001we please get an adoption of the agenda. >> I move to adopt the agenda as presented. >> Second. >> Okay. All those in favor, please raise your right hand and say, "I." >> I. >> All right. We are officially in our February work session. Dr. Herzog. >> All right. Well, good evening. Move forward a couple here. There we go. So, in front of you, uh, you've got a document looks like this. It is our monthly uh revenue and expense report. Um I as I'm going through the presentation, you can reference this. It will match what's in my presentation. Um so you have a document you can refer to. Um and if you have questions along the way, please ask. I would love this to be as interactive as we can can make it so you
002can can learn as much about the current budget and then the forecasted budget for for next year as well. So here is what the goal is for the work session really is around just talking a bit about the budget cycle so you have an understanding of of what the budget cycle looks like where we are in that process right now uh and then where we're going to be later talk a lot about budget to date and then some projections for the remainder of FY26 the remainder of this year sort of where I see this us going and headed towards um in June 30th and then the last two really talking about some preliminary revenue revenue projections for next year uh as well as some expense projections for next year um so that we can understand
003sort of where where this year will end and where that will take us into next year what it looks like. All right, so budget cycle just so you understand sort of what the budget cycle looks like in most school districts. Uh we're no different than anybody else. Very top we'll start at the very top like 12 o'clock June that's when we approve the budget. So, um, you approved the budget for this fiscal year last year in June and this year in June, you'll approve the budget for for next fiscal year. Once that happens, uh, we really start in with the fiscal year beginning in July. Uh, now what's interesting is we approve a budget in June and then we don't actually set our tax rate until September. So, we're set we're we're approving a budget
004on the revenue side where most of our budget is local taxes and we don't actually set the tax rate until September. So, we're projecting a tax rate when we set our budget based on the best data available. And I'll share some of that with you tonight. Um, while we're setting the tax rate, uh, we're also looking at sort of end of year auditing. So, we start auditing in September and that runs all the way through the end of the year. At the same time, we're really planning and projecting for enrollments, uh, for the next year and what that might look like with the budget. Um, from there on out, it's all revenue forecasting and expense forecasting. So, where we are right now, we're right in that February, March where we're meeting with departments, looking at
005the department budgets, um, what they're requesting, what we're telling them they need to be looking at for next year. We'll get into that later when we get to the budget part, sorry, for next year. And that runs all the way through until we get to setting the budget in June. So, it starts over again. This is a cycle. It is constant. So, what we're doing this year is going to impact next year and just continue to impact as we move forward. Okay. The next few slides are all about this year FY26. So want to start with fund one revenue and estimated actual. So where our budget was versus where we are. We're at about 80.23% of what we had budgeted at this point compared to last year. At the same time we were 81.44. So
006that's a 1.21% difference which I know is I put it in here. It seems small, but when you actually run that out and actually convert it to dollars, what that really means is we're looking at about $2 million less in revenue than we expected at the same time. There are some reasons for that. Um, we know a lot of those reasons. We talked about those reasons. And there is some hope in February that we'll we'll receive some more revenue from from Jackson County because they delayed the deadline for taxes. So, we should see a little more revenue in February. So hopefully for a little better update for you next month, but we know where this is headed. We know of all the cuts that are happening and we know we likely are not going to
007meet our projection in fund. Fund two is actually a little better right now. Okay, so fund two, our teachers fund. Um this is looking um in terms of comparison year-over-year, we're 31% higher this year, which means we've actually brought in about $350,000, a little bit more than $350,000 uh in state revenue that we had the same time last year compared to budget. Um and that really at the bottom there, they increased the state adequacy target even though we're not being paid that yet. So we're still being paid at $6,900 uh per student. Um the state adequacy target that we budgeted on was 7,145. So, we're still being paid below that. Typically, typically the state will increase that as we get closer to the end of the year. They have usually withheld and then increases. So,
