timing of these projects may change based on the strategic planning uh as you go forward this year but i also would imagine other things may surface so this may not be the exhaustive yeah the composition of what you see on here um probably will change a little bit certainly the order i would envision would change a good bit one of the one of the things that we're working with is just identifying all those we've already you know done done some work on on the

020roof on the roofing and taking a look at that but we're also wanting to look at it which tends to go to boilers and chillers and rooftop units so just kind of getting a whole handle of that and you know this document covers five years but i also like to have an idea of what what might be hanging out there two or three years around the corner past five years just in case you know something in that area were to deteriorate pretty quickly and then need to jump up a few years be able to have anything else done topic all right hey thanks to everybody for being online with us here thank you have a good day thank you sandra thank you so much thank you have a great week you too happy new year

021so uh i will turn it over to mr caesar ready for fcc thank you president palin um so we have uh [Music] more of your financial presentation so the um liz hennessey from raymond james will be walking us through a presentation on our existing death structure and what opportunities might be out there not only over the next year but over the next several years as we kind of look forward and also keep in mind the five-year project list and kind of merge all those together and come up with one larger plan so thanks do i need to share the presentation on the screen or do you want to do that this thanks corey thanks for having me this morning um i'm going to talk about the 4.5 million debt certificates and kind of the overall

022financing plan non-referendum financing plan for capital projects that the district has maintained over the years so let's start on page four that is just an overview of interest rates going back to january 2019 you can see interest rates were coming down steadily and then we hit the pandemic in march of 2020 that caused massive selling and expectation of property taxes not coming in user fees not coming in the things that are pledged to pay municipal bonds so interest rates as reflected by the aaa municipal market data index went up 200 basis points within a week it was really dramatic the fed stepped in and became the lender of last resort for municipal bonds as well as lowered interest rates and really stabilized the market after that bringing interest rates down on the fed funds side

023the municipal bond rates hit an all-time low in august of 2020 so rates have really stayed very low in this graph the yellow line is the 30-year the red line is the 10-year and the purple line is a one-year aaa municipal market data index the blue line is the u.s treasury you can see in recent months kind of starting in march of 21 we had some upward pressure with inflation expectations then things calm down and we're experiencing that again it's really a little bit of a roller coaster but um definitely the we're looking at perhaps higher rates in the future um according to the fed they're going to have at least one rate increase if not two in the next calendar year so the earliest one is now kind of built in for uh second

024quarter of 2022 so i think market people have taken that into consideration the rates have come down recently with the new i'm sure i'm going to say this wrong omicron [Music] virus so anyway we'll see how this all continues to play but you know the pandemic is clearly a threat to the economy and that bad news keeps interest rates low the inflationary pressure that we're experiencing does make interest rates go higher all right let's go on page six is the district's statutory debt limit and it's very large at 118.3 million but the district cannot access that amount of debt without going to the voters for a referendum next page is the two bond issues the district currently has outstanding the series 2020 those bonds are paid from the debt service extension base um they were

025refunding of the 2010 bonds plus 5 million of new money for capital projects and then the 2012 a debt certificates those are paid from operating funds and those are callable uh in the december 15th of 2022 and so the 4.5 million that we were looking at issuing in 23 according to the plan was going to dovetail with the opportunity to refund these 2012 a debt certificates okay let's go to the next page so debt certificates are paid from the general operating funds of the district they must you must budget each year for the payment and since 2007 the districts budgeted 800 000 annually to pay back principal and interest on debt certificates the district's practice has been to amortize each debt issue over 10 years to provide flexibility for future projects and you've kind of

026gone back and forth between the issue of debt certificates so we're talking about here and non-referendum debt service extension-based bonds which are paid by a levy that is limited under the tax limitation i'm going to talk about that in a few minutes so um the thing about refunding bonds you can't refund them more than 90 days ahead of the call date on a tax-exempt basis tax-exempt interest rates are lower than taxable interest rates so if we said today we want to refund these 2012 debt certificates right now because interest rates are low we would have to do it on a taxable basis and interest rates would be higher so um you know when we look at dovetailing the new issue along with the refunding you know you're looking at spending money this summer so we

027i have some analysis on the timing of that another thing debt certificates have to be spent on capital projects only and they're subject to the debt limit okay let's go to the next page so as corey just reviewed the district's long-range capital plan includes funding for boiler piping hvac repairs roof and bathrooms at harper hvac partial roof repair at mckenzie new windows at ramona in the summer of 22. um so one thing you could do if you stayed on schedule first fall of 22 refunding and issued new money you could approve what's called a reimbursement resolution now so you could go ahead and spend the funds on the repairs including the 4.5 million this summer and then in the fall august of 22 refund the 2012 aid debt certificates and issue the 4.5 million and

028pay yourself back for that expenditure so that reimbursement resolution is needed to do that it's very simple to page resolution i think the board has approved those types of resolutions in the past with regard to prior issues so um alternatively you could issue the 4.5 million now and issue the refunding bonds in september of 22. that's going to be option two option one is to issue everything in september of 22. so um the option to split the issuance is less costly than doing the new money 4.5 million and refunding the 2012 a bonds on a taxable basis so we're not going to show you that option the other thing to know that if you split the issuance and issue the 4.5 million now you will reduce your risk of higher interest rates right in september

029so um if you uh wait to issue in september and interest rates stay exactly as they are today on the 4.5 million you will pay a hundred thousand more in interest cost because as you know when you look at your cost of interest it's based on the amount you borrow the time it's outstanding in the interest rate so in the case of waiting till september were taking a shorter time to repay the debt but if interest rates go up by 10 basis points or 0.10 percent between now or february 22 and september of 22 the interest cost would be equal to or higher so we refer to that 10 basis points or 0.10 percent as the break even increase in interest rates to make it better off issuing now than waiting to september does that

030make sense okay the other thing we're gonna oh sure go ahead so what would what would so what we're talking about is about 1.89 that includes a 50 basis point interest rate cushion so we're really at 1.39 today then if it were taxable it would just be on the refunding portion and i didn't bring that with me but it is to do the refunding taxably and then the new money tax exempt now meaning closing in february of 22 that option is 150 000 more expensive than waiting to do the refunding so that's why we kind of didn't show that issue we're just going to show the split issue once which i think makes more sense even though when you split the issue you have to pay cost of issuance twice yeah no and i think

031my only point in asking the question is how much higher is it you know tax exempt versus tax credit on the interest rate yeah typically you know it just because it's on a maturity by maturity basis but you know at least 50 basis points 30 to 50 basis points taxable versus tax exempt in that short range follow-up verification or question the point one percent that you're mentioning as looking back at page four okay so the the scale on that is between lines is 0.5 right so 0.1 is looking historically over just the last two years um it changes by more than 0.1 very often very often correct so what we're talking about is a hundred thousand dollar insurance policy where the numbers could be way more than 0.1 correct that helps put it in perspective

032thank you the last thing we're going to talk about with regard to debt certificates is what if you considered a higher repayment limit per year you've been at the 800 000 per year since 2007 and so you know it's an affordability question um for corey i know you're going to be looking at five year projections later today but just we did some examples of how much additional proceeds you could get at a higher level of 900 000 per year or a million per year okay let's go to the next page here's option one this is the 4.5 new money debt certificates and refunding in september of 22. we look at the chart and start on the left we've got the existing debt service for the 2012 a the refunded debt service and the reissue of

033the debt certificates and you'll notice on the re-issue there's a little piece that goes a bit longer than the original repayment schedule the reason for that is to try to keep the annual payments at 800 000 when we blend in the new money and again we have a 50 basis point cushion in all of these interest rates the new money is in under the green box that's a 4.5 million repayment um over 10 years and or actually it's i think it's 11 years um so we've got an all in true interest cost of 1.89 on the new money 4.5 million and 1.49 on the refunded both on a tax-exempt basis they would be issued together in september of 22. this would require that reimbursement resolution we talked about a minute ago okay let's go to

034the next page option two this is issuing 4.5 million that certificates in february of 22 and then the refunding in september of 22. so the total cost is a little higher but as we pointed out if interest rates go up by just 10 basis points that cost would be the same if it goes up more the cost would be higher so in this case we split the issue cost of issuance are included in the all-in churches costs so those are all inclusive and here you see the 10 basis points higher the 1.98 percent all in true interest cost and then the refunding okay let's go to the next page here's option three and this is the split issuance again here we're going up to nine hundred thousand annual payment one thing that's kind of a

035benefit of doing a higher annual payment is that the refunding now stays within the footprint of the original 2012 bonds we don't have that little amount in 2028 that's required to keep the payment level at eight hundred thousand so that makes our savings a bit higher now on that refunding we do have savings we're not talking about earth shattering savings right but it's you know the cash flow savings is 46 000 versus 38 000 [Music] on that refunding in if we go to a higher annual payment let's go to the next page option four takes us up to a million annual payments in this case the refunding can even be accelerated a little bit and the savings now go up to 51 000. so again not a huge amount of difference in the savings but

036it does help a little bit to be able to pay off the debt a little quicker and in the um this option on option 4 you get 6.5 million and on option 3 it's 5.5 million so for every 100 000 you go up on the annual payment it adds about a million to your proceeds okay um let's go to the next page and just best practices oh yeah sure not at all it seems like the right place for this question i can't remember why why do we limit our memorization to give a future boards flexibility to come back and refund debt certificates and issue them again and and the surety of the payback the lower the interest cost sure i was thinking in terms of you know interest rates are very very low and that

037now might be a [Music] administration you know a couple years from now i hope you don't regret not borrowing more at 1.5 i have this feeling that we might the tricky part about that is the safety is the word lockbox concept i mean if we borrow the money so that it's there 15 years from now and we spend it because it's there then it's that's the unfortunate problem with trying to you know with your own personal cash flow would be simpler i hear you frank and i'm stating the other thing that you know i think we've been asked by taxpayers you know a couple years why didn't you borrow more at one and a half well related to that going back again to page four yeah the spread between the 30 and the 10 years

