001e e e that is awesome me that time crazy real quick all right good evening everybody um like to call to order this um board meeting from Central School District um designation of emergency rear of the room and then one on the left and right um roll please here to flag flag of the United States of America and to the repu stands one nation under God indivisible with liberty and justice for all Dr mission and vision tties we provide eal engaging inspiring bistic experiences that support success and empowerment for students families in community and diverse and Chang world and our vision is to go education for every individual is inspired to be able to reach their gos okay thank you um so moving on this is a um this meeting is called for the purpose
002of uh school budget and financial information um at this time um public recognition so if there's anybody in the audience that would like to speak now is the time okay Richard thank you two okay okay comprehensive a now the last time was quite a digest a lot more this time so walk through it start the SL I think we got it perfect there we go well thank you very much we've got a lot of work done here we're going to try and take you through kind of a little bit of the background of the district finances what we're seeing going forward so far as you build your current uh budget into next year's budget uh and we're going to tell you a little bit about some things that we would recommend that you start thinking
003about so as I did last time and the answer of time this is the same list I gave you last time of all the things we would go over and we've gone over every one of these every one of these exhausted so I'd like to also thank ad Dan and Michelle I don't see Michelle here but uh given us a lot of time and effort to dig through all the records of the school district but uh let's take a look at reserves first so I'm going to bring some popups so we can talk about pieces at the time of these slides so these are your your current reserves when we went over them last time a little bit I told talk to you about every single one of your reserves and I think my my
004major part was is that Point still still out yeah keep we keep going uh so that's fine is not put any more money in for the rest of your life and all those associated with want to Avid de the idea here is this is only for person vation days from the district employ liability the middle next one is I've got a whole list of capital reserves have res construction res23 milon keep in how that works when you start start a capital reserve time you do vo approv the the proposition four part first first part is the purp Reserve you notice down page below there I've got different purposes different equip forom Furniture technology comb and Technic and buses reserves for many things second thing 5 years 15 years now the reason you do that cuz
005it's evidence of long range planning that's what we're talking about instead of building an annual budget only start looking ahead and taking a look at possible costs going forward and then you could actually see basically where you want to go how much money you want to save and why you want to save it after you figure out period of time you should also figure out how much the reserve will be for other words what's the sum total of all the deposits that could be made into the reserve during the life of the reserve now how do you get the length of time and the the amount figured out easy if it's we'll say for instance it was equipment replacement Reserve I would say to you if you were thinking of five or 10 years why
006don't you had up all the equipment that you've got to buy in the next 5 10 years that's your amount that's your date so what happens is I think most school districts they simply all of a sudden discover that they need to buy a new lawn more they discover they need to buy a new truck but we don't want to discover anything long range planning is thinking about it ahead of time now the problem we have when we discover these things is they really hurt the budget for instance a five six years ago you could pick up a pickup truck $30 $40,000 State contract I bought three in the last couple of months for 75 to 85,000 each so they're getting expensive same thing with dump trucks snow plows snow plow equipment uh Lawn Equipment
007uh equipment for tur S Equipment for sidewalks snow blowers all the big tractor items they're getting very very expensive so what you want to do is like plan this out how much you want to buy so now we've got the purpose oh classroom Furniture let me not forget that many times the school district will do a capital project and during it they'll buy classroom Furniture like maybe these tables I would never buy tables chairs desks cafeteria tables and a capital project because they are non a eligible you're going to buy the tables for 15 years plus interest you could save up the money in a separate reserve and during the capital project buy the tables cash and save 15 15 years worth of interest on the dates it all adds up so the idea here
008is to think ahead that's what we talk talk about long range planning the other thing too is the fourth part has got to be where's the money coming from the money comes from a number of places One Fund balance if you exceeded the 4% limit you do if you would have a voter approved capital reserve this coming may you can simply the next board me transfer that money right into the reserve it can come from um state aid state for instance you were getting state aid on a capital project you dump some of that money into the reserve and another place I think you can get it from is a crude interest so what happens here now school districts have money and high interest bearing accounts so you can get a good Chun your interest
009on this if you put a good chunk of money in a in a capital reserve it can a crew interest and build up so let's just say it started at 10 million 10year Reserve could you ever have more than 10 million in it the answer is yes as long as you did not transfer it in there it only came in through interest earnings above the 10 million okay now you do not have to put the money in all at once if it's a 10-year Reserve you got 10 years only not only to fund it but to use it so you could put 5 million in and then decide to do a capital project and use three of it leaving two in but then you'd have more time to put more money until you got the
01010 million so it doesn't have to be deposited all at once it's a long range plan on what you want to do same thing with capital projects you had a building condition survey correct right all about your buildings so it tells you basically what needs to be repaired so the question I would have is okay so when are you going to do this what's your priorities what are the lists okay now I'm not your financial advisor I'm just doing this project but if I was I'd be asking that like right now because I want to plan ahead because if you have a capital reserve that money is a down payment against the capital project so if you did a $20 million project and you had 5 million capital reserve you only have to borrow 15
011but you're going to get you're going to get Aid on the entire $20 million project as long as it is aidable so there's a number of ways to look at all this so there's a lot going on with reserves that you should really consider long term now to spend the money you also have to have voter approval now to me it sounds everybody a lot of board members go wow gee voter approval to started it's a lot of work voter approval to spend it but I think that's the glory of it the glory of it is you keep Faith with the public you're not only asking him can I save it you're telling him what it's for how you can save it how you're going to get the money and how you want to spend
012it and then you can justify how to spend it so to me it's perfect perfect transparency and really keeping keeping in tune with the public the voters the residents so that's certainly important those types of reserves now there's also a reserve for repair which you are not eligible for but hypothetically a lot of districts are let's just say you had multiple school buildings and because of declining enrollment you decided to collapse the buildings into a smaller number so now you have an empty building what do you do with the building in many bases you sell it a lot of people make condos out them Apartments all kinds of things so what happens then well if you owe money on that building you take the proceeds from the sale other words how much you got for
013the sale of the building you put it in that reserve and you use it over time to absolve yourself of the debt because you still owe money on the building so it makes sense then there's another one there the reserve for debt or that's that's basically what that could be used your repair Reserve by the way isn't very good you don't have one and if you keep up on capital projects you shouldn't need a big one I tell districts if you put 20 to 50,000 in it's more than enough repairs are non aable so if the roof up here is leaking and you repair it you cannot get State support but if you replace it during a capital project they will help you pay for it so there's a difference you got to think ahead
014so what's the life of this of this roof that's what you start thinking about and the idea is to get a schedule of roof replac replacements for all the buildings so that you don't want to replace all the roofs at once because whoever succeeds you when we're all you know pushing up daisies probably 25 years from now somebody's going to have to replace all the roofs again at once it'll cost a fortune so the idea is plan ahead do everything in increments and that's what I'd suggest now as we look we've got a nice total here now here's what I like about these reserves if you notice we started at 1.58 9 million and at the end of this little piece I'm showing you now is 12 6 so somebody had their thinking cap on
015in the district which kudos to the district you have had over the last 3 years we say 21 to 24 huge amounts of federal funds available and that's the time to build fund balances and build up those reserves and you have but there's something else you have you actually have more cash than it's in reserves if you notice the section I'm showing right down here we've got the numbers in red over on the right 1.77 2 million you're inv violation of real property tax law 1318 if the controller comes in he's going to want you to return that money from once you got it and that's that would not be helpful for your finances at all that money should probably be up on top in those reserves someplace so you do have money that you
016can access pretty quickly to start any one of those Capital reserves or further fund any of the other reserves you want but that money is supposed to be up on top in those reserves you're only allowed to keep 4% of the next year Year's budget and you can see you're over by 1772 okay now I must tell you that you're not the only District that's in this little predicament the controller will not like it but I see an opportunity uh to me I think you could remedy this situation probably by June 30 okay if you work hard the next thing is capital project long-term planning as I mentioned in vehicle purchase and Technology there's nothing in there that tells me that you've done any longrange planning I think you're doing budgets year to year just
017hoping for the best uh as as you go which is okay too but it really isn't as safe as it could be none of this is going to get less expensive capital projects are escalating rapidly uh the price of Labor I don't think people understand the economics of inflation with regard to Capital Improvements uh maybe the price of eggs may come down once a L's gone perhaps but I don't think the price of construction's gone down at all because the trend is is once they get a higher price it stays up there has anybody ever seen one of the big car makers all a sudden reduce all their prices back to like a previous year it just doesn't happen so that's going to be the same with capital projects the other thing too is your
