001We talked about revenues last month and now I'm presenting a preliminary budget to be submitted to the county office. So, I'll let Rich talk a little bit about our budget goals and how we shape our budget around these goals. >> So, we've talked about these multiple times now, so I'm not going to read every component of this, but I want to make sure I highlight, you know, what the important parts of these are. Um, you know, number one and first and foremost, maintaining our comprehensive educational and extracurricular programs. I think we heard a lot of that tonight. You know, a lot of the student reports, a lot of things you heard about about the accomplishments of our students are um in the classroom, but also outside of the classroom. And I think providing those opportunities
002is a a primary goal for any budget to be able to make sure that students have, you know, the academic um support that they need, but also the experience that they should have in high school. And I think our students leave with a great experience and they are prepared academically. Um so number one I think is the reason it's number one is the most important. We do have to also ensure safe and functional facilities. Um this budget does aim to do that. Just maintenance of our buildings. When you look around our buildings, I never thought I would talk about HBAC as much as I do, but you know fresh air is pretty important in a building this size. And um you know just again cutting the grass, making sure that flowers are planted, making sure
003the bushes are trimmed. These are all things that um this budget will provide for and we'll continue to see the excellence in our facilities um that we currently have. Attracting and retaining highly qualified staff. Um you know, that would be a really close second to number one for me because um you know, if we we we we want to make sure that we have the best staff for our students. Um and I'm confident that we we have that. Um and we continue to maintain that. And so it's not only attracting them, but it's keeping those staff members and making sure that they feel supported and happy. And those are all the things that we've talked about many things. It's why one of our district goals is, you know, staff climate to make sure that uh
004our staff and faculty feel supported. Um this board does that. They support the faculty and staff. They see it, they hear it, they feel it. Um I know that from being in that strategic planning advisory committee. That's what that's the feedback that I get from from that committee is that um they see what this board does and how it supports them and they appreciate that. And I hope that you appreciate them as much as I do. uh as we do want to exercise fiscal responsibility and cost containment and again when you look at some of the things that we were able to cut in this budget uh 1.6 six million alto together closer to 1.7 now. Um you know again we tried to stay as far away from students as we could right as as
005far away from the classroom as we could as far away from activities as we could. Um and really got creative in ways to try to restructure some things with attrition of staff and restructuring things so that we were able to save the 1.7 million and bring this budget to a 4.29% increase instead of a 4.6. I you know I wish we could have gotten lower but um as in we'll talk about when we get to one slide how we we're $1.6 million less now than we were in 2018 2019 with the state um funding formula and that 1.6 if you think about it that's exactly what we're missing right now. So you know 2% would have been easy if we had the state funding that we thought we were going to have. And then last
006u but not least is lining with our strategic goals and state mandate. So, our strategic plan, you know, really outlines what our community wanted. We spent a full year, you know, talking to our community, surveying them, and asking them what they wanted. And these are this our strategic plan lays out what our community expects over the next 5 years. Um, so this budget supports that. It also supports the state mandates that we don't have a choice whether or not we want to participate in them. So, those state those state mandates are typically unfunded. You know, the state doesn't say we need you need to do this and we're going to give you a little bit more money to do it. they just say you need to do it. Um and then it's on us and
007our taxpayers to be able to make sure that is implemented. So um I hope you know everyone read over these budget goals. I think we we wrote these you know um so that you would really understand what we try to do from a philosophical standpoint while developing this budget which is a lot of numbers but those numbers translate student experience. So >> So what were our budget challenges this year? And as Rich has already um stated, the state aid funding that we've been receiving is what we're going to be talking about in the next few slides. The adequacy formula is not keeping pace with the expenditure increases. And we've been seeing that the past several years. It doesn't keep pace with the actual cost of our transportation, our special education needs, and our security. Healthcare
008costs are rising at a significant rate. And it's an anomaly year. We have a very reliable and consistent rate increases in the shift as we've had in the past several years as we're a part of a GIF where there's several districts all participating in the same plan. But this 20% increase that we're experiencing this year is unfortunately the best scenario in a very poor marketplace right now. Um the state health benefit plan is seeing rate increases greater than 30 35% right now. So this requires our district to raise our levy above the 2% in order to um keep pace with that expenditure. Our special education costs are rising greater than 2%. And the district out of district placements are actually reducing for this year, which helped our budget in this scenario. Based on our excellent
009in district programs, we're able to keep more students in district and keep them from going out of district. Transportation costs do rise greater than 2%. There are driver shortages and increasing gasoline costs, which also drive up the route costs for transportation. And again, state mandates require district participation in programs that require additional staffing or cost to us. So in order to stay compliant, it does squeeze our budget. So how did we bridge the gap and deal with those challenges? So again, as we presented at the last budget meeting, we talked about our budget drivers increasing at a rate much greater than our expected revenue. So how did we bridge this gap? There's an indistrict ESL program proposed for next year. So that is included in this budget. So it will reduce our out of district
