001agenda is community input. Seeing as there are no community members in the audience, we will move on. The one and only topic of discussion this evening is discussion of board goals and budget. Dr. Schaefer. >> Thank you, Mrs. Cherry. Uh thought we would take this time and and really talk about two topics that are related. Uh first the the finance goal revisiting that from our uh work session earlier uh this past year uh in well actually this year in February uh we talked about revisiting the finance goal once we knew a little bit more about the legislative impact. So that'll be our first point of discussion and then want to follow it up with a discussion about the operations impact and then plans to reduce the 2026 budget as a result of the same legislation.
002So, um, just thought I would, uh, talk a little bit about, uh, the legislative changes and how they're reshaping how we plan to move forward, uh, for meeting our debt service obligations. Um, think first maybe to review the key components of what's impacting us right now financially uh, is important because that's going to affect our assessed valuation and the resulting levies and then the necessary tax rates in 2026. So, let me be clear. The goal we set was for 2025, but we're also going to be talking about 2026 because one's going to follow right after the other with this new legislation. So, we're, you know, we're okay budget shape here in 2025, but, you know, we'll be rapidly approaching the end of the year and then setting ourselves up uh to be successful in 2026.
003So, the legislative changes that are going to affect us and a couple other local factors as well. Uh but the first of those is the supplemental homestead deduction. That's going to increase. It's going to increase over the next 6 years, but that's one component that begins to affect us in 2026. Now, we won't actually see that change really from a financial standpoint until we get our June draw cuz your first local property tax draw in 2026 is going to be in June. So, that's when we'll actually start to feel it in terms of that revenue might look a little bit different coming in. The second factor that's going to affect us in 2026 is the tax credit. There's a tax credit given to homeowners uh up to 10% of their uh tax bill or $300,
004whichever is maximum. Now, that doesn't sound a lot in of itself, but when you multiply that by all the number of homeowners, it does become a large obligation. And it all impacts us right immediately in 2026. So from the legislative standpoint, that's probably the biggest factor hitting us in 2026 because it impacts all in one year at the beginning. So that's something we need to account for and we have accounted for and looking at our uh computations moving forward. The third piece that's going to impact us is the fire territory impact. Uh so when you put those three together, we're going to have a pretty large impact in 2026. Although we don't know yet what will be the final approved rate for the fire territory. It was it was approved initially um by local powers
005at 53. Uh the legislature came in and capped that total amount for both there's two funds capped that total amount at 40 cents. So we know it'll be something less than what we predicted initially because of legislative change. But when we put that impact, the tax credit impact and the supplemental homestead deduction impact all together in 2026, we're going to see a decrease in the amount of revenue potentially coming in. Uh we're certainly going to see a decrease in assessed value and an increase in the types of credits we have to pay back out of operations and debt service. So we have uh conferred a couple of times uh with policy analytics working through this trying to better understand it. We've had a lot of conversations leading up to today. We do have a better
006understanding. I I will still tell you we don't know everything. Um because a lot of this hinges on what our net assessed values come in here which were supposed to be to us in August. And I can tell you uh Cory and I have talked about I think there is exactly one county and these are these are by statute these assessed values are to be the school corporations by August 1st. Well today is August 11th and there's one county that's in Indiana that has reported their assessed values and we're not one of them yet. So uh we'll be waiting on those net assessed values to come in because that will really >> like any idea what they what they do. I don't know if we could really tell even on there. >> The only one
007I saw was Hamilton County. And so I didn't get a chance to really compare. I did look at one district in Hamilton County, but it's not really comparable to us. From a size-wise, it is, but when you look at the makeup of that community, it's a lot of just farm ground. There's not a lot of residential growth that's going on there. And they saw a little over 1% increase. But I haven't been able I was going to go back when I get a chance to look at maybe Westfield or Zansville, some of the areas that are probably size-wise not comparable to us, but from a geographical standpoint and what the development is in their communities would be more comparable to kind of see where they're at. I just haven't gotten a chance to. >> Yeah,
008got yeah house obviously housing and retail are going to drive a lot of that here for us. Um, so what we have to share with you is some of the work put together by policy analytics. it'll speak to some of these changes, what proposed impacts are. I will tell you when they did their estimates here, uh the um net assessed value predictions they're looking at, they usually use a very conservative range, which I believe we're in the 3 to 5%. It would not surprise me at all to see our net assessed value go above 3 to 5%. Which probably helps us uh in a lot of ways in terms of minimizing or lowering the impact. But I will tell you that will have even if it is higher, it is not going to really change
009the impact much on the on the uh tax credit and it's not really going to change the impact much on fire territory. So those two impacts we can I think estimate a little bit better. Uh it could if the net assessed value goes up more than we're, you know, using in these illustrations, it could help us a little bit with the homestead deduction. It will offset that a little bit in terms of the revenue that we see. So Cory's going to walk us through some of the slides. I think there's five or six slides here I think are really pertinent to our discussion tonight here. And we're going to focus primarily on debt service for this portion because we want to talk about what should that goal look like as we move through the rest
010of 25 into 26. So that's kind of our intended effort here is to help understand what goal should we set revise uh as we look at that particular goal. So >> thank you. Uh so like Dr. actually talked about or mentioned Senate Bill Enrollment Act one was passed effective July 1. Uh so this is just kind of some of the highlights to you kind of see it visually on what is going to happen through Senate Bill 1. Uh like Dr. Schaefer had said the standard deduction which is what everyone receives now as a set dollar amount of 48,000. Uh everyone receives that credit on their tax bill. Over the next six years, that 48,000, as you can see there, yearbyear will decrease down to $0 in 2031, which means that credit or that deduction uh
