Committee of the Whole Meeting (Finance Workshop) 6-21-2025

001I call the order of the Township High School District 113 committee, the whole meeting on Saturday, June 21st 2025 at eight a.m. Recording secretary will now call the roll. Mr. Brown here. Dr element timer. Mr Heineman here. Miss Lupa here. Mr Nader here. Mr Baraza here. Miss Newman here. I would like everyone else who is present to identify themselves. Good morning. I'm Pia Pennello, executive secretary Pro Tem. Ali Mahantius and superintendent of finance. Jose Medina, executive director of facility management. Welcome to your first official meeting with us. All right. May have a motion to approve the agenda as presented. So moved. Is there a second? Any discussion? Hearing no further discussion, we'll proceed to a vote. All those in favor say aye. All those opposed say nay. The motion carries. We'll start with the discussion

002item just 113 financial overview. Dr Holland. Yes. So thank you all for coming on a Saturday morning. Um, we wanted to have this meeting, um, to provide a comprehensive overview of the financial state of the district. We think this is this conversation is timely and important as we consider the strategic plan and other efforts that district priorities that we may want to move forward. And so, um, I do want to thank our assistant superintendent of finance Ali Mahanti, who has spent a lot of time preparing for today to ensure that everyone has a comprehensive, um, has comprehensive insight, um, into our finances. And, um, I'm hoping that this is a fruitful discussion that allows everyone to have not only an understanding, but as we make decisions in terms of, um, how we're going to utilize,

003um, our stakeholders money, um, that everyone understand the wise behind some of our decision making. And so, um, it'll be an open discussion and you can chime in and ask questions along the way. That's the purpose. We do have, um, this sort of mapped out so we can pay attention. I want us to pay attention to time. I know we have a long meeting, but, um, again, we'll monitor time and hopefully we'll leave here with a greater understanding of our direction. Great. Thank you. So all right. So good morning. So I'm gonna get started. So Sheila, Dr. Holland already mentioned the workshop objective. So this is, uh, we're gonna start with sort of basics and it's sort of like a good refresher for all the board members and everyone else. And then start with like

004school finance 101. That'll be 201, 301, 401, 501. So, um, happy to answer any questions. If I don't have answers for questions, then we'll just take those questions and get back to you later. So thank you. And please feel free to interrupt me, ask questions, whatever, anytime. So, okay. All right. So the slide we went over before, we're going to quickly take a look at our operating funds. Operating funds are, when you think about operating funds, these are non-bond, non-capital project funds, things that are needed to run school district, daily operation, salary benefits, purchase services, supplies and materials, class, uh, contracted services and things. And then non-operating funds, like I said, are used for purposes outside the district's day to day operations, such as capital projects, life safety improvements, debt payments, and they're kept separate

005from the general operating budget. The fund uses, and again, looking at operating funds, education fund, which is our largest fund. I mean, that obviously has supports, instructional expenditures and, you know, cost things like food service, social workers, librarian, then there's business expenditures and, um, but mainly like the instructional and special education is a big component of, and improvement services are a big component of educational fund. Then we have operations and maintenance that is, you know, it's fun. And, uh, that is maintaining and improving, repairing, repairing buildings, grounds. Then we have transportation fund and these are numbers as defined by the state, how we code things, transportation fund, which is all transportation stuff. 150 is IMRF and FICA. And what that is, uh, IMRF is the Illinois municipal retirement fund and FICA is the social security.

006So that is basically all the benefits that we provide, mandatory benefits for our non-licensed staff. For licensed staff, they don't pay into FICA or IMRF. That's teacher retirements. So, uh, just by law, we have to have a separate fund for that. And there's a separate levy for that as well. Then we have a working cash fund. It's a very small fund. Um, uh, most of the, the revenues, uh, revenue wise is big, but expenditures, there are no expenditures. So districts, a lot of districts call it like a savings account where you could transfer a fund from like working cash to different funds. Other funds go into negative. And then in our non operating funds, um, fund 30, which is our bond interest fund. And that is tied to our, uh, debt payments, uh, debt payments

007that we levy for. And then the debt payments that we're paying back from our operating funds, for example, our revenue bonds. And then we have our, um, site and construction fund fund 60. So what we do is, uh, we do an annual transfer from our operating funds. We keep that separate for separate accounting, separate tracking. So it basically pays, you know, we, all the construction projects, big construction projects, we use this fund. And then we have a fire prevention and light safety fund. We've started to utilize that fund now because the board just issued life safety bonds. So the accounting and tracking needs to keep kept separately. And that can only be used for life safety approved, uh, projects. Yeah. All right. Just a quick overview. I should share this with our, uh, in our

008budget presentation, our operating revenues. Uh, as you can see that there is a heavy reliance in our district on poverty taxes. So we generated about 89% of revenues come from property taxes, 4% federal, 1% state, 4% state, 1% federal, and 6% other local. We'll quickly look at in those categories, just a quick overview on tax levy. I mean, this is a model of school money that school district requests to be raised from property tax. And then there is extension. So it's extensions, what we actually receive based on our levy, uh, consumer price index. That is like the biggest factor when determined the increase from the property taxes. And that is measuring the change in the cost of, for example, a fixed basket of products and services, including housing, electricity, food, and transportation. In our case,

009that change is measured from December to December. So the CPI from December to December, which comes out in January is what determines our levy increase in our property taxes and equalize assessed valuation that refers to the assessed value of all the real taxable real estate in the district. So our total EAV is about 5 billion. So what that means, the total market value of all the housing that is 15 billion in district 113 dollars. That's how tax rates are returned based on the EAV. So this is just like a crook, a bucket of things that are in the CPI. And we do monitor those trends, um, every month, even though the main CPI for us is December to December, but the trends help us because when we're bargaining and when we don't know what the

010CPI is going to be for future years, you can sort of strategize that and see that the CPI is low, you know, to ensure that you're not, you know, you're tying the raises to the unknown CPIers, you know, whatever the CPI is going to be. But usually what we have done in the contract agreements that we are tying the raises to CPI, which is a good thing for the years that we don't know. But that's how it's measured. And these are different categories in that CPI basket, I would say that measures the pricing change from month to month. All right. So just the levy process. You're all familiar with the levy process. I'm not going to just talk about it a lot. Things that we are required to do is, you know, how much we're

011asking for. Then we have to publish in the newspaper, we hold a public hearing, and then the board adopts a levy and we filed a levy with the county clerk. The truth in taxation. This is a requirement if the district levies for more than 5% of the seat. So let's say in the years that the CPI was 6.5%. And the levy was 5% due to the restriction and property tax extension limitation law. The districts have to follow the truth in taxation requirement. But what I want to point out here is, even in the years that the CPI is less than 5%, we've always done the truth in taxation notice and publish the notice in the newspaper followed by the public hearing and adoption just to be transparent with the community. What the board could do

012alternatively, if the CPI, for example, the last CPI that was known as 2.9%, they could just adopt a levy. But just to be transparent with the community, we do hold a public hearing and, you know, publish the notice in the newspaper that the district is seeking for a levy increase. So that's a good thing to do. It's not required. When was the last time the levy request was over 5%? Oh, so to the last, not the not the last year, but two years ago. And it was like twice in a row because the CPI was 7%, 7.7% in one year and 6.5% in another year. So we had to go for more than 5% because it were those COVID years or I will actually, I have a chart, you will see showing the CPI history,

013but it was after COVID. Or after 5% inflation though, yeah, beyond 5% of the construction, right? Correct. I was going to get into that later. Yes, absolutely. Yes. So in if the CPI, for example, is 4.5%, let's say if it is, our new construction annual increase averages about 0.5%. So that would have also triggered the truth in taxation, but we're doing it every year anyway. So so that that is that a tax extension property tax extension limitation law where, you know, if limits the increases in property taxes to 5% or CPI, whichever is less. And then, yeah, so the law was changed back in 1996. And this is just a tax extension cycle, I'm not going to go over it. It's just, you know, you have the assessor, and then the chief county assessment office,

014Board of Review, because the county provides an opportunity for residents to appeal their taxes. And then we're also in parallel doing the school district doing the tax district's budget tax levy cycle. So sort of like these processes go in parallel to each other. And how the CPI, EAV, which is equalized assessor valuation and tax rate, how it works is it's your tax rate is based on your EAV. So if your EAV goes up, your tax rate goes down, and if your EAV goes down, the tax rate goes up, because the district is only entitled to get what the CPI is plus new construction. So just because someone's property value went up, for example, by $50,000 in proportion, so let's say everyone else's property value went up by $50,000, it's the it's the tax rate, what

015determines in the EAV what our revenue is going to be, which is the CPI. So sometimes we explain that when we have, you know, homeowners calling, especially in the time where their property value went way down, and they're like, Oh, my property value went down by $50,000, I'm still paying high taxes. So we have to explain how the tax rate works, because the property values go down, that means EAV goes up, because it the tax rate goes up, because the district is still entitled to collect what the CPI is from the levy. So that doesn't mean that they pay less based on the property values, because we're a tax cap school district. Now it doesn't work like that in a non tax cap school district. So that non tax cap school district is strictly determined

016based on property values, that the property value goes up 10%, that district gets a lot more revenue. So correct time. When you're talking taxpayers, it's really useful to know what the average increase was across the township, right? Because then you can say to the taxpayer, well, the average went up 9%. So you need to think about whether yours went up more or less than 9%. And then it impacts your tax correct. So that's a number that we should just normally be given, because really useful when talking tax papers, right? So this is what I was trying to explain here is let's say that if you have a market value, $600,000, that's the market value. So EAV is $200,000. As I said, EAV is one third of the value of the house. The tax rate is

0172.4%. And the district, let's say collects $4,800. So let's say that, let's just keep the CPI out of the picture. If the district next year does not levy for a CPI increase, and the property value of the house goes down, the district is still entitled to get $4,800. But as you can see, the tax rate changed, right? So as I said, that property value goes down, the district still received the same amount of money, but then the tax rate goes on, vice versa. Sometimes we've shared this visual with people, and then this sort of helps them look, oh, okay, this doesn't work. Okay, so this is collection and distribution. So this is where we usually get our taxes in June and September. So think about major paychecks of the year. I mean, we get two

018big paychecks, which is June and September. That's how we strategize our investments based on that cash flow, because we know when that money's coming in, when our low points and high points are, and explain that during our investment overview. All right, so this is the Illinois Public Act 102-519. It started in 2021. And what that does is it allows taxing bodies to ensure they receive all monies as through a supplemental levy due to a certificate of error, board of review decision, or property tax appeal boards. The certificate of errors are, for example, that if your house is assessed as an incorrect value, you're entitled for a refund from your taxes. What used to happen before is the refund they would get the homeowners from the taxes would come out of district's revenues. And any appeals

019would come out of the district revenues, appeals after the cutoff date of the taxes. So let's say if you appeal your taxes for 2022, and you get some kind of a settlement, those refunds before were coming out of school district's revenue bonds. But now, because of this law, we're entitled to capture those refunds. So every year around September, the county tells us that part of the levy process, we don't have to levy for that. They just tell us that this would be our revenue share from the recapture money. So that on average added about $500,000 in our revenues. Because let's say if our levy didn't give a very simple math here, 100 million dollars is our extension from the taxes. On average, we were getting about 99.5 million dollars because of those things. So my

020budgeting was that my budget based on the collection rate, because all these things because of certificate of errors, p tabs, we would get the money taken out. But now I'm budgeting at 100 million hours because of this law, because we're the $500,000 loss that we used to have before we get it back. Does that make sense? So that basically created an additional revenue source. But what it also does is when you have big commercial properties, businesses appealing their taxes, before we used to, we were intervening their taxes because we wanted to make sure that if it's a big appeal, we don't want to lose that revenue. So why are we doing it now, even though we get that revenue back, just to make sure that the burden doesn't get shifted on its existing tax base.

021Because if you have big corporations appealing their taxes, and we're not intervening, even though the money that they would get back, we will get back. But that burden comes from the existing tax base. So we're doing in the best interest of the taxpayers. Does that make sense? So there's also another reason. You don't want that new assessed value to be set, and then held going forward, and they're not going to appeal, you're not going to get the money, right? So you want to try to do what you can to make sure that that assessment still gets set as high as it possibly can for future years as well. When the future year of the assessment changes, we Not necessarily every year. Right. But if it Correct. So it's only when you get the triennial reassessment.

022So you just want to make sure that if they get that reduced for this year, you still want to fight it, so that it doesn't become another new low baseline for the future next year, because then they're not going to fight it, you're just going to get less taxes. Right. And that's where the burden gets shifted to the, so we're still entitled to the CPI. So that's where the burden gets shifted to the existing tax base. Yes, so we also do it for future years as well. So and we have done that with few corporations, correct? Absolutely. You'll get the money. You still get the money. Right. No, I understand we still get it, but you don't want that corporation to benefit from it for the next several years, right, and not have the opportunity

023to appeal it, get that money back. One of the things that I thought about is if we had significant women, we would challenge something, we should probably let the community know that we just want something for that, and there may have as PR, I think. I mean, I wouldn't do it for a minor sum, but it's not a bad idea for us to take credit for having bought it. We don't get that many wins. Well, we get the money anyways, but... We get the money, yes. You end up selling, you end up selling nine times out of ten. We do not avoid revenue in any appeals. I mean, it really creates a controversial sentence, like if you protest your taxes, you win, then your neighbors all go up by a little bit. You know, so

024it's kind of a... I wonder if we've seen more residents protesting their taxes as a result of this, because if you don't now, it's not like, oh, well, you know, there's no loss. Now, if you don't protest your taxes, then other people do, that you're potentially going to pay more. So just in a very simple example for board members that want to know this, how it works, the appeals, and we get this question from the community's members as well, you might get those questions too. So let's say that if you're the only one in the district boundary and if Jodi appeals her taxes and her taxes were reduced by $2,000, and the district gets $50,000, right? So now her taxes are reduced by $2,000. We're not getting $48,000, we're still getting $50,000. That $2,000 is

025divided among all you guys. So that's where we get, you know, people saying that, oh, well, you know what? That person paid less taxes than me. And it's all based on individualized assessments. We don't know what those are for people. That's why we say on proportion, if VA goes up in proportion, tax rate goes down. Individual tax bills could be different. You might have some improvements done in your house that could increase your taxes. So for different reasons. Now this doesn't apply when a property goes from a taxable property to a non-taxable property. So for example, the Ridgewood Avenue property that just decreases. Correct. This is the burden gets shifted, how they calculate it. Yeah. All right. So in that case, we lose the money, right? We don't lose it, but we don't get it

026the next time. No, we will not lose the money. Basically, the burden, the tax rate is calculated, the burden gets shifted among the different taxes. Okay. Correct. Okay. Correct. Yes, yes. Because we are, whatever happens, we're getting CPI, whether 10 properties file, you know, tax exam, they go on tax exam, but then those 10 properties that are not paying the property taxes, who's paying the remainder of the tax base, right? So we still get that money. So just to answer Ms. Lupas question about the CPI increases, it just happened post COVID in 21 and 22. All right. So this is something maybe you might want to make a note of is these years of CPI, when do we actually recognize the revenue? Okay. So how I remember it, because it took me a while to

027remember it as well. December, 2024 CPI 2.9%. That revenue will be recognized. You do plus three fiscal year 27. Right. So 23 plus three is 26. Our next year's budget, which is FY26 is based on the CPI. Our FY27 budget, 24 plus three is the 2.9% is in FY27. So you just add plus three. That's where, that's the year we recognize those revenues. Does that make sense? And that's when we look at the contracts and negotiations and we look at the CPI and we know when that revenue is going to be recognized. And that's how we negotiate. Three years away. It's three years. Because the December 24 CPI, you know, the board adopts the levy in 25. So this December of 25, we will get that, the levy will be based on 2.9%. The June

028revenue we'll start getting, those are early, that June revenue we recognize because we defer early taxes into the next fiscal year. So that's why there's that fiscal year delay. Right. This is a conversation we had yesterday about the dip district. So basically it's two and a half years after you find out what the CPI is, until you get to check. Right. So if we get, we're going to collect property taxes right now, basically, or in June, when will those, those property tax will, will show up in our bank accounts right now? We will not recognize those until when? Fiscal year 26. July 1st. July 1st of next year. Yeah. Like in a few days. So it's only a short delay. Okay. And then the, what about the, and the revenues that we get in December

029or September, September rather, same thing. Yeah. Fiscal year 26. So it's really just the June. Correct. This is a very good practice to do, to recognize that revenue in next year. I mean, that's, that really helps with our bond reading as well. Because actually we spent it. All right. We just typically share this chart with, you know, sometimes with community members, if they question a lot that, Hey, my taxes are high compared to, you know, mine, you know, surrounding school districts. But, you know, if you look at our tax rate, which is at 2.47 or close to 2.5%, it's very like much in line with other school districts, other high school districts. This is just a chart that we, we pull to share with the public. And can you clarify on that chart, which of

030those are unit districts, which of those are, are just high schools? Yeah. So all of them are high schools, not close to us, but I've just like put all the high schools there in different, different areas, just to, you know, show. So we've got like Stevenson, district 128, which is Libertyville, Vernon-Hills, Evanston, Glenbark, Glenbrook, Grayslake, Lake Forest, Main Township, Neutron, but, but none of these are elementary school and high school. No, there are no elementary. There might be one unit school district, but I think I took it off. So they're all high school districts. So that's why we use that comparison. Anytime we do our comps, whether it comes to negotiations or anything, we look at our high school districts. If you try to avoid big high school districts, cause those are structured differently, but

031we look at high school districts similar to our, you know, enrollment. What's the definition of a big high school district? So you have like district 211. They have, I don't know, Sheila, how many schools? Yeah. They have like eight high schools. So sometimes they're structured differently than us. The staffing is different, you know? So it's just not an easy comparison. Right. I just wasn't sure what the, like what the. They might have like 20 positions in one department and we might have like three because we're a smaller school district. So for that purpose. Yeah. And so like Stevenson isn't considered large. 4,000 kids. So it's, oh, those. Yeah. Yeah. Yep. Yeah. That was larger than that. I said 4,000 or 5,000. I'm not sure, but, but yeah, this is our, for negotiations, there are a

032lot less districts that we use for our comps. There are about 10 school districts. Right. The closest comparable, just to keep that in mind, very identical to us is district 128 enrollment wise, size wise as well. That is our closest. All right. So I'm going to pretend I'm Audra for this year's investment advisors with PMA. So, if there are any questions, I'm not able to answer to be heavy to take down those questions. All right. So our investment overview, like I said, that we strategize our investments based on our cashflow needs and our cashflow needs are obviously the, the two paychecks that we receive on an annual basis, plus what our obligations are, what our obligations are accounts, payable, right. And payroll. So we know what those amounts are. So we work with PMA. We

033let them know that these are our estimated accounts, payable and payroll amounts for the next fiscal year. And that's how we strategize the investments that which investments could be long-term and which investments could be short-term and which investments can stay in the money market fund. And right now the interest in the money market liquidity is really good. So it's just not as worth getting more money. If you go like a two year CD or three year CD, the rates are very similar. So we have two investments pool. We have our operating dollars. We've got two portfolios in our operating dollars, but that's all operating funds. And then we have our bond proceeds. The bond proceeds, we have to track and do accounting for separately. The one is our alternate revenue bonds. Most of the money

034we've spent. I'm talking about investment wise, about 5 million, even expenditures, about $5 million still remaining in that investment pool. And then we just started investing the life safety bond proceeds of $25 million. PMA of course checks with us before they start investing because they're like, what is your cashflow for our life safety? So we have to let them know what our annual spend would be. So that's how they strategize those investments. Those annual spend is based on the projects that we approved for the life safety. The construction schedules, we look at all of that and work with PMA on that. Then obviously our, you know, we have to follow our investment objectives is we have to be compliant with the state statute. We can invest in Bitcoins, crypto, it's not allowed. So we have

035to look at our state statute and obviously stocks we can do. District investment policy. Then we have to also follow the IRS, IRS and IFA regulations. These based on the school statute, these are the investments that we can, we can do, you know, goes from like, we have treasuries, agencies, SDA, certify deposits, commercial paper, municipal bonds. These are all money market funds. These are all the investments that we are authorized to do. Well, we don't do them all. Some of them are very risky, you know, like commercial paper. Sometimes we, when we look at it, it's just not sort of like risks versus reward, getting 20 basis points extra to generate this much of a revenue and taking a bigger risk is just not worth it. So we work with PMA. PMA doesn't do investments

036for us. They, we authorize the investments to them and that's how they execute. So, but we look, so basically me as a board treasurer, look at that. What are the safest investments? How many, how many days and what is the yield? And sometimes I compare it with different investments from fidelity as well. And then I authorize those investments to PMA. So like the U S treasury is probably the safest, correct? And so you exam, an example is commercial paper is more written. I know the district's losing a lot of money. So on that list, what falls in, what's in the, in between where there is more risk than US treasury CDs. I mean, usually CDs, there's not a risk in CDs. I mean, the words government, but the risk is the risk is the, the

