001Okay, you ready? Okay. Good afternoon and welcome to the Finance and Capital Management Committee meeting. I am Barbara Sykes, chair of the committee. Joining us today is our vice chair, Gregory Harrison. uh Dr. Renee Molinar, member of the of the uh committee, as well as member Diane Autry and our president Jackson. So, let's if we can start with um approval of our past committee members committee me committee member meeting minutes. Madam Chair, I uh make a motion to pass the uh previous minutes summary. Thank you. Is there a second? Second. All those in favor? I I Those opposed. Okay, we're going to go right into our five-year forecast. Mr. Treasurer. Good afternoon, Madame Chair, co-chairs, President Jackson, Superintendent Otley, and Dina. Uh, today we're going to go over the five-year forecasts for this year. Um,
002we're going to be reviewing the forecast earlier than we have in previous years because the ban bianual budget for 2627 House Bill 96 has moved up the deadline 45 days this year. Next year it will be 90 days. So this year we have to submit it by October 15th. There's also one other major change to the forecast. We won't be calling it the five-year forecast much longer. They are changing the structure to go from one year of actual and five projected to one year of revenues, appropriations, and unreserved cash balance to and three years of projected. So, it'll essentially be a four-year forecast that will start next fall. This calendar, this school year, we're going to be moving on in the same format. So here you can see our current fiscal year. On the lefth
003hand side we have our beginning and ending cash balance and on the left we have um that we're projecting to receive 377 million in general fund revenue 300 spend 387 million 387.5 in general fund expenditures for a projected deficit of 10.4 million. And that's going to reduce our cash balance from about 89 million down to 78.7 million. [Music] Our revenue is made up of the following categories. The biggest category is at 55% is state funding. That's 206 million of our total revenue. Our local taxes make up 155.9 and our all other revenue which includes things like interest income and Medicaid makes up the other 14.8. Slide three, our expenditures for the year. We're projecting to spend about 315 million or 81% of our budget on salaries and benefits. Our purchase services are at 42.9 this
004year and our other expenditures are at 29 million. Slide four, we're showing our projected revenue and expendances uh side by side. So you can see the blue is revenue, the orange is expense, and our expenses are far outpacing our revenues over the next four years. On the right hand side, we see our projected cash balance declining rapidly. When you get to 2028, we are actually in the red, $13 million. So, our three-year financial outlook, we're going to net deficit spend about $45 million over the next three years, trending towards that $13 million deficit. And then by 2030, we're going to overspend $159.9 million or projected net deficit of about $81 million. Here we see the annual change in revenue versus the annual change in expenses. Historically, we have received about 1 and a.5% increase on
005our revenue every year. We're projecting from 26 through 30 that we'll only receive about a.12% increase. On the expenses side, we have historically seen 5.34% increase in expenses each year, but this year or from 26 through 30, we're forecasting that to be slightly lower at 3.3%. This is a graph of our days cash on hand and you can see that that is also rapidly declining. We started back in 2022 with 120 days cash on hand. This school year we're planning we're projecting to have about 74 days towards the end of the year, but by 2028 we'll be in the red on cash. [Music] district enrollment. So, as you can see, we're we're expecting this to continue to decline. It's declining about 1% a year or 218 students. On the flip side, our per pupil general
006fund expenditures continues to climb. This year it's at 20,588 [Music] and it's projected to go as high as 25,000 by 2030. That $25,088 divided by an 180day school year gives you that $114 daily cost per pupil. About $88 of that comes from state, federal, and other taxes. And 23% of that comes from resident owners property share. So the local tax share which is about $26 of that one 14. It's the last slide of our forecast. This is showing that our current revenue compared to May is about $443,000 less. We're also expecting expenditures to be about 1.9% or 1 1.9 million higher this school year. So, in conclusion, on the current path the district is on, we'll be facing serious financial difficulties in 2028. It isn't too late to make decisions that will impact that. But
007we need to do that now. The sooner we do that, the quicker we can start to turn this around and we can hope to resolve it. Are there any questions? Thank you, Mr. hour. Sure. Are there any questions from the committee members or members of the board? Sorry. Okay. I also want to recognize that our superintendent did join us. Welcome, madam superintendent. Uh, thank you, Mr. Byer. So, this is this is pretty much what we've been seeing and um we understand that's why we have to continue to look at the various uh cuts that we will have to make. If there's no additional questions, then we're going to move on to the uh permanent appropriation resolution. Correct. I just want to mention that we will be submitting that by September 30th. We'll have it in