018Capital project in this reserve section is 37% of all the reserves which is another reason to take that money that's above the 4% and move it to the top but don't just move it anywhere come up with a plan okay come up with a plan on where you want to do with it now if we look going forward when I was here last time basically it was under my understanding at the time that your budget was going to use some ERS and TRS to balance your budget in the current school year that will not be needed so if you notice I've got all those reserves trending forward without any any decreases and there at all I think we've Penny pinched our way toward the end of this year and I think we're going to be
019in good shape the key thing is you will not have to make those transfers and believe me when I saw that you're were going to make those transfers I really was very unhappy because you really want to avoid that you only want to make those transfers when it's absolutely necessary for the survival of the district that's your rainy day fund and it better be raining when you use it that's the whole idea make sense so that is no longer going to be used and that's no longer going to be used so that is good news you'll have other funds remember that the budget is in what they call the general fund your upk money goes into the special Aid fund the people when you eat lunch and breakfast and all that that goes into the
020school lunch fund okay and you have a school lunch fund here and it's doing very very well it's at the bottom of the page and it's supposed to be like that but sooner or later you will get a letter from the state education department nutrition division telling you you have excess fund balance and you're going to need that to use that money somewhere in your nutrition uh cafeteria school lunch program so that if it hasn't arrived yet it will be coming so just keep that in mind because they don't like you that big fund balances there all right the next thing is your debt service fund is in green Now The Debt Service fund is a is a handy fund but there's something weird going on with your debt service fund if you'll notice underneath
021it there's blue numbers which means it's going up a Debt Service fund by definition is always supposed to go down okay so a Debt Service fund where's that money come from well I'm not sure where you're came from but here's where they usually come from a Debt Service fund money comes from a couple places one let's just say you did a $10 million project you borrowed the whole 10 million but you only spent 9.5 million on the project so now you have half a million dollars and borrowed money you cannot give it back once you borrow it in a bond you cannot give it back so you put it into that re that little fund and then you use it to absolve yourself of debt for that Capital project each year 3 to 5 years
022some people stretch it out a little longer the controller likes 3 to 5 years um so that's that's how money gets in there the second way it gets in there let's just say you were bidding on a capital project and I said okay so I'm your financial adviser I said listen we got four bids and they're exactly the same they're all exactly 4% period for this right period period of time the right amount of money everything except one person said this yeah mine's 4% like everybody else's but redefined print mine says I will give you a premium of $30,000 if you accept my bid in English that means this you could take I'll get you set my bid and I will actually hand you a check for $30,000 that makes my bit better than everybody
023else's because now the net interest cost is now lower because you're going to take that 30,000 and use it in your first payment so therefore the cost of the district would be lower making them the winning bidder that money that 30,000 would go into that Debt Service fund and be used to offset thatb over the next two to three years it's called a premium there's a third way it gets in there a third way it gets in there is acude interest because all these money in your District should all be in in high interest varing accounts which it is by the way and should be pro-rated the interest to all the funds right and all the reserves so it can ACR interest there's a Fourth Way gets in there by mistake somebody puts money in
024there and they're not supposed to most of the time your Auditors catch you I see no evidence that was ever done at all but the key thing is it's supposed to be used every year the plus about it being used every year is it helps decrease your debt service in other words your debt makes sense right the bad news is it actually deplete your taxx Gap we're going to do a little talk on a tax Gap today the last thing you want to do is actually have your tax capap depressed if you can help it I know you're all board members and don't want to tax any more than you have to but we're going to talk about that before I leave and we got to talk about how that works because the tax cap
025is trickier than it looks so let's just save that conversation for a little later okay next let's talk about state aid I went over to state aid last time I was here but let's just kind of do it again for a quick refresh pressure because there's a lot on the page the first one I want to go over and I'm only going to do half it at a time because we going to look at things in pieces okay like where we are versus where we're going I think that's the way we got to look at everything so the first one's Foundation a and if you'll notice in the 2324 school year you got 17432 you'll see it's wrapped there on top which was an $876,000 increase or 5.3% increase in your foundation day you waited
02617 years to get that money I don't know if you're aware of this but the state has not paid in full you notice it says on there full full did not pay a district its full amount for 17 years I know because I've been arguing with the legislature for 17 years over so the thing is you finally got paid now I don't want you to think you got fully paid it says paid in full but you were paid in full for just that year the prior 16 years you weren't paid in full you're still not paid the for so I borrow a $100 from you promise to pay you $10 a week at the end of the 10 week I hand you 10 bucks I say it we good that's how it worked and where'
027the money come from to pay all these districts off Federal money remember Co money flew into the states they used to do this and that's because organizations I'm also executive director State wide School Finance Consortium we were suing the governor so what happens is she would if we dropped our suits she would pay everybody so we dropped our suits okay so she paid so you got that big bump there the next part I think you got oh you got high tax Aid $342,000 I wouldn't want anybody to think here you are eligible for high tax Aid anyway yes we have high taxes that's why we get it that is not true that Aid was created 15 years ago that a was created 15 years ago when it was created what they found out was it
028wasn't distributed equitably so what the legislature did is rather than take it back from anyone they simply kept the same amount for 15 years so if you were to go back in your books 15 years ago you would see that exact same amount there they have not recalculated it for any District in the state of New York because they don't want to have to take money away just in case you're no longer eligible but you get it so that's good okay then the next group are what they call expense driven AIDS so it's Transportation bill building bosies uh public and private excess cost Aid so let's start with Transportation Transportation Aid always vacillates as do all the rest of them by the way they vacillate sometimes a lot sometimes a little what determines Transportation Aid
029one is your property values your property values do a lot to determine your transportation rate there's a big formula it's two or three pages long but it works great uh but the thing is is that your your property values mostly the other thing is how many pupil miles do you drive now some of it's allowable pupil miles and some of it isn't allowable pupil miles so there's all kinds of definitions how many people de employ in the system if you have contract buing right how much is the contract what is it for so there's a whole formula for this thing and you'll only get a partial reimbursement for your total cost so it depends upon maybe you know you take the kids to the sectionals up in Albany or States up in Albany or something
030maybe have additional cost they allow that boom you get a little more Aid that year or you buy or you buy or Transportation routes right or something like that so it vas lates up and down the next one is um is uh building Aid building Aid moves around based on your Deb service schedule and all your capital projects right now your building Aid is actually streaming out about 15 years just like your debt service all your debt service is on a 15E schedule usually if you building building that building would be on a 30-year schedule if you do a addition to a building and the addition cost more than a renovation it's on a 20-year schedule so what happens here is most of your 15year schedules that means this that means over the next 15
031years you'll be paying off some of that debt which also means that aid for that debt will cease to exist this reaks havoc on the capital PR on on excuse me on the tax C so what districts normally do is this they look and they see okay when am I having a debt drop off it's going to drop off my Aid now if I could do a project that the new debt would be equal to the debt that's falling off I can stabilize the tax cap and I can probably advertise that this Capital project perhaps there's no increase in taxes associated with it and that's how you keep it stable if you miss that drop off absent any savings you made from a reserve or huge cash down payment you will have a tax increase
032because of the capital project your tax cap history tells me this has not been planned very well here it has been not planned at all very well here and I'll be able to demonstrate that for you when we get there the next one is Bose's a now Bose's a now you think of both these first thing you think of is probably students with special needs programs and Career and Technical education well that's not true these students with special needs will not be paid in OC's Aid as has nothing to do with both se's a it's in Foundation Aid students with special needs are in Foundation Aid formul and they're also in the next two categories public and private excess cost those two next ones down there because those are for high needs high cost specialed
033kids so let's just go through the both C mostly it's CTE Career and Technical education all right lot it's also for staff development could be admin could be uh uh different types of programs that you may enter in at bosis so there's a it could be technology that you buy through bosis uh it could be any leasing that you do through bosis like for copers could be maintenance for your Tech you know that type of thing repair services so there's are tons of things that come under the Bose's umbrella and that's what Bose A is for interesting about Bose's and transportation Aid to put the two together you pay the money up front for whatever you're going to do and the payments start the year afterwards and bosies the Bose Aid comes in the year
034after you buy the service in transportation Aid it comes in over 5 years after you claim the aid for the bus exactly or Transportation so it takes time the next one is public and private excess cost a those next too high cost special needs children so what this means is let's just say for instance for instance when I was a Bose superintendent I had a very huge Bose I had I probably I probably have a four or five billion buildings per Center and had four five centers so we covered 1800 square miles 48,000 kids so we had a whole building filled with kids on the first floor with wheelchairs fed through tubes and had their own nurse you picturing this okay I mean like severely disabled all right so those programs are very expensive as
