Recording in progress.
I'd like to call the August 22nd,
2022 Finance Committee meeting to order and announced.
This meeting is being audio recorded.
Can we just go around and state our name and who we are?
Kathy Sticker Board.
Member.
Stacey Winslow.
Superintendent Lindsay Group Board Member.
Erica Schmitt Board Member.
Cheryl Purcell Business Manager.
Greg Hormel Director of Service.
Michelle Agee.
Board Secretary.
Phil Elliott Director of Technology.
Mike Rizzo Board Member.
OC. Thank you.
Attached are the summary minutes from our last finance meeting.
May I have a motion to approve the minutes?
So move Mike Rizzo.
Second Renzi, JR.
Is there any discussion?
All those in favor say I.
I Although the post say no.
K the minutes are approved.
There's no unfinished business and we'll move on to new business.
First up is a quarterly update on the Milton Hershey Trust Fund.
We have fallen financial advisors here.
I believe we have some live. Yep.
Do you want to come on up to the podium?
It looks like we have
someone participating via Zoom as well.
Correct. That's Keith Elliott.
All right, go ahead.
Introduce yourself, please. Good evening. I'm Sherry Leo.
I am the relationship manager for this trust through Fulton.
And also I manage our a nonprofit services group from Financial advisors.
So I'm just going to cover a little bit
about the payment and bring you up to date on that
and maybe a little bit of history about the background for anybody
that might be listening and doesn't know the background of the trust.
So Fulton Financial Advisors serves as trustee
of a trust fund that was left by Milton Hershey.
And the main goal of that fund is to support the school district.
So that's how we are managing that fund to support the school district.
And we're basically following in Pennsylvania trust law
and then best practices as far as serving as a fiduciary and trustee
of of those funds.
So through some conversations during the COVID period, especially
and the needs of the school district, we talked about, you know,
could we do anything as trustee?
But they had put some temporary laws into place.
And so Fulton, along with you folks at the Finance Committee,
came up with a plan that to get you through
some difficult times and maybe some uncertainty times,
a 7% distribution from the trust fund is what we did
during the last fiscal year, last last school year.
But as a reminder, the goal is to get it down to about a 4%
distribution so that the trust can continue that payment year after year.
And the way we have an investor so that it can grow and that that 4%
is a percentage of a bigger pots that every year
the payment out to the school district.
The real goal is to have a grow stay at 4% or grow because the portfolio
is growing each year because interest rates change quite a bit
and you can't rely on them to be steady all the time.
So for this current school year, you all went through your budgeting process,
look like you did a wonderful job.
I got some some details on it, but based on that,
it was determined that the distribution
this year will not be seven, but it also won't go back to four.
It'll be 5% for this year.
So to give you a dollar amount
for the full year, the first payment will be September of this year.
Then we'll do December and then we'll go into 2023 and do March and June.
So the full payment will be $2,289,869 and that is a lineup on your budget.
And then we'll divide that in the quarterly payments so the district
will receive in September, December, March and June
570th 2000 $467.
So that be in place and I'm open
to any questions on the payment itself before we go into the portfolio.
Okay.
So if not, I'll turn it over to Liz and she'll go over the portfolio.
Good evening.
I'm Elizabeth Paris.
I'm the portfolio manager.
And what I'll do is I'll quickly go over the performance of the portfolio
and what we are doing this year
so far in the face of high inflation,
the Fed's monetary response, as well as the current spurns
about slowing economic growth, the high probability of a recession.
So we want to move to the next page.
This is the executive summary
and at the end of July,
your market value was just under $48 million.
We had this structured to have a goal and a target of 65% equity
and then the balance to be in cash and fixed income as well as alternatives.
The goal for this asset allocation is to return
an annual return of six and a half percent,
and that would then cover the 4% distribution
to the school district, cover the inflationary concerns
of about 2% long term, and then also cover the expenses.
It does provide a cushion for some growth in there because of then
that additional dollars will cover the administrative expenses plus some growth.
I think you can see in the lower right
hand corner the performance year to date.
The bad news is you're down 9.81% year to date.
The good news is the index, which we are
using, was down over 11% year to date.
And the index we use in this account is a combination of 35%.
The Bloomberg Intermediate Gov Credit index for fixed income
and then for the equity index we use the MSCI
Acwi index, which is a global equity index.
Certain things that we have done during the course of the year
have benefited the portfolio
and they involve what we call our tactical or short term allocation.
So on the fixed income, what we have done, we've been short duration,
so it's less sensitive to interest rate increases.
We've also made use of what we call floating rate
instruments such that the interest rate increases.
