The problem.
Okay.
Good afternoon.
I'd like to call the
March 25th,
2019 Finance Committee meeting to order, please,
and start with Roll Call.
And when you introduce yourself, if you can, please turn on your microphone,
give your name, and whether you represent
the district, school board or citizens Advisor.
Thank you.
Darby Villegas Citizen Advisor.
Kip Shaw School Board Member
Are you just borrowing district again?
Mike French Business Manager.
Jeff King Citizen.
Lindsay Drew School Board.
Joe McFarland Superintendent.
Kathy Secor School Board.
Teri Center.
School Board.
Okay, thank you.
The next item on the agenda is the
approval of the minutes.
Everyone receives them.
Any corrections or revisions changes?
If not, can I have a motion for them to be approved?
Some of.
Second.
All in favor.
I thank you.
Next item of business.
Mike is going to review
are the budget requests,
I guess the revenue and expenditures
up through now
as a as a continuation of our
preparation for review and final passage of the budget later
this later this school year.
Thank you, Mr.
Singer.
What I have today, where we're going to start
the review is last committee meeting.
We reviewed
the budgeted revenues
and I shared some of the information of the analytics
As we looked at those revenues and some of the changes
that I'll be making here for today's meeting.
But those were probably
the most major part of our 1920 budget
that we haven't gone over are the request for expenditures.
And what I've provided is a really quick two sheet
are summarizing all the requests that were made.
And this is the form that I've used historically
to communicate this information with the board and now the committee.
So I'm going to walk you through some of the things that are included in here,
some of the thought processes and some of the other things that we'll be
talking about
for next year's budget.
So the top level of this
summary starts off with all of our expenses for personnel,
includes the salaries, the insurance
we pay our portion of Social Security,
which is a little over seven and a half percent of salaries retirement
that is also synonymous with with Peter's,
the system for which we report our retirement to.
And next year's rate is
right around 35% of salaries.
And it was just a little over 32% of salaries this year.
Now we are while that continues or has increased,
the percentage has increased every year,
that pace has slowed.
We were at the point where, as you can see, the increase for this year,
which includes obviously as salaries increase, that retirement will go up
even if the percentage does not, but has 492,000 as an increase
from last year's budget when we were going through the peak of Peter's increases,
that number was $1,000,000 increase from year to year.
So you can see how it has slowed. It has not stopped,
but it has
reduced greatly from from what it was doing before
the salaries, the number that is in there
includes all increases for our
teachers, administrators and support staff, as well as accounting
for two new positions to the school district, one being
a term supervisor of safe schools,
although that that title may not be accurate for the final
job placement.
And then also he's a school counselor at the secondary level
is included in their also included in this salary
that's a little different from before are the salaries or is the salary
for our director of food services.
We had had discussions in prior years about the food service department
getting to the end of being able to be self-sufficient,
and the food service program up to this point
had generated enough funds through the sale of lunches
and food to offset all of the cost associated with operating the program.
One of the
pillars of that, of course, just talked about is retirement.
That same percentage of retirement
goes for anybody working in schools, regardless
if they're working for the cafeteria or teaching or the driving bus,
any of those types of things, that retirement level is the same.
So you can imagine our food service program is really
no different than any other restaurant trying to operate,
and it is subsidized somewhat by the government.
It still has very thin margins on which,
just like all food service or food programs do.
So if you could imagine if someone came to you and said you are now paying 30% of
your salaries into a retirement program, no questions asked, that has to be done.
You can imagine what that does to our food service.
Bottom line, and Mr.
Humble has done a great job over the years
of continuing to make the food service programs self-sufficient.
But we're getting to the point,
looking towards the next year where we can't provide that guarantee.
So one of the things we talked about,
maybe in a way to
to provide a true picture is for the administrative expenses
for that food service program to be borne by the general fund
and not necessarily by the food service fund.
So you can see what those costs of operations were year to year.
The food service program does not need in transferring over
or accounting for the directors salaries in the general fund.
That's about $120,000
we're taking away in expenses from the food Service fund.
The food service fund only needs about $40,000 to operate.
This was the decision in a conversation with myself and Mr.