011is going away. Uh but what they're going to do then is they're going to take the supplemental deduction and they're going to start to increase that. Currently, if you look at homes that are 600,000 or less, uh they are allowed a supplemental deduction up to 37.5% of their homes value. Uh, and as you can see here, again, over the next 60 years, that's going to ratchet up from 37 and a half all the way up to 66.7%. So, essentially 2/3 of all the property values in the district and throughout the state of Indiana are going to be able to take a deduction of 2/3 their property value. Uh, so that's one impact that we're going to see over the next six years that's really going to impact our net assessed value. Uh, the other couple
012things uh like Dr. Schaefer talked about was the tax credit. Uh, so it's actually 10 cents of the tax liability or $300 or 10 cents for every,000 uh or $300 with the 300 being the maximum that you could take. Um, with that, we've run some numbers to try to figure out how much that's going to impact the district. Uh, for us, we think that's going to be roughly about $950,000 that's going to impact us next year. uh what this has done and this is where uh there's a couple of nuances there involved with this is that that is going to be distributed proportionately among our debt service and our operations. So if you think about we've talked about tax credits and we've talked about circuit breaker loss uh statutoily those credits are only allowed to
013be applied to our operations fund. Now, if there was a couple of districts here in the state where that credit actually essentially wiped out their operations fund and then those credits were then pushed into their debt service fund. That's not us. So, we've never had to deal with that. Uh because the debt service fund is a protected fund, meaning that it's excluded from that. Well, those laws do not govern those statutes do not govern this tax credit. So what they're going to do is they'll look at the percentage of um levy that we have in our operations fund versus the percent levy in our debt service fund if you add the two together to get the percentages from there and that's how they're going to proportionately distribute that. >> Yes. Pause there a second. So
014back in May they didn't know what the proportionate sizes would be per fund. >> Has that been clarified yet? >> It's been clarified. Yeah. I spoke with the DLGF and they said it's basically going to be like I said the take the percentage of your total levy and whatever percentage is your operations fund versus your debt service fund and then that's where these credits are going to be applied. Thank you. >> So for us it's about 6040. Uh we'll be taking 60% of that hit on our debt service fund and 30% in our operations fund because actually for us our debt service levy is larger than our operations fund levy. So that's how that's going to be distributed. >> And that's that's a really important concept. We'll talk more about later, but it's something we've
015got to keep in the forefront of our mind as we have the conversation. >> Yep. Uh next thing is just the excessive uh property tax discrim. So this would be agriculture, this would be rental properties, uh those types of properties. In the past, the deduction on those properties has been zero. Uh there's been no deduction for those types of properties. Uh so taxpayers just paid the full amount that was due uh based on what the value of that property would be. Uh you can see here that over the next 6 years this is going from 0% up to 33.3% in 2031. Uh so it will provide an additional or not an additional but a a um I guess additional deduction uh that agriculture and real properties will be able to deduct. uh therefore again driving
016the net assessed value down uh because that's less tax dollars that uh need to be paid. Um so as you go all this you got there's a couple of other little minor things that I'm not going to cover on here uh that are still going to impact our net assess value a little bit. Uh but the next one here this kind of shows based on policy analytic studies and where they were projecting out. So the blue line actually the blue and green up until this year current numbers. But as you look at the blue line moving forward was pre Senate Bill one. So before this uh Senate Bill one was passed the forecasted net assessed value that they expected for the district to be here. Uh like Dr. Schaefer said they were they would I
017would say forecast that on a conservative approach. uh they were you know the last couple of years have been saying increases of roughly 5 to 8%. Uh and as you all know we saw an increase last year almost 20%. So uh they've always been very conservative on their approach to forecasting these numbers. Um, but with that being said, you can also see the orange line. Now, this is after Senate Enrollment Act One is passed. And with the changes to the Supplemental uh deductions and standard deductions as that funnels out through the next 6 years, along with the 2%, there's also business personal property uh that factors into that as well. But this is what they're forecasting our net assessed value to look like now out over the next 10 years uh that they have here.
018again compared to the blue which it would have been pre Senate Bill one. So that's kind of give you a little bit of a background on on what Senate Bill one has in it and that's the again real high level. It was a very long lengthy bill and that's the the biggest impact that we're seeing for us right now. Now we're going to look at how does that truly impact us. Um so this is looking at the non-debt property tax. This is essentially uh this is our operations fund. Um and so do we want to cover this now or do you want to give into more of the >> I I think touch on it now cuz the the two get because of this proportionality piece there is some there in the future will be
019some interplay potentially between the debt service fund and the operations fund. Not that not that you mix monies. You don't you never mix monies but how the tax impact works will affect both of those funds. So we may talk about this a little bit now then we'll try to sort of reenter and come back to talking about debt service specifically. >> Uh so I'm going to specifically focus just on the levy side of this. The difference in these two really in the operations fund uh it's not as relevant as it would be in our debt service fund and I'll try to explain this at a high level that we can understand the levy scenario and you think about again from the oper or from the debt service fund would be if we stuck with a
020flat constant levy and in this uh in these scenarios they've ran 117 so that's roughly what our levy is for this year so if we just maintain that out over the next 10 years. That's what they would be looking at from a levy scenario. When they look at a rate scenario, if you remember, what we were saying is that our as the medicine value grows, we are still able to even bring our rate down, but it was still creating higher levies. So the the levy was going up. So this is taking the assumption that based on what we were forecasting in before Senate Bill 1 when we had the rate staying uh constant or even coming down a little bit because remember we were we were targeting if you go you know a couple years
021back we targeted 89 cents in the debt service fund. Then as we continued to see our net assess value grow we realized we could lower that. We lowered it to 87 cents last year or two years ago. And then last year we lowered it to 86.41 cents. So as we continued to see that net assessed value increase, we were able to still lower the rate and create the levy that we needed to pay our debt. So this is showing that if we would have maintained that same philosophy and again we were targeting to be at the 80 cents by the year 2028 because that was the kind of the threshold that had been set for us last year when this came through the Senate and it was changed and so we were targeting instead of