The moment that the Federal Reserve says we're raising the interest rates,
the yield on that security will increase with very limited downside.
So we are using those vehicles as well.
The other things we have done is we really honed in on the credit
quality of the portfolio.
We started the year with very some relatively high positions
in the high yield,
but during the
course of the first six months, we reduced that credit quality, reduced
the holding in the below investment grade and increased the credit quality
because of the concerns with the recession,
as well as what we've seen as the spread between
high yield and investment grade really started to widen.
On the equity
side, things that we have done is we started the year
pretty much balance between what we grow call a growth style and a value style.
We were more invested in what we call cyclical value,
which would be those sectors that grow at a very fast pace.
We have strong economic growth.
We've now rotated into what we call defensive value.
Those are sectors of the market that start to do better
when you have a recession or a threat of a recession
and they provide a stable revenue flow to
the company's bottom line.
So that would include things like health care and also your consumer staples.
We've also increased the exposure to value.
We are now overweight value relative to the growth style.
Other things that we have done is when you look at the mix between
domestic and international, we continue to be significantly underweight
international because of the emerging markets
and the concerns with China's economy and then also the Russian Ukraine invasion
that also has impacted our investment in developed international
because of the concerns with the European markets
and what the energy and the inflation rates are doing there.
I'm going to pause right now and see if there's any questions
from the committee.
This is Cathy Zucker.
I missed the percentage.
You said our goal is an annual return of six point what percent? 6.5.
Okay.
That is the long term expected return.
Now, some years you'll
earn more than that, Other years you'll earn less than that.
But over a ten year period, you would expect about a six and a half
percent return.
And so we were at our highest we were 55 million.
Right now we're at about 50.
I would say year 55, because that was the market value at the end of last year.
So. Right.
Okay. Thank you.
And part of that is the downturn in the markets
as well as the withdrawals from the portfolio.
Okay.
I'm going to move
to page my page numbers aren't I don't have numbers on line,
but it's the one that says portfolio performance summary about two pages later.
Thank you.
And what I want to emphasize here is the long term returns.
So I'm going to look at the column that says since inception
and the last three lines of that
page, show you what the portfolio has done, what your actual portfolio
has returned for the past, just shy of ten years
is 7.61%.
The index, which would be that combination of the Bloomberg
Intermediate credit and the MSCI ACWI,
returns 6.53%.
And isn't that remarkable?
That's darn close to that six and a half percent.
Okay.
So you do you have earned a percentage above
that and it's close to 2% over that.
I'm sorry, 1% over that.
So what that tells me is, since we started managing this account,
your average distribution has been about four, three quarters percent a year.
It's started at 5%.
We put it back down to 4%.
And then last year it was 7%.
But when you look at the average over the past ten years, it has been about
four and three quarters percent.
The good news is if you add a 2% inflation to that
and then you add the fee
and we charge 30 basis points, but once it got over
49, was it it's either 40 or 50 million, I think it was 50.
It's 40 million.
It dropped down 2.25%.
So we've covered the administrative expenses, we've kept pace with inflation.
And you had your distribution above that 4% target
because we built that excess reserve in the account for you.
So at this time you're still okay, you're on target.
Know, we have to keep our eyes and ears focused on what we see with the economy
going forward and take the necessary positions
within the portfolio to preserve the principle best we can.
I'm going
to pause and see if there's any questions or if anyone needs
any additional information that we haven't covered.
This is Kathy.
Secretary, you said our ten year return average is 7.61%.
Okay.
And then if you look at the page before that,
you can see some of the variability of those returns.
So one year it was down in 2018, it was down 7%.
But then last year it was up 14 and a half percent.
So that gives you an idea as to what the potential ranges
or anything else
that's sure for.
So the question is, so if we're down 9.81% year to date,
what are you seeing as economic outlook or trends
or I know that's
so I we really are focusing in on that inflation
because that is what's dictating what the Federal Reserve's response will be.
And then we'll also influence the markets.
Our expectation is for the Federal Reserve to continue
to raise those interest rates until they feel
that the inflation numbers have returned to a reasonable level.
And the
Federal Reserve does have enough slack with the employment in such a way
to be able to do that, there will probably be some pain.
That's the expectation.
So we're you know, and when you talk here, what Chairman Powell has said
over the last couple of days, it's you're going to feel some pain.
What that will do for the markets, there is potential more downside
to the markets.
That's one of the reasons we do have an elevated cash position in the portfolio.
It's also a reason why we've become very defensive
on the equity side and become defensive on the fixed income side.
So I can't tell you.
I think the
the latest things I saw was
there's a 50% probability of a recession
sometime next year, if not this year.
So that's
helpful for me to understand what you're seeing.
