001Hello and welcome to the St. Mary Valley Schools Board of Education study session for February 25th. Christy will you call the roll? Sure. Mrs. Babs? Present. Mr. Berthold? Present. Mrs. Gilligan? Present. Mrs. Horanek? Here. Mr. LeChuga? Absent. Mrs. Solomon? Here. Mrs. Weiss? Here. Okay we have fiscal year 26 January district financial statements. Tony? Okay thank you. Good evening. So I'm gonna go through our January 2026 financials monthly financial report. This report over seven months through the year so this is the accumulation of all the activity of the district from July 1st to 2025 until January of 2026. We have multiple funds and as you know we have a a dashboard with the green, yellow, red sort of stoplight schemes to help kind of give us an idea of where we're at. We do have a
002yellow triangle for the nutrition services fund so I'm gonna spend a little more time on that after I go through the general fund. As you know we typically do like to spend some time on the general fund that's the largest operating fund of the district and so I'm gonna start with that and then touch a bit on the building fund then talk about bond projects and and then I will go on to the nutrition services funds. So I'm going to start with our balance sheet. These are balances as of January 31st 2026 so over here on the right column and we're comparing those against where we were at at this time last year so January 31st 2025. We like to look at any differences year-over-year and see what might cause those differences make sure that
003they're explainable and expected. So the number one we usually look at is our cash investments balances. Last year we were 126 million dollars now we're at about 112.6 million we're a little lower than we were last year. There's a couple reasons why. First of all if you recall last year we talked multiple times about the reimbursement to the general fund for the land sale from the building fund that was four point three million dollars. There's also that iPad sale that we talked a lot about. In addition there was about a million dollars or so that we've received from the Broomfield URA regarding some reconciliation of one of our IGAs for their URA. All those combined resulted in a little bit more elevated cash balance at this point last year compared to this year. That was
004a large portion of this difference. In addition we are budgeted to spend down our reserves in fiscal year 26 a little more than we were in fiscal year 25. So and when we have a little bit higher faster burn rate we would expect to see lower cash balance. One reminder is that we are at pretty much almost the lowest expected cash balance during the year at this time. We're going to see one more month February of a drop and then March we'll start to see tax payments and that will get our balance back up. So I'm going to touch on that just a little bit but that's really explaining the difference between last year's cash balance and this year's cash balance why there's a reduction and it is as expected. The next item I was
005going to touch on is this due from other funds. This is when other funds in the district just the general fund is the largest we have the biggest reserve so other funds sometimes operate in arrears. They have to spend their money and then they get reimbursed for it. Namely in this situation it's the nutrition services fund. They always have to spend their money and then they get reimbursed from either the national school lunch program or the state healthy school meals for all program. When they don't have a reserve they have to borrow money from the general fund and that's what this this is. You can see it's quite a bit bigger than it was last year by about two million dollars and that reflects the current status of the nutrition services fund and that's partially
006why we have the yellow triangle and we'll talk to that speak to that just a little bit later. Another change you see year over year is this $641,000 grants receivable that is related to a best grant for I think it's Twin Peaks Charter School. We recognize that revenue and we also recognize it as a corresponding due to other funds because it doesn't get paid out to them yet. Right now it's an accounting entry until they get some of their projects done. Once that gets done we'll request it from the state. The state will send us the cash we'll send it to Twin Peaks and then those two numbers will slowly drop an inch to zero. So right now it's just an accounting entry that nets to zero both on the assets and liability side. Another
007item that you'll see here is taxes receivable. Taxes receivable is an amount that we anticipate receiving from our community for property taxes. You can see it is increased just a little bit. We talked about that previously with a nine percent increase in assessed valuation year over year. This tracks with what we would expect. This number will drop as we actually get those tax payments. So this taxes receivable really represents that it's been levied and so we're recognizing it as expected revenue. There's a corresponding number down here called unearned revenues. So again right now it's just an accounting entry until we actually see those payments come into the district from the counties through to the tax payments in the spring. So you'll see these two drop as we get tax payments and you'll see this number