038pretty small right now so your question is relevant just from the standpoint of if we can get it for the same amount of money do we want to get it for 30 years versus 10 years i know i mean it's historically that's not always been the case spreads yeah i just i just remember a conversation i had with a good friend in the year 2000 when he called me to lock in my student interest rates at eight percent and we were so excited so anyway it's it's something i'm sure so from a best practices standpoint school districts typically do tenure or i i think that's really the best practice because conversely the other thing about interest rates in years one through ten that's the lowest part of the yield curve you go up 15 20

039years we're not going to be looking at 1.9 percent we're going to be looking at 2.5 or something like that so that's one point and then the other reason again the best practice is just lower the interest cost and leave future boards flexibility because one thing this board has been consistent in doing since i've started working with you which goes back a long way is um you know going back and forth between the debt certificates and the dsub bonds and you're able to do that every three to five years because of the short payback we lock this up for 20 years you know that's not going to be on the table in five or six years and it will be on the table five or six years of coming up because these bonds will be

040callable that's another best practice we always want to make sure there's an optional redemption feature because even if interest rates are higher that yield curve is typically that same shape we've had points in time where short-term rates go up higher than long-term but it doesn't happen very often mostly those short-term rates are much lower than long-term rates so even if interest rates go up all together in eight years we're going to be refunding you know and the years one and two at that point are going to be at this low lower rates than they would be long term yeah i appreciate that elizabeth um i think though i'm just thinking about the cpi for next year right which is how did we say it was chlorine like seven percent some crazy number yeah right now

041we're at uh like six one point one eight yeah so that's so so there's cpi and at six point one eight just for one year and who knows you know what it's going to be in the future but just that knowing that's coming and being able to lock in an interest rate that's you know frankly pay for that because what we are talking about i think for borrowing the money is capital improvements which should last a long time to kind of match your investment with your cash flow so and looking at the presentation i just saw it looks like we have lots of capital projects that are sitting there so the tricky part is back to something that you brought up several times if we borrow a little bit more because we're going to need

042it in the future our investment rate is super super low so that so we don't you know it's like we'd be borrowing at whatever number and we get paid back at 0.2 um so it's not like that number is tied directly to like the borrowing costs so we tend to get very little on our investments if we're holding money for the future which isn't necessarily great from a board standpoint but if we did that because of financial you don't get the back end you can then invest that extra money and keep that delta small i i see what you're saying right yeah you have a good point which is why i mean that's the reason why we're trying to keep that so this is the reserve number you're talking about yeah um that's why we're

043trying to keep that number as low as i think it's reasonable so we're just talking our yield on our reserves is definitely negative if you put in inflation all right thank you good point good discussion um so uh let's keep going then unless there's any other questions on the debt certificates i wanted to talk about the the depth service recommendation number but i don't know if this is the right time or it's better to talk about it later in your presentation well this is the right time for this presentation um i think one of the key things in that decision is your financial projections so cory i'll leave it to you if we talk about it now i mean i think it's i i think we could wait until we end up okay end up

044was this presentation okay okay all right so let's go to non-referendum limited tax bonds that are paid from the debt service extension base these were the type of bonds were issued in 2020 and the district's debt service extension base is part of the tax cap so in 1994 the principal and interest payments on debt became the debt service extension base which is can be extended into the future only to pay principal and interest on non-referendum bonds and in 2009 it started to increase by cpi so right now in 21 levitt year your debt service extension base is 1 million 590 so that's the limit and so the three types of bonds are working cash bonds that can be used for either capital or operating they do require petition period and public hearing life safety bonds

045which must be used for life safety projects that are approved by the state and regional superintendent of schools which require a public hearing so that's a little more restrictive in terms of what capital projects you can use it for and then funding bonds are used to refund debt obligations of the district such as lease or debt certificates and those also require petition period and public hearing in the past the board has issued working cash bonds it's most flexible okay next here's the working cash fund limit and it's very large it's larger than the amount that you could repay under the debt service extension base it's 55.3 million so but worth mentioning that's another limit under the statute okay okay so as i mentioned the board has kind of gone back and forth and last time

046we updated this plan after the 2020 bonds we left what's called a window or a channel to issue additional debt in 2025. so that we had planned on at that time issuing four million and that is a nice short payback of six years so and that would give you additional authority as soon as 2029 so we said you know if we go 10 years or this is an eight year payback here you could issue up to eight million um so that is in 25 and just another option as you look forward in your capital planning so um d sub bonds has been something the districts issued and left a channel to issue additional debt they should be repaid as quickly as possible to minimize interest costs and flexibility for future projects we made conservative cpi

047assumptions i should have talked about that we've got five percent on the 2021 cpi after that we're down to 1.5 simply to be conservative when we get closer to the time we issue we'll know what that's going to be but it's kind of interesting if we look back at cpi for purposes of tax caps the highest it was was 4.1 percent immediately followed by a 0.1 so with regard to the tax limitation law we see this kind of variability just based on that december to december time period that they use in the in the law but we definitely think we're going to be at the max as cory was mentioning cpi it's kind of like 6.2 right now um from december to october so that's what we're anticipating on that assumption so the other thing

048as mentioned with debt certificates having an optional redemption feature is important to allow you to save money typically seven years after issuance so [Music] and then so if we just kind of think about the plan going forward right now we've got in 22 4.5 million debt certificates with refunding 25 4 million decent bonds or more depending on capital leads and then you could come back in 2030 with a refunding of the debt certificates and an extension another so you're going 10 years in each option so again a nice kind of plan to tap the markets along with your fund balance as you use it to fund capital projects here at the district questions any questions we already asked a bunch of questions so um i think we all very much appreciate you coming and reminding

049us of how complex our bond situation is um and you know what our options are excellent presentation um i think i maybe understand 70 of it so uh so i think what we're going to do is probably talk to corey and he's going to help us through the decisions here it's been very helpful thank you thank you oh yeah sorry frank so under the debt service number we'll we'll talk about what we want to do but from uh like typical best practices we're in the 1.2 1.5 of our budget range what what do you see in other places well higher than that for sure i mean the rating agencies don't want to see you exceed 10 of your budget on annual debt service so you're very low and you know having had that 800 000

050in place since 2007 obviously your budget's gotten much bigger so that percentage is way low compared to what it was back then but it all depends on what else is on tap for future years right but that's why i wanted to get an outside view thank you very low yeah good it's great timing for us to as far as strategic planning process things like that so yeah thank you so much unless corey you had something else to add i was just gonna offer up a couple of thoughts um as we merge into five year projections later on um so to the to the point just made when we started doing the debt certs we were 800 000 of about 43 million so 1.8 1.8 of the total budget we've now dropped when we look at

051fiscal year 23 we would be at 800 000 we would be at about 1.2 so if we were to jump up to 1.8 that would get us about 1.2 million just under that annual repayment so the the biggest option that this showed in your presentation was a million dollars per year repayment that's roughly a 1.5 kind of splitting the difference of we're going we're doing something more than what we previously did or historically have done but not going all the way to where we were in 2007. um it's a nice option that i certainly like quite a bit i will just want to i just want to point out one thing before we move on to the next topic when we talk about how are we going to pay for like the projects that not

052only the ones we're doing 22 but over the next five to 10 years we really have four like streams of funding at least as i view it as how to pay for these things we have the annual operating fund surplus that can contribute extra money after we've accounted for all of our operating funds which that amount varies year to year a new revenue stream at least as now it's law it's mandatory it's not optional it's senate bill 508 so until something in springfield changes that we're looking at roughly a million dollars per year in extra revenue that we've never received or received in the past that's an additional option that would kick it from our perspective that would kick into our fiscal year 2023 budget so one year away the debt certificates that we just

053talked about that were we could we have a little bit of flexibility on how much we want to do and going out about 10 years and then the last one is the debt service issuing bonds to that service extension as i look at it that one seems to be the one where we probably have the most flexibility depending upon what we identify through our planning process um it's still a few years out but i think we have it's probably the one i say of all the options that's the one that gives a lot of flexibility that should we identify stuff that we want to do we can structure the you know different size so you know the things that liz has in here she had either 4 million or 8 million and those were relatively

054short paybacks of only four years or eight years so there there is as we identify things and formulate a plan we have multiple the nice thing is we have multiple um places to tap to fund these projects and we in at least in one of the situations two of them actually we have some flexibility as we did identify this plan we can match it to fit our needs so that's just kind of where i'm at and as far as like the short term obviously we'll work at the board's direction but i having looked at this i really like the issue in february walk in avoid the the rate risk and then refund the remaining that certificates in september and as far as an amount if you're looking for my thoughts knowing what's on tap and

055having kind of lift through like diving into the details i like the 6.5 it kind of splits the difference it gives us a little bit of extra i know the plan that i'm going to present here in a little bit and what i had showed on this one page document showed four five that's what had been in there previously but i think you know it would be nice to have the extra couple million and it is a really low interest so that's kind of where i'm at um and we can talk about that now where we can wait till five year productions yeah yeah thanks so much corey thanks elizabeth thank you um okay so before i think we're our next presentation i wanted to pull everyone to see if maybe we should take a

056two minute break yes sorry nick we'll be right back okay thanks [Music] all right two minutes that was amazing so so the next presentation we have is from our auto partner uh nick cavallari of bakertilly and um i think corey do you want to bear with us for a second oh it's all good so i think our next presentation is um thanks so much for all excited and we have our our annual reports which are excellent um light reading and i think accordion if you want to kick it off so just for board members so in your packet electronically you should have even more documents that was on your team then was on your table this morning they're just some of the documents we did um not not quite as important as a physical copy

057um but then on the ones on your left on your desk there's the bakertilly report for wixiem district 39. there's the big bound financial report that has the colored picture on the front um that's our kafir and then there was another one that has more single audit you know financial information so feel free to reference those as you go through and for the hard copies i left you feel free to since you have all that electronically if you want to take the hard copies feel free they're yours if you don't want to feel free to leave them on the table and we'll collect them after the meeting it's completely up to you with that said nick cavallari is the partner for bakertili they did the audit for district 39 in wixie and we are incredibly