010costs. We're supporting indistrict special programs and reducing our out of district professional costs. We're right sizing our non-instructional staff members at both buildings. Streamlining our security operations. Continued cohort expansion at Polytech programs without increasing our staff in our buildings but increasing the number of students coming from their programs. reduction in our staffing through attrition as Rich had mentioned and reducing our budget requests from the buildings. So as far as enrollment, these two charts talk speak to the Morhees enrollment and north enrollment. So our base population at North and Worhees are slightly declining. However, you can see on these charts that the Hunton County vocational programs, which are the smaller pieces at the bottom of each bar, are both stabilizing our total enrollment. So the first chart is Borhees and the students are the our students
011meaning the north students are the top bar. So those you know reddish orange largest bar the smaller pieces at the bottom the blue the orange the yellow are each of the vocational programs at the Vorhees building. The second chart is for North Hunter High School and the largest green bar are obviously our north students and the smaller orange is the biio academy and the blue piece is the new north campus building right below our building here. That building has two years of cohorts right now and we're expecting two more. So right now we have freshman and sophomore and over the next two years they'll be adding also you know juniors and seniors as they're um expanding their programs and also adding additional programs in that building. So we're hoping that those numbers also increase over
012the course of time while our student enrollment may be declining slightly. We'll see those um increasing. >> And just one quick question. So if they take shared programs at the Btech or Polytech, they take their uh core curriculum classes at North, they become a full-time student and take all of their core curriculum in our building. So they walk back and forth between the building. >> Okay? >> So if if it's one of our students, it's sort of they they come off our roles and go on Poly Tech rules, but we still teach all their core academic classes. If it is a student from outside of our um footprint, um they're coming in, they're still taking all their core academic classes, but they're act they still don't help our enrollment. So, our enrollment numbers, if anything,
013are lower because of Poly Techch, but we end up getting um a significant portion of that tuition back because we provide the academic courses. >> Do we know how many I mean, this is probably a question for another time, but do we know how many of our students we would have lost to another VOTE, but instead now come here and stay within district? So the programs here it's typically about 50% North Borhees kids in the programs give or take the program. There are some that are a little bit heavier on North Borhees and not so heavy. Um so you could theoretically say that those students we would have lost those students to another Votech program but it probably wouldn't be the same number because a student get that gets to stay here at North of
014Borhees and um be a part of our program they that's an advantage to them because they get to stay in their home school. If they had to leave their home school to go to a different school they might choose not to do that. You're right. Other districts that are sending their students here then incur the cost of not only the tuition to attend Polytech but also the transportation because it's the responsibility of the district to provide the transportation to the students. So if that building was on another campus paying for the student to attend and to transport to the students. So we would be incurring significantly more cost. So the revenue comparison from last year the major changes include an increase in tax levy of 4.29% 29%. A decrease in our anticipated extraordinary aid, a
015decrease in our budgeted fund balance from the prior year, a small decrease in the miscellaneous revenue, and a small increase in state gate, which we'll talk about again in more detail in the next slide. So, focusing on state, you can see this chart has the past several years, and the S2 stating cuts have impacted us in a very significant way. And I know we've talked about this at length, but it is important to keep noting that the district had $1.9 million cut from its budget over the course of that six-year period. Um, so again, although we've seen two years of small increases, again, it's not keeping pace though with the increase of expenditures each year. So it is bearing the burden on the taxpayer and not on the state to keep pace with the cost
016of education. And correct me if I'm wrong, that was I mean I realize we're going back a number of years now. That was part of the strategy of why the district formed the partnerships with the magnet structure with the polytech because it was recognizing that if state aid was going to be decreasing over 7 years, if you weren't doing anything to make your program and building attractive enough to bring students from outside or keep them, um there wasn't going to be anything to offset that loss. >> Yeah, the the revenue was a big part of that. Um, but it was also to make sure we kept our students in district as well. So, >> quick question. So, what are the actual mechanics that go into the excuse me, the state funding formula? Like what are
017they using to figure out increases and decreases? Like what you understand what I'm saying? Like what formula like what's inside the formula that they're coming out with these calculations? >> That's a good question. There's many components to it. They do take a six-year rolling average of enrollment. Um, and then they determine how far over adequacy you are. It's about a six-page document that they give you. But the nuance to that is, but how much are they funding it? And are they funding it in 100% of what it should be? And that's where the same thing with the XA conversation. What we're entitled to versus what we receive is the difference. So, I could share that again in another meeting or off to the side. I could show you some calculations on that. Um, but it's
018really how much they're funding the formula itself >> than it is the calculation. >> So, I guess if I'm clarifying on Rich's question, the state has a formula that they've determined this is how you determine what is considered adequate funding for for students, right? And then >> even though it's their formula that they've designed, they then give us less than what that formula would entail. And um I don't know if this is what you're getting at, Rich. Like what is the rationale for having a formula that says we should fund at this level, but we're going to actually fund it. >> Yeah. At a port a portion of it. >> And there's a portion of the calculation that takes into account transportation costs and special education costs. But the argument is always our professional organization
019goes to Trenton and advocates for districts to say it doesn't make sense that those calculations that you have are nowhere near realistic, right? The transportation costs that we're incurring are not what you're portraying on this for funding formula and then you're not also funding it properly. >> So there's multiple layers of issues. >> All right. So then all right, I'll I guess I'll reiterate for the people like me in the back who are trying to understand. So a the the for they determine the formula. The formula is not realistic because it doesn't keep pace with the expenditures and the costs of goods and services and educating students. So in addition to not being realistic, they still fund it lower. But is there I mean is there an argument or a rationale on the part of
