An audio.
Oh, I like to
call the Monday, April 25th, 2022
Finance meeting to order and announce that this meeting is being audio recorded.
Before we do the roll call, may I have a motion to accept Mike
Rizzo as the substitute board member onto the committee today?
So move. Lindsay Drew.
Second. Terry Singer.
Is there any discussion?
Just to let everybody know, Mike Rizzo is filling in for Kip
Shaw, who was on this committee.
All those in favor say I, i, I.
All those opposed? No.
Okay, Mike, you are approved.
Now we'll go around and do a roll call.
This is Kathy Sicker, board member.
Go to my right.
Stacy Winslow, Superintendent.
Lindsay Group Board member. Cheryl Purcell.
Business Manager.
Michele Agee Board Secretary.
Regis Byron Administration.
Terry Singer Board Member.
The Microscope Board Member.
Okay.
And for those online, do you want to just state your name?
Sherry Leal.
Mike Davis,
Ron Estella,
and Paula from.
OC. Thank you.
Sounds like we have all the citizen advisers on virtually.
It's great.
About 50% that which.
It may I have a motion to approve the summary minutes attached
from the last meeting.
So my.
Second. Mike Rizzo.
Is there any discussion?
All those in favor say I.
I. All those opposed say no.
The summary minutes are approved.
I'm just also trying to probably be
trying to sign in.
I'm just.
Oh, zoom
there. Okay.
There's no unfinished business for new business.
We have quite a few things to go over today.
We have a quarterly update from the Milton Hershey Trust Fund.
Fulton Financial Advisors.
Sherry Leo
will be presenting the quarterly trust update on.
Okay.
Thank you, Kathy.
Thank you, Cheryl.
Can you hear me?
Yes, perfect.
So there's a couple of pages of an update, just as kind of background again,
for financial advisors does serve as trustee of this trust.
And the Derry Township School District is the beneficiary.
So we manage this trust in such a way that, you know, our real goal
is to have a grow every single year as often as we can, as the markets
cooperate with us
and hopefully then that means that the distribution also increases
because it is a percentage distribution that we do.
So if we can turn to the first page of the presentation,
this just gives you the allocation of the portfolio.
So it is about 66% in stocks
and 27% in fixed income or bonds.
And then with the balance being in cash, which is usually held for distribution,
we have a pretty nice amount of cash in there
to hold for distribution and then some alternatives as well.
At the end of March, the market value, you can see in the upper right
hand corner, you can also see it down in the summary
in the bottom right hand corner.
It finished the month of March at $51,902,536.92.
And then there's some summary there as well.
But if we could turn the page, I think the next page
tells a little more of a story.
This is each calendar year going back to 2017.
And, you know, it's been a difficult
first three months of the year for all investments.
So whether it's bonds or whether it's stocks,
almost everything was down in the first three months of 2022.
But you can go back and see that luckily this trust participated
in the last three years, which were exceptionally strong
and beating benchmark and really four out of the five
last five years, the account has had double digit returns.
So we did have that period in 2018 when when the account was down.
But you can see that, you know, it's been up more than it's it's been down.
So that just gives you a summary of each of the to the calendar years.
The next page,
just to make a couple comments on this, talking about the allocation a little bit.
This one
gives you three switch pages some I didn't change here at home yet.
There we go.
So this one here gives you
the allocation again, but really shows you how different parts of the portfolio
performed to create the overall return for the portfolio.
And then it also shows you compare it to indexes and benchmarks.
So what you can see is that for the first three months of the year,
the portfolio was down is down 4.13%,
but it's not down as much as the benchmarks that we compare to.
And then you can take each of the categories equities or stocks
and fixed income and compare it in the various benchmarks that we put in place.
So as I said,
even fixed income was down
during the first few months of the year as well as equities.
So a lot of times they offset each other ones up, ones down.
This was a period where because of various factors economically,
both categories were were down there and then we gave a little bit longer
term perspective, a one year number, which is really march to march.
A three year number, march to.
March a five year and then a since inception.
And Fulton took over as trustee back in 2012.
So since inception, the average annual return.
So that's not the cumulative, but the average annual during that period
was 8.58%.
And again, it did outperform a passively invested index of 7.53.
And the second one that we compare ourself, which is 8.09.
So that's what we're trying to go for as a long term return.
Again, these periods like this will happen are usually short term in nature,
but we will continue to monitor them and and manage them accordingly.
And then the.
Last page in the presentation just shows you some components.
It gives you an idea what
contributed to the performance in a positive way.
So that's the top left hand side of this chart.
So it shows you each of the different managers
that really provided some excess return and helped the portfolio overall.
And then at the bottom you can see some of the things that are down.
I think the most striking thing is a top is mostly stocks
and the bottom is mostly fixed income and bonds.
So that's what detracted a little bit, but it gives you some idea
of how the performance was.
So any questions on performance
and returns management.
Any board members or citizen advisors
who have questions for Sherry?
I don't hear any questions.
So thank you for coming to give us our quarterly update.
I appreciate it.
Understanding that this is just a short term,
short term in nature and we have to focus on the long term.
Well, we don't we do want to focus on the long term
and we do hope it's it's short term in nature.
Kathy, did you want me to make any comments on a 4% or 5% distribution or.