037type of the amount of the CD, if it's over the FDIC limit, but then there's collateralization. So if the CDs that we have that are over a quarter million dollars, which is the FDIC limit, we make sure there was our collateralized. I guess the, the reason I'm asking is I think, you know, we talked about one of the questions is going to be, is there an opportunity, where is there an opportunity for us to find more revenue? And I guess my question, like, is there an item or items on this list that, you know, move us up a step, but don't move us into the red? So no, the right now there's not because the additional interface for some of this risky investments here at like 10, 20 basis points that will generate about 20,

038$30,000 more a year. So it's just not even, that's not going to get, bring us, let's say a million dollars or 500,000. Right. Not worth the risk. Okay. Back in the days when there were some opportunities where interest rates were 10 basis points, 0.10 are right now we're earning about three and a half percent. I do know a lot of school districts getting into commercial paper and this one school district lost a million dollars. So again, you just have to, again, do that risk versus reward. Are you willing to take that risk as the board is willing to take that risk? So, but right now we're not, I mean, the rates are so high that they are like investments that commercial paper doesn't give you a lot more in return. So in our operating portfolio,

039obviously is based on our annual revenue, which is 130 million dollars. Our investments are based on our cash, which we have in our, which is higher than our revenue because that's our revenue that we get in that given year. Plus what our fund balances, our investments are based on that and our cash flow. So this is just what, this is a very important chart for, for us. We work with this, with PMA on this, we look at our liquidity. So these are like high points and low points. So, you know, when I talk about like two major paychecks in a year, do you see the highs? Those are the two June and September, because this is where we start getting that money from the, from the county. Our low point is May, right? Because from

040September we have all these obligations, account payable, payroll. We keep paying those expenditures out until we get that money again in June. So May is our low point. Our low point is pretty good compared to the school districts because of our fund balance ratio. There are a lot of school districts in May, they run out of money. They don't have, they don't have, uh, actually funds to pay for payroll and accounts, accounts payable. So they issue tax anticipation parts because of the low fund balance. We're not in that situation. In our contract, we pay the summer wages at the end of the year. So we get a big paycheck. Okay. So there's a big bump in that expense anyways in May. Right. So in June is, June is when the cash goes out, right? Money

041comes in, you need to pay a paycheck. So we determine, because teachers are paid on a 12 month basis, uh, teach the first paycheck of the teacher, uh, at least for our license staff is, uh, end of August, so to meet the 24 pays, we used to do 12 pays, but when we're doing 24 pays, we actually have about four or five paychecks for the certified staff to pay them out of June, but that's all determined in the cashflow. So when I'm working with PMA, I let them know that my June expenditures are $9 million. This is how much I need in liquidity. So anytime you invest, I want to make sure that you factor that in. So I have that money in the bank so we can pay them out. Does that Yeah, we

042all work exactly. So, so yeah, we, we have like a lot of meetings about the cashflow cause it's very important to, you don't want to invest more and then it turns out you don't have enough money in your bank to pay those obligations. So we strategize bringing this up because it's actually something where it's a benefit to the teachers, but it actually does cost us money interest on that amount, so it's not, uh, it's not nothing that they get those money out of. That they get those paychecks, so not nothing. All right. So just look in our operating portfolio on average, we're earning about 3.84%. Wait, I'm sorry. How is it a benefit to the, I mean, the teachers are getting paid X amount of money every year for the summer, you're getting enough on

043them, right? Okay. They also probably have an impact on that. Well, that's their last year. First is not much, but I didn't brush. They got a lot of stuff for you. No. So they get, they get like, so right now they get five different paychecks in the summer because their first paycheck is in September. So we're basically, we take their salary. We divided by 12 pays. So we're paying that we're closing that we're closing them out. So it's not like, I don't think they're getting, I'm not sure if the right terms of that were paying them upfront. We're finishing their contract. Yeah. And I'm confused that that's what I hear. Okay. So the teachers are starting August, right? All right. We start paying them in September. And then by the time they're done, we pay

044them out. We close their contract here. So they're not getting an upfront pay. Okay. They're actually in arrears. They're in arrears. So, yes, right. Now we're shifting from 24 pays, 12 pays starting. Thank you, Sheila. Do 24. So, uh, their first paycheck would be August, August 30th. And then it's on semi-monthly basis. And then in June, we're going to have four paychecks and we'll pay them out. So we're not paying them up regardless. So even like, if they're starting August 16th, even with the 24 pays, their first paycheck would be August 30th. Right now, the issue was paying the licensed staff is when they would come in during orientation, we would tell them, Hey, orientation is August 16th. And you understand that as that your first paycheck would be September 15th. And they're like freaking

045out about it. Like, Oh my God, it's going to take me a month to get paid. But this district for years, even before I started, we've always had 12 pays for certified staff. So we based on that discussion with those, with the DA people, we've, we're changing that and then we're letting everybody know. And it's, it's a lot of work because they have to change their deductions, their oral three B's and all those things. So we've sent all that communication out there because right now their deductions are a thousand dollars a month. That deduction is going to be a thousand dollars per paycheck. So, so just to answer that question, we're not paying them changing. They have to go in the system and change. All right. So just our operating portfolio or fixed rate portfolio

046weighted average maturity is 267 days average interest rates, 3.84. Um, these are our out revenue bonds again, and, uh, and then our life safety proceeds, that's obviously investments are based on the projected expenditures, so we provide that, uh, uh, to PMA and that's how they strategize the, the investments. Um, so, uh, we've obviously hit arbitrage and alternate revenue bonds. And I don't think arbitrage sometimes considered negative. I think it's, it's a good thing because what that means is that the rate that we borrowed at, which was one of the lowest rates I've been, at least in the issue I've been part of, which we, because, you know, it was during that time of the year, our investment rates have surpassed that rate and if any time, so let's say we borrowed a 2% and our

047investments we're earning on average 5%, we run into arbitrage. That means we have maximized the return on that investment. Anything that we earn on top, the difference between what we borrowed versus what we're earning, that amount goes back to IRS. So, so what that means here is that we're going to estimate PM is estimating that we're going to earn about $2.7 million from the alternate revenue bonds of 50 million. Arbitrage is at 2.25. So the difference of that goes back to IRS. So what that essentially means is there's no, we can't do anything about this. It's just like the interest rates are so high these days that how I look at it is that we have maximized our interest. Tammy, does that, does that say it right? Okay. Any questions on that? The bonds are

048subject to the arbitrage, obviously alternate revenue, but the ones you did from the referendum, subject to arbitrage. Any taxes that find an issue, the issue more than $15 million per calendar year subject to arbitrage rebate. Or if you issue a certain amount, there are exceptions that should fit. So in general, if you're selling more than $15 million in a calendar year, you're going to be subject to arbitrage rebate, with some exceptions, the asterisks. But for the most part, you've been subject to arbitrage rebate. But back when you did your referendum, arbitrage wasn't a problem because investment rates were so low for so long. That's $15 million for the aggregate. In calendar year, that's right. That's not for issuance. Correct. That's correct. All right. Got a lot of slides to cover. So I'm going to keep

049going, if you have any more questions. And this is just our arbitrage here for our life safety bonds. As you can see that we've issued at a higher rate investments. It's not that, so right now we're not projected to earn any arbitrage based on our current interest estimate for our arbitrage, arbitrage, and then the interest that we are limited by the arbitrage rate for our life safety bonds. So yeah, we're estimated to earn about $1.4 million from the life safety bonds. And that additional money will of course go to the life safety bond projects, because there are a lot more projects that we need to do. And there are projects that were not approved as legacy that we have to do, which I'll get. All right. Just a portfolio. I'm not going to spend a

050lot of time. This is our average rate for our bonds portfolio, 3.8%. And then, you know, the maturity, it's all based on our spending schedule for the bonds. All right, so we're done with investments. Now we're talking about, so we're talking about other local revenue, which is 6%, remember. So now this is corporate personal property replacement tax. Um, back in the days, um, before 1976, corporations in the district, one through teen boundaries used to pay taxes on furniture and, uh, you know, machinery and, you know, corporate and like those big items, equipment items, furniture items, the state abolished that, and then it turned, changed that into corporate personal property replacement tax, right? So before it was called corporate personal property tax. Now what we get is corporate personal property replacement tax. So now what they

051did was that the revenue that we were getting at that time in 1976, they took that amount that the districts are getting, they divided that by the corporation's net profits in Illinois, determined a percentage. That percentage is, cannot be changed. Sparrow law 1976. So any, what they do now is that that percentage, any corporation profits, and it's just not our corporations district, you know, Illinois wide, uh, the profits from that, a share from that and that same percentage, that's how the state determines our corporate parcel, uh, corporate property, personal replacement tax revenue. So I know there's a lot of confusion about this, so it doesn't change. It's not based on the number of corporations is based on that historic percentage that was determined at that time in 1976. That's how we get our revenues. And

052because it's based on the corporate profits, it's a very, you know, highly variable revenue and it changes from year to year. In some years we've received 3 million hours. Then that 3 million went down to 2.2. That 2.2 million went down to 1.2 and now we're budgeting for 1.2 million hours. Anything you want to add to that timing? Um, I would also just say that it took a while for the state to acknowledge they actually made mistakes in FY 22 and FY 23 with the calculations. So that's partly why you're seeing the revenue decline as much as you are. Right. Yeah. Because when you, when I look back, um, I, and it seemed like, right, that it basically, it was almost like an off, the off year. And when you look at it historically, it's

053actually just not just, but it's returning back to where it was. Pre-COVID levels. But also in 22 and 23 timing, there were some higher profits that were reported by the corporation. There were some, but it was way overstated. It was calculated at the department of revenue. Yeah. I'm sorry. I think that was one of the reasons as well. The, the federal, you know, because they were, had higher profits due to those aides and stuff too. I mean, that's what I heard. I think that's some of it. Not, not a whole lot, but yeah, some of it. So just for, and I'm going to share that in our projections for 2025, which is the year that just ending our estimates were 2.1, sorry, $1.2 million. So I'm now budgeting for $1.2 million in FY26. I don't

054know what to budget for. And that's a big revenue loss for us, you know? So, uh, we've checked with other business managers in the group and they're budgeting the same conservative estimate, but you know, if we get more than that, that's a variance, a good variance, positive variance. If you got less, it's a negative variance. Our job is my job is to inform the board where we are based on those rooms. We can't control this. That's why we can't rely on this room. I guess I'm going to disagree a little. Yes. We can't control it. Yes. In my opinion, your job is to inform the board and your job is to give us your professional insight, what the trending is, you know, I'm going to actually go over, uh, I'm going to actually show that

055as well. Yeah. And, and, uh, uh, expenditure reports and the revenue reports. But as far as that, if, you know, we, let's say that if we find out that our corporate personal property replacement tax is going to be 1.2 million hours and a budget of 2.5, I'm going to go to Dr. Holland, Dr. Holland, just so you know, that's what's happening. And we didn't inform the board what was happening. So part of the manager, all right. State revenue, uh, this is evidence-based funding, special education, transportation, as I said, it's 4%. Uh, it's not much. Um, then we have federal revenue, which is 1%, um, title one, title two, all these grants, we have title three and then some title for Medicaid and idea, which is special education. All right. So looking at budgeted expenditures, uh,

056by categories, as you can see that our salaries and benefits are 79%. Then we have purchase services, supplies, capital outlay, other objects and non-capital equipment. That is our mania. And we're going to go over those categories as well. Uh, as you can see, our historical expenditures and salaries and benefits, and these are our audited numbers, fiscal year 20 to 24, because 25, we're not ending, we're not going to have those in audited numbers until December. So as you can see the increases here. Now, I'm just going to point out this 1.9%. Anybody knows why it was only 1.9%, just a quick question, because we had 23 retirements in that year. And what happens is that when, uh, licensed staff are, for example, at ME 60 step 25, we're filling certified staff, but I may hand

057or, I mean, sorry, I mean step five, so that's the savings that we generate that if you have a licensed staff member making 170,000 hours, that's the, you know, top end of the scale, we're replacing a licensed staff with 80 or 90 dollars. So even though we had increases, but those were offset by the saving from the 23 retirees, uh, that we had, because we hired them, you know, I mean, step five on average, but those are historic for our salaries. And some districts as a cost saving measure measure, they're more intentional about their hiring. So some things seem like they were by chance, not necessarily intentionally done to, um, to save money. And so like I've worked in districts where, um, a cost saving measure was to really like all departments had to lean

058into, like, we're not trying to shortchange our students. We want the best people, but we also were very mindful about where, um, like high, high costs, um, hires. Um, so there's always, that's just something to consider. Um, and, or if someone was coming in with, um, that was going to cost the district a lot more money, there was a conversation about why, so we could be prioritized, especially in some hard to fill areas, CTE, um, different departments that require special endorsements, um, there were priorities placed there rather than some other areas. And I mean, I know, and I obviously, I think this is more elementary, but I know there's definitely elementary schools or districts that make the choice to bring in, um, less experienced staff to teach them the way of the district, um, and

059then in, you know, the model then is they keep them in the fold for longer, and then they're trained in the district's way. One of our strategic goal strategies is really focused on mentoring. Um, and so I think that's important when you have a strong mentoring and onboarding and induction program. And usually that's multi-year. Um, that's one of the things that we're looking at enhancing to ensure that if we go that route, that, I mean, we have an induction program, but we have an opportunity now to really lean into it, to make sure that when we bring people in, we're supporting them, but they're becoming a part of our district in a way that, um, really centers our priorities and our instructional needs for students. And then the other side of that is making sure

060we have a very clear way that if that staff person isn't the right fit for us, that we're giving them the opportunity to move to somewhere else. And for assignments as well, as part of projections, knowing also how many staff members. We'll get to that. Absolutely. Cause there's a big year coming up. We'll get, when we talk about the projection. Absolutely. Yeah, that's something I do. Do we have a different, so there are some jobs that we're going to post. It's going to be a hard out. There's the qualifications for a, I'm not just making this up, like an English teacher or something like that, generically are pretty standard. There's a lot of Google's problems. There are other jobs, as you mentioned, that are, there are very few. We're like a higher experienced person. Is

061there any kind of, I don't know, documentation or sense of like, where we have targets in different departments or different types of jobs in terms of, in terms of hiring, you know, making an effort to say, no, we really do have to hire someone at a lower, a lower end of the. We don't right now, but that's one of the things that, um, mapping out some of our opportunities, that's one of the opportunities that we have. Right. All right. So now we're going to get to the categories of non-personal expenditures, which is 21% of our expenditures. And we'll get into, you know, some, some details on that. Have it stay still not going the weeds a little bit. We'll try them and bust. All right. Purchase services, transportation, special education, idea, technology, legal, property, liability,

062workers' compensation, security, professional development, that's object 300 category. Then we have supplies and materials, utilities, buildings and grounds, transportation, field, technology, software, capital and non-capital outlay, we've got computers and some buildings and grounds, equipment, then other objects, uh, most of our other objects is our special education tuition that was, you know, private placements, room and board and co-op. So I just like doing a quick breakdown, uh, like the $26 million of expenditures or non-personal, uh, as part of that, as you can see that someone was, uh, most of it is special education. Uh, then we have operations, which includes security stuff as well. And these are, again, non salary expenditures, technology, transportation, business operations, which the major part of that is our workers compensation and property liability insurance. And then we have like legal expenditure.

063So I'll just start to be like, lay really like just giving you like an overview of, you know, uh, what does that comprise of those non-personal expenditures, you know, there's over the years, at least over the eight years that this is my ninth year, we found a lot of savings that are non-personal expenditures. Uh, I mean, it's, it's, again, it's always a challenge to look at if you want to solve like a $5 million budget problem, you're not going to find that non-personal expenditures has to be a combination, but over the years we found about $1.2 million in recurring savings and, uh, the big part of that was food service, uh, we, uh, I changed the structure of the food service, where the food service vendor is now paying for the students, uh, and the

064custodial costs, students that are economically disadvantaged, we used to pay for those meals. So that saved us a combination that saved us about $450,000 a year. And then, uh, these savings of utilities, I mean, considering, uh, if Highland Park gets done in time, we're estimating about $300,000 savings next year, which is, which is pretty big. Um, so without Highland Park, without, without Highland Park is about $150,000. That's already factored in to your, um, the energy cost increase that 300,000 has already been backed out, correct? So yeah, whatever, exactly. So we've already, otherwise our costs would be $200,000 more. Right. So we just have to be realistic, but it's not new money we're finding. You've already baked that in to next year's next year's budget. Yeah. So I'm saying that this week is new money for

065next year's budget. The food service was long time ago. So I'm just saying over the time, these are the savings that we've generated. So what I'm saying is that if a non-personnel budget is 26 million dollars the next year, if these were savings were not found, it would be 27.2 million dollars, right? So we've done like different things, purchase services, uh, copiers, centralized purchasing, departmental budget reduction, after implementing some kind of a, I wouldn't say like zero base completely, but some kind of a hybrid budgeting where, uh, they show us all the details of expenditures that they're, uh, uh, in the budget process. And then as you can see, the non-personnel budget expenditure budget history from F by 20 to F by 26 budget, we've really controlled those expenditures on average. We've only gone up

066by 1.7% of all the costs going up in technology and utilities and all that. So I think the entire departments have really done a good job managing their budgets and us finding efficiency. Uh, I had one question. Yes. So you mentioned you switched to centralized purchasing. Um, how does that work? Do you just, could you give us 30 seconds on how that works? Yeah. So, uh, savings achieved through, so for example, uh, about five years ago, each school district had, um, their own contracts for spirit wear. So we consolidated that, that increased the volume and then we got lower cost. Um, we had 21 different contracts for copiers. So you consolidated everything. Did an RFP, we saved $100,000. We didn't have a centralized purchasing, I don't think I did, but the purchasing person, then we

067also found programs through, uh, like P cards and rebates. We started additional like 30, $40,000, uh, in that. So we've, again, taking, taking those things and even the things that were not required to bid, we try to bid that out to take, uh, you know, advantage. So there's somebody, uh, in central office sort of actively looking at all of our contracts for opportunities for savings. Precurement manager. Correct. Absolutely. Yes. And we've put P cards controls on P cards as well. We didn't have purchase orders before in this district. Everything was purchased through a P card. I'm like, okay, well, we're approving something that after, like right after it's been done. So now we put threshold on those P cards. If you want to spend more than 500 bucks, uh, you need to have a purchase

068order unless it's travel before there were no purchase orders. So I've never heard of that before. So we, we put those controls in place. Yeah. Okay. Part of strategic goal five, clearly I'm deeply, um, again, one of the strategies is to reduce inefficiencies and redundancies in spending. And so, um, I know recently at a board meeting, we talked about, um, technology and apps that our teachers purchase regularly, um, without parameters around them. And so again, just an example, um, we want to make sure that we have more oversight and insight into those purchases. If it's not, if, so individuals will no longer be able to just purchase everything that they want. Um, there has to be a conversation because of course, those things, those services add up quickly and some people may look at them

069as small expenses. But if you think about how much of like a monthly recurring, um, costs by teacher, um, if it's not, um, serving the goals of the department aligned with our school improvement plan, aligned with our strategic plan, we shouldn't be purchasing those. So we are going through a process of identifying, um, um, those inefficiencies, but also having a plan for approval just so we don't have contracts and recurring costs all over the place. Yes. And also some room to what Ali was just talking about with centralizing some of those expenses. Individual teachers are all using similar apps. There's probably an option for the school district to purchase some sort of agreement or like a negotiated better rate. Yes. It's a mindset shift, you know, which will then, um, so, and then example, uh,

070of like, we switched over the backs bookstore, right? As, as our, um, when, how often do we go back and review those types of decisions and determine that that still is a valid decision or it has met the goals that we had set out to achieve? So it's like a five year contract. So obviously there are opportunities, like in the best contract, if there are issues, we can certainly like cancel the contract and seek out other services. Uh, part of the Bex was not just the bookstore is also the Chromebooks. Right. And that's something that Ron also recommended. We see about a hundred thousand hours outsourcing the Chromebook function because we had two FTEs and the cost was a high, so we evaluate that. And, uh, so let's say it's like, if it's back to

071its software. So let's say for the Ron has a software cost, he's evaluating that whoever's overseeing, not the contract side, like the programs of the Bex, if things are not going well, then I can work with those people to see that if we need to bid out again, so yes, we do. That's another opportunity though, um, because we do have to take more steps to proactively evaluate and not just evaluate when things come up issues. And that's sort of how it's been. Um, so it's not just business and finance managing the contracts. There has to be an understanding of what's in the contracts and partnership, for example, with our assistant superintendent of curriculum instruction assessment, um, there's a partnership there that has to be more formal and formalized in terms of what, what is the