022maintaining an 87 and we're seeing how low we could get that down we actually said okay we need to get that down to 80 cents just because of the other legislative things that were going on. Uh I also back up and note that in this pre in Senate Bill one 80 cents was changed to 70 cents which is going to make it even further difficult to be able to hit that target. Um so that's what the rate side says. That's a it's a whole lot of explaining and it's it's very complicated to understand. So I'm going to pause here for just a second if anybody has any questions on that before I kind of explain what these are as far as these charts go. So our goal that we had set back in here in
0232025 which was achieving the 80 cent debt service rate by January 1 and not achievable. >> Nope. >> Not a chance. >> And being able not achievable with being able to pay and meet our debt service obligations. >> Correct. >> That's correct. >> Correct. >> Nolan bully really because you got to be at 70 cents, right? So like that 80 cents is great but it doesn't do what we need it to do. Right. >> But I think I still want to I want to emphasize that point is that we have not done anything differently. >> We were we were chugging along. We had our goal set. We were going to be able to achieve it. We had planned and then all of the game has changed. All of the rules that we have to live
024by have all changed in the necessary steps to do state wanted us to do. >> Correct. >> They changed the game. >> And then changed the game. Change the rules. Correct. >> And now we can't meet either one. >> Yeah. We have to figure out how to live by those rules. >> Yeah. >> I think an important concept we were talking about a little bit is to remember too when especially when we talk about debt service, it comes down to making sure you have enough levy, enough revenue coming in to pay your minimum debt service obligation. And that's advertised out for us now over the next several years. So the interesting thing though, especially in our community where we're growing, you know, fairly quickly, um, you have a lot more people paying into that. So
025if your if your levy stays the same, refit goes up a little bit year to year, depending on, you know, what your bond payments are in that given year, you have a lot more people in the community paying into that. So my simple math tells me that should give some relief for homeowners and taxpayers because you got a lot more people contributing toward that levy. The challenge is because of these dips you see, you can't raise the same amount of money that you could at the same tax rate. But because our net assessed value is growing a little more rapidly, I'd say, than the state average, then we also hope to not have to increase significantly a tax rate to make that payment. Okay, that that's a good thing for us locally. Um, so we'll
026see. Again, once we get our net assessed values here this fall, we'll know a lot more. Um, but our hope right now is because when you look at that, you go, "Oo, uh, yeah, we got a, you know, somewhere between 115 and $12.5 million debt service obligation to make. How much are we going to have to raise that rate to get there?" But I think the net assessed value will go up enough that we can probably hold steady and may not have to raise it. Uh but we'll again we don't know the exact outcome of that but I think we're in a in a pretty good spot to get there. >> So now let me talk about these this this specific picture right here. So the levy scenario and again this is looking at the
027operations fund. So if you look at just the the dotted I call it a dotted line dotted orange line there. That was what we were looking at back before Senate Bill one. Uh if you remember maximum growth quotient. So that was what the statute had put in place that would allow us to grow our levy in our operations fund. If you remember me talking during budget time, but I basically say, you know, the operations fund is capped statutoily on how much we can grow. The debt service fund is capped by whatever you as a board decide that you want that to grow or shrink, whatever that would be. Uh so with this, our maximum growth quotient over the last 3 years has been at 4%. uh it is going to be 4% next year. Uh
028but with Senate Bill uh 1, the other thing that they did was they said that after 26 that goes to zero. Now, they've left it open that when they come back in session in the next term, uh that they can look at that to try to reestablish if that needs to be anything different than zero. Uh if it wherever that might fall, we'll we'll have to wait and see. But as it sits right now, it is zero after the year 26. So, we know that for next year, we will be able to increase our levy by 4%. And that's what we've been doing over the last couple years. Again, if you remember last year, again, because we saw the huge growth in our net assessed value, we were still able to grow our levy by
0294% and we saw a 5 cent reduction in our operating fund tax rate. And so that's how because of the growth we saw in the Navy, that's where we've been able to see the rate come down and still be able to generate the dollars that we need to to survive as a district. So what they're looking at here, so that's that's the top line. That was before everything changed. The second line is kind of the dark red line. Uh that's kind of a solid line. That would be looking at okay, what happens when Senate Bill One comes into play? Again, main impact is going to be on the net assessed value. uh it's also going to be on the tax credits that we're going to have to see through that $300 credit. So with that
030uh again that was an immediate impact for this year but also knowing that there is still some net assessed value growth. There is still the MLGQ. It looks like we were going to be close to be able to stay about where we anticipated being pre all of this happening. After that you see the next couple years we start to see a decline. That's where you're going to start to see the increase or the changes that are really going to affect the notice value. Uh and that's why because that is coming down and with the fact that there is no MLGQ for that moving forward, that's why you're starting to see that levy start to go down instead of up like it has been. Now, if you look at the we'll call it gold, I guess
031that's gold line or yellow. Um this is going to be the impact of that same situation but with the fire territory. Now uh this is bringing in obviously with the fire territory being a totally separate taxing unit is going to cause circuit breaker impact on us. So again you think about the taxes that are are paid or that are collected from the county or from our local uh taxpayers and you think about the property or the um circuit breaker that has to be paid off of that. Just because you add another taxing entity to that, let's call it a pie, it doesn't make the pie any bigger. So now we have instead of the three or four units, we have an additional unit that's now taking a piece of that pie out. So if they're
032going to take a piece of that pie out, obviously that's going to affect all the other taxing units. That's us, that's the city, the township, the library, any other taxing units that there are that are are contributing or eating from that pie. We happen to be one of the biggest ones. So therefore, we're going to take the biggest hit on that when you see that impact come through. So what we see here in 26 uh with the impact of the Cabo one with that all coming through and everything we've talked about and then with the fire territory having an impact on the circuit breaker losses, this is where we foresee that going and showing. Uh if you look there, it's about a 950 or $925,000 loss from what we had originally thought we would be
