001order. Um Let's go ahead and read the minutes from the 2026 [snorts] 6:00 p.m. Uh we're going to write down the new business community finance forecast. Appreciate everybody being here. Thank you for your time. I know that some of you can't follow us, but you know what? Thank you anyway. Um we're going to get right into it. This is Jay Sale with Baker Tilly. He's on financial forecasting. The nice thing about this presentation is we've shown a version of it to all of the south teachers one day. Showed another version to all the north teachers next year. We did a presentation for the board and the admin team. So, internally we we everyone has heard some version of this and then we thought that the last step to this was just putting it out there
002to the community and even though they're not here, this is being recorded and the presentation will be on the website so they have access to it as well, but um Jay, I'm going to turn it over to you, please. You can go ahead and get started. So, here you can stand. You do whatever. You're in the home of the same. That's fine. Um so, again, Jay Sale with Baker Tilly. We appreciate the opportunity to be here. So, um as I explained to the board in the past, though, I'm my fourth year with Baker Tilly. So, we serve as a municipal advisor financial advisor for school districts across the country. Um me personally, prior to joining Baker Tilly, I spent 26 years in public ed. So, the last 20 years including the time with Baker Tilly
003was doing the school finances. So, I'm guessing that is why I have no hair and no bald hair because of all the uh the headaches that we go through with school finances. So, um whatever questions anyone has, please um please ask as we go through. I'm happy to to share this um uh answer any questions and if we don't, we'll get back to you and we'll find that information. So, as far as the agenda for tonight, it's kind of laid out some things we're going to look at. How the schools are funded, just kind of 30,000 foot view. I know we went over this um back last summer, I believe it was when I was here. Um where the money is spent, uh district's trends and challenges kind of you're facing, some state legislative changes
004and we'll spend a lot of time going through those legislative changes again just so we understand what those um implications are going to be which kind of leads into the next section. And then just talking about the path forward. So, um you've already done a lot of work and um it'll be um represented in some of the slides that I'll be able to to show here a bit, but I think the thing that I would just say and we've been telling everybody is just buckle up. The next 5 years are going to be interesting in the school finance. So, I kind of liken it back to whenever property tax caps went into effect and we started seeing circuit breaker take place within the state of Indiana. I think that's kind of what we're facing as
005we move forward. We're going to have schools that never dealt with circuit breaker like Decatur Community Schools. Um they're having to deal with some of these things that are going on within the legislative session that um uh as we kind of implement this Senate Bill 1 piece. So, um again, happy to uh to answer questions as we go, but So, as far as school finance, just from a zooming out 30,000 foot view. So, um our own personal accounts, you know, we have a checking account, we have a savings account where you're diverting money, but funds you can pretty much spend on what you want to, right? So, if I need to pay my house payment, I need to pay a car payment, insurance, buy groceries, utilities, it's all coming out of one place. Whereas within
006school finance, we have segregated funds or buckets where certain dollars are received into and only certain expenses can come out of. So, education fund bucket um is just that for educational or instructional expenses. It's funded based on state uh dollars coming to us based on your student count. Um it's going to pay for teachers, instructional staff, classroom materials. So, those instructional materials is what's coming out of education fund. Operations fund bucket um is for those operational funds. So, it's the the operations levy that you're getting from taxpayer funds that are going in to support it, but we're paying for transportation, you're paying for utility costs, uh property casualty insurance, um maintenance, your non-instructional staff positions are coming out of that bucket. Um it's levy capped by the state. So, there's one slide we have here
007that'll show you what you're receiving on a per levy or per student basis levy based on kind of some of your uh surrounding uh peers. And so, the simple question that people ask is why can't we just ask for more levy? So, the state caps the levy that you're able to ask for each year. And so, this goes back to policy that was in place in the 19 early 1970s. And so, when you start looking at why is one community able to get more funding than another, um surely it's 50 years of tax policy that's in play. And so, whatever they capped it then, there's only been so much that can be added each year. And so, that's why we have these large discrepancies uh that still exist today. Um and then the last one
008is the the third bucket within the debt service fund. So, that's another one of the funds and as a board you realize that there's more funds than just these three, but those are kind of the the main three that we have. For the capital project bucket, you have to have a debt that you're paying. So, it's capital expense, typically the quote unquote mortgage on the building or some renovation work that you've done. Um you can buy buses, big capital expense, but you can't purchase the bus directly. You have to have it tied to a to a debt of some kind in order to pay the debt. So, um that's kind of the the functionality of the debt service fund um the way it works. And then again, it's restricted and it's funded by your local