020the state as to why even even if it's not realistic, what's the argument for why they don't fund it? But is there a rationale? >> I I think it's because it's all part of a big budget >> and they say this is how much we're willing to spend and you know so they may say if you added if you follow their formula and you multiply by all the students it should be some number X but Trenton says I'm not going to spend X. I'm going to spend 90% of X or 80% of X on education. >> Prior to S2 for for a long time um it was what they called flat funding. So everybody basically got what they got the year before and that hurt a lot of districts to be perfectly honest. Um you
021know as our enrollments were slightly going down we got the same exact funding and then what happened other districts their enrollments were going up and they were getting exactly same flat funding. So S2 the intention with this was to come up with a more equitable distribution of those funds throughout the state. Whether or not that is equitable that is you know up for debate u but that was the intention of this and that's why it was put in place and that's why you will hear of districts that are um gaining money over the last you know seven years that we lost money. There were districts that gained money um we just weren't. So I guess my other question is so if we know the if you know the formula right does that help you kind
022of come up with okay if they funded at 100% this is where we think the number is going to be like can you make that predetermination based on the formula that they gave you meaning like the factor that you don't have to Brian's point is how much of that formula gets funded but does that even help assist like to guide you on where you think it should be if it was at 100% Let me just make sure I I understand what you're asking is if I were to put in the calculation what I think should be fully funded. Again, that's an estimation and it doesn't mean that they're going to be fully funding that formula, right? But you're just saying if it was fully funded, what would it be? >> Yeah. Like if it was
023fully funded, would that help guide you in advance? Say, okay. Meaning like here's the formula. So here's what we would get based on their formula if they funded it at 100%. Right? >> Here's what we would get if they funded it at 90%. And then does that guide you to say, "Okay, I have no idea if we're getting 100%, 80%, 70%." But does that help you come up with those calculations? So you can't control what they fund, but at least does that give you guidance on what you should or what we should get at the what at whatever level they funded. Does that make sense? It does make sense, but I don't think that's what I would use as my rational. We tend to rely on our county office who has a direct line to
024Treton to say, you know, where do we think they are for this year? And then they tell us where we think we might be landing for our standing numbers. >> Yeah, the the calculation is um one factor, but it's how they're going to implement that calculation. Our county office usually has additional information on that idea. >> So, they'll be able to tell us like, "Get ready. it's going to be a tough year. You know, the state budget's going to be very tough and you're going to have to you might see cuts. Um or they might say plan for flat and that's what they did this year. They said plan for flat. Um and so we listened to the county office and we were pretty close. $17,000 increase was >> more or less pretty much flat.
025>> So if I'm hearing you correctly, the funding formula is garbage. >> That's the consensus kind of most use it for anything. >> Exactly. >> No. when it comes to what for state aid. Yes, we don't rely on state aid as um >> we're not relying on any increases in state aid from year to year. >> And the max uh increase is 6% and the the max decrease is 3%. Is that correct? >> This year. >> Yeah. But that could change next year and every year. >> It truly depends on how much they want to fund. No, >> it makes sense. It's garbage. >> Yeah. which I had a question about the the other slide where the the uh revenue from the state over the years. So this is not inflation adjusted either, right? So
026>> so like it's 1.6% 1.6 million difference, but inflation it's it's way higher than >> these are just flat numbers like from as if as if the dollar in 2018 was have the same value as the dollar today. >> Right. If you were to take this 18/19 first bar and adjust that for inflation over each year, you're right. That would look like a >> It would be a huge much bigger, >> which is arguably everyone says, you know, your budget goes up 2%. That's not the case because our state aid revenue is always flat. So, it's always usually more like at 1.8% increase in the total expenditure, you know, the ability to raise those funds. But Rich, to your point, and I know there's, you know, not that school boards have a lot of tools
027at their disposal to push back on this. Um, you know, we do have a voice as a school board. we can um we can put resolutions together that say hey you know we are facing unprecedented challenges uh whether it's your formula or the way that the state is uh handling health care or whatever those things are um we might be a small voice but we certainly can be a voice in that and we can be a voice that can engage with other voices and I could I could also see that as the round table gets together I imagine there will be a number of folks who will feel that way and I feel that you've got it you've got a couple of organizations out there. We certainly have school boards who who but I don't
028know I don't know enough about their their their political uh sort of advocacy for for funding and things like that. >> I do and we've had sessions on the county level and I'm going to push for our September as a of finance. We're going to have them come in and discuss this cuz even the experts there will talk about the formula and kind of chuckle because it should be straightforward and it's not. >> That's the thing I don't understand. >> It should be predictable as well. >> It should be predictable. >> Like it doesn't make any sense. Like you have a formula that's you can't rely on, >> right? >> So it's garbage in, garbage out, right? So you're it's like you're rolling the dice. >> Like the business office has nothing to rely on
029if the formula does itself is broken, right? So I don't know. seems like other school boards or boards are grappling with this like nobody can get their arms around what the formula actually consists of >> now. We're too late for this delegate assembly in May, but if we want it to put together and we might and we probably could get a lot of Hunter County and Morris County and Warren and the others a resolution and go and from school boards go into Trenton and say, "Hey, every year we're dealing with this. We here's a resolution. and we want to fix this going forward for our board and future boards and our taxpayers. So or even it's a good point Barbara like even if they just gave us an explanation how to decipher I don't think