Hummel in which we felt it was a better way to to move forward
altogether rather than coming back each year and saying
this is how much money the food service program needs, making
this shift will make it self-sufficient for a couple more years at least.
Where did you say that the director's salary went?
It's just in salaries. Yes.
So that's the $750,000.
You said this because of the safe schools and the food director
Safe schools.
The food director, or there's a counselor in there.
And then all of the increases for for teachers.
So that all together is that $750,000 increase.
I was just going over the things that that make up that 750 right.
Okay.
Like with food service,
you've had some experience outside of this district
and I'm sure to know with what goes on in other districts relative to how
those costs are handled is how do we stack up.
I'm just curious, do you have any sense of whether the other districts
need to support their food service the way we do and anything?
Yes, it's gotten and a lot of it
driven by the increases in retirement.
So I started with the Bill Clearing School
district in 2005, and we outsourced our food service program.
By the time we got to 2010, the district was having
to make a contribution to the food service program.
Lucky enough to go to Susquehanna Township that had both
started out as district operated but had to move
to the other system.
Basically a lot of it because it wasn't making money,
it wasn't self-sufficient under
what we
operating it internally, and so looked to a food service company.
But their initial proposal, my understanding
was that that required
some payment from the general fund.
The statistics I have
are a little old coming from the 1617 school year, but approximately
65% of all food service programs were in the state were funded somewhat
by the general fund or needed help or were not self-sufficient.
So to the fact that we've been able to get to essentially looking at 2020
is the date that our food service program won't be self-sufficient anymore.
I think it goes to show the great job that has been done there
to not only keep the quality of food the way that it is,
but also the work to ensure that it has been self sufficient up
to this point because most other districts have not had that ability.
So you're just moving the director but not all the staff?
That is correct. Okay.
So are there still going to be in a separate food service fund.
As it is now? Correct. Okay.
Mike, having been in a district that went through the transition
from in-house food services to outsource,
do you have any feel for what
the cost savings is there?
How it really becomes
a there is the cost
savings realized I think is borne because of the quality of the product
put out, which in my opinion drops when you outsource.
But a lot of it, that's where it came from,
doing things a little bit differently.
But that resulted in less quality in the food.
They also obviously don't have to pay
the retirement costs, some of the other things from a
salary standpoint.
So their labor was was cheaper
because it did not bear those those additional costs.
So given I get with the retirement increases, we're seeing
that start to slow down on a percentage of increase year over year,
but just salaries, insurance costs, all of those,
at what point do we look at
do we take a deeper look at the overall setup and operation of food services and
then try to project out what the increases will be by keeping it in-house
and what the impact for that is on the general fund versus
the difference from what outsourcing would be.
Sure.
I think it's at any point in time we could
we would have to do an RFP to look or request pricing for
outsourcing food service program in this process.
I'm not going to note
verbatim because it's been a while since I've gone through it, but it is
required to us by PD How if you say we're going to do this,
then PD provides these are the steps you must go through
specifically for food service is something that they've looked at
over the past couple of years in changing the way that schools
issue RFPs and get that done.
Essentially, it's a state RFP that will go in and fill in blanks.
That would be how we get the comparison of what,
you know, what they would look or what that would look like.
Outsourcing.
We could put projections together.
Now, for us, it would probably be only up to the expiration
of our next contract with the support staff,
which would be in there, but then could provide, you know what?
We think those costs are going to be moving forward.
The tricky part with the food service program is not determining
what the costs are going to be, it's determining what the revenue will be.
And I have witnessed this as well, that if there's a change
and it may be cheaper but not better,
it could have drastic effects the other way because of students
are not accessing the food service so they pay less.
That could have a greater detrimental effect
than any cost savings that we could ever come up with.
So it is essentially a
process that once the board makes the decision, we'd like to explore it.
It's kind of easier what we do, but we wouldn't be able to necessarily
give the board information to say, well, you know, the speculation at that point
in terms of what that cost savings would be, but really, like I said, comes back to
to also that revenue side, which no food service company is going to come in here
and say they're going to write to make it worse.
But. Right.