I think we covered that a lot at the last meeting,
but I just don't know if that was anything you wanted us to to touch on either.
I don't.
It's Cheryl.
Do you want anything talked about?
No, Sherry, I think. Thank you for the update.
We do have information to talk about later.
Once we get into the revenue budget.
So that will get you back to you and confirm for sure
what we're going to be going forward with. Sure.
Thank. Sure. Okay.
All right. Thank you.
Okay.
Next on the agenda, the quarterly update Food service fund.
Said here are the quarterly financials.
I know you've been looking at them as we go.
I think the big thing.
To. Start thinking about and this has been, I think everyone's wishful thinking.
Of course, we've had two years of the federal subsidy
free meals for everyone that is going away.
So I know PD and
DFP, they're all getting
plans in order to kind of help us with next steps.
And so those are the things we're going to have to look at
A milk price increase to come forward with.
That will have to be
determined sometime by June, but those will be things to be coming.
I did want to point out on here,
when you look at it year to date, food service is actually doing very well.
If you look at the month of March.
So you can tell at the top there's no federal subsidy.
The subsidy is it lagged.
So there's about $200,000 that came in
in April that really goes back to prior months.
So if you put that 200,000 back in the month of March actually flips
to about an $85,000 profit and it brings year to date to about 122.
So from that standpoint, they're doing really well.
I'm sorry, I'm not following you.
What do you mean?
Year to date? 122.
If you look in the March column
under federal subsidies, the second line from the top, yes, is blank.
So there's a lag in that subsidy.
Okay.
So that was received actually in
April.
So just thinking about it to try and,
you know, take it
back to the period that it was due from.
If you see the $116,000
loss for March, if we add that 200 back, we'll end up
with March at 85 profit, which brings the year
to date profit to about 122.
Okay.
If that 200 is back.
And I just think that that's misleading to not have any federal subsidy money
in there, It makes it look like it's a significant loss.
I do want to mention that that is coming and that will
that will actually flip that loss to an income number.
Okay.
I'm just wondering if knowing that so technically it's in the black still.
Yes. And
we might
consider keeping this as a goal for next year to really watch,
to see what happens when the subsidies go away.
I know Mr.
Hamel is working on a budget.
He's got another review going on this week that has kind of taken some time.
But I know I need to carve out some time to sit with him
and really look at that budget and come up with plans
and then bring forward that meal pricing suggestion, recommendation for board
consideration prior to the start of the 2223 school year.
But that yes, that will that will greatly change things.
I know we've been working with
Dr. Rice Snyder trying to work on staffing.
Is there anything that we can do, those kinds of things.
There's a lot just a lot of considerations that we really need to take into account
going forward and what the impact will be when the meal prices come back into play
and given, you know,
just significant challenges right now with
same as every restaurant is having food supply chain, you know,
supply chain issues and staffing and just the cost of everything.
So there's there's a lot to look at right now.
I know previously when we
were opting out of the program
for the high school,
one of the things Mr.
Hummel had raised was that he,
by not being on the program while it was not fully compliant
from like the nutritional aspect, it did allow him
a lot more flexibility in buying options.
So I'm just curious, like if we know
what that difference would look like,
you know, or if that's something that he's seeking.
I will follow up with him on that.
I'm not sure what his
if I think the hold out was just really hoping out of it
is hoping but not knowing the unknown of the federal subsidy.
And now that they've pretty much taken that off the table, that's
pretty guaranteed.
That's going away. For the 100%.
But the free and reduced. Right.
So I think I think the conversation sort of stopped about anything changed.
You know, what
what do we have to change for next year so that would be a consideration.
Know the whole
the whole food program has to be looked at.
Okay.
And just for the record, I was in support of going on the program,
not just from the nutritional aspect, but also I felt like we were leaving things
on the table with reimbursement on some of those meals.
But as you know, things change.
And this isn't and the food service program isn't an area
I spent tons of time trying to get up to speed on just yet.
So I do need to do that for myself as well.
But I know
a lot of schools have lost a lot of money going off the program.
It's you can charge a lot more.
Sometimes it works out, sometimes it works, sometimes it doesn't.
So it's something I would be interested and I kind of forgot.
I think I had heard that that at one point we had been off the program.
So that would be something I'm interested in talking to.
Mr. Hummel about.
Yeah.
Any other board members or submitted advisors who have questions about foodservice?
Yeah.
This is Terri Singer.
I just trying to remember when we talk about
those funds expiring that enabled
the provision of lunch at no cost,
like what is the date at which that will end.
Of the school year.
The end of this school year.
So starting starting with the 22, 23 school year, it's
back to pre-COVID preparations pre-COVID.
And if I remember correctly, weren't
we about to go back on the federal school lunch program just before COVID came?
And then we set that aside.
But we did go back on because of the
subsidy. Okay.
And then that was kind of swept away by all
the provision of funds for
free lunch at no cost.
Or did we stay on the federal program.
I guess we had.
Gone back on because we changed the during COVID
when operations were different for food service and things became limited
and we were doing like the take home meals and that type of thing.
We went on to the program so that we were receiving it
because we had no ala carte sales,
but then
it ended up just working out because then when the waiver and full 100%
subsidy came in, all buildings were on the program.
So we, you know, were able to meet all of those things.