008start to go up again as we received the cash. Alright I'm gonna skip down to liabilities here. The look that's always going to talk to you. I think the only thing was maybe the P card clearing account. There's not much variance here year over year. It's as expected. Think of it as a holding place like a desktop workspace for when we swipe P cards. We want to immediately recognize that as a cash impact as well as there's a corresponding entry to this P card clearing account. And then it sits there until our accounting team can go through review the transactions and make sure they get they've been approved. The receipts have been reviewed and they're all getting they get posted to their respective expenditure accounts. So it just sits here as a sort of a
009holding place until those amounts get posted to their expenditure accounts. Alright that's the total all the items I wanted to speak to on our balance sheet. As you can see right now we are at about 92 million dollars again compared to 103 and that reflects the increased cash burn that we expect. I would anticipate this number to drop once again in next year's next month's financials and then we'll see it climb back up until we reach our anticipated fund balance at the end of fiscal year 26 which is June. Alright any questions on the balance sheet? Alright let's get forward to our actual to actual. So instead of balances as of a certain date this is the accumulation of all the revenue and expenditures from June 1st excuse me July 1st of 2025 until January
01031st of 2026 at least in this column. This is the comparative amount for last year so again we're going to do the same exercise where we're looking at year-over-year variances and make sure that they're explainable answer any questions to make sure they are as anticipated. The first thing is that you'll notice is we see like a 27% variance in our property taxes. One really important thing to note is this variance is really based on a very small sample size. As you saw on the previous slide the previous report we're expected to see more than two hundred million dollars in property taxes. We were only getting a trickle right now because the majority of our property taxes don't get paid until the spring and so we just see a small year-over-year variance and that's related to
011just the tiny interim amounts that trickle in throughout the year as you know a property gets sold and the property taxes you know in that were delinquent get paid those kind of trickle in between those those time periods. But when we have such a small sample size and such a variance in the types of property tax payments we would see a larger variance in in those year-to-year numbers. Not concerning at all what I do expect to see is a year-to-year variance of about roughly nine percent once we get done with the year after all the property taxes start to come in. Another thing you can see here is our investment income. You can see that's dropped year-over-year by about six hundred and fifty three thousand dollars. That is completely expected and budgeted for. That's because
012we anticipated that on a little bit lower reserve as well as a reduction in the investment return that we get from our local government investment pool that investment rate of return tracks with the Fed funds rates. Whenever you hear about the the feds they're adjusting their rate by a quarter point you know or maybe a maybe a half a point in some situations. Our local government investment pool tracks proportionately with that rate and so when we think that the the feds are targeting a lower rate we'll budget a little bit less in our investment income and so this totally tracks and is totally expected. Let's go to other local sources. You can see this 2.9 million dollar decrease year-over-year. That's because this other local sources from last year was elevated due to the iPad sale
013and that iPad sale didn't happen this year because we only do iPads on a four-year cycle and so that's why we see a lower revenue for other local sources at this time. That's that's what explains that that variance. Equalization is just a little bit elevated. That's related to just the natural increase in PPR as well as the one-time a holdback of the general fund amounts that we would send over to the cap reserve fund. If you remember we talked about that to help preserve some of our fund balance in the general fund we're doing a one-time holdback of 5.5 million dollars and before I say one time we are looking at doing that one more year and come to the board for the FY27 year again just to ensure that we're able to bolster the
014general funds fund balance as it is does have a big spend down on it. As well Brian's team is working really hard on the bond projects so the cap reserve projects are sort of at a second tier and so so they can do with a little bit less in our in their cap reserve resources. So what that translates to is an increase in state equalization because strangely enough the characterization of the amount that goes from the general fund to the cap reserve fund is characterized as equalization and so represents less outflow from the general fund and it results in more revenue in this particular report you're seeing. So that that's why that we're seeing that variance right there. Let's see here I'd like to jump down to preschool. Preschool we're seeing a little bit lower