And obviously quality is an important factor, you know,
to take into consideration.
So I don't think that I would ever be, you know, quick to knee
jerk react and say, well, then we should go down that road.
I'm curious.
I am of the opinion that we
never want to put staff in the district
through the process of RFP and seeing what other things are available there.
If you know, the need isn't determined.
But looking at the timeline as you just described it and how it would
relate to contracts and with the has a contract
coming up in 2020,
I wonder, you know, if possibly
that is something to be explored given
that will be, you know, renegotiating the contract.
And then on the on the other part of it,
I'm curious as it relates to outsourcing, to how that affects any
state program at the school, a national school
lunch program, the and the parameters around that.
I would once again, this is a guess, but I think an educated guess that
if we were to bring in a company to outsource,
they would require that everything be run on the same platform.
Essentially, I would imagine they would want all schools
to be within that school lunch program.
But part of
part of that whole process is them, the school lunch
company making a determination of if I can sell lunches at X price.
They make a guarantee I'll make this amount of money
that on the first year
is always on them and then it usually pushes back
in the second and third year to be on the district.
So in the long term it may not correct.
And I'm pretty certain that,
you know, the first blush forward will be here's all the money that I can save you.
Having gone through that process, not a lot of it is actually real dollars.
On the board agenda tonight at 7:00 is the food service agreement to forego
the federal funding for the high school
so that we don't participate in a national school lunch program
so we don't have to be bound by the criteria of fat content,
calorie content, and that we've been shown how they purchase ala carte
versus meal plan and how much we make ala carte versus foregoing the amount.
I'm just curious if we're at a point where we need to put this as maybe
a goal for this committee next year or because my first year on the board,
we did a comprehensive tour of everything with Greg Hummel.
We went to the elementary, the middle school and high school.
We saw what lunches
because elementary, middle school participate in the school lunch program
in the high school doesn't.
And we got a really good look at it.
The newer board members have not gotten that, but it comes up every year.
And this tonight we're voting on that,
opting out of the high school money.
But I also think that we should discuss it further.
It was supposed to be discussed in general services
and then we decided to cancel general services.
So that was the only thing on the agenda
and it didn't get a thorough presentation by Gregg Hummel.
Now it's it was just put in the board and now it's on for a vote tonight.
So I'm feeling like maybe I kind of skipped a step and moved it forward.
If that's the case and it needs to be investigated more
and it might come up tonight again.
So and just in, you know, full disclosure,
you and I had a conversation about this last week and
I have been wrestling with the, you know,
concept of whether or not to opt out and what that really means
for the whole picture and trying to understand it.
What is the deadline for having to opt in?
Yeah. I,
I think that
deadline would be for us to make sure we could get our operations in order.
So if I would,
in the context that Cathy raised this,
I would implore the board that we're at the point where that almost
has to be approved for this year because saying we're going to
look at that further.
We're even saying that we're not going to do it
anymore has consequences in our operations that I don't know that we're ready.
So I think examining it in a full, full context,
as you have noted, and saying we're really, you know, the approval
for this for the 2021 school year is not as easy or it was not easy.
But the timing of it was it would be such that
the board would get enough information in a timely fashion
to be able to determine if they would want to make that switch.
I don't think there's anything at all wrong with that
and having that in-depth discussion, I would highly recommend not doing it.
You know, this time through, we're just too close to
when that or the
whole process would have to start again in August to serve the food.
And I just don't know what kind of changes and those kinds of things
on our operations that that would cause me grave concern.
Well,
I just one aspect of it, but I personally would like to hear
from the students because what I'm hearing from the director
is that if we don't serve these ala carte items like mozzarella
sticks or chicken fingers or pepper pepperoni pizza
and abide by the fat content and calorie content
that we might be getting rid of some of that stuff,
and that the students are savvy consumers now.
They want what they want and that 70% of them purchase off of that
just instead of purchasing the meal, they purchase one item or so.
So I think it needs to be thought through like through the committee level.
And then maybe the board could tour the food service next fall.
Absolutely.
And like we did my first year on the board and then look at the dollars and
because I might I have a lot of questions like if we didn't do that, then what?