008we should even see a little bit more of a gain here as we get closer to the end of this fiscal year. So, actually in fund two state revenue I'm actually very optimistic uh in that. Now, it's not the biggest part of our budget, but I am optimistic that it's going to help us move forward a little bit in front. Okay. So, fund one, fund two. All right. I'm sorry. Move over to expenditures. Okay. >> Can I ask a quick question? Can you can you repeat um how much the state is holding back per student? >> Uh it is uh $245 per student that is currently being held back. And I I do I mean everything is signaling toward they will they will continue to move towards that. We just don't know. We don't know
009if that's going to happen this year or not. Um we hope we budgeted on that. So, we really hope we get to it. And that's $245 per ADA. Now, we're 90% ADA, average daily attendance, and 10% enrollment this year. So, 10% of it is per enrolled kid. 90 90% of it's based on our attendance of that day. >> Thank you. >> All right, switching over to expenditures a little bit. Um, so fund one, fund two, and I just lumped them together. I didn't want to go through fund one and fund two separately with expenditures. So I lumped fund one and fund two together as of the end of January. Um so we are basically we are right on okay we are 01% different uh budget to actual last year to this year. So we budgeted
010within 27,900 of what is actually happening um currently which is pretty impressive. Um so I always like to point out that uh Mr. Holder took care of the revenue side last year. I took care of the expenditure side. I just Yeah. Actually, he he should get credit for both of them for last year. All right. So, this is still operating. This is fund one and fund two. So, when you compare revenue versus expenditures, what we end the year with is our fund balance. And what this chart shows you is our fund balances over time, month by month. So, I I really like this chart because it really shows you a couple things. Number one, every year is the same. Okay, this is we we can predict pretty pretty usually pretty well because the trend is
011going to be the same every year. We're going to start at a certain point in July. We're going to dip down to our lowest in November, dip back up to our highest in January, and start dipping back down again. It is the same trend every year. The problem with this particular trend graph is that the starting points are getting lower and lower and the ending points are getting lower and lower, which that what that means is we are we have been we have been and we are contining to deficit spend each year. Um, now we didn't necessarily intend to deficit spend last year is because this is late money that didn't come in. That's why last year ended up lower. But you can see the yellow line. Okay, everything from January on is a projection.
012It hasn't happened yet. You can see where I'm projecting the rest of this fiscal year for us. Okay, that yellow line is going to end below the red. So, we're going to end with again a lower fund balance than we did this year. I have some actual numbers later, but just for your reference, we ended June uh 2025 around 73 million. The projection is to end June 2026 around 70 million. So about three and a half million less uh in fund balances to end this fiscal year. Then these this is a similar graph just not month by month. This is year showing you where our fund balances have been uh in terms of uh percentages and then sort of where they're where they're trending. Again, June 30th, 2025 is actual. Um and I'm projecting June
01330th, 2026 to be lower than June 30th, 2025. And again, there's some actual numbers there. Just fund balances for the prior three years. The actual numbers, you can see the how it's declining. Okay. Um, I don't I don't want to spend a lot of time on these three funds. Just want to make sure you understand that they're there and I think they're in good shape. So, fund three, that's our debt service fund. That's how we pay back our debt. Uh, if you look at that revenue expense report, those are on budget. We are on budget to be able to take care of our expenditures uh with debt service uh based on the revenue that we've received. Same is true in fund four, which is capital projects. Uh, revenue and expenses there are relatively close. I
014didn't note the revenue is under budget by approximately $500,000. Um that is a significant amount of money but in terms of meeting our expenses it should not we should be fine for this year. Bond fund uh currently the only revenue in the bond fund is interest that we've earned uh on the funds that we have sitting in investments with MOAP um that will change significantly uh once the bonds the remaining bonds are sold all that revenue will come in and that will show on the revenue expense report once those bonds are sold. Okay, FY26 key takeaways that I really want you to leave with in terms of this fiscal year. Okay, and I've already mentioned these. Revenue uh fund one's behind budget. It's likely going to continue. That's not going to change. Expenditures are on
015budget very much at this point in the year and our operating fund balance is most likely we're looking at a $3.5 million deficit uh where it's going to decrease uh by that much by the end of June. That is most likely what's going to happen if nothing else changes. So I just want to pause for a minute and I just want to make sure I just want before I move on to FY27 and start talking about projections there. Are there any questions about the current fiscal year budget that I can help? >> Can you clarify this? This 3.5 million is below budgeted or below last year? >> Below last year. >> Yeah. So we had budgeted below last year. So we had budgeted actually and we we first put together the budget in June that