015in terms of revenue and that's related to some a little bit lower enrollments that we were this year compared to last and also some timing issues with regard to the Colorado Department of Early Childhood CDEC. They administer this program so it's not CDE it's actually a different division that was created by the governor when they started the UPK program and they're still working on making sure that they're able to operate really efficiently and we have to do reconciliations with them and get they money to us and so there's always a little bit of variant variability with timing and getting their payments to us. Okay I'm gonna jump down to our BABS rebate so this Build America bond rebate so this is you can see no variance year-over-year but I still thought it was notable because
016typically in in previous years prior to last year and prior to this year we would have had our first payment by now but the federal government and the IRS is experiencing some volatility right now and so they're having a hard time processing payments as expected on a normal schedule that we would anticipate and so we are seeing some delays in that. Thankfully we did see in February which again this financial statement was prepared as of the end of January so we did see that first payment finally come through in February so I'll be happy to report next month that we did get that first payment for a Build America bond rebates. All right variance here pandemic relief funding as expected that's finally sunset weren't seeing any activity finally this year and then other federal sources
017this has to do again with another federal funding stream that we get through our our participation in Weld County the Pawnee grasslands National Forest Service distribution that they send all the school districts that are that are part of Weld County get a portion of this payment from the federal government based on their proportionate student count and that's worked out to about $600,000 for us so that usually comes in the summer and so depending on the timing it might hit as expected in fiscal year 26 but if it comes really late we might get a and it comes early in 20 in fiscal year 27 we could get two payments in the same year and no payments in an adjacent here right because it hits right around where we do our our fiscal year cutoff so
018we just have to keep an eye on that and that's what we're seeing here is a little bit of volatility with regard to those national funding streams expenditures our largest expenditures as you know is our salaries and benefits we see those elevated and that tracks as anticipated in proportion with our increase in compensation amounts for employees and the increase in FTE and then our benefits increases as a result of health insurance renewals and that tool as well I'm just going through my notes here this is what's guiding our conversation in case you haven't know this tiny little script that's why I have to pause once in a while because I have to refocus my eyes on the small the small text to make sure that I'm covering everything for you here okay one of the
019thing here that you'll see that are fairly significant variances is this number right here supplies materials and the corresponding increase in capital outlay debt service and this lease purchase number right here you can consider this mostly a geography change but also it is related to an accounting rule that requires us to do some somewhat complicated accounting at the fund level with regard to the inception of new agreements where we have multi-year obligations related to leasing equipment or entering into a subscription a multi-year subscription for software of some kind so what happens is without any money exchanging hands at all what we have to do is record the inception or the starting of that lease agreement and we take all the multiple years of obligation and we do a present value calculation if you remember from
020your accounting class or finance class in high school that we have to do a present value of that that multi-year obligation and post it as if we financed it and so we were not really financing it but the accounting rules say well you're kind of financing it because you're gonna be paying for this thing for multiple years so we want you to treat it as if you're financing it so what we have to do is we post the entirety of the multi-year agreement right here in this capital outlay line and a corresponding item on here called these purchase or financing arrangements so that's why those two are approximately the same number and they offset each other there's no cash exchanging hands with this transaction it is just a up-down on our expenditures and other sources
021I was trying to try to take a note but I want to make sure I don't forget what I want to ask so with that does that because I hear and I understand what you're saying is you have to post it as this finance but does that skew any of the financial numbers over time because you're posting it that because it's not dollar-for-dollar really yeah the the numbers that we post as a result of those inceptions they are exactly equal on both the expenditure side and the sources side now the reason these two aren't equal is because there's some other capital outlay in this number that aren't related to this inception of Rises so that's why these two numbers aren't exactly the same they're off by you know this 8.7 is off from this 8.0
022by about $700,000 so there's about $700,000 in this line that that are that's capital purchases that aren't lease inceptions right but otherwise this number 100% of it is also sitting inside this number and they offset each other exactly so there's no economic like net reserve impact there's no dollar impact with our bank there's no money exchanging hands as a result of that specific transaction now where the payment does come in which is actually us paying that vendor for that first year or the second year or a third year of those agreements those are yearly agreements and those are actual payments we're making an ACH to that vendor we're writing a check to them those show up in this debt service line right here and that's that's the that's the new paradigm that we have to