072cadence of reviewing every year? I think, um, deserves some insight into these large contracts because things have not always gone well and, um, we have not always had efficient and effective services. And usually that comes up when someone complains. And so, um, that's again, something we're planning on formalizing a bit more. And also, I know we've got, but also that change in behavior, you know, and again, I have no opinion on Bex, this is just, just a simple example to use. It'd be interesting to see how many, um, families have migrated over to buying completely outside of our system, um, and just going to Amazon, um, you know, or other solutions. So, uh, and then is there a loss there for us? And maybe there's not, maybe it's, it's overall better, but all of those

073types of areas serving students. Just a quick sort of audit process is just obviously it's a required thing to do by, by state statute. It's an independent review of financial records by, uh, CPAs. Uh, annually we have to do this obviously insurance accuracy wise, it needed transparency in financial reporting confirms compliance with laws, requirements, uh, detects and deter fraud or mismanagement provides assurance to the board and then the outcome of obviously the audit financial statements and process improvement recommendations. We haven't had any material findings in the last six years. So, right. Um, so even though part of the audit is internal controls, we did a comprehensive internal control study about four years ago, I believe Bregman were part of that, you were, were you part of the conversation in the interviews? We are, no, you're

074not. So, no, okay. You're not, so, um, so, you know, I had no, uh, issues because a lot of school districts are like more like in a defensive mode that, oh, well, I don't want to find out all those issues. I really want to find out what those issues are in our department. Cause I want to fix it. Sometimes if issues I'm not aware of. So please tell me where, what I'm doing wrong so I can do it right. And I was pretty confident in doing this comprehensive internal control study and sharing with the board, Hey, these are the issues in our departments. These are the inefficiencies and we've addressed 95% of those things. Some, we cannot arrest due to system limitations and low priority risks, but we have addressed. So for example, one of,

075uh, a finding was, uh, the centralized purchasing. Another finding was, uh, time clocks, which we don't submit it. And a lot of things were documenting procedures, cash handling procedures. So we've, uh, you know, creating some policies. So we've addressed about 95% of the findings. What's an example of something that can't be addressed? Uh, so like a vendor approver process, like four people approving the process in the business office, that would take like a long time and the system capability. So those types of things, very small things like rules, low risks. Thank you. All right. This is just that over time, our revenues, as you can see, are generally matching their expenditures. Uh, rules are fund balanced, uh, orange are expense and greens are revenue. As you can see that we took a dip in our

076expenditures during our, uh, COVID year, which is right here. Expenditures, uh, exceeded the revenue because there were a lot of needs for those students during pandemic. You guys, some of you were part of that board, I believe at that time. Uh, and that's why we have a fund balance. People would say that. Why do you have a high fund balance? I mean, this is exactly why you have a fund balance to pay for those unforeseen expenditures. All right. So this is, we had, we created a dashboard for the board or the expenditures or pandemic, you know? Uh, just every month we would show the, the, the reporting to the board that this is how much we were spending on pandemic on, and these are the items. So we created the dashboard during pandemic expenditures, also

077shared that with the community line by line. We spent about 7.2 million dollars in pandemic expenditures. And this quickly, um, there was also significant during that time increase in federal funds. So how, how is that balanced out the district spending versus the, like the additional funding that districts received? So it was all part of our, our income statement and our anticipated revenue. So if you, if you look at here, the 7.2 million dollars and our revenue was 3.8 million dollars. I think the money that we received was about 1.4 or 1.5. So what we did, our fund balance was the total expenditures we had with 7.2, all those pandemic needs for those pandemic expenditures. And then it offsetted the revenue that we received, which was ESA revenue. And then the FEMA reimbursement. The 3.8 right

078there, who told the federal money that you're talking about? So I'll get to the, it wasn't all 3.8. So this, we actually, okay. So our ESA revenue was about 1.3, 1.4 million dollars. So I went to a conference and I found out about that there is an opportunity to get FEMA reimbursement, FEMA dollars. The problem was it required about a thousand hours of work. And a lot of school districts said they don't have time to do it. I actually went to my accountant and I said that, would you be able to put that time and my accountant says that there's no time in a thousand hours an year. So what I did was I subcontracted his job for $50,000 and I put in full time on the FEMA expenditures. So for that $50,000, we got

079about 2.2 million dollars in return. And I told our school districts of what I did or like, Oh, they should have done that thing because a lot of school districts didn't do it at the time. So I think that was a good investment that got about $2.2 million dollars in fund balance. So the 3.8 million dollars is the SR plus the 2.2 million dollars. So that basically gave additional $2.2 million dollars in fund balance helped offset some of those pandemic expenses. So it totaled in a five, this three, the two plus the. So this 3.8 includes the 2.2. Okay. Does that make sense? Yeah. So one, it was one point something plus the two point. Okay. And we were actually featured because we were in the top 25 school districts. We were ranked on number

080three to maximize the FEMA reimbursement. We were ranked number 25th in the U S to maximize the FEMA reimbursement. So this was a really good accomplish. And we actually physically got all that money. Okay. You physically got all that. Yes. Checks in the mail still. Right. So I think that, I think I take that as a, a good ROI for $50,000. Okay. And I'm sorry, can you go back one slide? And so the rest of the seven came out of our, um, fund balance. So the 1.2 minus the 3.8, the difference of that is about three point. Otherwise our fund balance would be like, well, otherwise it'd be like five. Yeah. That'd be what. Right. Right. And this would get confused because our boss were early. Right. Came much later. At the end, they're saying,

081well, you're making a profit. Right. Right. We're reimbursing our savings account. Exactly. And if you look at those monthly dashboards, we had a line by line of how much we got in Essar, cause there were different kinds of Essar revenue. We also had a plan of what we're going to spend those expenditures on. We shared that with the board. And not only that we had like everything line by line, but what all we're spending, it was, it was a good dashboard that we created. Um, and I know we went back into the fund balance after July 4th to cover, right. And did we, I don't remember, did we do a similar? Yeah. I did. We, we didn't do a similar dashboard for that, um, project. No, we, what we did was we did apply for

082the grant and we never, we never got it. Okay. I mean, that truly all came out. And again, that was predominantly tied to services to support students and staff through it to use and such. How many of the expenses were recurring versus one-time expenses? So after then the pandemic, what, just curious where the lists are, where these, I don't know where these lists are, but I'm curious. I would be curious to see what came off. So most of these expenses were recurring, but I think the only thing that was, uh, sorry, non-recurring, the only thing was recurring from what I'm aware was the MTSS teaching staff that we added, because the district kept the MTSS structure, that's when it started during the pandemic. So the actual habit of non-recurring expenses becoming recurring. Right. So like

083even like the things I know, we had to do a whole bunch of hotspots, right. And, and so that students could have access. So all of that, we don't have to pay for that anymore. That all went away. The exact detail, like how many hotspots? Like that's a detail. I'm not saying, but I mean, that's an example of something that should have just been finite, but I hear like our buses have hotspot capability. Correct. So, and that came from the pandemic. So I'm just wondering how many of those expenses we actually are still. I can have a conversation. I can find out that, you know, uh, like what expenses we are still recurring, like those things. I think even if I, I mean, I can probably just go down the list and I, I would

084just, I don't know where this list is. So this was, this was, uh, part of our dashboard, um, the board. So we, do we still have records of this? Okay. All right. Just to, the way the expenditures are incurred payroll, uh, obviously, you know, how it works over time is actually, they are authorized by department administrators for payroll process. It's how we distribute the paychecks based on, uh, every month's schedule. Like we do it on a semi-monthly basis. Now, uh, purchasing is, I think I've already mentioned how we have process and strict control and controls and purchasing, whether it comes to P cards or, uh, purchase orders, and also there's, uh, a bill review process, uh, that we do, uh, that not a lot of school districts do where we give an opportunity board members

085to pull up bills. So sort of like the board members, they become auditors, you know, depending on their trends. All right. So, you know, we obviously follow the Illinois program account manual to code expenditures and report expenditures. There's a lot of requirements. Then we get into the budget where we have to, uh, adopt the budget annually. Uh, it's pretty much a 12 month process. We start with assumptions on the key budget drivers. We look at our projection, what our revenue is from our state and federal government. Usually we keep them flat unless there are changes in special education, uh, enrollment for those kids. Cause that has to tie it back to the federal revenues. You look at the bargaining contracts, the contracts, CPI increases, anything that's changed staffing, non-routine expenditures, technology, any capital projects, and

086that's how we, uh, have those budget hearings. And then, you know, we, uh, preserve further and attentive to the board. So it's so, you know, we do, uh, what we did was five years ago, we utilize start utilizing budget templates before the budgeting was that if the department has $20,000, their budget would go up by CPI, but basically what, what that did was even the department sometimes don't know what they're spending the money on, right? So if you have a household budget, you should know what you're spending on Netflix, correct? So with that idea, we, we generated budget templates, we helped them, uh, it was a lot of work on them and we helped them out because we had to give them a lot of history of what was spent on, but now when they

087submit the budgets, they are submitting detail of every line item. So for example, this is a dues and fees of $9,000, $10,000, they're putting all these itemized expenditures of what they're going to spend the money. So now even there, no, if somebody has to pay, what do you spend on this? Okay, let me go to the budget templates. You know, I'm spending $650 and things for our membership. It also doesn't assume that everyone needs an increase, correct? So it allows there to be a conversation around what's actually needed. What's nice to have what's needed and also allows money, more money to go in places where there may be greater needs. Stuff shows up on there. Once it, once it shows up here, folks look at it and go, Hey, this is the increase from what

088they asked you and the question or from the new pops up that was not there before and what do you need this for? Correct. Because Sheila and I have been on those budget hearings and I've seen Sheila asking those questions on things that I'm not aware of. Sometimes I ask questions, things on like software and other things, but like science stories, why do we need those? Well, why do we need this many at a time when our instruction hasn't fully shifted? So it's important to know like what's actually happening because some things are asked for way in advance years in advance of when, when they're needed. And then it's like, can we space these out? How many is actually needed for next year? You were obviously very intimately involved in that this year and for

089probably lots of good reasons. How will that evolve? So like starting next year, will you still be the person so intimately involved in those meetings or do you anticipate your new cabinet folks? Um, and maybe the jury's out. Maybe you're not sure yet. Yeah, I'm not sure. Okay. That's fair. Just because I feel like modeling part of this year was modeling a new expectation and how the conversations need to occur, how I would expect them to occur, which is also now for schools, they're able to, to know what they need to pay attention to in a different way and be able to respond to. Um, I think it might take a little bit more time. Um, especially, I don't think I'll just state prior to coming here. This is what I did for with high

090schools and with schools. Um, but there was a role for that. Um, so I need to figure out who else may need to be at the table. And some of the expenses, as we know, are not just teaching and learning related, they're operational expenses. Like they're connected to, um, a wide range of things short of cabinet being around the table for every conversation. That would be challenging. So it might be me for a while. Are all purchases of this nature? Is the information stored in a standardized database? Yes. What's the database? Skyward. We were completely paperless. My business office now is completely paperless. Like my benefit person was not two weeks ago and I told him to stop because I didn't know that. So it's everything, invoices, contracts, everything. Yes. It's good for the auditors

091too. So we give them systems to Skyward. They go in and they generate invoices. Also makes it easier, like by looking for like tail purposes. Like if you go in at five and there's 10 different teachers who have bought a similar thing. Right. You know, it's, it's sometimes gets challenging with P cards because P cards, let's say you use, uh, for example, um, you know, it's office depot, I don't know if it exists or not. So if Sheila use office depot and I use office depot, that P card purchase is made by Ali and Shale. So sometimes that gets challenging because there's no purchase order for office depot, so I can't run an office depot report and that expenditure will show up, that expenditure will show up under Ali and Shale in different categories. Sometimes

092that gets challenged, but limiting the P cards. That's why we limited the P cards because there is less analytics. You can't run those vendor reports. You can run those vendor reports from Skyward. And if you're using the purchaser for them. Well, I think some of that gets into the naming, um, and the labels. And so for software that might be easier to identify unless, um, I mean, one thing for us to look at, I'm assuming it's not like that, but if it just says software, we won't know what the purchase is, but if it has the name of the company, somewhere built in, we would have to run it, but everyone would be required, this is details, to put it in a specific category. So we would need to have controls over where every person

093names, like the vendor. Look at AI software, every teacher could buy five different AI services, and it'd be very difficult to track. Right now, Brian's on top of this stuff because he knows AI pretty well, but still, you know, that's a concern. Right. I think 150 bucks per every teacher. But that's also why we have an AI pilot happening, um, right now to, to put more controls around it, um, with teachers at both high schools, piloting, um, got to a, to a process where they've identified different outfits and they've been, um, piloting which ones we actually want to purchase. Now to go back to page 51, uh, one of the things that was interesting is I didn't know, for example, that we paid big members of the Chamber of Commerce, and I can now go

094get the Chamber of Commerce rate, the member rate when I go to one of their events, so it's sort of interesting that I got new information. Uh, so everyone knows you'd go get the member rate, the Chamber of Commerce. Well, if you're showing up as a board member of 113, yes, because otherwise we'll talk about that, but we'll just continue to move. Yeah, let's move on. All right. Let's move on. Okay. Pasco, what else? Yeah, right. Now to answer Dr. Holland's question, yes, we have, uh, the descriptions have gotten better. Unfortunately, we don't have a limit. We have a limitation in Skyward where we can't find invoices by description. But there's a new system we're implementing. 2027 is called cumulative. It's going to have that capability. We have the descriptions in there, but we can

095just search an invoice by description. The reporting is really good. Uh, so depending on, we've created different levels of reporting. So if for, for Dr. Holland, if you want to, she wants to just look at like high level, we, uh, we have a report like, and for me as well, by call planners, where the budget is spending history and where they are. And then for department managers, we also have reports line by line items. So let's see that this is girl's athletic budget. So the athletic director can go in and look at at any time by different lines that these are their science, we can look at it as cool and where they are, you know, with their spending. And then for the principles also is because athletic is one part of the program of

096principles budget. So this is a principles budget. They can look at different cost centers in that principles program to look at where everything is. And actually we do that too. When we have those monthly, uh, meetings, uh, principles. All right. Now we're talking about the high level budget monitoring report. When I look at it for my purpose, just to make sure that my budgeting is correct, but it's just still an estimate, but you still have assessment. So when I look at these reports, I mainly look at, and this is for the board as well, you know, the board should, every board member should look at these reports and ask me questions in person. Um, so looking at the current year budget versus current years, find this little domain. Versus last, uh, salaries and benefits being

09780% is non-personal expenditures are based on the timing, right? Salaries don't change, right? It's the same time of paychecks, the time of benefits. So if I'm looking at that right now, as of May, my spend is about 80% of the budget. What was it last year? 80%. So I'm like, okay, my budget is in line. If my spend was 90% and last year was 80%, I'm like, something's wrong in the system. There's something going on. So, I mean, that's, I hope that never happens either. I've done inaccurate budgeting or we've paid something out of it. Payroll, like in this part of your account said I need to investigate, but this is gives us like a good trend of where are you right now versus where were you last May? So, you know, this is a

098good analytics. So this was basically, you know, uh, our spending on capital outlay. So sometimes what we do is based on where the other budgets are in supplies. Uh, so let's say that if someone's asked for, uh, computers and supplies, when we code, we're very strict monitoring where we code things. So we have to code it in non-capital or capital outlay based on the threshold. So sometimes that's why those expenditures are off. But if you look at an overall category, like in non-personnel, we're pretty much in line compared to last May. Something like that could also just be a timing difference. It's a time you budget it later in the year. You know, some departments that ask for budget and supplies, but that actually expenditure belong to capital outlet. So what we do is we

099shift that expenditure in capital outlay. The budget is still in supplies, but then next year they have the detail of, okay, well now that expenditure belong to capital outlay, so they're going to budget in capital outlay instead of supplies, but also the time. This is another good, uh, reporting is based on the aggregate expenditures. So not only it tells us what our current expenditures are based on the last five years, it actually tells us what our anticipated expenditures are. For example, if this report is at the February, it's not until May, this anticipated revenues and expenditures we'll look at what we think we'll spend in March, April, May, and June based on last five years of data. So, you know, this is good because if you look at local $1.9 million, some of it is

100due to expenditures. So why are we turning about $1.9 million on local? Just a quick question, because our investment rates are high, earning good investment rates. My investment budget was based on PMA. It was 3%. We're earning close to 4%. So I'm like, okay, that makes sense. You know, so we're, we're actually finishing good, you know, in our state and federal are low because our state is basically based on, it's the transportation fund and our federal is based on special education expenditures. Though I actually had a conversation with Tiffany that I looked at her budget because her special education budget, the expenditures went down for private placements for room and board. That's why we're trending lower in our federal revenues, same thing with expenditures and it's all based on the time. Uh, other objects. You

101see why that's a hit big positive, but it's just on a high level. It's a very good analytic tool where you can sort of like anticipate how your year is going to add. I mean, if these numbers are going to be different in the June 30th and then you're going to have a cruise, but this is just a good monitoring tool for us. This is called five cast plus. It's an optional software that we purchased about three years ago. Great. All right. Just the budget calendar. This is just a process. We follow up. I'm not going to get into the details, budget due dates, and then we have proposed the budget on the websites and now we're at section two only 10 minutes behind. Um, yeah, like that's good. Yeah. You need a break. Drink

102some water. Yeah, I'm sorry. Are you okay? I'm okay. I think I'm gonna drink some water. Oh, sorry. Okay. And I think we have a short break after, like after this section. Yes. Right. It's a 10 minute. All right. All right. Let's talk about some history. I was here during that time. So it was building, building. Um, I know Rick was part of those questions. So, uh, this district had a 130 million, 33 million dollars billed by 56.5% of the votes in 2011, then there was an 89 million dollar referendum that was approved by 52% of votes in April of 2013 to finance capital projects. Part of that referendum, um, the district pledge 25 million dollars. So those referendum products were 114 million dollars, but the referendum was 89, I know Tammy knows all about

103this. She was in this process, uh, 25. How the district pledged 25 million dollars was to contribute five million dollars every year. When that commitment ended, we still have that five million dollars in our operating budget. So that started going to capital projects. Now from that five million hours, the district issued all revenue bonds to fund all those projects. So the three and a half million hours is tied for the debt payments too, because we're paying back from our operating funds over the years. That five million has grown by CPI because we grow that by CPI 5.7. So now that 1.5 million dollar allocation is more like 2.1 because we continue to grow that by CPI to allocate more money towards capital projects. Okay. So that's your next slide. Yeah. Yes. Sorry. You want to

104wear the next slide? No, it's all good. All right. And then we have, you know, we, uh, 2022, like I said, we issued 49.9 million dollars of all revenue bonds and we just issued 25 million dollars, which is our phase one of our life safety bonds to cover the life safety projects. What was the difference? If you go back to the first, yes, between the 133 and the 89 million, what came out? I don't know. Does anyone feel house? Yeah. We, the general, what is that? We're going to build full field houses. So we save a ton of money by not doing that. Okay. Plus, you know, we use precast concrete. We used, I mean, there was a number of other changes that happened as well. They also changed architects. It wasn't just, uh, the

105same thing was really bigger. They went to a totally different company to come and start the process again and go back and look through everything. It wasn't like they took the existing plan and just scale it back. Okay. Yeah. But I'm not sure the change in architecture for really was that important. First it was white. Yeah. But it was important enough to change more. Was it a, yeah. Was it a political move? What was that? The impression that I think a lot of time was that the initial plan was sort of an all in lots, not just the tools. I don't know if that's accurate or not. That was the impression. So they decided to. It was sold as the Cadillac. And yeah, yeah. And it will, yeah, it wasn't really brained correctly. In reality,

106not as much changed. Enough wood. Right. It passed. And I think there was also the first attempt, there wasn't a great awareness in the community about the state of the buildings. And so it took a couple of years then to create that awareness, that public engagement for people to really understand these are old buildings that serve a lot of students and have to maintain that luxury to our homes. The pools came out of the 89 million, correct? The new pools. Yes. Yeah. He had five committees, each with about 50 members that 30 times. Five separate committee, five separate committee. We have one on market research. For the referendum. Oh, I was in the building market research. I was on a tool. Yeah, that was one of the big brought me also brought it. There was

107a very active, like the first time around, and they brought in several people who had been part of that to join that trade. And that was part of it. So that was part of the effort to scale it down, to make people feel. And above the five, the steering committee made up primarily of architects, local architects. There you go. To clarify at this time, you weren't born on board. Oh, I was on board. This is me on the advocacy side. Yeah. You can't do if I'm on the board. Thank you, Jaime. Same. So I think this comes up on one of your slides. Um, the next slide. I did the products. Yeah. Um, yes. Um, so yeah, I mean, this is sorry. Can you go back? Yeah. Just so everyone has time to. So this