058grateful they were able to grind through things like most places uh you know staffing and being able to get everything done as we saw with some of that information that was coming from county that was uh delayed by several months so it was nice to still be able to have them do a quality audit and get it done when needed to so take it away nick and feel free uh nick if you want to share your screen oh perfect thank you i was gonna i was gonna ask about that well thanks for having me here this morning i'm gonna share my screen i prepared a brief powerpoint presentation with a few excerpts regarding the audit process you know and i understand that there's definitely a lot of information before the board in the committee um

059regarding the comprehensive annual financial report so if you have any questions on the numbers or things like that by all means you know please let me know so i'm hopeful at this time that everybody can can see my screen okay good i'm getting a thumbs up okay so um we uh conducted a financial statement and single audit for the district our reports were issued and were dated november 9th of 2021. the the scope of our audit is is fairly robust um the district issues which you call a comprehensive annual financial report it's a set of financial statements that are issued in accordance with generally accepted accounting principles it has a lot of additional documents within that particular financial statement that has historical information information about the economics and demographics of the district it's fairly fairly

060robust um it's over you know 100 pages long and can be a little bit overwhelming but when you start looking at it you start to notice you know there's budget to actual schedules there's high level fun level information but then there's also schedules that are prepared on what they call an entity-wide level or a full-cruel basis of accounting that gives consideration to all of your assets and your your long-term liabilities on not only your your debt that's outstanding but amounts related to your proportionate share pension liabilities and other post-employment benefit liabilities as well we also provide assurances over the illinois state board of education's annual financial report this is a regulatory report that all school districts in the state of illinois are required to have audited because your district expends over seven hundred and fifty

061thousand dollars of federal awards you are required to present a schedule of expenditures of federal awards commonly referred to as a cfa we provide assurances over those balances there's a document called a consolidated year-end financial report this is something that's been around for a few years now and it's required to be audited by your external auditor from the grant accountability and transparency unit in the state of illinois we conduct a single audit which is a compliance audit that the federal government asks if you expend over 750 000 they have performed over certain programs and we also conduct an audit in accordance with governmental auditing standards that requires us to report any matters that come to our attention that can be risks to your preparation of the financial statements or matters regarding compliance that may not

062have been done so during the year based on our audit results so as you can tell it's quite a bit we do spend a lot of time looking at your financial records and performing a series of tests yeah after doing all of this work the end result from the external auditor is rendering reports um commonly referred to as opinions and there are different types of opinions that are you know an external auditor can provide um the one that you want to hear when somebody comes to talk about the type of assurances that they've rendered is the term an unmodified audit opinion that's the highest level of assurance that the external auditor is essentially saying that all their audit evidence supports that the balances are presented materially correct you have the appropriate disclosures in the financial

063statements and the other documents quite quite often too because there's a lot of different schedules that are outside of you know what they call a gap presentation so we've rendered an unmodified audit opinion on the comprehensive annual financial reports an unmodified audit opinion in relation to the basic financial statements on the illinois state board of ed's annual financial report the cfa and the cipher so i'm all clean opinions in that regard now within a comprehensive annual financial report there are just a lot of different schedules when i come to talk to boards and finance committees i really do like to to spend just a few moments going over this particular schedule it's a statement of revenues expenditures and changes in fund balances as it relates to pages 18 and 19 in the comprehensive annual financial

064report um this is a fun level schedule external reporting is somewhat of a blend between gaap and the regulatory basis that this school has to maintain their accounting records and so the first column is the general fund and that includes your educational accounts your working cash accounts and your tort immunity accounts when you're preparing your state budget form and when you're issuing your annual financial report those are all individual funds for external reporting purposes those get consolidated together there's also additional combining schedules throughout the comprehensive annual financial report and additional budget to the actual schedule so that level of detail is still present elsewhere in the reports but here at the basic financial statement level those things are consolidated together so within the general fund one of the new changes for fiscal year 21 is

065that the district was required to adopt a standard called gas b84 and what that standard spoke to was how fiduciary activity should be presented within the financial statements that standard provided additional guidance to governments as to how they define fiduciary activity and the the presentation within the framework of the financial statements so a lot of research was done a lot of conversations took place with the illinois state board of education and ultimately where everyone landed was that student activity accounts do not meet the definition of fiduciary funds under this new standard and as a result of that that activity needed to be folded into your general fund so what you can see on the face of the financial statements and the basic financial statements there's a new line titled student activity this is the revenues

066or the receipts that we're taking in during the year for those student activity accounts and then a few lines down within the expenditures there's a separate line item right here as well um the ending fund balance of those student activity accounts are also maintained in your balance sheet it's not you know necessarily material to the overall size of the general fund it's just something to have some self-awareness of when you're looking at these reports now that there's a component of those club account balances that are now in a sense consolidated within your general fund um another line that that always draws attention when we come to talk to boards about the financial statements is this concept of an on behalf payment um under various standards accounting standards there are requirements to include an amount in

067your general fund relating to how much the state of illinois is contributing to your teachers retirement system and to the teachers health insurance system on your behalf because your employees are receiving benefits and the state of illinois is making contributions on the district's behalf to those plans so this line right here titled state retirement contributions 16.1 million dollars this is an expense or expenditure that's recorded in your fund level financial statements and then up within this category of state aid there's also a corresponding revenue that's being recorded we all know that the district does not receive directly 19.3 million dollars to fund operations from the state um but this dollar amount is required to be reported in your financial statements so in a sense it does gross up your revenues and expenditures it does not

068affect your ending fund balances there's also a great deal of disclosures surrounding these pension and other post-employment benefit systems within the notes of the financial statements as well so when i look at the financial statements i like to think of page 18 in my mind um of the funds that tend to support the day-to-day you know operational activities of of the school district now there's some funds that aren't necessarily included in there for the financial profile score that the state considers but i like to think of the illinois municipal retirement fund as a fund that's used to make payments for benefits uh to pension systems in addition to fica and medicare so what i look at is you know this this line right here excess deficiency of revenues over expenditures and we can see that

069um during fiscal year 21 the district utilized some reserves within the general fund reporting category primarily your education um accounts i did look at the tort and the working cash funds and those funds presented small surpluses during the year so this this 3.9 million dollars is really for the most part um for discussion purposes related to to the ad fund going down the operations and maintenance fund um had an operating surplus of 4.2 million dollars and then when you get down below here this category titled other financing sources and uses this category is used for transferring funds that the board approves in addition to uh accounting for proceeds from debt issuances and um during fiscal year 21 the district didn't issue any any debt um but they did approve six and a half million dollars

070of transfers out of the operations and maintenance fund and when we come over to the other side page 19 we can see where those funds went um 798 000 went into that service fund to fund the principal and interest payments the debt certificates and we also see 5.7 million dollars being transferred into the capital projects fund that were used to fund the 5.7 million dollars of capital project work that was performed out of that fund during the year transportation fund had a you know a reasonable surplus you know nothing crazy um you know i think your district didn't have as significant of a surplus as i have seen at other school districts um and that's all based on you know routing and your determination of in-person hybrid remote things of that nature the illinois municipal

071retirement fund um had a slight decrease in fund balances but but nothing um crazy you can still see that your ratios on your fund balance to expenditures on that particular fund are within reason um you know the debt service fund kind of operates on its own it makes just enough collections to cover the bonded debt that that that has an extension on your tax levy um that aligns with your principal and interest payments and then of course the debt certificates which are funded by you know an operating transfer which has been done so out of their operations and maintenance fund so you know looking at your your financial statements you know we can see that there was definitely a drawdown in fund balances in the general fund during fiscal year 21 and then the district

072is continuing to embark on the capital plan with the transfers from the operations and maintenance fund to the capital projects fund so i'm going to just pause right there because that's a lot to talk on on these particular schedules to see if there's any questions on these amounts oh yeah i i had one i think this is as good a time as any day after talk about it the state retirement contributions i know that's a transfer in transfer out type of number um the first time that i was aware of that number it was like 7 million and percentage-wise i did a rough calculation it looks like in the last six seven years the percentage of our revenue actually doubled um so 16 million represents about twice as high a percentage as the 7 million

073number that i had kind of remembered um [Music] what what type of percentage is typical um [Music] in the other accounts that you've seen and do you have any recommendations in terms of understanding what implication that might have in the future sure all very very good questions and uh i i would say that the calculation of these amounts are complicated and and when i say complicated i would say because the information comes often well after you are through your budgeting process and they are based upon actuarial valuations and other estimates what further complicates it is that the amount that's reported in your fund level financial statements which are the documents that i just went over are different than the amounts that are recognized in your entity-wide financial statements which is commonly referred to as the

074statement of net position and the statement of activities a few years back the governmental accounting standard board issued a standard it's an omnibus standard and within there they provided clarity regarding how amounts should be presented in financial statements when there is a special funding situation going on and what they attempted to clarify was the difference between the fund level financial statements and the idea why financial statements for the fun level financial statements what they have stated is that the amount that should be recognized should align with the same amount that is actually paid during the same time frame of your financial statement so what that says is how much did the state of illinois contribute to the teachers retirement system and the teachers health insurance system on your behalf during fiscal year 21 from 71

075through 6 30. in no point in time are we ever provided with a document that says here is how much the state of illinois paid for wilmette school district 39 make sure you use this number in your financial statements what we what we have to do is pull information from several sources one of those sources is the teachers retirement system comprehensive annual financial report for fiscal year 20 because within that report they have an appropriation amount for fiscal year 21 that is what they anticipate they're going to provide to that pension system understand that fiscal year 21's comprehensive annual financial report for teachers retirement system is not available at the time that we prepare these financial statements so we have to do some estimates and we use that particular amount and then we give consideration