What are you going to replace it with too?
Because maybe they would they shouldn't be eating mozzarella sticks.
I mean, the the guidelines are there for a reason, right?
So we're not serving pepperoni pizza and French fries
because there are better food choices than that.
But what is the choice?
And then are they just not going to buy at all.
Having been through this in a couple of different variations?
The and that's kind of the weird issue with food service program
altogether is they're expected to be self-sufficient.
And I also know the
way they're self-sufficient is making money on the la carte items
because they're able to mark those up as they see fit versus
school lunch, which, you know, pretty much if you school
lunch prices are consistent through every school are what they are.
They're reimbursed a certain amount
from the state and the federal government, which doesn't change.
So I think getting a better
understanding of that whole process will be will be good for the board.
All in all, because I think some of the things people are struggling with now
are good questions, but they're taking huge pieces out.
And once you kind of get an understanding of how all those get together,
I think it kind of gets to where board members that saw
that in the past that we could we could take a chance. But,
you know, all in
all, the experts say that that we should go through it this way.
But I think it'd be good for for everybody to hear
as much information as they need to to continue to reinforce that.
And I think that that would probably be fair for the purpose of
of planning for, you know, the next year.
And that part of it, I would probably and
maybe this isn't for you no discussion for here,
but something that I would want to address in the 7:00 meeting is that
I wouldn't want to see the process that we're
discussing of looking into it deeper
and then potentially looking for an RFP
as if that's the path the board chose
to wait for too long because it will have implications
on the negotiation process for the has a contract.
And so if we wait until the fall to do that will be too far behind
in receiving any results are making any decisions
as it relates for the budget next year to effectively execute
and get the contracts taken care of.
So I think it'll just be really
making sure that it's all done in a timely manner
that can, you know, serve the needs of both.
Which I think we can definitely do given, you know, this discussion now
looking towards the 2021 school year, is when that change would occur.
I think, you know, that that would be teed up
a lot better.
And given the amount of time that you're looking for.
Just for clarification for myself and maybe some other board members,
but we're talking about two issues here, both the opt in out, opt in and out
opt in or opt out at the high school with respect to the federal
school lunch program or
and possibly looking at contracting out.
We're looking at the rate.
But if we opt out and then would move to outsource,
we wouldn't be able to opt out for just one of the schools.
It's opt out for all our opt in for all.
And so they kind of have to happen at the same time.
But just if we go to an RFP and actually decide
for to go to an outside, we wouldn't have a food director anymore.
Is that correct?
You can determine that the program would still need a food service director.
And actually, when I do transition with Susquehanna Township,
no, I'm sorry, it didn't occur that way.
Am I or school district? I've actually operated
that way for a while, which they had their own director.
But then all of the workers were the outsourced portion.
We can kind of determine how that goes.
Now, once again, that
becomes the the company would not take responsibility
for the food service directors salary and benefits that would remain with us.
But we could say that they're still in their position
and guiding people instead of them just being our employees there.
So this happens with transportation to when the contract out.
There's typically a transportation coordinator who's that liaison
in the district, because obviously parents still need somebody to contact
with concerns or questions or things.
And so the district maintains a person in that role.
It's also a very weird law with PTA that the district employee
has to complete all of the requests for reimbursement.
And so if we would have a food
service company, as Joe noted,
we would still need people on our side to do a lot of the paperwork.
We'd still have to process the free or reduced lunch or the applications
that parents send in.
The food service company is not allowed to do that
through some guidelines.
So there still is a need for that position.
And to Lindsay's point, would it be too much to ask
by our next Finance Committee meeting that maybe you have a rough schedule
of the time frame within which this kind of analysis and discussion
would occur that would assure that we wouldn't miss any windows of
opportunity in terms of, you know, whatever.
Just a rough outline.
Mike, would that be possible?
Yeah, for our next meeting. And we are.
Joe and I were just talking.
Now this is to make this is more because as you pointed out there,
there are two different things there.
I think the first thing that the this committee I heard
wanted to get information about is making that decision going off of the
the national school lunch program at the secondary level.
That is the timeline that I think we can we can put together how
that education occurs.