033at. Uh and so that's going to be some of the conversations that we're going to get into uh from an operations standpoint. Like Dr. Schaefer said, we're we're going to talk about the debt service and I know we're kind of dancing all around here. Uh but that's going to be what we get into and so give you some of the premise behind what the operations fund and why we need to do the things we need to do there. Uh but as far as the debt service goes, the biggest impact that we're seeing here and potential changes into the future are going to be the proportional distribution of the $300 credit because again as we as we sit now it is distributed proportionately. Uh we are hearing the talks that that will be revisited in the
034next legislative session. Uh and that potentially could be shifted that they would protect the the debt service fund from that credit as well. So if that were to be the case, then instead of taking roughly 600,000 that would be shifted to debt service, that's going to be pulled back out of debt service and it's going to be shifted to operations. So that again, and that's where we're trying to get, you know, and plan for the future here over the next couple years, but we also have to keep in mind, okay, we're hearing that might happen, but there's no guarantee that that will happen. Um, so that's kind of where we sit as of right now with what we're forecasting and what we're seeing here over the next couple of years in both of that service
035operations. So, one one additional factor to keep on our radar, but it's a little too early to get too excited about it is our local income tax. We receive local income tax revenue a little over $400,000 from the county that's distributed to us each year. In 2028 in Senate Bill 1, we lose that. In addition to these tax losses, we lose that also, which we use to supplement our operations fund. Interestingly though, schools lose lit local income tax, but towns and counties retain their lit and there's some provision for them to be able to increase the amount of lit that they are leving or putting out there. Um, so that's a that's a real concern for schools because this legislation also made schools officially a municipality. It puts us in the exact same categories, cities,
036towns, counties, etc. However, lit is taken away from schools in two years, but while the other municipalities get to increase lit potentially to offset some of these debt service or well just taxing losses. So, that's something I think as we speak with legislators through this next year, we need to keep in front that we need some other types of revenue. If if they're going to lower local property tax revenue, then they need to help us find a way to increase revenues from other sources u because we have increasing need just as other entities do as well. So, that's just again that's out there ways some of that could change yet. That's a couple years away, but at the same time, we want to be mindful of that. Keep it on the radar. Interesting. If you
037look here on the I'll call it the orange line, gold line, you notice the tax impact was going to be not huge for us in 2026. But with the fire territory coming on, it becomes a very large impact for us. It about, you see there, about a million dollars total. The interesting thing is as we go into 2027, so we're going to be cutting out a lot in terms of budget in 2026, but then in 2027, even though the U supplemental deduction will kick in another step, we add the two together, we still don't see much of a different impact force in 2027. In fact, if AD goes up, it could actually that that loss could uh actually be a little less in 2027 in this scenario. So, we're we're having to in 2026 we're
038having to find a lot, but then we can move forward with that. Um is is is I'll say manageable. But uh what Cory was talking about, if if this is an if, this hasn't happened yet, but if the legislature decides to again protect debt service and we have to pay those property tax credits all out of operations, that line's going to go this way again. >> Um so that's something we have to plan ahead for. But again, the legislature we feel like needs to come up with other ways for us to come up with operational funds because again, if they continue to take away uh property tax revenue from our operations fund and you know, we're we're a healthy district and we're in a growing district. Think what it's like in other districts that don't
039have some of the resources and wherewithal that we have. that's going to make it very very difficult for districts across the state to operate at all. Um, so those are things we have to pay attention to as the legislature, you know, heads into the next year. >> You may have said this and I missed it, but what magically happens in 28 that makes everything pop back up again? Well, what we're seeing is is really you're pretty much level there in 2028 on the on the levy scenario. >> Um, you mean after 28 and 29? >> 28 to 29, all of those seem to pop up. >> Uh, >> I think it's just the growth in the NAV. >> Yeah. Okay. >> Yeah. NAB growth. >> Okay. >> Kind of bring you out of that because
040the >> the um supplemental deduction continues to grow for six years. Now, it's a little bit. It's kind of a little bit each year and you're kind of taking that tax credit hit in year one. So, NAV has a chance to kind of help catch you back up a little bit over time. So, uh I'm just going to please ask any questions you would like to, but um if you don't have specific questions, I think circle back around talk about just the debt service. >> Okay. Just clarify though, talk about what things could be happening in the future. You're saying you're hopeful for him, but you do have a plan that you're presenting to us tonight that we can't sit here and wait for dreams, hopes, and to come out state house, >> right? >>
041We've got a plan for what we know is here and now. >> Mhm. >> And that's what you're bringing to us at the rest of this meeting. >> Yep. Talk a little bit more about that here in a little bit. Yeah. Because we'll we'll talk about deserts. We'll shift back to operations. Okay. >> Yep. Um well again any questions you might have in terms of debt service and impact there is what what we're looking at in 2026 uh we are looking at a minimum debt service levy needed revenue in to make our bond payments that are already on the books uh at about 125 about 12,500,000 Okay. And we believe that even with the estimate here and thinking that NAV is more likely than less likely to be a little higher than our estimate that
042we can bring that in by maintaining our current tax rate. Uh we don't think we'll have to increase it now. I can't necessarily say that for 2027, but again, there's lots of things to occur yet. And a lot of that will be how much net AD goes up in 26 and then again in 2027. Um, as we've estimated out right now, well, as policy analytics has estimated out, it looks like we could hold our current debt service rate 8641 steady and still bring in the 125 that we need to make that minimum debt service payment. I'm going to put a caveat with that. You never know. you know, we could get surprised because if for some reason we don't think it will, but if that for some reason would go down more than we're estimating,
043then you might have to tick up the rate a few pennies. You know, penny, 2, 3, 4, 5, something like that should cover it. Um, so what what I would suggest is be look if you want to look at a goal to set is to maintain your current rate and then raise it if you have to to make the minimum debt service obligation payment. That's what I would look at for 2026 and we're just trying to ramp up to that here in 2025 as we learn our net assessed values for next year. you you make that comment that's keeping the debt service rate where it is. You're kind of preluding to next winter when we get together and set our goals. Is that what you're saying or are we changing our >> are you saying