076to um the district's credible earnings that were reported in fiscal year 21 in and then also to try to assess your proportionate share of that amount we we try to locate within the prior year comprehensive annual financial report the covered payroll amount for the plan and we get a we get a percentage so so this is how much school district 39's credible earnings are in proportion to the pool of creditable earnings that percentage is then applied to the estimate of the amount that the the state of illinois says they're going to pay that plan so so that number is incredibly challenging once to even you know get your arms around and think about and then sometimes it also comes up even when districts are trying to budget for it's like what should i put in

077there like i don't know what to tell you because your your percentage in the pool can vary and then the state's contributions to the plan can also vary and there are a lot of unknowns now generally i will say by the time we get to putting your financial statements together i i feel pretty good about the estimate and the approach um that that's used um but it but it does vary and i think it's important what you just mentioned is it's been a volatile number because you know prior to this standard it was based on you know an actuarial valuation and and then um you know a post ex would call it the op expense or the pension expense and that's the amount that they use for the full accrual financial statement so i think

078when i talk to boards about this the thing that they always ask is the same thing you ask me well that's complicated and what does that mean for us operationally what should i do about this because it sounds like i really can't do anything to change it i would say just continue to monitor legislative developments that could potentially shift costs of these systems back to your district right now the state of illinois carries a significant portion of these costs if that was to be shifted back to local education agencies those would be impactful to your budget and your operational results right now there hasn't been any significant changes um to that process it doesn't mean that that won't happen in the future though that and again it's in and out so for this year's budget

079it's neutral but it's long term yeah it's important though because you look at it go in and out of our income side of the equation but the liability is not sitting in our you know in our balance sheet i think i think without one of your points you were making it doesn't sit there because you can't quantify it it sits with states and i guess i was looking for okay what is the estimate of the number because i remember we we had tried in the past to come up with that number i couldn't find it in these reports i think you're telling us it's not here um is that true the calculations of the um on behalf payment have been provided the calculation itself is not disclosed in the financial statements proportionate share of the

080pension liability for the trs system that's allocated to the school district in addition to the teachers health insurance other post-employment benefit liability those are disclosed in the notes and those particular liabilities are reported on the entity-wide financial statements so the statement of that position and the statement of activities but not at the fun level would you mind highlighting that for us at some point today if you planned on doing it um to show you where those numbers are at yeah yeah i want to see them yeah sure let me um i think i have the comprehensive annual financial report open can you guys still see that yeah oh how i just flew that over okay sorry sometimes i don't know if it comes over or not okay so these are the two schedules that i

081was just talking about the statement of net position a statement of that position is a required schedule under under governmental reporting and what it attempts to do is kind of put all your fund-level financial statements together and then give consideration to things that are um like assets your your capital assets the buildings the equipment that the district uses net of depreciation and then it also gives consideration to long-term liabilities and matters relating to the pensions and other post-employment benefit systems in within these line items here are these long-term liabilities other long-term liabilities you know liz was just talking before my presentation about your general bonded debt and no point in time did anybody talk about you know 57 million dollars worth of debt outstanding um within these two numbers where she's probably more the due

082after one year number i should stand corrected is your proportionate share of the teachers retirement system pension and the teacher's health insurance system other post-employment benefit so in the notes to the financial statements those amounts are broken out by plan in detail what i will say is that when governmental accounting standard board 68 the pronouncement that gave direction to how pensions should be reported in the financial statements and then gas b75 came out a few years later those particular things i mean they were astronomically large liabilities were like wow this is really going to have a sizable impact so when you look at the statement of net position you come down here this category down here called net investment in capital assets this is the value of all your capital assets less depreciation that's accumulated

083then you have these portions of your net position that are restricted for a certain port restricted for a certain purpose generally speaking you know there are a few adjustments for the most part these are allocations based on your special revenue funds the remaining balances and then any liabilities that are specific to those balances are offset against them okay what you're left with is this unrestricted or this deficit position of 26.8 million dollars how do we have that well because the values of those liabilities those teachers retirement systems and teachers health insurance systems liabilities far outweigh the positions that you have on the entity-wide financial statements so this was something that we saw you know for several years and continues the teachers retirement system is is willfully underfunded the teachers health insurance system is woefully underfunded

084and as a result of that you have a sizable liability on your balance sheet to the contrary of that the school district also participates in the illinois municipal retirement fund for your non-certified employees and that particular pension system has been very well funded for many years and during fiscal year 21 you actually presented what they call a plan asset the value of your plan assets how the imref exceeded the actuarially determined liability of that system and i believe it was 2.5 million dollars right here on the face of the financial statements um and and that driving factor on that really for the most part was significant investment returns marked market um adjustments you know and that's been fluctuating you know a little bit back and forth for the district between a liability and a plan

085asset but it is um you know something that we've noticed with a lot of school districts this year that that system is pretty well funded comparatively to the state run plan yeah that's that's really helpful i think um the number i wanted to highlight was the state's proportionate share of the district liability which i think you're you referred to because in the sense of this is something that would be very significant if there were a shift yeah so so right here on this particular page within the um within the their schedules the the allocation of the liability for the trs system is 3.3 million and the state's proportionate share of that is 259 million that's the number i well i thought it was bigger but that's smaller than i remember yet shockingly large yeah so

086so here's the trend information too so here's here's 20 20. it was 228 you know so it grew i think i think the system is like an 85 billion dollar unfunded liability if i remember right i have to double check and look at the reports but it's pretty sizable i mean from my perspective this was when we say pension caution that's the number so so that's the number when you know voters want to know hey how important is this issue oh it's you know multiples of our budget for many many years thank you sure absolutely but that's also one of the reasons we always talk about the six percent yeah right so that we make sure that we don't grow our liability faster oh sure okay tax shifts of that liability even if it's like

087you know well one percent ends up being you know three four five percent of our money okay okay so i'm gonna i'm gonna move on to my next slide thank you so the the the presentation before mine kind of stole a little bit of my thunder but i just wanted to point out the transfers that took place and you know just consistently remind um everyone that you have a commitment to move about eight hundred thousand dollars out of the operations and maintenance fund to the debt service fund on an ongoing basis because the debt certificates and that you know um just point out that you you know identified and utilized 5.7 million dollars of operations and maintenance fund balances um for capital purposes during fiscal year 21. um this is a estimated financial profile summary

088this is a schedule that's included in every annual financial report for school districts it's one of the metrics that the state board looks at to rank i guess how you are doing financially there's a series of calculations that they do fund balance to revenue ratio expenditures to revenue ratio days of cash on hand we'll also look at how much short-term borrowing you may have outstanding and then of course how much long-term debt do you have outstanding um compared to the statutory that limit calculation it's a one-to-four scale unfortunately the metrics behind these ratings are not shown on the actual schedule itself but um what you can see is that you know on all of those categories the district received a four out of four you know i looked at your financial profile score compared to

089the prior year and you know i think just one of the metrics that i noticed and it's not even close to being kind of like in the area where it's going to be approaching to be less than before is that the days of cash on hand went down and that makes sense because you use you know 5.7 million for capital projects during the year um and that came out of your operations and maintenance fund and all of these calculations are based on four funds um your education operations maintenance transportation and working cash funds so i'm still you know from the state's perspective i'm receiving before from a 4.0 scale you know i briefly touched on this a little bit at the start of my presentation but the district was subject to having a single audit

090performed um your district does not receive a tremendous amount of federal funds approximately 1.3 million dollars of federal awards were expended in fiscal year 21 which required us to audit the special education cluster or the idea program the flow through the board program of about 1.1 million dollars so we we get a compliance supplement from the federal government and we perform a series of tests to see that the district complied with those matters and at the same time we also will perform tests of internal controls to see if they're operating in a way that are designed to ensure that you have compliance and what we were able to render from an assurance standpoint is an unmodified audit opinion on compliance and we did not identify any material weaknesses or significant deficiencies over internal controls for

091compliance so a clean audit on that particular program um one of the things that we also do when we're performing a financial statement audit is we gain an understanding of the district's internal controls over the preparation of the financial statements we'll perform a series of walkthroughs over key transaction cycles the purpose of that is really to kind of tailor our audit approach to risk on the financial statements having material errors that we may not detect what we also will do is if we identify any things during the course of our audit errors um you know internal controls that we don't believe are operating in a good good way we can report those to the governing body into management and some categories that you can use for terminology but the most important one is what they

092call a material weakness which essentially says that you know based on our opinion we don't believe that this process is designed in a way that would allow employees to detect and correct a material error or omission from the financial statements without the involvement of the external honor and you know i'm pleased to let everybody know that we did not report any material weaknesses um during the course of our our financial statement on one of the other things that we're required to do is if if we identify material non-compliance with with laws or regulations um during the course of our audit we would have to report those because it is a governmental audit and we did not have any instances of non-compliance during the course of our audit did not have any difficulties in performing our

093audit with with district business office we do not have any disagreements with management regarding the application of accounting principles or estimates using the financial statements as well and then just you know one thing i want to kind of leave behind just to think about is we always like to give everybody a little bit of um of a runway on any new accounting standards that are going to be required for implementation for fiscal year 22. so for fiscal 21 he had the fiduciary activity standard to implement and for fiscal year 22 the big one is the sb 87 regarding leases um everything that we used to use from an accounting standpoint on the lease accounting capital leases versus operating leases that all kind of goes out the window and there's a whole new standard around that

094um one of the things that we're recommending the clients do is just to get a good inventory in place of their release agreements and when you say lease agreements it's not so much just the typical financing type leases where you know you may be funding um you know computer purchase or something like that through a finance but also you know if you're leasing space to another entity or if you are leasing space yourself or any other type of situation where you're having the right to use an asset over a period of time so you know i know when i look at the financial statements there aren't any you know sizable capital leases that are on the financial statements right now um i'm not sure that this is going to have as much of an impact

095to your school district but still i think it's still good to take a quick look at your inventory of contracts and see if there's anything that may meet this criteria so that it can be vetted out the accounting behind it is substantial there's different schedules that need to be maintained for the particular assets or the lease agreements um and they have to be amortized over time so it does take a lot of extra work but um this is just something i wanted to let everybody know is coming down the pipeline it might it might be helpful to describe like a situation where that would be relevant to us sure so um you know i think in school districts you don't typically see this happen often but it can where they might have um a building