030they don't I mean that doesn't surprise me out of track but like but even if we disagreed with the formula at least we should have an understanding how to how to read it or how to use it so we can plan accordingly which sounds like a we can't do that and then on top of that you don't know at what level it's going to be funded so it's complete garbage >> but I do think you know and and admittedly I feel like this has been an issue and a complaint for many years. I mean, when I was on the board previously at CPS, it was every year it was what's going on with the with the funding, the formula, years of decreases. And I think individually, you often feel powerless as an individual board. Uh
031the opportunity to unify forces or voices. I know there's professional organizations, both superintendent and business administrators, who are probably pointing these things out all the time um to the absurdity of this. I just don't know at what point you hit a critical mass where enough districts, enough folks are saying enough already. Let's bring some clarity to this and and and we need solutions that aren't going to be yearover-year 20% healthc care spikes and things that are just demonstrabably beyond our control. Um, I mean, I'm I'm certainly willing to engage in that conversation and help organize um those conversations, that voice and that sort of campaigning. Um, because otherwise we're going to be back in a different version of this next year. >> And, uh, Rich, if I could I could if I could leaz you
032directly to Trenton as that that might actually accomplish something. >> No choice. Yeah, I had a question. Do we have any idea when the the formula was last looked at? >> I read an article, I think it was 15 years ago that has been implemented and that the 25 26 school year was the first time it actually was fully adapted. So, it hasn't even been like working properly. I think >> pretty much ignored it for over 10 years like was saying they just said flat funding. So they took the formula and said don't worry about that just same as last year for several years. Now they're using the formula again but it's also not fully funded. So again you can't rely on it because you can calculate it all you want but then when they
033say well it's actually 60% of what that is 70%. >> So much has changed years that it's now arbitrary to use and and it should be looked at again to you know see how it can be adjusted. >> Right. But if costs for something go up 20% each year, there's that's not sustainable. I mean, nothing goes up 20% each year. >> No amount of of formula works for just formula. >> And again, if you look at >> these historical numbers like this year is an anomaly because of healthcare. >> That's that's the only reason we're even having this discussion right now. Otherwise, we would be in that 23 26. you know, we still have to keep up with the other um >> costs, but that that it would be a half percentage point or or
034around that. It wouldn't be another 2%, which is what >> it's one thing that's driving. >> Yes. And hope and again, they're saying this is a one-off, you know, so that we that we shouldn't expect 20% healthcare increases every year. Um I'm hoping that's the case. I won't believe that until I actually see it. >> What were the health costs increased last year? they were last year was about 8% 8% >> right but 8% is still a relatively large increase for anyone minor I mean think about your personal budgets >> without a doubt yeah but again that 8% we were able to you know um cover with the 2.7 last year >> what was the year Katie that because Katie did a lot of work and we were facing this with healthcare and you went
035into this >> it was the double digit increase in 2019 >> 2019 And that's when we went up for a new health insurance broker. We entered the shift and then we were get seeing normal rate increases until just last year. >> But again, that's the marketplace unfortunately in general. >> But it was we were >> we were a stand plan and then you ride the wave on your own claims experience that can be difficult. >> But I think to Andrea's point to be able to say that 8% is normal is challenging, >> right? itself, >> but there is still a big difference between 8 and 20%. >> And you know, it is hard to think that next year they're going to say, "Oh, you're back to 3% in healthcare." I mean, that would be a
036wonderful and amazing, but >> especially since this is a big chunk of the budget. It's not some tiny little sliver that's growing at 20%. >> Yeah. >> Right. >> This is the second largest, right? >> Okay. Sorry. So the proposed budget increase is a 4.29% to the local tax levy for the general fund of 2627. The primary budget driver for this increase is the 20% increase in the health benefit costs. As we've been talking about, the total tax authority for this year is 4.6. However, due to the small increase in state aid and further budget reductions that we've been able to do, we are proposing a budget that is 4.29%. This will generate $171,975 of bank cap for future budget years. So, if you're familiar with bank cap, if you do not go up to
037your taxing authority, you could take that money and spread it over the next three budget years or leave it alone and never touch it again. But because you did not go up to your maximum tax levy, you can use that in a future year. >> What was that dollar amount? >> $171,975. Well, our our max was the max the first proposed percentage of the tax levy or was it high? >> No, it was actually less than the 4.6. Last week we proposed 4.5. Yes. >> But the so the max though is >> it's 4.6, >> right? Okay. And so since it's still below that, >> we were below it and then >> the money rolls over to use next year. Three >> next. >> You can't use it next year. You can use it over
038the course of the next three budget years. Then it expires. It expires after three years. So you can use all of it. You can use all of it next year two. You can use part of it in year one, part of it in year three. You can, you know, you have leeway as how you can use that or you don't use it and it just expires and and it's okay too. >> So is the bank cap like real money in our bank account or is it taxing authority? >> It's just it's like >> I don't want to say funny money, but it's not. I think the way to correct the problem, but I think the way to think about it is let's say next year >> we don't have a exception. So we're at the
0392% is the max. >> We could code whatever 2% >> translates to in terms of the tax >> and add $171,975. So would effectively look like I don't know 2.2% or something like that. >> So I mean this is not money that's free. >> Correct. the taxpayer in a future year will have to give it to us. >> Okay. >> But it's a way to >> it's like >> that extra beyond whatever there is beyond 2% because this year the >> we didn't use >> 2.6 >> points beyond 2% are because of the healthcare increase. >> It's leftover taxing authority that we can leverage in a sub. That that explains it in a way that >> now I understand >> because I think last year if I recall we didn't have any bank cap. I