008the September 22nd board meeting. We do this in in compliance with Ohio Revised Code 570538 every year. Okay. Thank you. And uh now we'll go on to the state performance audit. So we decided we we've decided to go ahead with the state performance audit and um I have sent an email back to Lori Gabay from the auditor's office confirming our scope. So we plan to do the financial management, human resources, facilities and transportation areas. As soon as she comes back with information on that, I will of course update everyone. Something I learned this week about a performance audit is that the entire board can meet and discuss that and it's not considered a public meeting. So that's interesting. That's something I knew before. Thought I'd share that. Uh Mr. Bowers. So when you say the
009entire board can meet and discuss that what do you mean to to discuss the scope or to dis meet with the state auditors? Yeah. So as they called them update meetings. So as you work through as they work through what they're working on and finding we can meet with them and discuss whatever it is they've discovered what they're suggesting we start to do or not do. We could just meet and it doesn't have to be a publicized meeting. It's not covered under sunshine law, which I thought was interesting. Oh, okay. Any questions from committee members, members of the board? Uh, just I understand that uh we originally thought it would would cost about 60,000 and that amount has increased. Yeah, we we assumed it costs at least as much as our financial audit, which is
010about 60,000 every year, but they have told us that it could cost anywhere from 80 to $120,000. Now, we did not select um nutrition, so that would hopefully keep it closer to the 80. Um but we'll see. Okay. And then one last question if there's no other question from the members. Uh do you know when what is the next step? Is there something we need to pass as a board? I'm assuming that they'll send us their proposal and then they'll if we agree to that, we'll get an engagement letter that I would then submit as a board resolution for you to approve. Okay. All right. Thank you. So next up we have the health insurance update. Yes. would you introduce the two individuals that's coming before us? So today we have Judy Nuer who is
011our benefits manager and Paul Katana from Oswald Companies. Thank you. Welcome. Thank you. Thank you for having us. Um what we wanted to talk to you briefly today about is just one slice of our health insurance program. We are looking at um changing our pharmacy benefit manager um for the next plan year which would begin in January. And so just as a a a quick um refresher, the district is self-insured for health insurance, meaning it pays dollar for dollar. um and we contract with a provider to process those claims, take advantage of their network pricing and those types of things. So, we have been with Express Scripts for several years and accessed their buying program, their bulk buying program and pricing discounts through the RX I always trip over my tongue. The RX Ohio Collaborative
012or otherwise known as the Rock. Um, based on some of the the uh research that we've done and providers that we've talked to, our recommendation is going to be that we move to a different pharmacy benefit manager. The plan design is not changing. It's who is processing the um claims. Uh we are going to recommend that the claims pharmacy benefit manager move to CVS Caremark through the buying group of employers health collaborative and um this will allow us access to better pricing. We anticipate that it will uh reduce our pricing by about 2 million 2.2 million $2.2 $2 million and have very limited disruption and and limited disruption would be, you know, um I used to take, you know, prescription ABC and that's no longer covered as a preferred drug. Now it's EDF. And um
013mining all the data from our claims, we have determined that that is very minimal. um less than I believe it was 10 10 people uh will have some medic potential medication changes or disruptions. Again, just in summary, uh our our claims have come in at about 27% higher over the previous time last year. And that's not a unique thing to public schools. That is a national trend that is continuing as we all see uh in the news that the cost of prescription drugs is rising at an alarming rate. Um, our specialty pharmacy is right now driving our pharmacy costs and these specialty drugs are typically your high-cost drugs used to treat cancer, rheumatological disorders, um, GLP-1 inhibitors, the the uh, diabetic and weight loss medications, those are also driving our cost upward. So, in closing,