009property taxes as well. So, I know you guys have seen this, done through that, but questions as far as just in general over the um kind of where where money goes and how it's funded. Like it? All right. So, then um kind of hot off the press, pulling in 2025 data, you get a snapshot of where your money has been spent. Um so, this is just looking at the education fund last 5 years. Um so, whenever you look at an accounting code in the state of Indiana for um for schools, we have what fund it came out of, we have the program it was associated with. You see this thing called an object code. We kind of listed those down at the bottom. The 100s are salaries, 200s are benefits, and we don't really see
010a whole lot of spending in those other categories. It kind of goes back to what I mentioned earlier. This is a very thin education fund. It's it's instructional and most of it is spent on staff. Um so, the we're a very heavy um people business within education realm. So, as you look at the 100s for 2025, about 96% of your education fund spending was spent on people. So, it was salaries and benefits. You do see a little bit of a dip from last year from 2024 to 2025. And so, as we go through and kind of show where you're projected to be, we'll talk a little about um the deficit you had and how you were able to close that. But, as far as just listing positions that are paid out of the education fund,
011teachers, instructional assistants, your library and media specialists, you can see the student support positions and then some of your administrators, building level administrators are paid. And you got a couple of district level uh for your director of special ed, director of learning that are paid out of the education fund. Whereas some of your others like your superintendent is paid out of the um operations fund which is on the next slide. So, as you look at the education or sorry, the operations fund, again, we kind of do the same thing, kind of smattering. You can kind of see what's ebb and flow throughout the throughout the years. Um this one, a lot more expenses in those other categories. So, typically what we see across the state, roughly half of the operations fund is spent on salaries
012and benefits. The other half of the fund is spent on those other items. So, uh we start getting into utility costs, we start getting into the maintenance of buses, um the capital expenses. So, if you look at the 700s, those are your capital expenses. Um I see a couple of bigger bars next. So, my guess is you you bought a couple of buses with um within the last couple of years, but you didn't in 2025 um out of that particular fund. So, there's nothing listed there. So, um you can kind of see how those uh how those play out. And then we see the different positions that are funded uh throughout the operations fund. I mentioned the superintendent, that's where you're paying for your facility maintenance staff from, your transportation costs, um etc. So, questions
013on how funds have been spent today? All right. We're going to keep chugging along here. So, enrollment. Um one to dive into a little bit as you look at enrollment. So, uh we went back and pulled data since the first time the state started uh putting information out regarding what legal settlement, residential settlement, and these this transfer option that uh that students now have was 2017. And so, we pulled that data. So, we have data from 2017 through the fall of 2025. So, this is all comparing fall to fall. If you look on the chart on the left, kind of that black or navy bar is representative of the number of students that lived in your school district in 2017. And as we follow that along, we kind of see it starts to drop as
014we get to 2021. And then we see a kind of a recovery, this little V-shaped recovery. So, going into the pandemic, there were fewer students living in the district and then post-pandemic, we've seen a growth as far as more students back. So, when we compare 2017 to the fall of 2025, you're actually plus 70 students that live within the boundaries of the school district. The teal colored bar is representative of the students that live in the district and attend the district. And so, you can see that continues to uh continues to decline. So, unlike where you saw the recovery occur with students that live here, you haven't seen that unfortunately from that recovery of students that have elected to attend school here. They've elected to to seek other options. And so, when we look at
015the the slide on the right hand side, the transfers in are the teal colored bar and you see those kind of went up and they they peaked about 2020 2021. And since then, they've kind of held flat. So, the number of students you're gaining from surrounding districts has kind of flattened out. But, unfortunately, the students that have elected to transfer out which is the orange bar has continued to increase. Um you're not any different than most schools across the state. Many people are seeing this just because there's so many more options that students have and their families have. Um so whether it's electing to go to their traditional neighboring school next door or whether it's electing to go to a charter school, a private school, or what we've seen a lot of are students that