044change the goal now or you saying >> it's more it's more relevant if you do change it now cuz you're you're already 8641 so you just be saying hey we're going to maintain that so >> through next year. So it's run you could run it through next year or you can revisit it in next year however you'd like to do that. Could yeah >> because our goal was to lower it >> correct >> by in 2027 80 cents. That was our ultimate goal. >> We couldn't couldn't we let the goal sit as it is do more of an explanation as we go along quarter to quarter as to why we're not able to meet it. And so if something were to change and >> we'd have reasons why. I I think again you you kind
045of set a goal that for a period of time. It's more about letting that goal run the course for the period of time until we get to the spring and then if we don't meet the goal, it's about explaining again why you don't meet a goal. >> Sure. You can you can certainly take that strategy as well. >> To me to me, if you're always going to change the goal, you're never going to get the measurements. Kind of like what the state does with test scores. Can you really get a true read on what you're doing? And again, we're acknowledging here tonight that we're saying ourselves, yes, that's the goal. But the reality of what is facing us from that's been thrown through the fan at us, >> right? >> We're here publicly saying this
046has been our goal, but >> we're not going to be able to achieve that. This is what our efforts are to going to try to get to a point where we can uh set a new goal that's more reasonable in the in the spring of 26 that we're alluding to tonight. Maybe to keep it flat. But in the meantime, we're doing our effort that we've set a goal that we talked about in the spring of 25. And now we're doing our due diligence to explain to you the public as to what we intentions were. But here's why we're not able to do it. >> That idea, >> not anything that we >> couple more couple more explanations throughout the year that might catch more people that might hear it too. >> What areas of the
047budget have you guys tossed around like, hey, we may have to make some cuts here. >> Well, for right now, we're talking about debt service. For debt service, >> you can't you you've got to you got to make your payments. >> So, we'll talk about that when we get into operations a little bit. just not to confuse anything. You guys let me know and you want to move on to that that conversation. >> Think of it kind of like classroom teachers. Classroom teachers are going to set their goal at the beginning of the year as to what they want to achieve academically. But as things continue to go on, they're not necessarily going to change that goal throughout the year so that they can accomplish a goal. It's about setting a goal and pursuing it.
048And then if you meet it, you celebrate it. And if you don't, explain and look at why you didn't. Well, I think it's too this conversation shares with the public as to why if we do have to raise it in the future, these are the reasons why. It's not because we didn't do a good job managing our money that was given to us. It's that the state created new rules that we have to play by. >> Correct. >> And it's impacted everyone. >> Yeah. And so by not changing the golden night, we're also giving us more time to really get those nav rates in and so forth that we get to the end of the third quarter. We're going to be able to speak even more even keel as to this was our intention, but
049this is why we're not going to be able to get there, but here's where we're at. >> Do we publish this goal to the public? Cuz I remember we kind of put it on hold, but have we pushed this out? >> Not I mean just our website and those types of things. As far as in our strategic plan, that's that's where it resides right now. >> I think we're far enough in the year. We've only got four months after this point. We should just >> keep it address. >> Yeah. Whether you do or whether you don't right now for 25 doesn't really make any difference, but you know to if you want to bring that back up and have more conversation about it certainly gives you an opportunity to do that. Well, I think it
050definitely clarifies the impact of Senate Bill One and the fire territory, and we'll know more when we have the rate, right, for the fire territory. >> Yeah. We'll know, you know, as we get into budget season, we'll know what rate they're going to uh project and we'll know what the that assessed values are. >> Those will be, I would say, probably the last two remaining pieces of information to really solidify where's that where's that going to fall. If they were trying to take 53 cents and now they're capped at 40, it's pretty safe to assume they're going to take the full 40, right? We would assume that. I think they have to look at their budgets and I think they also have to look at how much money were they being able to bring in
051under the old uh roof, if you will, of the township and town versus existing as a fire territory of its own entity. Um, that's something, but again, that's that's their decision-m and how they decide to move forward. Then in 2026, they have the authority uh to move forward with the fire territory. So, it'll come down to what decisions they make and what their planning efforts are and kind of how they see themselves growing out into the future, I think. >> Anything else on this? >> Okay, we'll we'll flip over to debt service conversation. Um, so and you heard me say it once already, but operations. I say this, I apologize. Operations. >> Um, combined impact of our supplemental deduction increase, the tax credit, and the fire territory. What we see for, and you can see
052it pretty well there on the graph, is we see a combined impact of about a million dollars of reduced revenue. Again, that is at a projected 3 to 5% net AV increase. If net AV comes in at 6 or 7 or 8%, which I think is possible, then you won't see that leap up. It's not going to change a lot because the main piece that that's going to affect is the supplemental deduction, which is probably the smallest of those three pieces impacting it. But it could help improve a little bit. So maybe you get a little bit less lost revenue coming in than what we you know previously anticipated as we look forward through time. Um so we've been meeting and looking at okay how how do you how do you survive that and how
053do you plan forward on it and what we see is first of all reduce spending okay reduce spending but that spending reduction has to be in our secondary priority areas I will tell you the levy for operations that levy is about 4.5 half million dollar. Okay. I will also tell you that about 4.2 million of that we don't have a lot of flexibility in that cuz that's paying for buses, drivers, all things transportation related. Uh it's paying for custodial, it's paying for maintenance, it's our central office cost, it's our utilities, it is our uh property casualty insurance premiums. it it's covering a lot and those things you don't have a lot of flexibility in there >> and that's what you're saying is in the first priority >> those would be first priority correct that's correct