035you can imagine right so what happens here is there's a special eight category for high cost kids could be also I had another four kids who are who are high in the autism spectrum no communication skills did not talk you know barely walked barely looked at anybody very very difficult very hard but but the thing is is obviously these are the kids that are most needy in every school system so what happens they're high cost too your school district basically has a a formula and what happens is you have to pay the first tens of thousands and I mean a lot of the for of the cost after the B so you reach a threshold every District every year has a different threshold there's a formula for it once you reach that threshold then you
036get a percentage above that threshold back so in other words let's just take a quick look so if you're getting Public Access cost dat of 582,000 you could be easily spending $750 $800,000 to get it does everybody understand what I'm getting it these programs while they're for the neediest kids and educationally the most needy our heart goes out to them they do the cost is high so it does have an impact on budgets overall and we're starting to see more of this across New York state that's why we have actually asked I've Lobby actually to have the legislature re and the education enironment review what they call the cost screens other words those thresholds and percentages to increase them because what happens is it's driving districts C to be absolutely honest with you it's having
037a we're having a hard time other words we want to keep up we have I don't know if you're aware of this but there's Federal as well as state regulations and all this and so what happens is to meet those regulations it's very expensive and I think the State education department wants to increase the reimbursements but cannot do it without legislative and NE govern approving they haven't moved probably over a decade and a half so I mean it's like you know Ma we buying a fort pinto and versus today's car and give me a break now the private access cost a would be more like schools for the blind schools for the de private access cost a it's funny because there's a difference in the way the cost screens work the reimbursements the the private
038is actually more B is less expensive for the district dollar for dollar than is the public which is strange but I think it's the key the school with the LLY the schools that going so that's right all right now you've got software Library textbook and Hardware a next and these pop around a little bit because these are based on how many kids you have because they're paid per student right now we've lobbied the legislature to try and increase some of these and I think we've got the Senate and the assembly thinking about increasing Library a so that would be very very helpful so it's it's just an amount for student one one proposal is go up to $11.50 and the other proposal also is going up to $11.33 so you can see they're really giving
039it all they got so uh but at least it's an increase but you'll notice they're not big eight categories and we always want districts to use all those eight categories they have to prove that they're buying those things in order to get that a then the next thing down here oops let me skip down to the orange one is the universal prek Universal prek this money is supposed to be seed money to help you start the program it's not supposed to function the whole program there's very few school districts I work with in in New York state that actually this money is enough to run the program sometimes when you work with a private entity sometimes it works out that way but it's very difficult in public education because there's pension costs you know what
040I mean there's there's a whole bunch of other things associated with public schools so it's supposed to be seed money that money is going to be subtracted from the total you look down at the bottom of the page you'll actually see it says total without upk that's because that money goes into the special Aid fund it does not go into your budgeted general fund it's a special fund so in other words it doesn't really run your school district per se does that make sense and you're supposed to tap that money now can you get all the money every year the answer is no they tell you what is the maximum you're eligible for if you hit all the rules types of classes class sizes number of sections kids slots you know to fill kids seats
041and things like this you have there's a whole bunch of regulations and there's different tiers of payment so what happens is that's sometimes available the problem school districts have with that one is sometimes they don't have enough room to fill all the slots in other words you got to have the rooms the physical rooms you have to have the staff you have to have the resources because whatever goes past that number if you fill all the slots it's on your dime no reimbursement right right out of the budget obviously an excellent educational program to have supplemental public excess cost Aid this was a another a go about 15 years ago that they went it's gone away they keep paying everybody in your case you get a whopping $617 a year for the last 15 years
042for no reason at all because they don't know what to do with it because they made an error when the calculations came out some districts got thousands so they didn't want to take any money away and then last but not least I've got the total without upk which is really what we're after then if you'll notice I'm adding on now the rest of the story and if you look at the rest of the story you'll see the difference in 2425 let's go back up to Foundation Aid was Zero notice you've got no increase in Foundation a it's zero now if you notice Foundation Aid is the largest number on the page notice that it is the biggest number you're heavily dependent on that Aid category right that's like what they call unrestricted Aid ger money
043do is do it with it as you as you see F the problem is when you get no increase it automatically curtails your reeven revenues during a year when your expenses continue to escalate it's like the boss said listen don't raise for everybody this year but I'll think about it next year well you go okay I guess you can't do anything about it but your cost continue to estimate and that's really the situation of the district in a practical sense now for next year it's looking somewhere around about 2.5% now why would all of a sudden go up well there's a couple reasons the the run we're using the run or the state aid data that we're using in this example is What's called the executive uh proposal run this is the Run by the
044governor in state of New York she wants this to be the budget so she said this is what I want to do with Foundation Aid so in your case it's going up 2.5% why would it all of a sudden go from zero to 2.5 I believe there's two reasons one it's an election year State a tends to be more robust in an election year now here's the interesting fact you've heard of The rockfeller Institute the study okay she charged the study with trying to take money away from districts that were safe harmless in other words didn't get Aid last year so she had them come up with a proposal to do it as soon as they published how to do it she within an hour because I'm because I get this stuff I within an
045hour she put out her news release saying she was no longer interested in that but I think it's because it's an election year she didn't want to have legislators or hers sign a bill taking money away from districts like yours so she made it so what happens is that's one factor the other factor is she changed three parts of the formula two affect you one is the census data in the foundation a formula it's 45 pages of explanation and algebra it's just what happens is they use the 2,000 census to determine Community poverty the 2,000 census is 2 years old there was no political will to change it everybody was afraid of what would happen so finally I think most of us that Lobby these guys they fell over the cliff so we're glad so
046they replaced it with something known as the small area income poverty estimate technical name for updated census so now your community looks poorer than it did in 2000 I think that help you get more Aid okay Rel now it's relative right everybody could be making more money but you're poor relative to everyone else okay the second thing she did is what they call economically disadvantaged remember how you used to count account of kids run free and reduced price lunch right then you go to a cep program comprehensive eligibility program where everybody gets breakfast and lunch okay what happens was then parents did not turn in the forms to qualify you for a poverty measure known as free and reduced price lunch that term is written into law she's actually going to cross that out and
047put in a term called economically disadvantaged so now she's going to look in your community find out kids are Community eligibility for uh food stamps heat uh heating program uh you know Medicaid reimbursements things like this so she's expanded the definition of poverty so it's helped many rural schools so those two have helped rural schools all over you too have to be beneficiary as well so it's going up 2.5 the legislature wants to make sure everybody gets around 2.9 to 3% so we'll see how this fares out now remember the budget's supposed to be passed by April 1 but last couple years not on time so we don't know when this will be we're hopeful that maybe you can get a couple more bucks out of this if the legislature wins this argument now for
048the next three years you'll know it's got 2% down the bottom of the page because I really don't know what's going to happen after her election year but I do tend to find out that there are legis late of election years and they don't want to take any money away either so I'm going to put in 2% to see how it paars out with a long range plan is if you got this small increase but if you'll notice look at the size of the increase it's 433 excuse me it's 357 364,000 you can see it in the orange on the top so it's not like a Monumental amount based on the size of your school district in your budget for Transportation uh building 's public and private excess cost C I've actually kept them running
049an automatic pilot except for building Aid and you'll see you're going to have a little drop in building Aid in the 26 27 year which may be very sad because we really would never want to see that because what we should probably been doing is a year or two ago of planning a capital project to make sure that did not happen because that's going to be a depressor on your tax cap right when you need more Revenue so um there might be ways around that but I'm not your financial advisor I suggest you talk to them see if they can find a way out for you but I think that's something we could have been considered that's why I like the long range planning um software and Library materials I kept going the same thing
050and because everything else is pretty much an automatic pilot the one we really worry about is foundation a because it's so valuable now the other thing too is this is based on the executive budget includes that safe I told you about saip for census economically disadvantaged instead of tripple fre of reduced price lunch and but uh updated puil accounts there's the other thing here's the thing you got to keep in mind if you ask me what our foundation is going to be I have no idea this is the latest here's why the district submits data in October based on what they know about their student population they that creates what they call a November run they run all the formulas based on that data then what happens is they submit more data in January updated
051data but with that data goes your beds in other words your actual real enrollment for bed's day I don't know if you're familiar with that it's an actual you account every kid and their demographic you hand it in it's the official record District then they update that run but they update it based on the current formulas what the governor did is she took the first run changed part of the formulas and ran different numbers so we have three different sets of numbers okay so uh they vary a little bit but I I think you're going to come out on top by the time this is done with Foundation here so just out of curiosity once the governor and legislators pass the budget right argument is April 1st when when you District usually see the aid