I guess
I have one more piece of news.
I am intending to retire
by the end of this year,
so I want to that is why we invited Ali already to the meeting.
I have collaborated with Keith for the past ten years
on this relationship and we continue to collaborate rate
as we transition this to his oversight.
So Keith didn't know if you wanted to say a few words.
Yeah.
Thanks, Liz, and good evening, everyone.
I, as Liz said, I'm Keith LRT.
I'm the chief investment officer of Fulton Financial Advisors.
I and and first and foremost, I apologize for not being able
to be there in person, but I do plan to be there at the next meeting.
And thank you.
You know, I've been part of the Hershey relationship since the very beginning.
I was one of the original presenters to the board and have worked alongside
with Liz since the initial funding of the of the Trust.
So I'm well in informed
and understand the the background of the trust,
the purpose and really what it means to the school district.
So with Liz's future retirement,
I asked her specifically to take the relationship on directly
and be the portfolio manager day to day, mostly
because again, you're very important to Fulton
and the trust is very important to to the school district.
So I, I begged Liz to be a part of it.
And, and I hope that
I'll have the opportunity to continue to work closely, more closely with you all
real quickly on
on some of that I want to give listed.
And Liz's answer was perfect around
what we see over the next six months or a year.
And and it's it's really to be determined.
But we've had one of the worst first half of the year we've had in history
historically
that turns around, you know, the second half tends
to be a little better when we see these really bad first half.
And I think there there is that possibility.
And maybe the silver lining in all this and kind of connecting the dots
with the six and a half percent target, we your relate
we target a specific allocation to meet a specific objective.
So a 6535 allocation
in our estimates and our our calculations suggest that over the long term
that should be a six and a half percent yield or a six and a half percent return.
That's enough to make your distribution enough to cover
inflation and and and any expenses.
We don't want to assume any more risk than that,
because in these times that the market turns negative,
your portfolio could lose even more than you want.
So we want to manage the right amount of risk
commensurate with the the right amount of returns.
Now, again, the silver lining in all of this
perhaps, is as interest rates are increasing,
it's probable that fixed or that equities will not be as
as as
per not provide as strong of a return as we've seen in the past.
However, fixed income and the yield on fixed income could be much better,
meaning that we could actually take a little more risk in the future
in the portfolio and still reach that six and a half percent return.
So today it's it's uncertain, but that's the type of analysis
and evaluation we'll be doing over the next 12 to 18
month percent
with less risk in the future than than we do today.
So with that, I don't want to take up any more time of the committee.
I just want to say thank you and and look forward to working
with you on the future.
Thank you.
Is anyone have any other questions?
Okay.
Well, thank you very much.
Thank you.
I'm I'll move on to the food service update. Mr.
Hummel, our food service Director.
Good evening and thank you for the opportunity to present to say,
afternoon with some new board members here and some new folks in the
also attending this evening.
Just want to give a quick background.
Food service is a proprietary account
when it's viewed in a school district.
So of course we're separate from the general fund,
the National School lunch program, which we operate, and it's offered
by the United States Department of Agriculture,
began back in 1946
when we realized that after World War Two, our troops were malnourished.
So our goal from the inception of the National School Lunch Program
is still the same.
And that's, of course, to nourish our students.
But we need to do so in a financially sound manner.
There was a time that we were that lost entity.
When I say we school cafeterias
and the debate of the mystery meat, mashed potatoes and
then tax
sours became tighter, we had a whole different shift
in our family nucleus and the makeup of families.
And then children really changed.
Between the sixties and the eighties.
Fast food boomed.
So did the technology,
and students all of a sudden also had more disposable income.
There was never a time back in the early eighties and nineties
that children really dictated to parents and defined
the spending of household income as did that generation.
And what that really did in turn to schools is we were always here
for students and to nourish them, but they're eating habits
really shifted through all of those years of those changes.
And then we were shifting to become more financially stable
and treating them, of course, as customers and students at the same time.
So what did we do?
We started selling to them what they would purchase.
Then along came 2012
with the Healthy, Hunger-Free Kids Act and
the National School Lunch Program had the largest overhaul
in the history of the program with new nutritional guidelines.
So what some of you might not realize is that was quite the challenge.
A lot of new products from very large manufacturers
in a we feed 30 million children a day in the national school lunch program.
So there were a lot of nutritional changes such as,
you know, whole grains, much lower sodium, lower fat,
and manufacturers needed a little time there.
The new products that were developed back
then weren't as kid friendly as they probably should have been.
Plus, it was a huge shift compared to what children were eating
at that time.
We we decided at the high school level to drop from the National School Lunch
program simply so that we could continue
with the wide variety and then not accept the funding.