040think LA the year before what we used up whatever >> we had. Yeah. Something along that. >> That was going to be my next question. So is on a rolling three is there anything left in or like what's in there now? >> There was not anything entering into this year. You generated it and that's what's going to be in for next year. But then there was there would be two years because you could use it for three. >> We could use it, right? We could >> lower the prior two, right? You got a bank cap up for the prior two years leading up to this year. So, >> right. But we did not have any we went up to the full taxing authority those years. So, there was nothing banked. >> Okay. So, this is
041basically this the 171975 is everything >> is everything. >> Okay. I think for the and I can't remember the three or four years before the last two years I think we were using some bank cap each year. >> Correct. So the 0% year obviously we generated bank cap by not going up to the 2%. So then we used the bank cap over those three years with the asterisk. >> Okay. >> But we also refunded um monies that was from the referendum. So there the projects that were done over the referendum came in less than budgeted. So we're able to refund that to the taxpayers. But what we did was we refunded that over the course of the three years that we increased the taxing authority but then also gave them a refund. their net tax
042bill was actually less than 2%. >> So those numbers that we see 1.6 1.7 2.2 were the workings of bank cap in concert with the referendum. Yes. Okay. >> So that's the whole idea that by having the leftover you can bring down that percent in future years. >> Right. and the one and 171 could theoretically we could spend 20,000 one year and 50,000 and whatever the bank of the three years >> or all in one shot >> uh Rich I didn't I saw your hand before but you got okay Stephen >> so it's still though this is money that we can collect from taxpayers in the future this that so that you can anticipate if you have a budget shortfall, so to say, you can say, "Oh, well, I've got 170 grand. We can take
043we can ask for 30 grand. We'll take this extra little whatever that percent equates to to next year's tax levy increase because it might be kept at 2%. So then you can ask for that little bit extra, but it's not." >> You're like, "Yeah, >> you're exactly right." >> All right. But >> yeah, for a while when I first came on, I thought it was like kind of free money like oh >> because money we didn't charge. >> Yes, that's exactly. >> We didn't charge you 4.6 now, but we will over 3 years. We could >> Yeah, >> we're trying not to. >> We're okay. >> And again, that's up to future boards, right? The future boards will have the ability to use a spank cap if they so choose. That's what it comes out
044to >> and that would be recommended off of administration's budgeting forecast and things like that saying this might need be needed potentially maybe who knows >> and where state aid goes >> right yeah >> maybe write some good resolutions and get some good stuff what what is the threshold to use the um the uh waiver the health insurance waiver >> the threshold to >> that you pull that >> the maximum that we could go to How do you how do you use that? What what like Yeah. >> Oh, how is it calculated? >> No, no, no, >> no. What allows us to use the the healthcare? >> Well, that's a calculation. So, so if your healthcare costs at the state level, they use the state health benefit plan as kind of their guide and they
045say if that goes over 2% that triggers the health insurance adjustment for all the districts. So, it kind of opens that screen in our software where you can say, okay, well, what is our increase? Ours was 20. Is that still more than 2%? Yes. So, they allow you to take anything over 2% as a health insurance adjustment. So, 18% of our health insurance um increase was able to be used as a health insurance adjustment. So, that's how they get to that $1.4 million number. >> So, >> that was available to us to go over the 2%. So in other words, it is some recognition at the state level that health care costs if our state plan is going up this much, we recognize that everybody's plans are going up. So we need to be a
046little more flexible and give you a little more leeway and authority to go above. >> Correct. We will allow you to raise your tax authority over 2% because of this reason >> because they recognize that the costs have spiked. >> Right. So, so Brown and Brown should would basically be able to tell us kind of within Q4, I'm assuming at the latest of this year, right, about where the increase is going to be for the Right. >> Right. >> So, that'll hope that'll that'll give you an idea if you can pull that lever if that'll be available. >> Correct. >> You mean if that's going to be available to districts that there's likely to be >> Correct. Because we know we're not going to have the enrollment waiver available to us anytime soon. And I'm
047trying to remember, Rich, cuz we heard from Brown and Brown in November. >> At that time, they were kind of signaling that it was he said he said 30%. >> He said 30%, but we're we're hoping to do better or something to that effect. Yeah. >> Uh Stephen, I didn't want to lose yours. >> Sorry, that's back to that that tax stuff. How was it refunded to taxpayers? like literally like >> or the referendum project >> previous years. So you said we were able to refund the taxpayers. Was it a literal financial refund to constituents like that? They like how does that work? >> So what we were able to do is in in my accounting world there's different funds. So general fund is our operating budget. Debt service fund is where your referendum funds
048sit. So it's in a separate fund um to track those capital projects related to referendums. So after all those projects were completed, there was money left over, right? So instead of doing any additional projects that were um kind of under the umbrella of that referendum, we decided that being that it was a significant amount of money that we could give it to the taxpayers. So how does that look? When we prepared the budget, um there's a separate taxing um percentage on your tax bill for referendum approval votes. So after you the the taxpayers have approved a referendum on their tax bill, there's a separate debt service assessment. So what we're able to do in the budget software is take the money that um that we can refund them and lower that debt service assessment because
049there is long-term debt associated with those projects. So we're kind of lowering the payment that we have to make against those capital projects on your tax bill. So it's like taking the two lines on your tax bill that's like North Warhees and the referendum vote. We're able to lower the referendum debt service percentage that you're paying in taxes. >> So it acts like a credit on your >> it's almost like a credit on your tax bill versus the general fund which is our operating budget. >> Thank you for >> and we're and we're not >> sorry that was it's very complicated. Thank you for that. And we're not the way I understand for a referendum you're you can only use those funds for the projects allocated projects >> or something related to those projects. Yeah.