052run theun usually wi in a couple days a day or two usually they're getting better at getting it to us uh and so that that's what I'll be however that still won't be your Aid that'll be the aid then because then there's going to be a may run and it'll be a June run then there'll be a new November run and then there will know what you're but we'll have a good idea yeah you got to keep in mind something uh every time your District submits any piece of data changing student populations you know kids going to this program that program different demographics occur and so on and uh what happens they constantly update the F constantly it's constantly updating so that's part of the Dilemma but it usually doesn't vary once we get to
053April or excuse me yeah once we get to April Governor's budget that's the best one okay now let's try some scenarios so long range planning is really a research question okay and so I like the research so here we go we're going to do a little research question so what we're going to do is I've got some on the top I've got some assumptions estimates for tax levy State cap at 26 2026 and thereafter got a question mark so you can decide what you're going to do but I'm going to suggest right off the bat without any any qualifications you get to that cap and you state at that cap for the rest of your life that's my going to be my suggestion I think I can prove l uh state aid will be a
054slight increase in Foundation Aid which I already talked about Transportation Aid will be stable your building Aid will follow that debt service schedule which means it's going to go down all right then for expenditures we're going to follow your contractual obligations as we know them now we're going to no notable changes in staff pattern compared to what they are now stable ERS and TRS increase cost no it's that ERS and TRS are the pension systems remember I told you I had a study that and the reason I'm studying is because pension systems are really kind of an interesting phenomenon first of all you have people with different tiers in each pension system the TRS for the teachers certified staff you know be principals dancing you know that type of thing and ERS is for like
055basically everybody else not- certified staff the ERS is going up 16% the TRS is going down a little bit but the TRS people make more money than the ERS so there's a lot of moving Parts here but even if this the the pension system that they were the what the the premium they're going to use that rate stayed exactly the same your cost will automatically go up because the rate will be multiplied times people's salaries and the salaries are going up unless there are now picture I'm going to say unless there are less salaries we understanding otherwise it's going up okay all right so we got to keep an eye on that next we got a a top health insurance escalation health insurance is starting to be a real issue I'll show you in a
056second so let's just kind of do this we'll go through the little boxes I've got for you here so what we're going to do is we're going to go for in 20 2526 we're going to go with the cap 3.43 and I put 3.25 across now that doesn't mean that's the cap and know it's down at the bottom in red I got a little disclaimer we don't know what your cap is we don't know what inflation will be we don't know what the growth index will be so we there's a couple things we don't know so we can't actually calculate it but here's the research test can this District survive based on what we know's going to happen to their costs if taxes stay at the rates I just put in blue everybody get what
057I'm trying to do so that's the test all right so what we've got here then would be a difference in taxes over the 25 to 30 year and remember how state aid is done everyone 25 means 24 25 school year right so in the parment of of uh School District Finance the date given is June of that year right so it's the end of the year so going from the 2425 year to the 2930 year you see an increase using those blue rates about $8 million to 17.5% everybody with me okay now the the pilot does tend to move around a little bit but you got a real small pilot okay I've got districts that have millions of dollars in pilots and they wish they didn't but they do the pilots crush your tax cab
058going over that a few minutes but the idea is I got your state aid here from that previous page of state aid okay so we're on the same page Federal Medicaid now your Medicaid's going from 90 to 200 why you'll notice see that if you look at the first two years and that's because we're trying to make it a little more accurate the district was really kind of underestimating it it's closer to 200 so we're trying to get a little better budgeting here does that make sense a little bit now will it stay at 200 forever can't tell we hope so it depends upon who you have for students and who's eligible for those programs right so that's that's how it works so the next thing is inter fund transfers and you'll see it goes
059124 120 and down to 25,000 this is really moving some of that money out of that Debt Service fund so you can say you're moving it does everybody understand what I'm doing here okay so at least you're going to make an effort now whether you're move it or not I don't know but you're going to make an effort okay that's we we want an effort okay the next one is other revenues now look at the other revenues 1.3 1.7 2.9 wow and this is because your District turned all the money into high interest bearing accounts so what you your inter business official went and checked out some of the biggest high interest bearing accounts available in New York state that are protected and then went to your bank and said can you match these and
060if the bank matched them that's where you put the money so you made the best bank to the buck this year so now if we can keep that going fine now we don't know what's going to happen to the Federal Reserve of course so this one line is kind of hoping against hope that things keep going for us because you got a good good chunk of cash but you know what this line could decline over time but let's just see what happens even if we can keep this line up there let's just see if that's going to still help us so what I do here is now I've got the total revenues and if you'll notice between the 25 year and the 30 year it's going up 10, 383 or 14% everybody see how it
061works okay now next page just follow along cuz this is a big page a lot on here all right so just don't get lost in this one this is going to be real important okay here we go the test at the end honest to God is really hard so I just be careful here we go so this one here I brought over the revenue so you don't have to keep flipping back and forth right I'm a teacher so I'm trying to make it easier this right here because open book you know the test it's only 45 pages but you'll get through it here we go so now let's look at the expenses but let's go through it in pieces now for some of you might be new some of you might be experienced but you
062have never experienced the uniform system of account codes like I have so I I had to to the city of Rochester and city of Syracuse I had a I had to work my way through $900 Million worth of codes in in a couple months believe me it's a arous test so I made it real simple for you salaries and everything but salaries salaries other we're not going to count paper clips we got to know where where the real money is so here we go General support salaries who the heck are the salaries and general support first of all it's the superintendent's office including the superintendent so anybody works from the superintendent's office it's the entire business office and all the people work there account payable payroll anybody who works in the business office but a
063big part of it is operations maintenance groundskeeping all that kind of stuff cleaners custodians maintenance mechanics people work outside all those folks that work the nights the days you know put cleaners custodians they're all in there so those are a huge bulk of the salaries in rural school districts all right so that's who's in there so that's General support think of it as the infrastructure for the district are we good now what's an other other is easy heat light electricity think of it as utilities okay but there's something else in other could be maybe your school attorney another but also there's both these administrative costs and there's where the tech is sometimes bought for school districts in the other okay in the other category for bosies so there's a whole bunch but it's also the
064wax for the floor the toilet paper the paper towels it's uh you know it's having a couple extra faucets on hand everybody understand what I'm getting it's everything for those types of things right it could also be the purchase of equipment like maybe a lawnmower or a dump truck or a truck or something all those for those of you who study this be the 1600 codes all right now instructions next you'll notice it's the biggest number in the page and it's supposed to be the biggest number in the page it's the purpose of the school district all right instruction this starts who's in instruction starts off in the principles it doesn't start off with the teacher starts off with principles so there's principles in our teachers guidance counselors behavioral specialist the School nurses in there
065uh elementary teachers High School teachers uh special ed teachers General Ed teachers coaches are in there class advisors are in there right so everybody that deals with a kid every day is in there okay so it's the biggest number on the page and the next one is other what is other other is all that sending kids to Bose's for CTE and special ed that's all another right but it's also the books the textbooks the library materials right it's the balances for the science department chemicals for chemistry it's the balls for the PE Department right whatever they use so that's what's in there so let's just stop at those four categories and let's start measuring this out a little bit so let's go back to General support General support is expected to go from about 3
066million to 3 million3 about 269,000 000 everybody with me other is going to go from 3.8 million I'm going to 25 now to 5.2 which is 1. 1449 million everybody with me instruction 298 to 33 almost 8 133% or 3.9 million almost the next one other 11 million to around 12 million 8 increase of 1.8 million 16.8 one thing you should realize as board members is I put percentages in here because board members like them I don't know why because they're unre reliable and let me prove to you why everybody go well this one up %. same thing with tax this goes up that percent that percent this percent well here we go your entire Revenue went up $10 million was 14% here I have salar is going up to $4 million is 133% the
067percents are useless you don't spend any percents you spend dollars follow the money so let's just take a look at it now we go down to Transportation I got salaries just got somebody overseeing it really and other is your contract going from about 5 mil7 to around 8 mil4 half 2.7 up everybody with me all right now let's go to employee benefit let's top to health going from to 6.3 million everybody with me so let's just do this take all the red parts and let's just add them up under the 2530 difference so these two here let's make it 1.8 million and four right with me four is what 1 five anyone 5.8 67 810 and then we have health insurance 16 so we added up just those numbers are they bigger than this number