Now, we have since
jumped back on board.
It was a board decision and an administrative decision to do so,
and we were preparing for that right when the pandemic hit.
I was meeting with students and getting feedback.
So I was very fortunate because the timing was just probably
about the only good thing that came out of the pandemic for us.
Speaking of that pandemic,
as you're most likely aware,
it had a very negative effect on our our department.
Never in our history
did we not have our customers to feed
in masses that we didn't during the pandemic.
So we never stopped feeding during that pandemic.
And I'm very proud of the efforts of my team.
We just shifted it look a lot different, as did everything else.
The foundation that our program has kind of built,
the strong foundation of being more than just breakfast and lunch.
We used to be very involved in classrooms and turned the cafeteria into kind of a
a classroom with sample events and worked with PTO and other individuals
to really create a learning environment changed during that pandemic.
And we are in a rebuilding process.
I did knock a few bricks for our foundation,
but that foundation is still very strong.
It did also tax us as far as financially.
The board had to make some larger contributions during the pandemic
to the food service department,
particularly during that
March two to June period.
And then we had to unfortunately do some furloughs of staff
for the first time because of the change of students attending
during that first full year.
We are, like I said, rebuilding
last year was very good for us
because of waivers that the United States Department of Agriculture provided to us.
So as you're aware, all students had the opportunity
to eat free
with total reimbursement
coming from our government through USDA.
Just to give you a quick snapshot
of that reimbursement,
one of the things that challenges Dairy Township and we
we talk about it with just regular funding and how we're underfunded.
If you think about the National School Lunch program, about 30 million meals
served a day about 76 to 78% of those 30 million meals a day
are for children who come from families who are economically challenged,
who are really approved for free and reduced.
And so the majority of our school districts in the country,
their food service is funded kind of like we were last year.
They're feeding all of their students and getting all
the reimbursement to cover their costs.
Last year we received just for lunch
for dollars hours and $0.56 a meal
from our federal government for each and every meal that we served.
By the way, last year, we
did serve a total of
98,000, close to 99,000 breakfast
meals and 326,000 lunch meals.
And you might say, well, what's that in comparison to what is normal?
You go back to 2018, 19,
our breakfast was only 32,000,
so we tripled breakfast numbers.
Lunch was only 116 hundred and 17,000.
Keeping in mind though, we weren't participating at the high school.
So some of that, but that basically tripled as well.
Some of the reasons, of course, for tripling is we offer
they offered meals at no cost on average.
Last year of our hour, we served about 1800 to 1900
meals a day, Lunch meals a day
and breakfast meals were over 600.
Having the ability to feed in classrooms, grab and go,
and then having it at no cost
really helped us spread
the importance of school nutrition
to all families, regardless if they were free or reduced.
Keeping in mind now that we're back to the regular program
with the computerization of our point of sale, no one knows
when a child is coming through our serving lines
if they're free or reduced or if there's money on the account.
We are at 26% as of today,
free and reduced.
Put that in perspective.
We were 23% back in 1822, 23%
pre-pandemic.
And when I started here it was 3%.
We were now at 26%, the highest percentage
we've ever had a free and reduced students.
We are seeing an uptick
in questions relating to the process.
We think due to basically the economy,
but we'll keep taking it,
keep helping those families
through that process to make sure that our kiddos
are being taken care of.
One concern that we have this year, of course, now with the meal program
going back to the way that national school lunch program is run,
and families who don't
apply for free and reduced or don't qualify
if they're going to continue participating in our program,
that's a very important we need participation
rates to stay high.
Your support to increase
our meal pricing was very helpful.
Something to point out that's
the average person doesn't understand
is we all understand that groceries are increasing.
But when you have a food budget of 600 plus thousand dollars
and then you're hit with the highest increase
and in your food bid
that you've ever seen in my 30 plus year career at 30%.
I know.
And we participate in a school bid of $25 million.
So we, along with other schools, have a very large
we are one of the largest cooperative purchasing groups in the state,
one of the top five.
That's huge to our to our costs.
And to have to pass that along was was very difficult.
And then other operating costs.
But we needed to to kind of toe the line
to be as financially prudent
as we need to be.
And what people also don't
understand is not having that high free and reduced percentage.
You know, then our federal funding drops.
So we're relying on that meal price
to generate our revenue.
Five cent increase
in our overall lunch prices
only generates about 80 $700,
which is nothing.
Or if you think about that 30% increase
and that's over 180,000.
So it's very difficult
and we're still trying to be economical
and provide that balanced meal to our children.
Also, remember that we never deny a child
the ability to charge a meal.