050Like if you can't just spend it on the >> inclusion of that we realized that there really wasn't anything else that we could tie into that. So we thought it was best to just >> and also we're not in that situation right now. We they closed the books on that and we do not have a current >> we're not paying any other referendum. >> No, that was the the last long-term referendum. Um the last short-term referendum, we have slowly been returning the funds to Capital Reserve, but as you remember, that was a one-year referendum. So, that was just capital reserve funds and the money that we got from the state. That was not long-term debt that we gave, you know, that we asked the taxpayers to approve. >> Okay. Tara, did you Thank you. So,
051the health benefit waiver, I know we've already now kind of talked about that at length. Um, but again, that's calculated. It's um the reason for the going above the 2% is due to that health benefit waiver that's available to districts for this year. Um, again, because we're having the state health benefit plan increase over 30% next year. Our health benefit increases 20% which again allows our tax levy increase to be over 2% to address that large increase in health benefits. And there are other adjustments that can be used in the budget, but none of them are available to us this year, just the health benefit adjustment. So total revenue comparison, the lo local tax levy, you can see the dollar changes 2.4 million. Other revenues, tuition and interest, that was a small reduction, but $120,000.
052Again, just a decrease in anticipated interest in other tuition revenue. Our state aid, you can see this number is going down. And Brian made a good point um via email today. This state aid number also includes X aid which is extraordinary aid. We've talked about that. That's um every year that is not guaranteed by the state. So we are assuming that we are receiving less next year because they again have been underfunding that each year. So although our state aid numbers that are guaranteed for next year are increasing by 17,000 and change, we are assuming $100,000 less in X8. So you're seeing that net number of 83,000. Our Medicaid reimbursement is related to SEMI. That's a mandatory program that we must participate in. These numbers are given to us by the state of what we
053can expect. Not a huge number, but it's an increase from last year. Budgeted fund balance is less than last year. Again, each year it's going to be more difficult for us to generate fund balance. So, we need to get used to reducing our reliance on that budgeted fund balance because again, that's assuming that we're generating a surplus that we can carry forward into a future budget year. And that's going to become very difficult as we feel the squeeze of increased cost. Okay. >> What is our historical budgeted fund balance like? Has it been around that five five and a half? >> It has been more than that at times. So we've been trying to dig it down each year to to again get used to knowing that it's not going to be there over a
054course of time, but we can't take a huge hit in one budget year. So we're trying to do it over the course of several. Is there is there a percentage that you you know is it almost like you know you're you're retired and you're you're 4% kind of you're pulling 4% out per year or something like that >> right? Um I don't know the the percentage of the budget off the top of my head but um yeah we are trying to lower that to closer to like a 5%. I think the last time I looked it was probably like the eight. >> Okay. Um, so again, going down the rest of the line, federal and state aid revenue and grants, we're expecting a decrease. We usually do conservative budgeting for any of our ESA and
055IDA grant funds. So that's about 80% of what was received this year. Debt service again is fairly flat, small increase, but that's based on the debt service schedule or payment schedule that we have related to those capital projects. And the debt service aid, debt service aid from the state is their contribution towards those capital projects. So overall total increase of $1 approximately $9 million for the total budget. >> So quick question. So the budgeted fund balance excess surplus, >> right? >> Can you just walk me through what exactly that is again? So over the course of last budget year which would be 2425 the close of the audit they determine how much is excess surplus which is either unspent expenditures appropriations or additional revenues which is could be additional extraordinary aid on the revenue items
056that we weren't anticipating. So at the conclusion of that year they determine what the excess surplus is that we can carry into a future budget year. Obviously you can't carry from 2425 directly into the next budget year because that budget has already been completed. So it's for the second budget year out. So 2425 carries into 2627's budget year. >> Okay? >> So you're relying on the fact that you have a prior year's surplus to balance your budget in a future budget year. So again, that's why it makes sense to lessen your reliance on assuming that those funds will be available. >> So these are monies that are available to the district. >> Correct. >> Okay. So and and yeah. Yeah. So that's right. So essentially it's at 5.2. >> It's assuming that you could be
057fiscally responsible during an entire budget year and try to squeeze every last dollar out of that budget so that you can generate surplus so that you can fund your next budget cycle. >> Okay. So say it differently. Worst case scenario, if that actually happens, you have $5.2 million of discretionary funds that you can tap into now. Correct. discretionary funds that I can tap into. >> Yes. Like this is available. These are monies that are available to the district, right? >> Something something catastrophic happens. We need >> we need $5 million. We have it, >> right? >> Not even really that, >> but it's allocated already. >> The budget was built this year. >> It's built >> was built this year with that number to start with. So it's not that what we expect to spend