The other one about the RFP
would take full board action to approve.
And I think we also would need to touch base with our associations
to make sure that they understand why we're going through this RFP process.
Nothing to do with what they're doing.
But just as our due diligence.
And so I would hesitate to put in any timeline out
before that discussion happened with. The.
Proper parties.
So that was my perspective, that it's the
understanding that what it looks like
if we were to opt in, is more important
because that getting comfortable with that could completely wipe away the
the idea of wanting to go through the RFP process,
knowing that we would have to opt in.
So I think that that would be the first step before
even discussing RFP.
Also, we could possibly give this to General Services talked
about as being their goal
because it's more in their purview and we could focus on some other things.
I was thinking about having a focus on for next year.
I yeah, I think.
We're going to do our goals in April and May and get them ready for June.
So yeah. Okay. Thank you.
Thank you.
The questions on food service.
I know. It's okay.
Nope, nope, no problem.
We don't have any questions about resources.
I just want to make sure go down there.
We're not circling back,
so I'm going to line to group insurance.
This is an important part, and I want to talk to them
to spend a couple of minutes on this.
As you can see from last year's budget to this year's budget, I've recommended
no increase
in the amount of money that we're we're spending on our group insurance.
This would be our health care or dental care vision,
life insurance.
Those are the major components that make up all of this.
And health care being the largest one, that's about $5 million of that number
is what we spend on health care coverage for all of our employees.
And with employees and dependents, we cover just at
just under a thousand lives or 1000 people.
With that program, I'm going to draw your attention
as part of the note about not increasing the group insurance there
last year was of the four or the five years that I've been here,
last year was by far our worst year in terms of claims or costs.
And so this year is a little bit better,
but only in comparison to one of the worst.
So that is one reason I was okay with not increasing the budget number.
There.
But more importantly,
I want to take you to the very end of this document on the second page
and at the bottom of this,
it shows
our what's noted is our committed fund balance.
So we have a total fund balance of about $8.4
million.
According to law, we're allowed to 8% of that 90%
of that 8% of our total expenditures, which is around $5 million.
We can have on designated.
So that $5 million can be used for
absolutely anything the school district comes into play with.
That would be out of the
something we don't have budgeted for
breakdown in a boiler or something to that extent.
Or we need to hire an additional teacher because our class sizes were increasing
more than we had hoped we would go back and pull from fund balance.
The rest of that $8 million of the 3.3 noted there is has to be committed
so that it is committed for a specific purpose
and those dollars can only be spent on that purpose.
For this year.
We have $500,000 set aside for any increases in medical costs,
2.3 for a piece of stabilization,
and then the other two are, as they're noted, non spendable.
The note receivable is the money owed to us by the township
for Granada Gym that goes way back.
Nothing to do with power train.
It was the renovations that were made to that gym back when the township ran it.
And then the last one is our inventory.
Just stuff sitting around what we have left over at the beginning
of one year to put to the next what I'm recommending.
And one of the main reasons to not increase the group insurance
in next year's budget is to switch the the that committed fund balance.
As I noted at the beginning of this presentation, our Pacers
has been relatively stable for the past couple of years.
That money was set aside when it was increasing $1,000,000 at a time
so that some money would be there to try to help offset that if needed.
Fortunately, we've been able to offset that through our own operations
and really never needed to delve into that $2.3 million.
So I'm recommending 1.5 million of that be transferred
or rec recommitted for medical insurance overages.
This $2
million really gives me the comfortability level
that should we have a year like last year, there's just a lot of high claimants.
Nothing we can do about that.
That's what our health insurance is here
for, is to make sure people can remain healthy.
But this gives us that cushion to say, you know, if we have those overages,
we don't have to have a knee jerk, Well, I need to raise taxes next year.
For that, we can delve into what we have set aside and really
look back at the numbers and the claims and make that determination.
Is this something ongoing that we have to deal with
or is it just that was it kind of a blip on the screen,
which happens every once in a while with health insurance
and especially when you when you cover a thousand lives?
So that is the main reason
this would require when the board would pass the budget in June,
that we have a separate item that recommends the $1.5
billion from peace or stabilization to medical.