We anticipate charges going up
and we tried our best to make sure that that message got out about the return
to the National School Lunch Program via
newsletters Menu Website,
where we still anticipate some, not some catching up
after the start of the school year,
but it is in school codes
that no child can be denied a meal.
So they can, they can charge and we cannot address that.
Nor have we.
That's always been our internal policy prior to that.
We do have some things in place that we will
email parents negative balance letters every two weeks will involve
our social worker to work with families
who need to apply for free and reduced
that that could grow quickly.
So we want to make sure that we stay on top of that.
Also, just so you're aware that debt cannot be
sure, what would you say, the end of the school year?
We can't own that debt per USDA.
The district has to kind of own that debt.
That'll be one of the year end adjustments that we will look at.
What's still on their books and general fund will absorb it.
So it'll come from food service back to general.
Fine. We'll take it as an expense.
So we
want to stay on top of that as much as we possibly can.
Excuse me, Can I ask you a question?
This is Erica Schmidt.
Okay, so
from what I'm hearing,
we have 26% with the free and reduced.
So we because we are back in
with the National School Lunch program,
we with with those, we get reimbursed.
That is correct. Okay.
So with the children paying for their lunch
is what we're offering them
a I guess some I I'm looking back to prior to the pandemic,
maybe four years ago and there was a big
variety that you that we at the high school.
So is that no longer where you're going or.
I'm a little confused at like if they're paying for that is it because
those prices went up so therefore
the free and reduced is kind of
not being covered?
Is that.
Now? Well, twofold. First, the.
So we we receive federal reimbursement under the three
categories of the free meal, which this year is at $4.53.
Just back in 2018, 19, it was under a dollar.
It was a dollar less than 349.
So it's really jumped due to
keep kids Fed act, which passed right at the end of June
right before the board meeting of the increase.
But it's 456 for a lunch for a free meal.
It's I'm sorry, 453
for 13 for a reduced and $0.91 for eight.
So we get $0.91.
In addition to what a paying student pays,
the selections at the high school have drastically decreased.
Some of that was with the change from,
you know, going from an hour cart to national school lunch program.
But really, what's driving that is staffing
today.
Minus, you take me out of the equation today
we did have seven individual 661 who started today.
So we only had five experienced food service workers there today.
And then count me,
I think my staff would count me.
So we'll say six and a newbie.
So that has really been
the driver of our food selections at the high school and we know we
we need to get staffed at the high school
so we can offer more selections.
So we are really pushing for that.
The increase and wage
that the board passed the end of June was a huge help.
I wouldn't say it's going to be the 100% savior of
getting all the staff that we need because as we know, there's
a labor shortage, But it's really going to it really catapulted us into another
stratosphere of of staff.
And we're starting to see people now in the queue
getting their, you know, their paperwork, getting their certifications.
So I don't count them until we have certifications.
But we need to more people at her high school.
We need six over
all at our district buildings.
So we're very understaffed right now.
Mr. Hamill, may I ask a question?
And I'm not sure if you had more to share, so I don't want to jump.
No, I.
Think that's a general.
I didn't want to get too deep.
Thank you.
I'm just curious.
So obviously, with the first day of school today, I went on to school cafe
to load money onto my son's lunch account for that.
And as I was calculating it out, obviously I knew that we had an increase
in pricing from a, you know, being part of the vote to approve that.
But it didn't really
sink in for me how much that increase impacts until I started figuring,
well, what do we need to what do need to have for a month on there?
And looking back at it, it's about a $20 difference
a month from the 2017 to 2018 school year for.
A secondary lunch. Students
looking at the qualifications
for the National School Lunch program and what counts as free and reduced.
When you look at a family of four,
you can't make more than $36,075 a year in order to receive free lunch.
And you can't make more than $51,338
to receive the reduced cost.
I understand a lot of districts have 100%,
but looking at our 26%, I'm going to guess that there are a lot of families
in Derry Township right now that make over
$51,338 a year, but are feeling
the impact of school lunches significantly because when you have
to, you
know, kids in secondary getting lunch,
I mean, it's almost $250 a month for breakfast and lunch.
You know, costs are like $6 a day.
Do we have any mechanisms maybe this is
something in the social workers
world to know how many people
are in that gray area,
because it is concerning.
You know, for me, I think.
But obviously on the budget side, we want to be mindful
looking at, you know, 90 $0.01 reimbursement on 425,
you have to try and provide a meal essentially for $3.50 or,
you know, something like that in order for it
to all wash out with the reimbursement cost wise.
But is there a way that we can look at,
you know, what the impact would be
for families that are in need of assistance?
Because I'm
only guessing, but it has to be significant.