054>> could you send a specific list of what those what you have listed in those so it's more specific >> sure um the what it leaves you is a area about $300,000 that you have some flexibility in and we would call those secondary priority because you got a little bit of flexibility But that's things like um you know software cost. It's things like paying attorneys fees. It's travel cost. It's food costs association. >> Memberships. Yeah. >> Those types of things. >> So what we see is the ability and you'll have to cut hard, but cutting out about 80 over 80% of that about 250 out of $300,000 is what we would target to try to reduce across those areas. And that will that's a that's a pretty hefty chunk to cut out of there. So
055what we would do is you would still have budgets and you would still have appropriations in those areas just they would be much smaller and we cut them down about 80%. Some some areas we get cut out all together and some would have some budget left because you still have to be viable and operate and do certain things even in some of those categories. But I mean those are even things like uh the money we spend on food for staff appreciation. We're not going to cut all of that out. Uh there are some ways we can cut it down. Uh we've already worked hard to get sponsorships on things that we've even done here in 2025. Instead of us having to pay out of operations fund to cover some of those things, we're trying to
056get sponsorships uh for some more vendors uh to help pick up the cost of some of those things so we can still provide those to staff members. Okay, that's just an example. So we find about $250,000 there. Um and then we have the second area would be a transfer of accumulated cash reimbursements. Uh when when we have um residential placements, students go into residential placement. We pay money into those and then we get cash reimbursements back from the state eventually and those have gone into accumulated funds. It's not new money. It's replacement money. We can take some of those dollars and then transfer those would happen through the the transfer from ED to ops. We can transfer about $300,000 a year there >> in addition to the 215,000 that we >> Yep. Now, that's not
057going to last forever, but that would get us several years down the road and and using that mechanism. Okay. About $300,000 a year. Um, and then to make up the difference, which is about another $450,000 on a million if that's what it ends up being, we would do that by increasing our typical transfer ed to ops transfer from the current 12 to about 14%. About two more% of transfer from ED to ops would find the balance of those dollars. Okay, that's still under the 15% threshold that we we try to maintain. uh but it keeps us in that range. Um so as I mentioned that' be done as part of our cash transfer but it also doesn't take well the the transfer the accumulated cash I want to be clear about does not take away
058from uh bargainable dollars cuz that's not new money. Okay. >> What was the said moving that up closer to what you say 14% total transfer. >> Yes. Um, so the the additional 2% would would cover and then what we would do to try to manage that because we obviously we want to retain as much as we can back in the ed fund. We will look hard at our class sizes and class numbers. And we have identified ranges and instead of managing to the bottom of those, manage more mid and top of those class range sizes. Try not to go over. Um can't promise we would never go over, but the next year then we try to adjust for that. So I'll use this as an example. If if we thought we needed to hire, you
059know, projecting to hire six new additional staff members the next year, we try to manage that and try to keep that at four. Um, is that going to push class sizes up? Yes. I'd be lying to you if I tell you it won't, but we'd still try to keep it in those in our guidelines for those acceptable limits. And in a given year, you might pop over a little bit in some sections and you come back then the next uh fall and hire what you need to hire to manage those class sizes. Managing more at the top of the range instead of at the bottom of the range. And that's to help offset some of those dollars then that you're, you know, transferring over. Okay. So, when you add those up, that's how we get
060to a million dollars. We hope that it's a little bit less than that that we actually um see in terms of reduced revenue, but that's what we'd be trying to accomplish in 2026. Um now, Mr. Brian asked a question about what you know what about the future? What what if you got to find more than that in the future? Well, here's some other places that we would have to look at. Uh I'll call this plan B. Okay. So, the next step would be you would we would have to look at further reducing staffing. Um and we try to do that by attrition. So if you know somebody leaves the district in a position not that we don't need but it isn't a have to have then you know we look around and say okay how
061can we redistribute duties and pick up you know pick up those duties on a position. Okay and that's what we would have to do particularly in the operations area. Uh that's hard to do. That's manageable. I've been there done this lots of years. That's manageable when you're not growing. When you're growing, it's hard because if I take my custodial crew for example, they have more area to clean, more kids to clean after, etc., etc., etc. And then you try to identify a position that we don't have to have. Those are hard to find. Um, so I'm just using that as an example. It certainly wouldn't come all out of custodial. May maybe none of them come out of custodial, but we look across all of our departments and even into some of our support staff
062areas and our certified areas. Those are things we'd have to look at into the future as well as managing our teaching force. Um, so that's kind of where you have to go next. I I would not think I would ever say that in a growing school district. U, but that's the position we've been put into uh here. So now again, we're not talking about that for 2026 unless just some opportunity comes up that hey, you know, position comes open and we don't have to fill that. So we're kind of looking ahead for the next year and we'll go ahead and reduce that. um we'll just do those by opportunity, but once we get into 2027, we can see what things begin to look like. If we have to reduce more than what we're reducing now,
063then those are areas we have to look at. Uh a third area, I call this plan C, uh would be to pass along user costs such as things for extra transportation. I'm not talking about just, you know, that's why hauling kids to school, but you know, ECA activities, athletic activities, all those kinds of things because you're paying for that right out of your operations fund. Um, and those costs, people need to know, those costs don't get paid for by athletics, for example. Uh, they don't get paid for by our clubs, uh, the fuel, the driver, those kind of things. Those get paid for out of our operations fund now. So it would be trying to recoup some of those costs on a asne basis for those people using uh the transportation. That would be an
064example. Curricular fees. Uh couple years ago the state said, "Hey, we're going to pick up textbook costs and by the way, you can't charge any curricular fees either." Now they've come back and changed that and said, "Well, there are some curricular fees that you can charge for. So we may have to reimplement charging for curricular fees." We didn't do that this year. But as we look at next year u 26 27 we may need to reimplement some curricular fees. >> Remind me how that's paid for by >> is that included in your textbook rental or >> Yeah, it used to be you'd have your textbook and your curricular fees added together and that was your sort of your textbook rental bill. The textbook piece has completely went away uh for for parents now. >> Okay.