068on top Yeah by a lot so what I'm trying to say is we haven't even finished the spreadsheet yet and your expenses just in the red numbers are outpacing the entire revenue of the district in the same period of time that's going to be a big problem okay now let's go down here's your building Debt Service you see some movement here you can see some going down that's that payment off debt service your B these capital projects being paid off you do not have a ran or a tan what the heck is that Revenue anticipation note or tax anticipation note people say aren't we supposed to spend the budget out the answer is no the budget has to be big enough so no matter who shows up you have enough money to pay for it
069so you'll need money in the budget for cash flow okay and I'll explain more about that in a second but the key thing is is that what's going to happen is if you have adequate cash flow to pay your bills because your state aid doesn't come in and equal installments and taxes don't show up until November correct okay so what the heck happens where do you get the money from you have to have cash if you don't you have to go borrow it either in a revenue anticipation note because you're waiting for state aid to come in or a tax anticipation no because you don't have enough money to even make it till the taxes come in so districts have done this in the past right and so what happens is it kills your bond
070rating now it looks like you're a wounded warrior in other words it's it's kind of like uh I need money to pay my mortgage so I go get three or four loans then I go get a loan for a car they give me a higher rate this is what happens you have now you don't have that right now we don't have that in there but if you won't have enough cash flow by time we're done you're going to need to do that those three end up zeros in the end we'd have to actually add numbers to them which would increase your cost because you wouldn't have enough cash flow that's one of the things we got to take out look for so here we go technically speaking the way your your expenses are going at
071about 16.5 million at the same time your revenues are going at about 10 mil milon 10.3 10.4 so as we look long term you have a problem would I say you have a problem right this second absolutely not no but if we don't start solving this problem right this second you'll have a bigger problem later does that make sense so that's what we're got to talk about so let's kind of put it together and show you how this all works now this next part is very complicated so even if I got to come back and explain it four more times it's okay because this is going we're going to really start moving things around now so I put your revenues and expenditures on top and I've got this thing called adjustments carryover you notice the
072first one in Orange is 1.4 Million last year your budget what you do is you come up with how much you want to raise in revenues that you budget for revenues is that what you want the revenues to come in at no you want them to come in higher than that you always want to underestimate your revenues why same thing is you never want to underestimate you you never want to overestimate your paycheck it's your Revenue the thing is that the re V don't come in you can't tax again there's no other place to get money except borrowing it from yourself your own savings account so you'll always want to underestimate revenues to some degree expenses you always want to have money left over you don't want to spend out the budget because that money
073left over is part of the cash flow so last year's 1.4 and next year is 3.12 now why did you have 3.12 and I've got a little explanation there for you and that's because you experience really a premium lag where you we were actually able to save almost $2 million out of the blue which isn't going to happen again I doubt so out of the blue you looked out you're ready to pay it but they gave you a premium holiday for the health insurance so you had a onetime saving does that make sense to you but it isn't coming back I doubt I doubt if it's coming back because usually they can't do it twice then we see 1.5 thereafter that's because your budget's getting tighter which means is there's going to be left less
074left over at the end of each year but that's part of your cash flow so what's that 1.5 part of your cash flow now you notice under uh adjustments for the uh reserves I've got nothing because what I'm going to test is will you need to use any of your reserves that you have so what I'm going to do is then look at the 4% you're supposed to have so that number in the blue plus the number in yellow is your cash flow think of it this way July 1 comes and hardly anybody's here right central office is working central office is working and then what happens is you've got ow and I'm working right operations of Maintenance they're cutting the grass you know there's you're paying health insurance though for everybody they're not even
075here right you're paying social security for people that are working right you're paying on your pension systems your pension bill by the way comes in over the summer so what happens is you got to have all that money then miraculously in the last week in August first week in September everybody shows up now you got to pay the entire transportation system got to pay all the faculty staff the nurse the guidance C got to everybody full swing all full salaries right coaches started class advisor have started think about it in the middle of the summer you had to buy all the materials and things to run the school district for the whole year so you can imagine your state Aid's biggest check your biggest check from the state comes in the month of March not
076September not July March that means you have the front almost the whole district for a while forers I'm getting it so you need cash flow so far it looks like we might have it well maybe where's the rest of the money so in full disclosure let's talk about where the rest of the money is so what happens here is is that the difference between a budget revenue and a budgeted expense we'll use the 25 years so watch My Little Fingers here 25 Revenue 74182 everybody see that expenses budgeted 774 anybody see a problem yeah the revenue is what it's three it's it's $3,234 th000 less than the expenses right oh boy what does that mean that's called the appropriated fund balance so here's what's going to happen that means if you spend out that entire
077budget like somebody wants you to and you only get the revenues then you budget it you're going to have to find in your cash and reserves $3.2 million to pay everybody that's why we want money left over and our revenues to be good so we have money left over now here's the Dilemma so what's going to start moving around is this if you look at the bottom line You'll see t total fund balance June 30th and you'll see it starts to diminish okay and part of it diminishes because what's going to happen in the next year so far the current budget which is not set in stone yet right still working on a budget it looks like we're going to be 2.24 million short that health insurance going to help out for that one year
078so we're going to be 2.4 million short we're bringing over 3 million but if you'll notice up here where it says assigned appropriate fund balance you'll see 3.2 2.2 see it that money could be sitting in your reserves other words it doesn't move other words you could add that money to your reserve line and still have the right amount of reserves but it's spoken for in case that budget is spent out understand what now that works so it's spoken for and if you go on to each year what happens is your budget then starts to get starting in 27 more out of balance you can see the bottom line - 35 then got - 5 then minus or 7 then - 9 you don't have that much money so what happens is slowly what's going
079to happen is you're going to have to set more of the money side that's on the bottom of this chart out of your reserves look what's happening to your reserve line in other words you could still be sitting in there physically but you can't spend it unless you spend out the budget so you technically are going to run out of money so let's think about it the research question was you went to the cap and then at 3.25 right and you kept that interest going there all those revenues you got the little state aid increases along the away but your expenses keep going same way you're going where will you be in 5 years you'll be in big trouble very big trouble so that's the story now keep in mind we had 4 point what
080was it 4.73 in capital reserves didn't we remember that your next Capital project well that's gone there will be no Capital project because we just spent it trying to run the school district so now we have to go to voters and ask them to release the money so we can run the school district this is why you look long term a budget may look like it's an annual thing and certain things look like a good idea at the time the question is what's going to happen if we keep on the same trajectory now let's take a look at this let's talk Tex because this is going to be very important so I'm going to do is run through lesson on how the tax cap works I got to tell you there are very few people
081really understand this I've been doing lessons like this for the last three years it's killing me there we go so how it works it starts off with 11 in other words how much was collected in taxes the previous year I'm going to use 40,000 to keep the math a little easier 40 million excuse me 40 million so that means this District in the 20 202 2122 school year the year before it collected $40 million the next number is it's multiplied times tax based growth factor and it's multiplied and if you'll notice the number is greater than the number one 1.41 what does this mean this means basically that your tax base has grown it's a multiplier so you go get the money colloquial example Thursday night Rick J's house four guys come over to play
082poker with Ricket five we all throw a dollar in the kitty the winnings is a dollar that's our base tax base right it's our collection Mr six shows up we don't take out like money to keep it to five do we no they throw in their money because they're increasing the base there's more to win I understand how tax base works so when the tax base gets bigger what happens is if you you hypothetically tax base keeps getting bigger see you could L taxes at 4% on an average people's taxes could go 3% because there's more the tax so you've got to take a look at that we didn't have enough time to make it to this mean to study that but it' be worth studying what's going on there but this is this District
083anyway so we multiply so you go get the money then we add back the pilots now Pilots are payments in L of taxes I think everybody knows where Pilot is I believe right from the Ida where they instead of paying taxes on the tax levy they actually give you a separate check right it's it's a grant from like an Ida Industrial government agency or something so that's just so you know how much you collected in property value worth okay then you subtract from it the capital Levy from the prior year what the heck is a capital Levy the capital Levy is you take your debt service schedule looks like your mortgage scheduling you add up your principal plus interest and you subtract any Aid so let's just say you had $500,000 worth a principal payments
084$100,000 worth of interest payments your debt service would be $600,000 you subtract from it the state aid say the state aid you got on your building Aid was 400 then that number would be 200 in other words that's the amount you're supposed to get from the taxpayers how do I know you're supposed to get it from the taxpayers that's because the taxpayers voted for you to take it from them if you go back go back in a minute anyone you want and look at every single Capital project you've ever had in the resolution there is words to the effect and Levy the tax there too it's in there all the time it's required because when you do a capital project and the school district borrows money their tax re bonds if this District wanted to
085dissolve itself the state would come in and create a board of education and continue to tax the people in the old District until the debt was paid it's required by law so what the tax G is telling you okay let's take out last year's amount so we have room to put in next year's amount which is on the bottom half of the form but before we do that we take it out then we multiply times the allowable growth factor the CPI the Consumer Price Index now the Consumer Price Index deals more with washers and dryers and cars and trucks than it does schools but that's what the law says to do we have to use it so in this case if you notice the CPI was really under 2% was 1.23 so we multiply the