096that they own and they're leasing it to a third party as the lessor or they have um you know i i have i have another one it could be like cell phone rights cell phone tower rights like if they're attaching these cell phone towers to your buildings and you have an agreement in place you know school districts don't do a lot of this stuff i think like other kinds of governments like municipalities or county governments may have more complex lease arrangements in place you know from what i what i think of is you're you're basically entering a new agreement over a period of time to use an asset and for that you're going to to give something and trade for that and what the with this particular standard is saying is that that that intangible

097rights to use is now something that needs to be recognized in your in your assets and then there has to be an offsetting you know liability for it as well so you know i think with school districts what i would start with is is kind of looking at my vendor file to see you know who we're paying people i think that's a really fast way what is this arrangement that we have with this particular vendor why are we paying them is there some kind of a contract out there that's sizable that goes over a period of time and it has to be over a year too you know so i don't know if i did a good job of explaining it because i think what schools were still going to be looking into it to

098see what types of leases are out there the big stuff that i normally see is is kind of the financing arrangement where you're spreading the costs out to buy something over a series of years you know sometimes like with bus leases and things like that but those again also still have to be embedded against this particular standard for disclosures and things like that no we appreciate it that's probably not as good an explanation as we could get we had in the past toyed with the idea of solar panels and putting them on the roof and potentially sharing some of the electricity would that kind of thing fall under this category yeah i think i think you'd have to vet out that contract to see um you know all the different provisions of it i mean

099this is a fairly complex standard and you have to you have to read the contract and you have to pull out all the little pieces that meet certain criteria um you know if if the lease has you know cancelable clauses in there you know is it reasonably possible that it will be canceled you know there's so many different criterias that have to be vetted but like what you just said you know the solar panels is a great example um you may not own those panels you may be committing to future use of those panels and corresponding payments thank you sure so so with with that i uh would open the floor to any other additional questions that you may have any questions um i'm not seeing any questions so i think um nick we really

100greatly appreciate your time and excellent presentation building our questions in the middle of your presentation we appreciate also um the documentation's excellent uh i don't if you haven't read it yet the this this is really good appreciated it clients read it actually which is good audit um i especially liked audit approach and results summary i think that was excellent i think um you know we have a lot of faith in our financial management and uh and think that you know our review of your form your firm's performance has been excellent so we do really appreciate the the the extra care you give us as a client thank you so much thank you thank you very much you guys have a wonderful rest of your day thank you i frank wanted to say something sorry it's

101really it's almost a throwaway question but it's it's worthwhile because sometimes something comes up if there's one thing i mean we do almost everything really well but if there's one thing we could do a little bit better any anything pop to your mind you know i think you're operating at a high level you know i mean your your business office is is taking the time to calculate all these year-end accruals that process really gives you more insight into your long-range planning because you're not taking that extra time to step back and review the results from the year that's prior while you're also the process of course putting your budget together i mean i got here about 15 minutes into eight eight o'clock and i saw a great discussion around capital planning um and then subsequently

102right after that i had the opportunity to sit in on a presentation to talk about how to finance that and then i came in and talked about what you did last year on on how you executed that plan you know and i you see some some some deficit spending in the general fund i think some of that is attributable to some timing of things of course the pandemic has impacted every organization differently um but i like what you guys are doing i mean i really do i like the planning that i see on the facility side because what i would worry about is is not taking the time to think through those choices of committing fund balances reserves operational surpluses without weighing the operational costs of the organization and eventually drawing yourself down to a

103point where you didn't necessarily anticipate so you know i think the things that that i'm seeing you do are all the really important things to lead the district financially you know operationally you know i didn't have any issues during the course of the audit you know information was provided to us timely you know as corey had mentioned i mean we're still working in a very dynamic environment despite you know it's just it's crazy and everything seems to be a little bit later than it should be um not necessarily districts you know personnel giving me things later it's just the world in general so i just would say you know just be patient as we all continue to work through those those challenges um because there's so many different layers to that but honestly i think

104you guys are doing a great job great thank you thank you okay i'll take you guys bye yeah all right corey back to you for more you share my screens hey but can i add i had one comment on the financial statements um and that is uh i i really like page 50. i'm calling these the financial statements i'm not sure that i think that's what they are um on on page 50 and 51 this is the trs uh liability the state's proportionate share of well that's um i believe and i was looking for you know i noted that it's gone up by oh you know a cool 90 million in the last six years which is concerning and um but i wanted to see what the actual trs rate of return was versus what

105they're projecting their rate of return so so going back in time i think that'd be helpful if you know someone picks this document up to see why is it going up so much um when the state's kicking in so much more money but anyway yeah we can let's try and find and see like a period of time what they what they've achieved in their return i know the one that yeah the information gets shared a lot more on an imrs side because they allocate assets and liabilities by district like they keep separate track sure trs doesn't it's just like everybody's money gets thrown into one big pot yeah and that's why nick said the calculations kind of convoluted it's difficult to pin down how much exactly is attributable to digital 39 but they should still

106have easily accessible information that says you know i know historically when i've paid attention to imref there's probably a little bit of a rivalry between them and they one of the things is not not only a good year good at economic years having you know high gains but also like when the economy turns down i know there was um different tensions talked about like in the housing crisis happened in the late 2000s you know a lot of people were taking like negative hits to their investments and then some people some of the ones that had done well they said it's not that like we didn't you know uh you know have a bad year it's that we just instead of going down 25 maybe we went down a couple percent level you know they figured

107out ways and so that trend definitely shows up over time so i i'm i'm thinking in terms of a percent yield in that year no i think that's fair i mean one of the other things that i think sometimes people critique the pension systems is they have like the actuaries use this assumed investment rate of return yeah and then you look at it and you say who's getting that right like how realistic is that because that's what drives how much money is going to be there in the future to pay benefits and if that's a flawed amount then that can throw off down the road um throw off everything else so i'll try and find that like what is what have they assumed because i know that they've from time to time they'll change what

108their assumption is and then what they actually achieve that's it rule of thumb is whatever their estimate is the best best best case probably a lot worse yeah i think so too we'll find out all right so then the last thing at least from my perspective today is the annual five-year projection so when we talk about the five-year projections um you know you can create a million different what-if scenarios but it's always good to know in the ones that where you finally settle and then the scenarios that you summarize and present like what are the big driving assumptions that really move things in a big positive and negative direction so i'll walk through everyone what the bigger assumptions are and then we'll touch on where we're at right now and what might be out there

109for us in the future okay so on the revenue side the biggest thing is what is cpi going to do for us and how does that impact our tax levy with property taxes being about 85 so we know that calendar year 20 was 1.4 that's an actual amount we're sitting at like 62 right now for 21. we're capped in this particular formula at five percent so whether it shoots up to six and a half seven eight or capped at five that will impact levy year 2022 and then for the remaining years um you see a 3.7 a 2.4 and a 2.0 we were able to obtain some bloomberg as cpi estimates thanks to liz and people at pma as well for confirming those amounts so you do see that you know by any standard of

110the last i don't say 30 years 2021 had a you know really high has had really high inflation and it's you know most times when you look at these things you see stuff around to give or take a few decimal points and you're still seeing you know at least economists thinking next year is going to be in the upper threes um we've plugged that into our into our equation another big thing on the property tax revenue side is new growth we've got our 10-year average plugged in a 14.05 million of new growth the range has gone from over the last 10 years and 6.9 to 24.9 so it is a pretty big range and it's as we've talked about before we don't generally find that that amount out until the levy is finalized or this

111the county finalizes that in the middle of the summer and then in in section two i think it's nice to point out that for every 1 million in new growth that's worth just under 30 and you can see that it our low point um a 6.9 that would add about 200 000 a year or if we had a really high year of new growth we would be at about 744 000 property tax collection rate that's another one what kind of a collection rate are we assuming so when we look back over the last decade plus our net collection rate which is all the amount of money that's been collected minus any refunds processed at the county level for district 39. we come to 98.6 so that's what's in our five-year projections and mirrors what our

112long-term collection rate is but it's worth noting that a change in the net collection of just 0.5 is worth about 290 000. so if we were to drop down to say 98 you know we'd lose about 300 000 for the year or if we had a really really strong year in collections we could we could see ourselves up about so you see at interest incomes based upon the fund balance or the reserves that we have local revenues fees collected that's primarily in our education transportation funds that is reflected based upon our currently order proof fee structure for a variety of items the keep 39 program just as a reminder it's a tuition-based program that's just over 6 000 per student per year we have for this current school year we have in the low 250

113uh range of number of students enrolled right now so we have projections going out for the next five years and as you can see that's a significant amount of money the nice thing is is that this is the first year with keep it all all for school all four elementaries and we're seeing real a really strong response which which is great to see uh item great slow down on that one what percent of overall kids is that i don't have that figure in front of me right now but i i think last time we calculated it was 75 to 80 percent of our students so we're enrolled okay thank you um related to kindergarten enrichment um on the expenditure side of that you kept everything flat salaries benefits etc but doing um other things i

114mean we have projections for future salary increases etc why did you choose not to plug that into this particular formula um well for this particular slide that's how we've shown it in the past in the in the actual model any any salary and benefit that's in there that has been budgeted for fiscal year is being increased based upon the applicable percentages um you know the one thing that i've tossed kicked around with this particular on the expenditure section item number six what to do with that is you know this is what was in there prior um being here it's what we used last year you know do we show that chart is growing the people that are in teaching those keep things could change from year to year you know what's the what's a what's

115the best fair way to represent like yes there is cost associated with operating this key program hence the reason for the tuition um so that's kind of that's kind of my answer i'm open to suggestions i just would say that any actual salaries and benefits um are stepped up by applicable percentages several items related to that the one i didn't adjust for inflation the other was that if the student count goes from 260 to 280 i assume there's at least one more two more teachers so that that raises the benefit supply and then a bigger topic maybe not for today but um when we first started talking about construction for kindergarten in richmond we talked about a fee and effectively a payback of the capital that extends over time which would be effectively the delta