023live under with these accounting rules as we're seeing now a little bit elevated numbers here whenever we enter into a new multi-year agreement here or here here and here and then the payments for those show up here now before this what used to happen is those payments would simply hit one time it was it was the single-year payment and it used to hit in the supplies materials line right here and that's why we're seeing such a lower amount here is because those payments don't show up there anymore they show up down here so this is what I was saying there's kind of a geography change between this number and this number as well this number and this number offset each other but are new and they're elevated artificially elevated that help a little bit maybe
024I have to sit with it for a minute but I'll just I mean I won't get into the detail here I think this is more of knowledge and it is an information and it is questioning after to be honest no problem it's a frustrating thing for me because this didn't used to be have to be explained like this is what it was didn't used to be an accounting rule until a few years ago and so it was mostly a cash basis and it was a little more digestible by the layman and so we had to sort of start having these conversations explaining this weird variability that we're see we'll see and we'll continue to see this variability because we don't always enter into a proportionate multi-year lease or subscription every year for instance when we
025renew our iPad lease we're gonna see like a 20 million dollar posting to this capital outlay and this other financing arrangement well that's only gonna happen once every four years we'll see it spike really high in these two items and they'll come back down and again I'll be mentioning hey this is big volatility from year to year because of an iPad arrangement type of thing so again we're gonna continue to see those as we work and on these financials together I think I'll get used to seeing this and I'll I'm happy to explain it and continue to talk about those impacts one last question well does that inflate or deflate I guess the number I mean it because it's like you put it there for let's just say over five years you put the eight
026million or whatever but the actual number in one year is is six so we really didn't pay eight right so that looks like it inflates the number well that's right it inflates the expenditure number and correspondingly inflates the other sources number right down here so these two numbers offset each other so this one is an expenditure or an outflow and this one is a source or an inflow and so they are they are it went on a net basis down here when you start adding them up together they offset each other but you're absolutely right when when looked individually on our expenditure list right here they are artificially inflated and not from an actual cash outflow it's from this accounting adjustment and that's again something I I regret that's kind of a frustrating thing to
027be able to have to explain to the public and to you for the layperson isn't trained on some of these accounting adjustments but again the accounting rules they wanted to have us treat these kind of as if we financed something and that's what would happen if we if we truly did finance yeah all right Tony correct me if I'm wrong it's because we've entered into multi-year agreements so it's like an obligation yes we've entered into that we will be eventually that's right but not immediately not immediately yes the only thing that we're the only thing that we're paying are the single year the single year subscription so let's say that we entered into a four-year agreement for iPads for twenty million dollars well we're really only paying five million dollars a year right for four
028years we're not paying the twenty million dollars even though you'll see on our financials that we expended twenty million dollars and we financed or got a source of twenty million dollars for that iPad purchase even though really from a cash perspective we're only paying five million a year I'm sorry that's a complicated thing and it's it's a little confusing and I'm happy to sit down with any of you if you'd like to talk through it more I just hit you up yep all right I do want to spend some time in our six minutes left to talk more about nutrition services before I do that one thing I did need to talk about was our fund 41 building fund this is our budget to actual they are doing great they're really cooking on a lot
029of their projects and so they are ahead of schedule so we are looking at coming to the board to do the second issuance of the 2024 authorizations remember 2024 authorization of the voters was that we could sell up to 740 million in bonds we've only sold 340 million of that for this first what they call trance the first issuance and the and once our construction teams go through the that first issuance in terms of their activity we need to go back and sell a second issuance and so we're looking at September or so to do that so you'll be seeing some activity for me some board resolutions whatnot in order to help have us authorize the sale of that second issuance we'll give you lots more information on that coming down the road all right