Right.
And good point.
I've had one family reach out recently that we're in the middle
and it was very concerning to the
it was very difficult for me as well,
thinking about how many families
really are in the middle.
There are just over the threshold
because, you know, we're here to neurosurgeons
and they they this particular person asked why there's such a disparity
of lunch prices, and it's very difficult to answer briefly in an email.
It's just like millage rates.
There's different millage rates and there's a whole large explanation.
There isn't anything in place besides the National Free and reduced
lunch programs for families
and that income, those income rates.
Now we have student a need account where the families
are experiencing a short term, but it's unfortunately not for what we're facing.
And what we're
facing could either increase those free and reduced numbers or our debt load,
which
I'm a proponent of,
it really worked very well when we had a free meal program for all
and the National School lunch program, from my understanding, was intent
tended to do so
because we don't charge 5 hours a day or what have you to ride a bus.
And if you don't go on the bus, you don't have to pay.
More students participated and it was just much easier
and the guidance and we needed less staffing as well.
Some of the additional staffing is because we're going back on the program and,
you know, all the regulations and
so we keep pushing.
There is one push yet here in our state,
Vermont, California, there's a few of a handful of states
that are now funding their school lunch programs
instead of federal.
But if we see an increase in charging them, that's local taxpayers.
So I'm going to have to come back and say so it's very difficult, right now.
And it's I.
I guess I'm.
Watching, though, how many applications
that we do get that are being rejected, because I think.
And that's I think really the crux of what I would be interested
in, in what we see from that perspective, because I think that it could
give some insight into maybe what that gray area is.
And I don't know what is permitted,
you know, in conjunction with the school lunch program.
But if there is a way to
to look
at what that would cost to be able to maybe it's increased
the eligibility income amount, I guess where
go with this in my mind and as I was like diving into all these numbers last night
and figuring it out and realizing that if you make just over
that threshold that you don't qualify for even reduced,
it's like seven and a half percent of your monthly take home income
after taxes to feed two children breakfast and lunch at school.
And when we look at all of the things we invest in,
hunger is where it starts.
Like we can't have kids not
properly fed in school.
And I know that it's a much bigger thing
than we as a district or a board can take on.
You know, it's disappointing that the waiver ended
because I think it did a lot of good in helping feed children.
But in our
district, we've talked so much about equity and,
you know, what we do to to make sure that all children
have that opportunity to succeed in what they need to succeed.
And I don't want to inadvertently see us miss a population of students
who, you know, could struggle because they're not able to afford lunch
or have that fear.
And I think we've put a lot of policies in place to protect from lunch shaming
and that they're not getting different food
and they're not denied a meal and all of those things.
But this is something that just really feels heavy
and that I would hope that
we don't lose sight of and continually look at
as we move forward, because we could leave a lot of kids behind.
Who sets the standard for
the threshold of how much you make the USDA?
That's, you know, that's USDA.
Okay. That's what I thought.
So I don't without going into debt,
I don't know how we can combat that one.
That's where I guess ultimately and from a budget perspective,
I don't know if it's ever even something that we can consider.
But if you were thinking about,
you know, of course, seeing that there are families up to,
you know, a family of four, up to $70,000 a year in
income is where we're seeing the applications come in.
And that's that pocket of people being rejected.
Is there a way from a budget perspective that we're able to increase that?
And, you know, we do so many things with equity and investing.
Is there just a way that the district can can structure that program?
I can say I've
not ever gone down that path or have those conversations.
Not to say that we couldn't or shouldn't have gone with food service
being one of the, you know, the goals of goal areas to keep an eye on.
And definitely as we start looking at this, what this looks like
now, that free and reduced,
you know, the free meals went away, it is going to be a really
big year of looking at everything.
So I think that
definitely something to keep in touch is something
that between your Greg the conversation just you know
what are we seeing that is being rejected that would be helpful to know
So definitely conversations we can have going forward.
Thanks.
We have about 15 more minutes for a couple more agenda items.
So do we have anything else with food services?
Thank you very.
Much. Thank you.
I appreciate it.
I will move on to quarterly
update cyber school enrollment.
This is for now.
So one of the goals we had added for
this year was to
start looking a little closer at the
what we see our enrollment in cyber schools looks like.
So that paper that's attached
the document, this is something
I asked that we start doing this year just to try and track.
I don't have historical because I didn't go back to prior years, so we did start it
for this year that we can kind of see from both a regular education
special education standpoint where the students are, you know,
between those two categories
and then the placements, what schools they're going to.
Now I can tell you this is 2122 data.
We're still working through the reconciliations.
What happens in July is they keep billing as what they build
prior year until all the enrollments and things get fleshed out.