016have just elected an online option. Um so because of that popularity, if you don't have your own online um option available, then students are seeking that somewhere else across the state. So um not typically you're you're not experiencing things that certainly other school districts um are are experiencing. But um it did it went from a situation where you were net positive students because you had more students coming in than you were losing to where now it's split and you're um losing more students than you're bringing in. So you have had this net loss, which um unfortunately impacts the amount of funding that comes into the district. >> [snorts] >> So as far as, you know, where where might you be headed from a from a demographic standpoint? So as you look at um taking a
017few things uh we look at cohort survival, so the number of kindergarteners that move to the first grade, first grade to second grade, second grade on. So when we went back and looked from a 5-year history, kind of mapped what that looks like, and then put that with um live birth data, um also um taking a look at that transfer data, um what could be on the horizon? So we kind of start our way up at the high forecast, so you could grow over the next 10 years theoretically to a little over 1,900 students, so you're gaining a couple hundred and so in order for that to happen, what you would need to see is that continued in-migration, so we kind of saw that V V-shaped recovery. So do you see more families relocating to
018the area and so that you just have more more people living in the community that you have that will be electing to attend here. And also an increase in um live births. Um so that's going if the birth rate goes up, um certainly there's more students that will be able to to attend. The baseline forecast, which is kind of just a status quo, so you can take what has traditionally been happening and apply it moving forward, unfortunately it looks like we're going to go the opposite direction, so instead of gaining 200 students, we'll probably more in a in a realistic situation where you might be losing another 200 students over that period of time. And then should we get to a low forecast where we just see an accelerating reason of people moving out of
019the community or students transferring out of the community, um then we might see an accelerated decline for whatever reason. you see more students that want to have an online option, if you have a large employer that goes out of business, um as those things happen, you may end up losing additional students. So that's kind of where we might see enrollment heading over the over the next few years. Any questions, thoughts on enrollment, discussion for that one? Okay. Um just a few things on peer comparison. Um so as we look at tax rates, the tax rate is listed on the left and we just grabbed some geographical peers, so those around you. So there's a couple ways to look at peer groups. One is geography, so who's around us, and the other is kind of from
020a demographic standpoint, who looks like us. Um so whether they're the same, similar enrollment, they have the same uh special ed population numbers, um multilingual population numbers, free and reduced population numbers, so there's a couple different ways to look at this. So this is just looking at it from a from a geographical standpoint. So around us, you happen to be the lowest um tax rate in the area, and so I'll put a note down at the bottom, 2025 it was actually the 13th lowest in the state where you came in from a tax rate perspective, and then the the median tax rate, so if you lined up all the tax rates in the state, so the midpoint of that was just a little over 97 cents. So you kind of see where you compare um
021from a cumulative tax point or tax rate perspective. And again, that was 2025 data. And then operation is letting per pupil for 2025 you're at about $2,400 a student. So as I mentioned earlier, um you start thinking about those are the dollars that are used for operational costs. So if you look at those other communities and you say, "Okay, how many buildings do they have, how many schools are they operating, how many miles are they transporting students?" Um I mean you're serving other than kind of that Greensburg area, the broader county-wide area. So when you look up and say, "Hey, Rush County and Franklin County might look more like us from a the amount of distance that we have to travel for bus services." I mean look at how much more money they're getting on
022a per student basis than what you're getting, and so you're it's it's causing some additional pressure on your budget just from a um a dollars perspective for from that perspective within the within that area. So any questions on peer data before we dive into last session? And I actually want to say that's a very good point because we are 294 square miles is what we have of the in our area. That's almost 80% of the county and and to see that we're on par with Greensburg who has next to nothing. They don't have to run the buses, the area, their expenses are down significantly. We do line up more with Rush and Franklin and it's it amazes me they get that much more per kid. It's it's criminal. Well, and the hard part is there's
023really nothing you can do about it because you can't tax levies are frozen, they're only going to grow by the MLG each year. Um so there's just not a lot you can do consistently. All right, so legislative changes. Um we talked about this again last summer when I was here, so we're just kind of recapping some of this again is from the funding formula, so House Enrolled Act 1001. So every year, every odd year I should say in the legislative session, odd number years, so 2025, 2027, 2029, etc., they will deal with House Bill 1001, which is the budget bill for the state. Within the budget bill is the funding formula for schools. And so in the 2025 session, they dealt with House Bill 1001. Once it's approved, signed by the governor, it becomes House