030finally nutrition services we're going to go to page 34 the intrusion services fund the issue here is that they've been similar to you know in the general fund sometimes we will have a plan spend down a fund balance the intrusion services have been doing that as well except they don't have as big of a reserve and so they've actually spent down their reserve almost entirely to the point where they're anticipated to spend down by budget to less than four hundred thousand dollars now what that does it doesn't give them any room for variability so if they were to over like like like do poorly on their budget to actual if they spent more than they planned then they could essentially exhaust their entire reserves and go to zero fully by the end of this year
031so we've been working with a team to make sure that number one they don't spend to zero that's the first thing in the current year but then the future they are not budgeting a spend down anymore they need to be flat or actually be building up their reserves just a tiny bit and get it back in the positive direction so those are the two things that we're working on with our nutrition services we had a great meeting with Brian Lamar the assistant superintendent of operations as well as Katie Cosette who's the director of nutrition services and they've they have a laundry list of things that they are working on hot and heavy right now a couple of things I thought I would just mention as a result of that number one they're working on in
032order to control food costs to convert to direct purchasing rather than using like a distributor like a whole sale of distributor the distributor model they tack on a lot because they're kind of a middle man right and so the distributor tax on quite a bit and Katie was saying that like once this is fully implemented and they're able to just do all direct they could cut their food costs as much as 20% now that can't happen in one year because it's going to be a long runway for that but at least they feel like they can make some significant gains in working towards that this next year so they're working towards that the local food purchasing excuse me local food purchasing grant from the state that is new for next year and that's going to
033add about $600,000 or so that's going to help address this and that is all that can go towards food that Katie and her team are already purchasing from local sources and so it's not as if they have to sort of shift to more local sources and increase the expenses that's just going to be able to offset that cost so that's going to help they're going to be working on some a la carte options so as we talked about previously the amount that we can charge for a meal it's fixed it is determined externally on us it's about four and four dollars and sixty cents per meal and it's from the federal government and how that is funded is the federal government says okay we're going to reimburse you for four dollars and sixty cents per
034meal for your kids who are eligible for free or reduced lunch under the national school lunch program right well then as you may know healthy school meals for all what they do is they say okay after you have gone to the feds and gotten all the kids that qualify for the national school lunch program for that 460 if they don't pay for a portion because the kid only is eligible for reduced lunch instead of free lunch or if the child doesn't qualify at all for the federal government's amount then the healthy school meals for all pays the rest but in no circumstance can we get more than the four dollars and sixty cents so that means that that Katie and team are required to operate under all of the lunches they serve to be able
035to make sure that their costs don't exceed four dollars and sixty cents per meal well if that amount from the Fed doesn't go up fast enough to keep up with inflation with increases in compensation for the food service employees and for food costs then what do we do right so there's there's not very many relief valves because the nutrition services funds the self-sustaining funds so so there's some of the things that they're working on and one of the other things that they can do is a la carte sales so if there's kids that want more than just what's the provided lunch the nutrition services team can charge and they can set those prices on how much an extra entree is or an extra milk or any other things that they'd like to offer so a
036la carte sales can help offset that a little bit so they're gonna work on that as well as some vending help healthy food vending in the schools and to provide for some more revenue sources so looking at all those solutions I'm encouraged that we're gonna make some progress on this but we're really gonna keep our heads together to solve the problem to make sure that they are a solvent fun and I'm looking forward to coming back and giving you guys updates as we make progress on that all right I think I'm at time do you have any questions that I can answer before I turn the time back over to you and and just one note we did review this with finance and on a committee on Monday and then during the regular board meeting
037later on tonight I'll do an abbreviated just quick blurb on what we talked about tonight and and then any questions yeah thank you board members have any questions okay well thank you Tony we know we are paying close attention to this so thanks so much for that presentation and we will see you again later this evening thank you for your time good night and with that I'll request a motion to adjourn all in favor