108is actually what was approved. Yeah. I mean, I think some of it, there's, there's an issue here. Cafeteria did not come out of the referendum. Yeah, but everything else, and this isn't what necessarily was approved. This is what was done. Correct. Cause there's items on the list that, that got approved and would have not been done. There were things that were like value engineered, scope reduction. So these were the projects. These are the lists we got from our previous architects of all the projects that were completed. Okay. So this is what was done. Ish. Cause the cafeteria was not a part of the referendum and it's on this. No, it's that's on this list. So I'd be happy to pull additional detail from previous, cause we had a different architects and then find out while

109all the projects, like the detailed list of the products, I know there's a list somewhere, like a comprehensive list. Yeah. I get, this is just to get like a quick, just a brief overview. I know, but it's going to form later conversations. So I do think it's worth some time if necessary. Are there things, um, where is there a list? Do we know there are things that maybe were approved that were not done. Do we have that somewhere? The big problem was they used a master plan that was started 2010 to inform the 2011 referendum, they did another master plan, but basically didn't have a lot of changes from 2013, uh, referendum, the one that passed, but the thing that was not done was the stuff that didn't make the list, the priority three stuff

110wasn't listed. So the community was surprised when we said, Oh, by the way, we all set up to a cafeteria, we all set up to the library. We never discussed the fact that there were things that didn't make the referendum list, and I think that's something we should have been public about, uh, because then the community is not surprised when 10 years later you say, by the way, we have to do this. So it was a error that was made during the referendum process and not describing what is not in there. Okay. Um, there's a 20, 2013 referendum, um, on a folder on the drive. Um, and I'm gonna ask Karen, I don't have access, but Karen seems to be the owner. So I know there's, I've like, if I go back emails, I have

111a list. I do too. I'm trying to find it there. Yeah. Well, it's findable. It was shared with me. I think Ken shared it with me. The last bullet point, what's wayfinding under Deerfield high school to site working, including traffic improvement and wayfinding, you know, both schools. Yeah. That's the name of our advisory curriculum. Yeah. That's right. That way finder, right? Yeah. I was thinking about the way point. Yeah. Yeah. Yeah. Um, all right. So renovations funded by capital projects. This is where we did the Highland park cafeteria. This from our capital projects fund over the time with that $5 million before we started, we did the alt revenue bonds. So these are some of the high level. I mean, there's a lot of work, a lot of detail. Solar pounds was a big project

112that we did that costs about 10.10 million dollars. We're going to get about seven and a half million hours back whenever we get it with the savings and the IRA rebate. Auditorium renovations were done for the Highland park lease. And then, you know, some, some work that we're going to, you know, it's pending like North storm utility, East parking lot. So we continue to obviously do projects, but we just don't have enough money in that capital project fund because most of it's tied to the alt revenue bond payments as well. So if you look at how much money we can, you know, uh, take out from that fund. So these are post-referendum projects, like things that we've done. And there is a big list, but it's just on a higher level. And then, uh, this

113is, uh, when there was a need of a bigger allocation, because 5 million are, it was not enough. I think the discussion at that point was the, uh, and correct me if I'm wrong, if somebody, you know, the background, right, that the board didn't want to want to delay the referendum talks and see how much money we can generate and identify revenue sources for 50 million dollars of work that was needed. So this was one of the, uh, funding source was the alt revenue bonds to issue 50 million hours of bonds. I don't think, I don't think we should categorize as delay the referendum. I think from a timing perspective, this work needed to get done. And like one 12 was doing a referendum. Um, and so it, there wasn't enough of a runway to

114do the work we needed to do to grab her in the past at this point, at that point. No, we did the auditorium for the. From all the performing. Yeah. Yeah. I could, they call, I know it's confusing called performing on the scale back version, the scale back. Yeah. Cause that was scaled back initially with a bigger, bigger scope. So yes. Um, so yeah, some of the projects we did, um, from our revenue bonds. And then we should like safety bonds, which is phase one. Um, uh, the renovations are here, the electrical improvements, uh, most of the works plan for 2026 deer field. It's a roof roofing, paving, mechanic unit, replacements, handrail, guard rails, and then plumbing and, you know, some side improvements. Um, obviously I don't, if you ask me the detail, I get

115back to you on the exact projects, but this is just a high level overview. We've shared that with the board during our life safety presentation as well. It's part of the life safety survey, the 10 year life safety survey. All right. So this is a really important slide, uh, because, um, I just made it in a very like high level summary of how much money do we have in our capital project funds, project that we can fund in the next five years. And please feel free to stop me if there are any questions. So this is our fund balance in our capital project fund estimated, uh, at 7.5 million dollars. So every year we already allocate, um, you know, 2 million dollars used to be 1.5. So over the years that fund balance is a

116cumulative 7.5. We use the solar project. We did the solar project from that fund as well in the next five years, right now, we're just looking from a five year perspective, because that's when the DSEP opens up to which Tammy is going to go home when we can, if we continue to allocate about 2 million dollars or 2.2 million dollars in that capital project fund, they'll accumulate to 9 million dollars by FY 30 and our alt revenue bonds, we have 8 million dollars remaining because the projects that we initially funded from our alt revenue bonds, we actually were able to submit them as life safety work. So what they did is when those amendments were approved by ISBE, we, we transfer some of that money from the alt revenue bonds to life safety, which freed

117up these dollars in our revenue bonds, which are uncommitted. So that could be used towards any capital projects. Does that make sense? That was going to be my question, part of that 8 million, so the restrictions on the life safety, that's one restriction. Yeah. The restrictions on the alt revenue is? No restrictions. We just have to, I had to spend 85% of that money, which we've done that. So now that money is basically, we can spend it on any capital projects. And what's the time frame? I mean, Tammy, is there, I think that 85% has been obligated. So there's really no time for it. Right. Tammy is the compliance manager. Oh, please don't give me that title. Make sure your mic's on when you say that. Yeah. So Ali's correct that when you issue tax

118exempt bonds, you have to have a reasonable expectation to spend at least 85% of the proceeds within three years. And the IRS wants you diligently expending them. So I would say as your unofficial compliance manager, that you should work diligently to spend the remaining $8 million. The IRS doesn't, you know, if they would randomly audit you in three or four years and say, why do you still have $5 million of this money left? Why haven't you been using it? You took the ability to sell tax exempt bonds and positive arbitrage it and earn interest, was that poor intentions on your part? Of course it's not your intention. Right. You need to diligently spend those dollars. So I would encourage you to do it within the next, you know, 12 months, 15 months, get those dollars

119spent. So our strategy now based on what Tammy said is that any projects that come up we spent on this fund, out of this fund, then our capital project fund. So at least we utilize those dollars first and then we utilize that. Does that, does that make sense? So like the stormwater work and all those things that were not approved as far as life safety, uh, amendments that we have to, uh, pay for, we're going to use this fund first. So this fund just goes down and then we can, you know, go towards those. So, uh, I said that we said that we did a million dollar solar project. And again, based on when, uh, Highland park is energized, these are our potential rebates, uh, 6.7 million dollars. I do want to give a quick

120update. I was actually talking to, um, Glenbrook school district, sorry, Glen Bart. And I spoke to Grayslake school district and new chair school district. We're actually doing a joint letter, uh, and we're sending that letter to our legislators, uh, because they're in the same boat as us. They're waiting on comments. So hopefully, you know, it's going to be a little, it's going to hold some power to it and, um, you know, we'll get the Highland park high school energized cause they're in the same boat with us. Are they partnered? Sorry. I was going to ask if they are partnering with municipal entities who are also having the same. I'm just wondering, I understand partnering with another school district, but I also know that the city of Highland park, for example, is having the same issues.

121So I'm just wondering if there's power in leveraging the community. Um, and if for some reason, Comet looks at the municipalities is a bigger fish than, than school districts. Rick, I'm going to turn that on. I'm going to do this. I'm just 6.7 is federal dollars. IRA formula. Right. And at some point there was some questions to whether that we were actually, we're going to get it. Right. We're getting it. We're getting that, uh, right now we're in the filing process for Deerfield, but Highland park will get it, you know, because the construction has already begun. So that means we're, we're eligible. I understand we're eligible. Yeah. Are they actually going to give it to me? I'll, I'll believe it when I see it in the bank, but right now, I mean, again, you know,

122it's, uh, what we've been told that we're getting it, but again, I only believe when I see the money in the bank, uh, so this is, again, it's just a what if it's going to happen. When it's going to happen. Um, so I, we're looking at the next five years. I factored in, we can take it out. This is to basically just show that how much money we're going to have available in the next five years. Then we have DSAP. I'm not going to steal Tammy's Tundra. She's going to talk about that. $15 million potential enough by 2930. I've added some contingencies because, you know, uh, we, we don't have, if there's unforeseen repairs needed, you know, for, for Jose to do any building work, we've got about a couple of million hours of contingencies

123that not doesn't include that 36 million hours because, you know, Jose usually there's things that he needs to do, unforeseen repairs, something needs to be replaced, emergency work, he usually looks at that fund to, you know, uh, spend because the fund 20, which is the operations and maintenance is strictly to run the building, you know, not to replace any like high equipment or major project. So there's some contingencies built in. Um, all right. So one thing to also note is in the 10 million, cause this is the 46 out of the 10 million, 8 million is allocated to projects that were not approved or HLS funding, but are required to be completed within the next five years. Can I ask you a question about that? Yes. So they showed up on FGM's report. Yes. The

124state said, these are now flights, life safety things. So why are we required to do them if they're not health and life safety things? I, that's, I mean, that's my question. We're saying that they're required just because they showed up in FGM's report. I spoke to FGM. The state says they're not. Yeah. I mean, I, I spoke to FGM and I actually asked that question and according to FGM and I can get into more details because we haven't done those projects yet that we are by law because they're in the life safety survey, even though those amendments were not approved, what he told me that were required to do. So I, I don't know that. Different departments probably. Yeah. And then the state's department. So at a backlog of this life safety is so hard

125to get hold of. But part of our, part of the directive that we get in FGM is we don't want to do any, we don't want to put on that list anything we don't think we need to do anyways. So the, the, my expectation is, is that eight million was stuff we thought we needed to do anyways, and that's why it was on the budget. My question is whether they're required to be done in the next five years. Yeah, that's. Those are category A and B items where according to FGM are required to do in the next five years. Right. But to Greg's point, why, you know, how many of the A and B items didn't way too detailed, but the bigger theoretical question is how many of the A and B items didn't get

126approved by. Oh, I have, I don't know on the top of my head, but that's something I can, right out of the eight million is also like the stormwater work and all that, that, you know, we approved to do. So I can get the, the bannock burn stormwater work too. Yeah, correct. So both, both North trail and bannock burn. So not all of it is that HLSM are designated toward the capital process that we're going to be doing. And we did have, I know there was, correct me if this is inaccurate, but I recall there being some questions around why some things weren't approved and our struggles with, just so everyone knows there was, I know Brian reached out consistently trying to get answers. And we're not going to get answers in a timely manner

127regarding an appeal, we talked about an appeal process, what that would look like. And it takes too long. Yes, we have, and it seems like there are questions, there are a lot of questions regarding why some things weren't approved. Um, if you go back through the reports, I don't remember exactly how that had been back up, but there were some things that it's like, you've got to be kidding me, this is not health and life safety. It's like sprinkler work, stuff like that. It's like, yeah, that didn't get approved. It seems so arbitrary. And these are examples though of, of, I think to Greg's point of us shifting our mindset a little bit of, you know, really, you really have to prove to us why we need to do this in five years. Like, let's

128just, let's not just take FGMs, you know, and I know they're a great partner of ours, but just take that at face value, like let's, I'd like to push back a little bit more personally and have a little bit more proof, um, because these are opportunities. And I personally, that 6.7 is for, for the ComEd and I, like, I think that's a gift that shows up if it ever shows up, that that would not, I don't feel comfortable all factoring that into any of our capital right now. Yeah. So then we're about 30, but I just wanted to have that number out there. I understand that. Right. I just, any further questions on this? Um, because when you see that information on an AFR and those, I know Greg, it's really confusing. So I just

129wanted to like, uh, create like a high level summary of, you know, these are our capital project funds. All right. That discussion. Tammy, I'm going to give you this. Okay. Thank you. Oh, yes, the fun part. That's right. My favorite part. Thank you very much. Okay. All right. So we are going to hover this table of contents today. Very, very high level, very quick municipal bonds, one-on-one, um, talk about ways that you can borrow money for capital projects, as Ali's alluded to a little bit already. Do a very, very quick review of your recent financing history. It'll be a little bit redundant cause Ali's covered some of it. Take a look at your existing debt and then revisit the strategy for issuing more life safety bonds in 2027 and 2029. Okay. So I think a

130lot of, you know, this, uh, many of you've been on the board for a while, some of you have other school board experience, um, but you can't just as a board say, we're going to take out a loan with a local bank, right? You have to issue debt under statute. And when you borrow money, you issue bonds on the types that you can collect property taxes for, uh, or if it's a type of borrowing where you're going to use operating dollars or operating revenue, like Ali also talked about today, that annual principal and interest payment, it's going to be called a debt service payment. So I'll probably use that coterminously today. Um, and when you issue bonds as a school district in Illinois, you are issuing at a fixed rate, right? So you say, when

131I sell the debt, for example, back in, in March, when you sold the life safety bonds, you locked in an interest rate, that's a fixed rate. You are not selling variable rate debt. You know, some more, uh, complex units of government sometimes enter into variable rate debt. You don't ever entertain that. So, uh, you enter into the fixed rate world, uh, under statute in Illinois, most types of financings can have a maximum maturity schedule of 30 years. That was a change actually a year ago. Uh, most were restricted to 20 years, but now you can go as long as 30 years on most types of financings. That doesn't necessarily mean that you should always, because that interest cost can get very expensive when you go out longer on the maturity schedule, of course, and when

132we talk about selling bonds that you extend property taxes for, that's a bond and interest levy. Okay. That's a separate levy outside the tax cap. We'll look at some numbers in a little bit. When we talk about your ability to sell general obligation bonds, that simply means you have the full faith and credit of your tax base behind you. You can issue the debt because you have an EAV and you can extend property taxes to pay the debt back. That's what that means. Okay. So here are the ways that you can borrow for capital projects and district 113 has entered into every single one of these, uh, except for the debt certificates, which I'll talk more about in a second, but on the left hand side, the boxes shaded in gray are ways that you

133can borrow and you can pay the debt back from the tax levy. As I mentioned, the orange column, alternate revenue bonds and debt certificates, you are paying those debt service payments from operating funds, not from the tax levy. That is a very, very important distinction. So let's revisit your ability to sell non-referendum bonds against your debt service extension base, or what we call your DSEB for short. So this law goes back over 30 years ago and the general assembly at the time said, okay, if you're a tax cap school district in 1994, whatever the amount of non-referendum debt service payment, your district had in 94, and it was completely arbitrary by the way that establishes your DSEB going forward. So that meant you 113 could sell bonds in the future on a non-referendum basis, as

134long as your annual debt service payments were not more than what your levy was for non-referendum debt in 1994. So for you, second line from the bottom where it says original DSEB, that amount was just under $675,000. So it said at that time can sell bonds, that could be your annual payment for non-referendum purposes at that point. There was another law that was enacted in 2009 that has, since that time going forward, has increased the DSEB annually by the CPI. So your borrowing power on a non-referendum basis, as of levy year 2025, is now about $981,000 per year. So in effect, it has increased your borrowing power on a non-referendum basis, okay? So this is a tool you have in your toolkit. Not all school districts have this tool by the way, because back in

1351994, actually, school districts knew that this legislation was coming and there were some school districts that said, well, either we have no non-referendum debt or we have a little bit of non-referendum debt. We're going to go out and rush to the market and sell more bonds so that we can establish a higher DSEB when the law passes. Several districts did that. Some didn't, yours didn't. But there were some districts that had zero non-referendum debt. We have, yes, 112 is one of them and said, we are correct. And that was complicated for other reasons too at 112, given the consolidation that they had gone through. But there are districts that don't have one. And quite frankly, their hands have been more tied than a lot of other school districts in their ability to fund capital projects.

136They can establish the DSEB, but they have to actually go for a referendum to establish that DSEB. You can, you can go to the voters and ask for approval to either establish one or to increase your DSEB too. So that's the amount of principal and interest you can pay each year. Correct. A period of up to 30 years. So if we have a longer term 20 year, which is what we're talking about, posing, then, you, you're getting a lot of interest. Yeah. So what you could do is if you had a shorter duration, like a five year, then you would be able to have, be able to borrow much more over the 20 year period. Yes. So the question, so what we, part of what we need to figure out is that do we need

137to do a 20 year, cause we don't have money now, or can we do several five years and end up being able to do it more over time? I think Rick, what we also have to keep in mind is look at our levy. Yes. Right. So if you want to do a shorter issue, you want to see what that impact on the taxpayers would be, right? So you want to make sure that your, your sort of your levy line sort of stays like stable. Well, it's all going to be the 90. Okay. So, so that'll be the same number, right? Well, increased by inflation. A couple of things. Can we put your mics on? Yeah. And also I was going to, and Alex, did you want to, yeah, I was going to, I was going

138to have Tammy kind of on the topic of what Rick's talking about are most districts, do most districts who do D subs, do they do five years, 10 years? Like, like, is, is there a lot of variety in terms of the bond payment periods that districts do? I would say that there is variety. I think as a best practice, most districts would like to be within that five to 10 year wheelhouse when they use their D sub to manage the interest costs and to continue to be able to address capital projects on a rolling basis, but there are some for various reasons that every time they do it, it's a 15 or 20 year issue, but it's also dictated by the size of your D sub of course, right? Yep. A Stevenson's a great example.

139They have a very large D sub so that they can roll over debt every few years. Thank you. And Rick, I did cut you off and I didn't mean to, is there anything else you wanted to add? Okay. I'm, I'm trying to decide if this is appropriate or not. I am curious, um, about Stevenson's model and decision to do that. And what was the deciding factor for districts, whether to go that route or not, just curious over back in 1994, because they have clearly, they're utilizing that, um, to engage in a lot of changes. So I'm curious how this, how districts at that time made a decision, whether to go that route or not. Some, some districts said, we just don't feel right about artificially creating a higher ability to issue non-referendum debt. That's not

140transparent. We would rather go to the voters when we have significant capital needs. And to my knowledge, Stevenson's been able to your point, address a lot of capital needs with zero referenda over the last 30 or 40 years. And there's been, I think some pushback in certain communities for doing that. Some there hasn't, but some there has. Well, I'm sorry, when you say pushback, meaning if another community tried to do with Stevenson pushback, meaning as a taxpayer voter, not understanding how school finance works, how are we able to address all these capital projects? And you never come to us as a voting base and ask for permission to do it. What's going on and you raise our taxes over time doing that. How does that work? Because I, you know, I was trained in this

141role of, on the board of, you know, the expectation because a school, uh, can't finance all the capital through our operating. That it is an expectation that every 10 ish years, uh, that a school board, a school would go out for referendum to handle those capital projects. Um, that that's almost, that's just kind of, that is when the school board finances look like because of how we're structured. You know, and, and I will also say when the general assembly was putting this into law back in 1994, their thought was districts should have a DSA because they should be able to take care of some capital projects without having to go to voters every time, replace windows and flooring and ceilings, but when there's the big ticket items, you should go to the public and ask

142that. That was their mindset. Any other questions or statement? We have a question, but I don't know if this is the right time for it. And everyone turned on their mics. Just, why don't we just all turn on our mics. So in determining like best practice in terms of funding, whatever projects we have in mind, do school districts generally determine the projects and then based off of that, they determine how best to finance it, or do they determine what financing will look like, and then look at the schools and say, well, what project can we fund with whatever we might have? Best practice is to determine the need first. So here's our list of priorities. Then we figure out what financing mechanisms are available. But at that point, we may have to scale back. We

143may not be able to do everything. So how do we prioritize things within a, you know, a five year capital improvement plan? And a lot of districts have, you know, 10 years facility master plans. I know you guys have gone through that exercise too. What's that longer term view? Now let's put it down into something, maybe that's a three to five year plan and take it out in three to five year chunks, keep reprioritizing. So we can maintain our facilities, you know, keep up with those expensive costs over time, rather than letting things go, and then all of a sudden having much bigger need because, you know, construction costs have gotten more expensive. Right. So I hope that answers the question. Yes, thank you. Jodi, there needs to be a vetting process as well, right?