016you approved. That budget has a $2.5 million increase in our fund balance. So we actually we budgeted for an increase and with all of the revenue shortfalls that have occurred is looking trending more towards a $3.5 million decrease in fund balances. >> So if you remember earlier we talked about we've had $6 million worth of funding that we thought we were going to get this year. We haven't gotten $900,000 from federal programs. We weren't notified until July. Um, then we assumed we would have some uh Senate Bill 190 impact, but we didn't know what it was. So, we budgeted as forgetting it because we had no idea what to put in there. That ended up being 1.6 million. And then with the change on December 19th of commercial property when you can't change your uh
017tax rate, as Hancock intends to take care of that when there's a switch, um that cost $3.6 million in local revenue. So, those are the really the three big buckets um of $6 million and why we went from trying to increase our reserves a little bit um after being shortfall in the previous year to now looking like we're going to be shortfall again this year. >> I will add one thing about the uh the operating fund balance reduction. So, that that is assuming we play the budget out exactly as it is currently. So in the budget there is also a $2 million transfer budgeted from operating to capital projects. So we can if we feel like we need to we'll make some decisions as we move forward. We can decide the board can decide not
018to do that transfer. That means that two million would remain in the operating budget and would not move to capital projects. That would mean that we could potentially you know come one and a half million less in operating instead of two sorry 3.5. So there's there's an option there. It won't get us back to an even budget, but it is something that we can consider as we get closer. I think we're too far away to consider it now. Uh we can we can think about as we closer to the end of the fiscal year. >> Dr. That is my question. At what point do you have that conversation with us? Is that a June conversation? Is that a >> We can wait all the way till June. We wouldn't make the transfer until June. So,
019it could be a June amendment. We can do a June amendment to the budget in order to to make that happen. Uh I would probably wait until to May or June to do that. >> Okay. Thank you. >> All right. Just kind of show you the uh the cycle, but really talk about some revenue projections locally here a little bit. So FY27, this is a nonreassessment year. So that means that AVs really aren't going to change too much, but they already have. Okay, we've already had some AV changes. Um commercial properties were reduced this year, which means that there's a very good that our adjusted assessed value is going to be lower uh next year than our assessed value is this year. Adjusted assessed value does not include new construction. Okay, so we've already received
020an initial number from Jackson County. They give you one way early. Okay, we have to then create a non-binding tax rate projection based on that. That AV is lower than our current AV. Now, new construction is unknown. They don't give you a new construction number until much later in the process. I am projecting based on $50 million of new construction and I'm basing that off of all of our prior years. Last year we were actually $119 million in new construction. That's a record by far I believe. So looking back at least five years I think a relatively reasonable projection is $50 million of new construction. Um the reason why that's important is because your new construction number is actually and not in every year it's actually where you actually get some new revenue. Um, so
021I did budget on some new revenue for new construction, but essentially our AV being lower than it was previously. Um, and then the last item, you all know if the voters approve the full waiver of Prop C, uh, we could also expect a revenue increase of approximately $4 million locally. That those are really the revenue projections locally that I'm working off of right now. >> Dr. Herszog, if if we get the 50 million in new construction, what does that translate to in revenue? >> Uh, depends on the tax rate, but I is what I projected $2 million of additional revenue. Uh but you'll see in a second where that that really is going to be erased very quickly in new revenue. >> Okay. Thank you. >> And we typically get that new construction the first
022number of July 1st and then a lot of times they do add to it. So for example, this last year we're at 119 million. On July 1st we received a $92 million number and compare that to the year prior was 52 million. So 50 million is probably a a consistent number, but every once in a while if you go back to 22, it was 62 million on July 1st. Um, so sometimes it's higher, sometimes it's not. >> We'd love to see a higher number that would certainly would boost the revenue from new construction for us, but I think it's reasonable to say 50 is a good projecting number at this point. >> So this is what Okay, so this is what I was mentioning that the revenue increases are going to be erased relatively quickly.