024Enrolled Act 1001. So this is looking at um House Enrolled Act 1001 from 2025. So things that changed within the funding formula. So there was an increase in the foundation amount. So the funding formula has multiple components to it. One is the foundation. The foundation amount is what every school receives on a per student basis. So everybody gets the same amount of money for that foundation. And so that money went up a bit. Um then we look at the complexity amount. Complexity is what is then added to um to the funding formula based on um it used to be on free and reduced uh numbers, but they changed it to staff and tenant numbers, and so they're looking at the amount of students that qualify, the number of families that qualify for um public assistance
025for food stamp programs. Um so that's what the complexity is. So the higher the um or the lower the socioeconomic status, the higher the complexity amount uh the district will receive. And so the um those dollars were decreased, so there was some funding taken out um of that part of the formula. Um curriculum materials, so the the state went through a change that will be reflected here a little bit as well um with how they're dealing with curriculum materials. So you used to receive money separately and like put it to its own fund. At the end of 2024, they had you transfer that money, put it in your education fund, and do away with the curriculum materials fund. Well, those dollars that you were getting, it was money you were already receiving. So the state
026simply took it out of one pocket and said, "Hey, we're now going to put it into the funding formula." So it looks like your dollars are elevated whenever you look at your funding formula, but it was money you were already getting. So it was just shifted from one hand to the other kind of situation. So it's just making sure you take that into consideration whenever you're you're thinking about how much money do we have to spend on other educational programming because those were dollars that were already allocated for curriculum materials. And then there was a decrease in some categorical funding. So looking at some career tech ed funding, there was a decrease in some of those, and so in a later slide we kind of quantify what that looks like and that impacts the district
027um in in totality for the next 2 years. Um property tax changes. Um so as we get ready to talk about property tax changes, a couple of things that came to fruition on this front is that um the district in essence has um four pots that make up its um tax base. So there's a 1% which is your homesteads, 2% which is ag land, um along with residential I'm sorry, along with rental properties, and long-term rental personalties, and they all fall in that 2% category. Then 3% is the business bucket, and then you have a personal property, which is um equipment that's used within those businesses. So those are kind of the four buckets that you have. So when we think back to the 2008, '09, '10-ish timeline, that's when the uh whole concept of
028these tax caps came into place. So that 1% you paid no more than 1% of your gross value um in property taxes, 2% capped at 2%, and those 2% capped at 3%. Um and so what has happened through Senate Enrolled Act 1, is there's going to be some changes made that are going to um in essence suppress or lower potentially your net assessed value for the school district. And so when the net assessed value goes down, in order to simply collect the same amount of dollars you're collecting, it's going to force the tax rate to go up just in order just the way the mechanism from a formula standpoint works. And so as we talk through that, kind of keep this in mind as we see some of these because you'll see some of the
029potential net net assessed value changes um that are potentially going to occur. So Um so for the first ones we go through here, so there was changes in the deductions for homestead properties, that 1% bucket. So um we'll go through the slide that walks through this a little bit, but supplemental is going away, I'm sorry, standard in essence is going away, and supplemental by a percentage is going to decrease to where we eventually that's all you're having is a percentage-based um reduction reduction for your homestead. There was homestead credits added. So you get the lesser of 10% or $300. Have you guys gotten your tax bill yet? 2026. Some some counties have released theirs. So when you open up your tax bill and you have a homestead credit, if your bill, so what you actually
030owe in your tax levy, if your bill is $1,000, multiply 10% of that is 100 bucks. So you would $100 is less than $300, so you'll see a $100 credit on your bill if that was your bill. If your bill is $3,500, multiply by 10%, $350. 300 is less than 350, so you're going to get a $300 credit on your bill. So kind of look at that as that comes along. So those homestead credits are going to apply in 2026. Um whenever you add those collectively across the county, they didn't get spread but based on the pro rata share of each individual entity. So the schools are going to lose some funding, uh the counties are going to lose funding, the cities are going to lose funding. So all those various overlapping units are going
031to lose some of that levy because of those credits. And then we quantify what those are as we go through here as well. Um the 2% bucket, the ag properties as well as the uh residential or the I'm sorry I keep saying that the um rental properties um have never had a deduction. And so they're going to start getting a percentage based deduction just like you do on homesteads. And so we'll walk through what that looks like here in a second as well. Um there's a change in the de minimis the de minimis amount for personal property. It's only from $80,000 to 2 million. So new property that's put into uh into service, uh you'll be able to um not So you won't have to pay taxes unless it's over a value of over $2