144Because I mean, schools are thinking in the best interest of the kids. So they want everything. So when, once you basically involve in that feet, uh, stakeholder committee, they're going to say all that. I mean, if I asked my daughter what car she wants, she's going to say she wants a really fancy car. Does she really need that fancy car? So there needs to be like a vetting process when like talking about scope reduction, what things are going to be reduced that can fit within our budget. Okay. I would also add on the topic of like the timeline between referendums. You know, I think that what I had been told years ago is that is a little different than I think, Anne, what you said is that districts tend to look at a new referendum

145when you reach the end of the pain off the previous one. Right. And I know, I know that's what happened in 112. Um, when I, you know, before I joined the boarders that they had, they had a referendum in like 1998 and they built Oak Terrace and they did a lot of, you know, stuff and then those bonds were finished paid off at around 2015. So that's what timing came up to try to pass another one to try to do additional needs. So it's almost like a, a home equity line, right? That you're like once. Yeah. And kind of to Ali's point, also that way you kind of manage the tax burden. Like if, if, if the community's done paying off one set of bonds, then that's a good time generally to, to add another

146set of bonds because then, you know, you're not seeing the taxes rolling in a roller coaster. Right. It's steady. Okay. But then it gets to a philosophy. Then to your point, do we want to have 15 year referendum payback? Right. 20, 25 year that aligns with what our facilities needs are going to be so that we can time it and keep slotting in future referenda and maintain our facilities the way that we want to. That's different in communities as well. Okay. So at a very high level, these are the ways that you can issue non-referendum bonds against the DSEB. So with the law change last summer, as I mentioned, you can now pay them back over a period of up to 30 years. If you wanted to, most school districts issue bonds against the DSEB

147for working cash purposes. Ali talked about the fact you have a working cash fund. You've issued working cash bonds historically in the past. So you issue the bonds as working cash. You deposit them in the working cash fund and then by board transfer via resolution, you move that money to the capital projects fund. And that's how you pay for the projects. I won't get into the weeds on funding or tort bonds today, but there are other ways that, particularly with funding bonds, that can be a multi-step process to fund capital projects, tort bonds you wouldn't issue to fund capital projects. But there is a process when you issue these types of non-referendum bonds, you have to have a public hearing, much like the type of hearing you have for your budget or your tax levy

148every year. And working cash bonds and the funding bonds also require a 30 day petition process. You went through a 30 day petition process when you sold your alternate revenue bonds in 2022. You didn't have the public knocking on the door saying, no, we signed a petition. You can't do this, but it is part of the law you have to follow. Okay. This is a huge change and you are well aware because you issued life safety bonds just a few months ago. So they are life safety bonds are no longer subject to the DSEB. That's a game changer because school districts that are not tax capped have been able to sell life safety bonds forever. Without any sort of restriction on what the annual payments are. So now districts like you that are tax capped,

149you have a level playing field. You can issue life safety bonds for up to 30 years again. And as I think you recall that you don't have to go through that 30 day petition process. You do have to have a hearing, which you did. And of course, as you've just already talked about, you can issue life safety bonds after you receive approvals from ISBE alternate revenue bonds. I'm sorry. So kind of what Alex had just said about that mindset about a referendum with this change with life safety and life safety is 10 years. Correct. Um, would potentially a mindset of school district be that in 10 years we'll do another set of life safety, like again, keeping that steady. Yes. And roll. And that, as you'll see later, we look at the political 27 and

15029 issues. We have that very thought in mind. Maybe that was a rudimentary question. I'm just trying to understand. I think that's a very good strategy because it's, it's defined for you. You have a 10 year life safety survey. You have to do it every 10 years. So it's part of that first bite, like you've done with this initial sale in 25 and then keep trying to maintain the same payment, you can keep addressing your life safety projects over time. So as you know, you sold the alternate revenue bonds back in 2022. Uh, so when you issued them, as Ali mentioned, you said we're going to use O and M dollars to pay that debt back. There is no separate property tax levy. And you had to demonstrate, you had the coverage for it just

151to make sure you all have the additional detail. Alternate revenue bonds are what we call double barrel bonds. So you, as a board made a serious pledge. You said, we're going to use O and M funds to pay this debt back. Let's say, and you pledge specifically the O and M levy, which you're allowed to do. You could have pledged something like, if you see at the bottom, something like evidence-based funding or corporate personal property placement tax, for example, let's just say for now, for argument's sake, you pledge CPPRT. And at the time CPPRT was sufficient to cover the debt service payments. Okay. Let's say five years from now, CPPRT no longer exists in the state of Illinois. Okay. Which the way things are trending, maybe that's not totally unrealistic. But anyway, my point is

152it goes away under the law. If that revenue source is gone, you could as a board extend the debt service payments for your alternate revenue bonds to the tax levy. A judge in a court of law would say that's allowable because the originally pledged revenue source is gone. In your case, that's not going to apply, right? Cause you said we're going to use the O and M fund. And as long as you have an O and M fund, you need to use your pledge revenue source. Okay. But it's a double-barreled revenue source because of the backup property tax levy for districts that might get into a situation where the originally pledged revenue source is gone. So North Chicago got into that situation. They pledge a federal impact aid and that federal impact aid went away.

153So that what that happened because that impacted right away. They had to pay their bonds. So that added that tax burden from the taxpayers. So. Okay. And just a little more details. Interesting point. Alternate revenue bonds do not count against your statutory debt limit. We will look at your statutory debt limit in a minute, as long as you are not extending property taxes. So that's a positive for you because you are using the O and M revenue to pay the debt back. Okay. Debt certificates. I'll just mention very quickly, if this were ever a vehicle that you wanted to enter into, think of it like alternate revenue bonds light. You are using operating dollars to pay the debt back, except you can only use operating funds. You do not have a backup of a property

154tax levy ever to pay debt certificates back. Okay. So then why did we do this as opposed to alt revenue bonds? You, part of the reason is you get a slightly lower interest rate on alternate revenue bonds than you do debt certificates. It's more favorable in the market. Um, and I think preserving the debt limit capacity was also attractive to the board at that time, maybe not as big of a factor, but knowing that the alt revenue bonds wouldn't count against the debt capacity and this does. Okay. Okay. Yes. Uh, Tammy, you believe 112 did the same alt revenue bonds too? They did. Yes. So why, again, you know, hindsight, right? Um, why was that a bad idea? Like, why would someone say doing alt revenue bonds wasn't the right thing to do? I know

155I'm doing, I'm doing a negative, but hypothetically, why would someone like, yeah, I've had other school district clients that have issued alternate revenue bonds, pledge their revenue source, like O and M like you did, and then a few years later, they are in a much more dire financial position and they can't afford the debt service payments. Okay. They still have the revenue stream coming in. So legally they have to use operating dollars to pay the debt back, but they are strapped and now they're making choices that impact the classroom because they have to pay those debt service payments out of operating dollars. It's probably just philosophically, I would think it's probably a bad use of a, you know, debt strategy for something that's, you know, a want versus a need, because like, if you're, if

156you're spending, you know, that's, that's money that's coming out of your operating funds, right? If you're going to spend that money on something like a new gym or a new, you know, as opposed to like saving it for, um, you know, long-term, like really important renovations or needs, then you could see how people would be potentially having an issue with that because, you know, you can, you know, you might end up with then having needs down the road that you don't have the money in your O and M fund to pay for it. Right. And that was part of the discussion that we, that we had of tying up, tying up that, that money, right. Um, in the, in the operating fund, that was part of the discussion of the year, don't we? Well, see,

157it's infrastructure stuff. I'm sorry. What did you say? Right. Infrastructure. Yeah. Then there's escalations of those projects that we're not going to do in the future, what those projects would cost during that time as well. I'd also say like in 112, we did it for, um, to redo the Northwood and Edgewood, but that's part of this because we, because we closed two schools, we realized significant annual operating expense savings, right. Then all of a sudden we have a few million dollars a year in savings that we realized from that. So then we were able to say, okay, we're going to take that annual savings and apply it directly to these bonds, to do the product. You know what I mean? So it kind of made sense from that standpoint. I think it kind of depends

158on the district situation. Yeah, sure. Ali has really covered a lot of this already on this slide, but just wanted to show you in one place since 2013, the amount of new money, we call it, financings you've entered into in the last 12 years. So from the referendum in 13, the alternate revenue bonds and the life safety bonds, you've issued debt about $125 million to fund various capital projects. Okay. So now let's get to your existing debt. So first to take a look at that statutory debt capacity formula that I mentioned. So you're as a high school district, we take your current equalized assessed value, your EAV. So the 5 billion that Ali mentioned earlier, multiply it to 6.9%. And then we subtract the amount of existing debt that you have, except for the alternate

159revenue bonds. Those do not count as I mentioned. And when we do that, we get that number shaded in light blue. It's about $266 million. So you have very large debt capacity. This speaks to the principal amount only doesn't factor in interest cost, but this is what the law says. If you wanted to sell debt for various purposes, that's the maximum amount. With an asterisk, a new, I think helpful component of the law change last summer. Going forward, if you pass a building bond referendum as a school district, whatever that amount is, it does not count against your debt capacity anymore. So that, that's a huge help because districts throughout the state, there were some that let's just say maybe their debt capacity was 50 million and they needed to build a new school for

16060 million. Well, there's a deficit first and foremost. What they'd have to do is go to the general assembly every single time and ask permission to exceed their debt capacity and then have the governor sign it and in every case it would go through. But now it just takes, takes that out of the process. You don't have to worry about that. Additional costs too, and having to do that. So, yeah, it's just, it's more, yeah, there's yes. So that, that's, that's a huge positive for school districts all over the state, but nonetheless, you have a very large debt capacity as a high school district. And that number, by the way, does change from year to year, right? So as your EAB goes up and as you pay down principal and existing debt, you're going to

161have additional capacity. So let's just say, as shown there in that box at the top, if your EAB goes up by only 2% in levy year 25, which is probably a pretty conservative estimate, your capacity would go up to about $281 million, all on its own. Okay. And he, he's for the last couple of years been going on by like, yeah, I intend for, yeah, I know. Yeah. Which that that's a conservative. Yep. So now I wanted to take a look at your, uh, existing principal payments on the bonds that you have. So this is not interest costs, just the principal, uh, for a couple of reasons. One is just for you to see in one place where those principal payments are, but also wanted to start, uh, talking a little bit about your call

162ability on your bonds and your ability to potentially refund or refinance your bonds going forward. So you'll see that, uh, every single bond issue, except the 2025 issue has a box in some of the maturities around it with, it might be shaded either in light blue or in light green. Okay. Then if we look at the bottom, very, very bottom, the second bottom row, you'll see there's something that says callable. So let's just say, take for example, your series 2012 B bonds on the left side. So that has a call date of December 1st of 2021. So what that means is when the board at that time sold the bonds, it told investors who bought their bonds. We want to reserve the opportunity to re fund. That's the term that we use in the municipal

163bond world, but it's very analogous to refinancing a mortgage on your house in concept. We want the ability as a board to refund these bonds in the future. If interest rates are lower at some point than when they are, when we originally sold them in 2012, but to do that, you have to establish a call date. If you want to be able to actually generate savings. So in the case of 2020 12 B, I called it was December 1st of 2021. Okay. And you can see subsequently for your other issues, what the call dates are. Now the three on the left side, 2012 B, 2014 and 2015 B. You'll notice you've passed the call dates on all those bond issues. So call date means it's callable on and after the call date. So use a

164board. Don't lose the ability to call the bonds in or refund them. If you pass the call date. Okay. Now the reason that those bonds have not been refunded is simply because interest rates have not cooperated, have not been low enough for you to achieve any savings to doing that. The other bond issues that are shaded in the light green inside those boxes, those are bond issues that have upcoming call dates in either 2029 or 2031. Okay. So along those lines, let's talk a little bit about what are the laws, the regulations around refunding bonds. So again, the call date is the date on which you as a school district can call in the remaining principal payments and the investor then, so the example of your 2012 B bonds, if you had refunded those, an

165investor would get their principal back on December 1st of 2021. They're not going to get interest after that. They're going to just get their original principal investment back. So the IRS says tax exempt bonds, which you have sold, right? So you've had the privilege of selling federally tax exempt bonds, meaning the government's losing revenue when you sell tax exempt bonds. So they're restricting your ability to refund them. Cause they're going to lose money. Every time you sell more tax exempt bonds, even if they're refunding bonds. So the IRS says an advanced refunding is a refunding where you refund the bonds more than 91 days from the call date. Okay. And at this time, the IRS says you can't do a tax exempt refunding on an advanced basis. Okay. It used to be that you could

166before 2017. We haven't been able to do that for about eight years. If you fall within 90 days of the call date, that's considered a current refunding and you can refund them on a tax exempt basis. Okay. And the IRS right now says you can do as many current refundings as you want with newly established call dates every single time. What I think the important takeaway for you to know is that we have a database of all of your bond issues in our system and we are continually monitoring opportunities for you to refund your debt. So at some point you may hear from me again to say, Hey, and it may not be a few years. So example, for example, the 2019 bonds have a call date of January 1st of 2029 in the spring

167of 28, I may be calling Ali and say, Hey, the market's starting to look favorable for this. Knowing the law says we can refund them as the soon of the fall of 28, getting within that 90 days of that call date. We should probably start looking at the numbers more seriously and maybe set up a time to talk to the finance committee and the board about it. We could also just refund that out of our fund balance, right? We don't have to issue new bonds. You could do a defeasance, right? Where you may have some fund balance and cash and say, yes, we would like to contribute these to pay these down. If we have a particularly high interest bond, for example, and you avoid some interest costs on doing that, that could be an

168allowable, it is an allowable use of fund balance to do that. Yes. Just for the board to aware, the refunding doesn't give us like additional revenue, it just shifts, eases the burden of it on the actors, right? So there's no additional revenue generated. So I just add that. And I'm glad you mentioned that too, because from the referendum in 2013, previous boards have refunded several times and generated savings for taxpayers. So you've been very proactive about that as a board in the past. Keeping a look at the bond levy line to stay stable. Right. Oops, too fast. Okay. Let's look at your existing debt service payments on your levy bonds. I know this is very, very small, but let's look at the yellow shaded line just to give some perspective, a starting point for all

169of us. So levy year 2024 represents the current or sorry, not current because we have a couple more weeks until we start the new fiscal year, it represents debt service payments in fiscal year, 2026. Okay. The left-hand side of the page represents, it says limited tax bonds, debt service that represents bonds payable against the debt service extension base or that he said the middle section, the unlimited tax bonds, debt service. That's referendum bonds, refundings of referendum bonds and your life safety bonds, because none of those payments are restricted by your visa. So for levy year 2024, your total debt service payment, uh, is about, um, $6 million. It's just a hair under $6 million. The, by the way, the County adds a 1% loss in cost factor. If you're not familiar with that. So essentially

170no school district collects exactly a hundred percent of their property tax collection every, right. In most cases, it's going to be something a little bit less. So they give you at the County, another 1% on that levy to make sure you always have the money you need to fully make your debt service payments. Okay. So instead of having a debt service levy of 5 million, 9 55, your extension is 6 million 15, okay. Against your EAV of about 5 billion, your bond and interest tax rate all the way over on the right-hand side is just a hair under 12 cents. That's the current levy for 2024. Now what changes from year to year, of course, is your EAV as Ali has described. What's fixed unless you as a board do something to change it, meaning

171sell more bonds, refund bonds, the payments that are listed here, what's on file with the County clerk. And again, those payments don't change unless you as a board do something to change them. So what you can see, and we'll look at a graph of this in a minute, is that tax rate is going to go up by about a dime based on a conservative EAV growth assumption of 2% and levy year 25 because of the life safety bonds that you sold a few months ago. That was a structure the board agreed upon earlier this calendar year. Okay. I think that's going to come in. I mean, that's important to communicate with the community during the upcoming levy process, because we do obviously share the taxpayer impact on like, let's say if it was $600,000 a

172house, if your property value grows in proportion, this would be the total dollar impact. But this year will be a little complicated because of the life safety bond. So we want to incorporate that in that communication. Yeah. You'll have your operating levy increase and you're going to have an increase from your bond payments, right? Cause usually it's flat, but this year there's less little spike because of the life safety bond. Right. Can you talk a little bit about why, why the debt service schedule was set the way that it was, this was done strategically. So why did we do it this way? Yes. So talking again about having a life safety, 10 year life safety survey, right. And trying to take care of those projects within timely manner, knowing you'll have another 10 year life

173safety survey, roughly in 20, 34, 35, what you'll see in my very last slide is showing you what is the ultimate plan for the 2027 and 2029. What you'll see is those bonds and aggregate all these life safety issues will be paid off in about 2034 so that you could do another life safety transaction at that time and keep maintaining aggregate level debt service. Right. But even within that, you know, for the next two years, the debt service of those bonds is 5.4 million and then it drops to 2.6 million. Right. Why was that strategically done in that way? Yeah. So let's just go, let's go here. So here's the picture, right? So you can see before, so there's the, the two new bars on the left, the darker blue, there's kind of royal blue

174bars next to it, right. That represents more life safety bond payments from the 2027 issue. Then it does start to go down, right. You see some gray bars, royal blue bars, a little bit further reduction, but we are assuming that you would sell more non-referendum bonds against the DSEB in 2029 so that in aggregate to your point, Greg, the aggregate annual debt service payments of the district will be level and when there's, is this a pointer? Yeah, it does work. Okay, great. So when we have more bonds coming off here, oops, I gave you one hit through my mind. So let me hear 2034. You'll see there's a drop off. See gray bar to gray bar from 23 to 24 gets smaller. That might be when you're doing another life safety survey, sell more life

175safety bonds so we can fill in more debt to keep the annual payment aggregate level. Now let's go back here for a second because as was mentioned earlier, 20, levy year 2036 or fiscal year 38 is the final payment you have on bonds in your district that is the final payment on your referendum bonds. So, so talking earlier about timing of another referendum, you kind of having that in the back of your mind. If you wanted to do another referendum, that would be an opportunity in terms of a significant debt service drop at that point, simply from a referendum standpoint. Okay. Did I answer your question? Anything else I want to mention here? I think that about covers it. We're going to come back in a second. See at the bottom of this slide, there's

176a solid red line going across and the dotted red line and come back to that here in a minute or just want to just add, or if we wanted to do a rep, if we wanted to try to keep the payments stable and want to do a referendum before this, we could call those bonds and pay them and then ask people say, and then ask for. Absolutely. I know districts have done that. Yeah. Or, you know, in 20, you know, 20, 32, 23, 33, you're thinking about more life safety coming more projects. You might make a strategic decision and say, well, maybe we don't do another life safety bond issue. We do a referendum sooner in 2033, 2034, and we bring the debt service payments back up that. Yes. But yes, you will have strategies

177going forward, but I do think for you as a board, it's good to think about when you're going to have some big debt service drop-offs coming up. Okay. Okay. So this is the projected bond and interest tax rate for the district. So there's an arrow going to levy year 20, 25. So as Ali said, that will impact the property tax bills payable in calendar year 20, 26. We estimate conservatively, it'll probably be about a 10 cent increase. It could be a little bit less if the EAV grows by more than 2%. The estimated impact on a $610,000 market value home is about $200. So there will be an increase on that house just for the bonds you just sold of about $200 in calendar year 26. Full year. Yep. And we communicated that impact when

178we were issuing life safety bonds as part of our presentations. Yep. Okay. Okay. So this is a subset of the slide. You saw a few slides ago that had more of the bars on it and the lines, the red lines were toward the bottom and much more smushed. So this is just looking at the DSEP by itself. So what does this mean? The red solid line going across is where the DSEP is right now, that roughly $981,000. The red dotted line is showing you if the CPI is 2% per year going forward, how's that DSEP going to grow? How will it continue to increase our borrowing power on a non-referendum basis? So you have, as Ali has mentioned, a significant drop in that debt service payment in levy year 20, 29, right? Cause we're below

179either of those red lines were significantly below. So we did run the numbers at current market rates, a 20 year issue in 20, 29, based on 2% annual DSEP growth, filling up to that dotted line that would generate about $15 million at that point. That's where he got that number from. But to your point, Rick, you know, you could do, you know, a few million dollars every few years, depending on where the DSEP actually is and continue to handle projects that way. But we just wanted to quantify for you, how much might it get you in 20, 29 with a 20 year payback? And that decision is based on what we want to spend it with. Right. So it just, this is truly in fiscal 20, 29, right? This is not like we do it

180at 28 and then hits at fiscal 29. I just want to make sure cause we've talked about levy year 29. I mean, the proceeds will come in this clear. Proceeds would well, there is some flexibility like that when we actually, actually you could issue the bonds as soon as 28, if you wanted to, right? You could, you could. We assumed it was like a February 1st of 20, 29 issue thinking maybe you're going to fund projects in the summer of 29 starting, but you could sell them as soon as 20, 28 and the structure that I've described would work. And then just a revisit, Ali's covered this as well. This is the existing debt service payments on your alternate revenue bonds, which go through fiscal year 42, just under $3.6 million at this time. And

181depending where rates are over the next few years, and we get to that call date, hopefully maybe we can refund and lower those annual debt service payments and free up more dollars to use toward capital projects. That would be the goal. We'll have to see where interest rates are. I mean, the interest rate cut on this was one of the lowest interest rates I've ever been a part of. So, I mean, I don't know if. But you might have going for those. You're moving up on the yield curve, right? So it not to get too much in the weeds. We'll see no problem with this, but that would be ideal if we could lower those payments. And then this is the, we looked at the graphic version of this already, but these are, these are

182the numbers just kind of weaving in so you can see those two columns shaded in different shades of blue. So the next issue of life safety bonds would be 10 million in 20, 27 and another 10 million in 20, 29 based on the life safety projects that you all have identified. I do know that there are additional needs too, which we don't know at this point, cause our boilers are failing too. So that's just, that's it. Yeah. Any questions on all of that? Yeah. I want to make sure I understand that comment. So the boilers would be certified by the state as life safety. Oh, that. Yeah. I feel like we don't know anything. I'm not, I mean, we need to do that anyway. We don't know that. As far as what we know that

183the districts that have submitted voter replacements have been getting approved is like, it has been that we correct. Yes. But that helps whether it gets approved or not. We need to do those anyway, and that's a big project. So I have a question. I'm going to try to be clear on this. Um, so I understand this greatly. Um, I mean, I, I understand. So this is all helping us from a capital perspective to ensure that our buildings are operational and that, you know, where we need to enhance our classrooms to improve the education of our students, we still have a challenge in that our operating budget is still showing a deficit, which we'll get to the, in the next topic, but this is completely capital, right? Because that's my, that's my, how does this help

184us solve? It doesn't. Okay. This is, we're talking about non-operating. Right. I just wanted to make sure. So this does this obviously make sure our classrooms are, you know, can give us the opportunity to make sure our classrooms are at the right, um, level to support the new needs of our students. Um, but, and what comes out of the master's facility plan, right. Which is again, should all be tied to, you know, student need. Okay. Unless we theoretically can access funding sources that not requires to use O and M funds to pay them. Correct. Can you say that again? Right. To the extent that we're able to find funding sources that don't require us to use O and M funds to pay them. Right. If we can levy outside of O and M to pay

185the debt service with the life safety bonds, for example, okay. Okay. Right now we've got, I can't remember, three and a half million dollars of our operating funds are being used to pay debt. Right. Right. If we can find ways to fund this that don't require us to use sources that require the use of O and M funds to pay the debt service. So then that 3.5 back into being a user professional development, things like to become something less, still fund the capital requirements. I don't know whether we can or not. I'm just saying theoretically we're spending two and a half million dollars of our operating funds right now to pay debt service. So we can find ways to not use three and a half million dollars of our operating funds to pay debt service.