It really takes it.
It requires board action.
But there's nothing official we have to file or anything like that.
It is just the board making that decision.
Making sure that they can make.
So we can't just change the commitment designation inside of the budget
and have that be
it has to be a separate board action to specifically re commit those dollars.
That is correct. Okay.
And that board action is not required to pass the final budget or do you want it?
It would all be at the scene conjunction because I wouldn't feel comfortable
if we're not increasing that money we have set aside, I wouldn't
be as comfortable saying I don't want it in
or I don't think it's going to increase next year.
Willing to say, you know, everything with health care is somewhat that way.
You have trends, you have prior years information,
but no one knows when
one of our employees or their dependents is going to have something serious occur.
And because we're self-insured, sometimes that can affect us adversely.
And we could do that motion at any time, just we're going to do it at all
at one time. Absent doing the budget.
Absolutely. Yes. Yes.
But if it happened before, there's not that would be fine as well to to recommit.
That might get the Dauphin County Technical School.
I hear talk that other school districts and or consortium for medical insurance,
have we ever thought of that?
We did look at that specific medical insurer
in the we're not in a place
where we could could could garner any help for that.
One of the ways that they go about
would have been for us was they would actually increase our cost.
Then they could keep the guarantee that we wouldn't
have a large increase year after year,
but large portion of that is because they're increasing our cost in year one.
So it just doesn't make any sense for us.
Not that that couldn't come about at some point in time,
that it would be useful for us.
But but not at this point.
And there are, I think, are better options than the ones
that our Dauphin County counterparts are in.
But, you know, that,
again, is a lot of investigation, a lot of interviews, a lot.
But to make sure that we're picking the right one for all of us.
Okay. Thank you.
So much.
Just to make sure I understand this, we're talking about moving the 1.5
that was previously in piece stabilization
into health care. Correct.
To to accommodate any potential increases in cost there. Yes.
Okay.
Well, I think that's an excellent idea.
Mike, do you know if EIA has ever run their big day actuarial
to determine the likelihood in a given year
of a thousand people covered, given the ages and the genders,
the likelihood of that million dollar disease hitting in a given year, it's
not so much out of
there may be some for planning, but more or less, can we expect it?
Are we?
So I don't know how to answer that question.
Yes, they have the actuary all
ability to do that.
This year we had five individuals
altogether cost us $1.2 million.
So while it's not one person out there,
four or five kind of gets there pretty quickly.
Absolutely.
And those numbers are going to keep going up
if they can give maybe a sense of whatever threshold we would set that
the $500,000 disease or whatever, 200,000,
how many of those year can we expect?
Because that might be more useful in terms of forecasting
what we need to have from the general fund put in there for for contingency.
That bears a whole nother question.
So what I've provided for our group health insurance is based on
our history as as information it provides.
But they, they, they provide me a budget number.
And if I were to plug that in here with,
we wouldn't have to have any discussion about why we're raising taxes,
because that would stick out like a sore thumb.
That calculation, though, is not necessarily as you as
you probably know, Cap isn't necessarily what our costs are going to be.
It's what our liability is.
And what I'm trying to focus back in
here is is what those costs are going to be.
Our liability is much higher than what I'm noting here.
But given past trends in the way
that that our people utilize that that health care,
that's where we get back to.
But the other part of that is I could work with Highmark or AIG.
You give me a better a better figure than Highmark would.
But we go through that process every year that they provide information.
And this is what I think you're you're going to cost next year.
It's always higher than we get to.
That.
Only being said, it's, you know, because they are kind of calculating
some of those worst case scenarios in that where we look at
how many of those have happened over the last couple of years.
Okay.
Thank you.
Line three.
We only got about 20 minutes. Mike.
Yep. These are these will get easier, I think, as we go.
Maybe not the
the the Social Security retirement, as I noted before,
are just factors of of the salaries
and what's been calculated there.
We are looking at an increase the payment for our graduate study
we budgeted $230,000 and I looked yesterday
and we've already hit that mark for this year.
So we'll be over that in terms of budget.