032million. Uh so again, it's going to eat away or erode a bit of that bucket with the personal property from the school district perspective. And then currently there's a floor in place, a depreciation of floor. So equipment that would go into place, you could depreciate it down to 30% of its value and then you would that would always become part of the tax base for the district. So that is also going away for new equipment that was put into effect after January 1 of 2025. Um excluding any new TIF area. So there was a TIF area that was started after July 1, then that was excluded. So all of those buckets are kind of going to get hit a little bit except for the 3%. That's the one that's not really having much change to
033their particular situation. On the revenue side, there's an elimination of the local income tax that school districts currently receive. Um so it's supposed to start 28 budget based upon this legislation. In the 26 session, the one that just wrapped up, that was punted down the road a bit. So they got moved to 2029. So you're going to still receive those dollars for another year. And then there was a cap placed in the in the uh cap for 26 operations fund maximum levy growth at 4%. So it is based on the non-farm payroll formula. Um and so it should have been a little over 5%. I think is what it should have been but the legislation capped it at four. And so um in 2026, they have removed that cap for 27. So if you're planning
034next year's budget, your MLG queue can grow at 5.6% instead of 4%. So you'll you should see a little more operations levy um next year because of that that technical change. All right, so how this is going to work. So as we look at that 1.3% homestead credit, when you look at that flowchart on the left. So currently if you open up your assessment and you say, "Hey, my home is worth $193,500." That's what the county assessor says the fair market value of my property is. Then in 2025, you would go through a process where you get a $48,000 standard deduction and then you got supplemental deduction that would have been 54,000 and change. So your net assessed value was over $90,000. That's how much you were actually paying on your particular property. And so
035the school world, you're going to add up all those net assessed values, that's kind of what makes up your 1% bucket. So what's going to happen when we look at 2026, so this year, the standard deduction stays in place at 48,000. The supplemental deduction is going up from 37 and a half to 40. And so then you see it goes from that 54 number to 58 too. So then the net assessed value drops. So now the net assessed value that the homeowner is paying the uh their property tax on is 87.3. So it's about a 4% decrease. The question that we're going to have to look So as you kind of walk all these out as we get out to the end of 2031, you see the standard deduction eventually goes away and it's completely
036uh uh replaced by this percentage based. And so when we get to 2031, 2/3 of your gross assessed value is going to be eliminated and you're going to pay taxes on 1/3 of your homestead value. So when you add up those percentages across the bottom, we see a 4% dip, a 5% dip, a 5% dip, almost a 5%, etc. Um how much is gross assessed value going to grow that's going to offset that? And so do we see times like we were in when we came out of the the pandemic came out of the pandemic where we were saying 14, 15, 16, 20% increases in home values? Because certainly that would offset those losses. Or most recently across the state last 3 years, it's been a 4% growth in the median. So 4%, we still
037don't quite cover it. Um it's going to be probably um it's going to vary, right? Depending on what area you're in in the state and also the price point of the home whether the gross assessed value is going to go up. So if it doesn't cover it, it means your 1% bucket as a school district is going to decrease. And as we went back to depending on how much it drops, just to get the same money you're getting is going to force a higher tax rate regardless of what you do as a school district. Just proving mechanisms of what's happening. That makes sense? And you know, that's a lot of moving parts. Any questions? >> homestead or is this um ag and So this one is just homestead. Good question. All right, so then ag
038and the um also the uh rental properties are going to work the same way. So this is for that. So as you look at the flowchart on the left, you notice there's currently no deductions. Whatever the home value was, I used the same one, 193,500. If that's a rental property, so that same house we were just looking at is now a rental property, the net assessed value is 193.5. So that's what the landlord or the owner was paying taxes on, that's also the net assessed value that the school district was receiving. Um so as we look at this, there's going to be this um deduction that's put in place. So eventually by 2031, you're going to pay taxes on 2/3. So 1/3 of the net assessed value is going to be eligible for a deduction
039and you're going to pay on 2/3. So you can kind of follow that same thing across the bottom where year-over-year change, we're in 6, 7% of um net assessed value decreases within that 2% bucket. So that'll be for your ag land, which is going to be a lot of ag land in the county. Um as well as those um uh if you have any rental properties um apartments, this type situations, they fall in that category. So again, nothing that you do unless the gross assessed value grows more than what those deductions are going to come into place, it's going to force a situation where chances are your net assessed value is going down, tax rate will most likely go up. All right, so kind of what's it mean in a dollar perspective? Um so the