023Okay, so you all have heard I think a lot of information about the residential tax credits from 23 and 24. Um the county has given us these initial numbers and I think these are actually final numbers they gave us um at this point. So what I'm projecting in terms of the revenue impact is about $7.2 million uh in tax credits and then for the operating revenue and then 1.6 on the debt service side. The reason why tax credits are so devastating is when we create the tax rate. We create the tax rate is that those are in there. So we set a tax rate assuming we're going to receive that revenue and then we have to back that out after the fact. So that is a significant hit. And the same is true of the
024senior tax credit. Now we know that one's coming. It already happened this year. It's going to happen again next year. I chose to project the same number for next year of of exactly what it was this year about 1.5 million. It could be higher. most likely will be much higher the next year uh than when we have a reassessment year. So those are some revenue impacts that that truly are going to hurt our revenue coming in. So if we were to receive some new construction revenue of about 2 million property of four million both of those revenue increases are erased immediately by these revenue decreases. You'll see that a few slides. Um, so yeah, I mentioned these also. These are our potentials. So if you add up all of those together, okay, you add up
025the potential revenue increases from Prop C, from new construction, and you take out the potential revenue decreases on those tax credits, it is I'm projecting now that we're going to be receiving $4 million less in local tax revenue in FY27 than we receive in FY26. And that is very rare to have that occur. Typically, your revenues are going to remain relatively stable. increase a little bit. Uh these are certainly not going to increase in terms of what I'm projecting right now. All right, moving over to state a little bit and this is this Dr. Buck gave me some new information today that may even change what I've put in here. So, we'll talk about that. Um the initial indication is the state adequacy target will not change for next year. Okay. Now, I think that
026might we might see might see a change based on uh potential revenue shortfalls at the state level. I think $300 million potentially for the entire state. Um, so for us potentially, I mean that could be a $6 million hit for us on the state revenue side potentially. I did not factor that into anything you see in here, but that's new information. So I'm everything you're going to see is operating off of relatively flat state funding for next year. Um, now we will see the state move uh to its second year of of its its combination. Dr. Buck spoke to this earlier. The state combines attendance and membership. Currently it's 90% attendance, 10% membership. Next year it increases to 80% uh attendance, 20% membership. So as that membership number goes up, our overall number of students
027that account for stadium is going to increase because we have obviously based on attendance, your attendance is going to be lower than your membership. So that should go up a little bit but ultimately you know at best I'm thinking flat funding for next year uh from the state federal this is based on just what we have been told in title funding about a 10% reduction in title funding uh from the federal side remember federal funding is relatively small for us it's less than 4% of our budget but it is still something so I did I did plan on a $170,000 less in federal funding for next year >> we typically get notified in May. Again, last year or this school year, we didn't get notified till mid July. So, you know, prior to this year,
028we've always known it before the budget came to you. We knew what the feds were saying they're going to give to us. Um, we hope we go back to that this year. >> All right. >> I do want to stop for questions real quick. Any questions so far on the revenue side? We're going to switch over to expenditures a little bit now. any revenue FY27 for next year revenue questions. Okay, let's talk about expenses. So if everything I've done in this entire presentation has been based on based on the assumption that Prop C passes on the revenue side. So I'm going to do the same assumption on the expenditure side. Assuming Prop C passes, then if the board of education approves the recommendation from Team Lee Summit, that would increase our sales and benefits expenditures
029by approximately $8 million. Um the second bullet there and this work has begun. So I've been working with building and department leaders on setting up their budgets for FY27. We have all been operating off of a expectation that they reduce their building and department budgets by 10%. So what could that look like? Well, if they actually could do this, which they cannot do, if you add up all the building and department budgets together, it's about $47 billion. That means if we reduce 10%, it' be $4.7 million in savings. That's not realistic because a vast a large majority of those costs in that 47 million are fixed costs that we really cannot impact. So I the purpose of doing this is truly trying to just offset some of the potential increases we might see in those
030those expenditures that are fixed like fuel like utilities, our liability insurance, we can't impact those and those tend to go up in cost. So the the 10% reduction is an attempt just to stay flat to try to keep those expenditures from increasing for next year. I do not anticipate that being a a way that we could pay for step movement or anything else on the salaries and benefit side. That is an attempt to keep our supplies and purchase services as best we can flat for next year. >> Okay. Because so um when you say building department. That means that includes the SLC in terms of >> like if you're purchasing software that all the buildings are going to use that's included in this goal to to try to reduce by 10%. that would be except