086number by 1.023 right now why are they multiplying it that's because the tax cap the legislature says well if inflation is hitting the school district things are going to cost more they should be able to collect more so let's let them go do it makes sense then what they do is they take the pilots out for the next year you notice this pilot is 18295 is it 999 we're taken out because that will not be collected in Levy that will be collected separately so we know we're going to get that money okay then you add in the new capital Levy 81618 which is the new capital ly for the next year please notice that 801 is larger than 57 the money going out of the formula was last year's impact on local share of capital
087projects which was 517 this year's new number is 801 so it is larger than the number going out therefore it's going to push the cap up to pay for the capital project okay now so now your new Levy limit is 4,926 or 2.31 159% please note it is not 2% we can make it 2% by lying about one of the numbers but other than that it's going to be hard to exactly get 2% because some of these decimals are like five or six decimal places does everybody see how that what I'm getting at so my point is there's no such thing as the 2% tax cap there never has been probably never will be where did get its name it got its name from that CPI if the CPI in the United States next year
088or coming this year excuse me was 80 bazillion per. that number in the tax cap calculation could not be more than 1.02 and that's what's happened in the past a lot of times matter of fact this year it's going to same thing you're going to have a 1.02 in your formula but inflation is 2.8 to 3.1 right now so that's where it's limitting that's where they got the name tax cap 2% the amount you collect isn't 2% just that one line out of the eight steps right with me so far all right now let's here's what happens next in the next year you'll notice if we collect the C this Levy limit here I got a little arrow that's where you start your computation for the next year other words you start where are you
089left off and it just keeps going right along now I've standardized some of the numbers to make it easier for instance if you'll notice I've actually stabilized The Debt Service see the capital Levy stabilized now at 801 and you notice I stabilized the cab and what did it do or the pilot what did it do to the levy now flattened it right up okay now here's the problem the problem comes when we don't follow that rule that I just want to so if you go to the next page this is what the TX cap would look like if once I stabilize it in the second year and I just kept it going every year and you can see how it kind of flattens right out at some number everybody see that see how it work
090all right now what happens when there's a problem inevitably some board meeting or somebody says something to somebody somebody says something like this 2.3 I thought it was a 2% cap where everybody thinks it's 2% C what are we going to do we got to remember you you are the CFOs of the district you are the chief financial officers you have it's your duty to explain to everybody it isn't 2% if it isn't 2% that's not easy to do but it is your duty so sometimes somebody will say tell you why instead of at 2.3 let's make it 1.9 I mean who would know the difference everybody would be happy nobody's going to make a big stink it's under two that everybody thinks it is what the heck let's do it every all right yeah
091what the heck it's not going big deal well let's find out so here we go now what I'm going to do is I'm going to take the same calculation I gave you the first time where I got the 2.31 59% and now what I'm going to do is I'm going to change it to 1.99 everybody see that now look underneath the 1.99 the number you should see is 7960 see that that means if you collect the 1.99 instead of the 23 you're going to collect $796,000 more to on your school district compared to the original number which is down over here 926 so in other words whoops another words you're not going to collect $130,000 everybody with me okay so it doesn't sound like the end of the world but let's let's think about this
092for a second as a practical matter because what people don't understand is they really don't understand how to use numbers here we go the whole board's going to work for me Monday through Friday and going to do a project for me if you do a good job I'm going to give you 100 bucks if you're like the average person you're already telling that by Friday you'll have $500 in your pocket and I won't and you because you're going to do a good job you're good people so you say okay let's get working on this thing now why you're working on here's what I'm thinking I'm Mr taxpayer businessman and here's what I'm thinking what was I thinking when I promised them $100 I don't want to give $100 I should have said a lower number
093I mean I want to save all the money I got I give my money away Project's done here it is Monday at the end of the day take a look at your project and I say this wow nice job you guys pretty good pretty good I tell you something it's not exactly what I had so what I'm going to do is I'm going to give you $9 so now you are short $10 correct and I have your $10 so then you think together wow we better work harder on this $1 tomorrow Tuesday so you get together you get to own on your project Tuesday comes along and I'm looking at wow they really worked hard something else is going through my head I do not want to give them $100 besides they took 90 yesterday
094what are they going to do about it I'm going to give him 90 again so I give him $90 so you're short $10 on Tuesday correct it's interesting because now I have $20 more in my pocket than I would have had and you have $20 less cuz you're really short $20 not 10 if we keep this up by Friday you will be short $10 on Friday again but you will be collectively short 50 each and I will have $50 in my pocket for each of you so I got the money I promised to give you but then I feel guilty so G let me make it up so here's a big math question for the board ready CFOs I want to give you a 5% raise how much is the raise us on the board
095what is it us on the board yes 5% raise yeah it's an example1 okay it's not of $100 that's the interesting thing it's going to give be the 90s that's all I've been given you so you got 50 raise instead of a five so I got you again I got you again and here I was being magnanimous so I'm sitting here with money it could have been yours how's your household economy doing based on the schema not good so let's try it so here we go so now we go to this page here we say okay let's take let's leave 130 on the table and what we're going to do is now we're going to start over our new calculation but our new calculation won't start off with 440 million 926 it's going to start
096off with 4,796 everybody see it so I have just decreased your rate of increase forever you understand what I just did forever forever so what happens so you just got here's your $2 see the 2144 that's your four that's your four that's your 50 Cent you lost see how this works now look at it this way if I were to run this thing here's how it would work look at this and the first if I compare it to what we could have had here's what we did we lost 130,000 on Monday right here see Monday I also lost 100 thday on 30 on Tuesday remember 130 again are you with me in the story plus the 2144 because we decreased the levy the next year we lost another 130 plus the 2144 from the previous
097year and another 2179 because we decreased 11 go all the way over to the other side to make this an easier story and you are behind if you look down grand total loss $673,000 that is somebody else's pocket That was supposed to be used to run your schools but let's make it worse if you were to go back and compare the levy what it is now in this example compared to what it could have been the levy is an additional look at this3 $39,375 640 see that so here's the thing this is when the board forgot it was the board of AD turned into the board of friends taxpayers and relatives because your job is to make sure this institution stays vibrant these kids need you you are all they got so let's just take
098a look at it here's another thing what happens to you didn't stay to the cap twice look at this one I did one the year before plus the 1.9 now look how much they just did it twice look I he went back one more year 1.78 five million now here's the thing if this District doesn't need 1785 million we're good but if they do we're in big trouble because you can't get it back well you can but it would hurt like a lot so here we go what are the other factors here we go the CPI changes here's an example right here I've got the same models in here all I did is change the CPI look how the tax cap changed look at when I finally got to 2% see the bump in the
099cap because the Cap's telling you go get the money then I did another example here Pilots I changed the pilot when a pilot comes into your tax Camp it depresses it all things being equal when it goes off it makes your your your tax cap go way up look at the page Why does it go way up because the people paying the pilot are now in the tax base you got to go get their money from them that's what they're sitting right now that's why they don't pay the pilot so what happens here as you can see look at this example the pilot is going up it depress the cap down to 1.3 look at the next example over farther on the right the pilot went down tax Gap goes up to 4.2 did you
100do anything to get the the tax kept up to 4.2 no it's the pilot those people are not paying the pilot anymore cuz they're sitting in the tax base and you they're waiting for you to tax them but if you don't tax them you're going to lowerer everybody taxes because you're going to be sitting there going well we got a 4.2 my gu nobody wants a 4.2 not your fault if you don't do the 4.2 you can't get your money out of what the people were paying the pilot then there's another one here local Sher debt look at this example local sh share of debt drops so tax cap goes down you can see it right here that's when your you your Capital project starts falling off that's the year you want to have new
101debt so it stays stable if you look at the next example look at it goes back up now you got a big tax increase so the idea is you got to plan capital projects if you want it to be fluid so there's no tax increases the result of it you got to do it at a certain time where debt hits your cap so so that's how it works now this page here is if you follow the tax cap since it's Inception what it would look like this is that page right now so I actually recalculated your entire tax cap from 1213 now watch this see all the red squares why did it go up look it it went up to 3.5 why you can see it right here you can see it right here pension
102system cost you can see over here why' this go down to 1.7 you'll notice look at 2% inflation going down to 1.14 see it go to the next one why this one go down to 0.24 look how low it is look how low it is okay Pilots receivable look at look at you have hardly any growth and look at the rate the inflation went down again so it's going down twice in a row then it goes back up you can see here the difference why is it going back up it's going back up look by almost a 1 and a qu% that's because What's Happening Here is you're changing your debt service schedule you can do every one of these and there's a reason while each date everything changed so you can explain it you