186Then that would open us up to the soft costs. This would be a good discussion. Like when we talk about the projections, but to also answer and one thing I want to do correct on is the, the $5.7 million that we allocate every year from our that's allocation from our operating funds and not saying that it should, but I'm just telling you that the 3.5 is tied up for the next 20 years, the $2 million can go back to the operating funds if the board wants it to go back to the operating funds to solve the deficit. I'm not saying it should, but I'm saying that it can if the board wants it. So, because it's coming from the operating funds, but then what that'll mean is that there is no money for capital projects.

187And those capital projects would be break fix that be. Yeah. Well, sometimes also capital project can reduce your maintenance costs. You know, if you fix the boilers, you require less duct tape. Yeah. I declare we're done. I have to go. Of course. Now Rick's mic's out here, but he hasn't done it all the time. And now. Oh, good. Maybe. Especially the space paper, whatever that. Yeah. Okay. Okay. Thank you. I just, what's next? Tammy, thank you very much. That's my pleasure. Thank you. So we will take a 10 minute break. Sounds good. There are food items. The microwave too, if you need them. Thank you. You're up. I like it. I feel like I got it. Yeah, but I thought about like putting my foot up and I thought that way. Yeah. No, things are

188really for me. Like obviously I've heard a couple of different times, right? Like this is helping me connect. You don't want to connect that night. I know some people needed to be connected and I wasn't really clear. I lose it though. Yeah, no, I agree. I agree. I agree. Me too. Cause it's not, this isn't my background, but it's my brain. And there's so many different things that can go off. Right. Like I have to keep going back and saying, okay, let me go back to this definition where we go. Like, if they weren't revisited. Yeah. Like, and maybe the survey needs, she needs a feed making practice. Yeah. So, yeah. So thank you so much, Tammy. Appreciate it. Yeah. Thanks. Thank you. Thank you so much. Are you playing golf today? I feel like

189I am. You're playing golf today? I think so. Tammy's a good golfer. Sometimes. Greg's wife is a good golfer. Yeah. Yeah. You play a lot? I don't play golf. Ah, oh, I used to play. You need this back, Ali? Uh, yeah, I'll, I'll, I'll take it from you. Thanks. You too. Take care. Congratulations. So exciting for you. I mean, I know for your trajectory, it's the right decision. It's not great for us, but you know, yeah, of course. But you, well, but you can't turn that down. I mean, if you want to, yeah, that's fantastic. I know, right? Where are they? Yeah. So we've got to figure out a car. We've got, yeah. Um, well, we have that third car, so I think he's going to take it and then he'll have to, you know,

190do the insurance and everything. And then like in six months, Matthew kind of needs it starting in the winter because when they do their off season training, they have to get themselves there since it's not indoor, you know, it's not run by the school. Um, and you can imagine a group of boys trying to figure out how to get 30 boys from point A to point B is not super great. Yeah. Well, they, we've, they did a tournament in Madison, uh, in the winter and they all got themselves there, but there wasn't a real big plan to how they were going to get home. Surprisingly. And Uber was like 50 bucks from Madison to Carol. Yeah. I'm like, yeah. So, cause Dave and I were about to jump in the car and he's like, let

191me just see what it is. And there were like three of them in the car. So that was a no brainer. You can't, it was warm when we came in and now I'm cold. I know, but I don't want to mess with it. And then they, I had curl. Yeah. So I have a great EOA as well. That's like the place you're starting to read like your books. Yeah. I think, I mean, I think he'll do really well with them. Kyle got a job. He did. Where? The Davenport school district. Um, where is that? It's large. Um, so it's, it just, um, Davenport, Iowa, like quad cities. Yeah. I mean, there's four high schools, five high schools, 20 elementary schools. Wow. And then obviously the middle school is probably half, um, seventh grade. Yeah. So

192seventh grade ELA. Congratulations. Yeah. So it's very fun. We'll commend anybody willing to teach junior high. Oh my gosh. It is a labor of us. Ah, it really. I know. Like they're idiots. Like, they're like, they love them. Awkward. No, you're not a drop of the apple. Don't sign. Nope. I'm usually my folks all the time. Yeah. Like you won't believe it happens. Yeah. Yeah. Yeah. Actually, it's a challenge. The hardest part is that you don't know who's showing up because some days they show up as like a mature eighth grader niche. And then other days they're like acting as if they're in fourth grade. It's not consistent. Whereas I feel like in high school, like my seniors behave like seniors. I know what to expect. My freshmen are pretty consistent. Schools are like all

193over. Yeah. It's all those hormones and all those. Yeah. I did joke with them. I said, you probably won't have the Mitzvah circuit. They have been born. I have one that you had here. I think that's all. She's like, I can't do it. I love teaching middle school. I know you've talked to me about how many conversations you have. Can you help us? I'm like, no, I'm American. Okay, you help me. No. Great. I'm about to ask you the same question. Yeah. We won't have any big plans this weekend. This, this other than this. Other than this being the highlight. I hear you. I went on my calendar for weeks. The only good downhill for a minute just happened now. Tomorrow's my birthday. Thank you. Thank you. I'm very excited. It'll be the first day

194this week. I can sleep in after school got out. Yeah, fun. I'm finding the kids everywhere. Yeah. Nice. Yeah. We're celebrating father's day tomorrow. Oh. Because I was out of town last weekend, chaperoning, 27 teenagers at a leadership conference, like camping with teenagers. Oh my gosh. Yeah, a lot. Yeah. And so we didn't get home until like Sunday night. And so I basically missed father's day. Oh, so we have to redo it. That's fun. We've got friends here that are stopping to stay with us on Tuesday. So we're at the house up. Which way are they driving? Yeah. Well, we live in campus. Whose place is the greatest? I feel like it only gets clean when like people are coming over. Right. And it's a good excuse to have free money. Yeah. Or a little

195bit. It might be after I haven't cleaned it up in months. Right. Right. Explosion. Just shut the door to the basement. Don't let anybody down there. Yeah, that's what it is. That's what it is. Yeah. It's a good excuse to clean up. Yeah. Their costs. That's a good idea. You're welcome to stay. Here's the cleaner. Yeah. The bathroom. Right. I have this list of projects. Oh my gosh. That's a lot of busy. Yeah. Oh my goodness. Yeah. Yeah. Never ending. No. I actually had a whole bunch of problems with City Palo Parco for pets because I used to submit permits for everything. Yeah, you're right. And I submitted all the permits and it turned out that I would just replace the pets if I had to do anything with the pets. Just left off my

196baby. Oh, no. And so he's like 92 years old. So I knock on the door like, hey, they go, yeah, I'll find a pet today. And they say, yeah, but the cat is not here. At some point, the owner would say, you should care for the pets. Right. So it's kind of taken a risk. Yeah. But we also have a dog and it connects to his fence. So if we put it in a different place, then it won't connect properly. Right. Won't close that gap. It'll be a gap. Right. How long did it take you to get here? How was that? We had a similar issue, except our neighbor was not okay with it and actually came out and they were measuring it. I guess there was like a four inch difference between where the

197fence was where they wanted it. We wanted in the end, but I was like, really doing this over four inches. Yeah. Please just put the fence in. We had something happen where the building next to us, there's a condo building right next to our house in the fort, and they were getting all of their landscaping redone, carrying out all the grass, like that looks pretty close to our yard. So we went out and looked and they were actually six feet into our yard. Oh my goodness. And they were like, oh, sorry about that. And it's cause they had flagged it, but what the flag that the people were ripping stuff up were following, like the sprinkler line flag, as opposed to the property line flag, so they re-sought it. Yeah. Still like, um, that way,

198but it hadn't been home. Well, I guess I probably would have still done it because they thought it was someone there. There you go. Hello. What a nice story. Yeah. Just moved here. It's like, you're, you're on the court, right? Yeah. Are there like a home association that governs stuff? Yeah. Yeah, there is. And then the, but the con the bachelor's quarters has its own association as well. So, but it was lovely and they were really nice and fixed everything. And I think we're whenever we get ready to start up again. Okay. That's still the Ali show. Well, Tammy, I guess mine. Yeah. All right, let's get going. All right. So now we're going to talk about some of the questions that were asked earlier about deficit operating funds and, uh, you know, talking about

199looking at our. Five-year financial projections and, um, obviously, uh, what assumptions have I used, uh, for those, uh, for those projections and how we're looking like, uh, from our fund balance perspective, again, happy to answer any questions as well. So just a quick, uh, tool thing about the tool that we use, uh, forecast five as two components, once the projections and other ones, the board reporting, that's what goes five plus. So, um, the projection software that we used, uh, they also offer services. A lot of school districts use their consulting services to do the projections for them, but I got rid of that. I use their software. I've learned their software. So I've mastered that. So I just use them. The only thing I need from forecast five is the software. I do my own,

200like going into salary calculator is doing those projections, building those models. I've learned that from the workshops. So I do that on my own. And before you finish with that, note that all our other systems feed this. Yes. So it's like all automated, not like you got to enter in, well, the shower is going to be X. Right. So we, we do in those calculators, we do in those calculators, put that information. So they're deaf calculators where we can put in, if you know what the teacher salaries are, right? So we have to put what those salaries are for those years, for the year that we don't know, we assume. We know what health insurance, so looking at like highly, like, um, like benefits are big part of expenditures. I don't know what benefits are

201going to be three years from now, but based on the average, I know they're going to be 8%. So in my production, I put 8%. I mean, they might, you know, in one year we had, um, a zero increase. Right. Five million dollars. Right. So the projections change, can change. Um, so the assumptions that I have for the next five years, the year that we don't know, uh, uh, we know the CPI for two years. Uh, the new construction we've been averaging, as Alex said, new construction on top of the revenue we get, we've been averaging about $25 million of AAV of new construction. That's what I have for the next five years. Now I know there are talks about developments and all those things that all those things will happen. They're good. There'll be

202extra revenue, but again, our goal is to be conservative of their projections. Uh, once we have that, once we have that information in a year where if the County comes to me and says that I'll lead this time, the new construction is 50 million hours, every 25 million hours of new construction brings us $625,000 of revenue. How you calculate that is our tax rate of 2.3%, not including the bonds. You take that AAV times 2.3%. That brings us, uh, that gives us an additional revenue in our street. Does it vary for, um, so if existing like commercial properties are repurposed or a new structure is built on them, how does that change versus something like, um, like the, the old Lincoln school property, for example, that was not on the tax rolls as well as

203being added to it. Like, is, is it just like, is it just, we have to wait for, like for existing, for new construction on existing on lots that are already part of the tax levy, are we just, we have to wait for an assessment or how does that work? So this is, and Rick, if you want to chime in on that, this is strictly like new developments was this also includes, cause when we've asked for the pins renovations on existing properties or improvements, so let's say if you build a basement in the house, and that is an extra revenue that the district will get, that will count as new construction. That counts as new construction. Usually applies when the value of the property is increased by 25% or more due to the new construction. Okay.

204That's when you get an automatic reassess. Correct. Okay. Uh, and, and, and it's good to think, in particular, the new construction. Yeah, it's a good way to say it. Lincoln school property was sold, the value of that land went on to the tax rolls as new construction and it'll go on again once they actually build houses there. Yeah. Let's build the night house. Now the county can sometimes make errors in new construction. There was one time the county gave me an estimate of, Hey, uh, use 19 million, 18, no, sorry, 13 million dollars in construction. I'm like, I've never seen a 13 million dollars in the last 10 years. So what is going on? So it turns out that there was a glitch in their software system. So if you wouldn't have questioned it, we

205wouldn't have gotten that money. The great township assessor, for example, did not know he was, when the senior center was sold at Highland Park, one of the tax rolls, he did not know that he should tell the county about that until Holly and I reminded him. Yeah. Oh, that helped one 12 out too. Okay. Okay. Uh, future investment return. I'm sorry, Alex, were you saying something? Nope. Okay. I didn't want to interrupt you. Future investment returns are projected at 3% based on our guidance from our PA financial advisors for investment rates. Again, as investment rates go up and down, that could change, you know, uh, the projection that can change how, what our deficit or surpluses EPI two and a half years or two and a half percent or unknown years going forward. We know

206the CPI for 2024, right? That's 2.9. Right now we don't know what the CPI is going to be December of 2025. It's trending to be closer to two and a half percent. Um, we do have a thing called Island group where we have business managers of a lot of high school districts and we constantly exchange emails and we meet and we go over the, Hey, what are you projecting for your CPI? So, um, we share that knowledge and basically the census, uh, consistent consensus in that group is that everyone's using two and a half percent as a conservative assumption for those CPI, uh, steady local state and federal funding, um, because the state and federal funds are about 5% of the budget. We just keep it flat. No increase, uh, unless something happens to special

207education, something like what happened this year. We don't know what's going to happen two years or three years from now, but that's a small part of the budget. We're just keeping it flat, but no increase or no decrease in revenues in the next five years until that by 30. We know the retirement. I know this was brought up earlier. I'll show a table of retirements and I've factored in that, in my calculator with a lower salary. So we factored those offsets, no additional FTE in the next five years. We're keeping level staffing as part of an assumption. Not going up. We have, um, medical dental live increases average by seven to eight percent rate built in for the year. I am a rep TRS rates are flat because they haven't been changed much. And then

208what's important is for the bargain years contract that's our out of the bargaining agreements, but just for conservative conservative raises for, uh, you know, for example, the lights and staff members almost tying to the CPN and keep in mind that the license staff members get a base increase plus step or average step increase in this district based on the placements, not based on the index, but based on where everyone's place is one and a half percent, that average will only continue to go up as more teachers retired because teachers who are at step 24, they're capped out. They don't get that step increase. They're only getting the base. So we have a lot of teachers between 24 and 28 that are just getting a small longevity, that's why the average steps is 1.5, but if

209a teacher is who's placed at step six to step seven, that step increases 3% or three and a half depending, but if I combine everything, that's one and a half percent. The teachers automatically move up a step each year. Yes. And then they cap out at 24. So 24 to 28, it's a flat, uh, dollar amount of longevity. And at 28 is just CPI. It's the, it's the base increase. Thank you. You're getting the negotiating key, your estimates of what it's going to be. And is that typical at schools that it's like our, our programming of steps. We do a survey with every school district. So, um, we shared that with the board in the closed session as well. The different comps, not sure. Yeah. I think, and you guys, some of you are part

210of it. So yes, absolutely. We talk with our business manager group. Anytime they're negotiating, we help them out. So, uh, next year I'm going to be reaching out to my island group to help me out because they're not that many districts negotiating, but yeah, we have a template that we use, um, there are small things like lane changes that we don't know of. So we just have like an assumption on based on the average increase of the lane chain, but usually it's like $200,000 for teachers who move from lane to lane and what the cost of those lane changes are. That's like someone finishes a master's degree or something like that. I'm sorry. That's like somebody finishes a math degree or something like that. And then there are like a hundred different things that are

211very small, which we put in the calculator and, uh, you know, in those assumptions, but those are like big high level assumptions that can result in like a multimillion dollar shift and, you know, deficit or surplus. You know, as you can see that, uh, CPI for the last 30 years has been close to 2.5%, so that's a very safe assumption to use. And if CPI, let's say if ever is going to be 5%, then that's just more revenue. But I just don't see that happening in the next few years. Only happened post pandemic where two years, CPI was the seven point something and 6.5%. What happened in 2010 where it was so low? In 20 years, the markets were crashing. Oh, is that the doc? Okay. Yeah. Yeah. Yeah. This is the word districts got

212law, uh, smarter where a lot of school districts mentality was just to negotiate contracts based on the history of CPI. So like, okay, CPI averages like two and a half, 3% will give you 3%, but not tying it to the CPI. So when this happened, a lot of districts got smarter. Like now we're going to actually tie your contracts to the CPI, uh, because in this case it was 0.1% and a lot of school districts negotiated raises of 4%. So now basically that created deficits. And this is actually what happens where, you know, if you look at your salaries and your benefits, they outpace the, your revenue growth of two and a half percent, right? That creates a deficit, right? So in here, as you can see that this is the budget that we shared

213projected 2026. So you have your revenues of 127.3 million dollars. You have, uh, your, uh, expenditures of 122 million dollars. And then this transfers are the net result of the transfer. That's the transfer to the, from the, to the capital project fund and to pay the debt payments, the 5.7 million, right? The 2.1 plus 3.6. So that is right now we're showing a projected budget, uh, deficit of 743 million, 743,000 with our estimated fund balance at the end of next year at 59.7. Now, obviously that is based on the budget of 5.25. These things are going to change once we get our audited numbers. So that's 49%. Um, our district's fund balance policy, just to keep that in mind is 40 to 50% of our expenditures. Okay. So right now we're at 49 or projected

214to be at 49 based on the assumptions that we know of that I've actually discussed because 2027 is going to be a negotiating year, so I have to put for, for the licensed staff, I have to put some conservative estimate on those, what those increase are going to be. And then we have, you know, um, 27, two and a half percent, I'm sorry, two and a half percent CPI and then, um, I'm sorry, 2.9% because we know the CPI because it's for December 24, that's 2.9%. The additional money is the new construction and then estimates from PMA, that is our revenue increase 3%. And then the expenditures are this 3, 3, 3, 3 is basically, that's basically our consensus with other business managers. What's a safe assumption to use. Something can go up, softwares can

215go up, things can go down, but that's just a very conservative assumption that, uh, to use like 3% in our non-personal expenditures and then the 6.6 is our benefits that's based on history of what our expenditures and, you know, insurance and all those things that are going to be, and then the salaries are based on some assumptions, as I said. So revenue is going up by 3%, expenditures is going up by 4% resulting in a close to a $2 million deficit. And then there's a dip in the fund balance. So as this trend continues and those assumptions are built in, so because I've tied the, in FY28, the 2.5% CPI plus new construction to, okay, that we'll, we will limit our increases in purchase services, supplies, cap globally by 2.5%. Again, it's hard, you know,

216it just depending on what those costs are. We don't know at that point. So then we're looking at a 3.3% projected increase and a 2.7% revenue. So as you can see that if that trend continues, because CPI is going down low, downwards, our deficits continue to increase and retirement cost savings are also built in. So here, if you look at, in, 2029, as you can see that the salaries have gone down because of those retirements or retirement replacement costs. So if these trends continues, our deficit continues to go up and then like in 2030, this is where I'm sorry, 2029, this is where we hit that under already 50% of our fund balance policy. Now I know that Greg asked a question about finding more money in capital projects, correct? Well, you find money in

217capital projects. So let's say that if you want to find two and a half million dollars, that means that you have to cut nine million dollars because you have to first address the deficit and then find three and a half million dollars on top. So if you want to find three and a half million dollars in FY27, you have to cut two million dollars to balance the budget and then cut additional three and a half million dollars to find that. Otherwise we're going to have a three and a half million dollar deficit. So it's just a, basically it's of like, you know, A minus B equals. So it's just like, it's a balancing act, right? I mean, if you want to find, if you want to, if you want to allocate more money, you have