116between these two lines and i know whenever we do that it sounds good and then we never actually formally keep track of it but this delta is smaller than we originally thought it was going to be um and there's two parts of it one do we have some way to reflect the fact that there is some revenue for this that then goes back into the capital to repay the capital for it the other is um if the delta gets too small when do we have the discussion on whether the fees are too small so there's a number of items related to the ying and the yang that cost them the revenue on this that the only thing i would say immediately as it relates to adding staff i think whether right now we're barely over

117250 whether we're at 250 or we jump up to um i don't see any change in staffing we're pretty set as far as kindergarten teachers across those four buildings we would have the capacity as 20 or 30 kids come in i would almost certainly be split over multiple buildings you would be able to fit those into the existing classrooms so i think on that front but yeah and again i don't know if today's the right day probably not but at some date i mean like i said we did have the concept and we knew at the time that there was a lot of caveats to it but of the fees would be used to partially pay back the initial initial construction and we don't really show any kind of budget reconciliation um of that so

118you know may not be important it may be useful it may be somewhere down the line we decide and i'm not trying to propose stuff but somewhere down the line we decided we wanted to go to a full day kindergarten you know what does that mean in terms of where those funds come from or in this case you know suddenly there'd be uh really the doubts to our budget is i mean there's a lot of little subtext to this now that we have a program well received in all of our tools um these numbers eventually soon i guess start talking about some of those other continuing on with revenue this last couple items so evidence-based funding we're assuming that remains flat um any incremental changes that get passed along at the state level it's very

119tiny for district 39 impact the federal aid does include um sur funding in fiscal years 23 and 204 and then as the that funding ends uh you see federal federal aid drop off for the last three years of projections uh level funding for the categorical grants throughout and flat funding for for personal property replacement taxes on the expenditure side uh we've got certified salaries in there for basically year 23 based on a 3.9 percent increase that's um was collectively bargained fiscal years 24-27 would still need to be negotiated we have identified savings through known certified staff retirements as follows see a low of two to uh teachers and as high as 12 and history or 24. it's a much larger than normal amount and then at least as it relates to the projections um support

120staff salaries are to be negotiated for the entire projections exempted administrative staff is 20 years we have a five percent annual increase to the healthcare insurance line item for all five years we have the rough amounts of cost for the kindergarten program so let me real quick on the health insurance costs three four years ago we were always plugging in a conservative number 10 11 we decided to be closer to realistic as part of our reserve calculations and we went down to five um is five too low um i mean now that we have a couple years more years i mean i know it varies a lot but um again we went from like 10 11 to five is five right or should it be more like seven so that's a good question um from

121what i've seen i think five is fine for now and last year we were at three three across the board i think the year before that it was a little bit higher but i think that's certainly one to keep an eye on it especially as we head into the late winter spring and if we were to identify something longer term or got some information from our insurance consultants that you know suggested some some pretty substantial increases okay but right now it sounds like five percent is still valid absolutely okay thank you the imrf fund is obviously it's calculated based upon the support staff salaries the one nice thing is that overall we've we've seen the imrf rate which is specifically identifiable the bishop 39 um continue to decrease and imrf in their actuaries they recalculate

122that rate for every organization that's a member of imri so that can change but we said we tend to be uh heading in the right direction at least from what i've seen in my career uh our rate is a historically pretty good spot uh insurance expenses in the in the torque fund so some a good bit of piece of news we got last friday our liability insurance through skip we had our annual renewal meeting and we found out that that amount was going to be five percent for the next calendar year which was which was really encouraging the the overall policy bill is something like 240 to 250 000 the one piece that's missing for our next power a year our policy runs 12 31 to 12 31 is we do have some cyber liability

123coverage which is important if you pay attention to the news there's always different organizations or different types of governments that are getting their systems taken over and they're being ransomed um that part of our last i looked up the last time we paid that bill was only like three or four thousand um that is a challenging industry for the insurance companies um gallagher told us on friday that a lot of carriers are exiting that market completely because our actuaries can't can't even quantify what their liability and exposure might be and so while they said that we should expect potentially multiples of what our previous premium was in a renewal so i have a meeting this coming friday um the good news is like i said you know our total cost is 242.50 we're talking about

124three or four thousand out of so even if it goes up double or triple you know it's that's not great but it's it's not like it's previously a huge part so we've plugged in an eight percent for there and then after that plugged in for insurance liability coverage five percent years after that and then other purchase services we've set to three percent supplies we've set to three percent um i guess and you'll see later on the last bullet point um services under uh for special education except for three i think the one thing to know even though i have got those plugged in that's not necessarily a guarantee one way or another that when we do our budgeting for fiscal year 23 that we would just allocate that amount of money to each department on

125some level it's going to be some of those areas it's going to be what we truly need take for example transportation services you know i might only want it to be a 2 3 increase in the budget but we're going to budget based upon what we expected realistically be so there could be some variances off of that but for purposes of projection this is what we're using um section 10. one quick one since you're just talking about the cyber insurance um is there levels of quality of coverage um are we well covered or basically there's a standard rate or are there options for slightly better coverage because that's certainly you know a three thousand dollar insurance payment if you know something happened i mean you're you're adding like you know three zeros to that number

126yeah from from our conversation last friday and then what i assume will happen again this friday the the individuals that are running the skip pool felt really good about the coverage levels in all the areas you know whether that's buildings theft school board legal liability cyber you know it was really interesting on the cyber liability it kind of relates to my area my specific area but one of the things that they've seen a really big uptick in beyond like the ransomware stuff is people spamming business offices or like payroll changes and like we pay some of our vendors ach is like getting that and so what they had told us on friday very explicitly is you don't have a process in place to independently verify any of those requests so you know people tony and

127i've talked about this you can get an email in your inbox and when you look at it at your box it says it might come from just 39. click on the drop down box it's not actually coming from district 39 and so they gave us some tips and processes that the insurance companies are now mandating that need to be in place where you independently call somebody that you know their number or use a district 39 directory email to verify before you process things like that because if you don't then they're saying oh you just wired 200 to construction vendor we're not covering that because you didn't have that verification process so i think you know you are seeing some pushback from the insurance companies and with also a lot passing along best practices and tips

128of making sure that as as the organization is being covered we're doing everything we can to prevent those things from happening okay so we have the right tier of recovery thank you um so section 10 just has a summary by fiscal year uh by the type of type of work and an estimated amount as i said as we work through things over the next several months with str nicholas you know we'll have a bigger longer plan for for all of that but we need to have something in our projections all right so let's go down to and see what what is plug all that in what does that all kick out as far as kind of an end game for for the next five years so the first thing is our our favorite um fun

129balance as a percentage of expenditures are graph so you see the last five years of actual uh you know where we were around 70 we dropped down to about 57 from the most recent audit basically your 22 has a the budget saying hey we're going to be around 45 so when i look and plugged in all of this the base scenario we're basically in the mid the low 40 range and that includes all these capital projects and the nice thing is is that you know we were able to at least in this scenario this projection accomplished a lot of capital projects still stay above our 40 and obviously the lowest one is fiscal year 25 where it shows 40.12 um you know that's from now that's three and a half years away you know the

130reality is we're going to make dozens and probably hundreds of decisions and some that we control something so you know it's still above 40 but you know we would certainly uh as we're going through as we always do keep an eye on how any decision impacts not only the next fiscal year but the going out future the next page shows the operating funds so this scenario shows everything i talked about above includes all the capital projects so the first column is our fiscal year board approved budget and then fiscal years 23 to 27 are the projections so we have the total revenue for ed education operation maintenance transportation the imrf which includes benefits for that social security medicare working cash and then tort which is our liability insurance and workers comp expenses you can see

131um you know like things things are in a solid place we're able to accomplish a lot you know within the within the parameters that we've set for ourselves scroll down to the next one so the next one as i you know the the one thing i wanted to show is kind of our baseline so when i set the baseline scenario i did so without senate bill 5. the reason i did that is you know this is senate bill 5 is so new and while it is law and it's mandated for now um i wanted to show the baseline as without because that's what we're used to this next scenario that i've got pulled up right now is everything on the previous slide but it includes senate bill 5 for every year of the projection so

132senate bill 5 as we've talked it is about a million dollars per year um additional revenue so when you plug in that additional million dollars per year that does change the equation things look look a little bit better um percentage-wise when you go to that bottom line so this is what things might look like unless the senate bill 5 gets some sort of amendment to it our next page we also always like to look back five years look forward five years just kind of in one page summary this this slide shows operating revenues and expenditures by fiscal year the blue is revenue green is expenditures so you see the one nice thing when you look at this is you see over you know about a 10-year period you see that nice consistent revenues exceeding expenditures

133in the operating funds um you know consistently about across the board some years a little bit bigger than others but it is always nice to see and then certainly one of our goals so this next page shows operating funds revenue revenues only you can see there's a breakdown for property taxes then the other local revenue would be all the different the replacement taxes interest and all the different miscellaneous fees that we charge families within our district we have a section for state revenue broken out evidence-based funding versus other state revenue the other state revenue the big item in there would be the reimbursement special ed reimbursement money but also the special ed transportation reimbursement um why is there a big increase in 2024 because i mean it looks like it's about 2 million a year

134the way this is plotted but 2024 went up more like 4 million so what's different so 2024 in the model that's the fiscal year where we would expect to see the financial impact of this year's cpi on the property taxes so the model has the five percent um you know plugged in as the as the increase so that's that's the big driver right there and then the next the next page is the operating funds as well but this shows expenditures only i always like looking at our operating expenditures this is kind of a breakdown the way i i like to look at it salaries and benefits have their own line item up top you see that's such a big part of our overall budget purchase services online and supplies capital outlay other objects that's typically