040funding formula we had talked about, so we were projecting additional revenue to the district of about $141,000 for um for the 25-26 school year. As we look at next year, we start bringing in the projected enrollment decline. Um unfortunately, it's probably going to be less money coming into the education fund. Whatever we hold up for curriculum materials and we hold that those dollars back, there's just not going to be a lot more money uh there's not going to be a lot of dollar stream. And certainly if enrollment patterns change, something happens and you end up with more students coming in, um then could mean more more money coming into the school district. Um homestead credits, so we talked about those credits um that uh lesser of either 10% or $300. Um so the DLGF had
041released a document showing that it's about $266,000 is what those totals are for the district this year. So the one thing that's interesting is that in whatever tax caps came about, they protected the debt service fund. So the debt service fund had to be made whole so that you could make your debt payments. So all circuit breaker losses had to go to your operations fund. Um they didn't do that with these homestead credits. They were going to let them be split proportionately based on your tax levy. So if you were in a situation where half of my levy in debt matches the other half of my levy in operations, they didn't split 50/50 or whatever that was. So um they made a technical change. And so for 2026 budget, they're giving schools the option of
042putting them where they want. You can either go ahead and let debt fall where it's at. And so depending on what your debt balance cash balance is, that may be the good thing to do to protect your operations fund. Other people if they don't need to make sure they're paying their debt payments and they don't have a lot of cash balance, they have to move all of those losses in 26 to their operations fund. But beginning in 27, they are protect protecting debt. So all of those losses will now hit your operations fund starting in the 2027 budget. And then local income tax they eliminated uh the local income tax as we talked about and instead of being affected in 2028, uh they punted that to 2029. So, you get to collect that additional $265,000
043you're currently receiving for one more year until 2029. So, I think the one question that is going to be interesting to see is right now they're letting um they're trying to restructure how LIT works um within counties along with um PCRC, so property tax replacement credit, which you guys don't have to deal with. Um and so they're establishing a board that will allow municipalities to go to this county board and ask for LIT revenue, and schools are excluded from making that ask. So, it'll be interesting to see if the the General Assembly changes their mind down the road to where they'll let schools come and ask uh to receive some of that funding. So, that's to be to be determined still. Any questions on the legislative pieces or those items? Just waiting for the good
044news. Keep going. Good. >> Hey, we're getting there. We're getting there. That's the good news. All right. So, financial projections. So, as we look back to I pulled I went back to the 2023 data. So, when you look at the bar chart, the left uh the kind of the teal color is the revenue coming in the door. The darker bar is the expenditures going out the door, and then down at the bottom you can kind of in some places see a little gold bar either positive or negative. And so, that's reflecting either a surplus or a deficit. So, if you brought in more than you spent, surplus. If you spent more than you brought in, deficit, right? Um so, as we look at 2023, you had a match it off to the right-hand side. You
045had a deficit of about $854,000. You spent $854,000 more than you brought in in your Ed and Ops fund. And the same thing happened in 2024. It was about $819,000. And I put an asterisk next to that because at the end of the year, that's when you were that's when you collapsed your um curriculum material fund, and you transferred the balance to your education fund. So, if you look at your fund balances that year, it looks like you were upside down by about $110,000-ish. So, that transfer kind of masked what was going on truly within the structural spend of the of the district. So, about that time I talked to you and Dr. Burns and Melissa, and we started talking about this legislation that was coming in. And so, you had already witnessed this structural
046deficit you had, and you were starting to work through some budget cuts to try to get things on track. And then I got to suck the air out of the room and say, "Hey, by the way, you're going to lose more funding, right?" So, um thanks to all the work that you guys have done in this room, you've been able to right the ship. And so, in 2025, um we're last Well, no, we were when I was here last summer, we were saying, "Hey, you're probably going to be at about a five $600,000 deficit." And you flipped that. And so, now you finished 2025 on a positive note where you grew cash balance by about $600,000. And so, you've set yourself up well to be able to mitigate some of these other things that are