014um the rising cost of healthcare is going to cause all employers to adopt new strategies and programs. Um and our goal is to do that without changing the benefit platform. So by partnering with employer health through CVS that'll uh allow us better programming, better analytic reporting, formularies, rebates, bioimilar programs and uh it also offers a more robust customer care experience for our members which is important and there is more drug transparency uh pricing available to members as well. Any other any questions? So, are there any questions from the members of the committee or members of the board? So, on this uh any questions? No question. So, are you projecting any savings? Make I'll let Paul handle that one. And Judy did a fine job explaining. And you want to repeat your name again and spell
015the last name for us? My my name is Paul Katana. C A T A N I A and market president President Fswald Companies based here in Akran. Thank you. Okay. And we've had the pleasure of working with APS now for several years. We've reviewed the uh medical claims activity both on medical costs as well as prescription drug costs. Those two things together make up your total claim spend. And even though the prescription drug costs have gone up considerably as Judy mentioned, when you combine the total plan cost, when you look at the medical uh hospitalization, physicians plus the pharmacy, plus any fixed costs that are negotiated every year, your year-over-year spend for the health program for 2026 is projected to be in the low single digits. um with with this change, it'll save an additional
0162%. So even though the prescription drug costs are going like this, you know, we're looking at how prescription drugs impact the overall spend on other claims as well. And that's the trend that Judy was referring to. Even though prescription drug costs are going up in some areas, we're seeing other types of unit costs stabilize. However, we need to be ahead of this on the prescription drug cost because we've looked at this probably three years in a row and there has been some I would say trending north on the rock the the the current prescription benefit manager and employers health has proven u for the last several years that their discounted rates and their their ability to negotiate contracts on the CVS Caremark formulary are more powerful than what the rocket is able to get us
017on ESI Express Scripts right now. So, there's actually a net minus 2% cost difference for the plan to answer your question. Um, so it adds up to about $2.2 million. Great. Uh, one, uh, so has the Mrs. uh, Nesser, has the staff been made aware of this? No, no, not not yet. We will be doing a um you know a a marketing campaign. We have our open enrollment annual open enrollment coming up for health insurance. So we will make sure that everybody has all the information that they need and we'll probably begin those communications in October for uh 111 effective and our our new provider CVS will also uh assist with that. they'll put in a special u member call-in line to help you know transfer prescriptions over and all of the things there as
018well. Okay, member Harrison. So, with our savings, um are are we passing this on over to the consumer individuals as co-pays or are is this an actual savings overall? So it is a savings and it it comes and and Paul don't hesitate to jump in here but um they all buying you know it's bulk buying so the the agreements and you know pharmacy benefit managers it's kind of a shell game um where they're Costco but we will realize savings because we are paying less for the drug. the the members co-pays do not change. Those are are flat. Um what it will be instead of paying $1,000 for a drug, we may get it for, you know, $990. So yeah, the the saving, and you answered it beautifully, Judy, the the um it is a a
019savings off of what the plan would otherwise pay if we didn't make the change. So, the employees are again, they're paying their co-ay. Those are locked into their contracts and um but the actual unit cost of the spend that we have on all of our drugs will go down by $2 million. Any additional questions? All right. Thank you. We appreciate you coming. Thank you. Thank you. So, next on the agenda is the board members event information. I think everyone had an opportunity to look at that. There any questions as it relates to that? If not, all right. Unfinished business. Is there any unfinished business? M madam superintendent, anything you want to bring to our attention? No. Thank member Harrison. Do do we have an update on building um u the building projects? Thank you for
020your question, member Harrison. For this meeting, there was nothing presented. Uh any updates that we did have, we included in the weekly notes, the Friday notes. Okay. And we still have the meeting scheduled for the uh Millis FIFA project on the Yes, we do. And there's a flyer that we are we have created in collaboration with the uh council woman Tina Boyce and that's September 23rd. Let me check for you. I believe it's September 23rd at the Kinmore Community Center at 5:00 p.m. Yeah. 5:00 PM 5 to 7 at Kim Community Center. 5 to7 5 to 7 on September 23rd. Yeah. Okay. Any new business? There's no new business. Uh may I have a motion to adjourn. So moved. Second. All those in favor? I I. Those opposed. So, the finance committee meeting is finishing
021at 4:51 p.m.