031that would likely be one I did not reduce by 10% because we can't like if buildings are using it. If students are using that uh it is an expense that needs to come out of let's just say it was the curriculum and instruction department or the assessment department like NWA we're not going to cut our funding for that because we need it in our schools. Those are some of those fixed costs that I cannot. So some of the things that we could um our supplies budgets perhaps uh some of our purchase services that we might be able to do without in the future uh in some of our buildings So food is a supplies cost. So food for staff, food for students that we've purchased, we're trying to cut there as well. There are numerous
032areas we're trying to cut to not impact what you're talking about with like a a software. >> But for example, buying bus fuel as a as a purchase service or supply um fits in there, right? We have to pay for it. We'd rather 10,000 miles a day in yellow buses or electricity. We have to pay for that purchase service, right? >> Um so there's some things we cannot cut in this in this realm. >> Correct. So that's what I was wondering. Can you give an example of a purchase service that could be cut? Because all the ones that are coming to mind like the ones Dr. Buck just mentioned, we can't we can't not use, you know, bus fuel. >> So PD days and the number of subs we we create by PD days, that's
033something we can cut. >> Substitutes are great. >> So but substitutes for being sick. Obviously, we can't cut that. When you're sick, you're sick. Um but we can choose to have less professional development days where pull teachers out when you have sub for them. >> So professional development isn't written into the contracts. uh or the requirements by the state that they have to do a certain number of PD hours or whatever. >> We have to spend 1% of our um state foundation formula on professional development, but we far exceed 1% of our state funding um on professional development. >> Okay. Okay. I might have more questions later. Thanks. >> That was what I was mentioning before. Um we just I mentioned a lot of them there. Um, subscriptions. That's a good one about a purchase
034service. There are some purchase services that are subscriptions that we have and many of our buildings have been looking at trying to remove some of those subscriptions. They they've had they paid for. >> I'll give you an example. So, with our website, we have a service that we can use to send out newsletters, but then we also have a lot of buildings doing prescriptions for things like s'more. I used to use a s'more. I got rid of it because we already have the district's already paid for a vehicle for that. Why pay for another subscription? So those are kind of conversations and it's literally happening building by building and department by department with the leaders and as well as Dr. Herzel. >> You have to be very mindful that not every situation is the same.
035And I'll use some examples. Some of our elementary schools budgets are $15,000. >> Cutting 10% of that is $1,500 is going to really impact that small budget. Or some of our other school budgets as you get the secondary level, those can be hundreds of thousands of dollars. They can usually in some of those budgets where we can make some some cuts that and my question usually is is this still going to be able to allow you to meet the needs of your students and staff >> like by doing this and being fiscally responsible. Can we still meet the needs of our students and staff? And the vast majority of principles and department leaders have said yes, we can do this and we we should be doing this regularly to look at areas that we can
036cut when when it's necessary. What is not on our operating cuts up here is that we do look at when we have someone leave, can we uh collapse that position via attrition or not. Um so for this year, knowing that we were going to have Senate Bill 190 impact us, but didn't know how much. Um we cut 1.3 million out of our budget and salaries and staff. 42% of it was in this building. Um so over $500,000 are in this building. um we do that on a regular basis and we'll do that continuing throughout the spring as people um retire or or move to Utah with their spouse or whatever it might be. We'll say all right can we collapse this position or or no it's essential we got to keep this position. So there
037will be some cuts that way as well. >> Okay. So when we're talking about 10% you kind of split it into like the two big groups operating and and salaries and benefits. So 8 million increase in salaries and benefits. And then building and department, we're talking scale-wise, we're talking about the the 110 million that's sitting in the 2026 budget. Is that like on the scale that we're talking about? Not that not that number precisely because that's not this this year, but is that what we're talking about? Is you're looking at 10% of 100 million or >> the 10% is is actually on about 47 million. >> 47. Okay, that's what I was wondering. That looked like a really big number. I don't know why. >> It will not. No, I will not. No, >> we
038won't be able to make that big of an impact. And I and I don't even think we would hit 10% of the 47 million. I don't believe that that that is reasonable. >> So So 10% of 47 million is like 4.7 million. That's not going to offset the 8 million. So we're not there yet. Okay. Jumping ahead. >> Yeah. Because that 47 million includes electricity and bus fuel and things like that. Some of the bigger ticket items in there we can't cut. >> Okay. >> Yeah. We are attempting to make as many as many cuts reasonable cuts as we can in those areas. And that does include like I said buildings which are all of our schools and then our departments. So the departments here at SLC but also our departments like facilities that are