058this year includes what we raised from tax revenue, what we got from state sources, >> and this amount >> surplus. >> This is already surplus. >> Surplus. Yeah. >> I know we're not adding to it, but >> it's an old year surplus built into the budget. >> So it's not extra money. It's not anything. >> Oh, sweet. We got extra 5 million. >> No, no, no. I know that. >> It's not that. >> And I guess are catastrophic things. Yes. that that is sort of >> I know that's not how things work. I mean, we would never got we would never have that. But >> and you also have to remember that's not like the budget that we're we're working in currently is 2526. That's the school year that we're working in. These were funds
059generated from the last budget year. So each year we're going to feel the effect of not being able to generate that much surplus each year because of the cost rising and the revenues not being um fully funded by the state that we're used to receiving. >> So I guess I'm just so going back to Dan's point. So, so this is money that are available to the district to use or or it's not. >> At the conclusion of last year's audit, we set aside this money as I guess the best way to say it's more like an equity account for the district. You know, it's like a balance sheet number that we know is set aside and restricted for your budget preparation for 2627. It's not something that can be touched because it's already been allocated
060for a future budget year. But I think Rich, if I'm understanding your line of inquiry and if I'm not clarify, you're saying strategically looking ahead is is this money that you could be leveraging towards budgets even though you'd be recognizing that you'd be drawing down sort of your reserve and you do it at there's risk involved in drawing down reserves. >> That's exactly right. I guess where I I got conf I'm getting confused is that that's my understanding of it, but it's also what um Rich mentioned is that it's kind of baked into the current budget. So that's where I'm getting a little confused. >> And I guess also like the way fund accounting works is we have to balance a budget with revenues equaling appropriations, >> but you have to make sure you never
061go into a deficit. I can't let this district do that. So, you have to I don't want to say bacon because I don't really enjoy that term, but you know, you have to make sure there's contingencies in place in every single portion of your budget. And not to say that they're inappropriate, it's they're completely appropriate because you can't go into a deficit. You have to be able to justify those contingencies and make sure that they're appropriate so that you can have something at the end of the year. And again, god forbid if something broke in the building, I have money that I can transfer and fix a boiler, fix a plumbing issue. This is the break glass in case of uber emergency kind of thing. >> And at the end of the year, if you
062have that surplus, great. Then we could use it in the future budget year or we could put it in the capital reserve, which is what we intend to do. >> And I I think we're both trying to get to the same thing. But I think my understanding now is it's not like you have this money now. This is over the course of the year. >> Correct. >> This is what you're expecting to have at the end of the year. >> Correct. Everything is budgeted correctly. That's the if everything goes the way it's planned. Correct. Right. >> Okay. So, it's not like it's sitting in the bank collecting interest. It's it would slowly build over the year as part of this >> as we're collecting. >> That's that's what I was. >> So, that's where the
063confusion is. So, it's not funds readily available to the district. Now, it'll be throughout the course should that catastrophe not. It's a slow build for one giant boiler thing and then you Yeah. You don't have that money. You know, a giant repair bill >> lowers that. >> Stephen, >> is it safe to say that the $235,000 change from 25 26 26 27 was spent out of that excess surplus and that's why it's less then right because last year cuz it rolls over kind of theoretically every other year I get but >> that's theoretically then what like it >> uh well no maybe not it's going to go it's going to taking down that number and we're hoping that it doesn't >> cuz it's like in a sense. So it's always that >> amount really we're
064spending you spent we spent a little bit from it and that's why it's less. Is that safe to say that that's a way to look at it or not really >> that each year it's going to be more difficult to generate as much. >> Okay. Okay then. Okay. I think is not the right way to say it. All right. Thank you. So to that point I guess looking at the 26 27 numbers if we didn't have that budgeted that excess surplus does that mean that 5.25 25 would have to come from T tax levy >> and we can't raise tax levy any more than 175 that we still have left >> but would be cuts >> but the okay so theoretically if we weren't able to raise taxes any further we would have to find
06554 million >> or cut$54 million >> which is what some districts are facing right now >> more than K I don't mean to put you on the spot >> Dan and Andrew >> the the number. So the number from 2526. So we don't we don't that's not done yet because the year is not done yet. So you don't know where >> the number that we're able to generate right until the school year is done and complete purchase orders are completed. Then I >> So that that number may be a little bit higher maybe a little bit lower at the end of the year. Right. When they when the audit is done that's what you're Okay. >> And then that's what you plug in for the for the next year to kind of Okay. >> Correct.