So we just stayed on there.
Okay?
It just worked out to our advantage that we had opted in just prior.
And stay there
And will we have to elect again this coming school year or we just stay?
We only voted and we only elect to stay off.
Right. Okay.
So we're just going to continue.
We'll be on the federal program. Okay.
Thank you.
Okay.
We'll move on to our next item of new business Monthly update 2021
2022 General Fund Revenues and expenses.
And so tonight, I just want to spend of course,
this is the time that we will be talking about the proposed final budget.
I want to spend a little bit of time about
where we are
currently and then the assumptions
in the proposed final budget going forward.
Now, remember, the proposed final budget.
So coming out of tonight, what we really need
recommendation of the Finance Committee, this is the proposed final budget.
I will build it. We will.
Ford approved the public display and advertising of it on May 9th.
And that's we have to do it on that date due to the timing
of the budget calendar for PD.
So May 9th, we will actually approve the public
display and advertising of the PD 2028, which I will build again
coming out of tonight once the Finance Committee recommends
the assumptions in the final proposed final budget.
Final budget, then between May 9th and June 13th, we will
make any changes or corrections
or adjustments as they come available, come known to us.
And then June 13th will be the final budget.
All right.
Can you do that in a second, please?
Page, please.
So looking at revenues,
local revenues, our revenues continue to come in strong.
The impact of the pandemic and we've seen it the last several months.
The earned income tax, the amusement tax that is all back
and strong
state subsidies.
There is not a whole lot to talk about.
And I don't want to get into a whole lot of assumptions.
So the proposed final budget is on here.
This budget proposed final budget is built with a 3.4%
increase, which takes us up to Act one indexed.
This also is built on the assumption that we are not at this point
going to bring the icy day giant center pilot into our budget.
That's about $700,000 of revenue that we are missing.
There is still an outside chance.
I know there are talks going on between the ICD band
council, the bank AG and R about what that might look like.
But at this point there is nothing concrete.
So we are not confident at this point to put this into the proposed final budget.
So just remember that $700,000 is missing.
Why do you have 289?
That's from other pilots.
The other pilot that we get is the hospital.
Right. Okay.
And that one we continue to get so that 298 is just based on
what we just received in April. Or.
So. That one's that one's a guarantee.
This the ICD eight pilot is not
I will say they do seem Dr.
Winslow and I met with them.
They do seem very supportive and in favor.
I know the county commissioners
nurse have talked to them, The township supervisors have talked to them.
We've talked to them.
You know, there's there's a lot of pressure on them to find a pathway forward
to make a pilot payment in the next year for everybody.
So I know that that's that's the goal all around.
Again, I'm just waiting for a little more concrete,
had more, you know, more concrete than we're talking about it.
But I know that I really do.
I did come away from that meeting feeling that they were that is the intent.
I did attend the ICD board meeting last week as well.
Same thing, the conversation.
Same conversation there.
Again, everybody's really trying to help them
figure out a way to get the payment out now.
And looking at the numbers, giants and the hotel tax is back.
So they what, sitting in escrow they are well positioned to be able
to make bond payments, that they should be able
to find the other money to pay a pilot.
And that's the big key to it.
So if they didn't if there wasn't enough hotel tax coming in, why that's
that's important because a hotel tax comes in, goes into escrow,
that money has to sit and pay bond payments.
So what was happening was because there was no hotel tax,
they had to find other ways to fund the debt service.
So now that they're
feeling pretty confident that
their numbers are back with hotel tax, they should be well positioned.
They have a November 2020 choose their next significant debt payment.
So at that point, when they can make it and they're fine,
they're trying to find a way once that's made that they can pay out.
Pilot.
Cheryl, this is Terry Singer.
I want to make sure I understand what's presented here.
So taking the tax increase to the index,
taking 5%
from a trust,
still puts a 675.
Yes. Short for the year.
So that 700 would pretty much balance this out.
So that's this budget right now is sitting without $700,000 of pilot money
that if we were to get it or if it does become a little more
definite between now and June, we can build. It in.
Again. We can.
We kind of know that that's missing.
So that kind of helps our bottom line that if we get the 700, we're
we're in a good position.
So if we don't get the 700, we either don't spend as much as we think
we're going to spend or we take some from the fund balance that.
And right now we're still hoping that that I guess there's, you know,
so hopeful that that comes through.
We've also still had conversations that if we don't think
we're going to get the pilot, what areas can we look at?
So we've been having those conversations with all areas of departments and
and trying to pinpoint some areas that we know if we have to go back
to, we can pull from.
Yeah, I know in the past and I am not sure what explains it other than maybe
conservative budget projections, but it seems every year we would
have a
loss projected along these lines, maybe even higher.
And ordinarily not only not come up short
but wind up with a surplus.
Am I right in that recollection?
If you look at the summary page, you can tell the budget versus actual.
And that's true.
And the
the best way to go about it, I think for most of us when we build
the budget is to be a little conservative with the revenues
only because if they don't come in for some reason, then you're really stuck.
It's better to end that with a little bit more.
Now, I do notice from the actuals they're not significant as far as now.
I do know if there are extras
on the bottom line towards the end of the year.
I know there have been years that additional funds
were transferred to Cap Reserve, which is always an option as well.