103can see it it's observable in the cap now the next page on the top is what you did with the cap so let's talk about that didn't collect 1213 didn't collect 17691 next year didn't collect 535,000 you why didn't you you could you wouldn't collect the money for the taxpayers for the the pension system or the capital project so you paid for it out of your own treasury next year 32 3100 13,000 34 two years at the C then 129 the rest of the years at the cap so what does this do to a district over time easy there's the answer Monday through Friday Monday through Friday Monday through Friday so hypothetically since the C tax C started you're behind 7.9 million and your Levy right now is 915,000 almost 96 ,000 less than it
104would have been annually almost a million bucks you got to stick to the C even if it hurts now know last year you tried to challenge the cab that was a very smart move I know it didn't go well I wasn't 34 gos was it but I got news for you hell have no fury right you got you got to try because I was the only way to save you to be honest with you because you're going to need all the money you can get so here's what I'm my recommendations first of all keep in mind you got an intern business official your superintendent works like a dog I tell you every time I call he's working on something for me so I got to apologize for driving training you through everything and your inter
105a business official I Tor her the death so she's probably can't even probably too ill to come right so and your new your new business official would be just great I love working with Mike he's really fast enough update so that's really good for you uh so but the key thing is the budget's not done we could still have things happen where else you need more people want to leave more substitutes more kids show up need special programs right so to me I usually tell all districts I usually cut off expenses December one because we got to count the money if it's Mission critical and you need to do it for a kid or for a program or whatever yes you do it but we don't just sit there trying to find out how we're
106going to spend out the rest of our budgets the truth of it is every Buck counts especially where you guys are at next B the process is difficult if you ask me right now Rick you gave us uh health insurance projections is that exactly how much your health is going insurance going to cost I have no idea but I got to tell you that's your Trend data if you keep everybody a guy and the problem you've got with many districts and although You' right sized a bit the truth of it is when Co came in we sometimes grew a lot of Staff or kept a lot of Staff things were more robust but the thing is once that Federal money went away it was all on your dime and the longer you keep them the
107more it starts training your Treasury and extrapolating those numbers into bigger numbers think of something if we had a budget I remember you saw one say about 150,000 it's moving to three or 4% that's one issue but when you got an issue where you got something at $12 million and it's moving at 10% you got a different problem so whatever the issue is so bigger numbers and bigger percents you'll real problems cost reduction should always be away from the kids first now the truth of it is sometimes you try and economize become more efficient every school district should every year I was a superintendent and believe me I was trying to get my system more efficient more effective every year it's not as easy it sounds is you get to a point of you know
108no returns you're like how you doing but you got to try but the key thing is here's the problem inflation is a big problem for all school districts it's not 2.8 and it's not 3.1 okay cost of textbooks materials lab equipment uh insurances and all kinds of stuff is not following the CPI it's greater than the CPI okay so that's a problem the next one reevaluate purchases and staff need listen when you had everybody I remember during Co we were we hired some people probably in every District to help these kids catch up and everything else and that was nice when we H somebody else's money but when we're we're looking at the future and it doesn't look too healthy that need all of a sudden we have to re-evaluate what's more important than what
109else inside this District that includes student programs and everything else class sizes enrollment you know and retirements and things like this got to be taken into consideration you got to start looking at what are we going to buy what are we going to schedule how are we going to schedule this how are we going to get this stuff so the thing is is it's very difficult but it's necessary but here's the things you got to remember school system sometimes there's a certain part that's on an automatic pilot if you need a physics teacher you need a physics teacher and they're not easy to come by I think you you got you got a champion here and your new business official but I think that's almost by luck if you think about it let's face it
110trth it is I'm do you have 100 candidates right no I don't think so okay so the problem is it's a starting to be a real problem in certain areas so the thing is right now monitor expenditures to the financial plan limitations on revenues salaries and benefits can overwhelm the district's finances versus any potential Revenue gains now this is really difficult for me to say because for 10 years I was a teacher Union plac but the truth of it is we can only have as many people as we can sustain otherwise we drag the whole thing down does that make sense to you we're going to have to make some tough choices programs and things like this so you're going to have to take a look at who's absolutely absolutely cannot work it without him
111then you're going to have to adjust your revenues to go be able to pay for that right now I I only see a $6 million gap in five years I think you got to do something some major movement here uh and and don't forget you got to develop a long range plan because the calvary is not showing up I don't think the state's showing up fast to help you up the next thing is annually evaluate reserves and fund balance for sustainability and liabilities some of those reserves are there for a purpose and we're going to eat them up just running the system I think at this rate long range financial and capital plans help to stabilize the tax cap and our useful strategy and if you miss that vote I think at least four times
112looking at the tax District must continue to right size based on diminish enrollments and Trend data and that's going to be very hard so I dug off some stats on your District right now in the current budget Tak into account there's a number of positions that have been filled and the retire is being replaced by people in the lower salary call that breakage so that's hethy there's also an English langage uh uh uh elll teacher you call E NL teachers there's some of those for last year there's 106 teachers on top step 20 now nothing against these people I'm sure they all worked hard I worked till retirement too all right my daughter's a teacher hello but the thing is it's affordability question does that make sense to everybody nothing personal uh for 25 26
113is going to be 113 you have 15 people with 30 years or more of longevity normally it's 30 and 55 and out I think the thing is is this is heavy you're heavy on the top which means is sometimes what happens as you start jettisoning the bottom and that that's your replenishment system very difficult and I'm sure there are certain programs that are very important to you more than others key thing is tough decisions have to mated this is a big big jump o my screen kind of went away you guys can read it still though right okay right sizing has been successful and as it it has helped you but it's not enough so far State 8 2.5% increase in Foundation 8 isn't enough I'm hoping for more oh you know what we haven't
114even taken into account zal Mission buses that main day goes I think we're all underwater all right just so tomorrow if you get a chance to find a phone call the legislator tell them to give this thing up move it back 5 six years we all want cleaner energy energy I don't think we want kids uh reading the diesel fumes or the drivers either we're all set with that no problem but you guys don't have listen if your contractor starts buying these so let's just say your contractor works for five districts in your area and they buy one for a neighboring District who's going to pay for it isn't them it's all of you it's a business model think about it ch- Ching so I get that thing moved back 5 to seven years fast
115uh next thing is monitor the tax cap note the growing use of the appropriate fund balance and be aware of super majority remember you tried to do the super majority last time you may have to try it again because you're going to need some cash fast I do have to tell you that I think it was really heroic that you try to go for the te above the tax capap last year I'm sorry I didn't make it I'm going to tell you something right now my analysis is telling me if you had made it this wouldn't have been such a harsh talk tonight at all you've been in a much much much better place think about it this way let's make make up a number if you could get 250,000 more for the next 5
116years that's 1.25 million understand what I just said just like remember I was taking the $10 away from you I'm giving it to so the key thing is you've got some tough decisions to make but I think we've covered a lot turned over a lot of rocks and everything else you know and I think the thing is we're all trying to do a good job everything sounds like a good idea at the time so this is a case of where we just pull ourselves up by the bootstraps and make some tough decision Deion to go on we I already looked back we know what happened back there now what are we going to do about it is where you should focus your attention are there any questions lot I told you it' be a lot
117here I told you it be comprehensive here's the thing it's like drinking through a Fire H right great I like do this for great though that's great yeah I I hope it helps here's the thing obviously you got to have some good discussions uh Dan's very good at this that Dan followed me along the whole way no problem he can always call me you have questions he can't answer um sh's a great resource Mike's coming along very well but the thing is you got some tough decisions let's face it it's not about just cutting expenses it's also it's also enhancing revenues it's you got to have both ends in the equation this is where my dad used to say I got to get another job I got to get more income so you got you're
118going to have to you're going to have to probably reach out again and how you do that it's up to you but the truth of it is just we're for you're in for a rough road within 5 years e probably in 3 and a half okay thank you for asking me to do this project uh if there's anything else you need I'm just a phone calls La uh there's anything else but I think we've got everything about covered SEC okay we'll skip the test all right thank you everyone take care me a favor I get out here get back the doors thanks I can do everything except get out of here okay good night everyone be well thank so much um so it's on the agenda any discussion something just kind of lay spoken I
119know it was a lot but I mean so that no I I feel people definitely need to see that especially yeah I agree with I agree with also AG it's like hey if you don't do like don't change things something changes like we're in serious trouble you know 3 four years so I mean immed what I'm thinking in the moment is right the one slide that has anticipated revenues and expenses right kind of walking through that perhaps and then another segment with the tax Gap history yeah I think I think that that's really important that function you collapse so it's not details on the pil and stuff I don't think that critical very basic information lay out I think especially saying what he said about last year about how close we came and how short
120we are now due to that V last year needs to be that needs to be that needs to be reiterated because as we know people on vacation people didn't show up lot of people show but they got to know what that cost us as a district said how long I think this Dr this might have been what you just referred to if I if I heard you correctly but and I think it came up last year I think we did try to articulate it but um you know does our community know how much we've left on the table right again just just repeatedly wanted to bring up that point that okay so what we've seen in the past is Penny wise pound foolish right we now are missing $7 million because we wanted to optically