218to look at where it's going to come from. So, but two, two, two million dollars of that is, is, is capital. That's coming out of our, you know, coming out of here. Right. If you go find that $2 million from a bond issuance instead, right. You don't have to find it twice. Yeah, then you're at zero, right? Right. Then you're balanced in that example, right? So we've got $2 million that's allocated to capital projects, right? That creates this deficit. Yeah. We say, we're not going to take that $2 million out of our operating, right? We're going to go float bonds instead. I'm not saying that we are. Okay. And that $2 million gets, comes back to this. Yes. So now we don't have the deficit anymore here. Correct. Right. Yes. So, yeah, right. I'm not

219saying we're going to do that, but right. But finding that recurring $2 million, yes, absolutely. But if you don't have that, if the issuance goes away, if you don't have that, that's not a permanent funding, right? This is a recurring funding, but absolutely. One way to address it is if I take that $2 million away, then we're positive here, right? And then our deficit goes up a little bit because then you were still having that issue about revenues, expenditures outpacing the revenues, not as much. I mean, our fund balance is pretty healthy, right? We have six months of cash in hand, on hand, but yeah. But what you're saying, why, why you would, in theory, you'd kind of be balanced that next year too, because again, the $2 million is factored in. Right. So I

220think you might, I mean, I have to plug it in the scenario. It's not going to be as bad. It might have 800, 700,000 dollar deficit or something. Because even if you're balanced here, right? Let's say if you're balanced here, right? If you find the $2 million, if we're balanced here, let's say we find them this year, next year, the revenue goes up by 2.7, expenditures go up by 3.3. So there might be a 7 to 800 dollar deficit, correct? Because every year the expenditures are outpacing the revenues, right? I mean, if you spend more than what you make, then, you know, you tap into your reserves. And stipends are in the salary line? I'm sorry? Stipends are in the salary line? Correct. Correct. How much are stipends annually? Depending on, so if you want

221to just like stipend on the schedule, it's like 3.3, 3.4. And then if you just add everything like extracurricular and all those other things, it's mostly 4. It's 4. 4, yes. So it depends on which, where you buy out. So in the salaries and benefits, I know you factored in future retirements and then what placements with, you know, new teachers. I mean, is that, that's the idea? I mean, my question is this. We have the same number of teachers throughout this, or same number of staff throughout this entire thing, same number, that's held constant. Right. So if you look at the composition of it may change, but it's the same number of crooks. Right. So all I'm doing is I'm, I'm averaging about $50,000 savings per, per retiree, depending if they're at the top of

222the scale and because that's a conservative number, even though savings are a lot more, keep in mind that they go on our post retirement insurance and we have to pay them depending on, like sometimes if they retired 55, you have to pay 10 years of insurance, some factoring netting all that out. So all of these retirements here, basically, I've looked at their salaries. I go very detailed with my projections. I looked at their salaries and I put in what the new salary would be. And then that's how I generate. And then minus what the post retirement insurance is going to be, what kind of insurance plan they're going to know. So I factored all that in my projections. I apologize, people must be ready, but how do you determine what the new salary will be?

223Do you just, do you like that? So average, higher placement. So we use MA step five. Yeah. Our, our student counts in the district factored it all into the staffing with the rest of this. That's where I'm going to go. Yeah. And I, I'm just waiting for, uh, I mean, it depends, I guess it's, it's on the needs it's, um, so what's your take on this? So student enrollment at the high school level doesn't always, it's not apples to apples is different in high schools because, um, the decision to run courses, um, is based on, um, course selection. And so high schools in some ways function like a small liberal arts college. Um, and some, there are some times when students will choose study hall versus a course. Um, there are some times when students

224fill up their schedules. And so because students have, um, flexibility in terms of the courses that they choose, there are years where students may choose more courses. And so that would mean that there's more sections of a course. Um, they may not, um, opt to some of the other experiences where, um, it doesn't require that don't require a teacher. So it's hard to, um, at the high school level, yes, enrollment's going down. And sometimes in districts, and I've experienced this firsthand when enrollment goes down, depending on the programming that a district offers, um, course selection sometimes can go up. So I just want to make a comment on this, on this subject. So I just, um, and I, and I know I've talked to this about Dr. Holland about this previously. So I'll, so I

225just pulled from the Illinois school report card, which is publicly available data on district 113, um, in, uh, 20, 2018, very similar to this shows we had 3,600 or so students and today about 3,080, um, in 2018, our student, our admin to student ratio, our student to admin ratio was 106.5. Certified staff was 10.7 and teachers was 16.3 in 2024 with just over 3,000. Our admin ratio is 68. Our certified staff is eight and our teacher ratio is 14. So we have a lot more people being employed by the district relative to the number of students we have at all levels than we did six years ago as students, as student population went down. And so I just feel like, I feel like as we're having this conversation, I hear what we're saying about, you

226know, kind of current productions and, you know, and all this and it's not necessarily a one-to-one ratio like a student leads, you know, but I feel like that has to be part of this conversation is that we have seen a substantial drop in enrollment and we haven't seen a corresponding drop in and since then, there have been a lot of significant amount of ads. Yeah. In the last five years, we've added between 30 to 40 FT. Yeah, absolutely. This is something I don't even remember when we got this. Yeah. At this 10 years, but through 2022, 23, we went to the guy that's a year ago. So 2013, 14, almost 3,800 students, 299 FT for teachers, total teachers FT, 22, 23, 3,200 students, 600 fewer students, 348. Yeah. Right. Yeah. Well, I think, because I,

227what I'm hearing too, is I think the profile of the students we know are changing and their needs are substantially increasing. And so, you know, from the MTSS structure, from the social workers perspective, from the psychology perspective, like all of those are additional staff that's required, that is, we believe, required. But those are decisions we have to make. Yeah. Based, I mean, these are not, it's not an iron law that we have to pay. Those are, those are trade-offs that we have to make, right? With regards to our financial situation and our enrollment and, and, you know, you know, where we think, you know, additional resource could be needed. I agree. We all agree. Yeah. But it's not a one for one. We all need to agree on that. It's definitely K-5. Yeah. Yeah. Well,

228and I think it's important to also think about the number of students with like IEPs and 504s and the varying requirements, as opposed to a desire to have a certain ratio of student to teacher. There are different requirements for students with special needs. And so I think that that's a part of the conversation too, where there are other factors at play. I agree. For specialized coursework and the size of the class for specialized coursework. So it's, you know, not only students with who are qualifying for, for an IEP, but all of those things is much smaller. But I, I agree with what everybody's saying. I just want to be clear. Like it's a conscious decision to spend more on certain things. It's not expenses are just going up and we have to find a way

229to deal with it. Yeah. Agreed. Agreed. Yes. Again, I could, we could build different scenarios. What happens if investments go down? What happens with this? What happens with that? This is just one of the scenarios. I can, if the board wants me to like create other scenarios based on certain things that Ali, what happens if you had 10 staff or lower stuff, I'd be happy to do that and provide that information. Everything that's driven by a look rather than for. Right, right, right. I mean, we have the finance committee. So, I mean, if, uh, yes, so, uh, absolutely. But I have, at least I can model that out. I have that information built in. I can model any way I want to. So for adding staff, moving staff, if Gallagher comes to me, insurance and

230says that, oh, our insurance did not go up, I can, I can put that in. So I keep that updated all the time. And I think from a board standpoint, I think we would be looking for Dr. Holland and their recommendations for where cuts or staff should be changed or whatever, but I think it is coming up on us to say that that's something that we need to look at. I mean, that there should be some agreement here in terms of, in terms of, you know, if we're looking at a long-term financial picture like this, like what's the, what approaches do we want the district to take to try and address this and that should be one of them. And then we would, you know, let her go do. Self-critique is, and us as board

231members, it's a conversation we really didn't start until she had like came before. Well, okay. I agree with that, Rick. And I think, I think there were a lot of high school, uh, districts that because of COVID and then because of other, and, and I'm sorry, but also the mental health crisis with students and them showing up in the buildings, which is, it has, is an issue in the K through eight, but a significant issue in the high schools and high schools also tend to have to, obviously have to also take care of some of our most vulnerable students beyond the four years of their education. So, um, I think we need to get a hundred percent better at making strategic decisions that are tied to staff and not just keep adding bodies, but I

232do think there was some, there were some specific decisions made in the past. It wasn't just I mean, there's so many things that caused to get where we are. And I, and I don't think we did a terrible job, but we really became more focused on it. Alex, to answer your question though. So, uh, you know, uh, with Dr. Holland working with the leadership was able to, uh, cut down by nine FTES. So, um, so I think that the first time at least I'm seeing that there's a reduction, um, you know, but we're still well above staffing levels from six years ago. I just wanted to, yeah. So any questions on this model? I know there's a lot going on and there are a lot of assumptions built in. It's not going to look like

233that two years from two years from when we actually find actual information, things will change, right? So, um, but it's, it's, it's based on like the historic increases. It's, it's, I believe I'm very confident about the assumption that I'm you. So basically by, um, FY 28. So there has to be a commitment, of course, to honor the district's fund balance policy, so it's not optional to go below 40%. Um, just the policy too. I mean, there is that option because the, you know, ours fund balance, and I think we've proven time and time again, the importance of a healthy fund balance. Um, and other school districts don't necessarily keep 40 to 50%. Yeah. Do you have, do you have a government finance officer recommendation is between 25 to 30%. That's what I thought. It's basically

234the own district, each district's philosophy. Uh, I mean, how did we land at this? That was my question. How, like how that policy that we've had of between 40 and 50, isn't it relatively recent? It was BA, it was before Ali. So I'm not sure, but, uh, I've, I've known a lot of school districts that range, but I can do a survey out there with my island group, uh, to see what other school districts done that long. Well, I don't, so I'm less concerned about what other school districts are doing. I it's helpful for me to figure out a way to find out the history behind our decision-making because I believe everything comes from something. And I wouldn't want to change without having that information. Like at the beginning of this section three, you're talking

235about forward passive item, how you use it, how you figured out how to use it. So that saves us some money as well. Are you not much, but not much, but every money, are you teaching that to someone else or like, cause we're talking about this is BA, this is before Ali, but there's going to be, you know, like after all, is this information that's knowledge that you're gathering? Yeah, absolutely. Okay. That's right. And I would prefer not to change anything. I would prefer to be charged with the expectations to address this issue because we can continuously change and never solve a problem. No, I, I agree with that. I just, I just want us to be aware. And again, the 40 to 50% has very recently been very advantageous to us, both because of

236COVID and because of July 4th. So I would also say that it's, it's a different conceptually, if we're going to say we're going to go down to 25% or 30% or whatever, because we have a one-time facilities expense and we would rather spend money on out of the fund balance and issue bonds. That's very different than saying we're going to tolerate an annual deficit. Right. That's going to bleed the front. Right. We're going to make up two totally different, different things. And I understand it helps with our bond rating with what we have for our fund balance, which helps us in, in borrowing of cash and money. So, you know, this is not an easy. And if, even if our fund balance was 25%, we have to address it because eventually it's going to go

237over 25% because we're in a structural deficit. We haven't found the crowd. Punishers that are outpacing our revenues. So at one point you have to address it. I think what that does is lowering the fund policy gives you maybe more time, but you still have to address it right away. It'll continue to go down just like, just like this, right? So if you look at, there was one more chart here. So this is basically our history, like pandemic expenditures, fund balance dropped, it's picking up a little, it's been very stable, going up a little bit. Investment rates are good too. CPI is high, right? So that's our budget. That's our projected budget for FY26. These are our operating costs. So you've done well, you know, dip pandemic, you know, got some reimbursements and then from

23821, you know, to 23, investment rates has been really high too. So that's helped us as well. And, you know, we had a big investment here in AFR, fiscal year 24, and then, you know, the budget and then projected budgets as well. So it's a downward trend. So I think part of the next steps would be for me to map out a plan to address this over time. Because it can't all be addressed, won't all be addressed in one year. I also want to be mindful of the impact of decisions on teaching and learning, of course, and the way we support students. It will be a challenge to do just thinking about the three years, sort of less than three years to try to get to a better point. But I do plan to come

239back to the board with some possibilities. And I also want to name, I understand that this is a negotiation year. The way that things are written supports an increase in staffing. So that's also part of the landscape. And we'll have to figure out, have those discussions within that setting. Can you explain that a little? Yes, we have very, part of the contract has class sizes that are significantly smaller for high school. And those were agreed upon. Yeah. Well, far off for those from the sizes that we have now. Like, is that? What do you mean? So we actually are following the contract this coming year. So currently this coming, following the contract with those sizes. Yes. Because we don't want another year of grievances the entire year. We're not following. And I mean, we agreed

240upon it, so we should be following it. But there has to be open conversations around what's appropriate. Got it. I misunderstood. I thought you were saying that, like, just throw out a number that we were averaging at 30 and students per classroom. We got to get down to like 25 per classroom. That's not what we're saying, or is it that what we're saying? Well, I'm saying that the, our contract had unusually specific language regarding class sizes and by, by a range of factors, by level, by who's been de-leveled or not, like by almost everything. But very specific parameters that we're operating under for class size. In this contract. In this contract. I'm hoping that, I would hope that as trust is built, I think again, everything comes from something and it's my understanding that some

241of what exists came up and due to the absence of trust and confidence in managing that process. And so I'm hoping that with, by demonstrating that we can, that it is being monitored, that we do have a process that some of that can shift at the same time, we do have an opportunity to, to look at retirements. We have an opportunity to make sure that our programming, for example, around MTSS is structured in a way that meeting our needs right now. Yes, there were a lot of increases and sometimes a solution tends to be to add people rather than again, address the system and have a high functioning system. We're at a different place right now where we are going to be making some shifts to our structure. I also know that with some of

242the conversations from the past regarding science, there are some shifts. So I've been thinking about a lot and we'll map out some possibilities. And I think we're just going to have to stick with it. I want to make sure though, financially that when we're building in assumptions, that the assumptions are realized. And so if you're building in masters plus five and we, and no one knows that that's what we should be following. It's, it's really not a good way to function. I think we should, like, I want to pull data to see where have we actually hired? Like what's that average and, and have those discussions because again, I don't want to compromise the quality of our educators and I also don't want to build in an artificial assumption. So I actually think we can

243be at a better place by some, by some shifts. And it can't just come, it will come through staffing, but also looking at the redundancies and efficiencies, inefficiencies, putting some things in place, maybe going a few years without the nice to haves regarding food and other things, I know people cringe when those things come up, but everything adds up, so I think there are some, some possibilities. It will just be, there will be hard conversations and hard decisions and it won't be popular. And time, it will take time for some of these things. It will take time, but I'm looking at this. We really don't have time. I know. Okay. So I'm just going to be like, I be a taxpayer, right? Ali, I have sat in these board meetings for five years and every

244single time I see that beautiful spreadsheet of five year projections and it's always red. And then at the end of the fiscal year, it's black again. So why should I believe you? Well, I mean, right. I mean, I mean, again, I'm just saying like, that's, you know, right. I mean, that's what the unions say too, in the meetings. So again, we built conservative estimates for the highly variable revenues, like investments and investments go up 4%. There'll be a black, if there's underspending in the budgets, there will be black, if there are variances, right. Sometimes it's also the timing of the money as well. So being able to explain why there's a variance is important to make sure that the community has trust. Right. But it's, it's always among our business manager group to have like

245very conservative estimates because what's going to happen is here that if we're able to control our budget to a flat increase, then you might see, you know, a lot of savings, but at least it's, it's, it's, it's a good measure to please put some assumptions, same assumptions that, you know, if you're doing your household budget, how much will your Netflix go up in three years? You don't want to put a flat, right? I mean, you don't have some increase, you don't know what that is. So it's always good that, but being able to explain what those gradients are, it's important to go to us. And it's the last of the contract. Maybe if they use the HMO versus PPO, that stuff matters, but you know, just quickly going over what Dr. Can I just say

246one more thing? I'm also thinking most importantly about ways to slow down the shifts. So based on your assumptions right now, I've been constantly thinking about how to shift those assumptions built in here to slow down, even if it takes longer. I hate seeing the red, but even if it takes longer to get out of the red, I still don't want to dip below the fund balance, like just need time to work this, this system, but I'm being optimistic in that we can make some significant shifts within the next three years. We might be black if our investments are continuing to be finding higher. Right. So we might not have a deficit. So we might be black, but we still need to address. That's what I'm saying. Right, right. It's not, yeah, it's not, you

247can't judge it on where. They're going to come to me. Ali, you showed it down and said, oh, we were in black. I mean, I'm going to have a really good explanation on why. I know. Yeah. And the challenge is that so far it's good, but the reason why has been because our revenue has come in higher, like from investments where multiple things to revenues. And sometimes we're not staff fully, fully a hundred percent as well. Right. So that factors in as well. I know, but that's also then impact. Is that potentially impacting student? You know, it could be. It could be non-licensed staff too. So let's say that, for example, if we have seven on average, eight positions that are open that we haven't hired yet, that that will create a variance in salaries,

248that doesn't mean we're going to eliminate the positions for my projections that have to do build staffing. So there are a lot of explaining like higher level variances. That could be a lot of the due to those things, you know, but it's mainly been revenues. Um, I mean, that is, that has been the primary country contributing factor, uh, with those variable revenues. Now CPPRT as you know, like you just followed the chart. I mean, you know, it was so high that why we had those years in black. Now it's going down. We don't know what the next year, if next year, the estimates are 2.5 million dollars, then I'm going to say, oops, I'm sorry. I mean, didn't know that. I don't know. It's hard to forecast where it's going to rain 10 days from

249now. I have another question. Um, on the topic of revenue, um, do we, are we looking for any additional ways to raise revenue for the district? Uh, beyond what we have now. And I'm just throw it out. I mean, he has ideas like, okay, if we're having a, we're going to have 700 fewer students than we did several years ago, presumably that means less need for space in terms of facilities and stuff like that. Could we, you know, rent out the use of a gym during the summer to somebody like that, you know, like we do, do we have, we have opportunities to increase revenue streams, things like that. We do look at the rental revenues as well. You know, fees, uh, we've looked at, um, uh, working with our school districts. So for example,

250I mean, not just, it's just not revenue cost savings too. Like when we do our appeals, I share with like 112 and one or nine, that saves us some money, right? But yeah, we've looked at grants. We do get a, we do take advantage of the school maintenance grant. Uh, that's, that's $50,000. If there are more grants, the problem with a lot of these grants are we are not eligible because we don't meet the low income ratio, but we continue to look at and talk with our business managers. Uh, I just like heart. I mean, you have in your local revenue, there are opportunities, but then, you know, then you're looking at fees and all those things that impacts, um, doesn't generate much out of it too. So, but yeah, we do continue to look

251at different. Yeah. I mean, we did a lot of work at Dearfield high school for flood control. We got reimbursed for a lot of that through grants, for example. You know, especially with the solar that when we heard about the REC, which is the renewable energy credits income and comment rebate. I mean, once we get it, I mean, that was a really good, uh, project we did, because if we get that rebate, the project gets paid off in seven years, the 10 million dollar project gets paid off in seven years every year, because of the escalation, both in electricity, we're going to be now we're saving 300. But six years from now, we're going to be seven, $400,000 every year for the next 20 years, that's $8 million. So again, just continue to look at

252what, how we can take advantage of those, you know, uh, like electric buses, their rebate grants, we apply for that. But, um, but sometimes it gets challenging because we're very limited because we're not a high, low income school district. We don't get a lot of federal funding and we're, we don't, we don't get, uh, uh, we're not eligible for those, uh, additional grants. That's always a challenge. But Alex, I think what you're talking about, and you and I have talked about this, could we host a Memorial day baseball tournament for all the local little leagues and they pay us, you know, ex like my dollar might use our fields. My kids have played in a big soccer tournament every year at Palatine high school, they host, so they use the whole thing. I'm sure they

253get that district gets some amount of money from that. Yeah. Right. Right. My other question is what's not in these numbers, what initiatives we've talked about, like implementing the strategic plan, I think that is not in these numbers. Right. True North is not necessarily, it might add net outright to zero to the same, but. Right. True North's not in here because we're figuring that out. Right. Um, additionally, part of this discussion is, um, I've been keeping track as we've been working through the implementation plans, um, we will need money to implement aspects of the strategic plan. Um, and so that is not built in. And at this point, um, I have things built in, like, for example, the master facility plan, um, and that proposal and, um, but in talking with Ali, we talked about

254that, that could probably come out of the capital project budget. So I have, I have a list of items and next to them, I have where the funding may come from. Um, so without that in there, I'm looking at like, I'll need at least 250,000. I thought it was going to be more. Um, and again, we're still working through the implementation plans right now, but I, I'm recognizing the conversations around the budget and also what might be needed by the time this comes back to the board for approval in August. But that's also over a couple of years. That's not, that's not a one-time cost, right? Um, so the vacation takes going to take, it's yes, it's going to take some time. And, um, I'm mentioning this because our priorities implementation will happen in phases.