So this is this is a snapshot clearly just of what was left in general fund,
what was budgeted for
and what was the actual results for general fund in each of those years.
Okay.
Thank you.
And then,
yes, this does so what Sherry and Liz from Fulton Bank had shared with me,
they did share with me the numbers for 4% and a 5%.
I know the thought process was that, too.
If we can show the need for it, we do go for the 5%.
Now, this would be and they've cautioned again, as you heard, numbers are down.
So until the
everything really rebounds there, they're cautious that
they will still support a 5% draw in the 2223 school year.
However, with the intention that we go back to 4% in the following.
So the numbers.
So what's on the spreadsheet now for projected revenue?
It's at 2,289,000 roughly.
That's a 5%.
A 4% would be 1.8 million.
So there's a difference of about $450,000
between a four and a 5%.
Again.
And I did ask them with with the
you know, with the drop in the in the trust
balance over with everything that's going on economically lately.
Are they still comfortable with five and they did confirm. Yes.
So I did want to share that anywhere.
So this is Terry.
So again, and that's probably already been discussed and explained
and I probably just forgot.
But so we're showing about
2.1 million this year and next for Esser.
Yes. Coming into the budget then.
Then that's gone. Yes.
So what's changing in that two year period
that's going to enable us to not have the need, that $2 million.
That is going to be something we work on.
I that has to be addressed and planned for.
I know it will go into some of the expenses and department side of it
knowing in this next year.
I think we've had the conversation at last, at last finance meeting
that some of our inventories and reserves and things that we just put off doing for
for the last two years really have to be addressed.
So there's some areas in the budget that we really can't take from that.
We really need to address some some facilities issues, some technology
just across the board, things that the buildings need
and then after that.
So it might be while we have the 2 million we take care of
the needs that we put off and then we see where we can go from that.
So what if I'm understanding you, you're saying that some of it
might have to do with getting around to addressing some capital needs
that we've had that will.
Be capital, some of its capital and some of it's just
things in general fund operations,
general maintenance that really don't rise to a capital improvement.
Maybe. Right. Okay. Thank you.
Go ahead to the next page.
Sure. This is Lindsay. Drew.
Can you just speak to the with the Esser funds?
I see that 2.1 million is in our revenues.
Obviously, those are not recurring funds.
And so that is a very large dollar amount for what
the potential shortfall is in the next budget year.
In two years.
Right. Right.
Do you see are you able to draw
any kind of correlation on the expenses and kind of looking down the road?
And that's what I think we were just talking about,
trying to get caught up a little bit next year.
Not, you know, I've worked through
what I can to get comfortable with these numbers as they are.
I think that is one of my budgetary goals for next year is to knowing that it will
it will. Cliff then the following year, what do we do
on $2 million because of the budget?
So that is a big consideration for and that's
a big part of let's be set this year and make sure we're in a good position.
What do we need to do then?
The following for the 2324.
Now that I will be here for the full year, I do you really want to start
the whole budget process much sooner in the year
so that we are having these
conversations starting in the fall that we're really planning for.
You know, that way you know, work through the summer, see some of the cap
needs or, you know, the building needs, see where we really are at.
We've got some new administrators in place just to give everybody a chance
to really settle in and then get our heads wrapped around what's coming.
Because our debt service increases by then, too, right?
It's pretty much plateaus. Okay.
We say that after.
We have experienced that first savings.
Yeah, we'll stay about 4 million and it it actually falls off
in I forget, I don't have that with me, but I can get that I.
Think 20 it's not five four out of six.
So that's and I've been talking to Luther
Delly with Raymond James about knowing that we have potential
building projects or CAP needs coming up.
What could that look like to start layering in that debt
and when to do it and how to do it to and basically to
to to that point so that we don't have a spike
that we can kind of stay at that 4 million.
It'll push it out years. Of course.
But how do you know
we should be able to layered in so we might have a refinancing opportunity
just to try and make some room in the debt service.
Basically.
So those are things we do need to look at knowing we probably do have
some big needs coming from the cap list,
then that's one of my concerns is I want to make sure that we're positioned
and that's part of it too,
and really want to make sure that these numbers stay high.
Our fund balances are preserved rather so that when we do go
for financing that we can maintain our debt rating, our bond rating.
Rather.
This is Kathy sticker
for me, this is all the reason why, unfortunately,
we need to go to the index 3.4 and do the 5%.
Knowing that these grant funds are only good for the next two years
and we will fall off. A cliff.
And that we still took money out of our fund balance
the last two years with COVID and we did not do a tax increase
and we still haven't replenished all of the money we took out of that.
And we did everything we could over
the last two years to not have a tax increase during COVID.
But we've exhausted all that.
The early retirement incentive, the increased draw from the trust.
And so for me personally, unfortunately,
just looking at the budget and reviewing it
with Cheryl and knowing all the things that we just
we're going to have to go to the 3.4 and the 5%
we look.
And if we look at the expense side of it and I kind of wanted to zero in or,
you know, really focus on a few of the budgetary
the the line items that are increased that we really do not have control over.
Do you go to the next one, the department in department
spreadsheet.
And so while we've had
the conversations with departments and areas to really look at their budgets,
unfortunately some of these areas are out of out of everyone's control.