So we'll start tracking this for 20 to 23
and we bring be able to bring this back as we go through the year.
I do think I know I've seen other schools
where the special education numbers are way higher, but you can see
it's really disproportionate when 21 students are almost $580,000
versus 88 students being, you know, 1.2 million.
So there's definitely a big differential
in the cost of special ed placement versus regular ed.
Do you this is Kathy sacred?
Do you know if we reached out to these 109 students to see if they would come back?
We did. We did reach out.
Okay.
So we don't know this year's numbers yet now.
So we'll start seeing billing that will be adjusted.
Normally, July bills are
reflective of where they ended June, but if they start to withdraw,
then they will start to make those adjustments August, September.
So those will be the next quarter.
When I bring these forward, you'll start to see what those numbers look like.
Okay.
So we will have a quarterly update on this
really monthly.
I can't remember what was it, but definitely
I we're going through this monthly, so I have this data at any point in time.
I do want to go back and kind of see some historical and again, see where we were.
I don't know those numbers.
And then just keep an eye on this and work with because that was
a communications effort, I think, to try and reach out to the families to see
if we have any impact.
Yeah, we sent out a survey.
We got very low response
on that survey, but there were several calls
that I was able to have with families that are very helpful.
Okay.
The the 2122 So the 109 were from last year.
Yes. Right.
So we don't know if it's even more this year.
Right.
We're hoping
we're hoping the numbers are down that that trend is that there's there's
the credits that are reflected on the bills are actually downwards,
not upward. So
we're just trying to look at this as we you know, that was a big budget
driver, that 1.7 million that was higher than we had seen.
And this is not the final reconciled number, but it will be in the ballpark.
So, again, just something to keep an eye on as
we go forward and what can we do and what is it really costing us
since that is was a significant jump in our budget this year?
Okay, great.
Any other questions about it?
Okay.
We'll move on to our 20 to 23 general fund revenues and expenses.
And under that is an update on the state subsidies
and depositories.
Just so I know that the board has seen this before,
I just wanted to bring this forward for a full discussion to the committee.
Again, we passed our budget on June 13th.
The state passed their budget on July 8th.
So we're passing a budget with unknown information.
So can see we will receive in 22, 23
almost $1,000,000 more in basic added special ed subsidy funding.
So that again, as we go through conversations on cap
planning and everything,
we are in a pretty good position for this 2223 budget where we stand.
So we don't really have any identifiable needs to jump
to try and spend that 985,000 recommendation is we let that sit.
We know that we're going to have excess revenues in the 2223 school year
and see how that kind of comes out with the cap planning
and what comes up with budget and conversations.
But what we do going forward.
So it's just to make sure everybody knows that that is an expected
increase in our revenues.
Cheryl, this is Lindsay.
With regard to the ongoing
funding from the state, with the exception of like the Corbett administration area,
like ERA when there were just massive cuts
to education funding,
have we seen that it
drops back down year over year or would this
somewhat be the baseline for going forward?
Expectation is this is going to be the baseline
probably not see an increase next year?
I think so a lot of it will have something to do with the governor's election.
You know when they
what changes we see at the state level.
But I would expect that this would be baseline.
So while we pass the budget
not knowing this and it was an additional almost
you know, million dollars looking at that, this will really help for this year
to help restore some of that balance that had come down from deficits
during the pandemic and also allow us to start planning ahead for projects
and capital needs, as well as maybe returning staffing levels
so that we're not filled through attrition.
This gives us a lot of room for conversations as to
what do we do going forward then,
because since we were in a good place coming out with a budget where we landed,
a lot of schools now are using this to plug holes in what they didn't budget for.
So or but you know, budget for a significant deficit balance.
We're in a really good spot to mindfully plan fully you know, use that money.
So that is that is the goal.
The piece at the bottom which is new,
the state grant the physical safety and mental health grants.
This was a new piece coming out of the state budget.
So we received $306,000.
Basically, there's two separate grants, physical safety being one, mental,
the mental health being another. It's an even split.
So we have $153,000 to spend in both categories.
This grant, again came out July 8th.
And while it's very nice we have the window to submit these grants
open August 1st and is must be completed and submitted by August 31st.
So there's a lot of conversations as to how and you know what to identify.
How do we spend this,
the spending on this
you cannot supplant we can't just take this money and already
use it for something we had already budgeted.
So we need to come up with
items to apply this.
These moneys towards it is a two year grant, though.
So we do have two years of spending time to spend it.
So what we'll need to do is, is basically get this
application submitted.
We will bring it back to full board meeting for grant approval, for board
approval of the receiving of the grant, and be able to explain
what the items submitted were at that point.