065>> And curricular fees have all but gone away. it'd be bringing back that which is a smaller piece of that. Uh but we may have to bring that back because we're still buying frogs and family consumer science materials and band uniforms and those kind of things >> that was invoiced at the same time as >> Yes. >> Yeah. back in the day. >> So again, those are some things we're, you know, have to look at into the future. Um technology fees. Uh right now we've been paying basically the insurance package for these for our our kids and families. there's a cost per child on that and it's it's much more efficient and probably better for everybody that we're able to do that, but that money's coming out of operations. So, we may have to have
066families pick up that cost for the insurance plan for their their child's Chromebook. Uh those are some things we're having to look at for the future as well. So, you know, you you add all those things up and that would be the sort of the next level of reductions that we would have to make in our spending and then have that picked up by the users that are that are doing that. So, bus services is there maybe there are some schools probably not but does anybody charge for that? Are you allowed to even charge for bus? I >> to give you an honest answer or accurate answer I'd need to look into that further. >> It's not you don't have to provide bus service. Is that correct? >> You don't have to, but you have
067to go through a statutory process in order to end bus service. This district actually did that in 13. They filed for it in 2013. That was before I I got here in the district. Never implemented it, but did have to file for it, fearing that some legislative changes at that time might cause that to happen. So, you are correct. You don't have to provide bus services, but you have to go through a process to end end all bus services. >> Do you have to go through a process to charge a fee to ride the bus or do you know if you can even charge a fee to ride a bus? >> I'd have to find I need to check on that. >> You know, worst case scenarios, things you got to look at, right? >>
068Right. Yeah. I my guess is there's a way, but I need to find out what exactly what that is. >> Yeah. >> So, I think you have at the beginning of the conversation, you mentioned again I asked for the what you saw as the priority one spending. I think you mentioned buses in there. >> Yes. >> And right now we know we don't have enough bus drivers for the buses, >> right? >> Is it feasible that we could reduce our bus purchases say by at least one bus? That's a 150,000 that helps cover what we need to cut in our secondary spending area. How many buses do we buy a year right now? Or how many buses have we been buying a year for the last say three years? >> Let me clarify. for the
069last year, the buses we've been buying, we haven't really been able to afford to buy those out of ops. We've been buying most of those out of go, our go issues, and lot you see a lot of districts do that. Um, so that's that's how tight you really already are. So, but all of your other transportation operational costs are paid through operations, but we certainly can't afford to reduce our driving staff or to pay them less or those kind of things. So to to the point I made earlier, we just don't have a lot of flexibility there. But could could we potentially what you need to do is make sure the buses you're operating and a few spares are newer >> at least to the point you get by that some more debt falls off
070that you could utilize the 24 million that we approved back in >> Y >> what was it June? >> Yeah. And and we saw that you're you're absolutely right. And we saw that happen from about 2008 forward because people just didn't have money to pay it. And so you saw bus fleets getting very old. Um and we kind of were recovering from that in 2015 161 17 and then started rebuilding our fleet because some of them were in really bad shape. So um we've recovered quite a bit. I think we're in pretty good shape now. Uh I will tell you though as soon as we can get drivers and we have we have a couple in training. We have some more that have applied. We actually need to add a couple more routes. We need
071to refill those that we're substituting in right now and then add a couple more routes cuz our buses are packed. They just they just are. But I think it would help at least me as board member if you could send a specific list of what you see as the priority one spending list and the priority two spending list knowing that you're saying that you're really looking to pull 250,000 or so from that secondary priority spending list. So what this may so as we look at the next meeting coming up the uh funds report we have a report in there to list all the various funds and so as you make some of these cuts within that secondary priority list is it reasonable say then that some of those funds will kind of disappear. There'll be
072less funds within, for example, I think on that report there's a fund that says it's a car amount and it's not significant, but it's $2,500. >> Yeah, that's so something like that. That's a clearing account that we use and that is for Mr. Land and for Mrs. Swanson because we do provide a district vehicle for each one of them and so they do have to pay a portion that has to run through their payub. They they don't really pay it, but it's just for tax purposes. It get run through there. So, it's really not a transfer of money, per se. That's just a clearing account. >> Um, the the cuts then the the things that we're talking about as far as an expense reduction would only be affecting the operations fund. >> So, you really
073wouldn't necessarily see any significant changes in any of the other funds that are on the fund report. It would really just be the operations fund. >> Okay. I would hope that like um we have to start charging families these different fees whether it's curricular or Chromebook that we would gradually do this and not just hit them all at once. So maybe next year we need to think about maybe it's the Chromebook fee, maybe next year it's a curricular fee or a bus fee. So then instead of going from paying nothing to paying a whole lot, you know what I mean? to be more gradual kind of like what we do when we have to increase pace or you know lunch or breakfast fees you know we try to do that gradually um I don't think
074those are bad ideas I know it's nice as a parent not to have to pay them but I also know as a teacher when I mean we don't get everything that we need to get or you get one set for a whole grade level because you don't have textbook rental >> well that's in your district >> so I mean it's just It's hard, you know, like it that impacts, you know, the dayto-day classroom, what you what supplies that you actually need. Instead, you're printing off. >> Yeah, you're right. You're right. And it's we will try to do that as gently as we can. I'll tell you that. Uh we just don't know how gentle we're going to be able to be. That's >> and that's that's a lot of unknown because we we do see