039not here purchasing that is offsite nutrition services etc. I have a question if I So what I'm hearing you say is we are going to attempt to um see what can least painfully be cut from the classroom experience first and foremost. So like if I need the cadaavver to dissect it in biology for first hour and I need another one for second hour, I'm going to still be able to buy that, right? Because I guess you can't do the same dissection twice. Okay, just because we actually had this conversation, a lead teacher one day, so I'm I'm channeling that. But in all honesty, there's some other things that um are maybe way outside the box of what we've thought of before that while one of them might not be a huge deal by the time
040we look at two or three of them, it could start to add up to that four million number that we're looking at without destroying the student. So, when will we maybe see an idea list of what some of this might be or will we or how how does that work on this side because I'm I'm very familiar with the other side of cutting. I'm just curious as to what that looks like here. >> Uh as far as like seeing an act, the impact of the cuts. So, we're too early in the process to see it now because we just started those meetings in February. The hope is to conclude our budget meetings with our our managers by by mid-March. So I would think a reasonable timeline to be able to at least show what the
041impact was budget for those departments versus budget next year would be in April. It would be a relatively reasonable time to be able to see that uh what the impact would be. We won't have all of our projections done for everything by April, but those department should all be done. >> So then do we think about things like uh I don't know deferring the purchase of u you know another set of uniforms. Are we at are we at that kind of stage here or >> I think that's post uh September. Uh if we agree let's find out where we are revenue wise when we set our tax rate. Um that's that's >> we've given some folks heads up and team Dr. Carlson said, you know, the first time in six years he's heard me say
042about potential of cuts, but we'll have to put together if if revenue is uh still in this situation um when October 1 hits, we're going to put in a process for six to eight months uh to do a deep dive and review and and select what things to cut. Um so that I think let's wait for that piece. >> Yeah, that's fine. And I'm not trying to be Debbie Downer. I was just trying to like get a a Yeah. Anyway. Okay. Thank you. Okay. So, just to clarify what you just said, you want to wait until the tax rate in September because you just feel like these are these estimates are too >> well if the board chooses to take back some other voluntary roll back that'll take care of some of this um or
043all of this. It just depends on the will of the board in September. And we we you can't vote on it now. So, you have to wait till September to vote on. So, we just have that unknown. So everyone everyone pretty much knows that either we make ourselves whole in September with tax rates uh or we move into cuts. That's that's but we all have time then we so when you think about the negative revenue and the positive increase in in expenditures based on salary growth that's a $12 million difference for next year. We could not do that multiple years in a row. Um we can do it one year but we cannot do it multiple years. So if that 12 million gets taken care of then okay um if it's not then we have
044to start cutting seriously cuts and it's not going to be cut s'mores at that point. It's going to be cutting it's going to be people um at that point. So >> thank you. >> So Dr. Buck already mentioned this and this is what the last slide really says. So FY27 projecting a revenue decrease of around $4 million. We know again this is all assuming this is all assuming Propsy is successful. Um, on the second bullet, the expenditure increase of $8 million based on salaries and benefits alone, trying to keep everything else as flat as possible in terms of spending. Now, I mentioned the entire presentation was that Prop C, assuming it passed. If Prop C did not, if that did not pass, you can just basically flip those numbers in the first two bullets, it's
045going to be an $8 million revenue decrease and a $4 million increase in salaries and benefits. So, it's still a 12 million gap. It makes no difference. Uh either way, the gap is the same. It's still $12 million. Um another piece there that I think is important is the third bullet, the tax credits that are probably one of the most impactful revenue pieces for next year. That is an FY27, 28, and 29 issue. It is not a one-year issue. That is going to be spread out over three fiscal years. So, we're going to see that impact for three years in a row. And then my last two bullets, and I think Dr. sort of mentioned this. Second to last, what we're currently doing and this this issue of the revenue decreasing like this and our
046expenditures increasing. This is not sustainable. We cannot continue to do this. Um the bottom bullet, the only way to to get us moving back the right direction where our fund balances are remaining stable uh or increasing even, we're going to have to have a revenue increase andor an expenditure decrease. some combination of those two have to occur in the very near future for us to be able to have a sustainable budget year. >> So, just going to give you we're we're very fortunate in a couple different ways. Some of our neighboring districts are hurting a lot more than us. So, the day before I started in 2020, our fund balances was 63 million. We built that up to June of 30th, June 30th, 2023, it built up to 81 million. So, we increased it by