135special ed um tuition and some other views and fees and memberships but yeah i mean it's just a really nice uh breakdown you can see how it goes up and down in certain categories by year but yeah it should mirror you know a lot especially on the salary and benefit a lot of our major assumptions all the remaining okay sorry one more yep um we have the actuals for uh 23 for salaries um do you use the 3.9 percent in the out years or um no i use this are you talking you look at like our historical averages that's more in line um so yeah i feel good like when i look at it there are you'll see there's about 15 more pages i'm not going to go through them in detail it's just the

136remaining pages are each fund by itself um everyone has their own copy if anyone asks questions about those feel free to ask me i don't want to take up everybody's time going through those um but i do overall i do feel like the assumption that we view assumptions that we've used in here they're conservative they're not overly conservative um you know on the salaries and benefits that's a big driver we're using realistic compensation like chain or percent change amounts that are i think are realistic um without being you know too high or too low um you know like i said i think it we're in a good spot let me just go back to one of the summary pages and then i'm open to any comments questions before i assume we will want to talk

137about how this may play into our death certificates in any other funding as you can see on the page i have pulled up here now we've got tentatively in here we've got 4.5 in there right now and then going out to 26 we have the 4 million for the bonds out of the debt service extension base so as as a point i will say that as we think about what liz said on the bot on the on the death certificate side from a timeline perspective just about the frame of reference i did ask her what would it take the district say we liked the idea of issuing death certificates in february or trying to issue him in february and then waiting until september to do the refunding part so we could lock in that lower

138interest rate it's like what kind of barriers or timelines or what are we looking at and the really nice thing about the debt certificates is there's not a lot of barriers to issuance and really um first thing would be kind of coming to some sort of consensus of the path you should take but then it would really just be coming back in say january and having the board approved parameters for an issuance and then once once the board has done that then it's really going out to the market and um you know making the sale of the bonds and closing so compared to some of the other methods it's really quite quick obviously there's some information that the district or the business office would have to you know prepare for the issuance um offering statement

139but the timeline is actually quite short so with that said i'm open to questions comments on either this or how we want to proceed with the certificates i just want to confirm that i understand what you just said so for timeline discussion today general decision next week or or more january so i think i think there's a couple of ways we can go about it so between now and when we would want ideally like to see potentially see board action say we're for the death certificates say we wanted the board to approve something at january 24th that gives the board opportunity to have discussion provide direction today obviously we have a meeting next week but typically we wouldn't it's more action and then we would also have the committee finance and facilities committee uh i

140think the second monday in january so that would be a couple weeks ahead of that january 24 meeting so i think on some from my perspective i would like at least to hear i don't need like i don't think definitive answers today but i i would be i would appreciate hearing how everyone is feeling about some of the options and then we can if there's questions or things that you know you would like to see me prepare or something i need to research to answer going into the january i think at the january meeting is probably the january committee meeting probably need to you know make a decision and then we could prepare the documents if we're all heading in that direction yeah um so i think you said earlier that you would recommend option

141two where we split it between february and september and then sorry go ahead i i would say i think on her thing it was um option four it was split between february in september and then it was the option okay so the uh that was my next question because i think you said if we were to maintain the percent of the percentage of the budget that we allocate going back to i can't remember 2007 or that would give us 1.2 million so you're recommending option four you increase the payment too yeah so okay so the option that i'm that i that i would recommend at least right now is it would give us an additional 2 million in proceeds and it would kind of if we go back to the percentage of budget we were

142paying in 2007 we could make our debt repayment 1.2 million i would suggest for now we only make that one million per year so we're kind of splitting the difference where we're bumping up about 200 000 um you know i could you do more i think the one thing at least from my perspective the debt certificates is you're committing to about 10 years of paying it out of your operating funds whereas you have you have some of these other funding options available like centerville our operating funds plus there's bonds through our debt service extension base and that one that service extension base in particular has some good flexibility i just you know i think splitting the difference in settling you about a million dollar repayment per year feels like the right number for right now

143okay thank you frank did you watch yourself uh yeah i like the the lock-in in february the 100 000 insurance policy i mean the rates by september could be ten times you know one percent or more um so you know you don't win every time when you buy insurance but i think there's a pretty high probability that this would pay off so i definitely agree with that um i also agree with with some increase in the the depth certificate limit i mean one of the things i was looking at was since it's a five-year number that we plug in if you look at the terminal percentage so you know assuming that our revenues i guess expenditures or revenue revenues go up by you know inflation per year um the number at the end of those

144five years is actually percentage-wise a little bit smaller even so i think the the recommendation that you have is ends up at the end of those five years being under 1.5 anyway so i think that's a relatively conservative is a little strong but a realistic goal compromise okay okay i think corey what i would ask for is a one pager here's what you know you think or the administration things and then here's another option if we kept doing that you're one more thing is it probably comes up under the strategic plan maybe it comes up their committee work for the next six months or whatever but we have a couple revenue sources that we've talked about we've talked about potentially adding you know two plus million dollars um over the run rate budget here plus

145we've got the state law thing which adds a million per year um whether it's not a good way to do this but whether there should be a way of putting that aside um or at least talking about what we'd want to use that money for rather than just run rate capital projects which we already you know baseline budget have um so bigger topics related to fiscal conservative fiscal and facility issues that are that come up in the strategic plan but you know the bigger the bigger topics that you know there's something big that we want to effectively have a fund that we build up over time so that we can afford to do something bigger it's a bad example but an example if we ever decided that we wanted to go through kindergarten like i

146said it's like a 1.8 dollar gift but if necessarily the right example but that type of a thing given that we're talking about over the course of a five-year budget you're seven million dollars eight million dollars for funding that within the current performance yeah i appreciate that comment we're all i'll think in the same sort of way about it all right i think we're done corey are you done yeah i'm done unless you have more questions you have the direction that's helpful for you at this point from the board would it what would be helpful we can yeah we can bring back more i'll bring back what this looks like in january like i said it's the barriers are pretty pretty short we can start working behind the scenes um with liz uh but yeah

147we'll we'll come back and share share again sorry january committee meeting and with kind of an end goal of that january it does sound like there's general interest in your recommendation sending more information going forward i'm not sure when it should be but it looks like whatever it is it's getting closer to what it should be we need to schedule a meeting or two to discuss what to do with that million dollars i mean i think that's more than just kind of a footnote or a budget thing i mean i think we need to talk about what what are the options maybe there are maybe it is just goes into the fun but um i think we need to schedule discussion because that is a fairly large um yeah no i i think we all

148do so and in terms of when would be the right time to talk about probably not um i would think we should wait until we are further down the road you know i i mean that's kind of how i think funding available probably going to be expenditure needs that we're going to want to improve meshes with what you're talking about yeah i would agree with that i think waiting a little bit longer the strategic planning should flush things out on the kind of the operational side or the education side of things and then also it'll give us this a similar timeline to identify what truly what are the needs and desires those amounts i think that's a really good time to leave all that together so you don't have an exact month yet but certainly

149i know i'm hoping to sdr nicholas aren't listening anymore but i'm hoping march or april we can have some of that information maybe the latest yeah thank you all right turning it back to you hi lots and lots of information thanks so much so we will turn to strategy and mrs schneider fades is not here but i will turn it over to you to talk about the district's strategic advisory scene put my notes really quickly as the board is aware the dsat team uh dsat held its first meeting on november 18th and we're looking forward to holding our next meeting on i'm sorry on november 18th and then the next one on december 9th our first meeting really focused on it was a pretty organizational meeting overall um teams were separated the team was separated

150into subcommittees charged with some tasks to look at kpis and we'll be focusing on that work at the next meeting i'm happy to have um frank or aaron provide an update from the board's perspective on that meeting and upcoming meetings i mean i agree the it was a good starting organizational meeting um and i know there's the templates for thursday um for for people to put in ideas so i guess i'm on specifically the uh go one so if any board member has any ideas for kpi can they send directly to me if yeah okay so if any board member has any specific kpi ideas and you want to send them to me before well hopefully before wednesday so if i can incorporate them before the seven o'clock thursday meeting am thursday you have an

151opportunity i would just add one of the things we talked about during the meeting was that we want a broad range of voices and i think the constitution of who's on the dsat um as far as the membership goes very reflects that you've got people that have lots of roles in school and people outside of the school as well and then i'm on goal three which is the professional community which has to do with valuing and retaining highly effective staff we've got a google doc working on right now where people are adding ideas for kpis so if anybody has any ideas they want me to add to that list also i'm happy to do so representing us okay just an update terrific so we will have a public comment at this point don't see anybody

152in person do we have anybody online okay we have lisa though i'm sorry we have lisa hi friends hi hi thanks for jumping in i can get in the car and be there in 10 if you want no no we're moving to old business so hang in there with us right where you are uh so we'll move to old business and the first item is discussing the uh board certain board policies and i know um john and frank have looked at that a bit so i'll let you read the discussion i'll so um after the last time we discussed this i reached out to the league of women voters they had no specific template that they did i also reached out to the village board and they had no specific template however the league of

153women voters maybe the village the village i believe pointed me to the park district that was actually looking at this particular policy for them so i reached out to the park district and they did come back with a little bit of verbiage that um that they had in their policy there are some differences from a legal elected standpoint that that different boards are different um but they did they did have some wording and i thought it moved in the direction that i was looking for so i wanted to bring it to the board for discussion what they basically had and it was in your packet i didn't bring it specifically but basically if you remember the termination requirement was the majority of the board says that the board has not as a board member has

154not been effectively fulfilling its duties and then it referred back to a policy that basically had 1819 enumerated duties but although one of them were board collective board duties and there was only one real individual board member duty and it also was fairly vague in terms of you know four members of the board majority of the board votes that somebody wasn't fulfilling their duties it didn't say how you determine that etcetera etcetera what the heart district had they had an additional clause that identified a definition or at least a starting point definition of what fulfilling your duties were and the two parts were if a member did not participate in three consecutive board meetings um or um official meetings over the course of a year so if you include committee meetings and you know required

155uh special meetings etc um so it gave a little bit of a numeric definition of not fulfilling your duties um and i thought that that added value because i really i really think the ambiguity of you know majority says that i don't think that person is doing what they should be doing is a strong enough rule to to basically overturn an election effectively the wording was in one of the packets that i don't know in anything we so um comments or are you saying that you would add that on to um 2 6 0 like it would be right after this first okay and and i i would assume it would still be uh may vote as opposed to should or must um i'm not sure the right way to say it legally but it