047coming about. So, as we look at '26 and beyond, as we started trying to model some of this out, as I mentioned earlier, personnel costs are the largest things that you have in the district. So, I held those flat and just said, "You know, if enrollment's going down, and you're able to give pay raises by simply um reducing staff and repurposing those dollars, you're still making the same amount of money, but you may be paying people more, but you're having to shrink your staff. So, if that's the way you approach it, then we can mitigate this without a lot of hard work, right? You still have a little bit of a cash balance in there. But, if you start for every you currently spend about 16 and a half million dollars a year out of
048Ed and Ops on salaries and benefits. So, every 1% pay raise that you would give roughly is about $160,000-ish. So, when we say, "Hey, we might [clears throat] have a little bit of cash balance that we can do a 1% increase." But, we start getting to 2% let alone trying to meet inflation and use it 3% or greater, it's going to put you into a deficit situation. So, it's going to mean more restrictions as far as where additional cuts that you have to try to find in order to balance the budget. Certainly, you still have some cash balance you can spend down, um but it's only going to last for so long as you start trying to spend those down. So, from a good news perspective, kudos again to all of you for the hard
049work that you did. I know it's been difficult decisions that you have made, but you truly have set yourself up to be able to navigate this. Um unfortunately, many of these presentations that I'm not that I'm doing, they they haven't done that, and they're um currently in discussions with the state on being forced to have to do some things because if not, then then they're in a situation where the state comes in and takes over. So, um it's never easy decisions, but um again, kudos to to you and your your efforts in making this happen. So, um with that, as we've been talking with schools a lot, it's we kind of framed this around, "Hey, we're trying to search for efficiency." So, can we all come to an agreement that the first place we have
050to start is financial sustainability, right? So, we have that, and now we want to go out all these other things, all the programs, um recruiting and retaining staff, etc. And so, then through that, you have some various levers that you can pull, and you guys have been working these. So, one is revenue. I know Melissa's been scouring trying to use and mitigate any worse that you can. We've been exploring some bonds. Unfortunately, there's not a lot of revenue opportunities that are out there. You can pull the trigger on an operating referendum. I'm hearing there's 100-plus schools that are considering trying to explore one for this fall. We'll see how that number shakes out. Um so, I think it's probably going to land somewhere about half of that will be my guess that actually put in
051a referendum on the uh on the ballot, but there's a a lot considering. Um expenditure controls. Where can you shift some costs? And so, one would be, "Hey, we're no longer buying buses out of operations. We're going to shift that to uh to buy those out of bonds." Um uh Melissa and I talked about indirect costs. So, can we recoup indirect costs through through grants and charge some of that off? If you have some money in grants, great way to do it. Can we charge some of those things to food service so that we're not paying for all of our custodial or utility staff to use food service if they have the budget. So, it's kind of working through some of those things. Those are going to be just minor tweaks. Those aren't going to
052be really large items or big blocks that you can go find. Um things that you've already been doing from changing service delivery, so outsourcing some things the possibility. Or if you're outsourcing, you bring some stuff in-house because you're able to do it cheaper. Um so, those first three are kind of yeah, we're going to continue doing what we're doing, how we're doing it. We're just going to kind of tweak a little bit on uh on how we're how we're getting those things done, but we're not reducing services. The last is just, hey, we no longer either as as a last resort have to pull the plug on programs, um or maybe this is no longer aligned with the mission and vision that we have as a school district. If this is a legacy thing, it's
053been around since the corporation was founded, and we might just have to pull the or if it's no longer aligned with what we're doing. So, um in talking with Dr. Burns and Melissa, we identified many of the things that you guys have already done within the education fund from reducing positions, limiting hours, um to within the operations for uh out-outsourcing some items in order to gain some efficiency. Um so, it's just kind of continuing to work at these things in order to give yourselves a little more breathing room uh as you move forward. And so, kind of key takeaways as we as I wrap up here, just again, those school funds were restricted to limited ability to use them. Um you had this revenue gap um that you were able to close. I think you
054have a good story to tell to be able to as you continue to move on. Um you took an action, so that's a a good part, but um again, more decisions are going to have to come. So, if you want to give additional pay raises, um you want to continue to maintain some of those programs, then you need to continue to tweak things, especially as enrollment changes. That's the key, I think to this time. So, happy to answer any questions if I didn't suck the air out of the room again, but um thank you very much. Thank you. I'll start with anybody out here. Questions? This side of the table? Anybody? Jay, thank you. Success. Working with another group. All right. Appreciate it. Thank you very much for Good evening. Thank you, everybody. You're good.
055Thank you.