255So what may be needed right now, there may be something else needed in two years because we're at a different phase of that cycle. So there has to be some flexibility as well. And I'm not mapping this out, um, outside of thinking about other cuts and other, um, cost saving measures. So I just want to name that. It's not, they're not separate conversations. I'm thinking about that as I'm going back to our staffing, as I'm going back to thinking about what our special education landscape will look like, um, as we're factoring in hiring, all of those things. So it's all connected. So I think figuring out all of those, all of those things and thinking about the example earlier about the FEMA and the investment, that $50,000 investment that was made to get that $2

256million reimbursement. I don't want to be Pennywise pound foolish and look at an investment like a $50,000 investment or investing in this work and saying, I don't know if we can spend that 50,000 and then lose out on like this other piece as well. So I just want to be mindful of like, there's costs associated with figuring out these costs. There's costs associated with where are those redundancies and time and effort and all of those things. So just thinking about it's going to hurt a little bit, but the payoff and the savings and how we can look at like, oh, well, this cost saving measure. It gets us out of the, like, what I appreciate is talking about the fund balance and talking through that. Because what I was thinking was, oh, well, like if

257you just produce that fund balance, then you're good. Well, yeah, but you're not changing the behavior. You're not getting to the root of the systemic issue. And I think that makes tons of sense. And I think the other question too, is by going from 40% to let's say 25%, here's what we're losing out on in an investment income, or here's what that's actually costing us to go that route. So I appreciate the conversation. You know, one point I do want to make is that the board was able to commit $25 million from the fund balance during the referendum because there wasn't a fund balance because we had it, because we had it. So yeah, I mean, I just, that's something I want to be like making sure that you have what you need to get

258the work done and that we're investing in the right things, and it's going to cost us money to do. And it will cost us money to develop the master facility plan proposal to possibly hire people that we may want at the table through that process. The challenge is going to be, there's probably going to be a lot of things. I know there will be a lot of things that end up on the master facility plan. Again, we would have to figure out how we're going to, what are our priorities and how we would pay for those things. So this conversation is essential because we'll have to figure out what our options are for paying for some of the significant needs that will end up on that list. Question. Earlier, when you were talking about, you

259know, there are some things that are nice to haves, there are some things that are need to haves in the life safety. We had like A, B, and C, and A and B were like the top priority and C weren't the top priority in other areas. Are we doing the same thing where it's like, this would be a, this would be a nice thing or like that categorization through the budgeting process. So something doesn't make it into the budget, whether it's like something doesn't make it into the budget, whatever. It's a great idea, but it just doesn't make it into the budget. Does it get captured anywhere of like, I mean, the document history. What was originally asked for and then what was removed or like, no, you're not going to like that department then

260would need to bring that back up at a later date. Like we're not necessarily, we have notes. Yeah. Like with any, yeah, I had that in one of my budgeting years, I've created category A, category B and nice to have. So everything was put in category A. I'm like, that's not working out. I mean, okay. So everything was in need. So nobody put anything in B and barely anything in C. So I'm like, okay, all right. We just have to review. So the other big thing that we'll have to focus on and this will take time to build, but a short amount of time, I'm hoping we do need to have the conversations around the returns on our investments just to ensure, and this is coming up through our strategic planning process across the board.

261When the district spends significant amounts of money on initiatives, programs, different items that come up that we say we need, having a process of determining its effectiveness, a review process to determine its effectiveness and to also be okay with parting ways with some things that we've just been doing because it's become the norm and it may not be serving us or it may not be yielding what everyone hoped for because sometimes things are implemented and there's no accountability afterwards. We add, we add, we add, yes. And then there's no conversation. So that's coming up through as well through our strategic planning processes. And I think that approach is going to have to occur across all of these, all of these areas. No, that's what's exciting about the strategic plan where it gives us that rowing

262in the same direction, all looking at, you know, having that mechanism of here's our mission, here's our vision. Is it serving our mission? Is it serving our vision? And that gold five as well of that financial component, how that plays into it. And I personally think again, because, you know, I believe obviously words matter that I think it's important for us to be framing all of these, whether it's employees or staffing or, or programs, trade-offs versus cuts. Like as opposed to what are we going to cut? What is our trade-off by implementing this versus that, or in this way versus that way? I mean, I just, I think it's because the umbrella needs to be students and the education of the students. So. I mean, this is like basically what we think of it, like

263as Dr. Haaland mentioned, right? Anytime you look at, you know, efficiencies and cuts, we trade off trade-offs. All right. Literally said it 30 seconds ago. Say it three times. Okay. Operational services. You look at operations, then we get to the staff and students, obviously depending on how much we can find, right? Right. We've done a lot of those things, like negotiated three third-party contracts, paper resolutions, some paper hiring consideration and all those were doing that, right? But we continue to find those efficiencies, but then it gets to a point, depending on the side of the deficit. And then you have to like look here, right? Then you have to look at the conflicts. And now when Dr. Haaland mentioned, we were limited in our negotiating conflicts. We have to do the class sizes. And then,

264you know, that should be the last thing that people should ever think of, because I mean, that's why we're here, we're here for this. Right. But, and again, we are going to have to potentially be making some trade-off decisions at that top of the pyramid. Right. Yeah. No, I think we've, we will continue to, but I think we've done a really good job on the operational services. You know, that is probably as at, you know, pretty lean. It's now we are on the other two levels of the pyramid. Well, it's a blessing and a curse because there's, you know, we've gotten so good at it, right, that now it's nothing more to get out of. Right. Well, there's some other changes though, that are happening. For example, talk about using architecture, that kind of stuff

265is that there's options in, for example, we started using this separate services, right? But that gives us more in capital, right? It doesn't help us in our operations. You know, but it saves us a lot of money. And in that perspective to maybe do some other techniques. 112 at Oak Terrace, we did all of their classrooms for the early childhood, not using the architect. And they did it for like a million three. I mean, it was just like, so those are the types of things that we need to be looking at from a capital perspective. You know, I'm not worried about the capitals. I am. I mean, obviously we want, we have a lot to do. We've got to figure out the operational side. And I also want to acknowledge there's a significant amount of

266work that needs to be addressed in our schools in terms of the capital aspect of things. And I'm concerned that as expenditures continue to increase based on repairs, like even just looking at those line items, like we're going to spend more not addressing issues. And I do think we will need to figure out how to invest more in our facilities. So if I can, if I can add a little bit to as far as the facilities, whether just going with an architect, I'm sure architectural firms just want to replace, replace, replace, replace. I don't think I've ever seen a plan where it's just like, okay, how do we budget accordingly to move forward? So one of my roofs is completely done. So when I did a roofing consultation with a roofing consultant, experienced everything, we

267expanded that roof life another 10 years, so that's able to let us budget accordingly with Ali or what we need to do instead of just hitting just, hey, we have to replace, we have to replace. Once that's replaced, we can budget accordingly another 30 years to say, hey, this is what we need to do. Solar panels, after the life expectancy of that, it's another 25 years. Now we can budget accordingly to say, hey, we are going to budget this for the next 25 years to start replacing these sort of panels. Same thing with RTU units, you know, talking to the building managers, are we getting expenditures for these? Are we getting expenditures per unit on what we're spending on repairs? So gathering that data, you know, from the different RTUs, from the roofs, are they

268leaks, are we, you know, gathering that data to what areas need the most replacement, what areas need the most work? So just that starting point in the capital projects. Budget is part of the CDO and M budget, which is part of our operating. Right, correct. And that's why I have those 3% increases. I mean, that's still very conservative. I could go like 6, 7%, but you know, sometimes we back on, okay, well, capital outlay, there's not a 3% increase. So purchase services, because Jose needs, has more facilities and repairs, his budget will go up. So it sort of ends up being like, sort of like, you know, in the same. Jenny, were you trying to say something? I think that, I think that like Jose makes a really good point and going back to the

269trade off or a cut, I feel like when we talk about cuts, it's just the blunt and it's just like going in with a blunt tool to handle every aspect where I think what we need to do to really be like what Dr. Hall is saying, looking at these things, trying to find all the nuanced ways that we can find these changes, there's got to be room for it and they may be asked by he here because of the two major emergencies we've suffered. There hasn't been room in time for that. Now we've got that and we've got a plan to use as a framework to find that. My favorite phrase, the allocation is scarce resource. Yeah. You know, as I mentioned, how much, so depending on what, how much time you want to spend

270on finding what, right? So like insurance, I know it's 10% of our budget, that's 10% of our personal. So like we continue to have the conversations with Gallagher, try to move in the co-op, we can save half a million dollars, there's a possibility. We don't know yet, but there's just opportunities like that. Yeah. So finding like things that are efficient, you know, but also looking at things that we can like, you know, do things differently, like insurance or the co-op, more shared services, taking advantage of those things and all that stuff. Yeah. Baseball term. So I've shared this chart real quick and I've shared that as well. Projections are in the wrong direction now, enrollments, and then just quickly looking at some opportunities, because we, if you look at our 2028, so those savings from

2712028, we realized that in 29, right? Because June 30, 2028. So there might be opportunities to, for ships, we allocate, we assign, we structure, so I mean, there are a lot of, you have 17 licensed staff members who are fined at the end of, and most of those 17 are at the top end of the scale. So, so again, these are, these are the requirements here. And those, and those were already factored into your calculations, right? The saving, not replacing them. Yes, but not. But no, no, no, but the, but the. My tool. Yes. Yes. And my daughter, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah. But again, to Sheila's point, like, yes, that's factored in and let's look at historically how we actually have hired in replacement and making sure that that's aligned

272and this assumes that we're replacing that's, that's rosy. Because your assumption was no additions. Your assumption doesn't say any rent and, and reductions. Levels down. We're right. Yeah. Which is the starting point. So I'm, you know, maybe we as a board, no, we're, but we need to think about that. Maybe we do want to instruct your team to say that assumption needs to be no addition and well, I would prefer just charge me with developing a plan. I mean, I can give you the opportunity to run a building. What does it need to be based on? Like need. Yeah. So, okay, guess whatever. So that's why we hired you. I guess it's a plan with the, I focused on efficiency. Yes. Right. Like I think that that needs to be a part of whatever that

273looks like. Yes. And going back to the chart with our fund balance, a plan that adheres to our current policy around the fund balance and that is comprehensive in that it considers all facts, all facets of the districts of the district. Yeah. And the one thing on the fund bail, I was just thinking about this is I agree. I mean, I want to be clear. I don't believe we should be editing the policy today and lowering it. And I think the policy was obviously written for some purpose and trying to maintain that. Let's also keep in mind. 40% also meets the fund balance. Like we don't necessarily, like we don't have to be at the 50%. Like, you know, we can be at the 40% and we're meeting our policy and we're potentially still in

274a good financial position. Keep in mind though, because it's percentage of expenditures, even if we balance our budgets, that percentage will continue to go down. Yeah. If not start losses, just remember that. But I guess I think, I think to that point though, if we were to say, okay, there's a significant capital, one-time capital need, then instead of issuing bonds for it, we're going to pay for it out of a fund balance. I thought that's a totally different thing. Then we have a structural deficit because of operations costs. Right. Right. I mean, we, and then we could, I mean, we could have that session as a board. Like, can we dip down to 35% or 34 or whatever? And as opposed to issuing bonds or whatever. And I think that's a, you know, but that's

275different than we are. We have more staff or we have more. Dr. Pauline was talking about like strategic expenditures. So she has in her list, what are the recurring expenditures? What are the one-time expenditures? I mean, we're happy to fund those one-time expenditures or capital projects, so we know it doesn't create a structural deficit, but you know, the recurring expenditures is always an issue because it has to offset the recurring revenue, which is, which is the challenge. Okay. I, I was going back to the agenda. Yeah. My, the PowerPoint slide part is done. Okay. Good job. Thank you for the time that you and your staff put into this information. So thank you very much. So it was. Sure. We got a lot of data. It was well worth this morning. So far, would you

276be okay? If, and this is from, for me, if we go around and, or board members to state, are there any, I'm curious, are there any high level takeaways or takeaways that you're leaving this meeting with or, because I put, I put that on the agenda. I think we just frame some things up, but I'm just curious. Um, and I think it would be important for me to hear, like, what are you walking away with, um, either better understanding or considering, wondering about, or, um, thinking about. It's a very good question. For me, I'm actually feeling, maybe it's feeling slightly more optimistic that we've got some opportunities to actually really address this. Um, than I did before I walked in this morning. Okay. Thank you. I'm thinking of our work as a board after seeing

277this and, um, and especially with the contract negotiations coming up, we've got a lot of opportunity and it seems like it's the right time for this opportunity as well, like being a relatively newer board and with a new superintendent looking at all the history that we have and all the things that are coming up and being able to make some good decisions as a team, thought out decisions and make a plan. I I'm thinking about that red line that was going down for the next, like six years, but you know, the things that we do right now, we're going to change the way that looks for the next six years. And I guess that's what I'm thinking about it. Or that six years later. Right. Right. We're, we're not going to be just pushing things

278away or pushing things off or putting it off or holding onto it and not holding onto something that's not working. Um, I think being able to find all those things and, and do something about it. And I think it's kind of exciting, uh, who knows that a financial thing could inspire and excite for the task ahead. I think I'm reflecting on, um, I was feeling really optimistic and then Greg asked the question about what's not in the budget that we might not be considering. And that gave me a lot of pause just because I think I'd like to believe that historically the administration has wanted to have a well-run district. And then at least in my tenure on the board, there, it's been like one huge crisis after another. And so I'm wondering, is there

279a way to plan for that or, and perhaps there isn't, but in what way can we, whether it's by having the right people in the right seats or forecasting in a way that can mindfully plan for incidentals, things that just come up that might, that could possibly derail our plans, but can we plan for it in a way that it won't, if that makes sense? Yeah. And to that federal funding, I mean, there's all kinds of potential obstacles out there, you know, and I still thought you were going to say it's an opportunity. Well, I mean, not now. No, you're right. It's not. Yeah. And, uh, it could be the next emergency. Yeah. You know, what if, uh, all of our funding for special ed go, that's two million dollars. Yeah. So, I mean, in

280the scheme of thing, it's not 20% of our budget, but it's real. Yeah. It's a big, big piece of that potential. Very real impact. You know, that being said, I also come away with, uh, uh, I, I've been having a growing confidence in our desire to meet a lot of these issues and, uh, it's, this conversation reinforces that. I think of one word, I think it would be proactive. This feels very proactive and this feels very measured and it feels very like we're in control to Jodi's point, like from being on the board with everything that's happened from, you know, day one on the board until now, it's always felt like there's been something and today feels very purposeful. It feels like it's very strategic. It feels like it's very like this coupled with the

281strategic plan and all the strategic plan work is so exciting because it feels like we're not reacting. It feels like we're headed in the right direction. And we're not having conversations about, you know, budget reduction, budget deficit reductions because we're in dire financial straits today. It's something that we can foresee that we still have time to course correct. So that proactiveness feels really refreshing and your team's amazing. Everything that's gone into it. I mean, it's just the, the confidence and, uh, just, wow, like incredible. I would say, um, I really agree with comment that Dr. Holland made earlier, that, you know, you were saying that you really wanted to understand why certain decisions were made years ago, because that helps inform, you know, kind of what we do now and make those decisions. They have

282been the right ones at the time, or we build or revisit them. And I, and I, I kind of, you know, as I'm relatively new here, um, I looked at a lot of what I saw today and what I've observed and I feel like I would really like to understand more about the philosophy, uh, and sort of educational changes that have led to the kind of increased costs that we've seen at the staffing levels, um, and some of this related to the union contract, some of it seems like it's not, but I, I'd like to understand a little bit better about how those decisions were made and what led to them, um, and because in some cases they may have been, they may be fine. And that's just, that's, that's what we have to deal

283with. But in other cases, you know, we may be able to revisit some things and find some savings, um, because a decision that was made four or five years ago, it may not necessarily be something that we have to stick with. So I'd like to understand a little more about when we say things like, you know, and I'm not calling me, I like students to have more needs. So we can spend more money on X or, you know, de-level it or whatever, whatever it is, like, you know, we just need to unpack some of the stuff and understand like what the actual cost drivers are here, because I don't think we should assume that it has to be done a certain way. Um, you know, what I wrote down is, um, I think this has

284been a very valuable strategic step. I actually had it written down before you said it, um, single brain, um, that this was extremely valuable use of time for me. I've, I've sat in multiple, uh, financial either committees or meetings one-on-one or, you know, um, and this seemed to connect some dots, uh, for me, um, in a much more concrete way. I also believe that this is an opportunity for us to control our direction, um, and I think we've been desperate for that, which I think is what a lot of all of us have been saying. Um, and two other additional points. We have the right folks around the table right now, um, from our different perspectives, which I don't know if we've had over the last couple of years. Uh, and the last point is

285gone cause I didn't write it down, which I found it was something Alex just said. Oh, I know, sorry. Um, is, uh, I do want, I personally want us to balance the finding out why we made the decisions we made. I think there's been such large turnover that some of that we're never going to know. And so asking the question of why, why does it make sense now, even if we don't know why it made sense then, and then validating it's the right direction. You can ask Barry Bullock, but his memory is selected. Well, I, well, everyone has their own lens by which decisions were made. And so, you know, I think it is constantly asking the question, but why, why is it today? Why is it still valid today? There's a real common thing

286about controlling our direction and then, and being proactive and not being reactive. Like there's a sense of forward momentum. Yeah. Yeah. Yeah. Well, thank you. Yeah. This was helpful. What about you, Shayla? Yeah. I mean, from, um, from what we've said just now and what you've heard today, like, what are you feeling at the end of the, or what do you want from us? What do you hope we're taking? What do you? Well, I don't want to answer what I'm hoping you're taking. This was just actually helpful for me to hear from each of you, what you're thinking and what's on your mind. Um, preparing for today. I mean, it's based on, um, my desire to have this meeting. It seems like it's, um, it met that need. Um, I felt like we needed to

287come together and really have like a concentrated block of time just to talk through everything and also to connect, um, this conversation with where we desire to go as a district. Um, but sometimes it's easy for me to stay in my head and wonder what everyone thinks. I hear different comments at the board or have different conversations, but collectively, I think these types of conversations are essential. Um, whether we agree on everything or not, I think, um, perspective sharing, um, is really important for us as a group. And I felt like today modeled what I hope we experienced more often. Um, I don't like to be in re like reactive mode all the time. Like I would like to be proactive and stepping into the district this year. And seeing the state of things and

288spending a lot of time asking a million questions and I will continue to about the Y. Um, I'm also mindful of the Y that the Y is important, but also I have a better sense of where we need to go and that will continue to grow. But, um, this conversation helps, um, give me some clarity on developing a plan to bring back to the board and to continue to discuss, but also I feel like we'll provide clarity for the team overall. Um, so it's been very helpful. Good. Um, I'm going to challenge us all. I know on Tuesday nights, it's a little bit different because there's just more people in the room, right? But, um, when we have the opportunity to share thoughts, just like we did, I really want us to do that because

289I do think it gives Dr. Holland direction, um, and the rest of her team direction, uh, and even the community, so, and I know sometimes that can be uncomfortable, but I'd like us all to be a little bit more comfortable with being uncomfortable. Okay. But we have the rest of our board meeting. Yeah. As this will bear, since there was no one signed up for public comment, there will be no public comment, so it takes a good five minutes off of my speech. Yeah, you're right. Um, we will now proceed to action items. It is recommended the board of education approve an amendment to the employment contract of the superintendent, Dr. Shayla Holland as presented. I have a motion to approve the recommendation. Is there a second? Is there any, uh, is there any discussion

290hearing? No further discussion or roll call vote. Please. Dr. Elliott Schremer. Aye. Mr. Heineman. Aye. Ms. Lufa. Aye. Mr. Neater. Aye. Mr. Baraza. Aye. Mr. Brunk. Aye. Ms. Newman. Aye. The motion carries is recommended the board of education approved the personnel notice as presented may have a motion to approve this recommendation. Don't move. Is there, is there a second? Second. Is there any discussion hearing? No further discussion or roll call vote. Please. Mr. Heineman. Aye. Ms. Lufa. Aye. Mr. Neater. Aye. Mr. Baraza. Aye. Mr. Brunk. Aye. Dr. Elliott Schremer. Aye. Ms. Newman. Aye. The motion carries there being no further business. May I have a motion to adjourn the meeting? Don't move. Is there a second? Second. I just don't want to time. All those in favor say aye. Aye. Opposed say nay. The motion

291carries. This concludes the business township high school district one 13 board of education for this afternoon at noon. Thank you for your time and participation. Thank you. Thank you everyone. Well done guys.