047$18 million. And we've had to whittle away these last two years now three years counting this year because of be honest with you the overreaction of county assessor and thus we get withholdings. Right. So we we lost 4.9 billion uh from the formula because people won their appeals between when we set a tax rate in 23 and when they had to pay bills. So our calculations said they were going to pay it. They won their appeals then pay a lower bill. That carried over two years in a row. Then we've adjusted some for that but we can't adjust for all of it. Um, so we've gone now from 81 million down to 73 million and we're predicting predicting the end of this year be close to 70 million. It really kind of depends on what
048happens with state and if they fully fund or not the formula on here at the end. Um, so we went from 63 million in 2020 to maybe 70 million at the end of this year. Um, but 12 million whole if we don't do something in in September, that means we're in the 50 million upper 50 million range at the end of next year. We haven't been in the 50 million range since 2012 for an end of the year balance. Um so it's been a while. So grateful the first few years I was here we were able to build up uh the fund balance because it's helping us weather these storms. But we're now having a supertorm coming um with these tax credits of 9 million a year. Um so now we either got to uh
049take back our state leading uh uh voluntary roll back or we got to move into major cuts. >> I went back to a previous slide just to illustrate what Dr. was talking about a little bit. If you notice this this trend line that I I'm showing you again with a 12 million decrease next year, this gets this looks a whole lot different in the future. And the time of year that I am most concerned about is you can probably you can see it November. We hit our lowest point in the year in November. Our our concern is making sure we can meet payroll, pay the bills in December because we have to have enough of a fund balance left when December starts to care of all that because we will we we'll realize revenue from
050local no matter what it is we'll realize that in December, January, February and we'll build that balance back up. But we have to have enough to start with to get us through the very difficult months of November and December. So that is my biggest concern moving into next year and certainly the year after if there are no changes. Can you give a ballpark of I don't want to say worst case but if expenditures were to stay flat and in the in the non- salary and benefit area and we went up 8 million in the salary and benefit area and all these estimates were to come true what would that November number look like what would the balance what could the balance be >> that is we don't end of November balance is hard to predict
051is >> it was it 43 million this year but all it's not liquid so that's also part of was 43 in June or in November? >> November. >> Okay. >> He'll look it up. >> Give me one moment and I will look. >> Yeah, he'll look it up. But um but all of it, well, he's going to give you a number, but it all won't be liquid. And so what Chad has been working on this year is making sure we have as much of that able to be liquid in November of 2026 as possible. Um there are districts that sometimes have to borrow and so you does have to pay interest um to make that payroll on anticipated future taxes which you know you're going to get um because obviously we're ending the year with
052enough balance that we're going to meet you know our payments easy this month next month it's it's really that low point you got to worry about. >> Yeah. So end of November fund balance this year was in fund one and fund two 26,43,644 deduct 12 million from that then but really that 12 million will come after that because that 12 million mo 9 million of it or 7 whatever million of it is really county money. Um so we wouldn't expect to get it before November anyways. >> Yeah. You you wouldn't subtract it all from that actually. It would it would happen over over the course of the year and it would it would be less We didn't get the county revenue. We still we'll still have increased expenditures because if we increase salaries and benefits,
053the salaries and benefits costs from July through December are going to be hitting and they will be larger than this year. So, we'll see a fund balance reduction throughout that time. It's I do believe it to be sustainable uh currently, but we're going to have to have a course correction at some point in time to be able to continue to be stable moving forward. To give you a comparison point in FY25, our nove end of November fund balance was 35,790,000. So we we saw a large reduction in fund balance from last year to this year uh in the month of November, which sort of coincides with what you see on the screen. >> Thank you. Um, I know this question isn't going to address a $12 million cap, but um, is the is the district
054looking at um, any special programs grants like to to maybe backfill some of the title funds we're losing? Anything like that? Are we looking at any significant >> The biggest piece of that is moving from our our uh, title one prek to our prek program because there is funding there. So, we couldn't do that this year because it literally found out in late July and we already had everybody there and so um but we are doing that for next year. So, prek is going from nine classrooms to 12 classrooms and we have some people moving from um Great Beginnings uh Paradise Park over to Prairie View Elementary which means we have to move online education out of Prairie View to create the classroom. So, they're going to Long View Farm for a couple years. Um