Any questions on on any of that.
Just and again, it's
schools are held to a very tight timeline and there is no grace
if you miss the timeline, you miss a deadline. But
the state's not held to that level of
doing your business.
Thank you.
We'll move on to the 2223 Capital Reserve plan.
And this was already reviewed at General Services, right?
It was to it.
Can we go back to depository?
Oh, sorry, Depositories. Yeah.
I just want to take a couple of minutes, but I know we've been looking at this,
so what I did and just sort of at the board and everybody,
because there is a vote on tonight just to approve our 2223 depositories.
I did add two institutions, Hislop, and plug it with us as
Liz and Sherry were talking Fulton Bank, the interest rates rising from the Fed.
It is a much better environment for districts now than what we were at.
So I want to take a close look
at where our monies are.
I know I've been pretty shared.
My opinion about WSF is that we've got $4 million sitting there.
I can share that.
They just told me all of a sudden when I said I'm moving, my money's out,
I don't care.
Now we're going to get 1.5%.
So it's still buys us some time to to work through some other pieces of it.
So they did bump that up to 1.5.
I've also been really pushing
and be a little bit to to start bumping rates a little faster.
So effective today actually,
the money market is going to 1.75.
I also got some better news at the end of the day from them
that they are bumping that actually to 2.5 on that money market.
And instead of .55, it's going to.
When it.
Starts point six.
So it is going to be a little bit better.
But I do want the opportunity with some of these,
especially as we do plan for, you know, an elementary area.
There's big cap projects that we know we've got long term needs.
I really want to be able to look at some of the
the avenues with his lap it to have some longer term CDs
or you know tie up money a little bit longer
for funds that we don't need and we can be getting
to know some of these are pushing higher, you know, towards 3%.
But I want to know where monies are.
I know what our needs are and then really start coming up
with an investment plan that will maximize some some revenues back to the district.
Now, what
I sorry, this didn't print that one.
I pulled it up.
I can print it and everybody later.
Yeah.
It's attached to the agenda.
Well thank you for that.
I always like hearing a higher interest rate on money that's sitting.
And we do we do have significant money.
So and this is a good time to do it because we've gotten a lot
of the heavy real estate taxes come in July and August.
So this is the time to start
looking at some of that and do some of those set asides.
So I just want to share that.
And then the last thing
is the cap reserve, which you did again, we did just talk about in finance
and have been talking about, but it is on the agenda for approval tonight.
So if there are any further questions on that.
The general services have any issues.
The CAP plan?
That's correct.
No, there was no issues with the CAP plan.
We will be bringing forward to the full board the proposal
to bring in Hamilton Associates for the assessment of the
we're not a building repointing.
Okay.
Thank you.
And last we have contracts,
which is our list of contracts that go for board approval.
Does anyone have any questions.
Or comments about that?
Could I ask just a question going back to the Sure.
Depositories where it is, Grenada funds the one point million
is that the account that the
lease dollars for
the lease expense is held in?
And have we already settled out all of the expenses with PMC?
I need to work through some of those last pieces with them
and then they will be out in October.
So I was actually an auditors here today.
I was talking to them about that because I want to make sure I don't know
if there's any how that money is structured or anything, but they don't.
I think
pretty much once we're done in October, that's our funds and what we can use for
that.
There's around 900 and some thousand last year per the audit.
So I was just curious so that as we move forward,
of course, to maintain that building without a tenant, right.
If that money's available for that, I believe it is.
And that's why I wanted to bounce it on them,
since I'm not familiar with any
if there's any caveats with that fund, I don't believe that there is.
But I will make sure and be able to talk more about that as we end that leads.
Okay. Thanks.
I have a quick question about the contracts, the world of learning.
How how many students do
we usually get for that per year?
I had that in the notes and
we generally get between 20 and 30 students.
Okay, So we just pay per student when they sign up, Correct.
So do we allocate for that every year? Hmm.
And we usually would know about that
with course enrollment right before budget time.
Correct. We have an idea.
It's not perfect at that point,
but we have an idea and it's been a fairly stable number
for the students who are interested.
Like if someone starts taking Mandarin, for example,
we can usually count on that student being in for at least the next three years
because they're going to do one, two and three.
Okay, Thanks.
Any other questions
about anything related to the agenda or anything for the good of the order?
So thank you for this continued contract.
This has been really helpful and just understanding
and seeing all this information.
So thank you,
ma'am.
I have motion to adjourn the Finance Committee meeting.
So when did your.
Second make resolution?
All those in favor say I.
I, I was opposing? No.
Okay, The meeting is adjourned. Thank you.