So if you look at the top two lines, so this is the proposed funnels
on the far left and then it's like it's comparative,
but it's broken down by our department areas.
The key spend areas you can see salary and benefits.
4% is what's driven by contract.
So that that's and that's actually an average of so the teacher
contract, the ACT 93 administrator contract and the support staff contract.
So that's a blended but that that does average out to a 4% increase.
We're working with h.R.
To make sure that we're we're good with that number.
So that's we really think that's where we're going to land the benefits line.
I've been working with our consultants and we do
we are seeing a 12% medical increase.
I know we talked about that last time
and unfortunately again, there's just nothing we can do.
There's there's nothing we can do.
So this does build in a 12% increase to the medical line.
The other increase in there, not as big.
Of course, I'm dental is probably 10%.
The other items are probably of five and I had shared that last
with you last month.
I can share it again, but I did tweet those
a little bit again, just to make sure that we were covered from the medical.
I talked to them again this afternoon. You see anything different?
But we just know that we unfortunately have some high cost employees.
Plus, it's not just the number of high cost.
We have a lot more in a larger that are hitting larger numbers.
They might not hit that 175 stop loss, but we have more employees
in less than 175 than we had before.
So it's just it's just a cost driver.
And again, we can watch it.
There are some now there they do have some what they call game
changer of products or whatever that we might try to implement, implement.
A lot of them are voluntary, but it might be options for employees to,
you know, pursue some
maybe a different way
to look at their health care or, you know so.
Fortunately.
With with with cancers or things, are there programs out there
that we can help our employees with their health care?
So we're going to be looking at those things
just to see if there's anything we can implement.
I'm just I would just be curious for more information
regarding the health care increase, because we've had
a number of conversations over the years about that
and so I'm just curious the kind of like where the increase is driving from,
because one of the biggest components of it was the prescription
plans and. So.
There's been a lot of kind of like back and forth with high mark about
our ability to carve out
the rebates that they were offering
and the way that that that was factoring in,
which obviously showed a very large margin because of the jump
that was there once we started questioning it.
And I know I have been really involved in that process
and helping to identify those,
but I wasn't sure if maybe some of that has backed off
or they're changing those things and that's what's driving the spike.
And do we need to look at doing something else with prescription plans?
A carve out is definitely something we need to look at.
So and prescription rebates, unfortunately, is one of those you.
You. Just areas out there where you you can lose money or you can
if you do a carve out and it's done right, you can see significant savings.
So of course, as much as high Mark doesn't want us to do that
because they want those rebates back to them.
There are programs and we are able to do a carve out
as long as, you know,
we make sure there's no interruption to employee what the employee sees.
Right.
As it's just the avenue of how the prescriptions are filled.
We have opportunities.
So that is one thing I will be working with them on.
And I know there was just this background a couple of years ago.
They told us
that we were not allowed to carve out. And.
We had gone down the road of being ready to carve out.
And then they said, No, you can't.
But then we found out later on that, yes, we could,
but it was too far into the season to be able
to really effectively change that, you know, and
positively look at it.
And because of some of the plan changes, we were able to offset what we wouldn't
have been able to save.
So if we could just kind of take a deeper dive to understand, because that's just
salaries and benefits are just such a huge piece of the budget
that we have very little opportunity to, you know, influence or change.
But that makes me want to understand the bill down, like the breakdown of it
even more.
Now I look at the carve out is definitely and they did so again today.
We have opportunity in that area.
So that is something now we will we will push out open enrollment beginning of May.
So July ones are start.
So we will not have anything in place for July one.
So I don't know from a timing standpoint, if we can do a 12 one or, you know,
in my mind you can do a midyear carve out because you're not changing the plan.
It's just again, changing Maybe the the card that they use could be
the way it gets filled.
Could you explain?
I don't know that I remember what the carve out means.
There's a PBM, usually a pharmacy benefit, Right.
That works on the outside.
So they're not necessarily with high marks. And.
Prescription rebates.
There are crazy calculations.
And all of these contracts and with high mark, 100% of the rebates going back
to high mark with a carve out, it's sort of a negotiated deal between us.
And so this is where high mark loses, but we can see some of the savings
that the farm the PBM would get some we'd get some, but
it would still benefit the district to do that.
So previously high Mark would be giving us,
say, $10 back,
you know, per person of that 100% rebate that they were keeping.
But then once we started bringing up the carve out
and looking to do that, suddenly they were able to give us
three times that in the rebate and that there's a lot like in
just the pharmacy world that is hard because it is
not well regulated and legislated
for the impact to it because not only does it impact the rebate
and who benefits from those rebates, but it also can stand to limit
the opportunity of where
plan members can can get the drugs or, you know,
if they're able to go to any pharmacy or if they're required to use mail order.
So there's a lot of different factors in it.
And then also looking at the formulary of, you know, what are the most used
prescriptions in our plan and making sure that those align with it
so that there's not any disruption of service or potential spike.
And that's kind of that dance that we do because of the contract,
you know, the bargaining agreements and not being able to change much
inside of those contracts while also trying to control the costs.
And if there's ways to identify those numbers
and make allowances for certain things that are in place now
that you know, so they're sort of grandfathered into the new plan.
So there's there's work to be done and
it would do a lot of that worked out
analytics behind the scenes just to to bring that forward.