055and that will thus create a funding source for that. So, that's that's a significant portion of of what we're trying to do to cut that piece. um you know so we have some other minor moves that are doing small things but that's the big ticket dollar item >> and that's a government grant or a or a nonprofit grant. >> Well, it's either one of two things. So either it's tuition based or the last two years we've gotten a grant and they they're signaling we'll probably get it again that then it's paid parents pay anything because it's paid for by a state level grant. >> So we think we're going to get the state level grant again. We won't know that till June. Um but if if not parents are going to be paying tuition. Yeah,
056I remember when Dr. Sean presented that several months ago, the the grant amount. So, are we looking at any are there any other opportunities out there because every district is hurting right now, right? So, I mean, is the landscape for grants pretty thin these days? >> It's always been thin for us. The biggest place we have grants is in career technical education and usually matching grants and that's Shaina Booth's world. Um, but as far as things we use our title funds on, no. And the vast majority of it is title one. Um, so it's people helping kids. >> Thank you. >> Any other questions on any part of the budget presentation FY26 or next year? >> Well, I hope in the very near future I can give you a positive budget update. It has not
057been positive so far in terms of where we're at. Uh, we do have the reserves to be able to move us forward. That that that is a positive. We're in very tough times. We have reserves to move us forward and we also have options as well that we can consider moving into FY27 and beyond. That is also a positive. >> I've got one more one more question. Sorry. Um uh you talked very briefly at the very beginning of the presentation about um about what all these uh let me get the words right so I don't say it wrong. um the uh the debt service um uh implication for the tax credits. Um can you talk a little bit more about that in terms of why it I mean I get I've learned from you guys
058that that it doesn't really affect us but what how could it affect us in the future or are we just good? >> So it's 1.6 million. It's on slide 15. Um so 1.6 six million a year for the next three years is what our estimate. And by the way, we're hoping that's too high because if you moved out of the county or you expired since 23 or 24, obviously you're not getting tax credit, right? So if you moved to Cass County or you moved to Florida, um you wouldn't be tax credit because it's a credit on your Jackson County tax bill. Um so that we hope this is this is if every person stayed and didn't move. Um it just means we pay our debt off a little bit slower which means in 2030 we'll
059borrow we can borrow about 10 million less than the 2030 bond is the big thing. If that number got bigger it could impact our payment schedules. Right now it is not. It's just we're slow enough that we'll have uh a little bit more debt on books when 2030 is and we'll be able to borrow a little bit less money with bonds. >> Right. So it could affect us out in 2030. >> Correct. And of course, that's assuming uh I think it's 3% new construction growth or AV growth with new construction as well, but that could also could be low. That could be higher. So, we may see more. I mean, you know, Discovery Park keeps getting built and if it's all open by January 1st of 2030, that number could be bigger again. So, >>
060thank you. >> So, we we began the year with a $12 million balance in our debt service fund and we've added to that with revenue. We'll expend estimating about 29 million expended there. So we should also end the year with a a balance there to help us move forward if we receive less revenue. Dr. Buck's correct we'll structure the schedule uh for repayment of the bonds to be a little bit slower. That will cause us to be able to borrow a little bit less. But overall I do feel like we are okay in debt service. When I say okay I mean keeping our 87 cent le as it is. That's That's what I mean. We that that is a a levy that we could change. We we've committed to not changing it and keeping it
061there and we should be fine. >> So, I want to point out another thing a year past this. So, FY28, we do have a small portion of our district in Cass County and they are um based on the special session bill that we passed a 0% AV growth county. Now, there's a big lawsuit that we're supposed to hear the judgment here pretty soon whether that's legal or not. Legislators don't believe it's legal. They said, "Yeah, let's put in there, but we we don't think it's going to hold muster with courts." Um, but if that's the case, FY28 will have an impact on on our budget from that that part of our our population. It's not a huge percent of our district, but it is enough that we would notice that. >> Thank you. >> Anybody
062else? I I just want to say that many of us I was an administrator in 089 when the economy crashed and we had negative inflation which you know this is not negative inflation times um we we did okay right we had some pain we cut 6% of our budget and and we move forward um what's interesting and frustrating about this one it's not the economy crashing it's it's um it's it's government choices so um our our inflation rate is you know still going up and we're still have our goods are still costing more money. So, that's what's really hard about this um this time is that it's been choices above our level um that's causing this. >> Thank you. Um anybody? Thank you, Dr. Herzog. I appreciate your uh your time this evening. >> Absolutely.
063>> All right. I think we are officially done with this work session. We will adjourn and go upstairs.