075that being if there's some small things we can begin to implement now. >> Yeah. I say now as we move into next year that might soften the blow too rather than waiting waiting waiting. >> Yeah, that's what I was saying. Not so bad. I mean like >> people have heard about Senate Bill one you know and the impacts it impacts not just local schools university impacting a lot of different entities. So >> yeah we >> I mean I wouldn't be opposed like oh if I had to pay a $50 you know Chromebook fee a year. I don't even know what it is. So I would say our our our cricket and it's not actually the the Chromebook itself, >> right? The insurance >> it's Yeah, cuz the Chromebook fee itself is covered in the TBR
076and the textbook rental piece. Uh but it' be the insurance piece and then maybe some curricular fees and that's probably where we would start. Um and then you have to put a pencil to it and figure out ex okay roughly what is that you know offset because at that point I think we're sort of supplementing and trying to round out however much budget uh reduction that would have to occur or you know increase revenue and that's really when you get right down to it and you look at schools across the state and we had a lot of talk about this and these these ideas were coming from the legislators uh this past year before the session started was to look at what are other sort sources of revenue to replace property tax. >> Not hamper
077what everybody's trying to accomplish in terms of educating our children here in our communities, but if you take away property tax or provide that relief, is there some other source of revenue to plug in there to help compensate for that so you don't uh hamstring districts? And that's what is puzzling to me is they made some changes to lit uh to help cities, towns, counties, and other municipalities that are going to struggle with that also. But not only did they not provide that extra for schools, but they're potentially taking away what we've already been receiving. Um so that's a little hard to understand. Um >> they put us in the same category. Mhm. >> And and then as Mr. Herbert already explained, there's a significant liability out there if you're going to proportionally have districts
078pay back those tax credits out of debt service. that puts your debt service long-term in some jeopardy because if you're paying those out in large amounts, you cannot recoup enough of that money to stay solvent in that fund for the long term. So, we know some changes are going to have to occur there. And I and I'm feel pretty confident the legislature will address that. How they choose to address it, you know, will there be some other source of revenue that can go there or you just going to make us take it all out of operations are already already really hurting? Um, I think that will be very very difficult for a lot of districts to to manage over the long term. >> Well, and as you have to make cuts, like if it's staffing,
079that kills the morale and the culture of it. >> It it does, but also in your operations, it can make you almost non-functional. >> You know, there's only only so many people you can reduce and then still still operate. So, it'll be, you know, interesting to see what changes get made as we move, you know, through the next couple of years of the legislature. Good news is we don't have to figure this out all at once. Uh right now we're focused on 2026 and then you know kind of looking ahead at 20 uh 27 and 8 you know trying to think ahead a little bit but also knowing there could be you know different things that happen between now and then to you know have to have to work through later. So once the NAV
080comes in from the county, hopefully by the end of this month, you'll be able to narrow down more specifically what we need to trim from ops in 2026. >> It'll help. >> That's going to get presented to us in October of 25. >> Yes. But also, you know, paying attention to what the town does with the fire territory rate will be important as well. um both both of those pieces and and they're working through it too respectively as they go through their budget cycle and having to decide how they want to you know work into that process. So th those two factors yes will each one of those will help us know more about uh the direction we're headed. >> So the definitive number of what we're going to be reducing in ops isn't really
081going to come until we get to our budget meeting in October. >> I mean definitively yes >> from a budgetary standpoint. Yes. from a true dollars and cents standpoint, we really probably won't see the true impact until June of next year when we receive that first tax payment, >> okay, >> to really know what that circuit breaker impact and the tax credit impact is going to be on us. >> So, we need to be acting in the best interest and then if we need to back if we need to back off, relax a little bit June, we're better off >> than to be too lax and not have gone far enough by the time we get to June. >> Correct. to plan for the worst and hope for the best. Right. >> Yep. >> So,
082that's that's what we have. Happy to answer any questions that you might additionally have, but that's where we're at today. And, you know, that could change a little bit tomorrow. And and as you're talking about, maybe by the end of the month, we know a little bit more. Keep moving forward. So when you you talk about moving another 300,000 out of ED doss and increasing that transfer of entry closer to that 14%. Um, is there things that you can address in the ED area besides staffing that's going to allow for that to happen before you get to a staffing point or are you seeing as just a >> you I mean when you look at salary and benefits about 90 91% of your ed fund is salary and benefits of some type. >> Okay. And
083then you got classroom supplies, materials, those kind of things that really make up the difference. You might have a couple software, you know, you may have some software in there and there's some small things that yeah, we'll we'll look at all things to say, hey, can we do without this, can we do without that? Or do we have a license for something we're not really using and we can end that. Um those are the kind of things we're looking at both in operations and in the ED fund. Okay. But I again this is a I I would say more of an advantage than a disadvantage because we're growing. You're having to add staff to stay even if you if you want to think of it that way. Um so if you can slow down a
084little bit your additional hire rate then it helps you to manage that a little bit more. The end result is you do push up class sizes in some areas. Um and that's can be a little bit tricky to manage. It is manageable but you have to really you know stay on it and stay after it and and um manage as we go through time. >> Any other questions or comments? All right. I need a motion to adjourn this public work session. So move. >> Thank you, Mr. Brown. Second. Second. >> Thank you, Mrs. Ward. All in favor? I. Any opposed? That passes unanimously. Call Tesla in.