And I really haven't spent time like I've looked at the whole medical
being 12% trend, but I haven't done that deep dive into all the areas,
the pharmacy, you know, and I know that and farms really where you can see
savings.
So that would be an area of opportunity for the district.
So if we could do something like that, that's going to bring savings back
and lower these costs over the years.
And if I look at the budget
and I might be reading this wrong, but it looks like it's
$2 of benefits for every dollar of salary, I mean, maybe that's not right,
but to show you a 4% increase in salaries, but almost a 10% increase.
Some of that the numbers.
But it is I mean, it's 30,000,020 million.
So it's.
Yeah.
In total and benefits Why what's driving benefits
to the teachers numbers in there which is the full 35%.
So you take
we'll take the revenue in on the other side
but 35% of salaries is sitting in that number. So
that inflates that as well.
But the other areas that are really,
you know, curriculum, I know we just approved the math book.
And if you look back the last couple of years because of COVID
curriculum is pretty much halted to, you know, a ground stop.
So we have
to bring some things back into the curriculum world.
And again, that includes that the math series
that was just for the middle school that was just board approved.
The other is special education.
Again, here's an area where we don't have a lot of you know,
I sat with our special ed directors and we went through
kids in seats and where they're placed and what the cost is going to be.
And that's primarily what's driving this.
And when I look back, I mean, that number, the 2,000,045 actually
year over year is pretty much in line with where they've been. So
it's it's a $2 million line item
and we don't have a lot of
options sometimes with with these students.
So we do what we can.
Technology you see that that's up $203,000 roughly.
Now, I will say part of the accounting change that I'm
you know, that
one thing that I want to do, I saw some technology
purchases that were sitting in cash reserves that are more
supply items and really should just be repair and maintenance.
And so I'm going to look at $200,000 normally sits in cash reserve.
It's just that I moved it
from cash reserve back into general fund, unfortunately increases general fund.
But at six one half you're going to do it either way. But
I just want to show it in general. Fund
And then we talked about this
to the college is having more students in that program.
You know, we can work with Lori Wade, see what we can do
to try and get students part time maybe and see some savings there.
But as of right now, an enrollment, that's what that number looks like.
And we did we talked about this, too.
Pretty in depth tuition, that 2.29.
There's not a whole lot
based on our current enrollment where students are projecting out for next year.
That's pretty accurate.
You know, that's that's more in the ballpark of what we're going to be.
So when I look at those items, those are the big drivers and there's not
a whole lot of wiggle room.
If you haven't.
Key to the next page, please.
There's a I'd just like to ask a question.
This is Terry Singer.
I know the the outgoing tuition 2.2 million.
I mean, that's that's about that cliff we're talking about.
We're never going to get that down to zero.
But it being in the position
that you're in is do you ever see any
entities promoting their efforts
to help school districts get their students back?
Who have gone to Charter or
anybody working on that
at a higher level?
Terry, It is something that I mean, we've worked on it.
We haven't really pushed people in these last two years just because.
COVID.
And really wanting to be.
Respectful of of.
Comfort level.
And what people. Wanted.
And needed for for their.
Children as far as health and safety was concerned.
I would love to see.
A lot of the people who chose cyber come back.
I think that would be great.
I will say that this morning that was a.
Major focus of our Advocacy Day.
This morning because. While.
Not. Necessarily
being opposed to school choice, definitely opposed to the cyber funding.
Formula.
And very opposed to the way that they are able to do special education.
So a student could leave here with no IEP and the next thing you know,
they've got a speech and language IEP, a cyber school, and we're paying.
Special. Education.
Tuition. For.
Something that I don't even know how you remediate.
Virtually because it's speech and language.
I heard that before, that becoming more common.
Oh, it's a huge thing. It's a huge thing.
It's like ten or $12,000 more
per student.
It's a massive. Amount.
Even with an IP, but they're getting one once they arrive, correct?
Correct.
The other piece that I think is just very telling
as far as the whole cyber education piece is concerned is
there are 28 states that allow cyber education.
The rest of them don't even allow it.
They don't allow them in their states.
The state that we are the state out of all 50 that has the most students
enrolled in cyber.
Education, Ohio is the second
and they have the half the number of students that we have.
And that's because other states have managed
to get their act together and put regulations in place.
Right now, cyber education is not held to any kind of standard
as far as excellence on the testing that we're held responsible for,
they're not held to the same level of accountability for attendance.
We often have students.
Who. Leave, go to cyber for a year, come back, and they're set back a year
because they've done literally nothing the whole entire time they were gone.
And I will say I want to qualify that.
I do believe that there are families who are right now participating in cyber
and their children
are having a different experience because there is family support.
That is not what you would normally see with the students.
That we usually. Would lose to cyber.
But we have we have doubled the amount of kids in those enrollments right now.
And they advertise hard, they lobby hard, and they they're constantly
talking about free tuition and there's nothing free about it.
So, you know, a taxpayer whose children are going to cyber school,
it is their taxpayer dollars or tax dollars are going to pay for that.
And some of their neighbors because they get more money than what.
We do per student.
You know,
based on our numbers, we do pay we pay 13,000,
13,000 for a regular
education student and 27 for a special education student.
Now, fortunately, we have more regular ED students.
I've seen that flip flopped.