066>> Andrea. And is there a max amount we can isn't there a max amount we can bank either a percentage or a number that >> um 2% is the amount of surplus that you're allowed to keep as like a reserve but this is kind of separated aside because this is used in a future budget >> and because this is something that I guess ultimately gets reconciled through the auditing process. I guess I'm trying to think back to when we had our auditor presentation. I'd imagine that's an item that they point to and say you're in a you're in a good place as far as this goes. >> They do and they continue to say, you know, it's great that you're able to generate the surplus, but try not to rely on it. Try to use
067it for onetime things, but unfortunately, you know, the situation that we're in, we're using it for recurring costs, and it's going to be more difficult to generate over time. >> Okay. >> Is there a target percentage of the budget you'd want to see this number at going forward? >> I'd like to see it closer to like the 2 to 3% of the total budget. Um but it's going to take time to get there. >> What would that be? >> Closer to one to2 million >> more. The county office has said the same thing when they look at our budget. You know, try not to lean too heavily on this number. Try to reduce it down if you know that you're going to get a onetime revenue, but you know, unfortunately, we're not we're not in
068that situation. So, we'll try to reduce that over time. >> But you're basically threading the needle on this between those two two polls. Okay. So, I'm not going to talk too much about local taxes and how much is affected tax bill. We'll really get into the meat of that at the public hearing, but I wanted to share at least just um the worksheet that we have available to us right now, which is the regional tax share per municipality. So, you can kind of see how each municipality has changed. Um >> can you just explain what each of those columns are as you do that? So the equalized valuation of the municipality, we're given that number from the counties around from the municipalities. So they update that number every year based on um the um tax
069base in their municipality. So the function of this worksheet is to say how much is the municipality shared of regional taxes for our district and that's a function of that change in their municipal gradables and also their high school enrollment. So I have that high school enrollment column. Um they base it on the 101525 numbers which is the ASSA snapshot date which was last um October. And then you see the share of the regional tax levy for last year. That was a function of last year's valuation of their municipality and also their regional high school enrollment for last year. And then how that compares to this year's regional tax levy and then you see the difference column. So again, it's it's a factor of if they've had ratable changes and also their enrollment for their
070from their municipality into our district. >> Uh Andrew, >> why could there be a.5 on enrollment? >> Because student >> Yeah. So when when we send a student, that's a good question. It's a really small student. >> When we send a student to polytech for a share program, they only get to count them as.5. So uh Stephen, >> no I'm sorry. >> Oh okay. So just uh again one more time for me in the back. Um equalized valuation that is the total value of all of all the ratables in each of those assessed ratables in the municipality. Enrollment is the number of kids coming from each of those municipalities, which then produces a percent of the whole that each municipality has constituted through the students they send. That changes each year and that produces the
071difference that then where things nudge up or down regarding the the the the taxation going back to the each municipality. >> Correct. >> Okay. So if there's any if there's any um municipalities that haven't been reassessed in a while, they're getting a discount. >> Well, yeah, I mean that would always always be true for sure. >> So what are the next steps? Tonight we'll have preliminary budget approval. That will give me the ability to take this budget, submit it to the county office, and get the executive county superintendent and business administrator to approve our preliminary budget in advance of the public hearing in April. >> And what is it they're looking for in their approval process? Like what do they vet in review? >> Um, it's a pretty long checklist that I go through to
072make sure that they have every document that they are looking for. So, they're looking at different things in the actual budget software, but then they also look to see, do I have all the attachments, personnel roster, um, enrollment support, tuition, send, receive information. Um, there's just several items that they ask for in addition to what they're saying in the budget to substantiate what's in there. >> So, it's the show your work part of the math problem. >> Exactly. Um, so that'll be the work that I'll do this week to get it submitted timely and be ready for the public hearing and newspaper advertisements in April. And then after that, after the April 28th meeting, we'll certify the taxes and then implement the budget for July 1st. >> Um, if there's any further questions, I'm happy
073to answer them. >> So, we're in the motion. >> One question. >> Yeah. Um Rich at the last meeting you mentioned that you come back today with maybe some favorable news on security front. Is there an update on that? I guess I assume that if there was it would have affected these numbers. >> Uh yeah but there there is nothing that affect these numbers. Um and yeah there's there's no updates. So what I said last week um we're still negotiating that and talking about it. >> Okay. >> So the cost could possibly come down. No, the cost is going to be what we put in here. We're trying to get more bank for what it comes down. >> Okay. >> Other questions? >> All right. We are in the motion, right? >> Yeah. I know
074we're well and believe me, I want to thank everybody for a very a lengthy conversation and discussion. Um I realize this is this is not easy for anyone. Um, you know, this is there's a lot of hard work here. Um, and I don't want to lose sight of that. Um, I think our questions and the communications help folks to understand uh sort of some of the unprecedented challenges that we have been facing. um and the work of the administration to bring us in where they are and and while simultaneously keeping us on a um a good footing going forward. Um you know there's no uh as we learn more and more through our questions. There's there's sometimes more questions than answers when you get to the state level. Um but as far as trying to
075do our best to navigate sort of these challenges, some of the predictions, some of the volatility, um you know, it's um it's it's the hard decision that we're asked to make each year um in in seeing this, uh educational endeavor continue. Um,