156to give a guideline of what it means not that you know if somebody missed three meetings that you know well you know they missed three meetings both but that it kind of tips a scale that says it should be looked at i'm looking at it and what you described is what said you know i don't have an issue with the 12 meetings over the course of the year but three regular consecutive board meetings if someone on the board were to get something like cancer and miss three consecutive board meetings even though they're fulfilling their duties doing what they can outside of the meeting agenda or the meetings that are in person i think three months in the course of a four-year term is really not that much and i am um hesitant to agree to

157something like that and that's why to discuss it i mean my my point was if we adopted this it would be a a guideline not a mandatory so you know i would assume that a board would say that that's a perfectly different reason um but i also recognize that once we put a number in there that somebody may use that i mean right now there's no number right now it could be one meeting i wouldn't put it in at all for three months for sure that would be my inclination i mean i understand the need for on some guidelines and you know i don't know if it's like excessive um you know absenteeism or because i think that what what the language currently you know minus that that ad is getting at is misconduct versus

158neglect you know and which could all be the same thing and so i mean and really that that is up to what a majority of the board would consider at any given moment in time right like that that standard could be a little bit different you know based on here so my only concern has been it's an elected position not a point an elected means that it represents the total voting community and you know for a majority of the board to say they want to overrule the voting public needs to be in my mind a high bar more than just that person's annoying would you have a an issue with the second part of you know meetings over the course of a year or you're recommending just using the word like acceptance i would probably

159go with using that word excessive but i mean i don't know i i don't really know i thought a lot about i i don't know um what would be um sort of um usurping the role of the electorate you know like maybe you just you know unless you do something really egregious you know you have four years to do whatever you're gonna do i i don't i don't know but the way it's written right now it could be like is that as long as the majority doesn't like somebody they could vote i mean willfully you know i mean in fact if like maybe that language should be um you know expanded upon you know because to me that's that's not like we don't like you or you haven't shown up for a meeting or two

160but actually but there wasn't i mean the thing is tied back to the only individual board member activity was effectively campaign violation is something like that i mean all the other activities are you know didn't vote um or you know you're supposed to vote on you know the budget um so when i was thinking about this um the other night um and for all of those you would need a majority vote right so like maybe if there's one person who's consistently not voting you know maybe there's not much harm there but to me what would be more harmful is if somebody were to you know actively thwart the aims of the board i'm not quite sure what that would look like if it would just sort of be you know outside of the board room

161or you know again i'm not sure if that would also require the electorate to step forward then or no i mean i'm not sure the electorate would know right necessarily i don't know i i i really understand your desire with this i think this is complicated and i'm reluctant to just sort of come up with our own language about it i do feel comforted with the language policy that it's not just that the board would vote the person off they right there's a process that then that would have to go through that's right we would have to request it of the intermediate service center as we've learned there aren't uh this doesn't happen and so there isn't um too many procedures that even the intermediate service center regional office can point to in terms of

162what that would look like um it's just not something that happens very often someone would have to it sounds like stop coming and participating all together before there would be consideration if i could add i mean we could call it a for example you know miss whatever six months meetings and and just end it right there i i feel i'd be okay with that i mean it just gives some you'd have to say well you'd have to explain away yeah oh it's um no this is hard so so i've been thinking about this as well so one of the benefits of not having a standard is a you know it'd be a political act to vote somebody off so there'd presumably be all kinds of calculations that all the board members would make about oh

163am i willing to live with the consequences of this political act you know there will be consequences for sure um but i mean i would think a standard based on you know basically election after six months and if the board did not if the board understood it you know some tragedy happened to a board member then yeah one would think you would not worry about this provision so right there's an assumption of good will yeah oh yeah that's right in good faith for sure i'd be more than happy with for example i don't i mean i didn't think that it needed to be mandatory for exactly the type of issue that aaron brought up that there are cases that everybody would completely understand um for example at least gives guidelines if somebody was starting to

164think about whether this is appropriate that there is at least some threshold so it would read something like an additional sentence to this policy that says something like for example willfully failing to perform the member's official duties may be considered to be neglecting to attend and then the rest of the sentence that you suggested since we're talking for example that i feel right would you be comfortable with using the word excessive rather than i would prefer that but and then the board could use its judgment to decide what that means maybe it's excessive absences to board meetings unrelated to um extenuating circumstances i mean i guess you could use that everybody could find some extenuating circumstances but i and you know at different points of time some might be acceptable and so might not i

165mean right we're never gonna totally nail this down but it maybe bridges the gap of what people are looking for we run all this well once the board settles on something that there's some consensus around we'll need to run it past our legal council to ensure that um it is legally defensible so then what i have at this point would be removal of what is in yellow highlight which was added to try to address this concern but doesn't actually address the concern so we would take out that as listed in policy 220 powers and duties of the board of education because as as frank has pointed out that is the board as a whole not a member of the board and so we would go back to the original sentence that was proposed and then

166would follow that with something that reads for example willfully failing to perform the members official duties may be considered to be excessive absences from board meetings unrelated to extenuating circumstances this is one level is that what the board collectively would like us to bring back for what i think now would be fourth and final reading maybe it's third and final reading third and final reading pending legal review we'll get that review done before monday's meeting is there consensus around that or yes i'm sorry i mean the way this is written it's that it just says refer to them to implement it doesn't say refer to them to evaluate and that really comes down to their policies whether they have any ability to override it but nobody ever does this okay okay i think you've got

167directions have that written down we'll have it reviewed by our legal team and um bring it for third and final reading on monday nights thanks great and then our second topic that i know of is intergovernmental cooperation working group topics great so um we talked about this last month uh i kind of gave you an update of um the meeting that we held and that um the village would like to for each of the boards to come up with prioritized topics for this year and i understand that the board or the village would like to prioritize sustainability and mental health yeah and um i don't know what but um yeah so maybe we can talk about the whether you agree with that or if there is another topic if you want i can list the

168sort of topics that were on the table so sustainability diversity equity and inclusion or a welcoming community mental health and youth services communications and strategic planning and so we also i think that the village had also suggested that each board kind of talk about where they're at with strategic planning again since we already have one in place we wouldn't benefit as much from that but we would be able to share our experiences so is there anything that you would like to prioritize the timeline for this like over the next year then yes i like the mental health of the kind of coming out of the thing john did you want to talk about it i think um for sustainability i just have to do a lot of listening because i'm not sure what that term

169means um and but i really like the strategic planning i think we have a lot to offer sadly that's the first meeting [Music] you know intergovernmental dialogue so i'm not really exercised about the topic is there's consensus around sustainability like very good things to talk about worth talking about we obviously take you know these topics very seriously from the school district so it'd be interesting to see what others do i see them as really great places where we could leverage the different groups to make a bigger impact so to me they feel those two feel very important because of coming up clearly they're such a mental healthy students our teachers our parents the community at large that seems really relevant for all the groups and sustainability as well do you have any thoughts i'm fine

170with those topics um we veer off into the weeds too much but i'm curious are you dealing at all with the suspicious centennial celebration or is that that was pretty much in the background yeah okay we have a committee here for the district that is feeding um the village efforts there so i think a lot of each of our groups seem to have identified some representatives to already be working on that yeah thank you okay so if there's not that much yeah then we'll um or maybe dr kama scully are you are you the liaison like to mike at the um the village i think it's important that you all have the conversation then you get to bring that back to that discussion okay so yeah i think he was just simply sharing kind of

171what they had talked about so far i think you can bring it back to the next meeting thank you great does anybody have any other old business for new business um i do want to ask about the league of women voters this is an appropriate yes this is a great time thank you there's an upcoming meeting for the student uh civics i don't know if anybody's participated in that i've done it a few times and it's unbelievably powerful and i think the first meeting is this uh january 12th is that correct i guess the kickoff the kickoff meeting so we'd be looking for two board representatives and i don't know what happens at the first meeting but you work with students who are learning about local government and some will be assigned to the school

172board and it culminates with them doing a mock meeting on a given topic and they learn about our processes so if you are interested in being just let me know and more than enough interest we'll figure it out this is november 12th and i'm not sure if the exact time it starts at seven that's what it's proposed to start at so is the commitment to mentor these groups throughout the process correct you know there are maybe four or five you know maybe not even you know i think it's i think it's a pretty um light commitments so you would attend on the 12th that's part of the introduction um there's an interview associated with that sometimes it happens on the same night sometimes on a different night and then i think there's one other event

173that you would participate in near the end of the program and then we typically i think honor the students here at the board meeting as well so that would be a collective court committee i recall there's one meeting they observe and prior to that meeting you meet earlier with them that night so it's the same night as a board meeting just a little bit earlier i know erin you expressed if you're interested tell me and if we have more than two then we'll narrow it down okay i'm interested okay great all right okay great so i'll circle back to we'll figure that out maybe people have the experience um but we'll determine that well in advance terrific any other new business okay having no further business we need a motion to adjourn the committee uphold

174of the whole meeting i move to adjourn the committee of the whole meeting may have a second motion having been made and seconded all those in favor please indicate by saying yay motion carries by general consent and the time is 11 o'clock precisely 6 30 for dinner seven o'clock for the meeting anyone who will not make it back by 6 30 or just simply does not want to eat dinner to be here um 6 30 and then it'll just be available throughout the meeting but if there's someone who said absolutely not arranged what i'll be here so i guess everyone would have to say skip the meal altogether we'll be here at seven if if we wanted to do that ever going to be here at 6 30 great great that'll be nice before we

175get started yeah we stopped the live stream but lisa's still on i left this very much in case you need to talk to her yeah i'm sorry i missed it is there anything you need from me no i don't think so you know heavy finance committee meaning that you got all the materials yeah okay cool i'm sorry you got delayed or it's all good all right talk to you soon thanks for watching see you tonight yep