But then we have so we've got about 92 students right now in cyber.
All. Thank you for that perspective.
I think it helps understand that.
But also
with hopefully the pandemic in the rearview mirror.
So we can maybe figure out a way to try to attract some of us.
Who would definitely like to see some students come back.
I hope that the families start to feel more comfortable in.
Bringing their students back.
And then and I really hope our our General Assembly gets their act together,
quite frankly. And and please feel free to
reach out to to Representative.
Mahaffey and Senator DeSanto.
To to support those initiatives, because there. Is.
There is a fair funding bill out there.
We just we just need them. To support it.
And that's where some with some the work, I think from the high school
and getting students at Kayla, even if they come back part
time, it it will still shift our costs a little bit.
So there's
you know, there's a there's a conversations to be had as to what
can, you know, is there anything we can do for some families anyway?
You know, you're not going to get them all back.
Like you said.
Well, I think to add that it's just an important thing
to highlight, because when you look at the
overall expenses
and, you know, especially the departmental ones
and see that, you know, we have always been conservative
in those increases and I think have well
managed that process, you know, Well,
that's really the one that is beyond our ability to control, in addition
to a lot of the other unfunded mandates, you know, in public education.
But I think that's an important aspect because when you look at the projected
deficit on this budget, which is including an additional distribution
amount plus a 3.4% tax increase,
it's not tuition line item
that is directly attributed to why a tax increase is necessary.
And so when people are saying we need a funding reform
for it, it's not against that method of it,
but it is decimating the budgeting process for public school districts because.
The money going out is
not a 1 to 1 equivalency, and so it is harming
the public school districts as a whole.
And I can't imagine, given all of the additional lines of revenue
that we enjoy in Derry Township, what that must be like to sit
in these seats in other districts who are experiencing the same thing.
This is not a unique the Derry Township issue.
Right.
Now, and you're combating advertising that is saying free education.
Which.
On this on this side of the fence, we know clearly
it's not free education, but those things, the advertisement.
And the when the advertising is being done with the tax dollars.
So this is true.
So these were the is what I mean,
the big assumptions in here, it is a 3.4% tax increase.
You know, and again, this is this is where we stand today.
If if something significantly changes, that is a 5%.
And I did put the numbers on there just so that you had them.
The five this budget is including the 5% withdrawal
the rest there just to highlight that that it's two point
that 2.2 roughly million dollars over the next two years.
And then there's those three line items
really are the drivers.
Now it's it's interesting.
So this year if you looked at the the increase
it's a 7.7%, which is a very large expense increase.
However, if I annualized if I go back to 1922, 1920,
pretty much we average a 3%,
as you know,
expense increase per year.
Sorry about that.
So normally pre-COVID pre-pandemic it was about a 3% increase.
If I take 3% year over year year, we end up right at that
the same expenses, 71 million.
So if COVID had never happened
and we just went along our merry little way at 3% a year,
we would still be sitting at $71 million projected expense by the next year.
So just so we really just stopped the bleeds.
It stopped and now we're. Where we would have been.
That's because I went back and I looked at that and it comes out 71 and change.
It is very it it's very close.
It's odd how the math worked out on that.
So it's really we and that's I think the importance
of the things that didn't get done for a couple of years to their back. So
you know the.
What.
We need to cover it back and again it's not it's
not in the department buildings it's it's these big ticket items but.
It's it
you did the 3% year over year but was with no tax increase for the last two years.
And then three years ago, what was it, a one or a 2% second, 1.2.
So I was just looking at.
Right, right, right.
No, I'm just thinking about
how we made that up and other ways.
Or, you know, there was there was not really
only because there was a loss in revenues last year, I mean.
Oh, okay. A loss to the fund balance.
Oh, that's part of what
too, If things you know, and I'm still you know, we're still working
on some encumbrance issues, I really would like to try and get
a better handle on where I think we might land this year just to see
if we can smooth out some of that fund balance that way.
Which I mean, what was that 1.2 that we were down
last year just to bring that number back up a little bit.
So again, looking at know
fun looking at projecting any kind of bond
rating or anything that we might need to do increase over to cap reserve,
but we are trending higher on our spend right now.
Again, I expect medical to come in over. So
we might be where it's budgeted to come out.
I don't know that just yet.
I'm sure one thing that I'm just I know that this committee
needs to make the recommendation.
What.
We need to vote on whether or not we're recommending it to the full board.
But when it gets to the full board and then for the taxpayers and residents
and community, you know, the understanding of it, I do think it's
really important from an education perspective that this is explained,
you know, to
to walk folks through why that is, Because I think that
any time that you're just talking about the percentage of a tax increase
or those things without really providing the why behind it, because
for most of us sitting here, we've been deep inside of this year
over a year and have some of that context and historical understanding of why
things look the way they look.
But I don't think that that is the norm.
And so I guess my ask would be that that we really make sure to
break down as much of the educational component of it.
I know we're running short it.
I'm sorry, did you want to.
You know, I was just going to say I was just thinking
and I know we've talked a little bit about it May night.
So this is would be for board vote May 9th.
We can do a presented a budget presentation, update education
you know of that on May 9th.
If that is something that you would like to see done.
I wonder if that sounds like a good idea at the public board meeting.
I think it's I think I think it's necessary.