121say it wasn't you know 2% it was 1.9 you know and then and then this obviously it's it's like any any you know exponential activity right in in mathematics so but but that's not that's not I don't find that to be readily accessible and digestible for your average person right especially because a lot of times when you're think about how do you how do you vote on a school budget I mean it does come down to just kind of some sound bites so you know I guess I guess you know my question is more rhetorical but how do we you know really continue to you know develop the the consumer awareness of what it is that we're doing here uh because often times that tax Gap is I mean it is absolutely it is the
122bottom line it's a yay or nay based on based on that alone um but the the longer term disadvantages I mean that's it's astounding it's astounding and that we're not being bad stewards by going to C here yeah right but that's I mean because that was what was you know conveyed is that we were being wasteful of throwing things away and not you know and uh and yeah and so that was it was a demonstration of good leadership to have it be under that and so to be able to really articulate taking advantage of what is on the table because we are running a district that functions this way and that that's um being good Steward of the monies that are there I think it's a good point too you know especially because again we're
123you know here we are we've got a a few months you know this this is ongoing work um but also just recognizing you know the role that political expedience takes uh for people when they commit to the these kinds of positions um often times you know the responsible stewardship goes out the door it impacts your popularity and when we look at this here that he's drawn out 12 years right 13 years um that's significant that's significant I think you know something that came across is when do went below the one the for like the one year it was um probably to appease a community for one year but it needs to be articulated that that impacts way more than one year and you know I think people kind of look at the budget as an
124an as you mentioned before as an annual thing but we have to really look at it as having long-term impact of District overall I appreciate that part about the tax Gap I'm about what happened in 2006 2007 and how that impacted the numbers that led into this and that wasn't good for anybody and we haven't dug out of that find ourselves and others because of cuman and as you mentioned the state never did their part on you know 17 years not funding our foundation needid so I mean there's a lot and there's a lot to go forward with yeah I I think for you Dan like you you need to try and do a very good job of conveying it like what we need to do for the next 3 to five years to kind
125of dig ourselves out and really write the ship as he said many times um just not not just for our our knowledge I feel like honestly I feel like I'm thankful that he came in because he he gave me a lot of knowledge that maybe I wasn't quite clear on um but like for for the the stakeholders out there who who maybe didn't see this um they really need to understand like it's we're you know it's it's defc mode whatever you want to call it like you know we need to fix this and we need to fix it now um and for the future of you know not just not just our kids but the kids that are going to be coming up behind us as well um and it needs to be like this
126is what the plan is for the next five years like this is what we need to do to get to get back to you know being financially stable um this way the taxpayers and and stakeholders understand that like it's not just we're we're pulling an arbitrary 4% number out of our you know whatever out of the air this is this is what it's going to take to to get it back to you know in five years being you know we can get back to whatever it is the the standard tax cap at that point but I think I think kind of helping people understand that at least that maybe there will be there's a game plan and there's there's maybe an end Insight of it to get back to where we need to be is
127is key too I've had a lot of people ask me about that I I think it's also important to note that he said it has to be on both sides of the equation we're going to have to make some really difficult decisions about you know programs that are going to stay positions that are going to stay or go or whatever but it has to be on both sides of the equation and that has to be explained out as well agreed you know I don't think people understand in general I mean I didn't until I start think how important the reserves are um and then I also I don't think anybody has a real clear idea of where sories is compared to surrounding districts from the reserve like how well funded some of our neighboring districts
128are taking Kingston the big District out of what they have Comp US that allows you to do long term just kind of a couple takeaways you know for myself would be uh just announc as well so on the one side that had the 20 26 you know expenses um first one are so that budget with the salaries others and so forth that is kind of taking into account some of those reductions that I already mentioned in the last board meeting so you know not fing positions replacing people in the Lower Side so that's kind of what go already in there what number is in there the expense uh the expenses yes expenses are so take into account the reductions I mentioned last so it's not just a roll over of current people it's uh with
129those reductions and then moving forward it's maintaining that same from there that's part of the justification why there smaller increases than um so that's number one U number two mean you know in the planning process right it other districts right have done uh have I seem like gu negative but have planned better for in terms of their reserves in terms of capital projects and so forth so all this has be part of our our conversation moving forward right so we I shared last time the debt Serv is coming off so we need to start now about Capital products in the future so that we don't have these big swings in our tax we kind of trying to keep things more predictable going forward um you know and then just in terms of reserves right like
130I'm aware of another District that hasn't gone to the tax cap every year but they've got 20 $20 million in reserves right that's a very different story than us you know when you know 4.7 million is is dedicated for Capital and not for other other things not as for that so just some of those things to throw out there but I do appreciate the feedback um about videos we work on getting out the information and then on just general kind of announcements this Thursday is a new candidate uh night our attorneys will be here to kind of share what it means to be a Bo candidate Bo members will be there as well just kind of share their perspective questions uh I think that was a great night last year hoping for the same uh
131kind of back and forth um uh April 8th we will present you know our first round budget which will you know be the budget that is here as well um you know if the board would like to see reductions obviously off building some reductions as alternates as well um and then we can to have that conversation uh on the 8th as to the board's well willingness to use additional reserves this year as be plann for this for school year um for that and then on the 22nd we do not have school but we will have a board meeting um for the the final budget as well uh other thing I did want to mention is is that part of that money that he said was over fund balance is the appropriated money to cover the
132expenses that $77 million budget this year right we're not spending that that $3 million hopefully right fingers right now unless things happen um but right it's the $3 million number because we had the the insurance holiday which is little over $1 million right so really 2 million if you think about it that way and then just in general right he said you need cash flow right so we need cash flow so you can't build a school budget down to that Penny right and then um also even just in terms of salaries and positions we need to build an extra funds in case a staff member goes out on a medical Le for the year we still paying their salary and then we have to pay a salary for a whole new person right so we
133did uh were fortunate you know in that area this year as well the other side of that savings is we had some uh special students who are still waiting out of District placements right so there's a savings because unfortunately we haven't found a placement for them but we did allocate money to cover their their services when we get a placement for them so it's it's a variety of reasons um why that money will not Beed and just so everybody's everybody's following um because you pointed out to me during the meeting you're talking about the line on page three that says rpt law and is 4% that number that's uh no so the the the amount over right 1.7 that was the amount that we the same page so that's on page three it's that red
1341772 just ask clarification is it too late to have a capital project so there is no debt I mean is there there is no Cliff so uh as I shared last board meeting there we should we could if we vote in December of 26 uh that would be good because then we could use some Debt Service to make the bar drop a little bit lower kind of keep things going or we could go out to vote December 27th start or year two I am meeting with our fin plan I think it is tomorrow or Wednesday tomorrow to talk about kind of timing for that and the ACT actual amount that the project could be um with capital projects though right their calculations based on everything is aable right so part of things may not be
135aable depending on cost right so each building has a a limit for site work as well as interior work so we can kind of have to maximize where we're going to spend money um but I would Envision right the roadway atardi being a big chunk of that aspect and like like as he mentioned and Tim had mentioned this last time we were talking EXA we just mentioned it that most districts do capital projects every 3 to five years is there a way to start the plan that says okay this is the one we're going to do now and then in 3 to five years this is the next set like you can start to give the public an idea and get them used to the fact that okayy most most of these come years perard
136is going to be the big chunk of this there's some other things off the building condition surveys and then after that folks this is the next thing we're looking to yeah so that'll be part of the conversation tomorrow is really kind of looking at those time periods of when we can pick up extra stuff um the initial conversation is is that the next one could be right our $4.7 million could equate to like $1 million taxfree we can kind of just pay for it over time and get the return on C payments and then by that that debt that comes off could be like another 7 million um those was our loose conversation so I'll get better information tomorrow so we could go out for right 18 roughly million dollar project next time and then
137we can kind of as an EPC comes off can pick up a little bit extra for that and so forth Just to be comprehensive just go table anything else one more time like we need to be very out there like with this stuff like repetitive too cuz I mean even even with the your meeting today like I think we only posted it once on Facebook and there were some comments that I saw um I think we need to be you know multiple times a week just kind of putting it out there just so it's there more so than anything I think the more it's there the better off we are all right nothing else uh motion to adjourn second seconded by Mr Wells all those in favor all right thank you for