Yeah. Yeah.
We could do have.
A and I can report that tonight at the 7:00 meeting.
That.
We'll have a presentation on May 9th. Time.
Well I think we have about eight more minutes.
How is any.
I'm thinking we should move now to see if the Finance
Committee is going to accept this consent to the board.
I just ask one quick question.
Go ahead.
The $1 million at the bottom of the fund transfer is that's indicating
that the budget calls for
having $1 billion available to put in the
in the cap reserve fund.
Okay.
Which is what I think we didn't do it last year, but we had.
We didn't do it.
It's in this year's budget to do, but pretty much the last year.
Okay.
But usually it's a million dollarss.
Okay. So that includes doing that.
Okay. Thank you.
Okay.
Well, may I have a motion to approve the proposed final budget
as presented tonight?
Today at Finance Committee.
So moved Rizzo the second.
But I would just add with the caveat
of a four of the presentation
think I would recommend it to the full board
with presentation and explanation.
Okay so I mean, often at board meetings
we have informational presentations.
This would be that I guess for that meeting.
Well, it sounds like we're definitely having the presentation.
May Nights.
Yeah.
Yeah, we used to have the these presentations as a full board
when the Finance Committee wasn't meeting
because we were doing finance as a committee of the whole.
As we reinstate to the Finance Committee,
the more in depth conversations came back to finance and reported out.
I think the timing of that played
well in that we weren't increasing taxes, you know, things.
The financial picture looked a little bit different and
I don't think it not that it's not always important,
but the explanation, you know, wasn't as
robustly needed.
So I think in this situation it's definitely important.
Okay.
So we have a motion as second.
All those in favor say I,
I, all those opposed say now.
Okay so this current but thank you
show will be sent to the full board for a vote May 9th
with the increase and the increase on the the trust to withdraw.
Does anyone else
have anything any other questions before we move to public comment on that?
What we just discussed?
Oh, I'm sorry.
We have contracts. Okay. Let's move on to contracts.
And those are those are just the contracts that had been shared with board.
That one will be we've talked about that the architect for to take a look
at the elementary school that will be on this evening
and then the once from May 9th for shared with the board on Friday.
The documents were attached.
Just wanted to give anybody if there are any questions on it
and those contracts that are coming forward.
Thank you again for providing this.
It's been really helpful.
Yeah.
Okay.
So we now have public comment.
Is there anyone in the audience
who would like to come forward to give public comment?
If so, please state your name and address.
For the record
or anyone online.
Oh, go ahead.
Please come up.
To the online people for us to sometimes have trouble getting.
Yeah, I don't know.
I see most of our online are citizen advisors, so you might be our only public.
Okay, great. Welcome. Great. Thank you very much.
Steve Fotis at three Spring Creek Lane in Hershey.
So I listened to the
previous one of the previous board recent meetings
and my curiosity was piqued when we voted for the hack funding.
Nothing against Hack, and I don't really know what the virtues
of that recommendation might be or might not be,
but it indicated to me that there might not be
a super sense of urgency on some of these financial issues.
And so I spent the weekend
just looking through the same budget that you guys just reviewed.
And, you know, I can see the same thing that you see.
There's a cliff coming.
I subsequently started to worry about the $2 million or so of federal funding
that we've been using to plug things over the last couple of years.
I was hoping that that was not the case
because I haven't examined this much before, but of course it is.
So my my comment here tonight is looking at our budget
and realizing that 54% or
so of it is salary and benefits, which is really, you know, a plug number.
There's really not much you can do about that.
I'd encourage
the board and the Finance Committee
to have as much of a sense of urgency
as is possible in trying to plug
the subsequent years issues.
I think it requires at least a little bit more
digging through some of the budget numbers
because the revenues are going to be whatever they are
and they're not going to include the federal monies anymore.
The board made some very good comments
tonight regarding the charter school
issue, which I also noted in the budget.
And I think there ought to be, if possible, a little bit more effort
in trying to recover some of those charter schools, school students.
I think you have to look
at the customers in this district,
which include the students as well as the parents and the taxpayers.
We spent,
I don't know, a little bit over 100,000 a year now on HVAC
for a pretty low customer count.
Okay, that's gone.
But now we have a lot of customers fleeing to charter schools for whatever reason.
My first question is, do we know why
we're assuming that it's all health and safety issues?
I'm I'm not so sure about that.
I would encourage people to do some digging with those students,
parents who are leaving on what it is.
It's motivating their departure and what it is
we might do looking at them as customers to bring them back in.
So I make that observation.
I commend the board and the Finance Committee
on trying to work through these issues, because I know
they're very difficult issues and they're hard to dig through.
But my net observation would be
there's still a lot of work to be done before this cliff comes.
And every one of you look, I've done a lot of corporate budgeting work.
Every one of these line items really needs some examination
in order at least to give yourself a running jump
on what is coming post
the subsequent budget year.
So thank you for your time and I obviously wish you the best of luck.
Well, thank you. I appreciate you coming.
We normally don't get public comment, so we love that you're here.
Is there anything else for the good of the order.
That.
OC May I have a motion to
conclude the Finance Committee meeting?
So moved.
Second of.
All, those in favor say I. I oc.
All opposed.
They know k the Finance Committee is ending at 6:00.
Thank you.