So we looked at increasing that number
for for next year.
Is that for all employees or is it specific to like 93 or.
It's at 93 and each year the only ones that really on access to that.
So it's both. Together.
Yeah.
We have a little bit
of an increase in the tuition to other areas.
This is the payments that we make to our vo tech.
Um, the payments that we make for our cyber school students
as well as we are required, as is all
Dauphin County schools, that we make a contribution to Harrisburg Area
Community college, all of those are included in there.
What is not included in there that has historically been
and would actually make the number look a lot higher.
I've included in the past the cost for our whole the students, which for
are the students that take our own online
curriculum that is born in the school.
They can, of course, take it online.
They don't have to be in the school,
but we don't have the extra cost that that is our program.
And in the past I've always just shown that as another tuition to another area.
I move that down to the high school budget, which is the main reason
the high school budget is a $120,000 above where it was last year.
It is directly attributed to the cost for those whole students.
So just wanted to point out, we are up for the tuition,
the our costs for the CTC were up,
which we knew was going to happen when Harrisburg became a member district
two that our costs for our cyber school students has ticked up.
We were at a low two years ago of around $300,000.
We're back up to our normal kind of $450,000
payment per year for those students.
Our substitute costs have finally gotten to a point
where we can look back at history and determine where they are.
This sub for teacher service has just kind of been a moving target
from a budgetary standpoint in terms of usage and cost.
And the the reduction there in budget
does not reflect a huge reduction in
usage.
It is just I think we were over budgeted this year as we looked at one,
the technology budget
includes the iPad refresh
for classroom iPads for the elementary level students.
It is not a not a 1 to 1 correlation,
but each each classroom will now have a full complement of iPads
for to use in that class as part of this budget.
And that's on agenda for tonight for board approval as well, correct?
Correct.
And we did talk about it here, but it was a curriculum committee
that needed to sort of endorse
to the to the full board that this was an expense that they supported.
Correct.
It was as well.
The next one
I want to draw your attention to is curriculum and instruction.
This is a line item that will change.
It will decrease.
There's a lot of books that are in
mostly that's all that increase was was was books,
replacement textbooks, as
well as some other programs that were new to the district.
Since our last budget meeting, there's been some changes to this
in terms of how the the process that the curriculum folks go through and aren't
to the point where they're able to make a final decision on one of the pieces.
So it'll be pulled from the budget, which will reduce that number.
But like I said before, all of that increase was really
was was for books.
The curriculum budget accounts for when
a new program textbooks comes into the district.
So they would buy all the and
I don't have the right term because I don't remember which
group is getting new textbooks but if it was the English or math textbooks,
we would buy all the algebra textbooks needed out of the curriculum budget.
Then the high school budget would be required
to put little pieces of that as they needed to replace textbooks.
But the the first iteration or when
a new version is purchased, it goes through the curriculum budget.
And a lot of this was elementary reading.
Next, major,
I will draw your attention to a tax collection.
There's an increase there that is directly related.
Our income tax collection, the Keystone
Keystone tax collection, collects that for everyone in Dauphin County.
Their agreement is that they get a portion of that is paid to them in commission.
I've increased our real earned
income from about 4.7 million to about five next year,
which is what we're on trend to receive this year.
And so because that not the number of of the revenue increased,
of course the cost is going to increase along with it.
So that's just directly related to our earned income tax
collection.
The final one is transportation.
There is a decrease there and that is because of the work done
by the Transportation Department.
We currently out we started the 1718 year
having the
the IU the intermediate unit transport
our nonpublic and special needs students.
And through work of our Transportation department, we've been able
to bring those nonpublic students in, transport them ourselves.
And so that's a direct reflection of that.
Reduction in cost there for transportation
is the ability to bring those students in and transport them ourselves
without any additional vehicles or people needed to do that.
And we'll spend a lot of time if
I won't spend a lot of time
on this second page, only to note that all of the revenue increases and changes
that we talked about at the last committee meeting are now reflected here,
and a lot of that is the increase.
As you can see in our local revenue,
about $800,000 of that 1.6 is directly
related to a 2.3% tax increase, real estate tax.
The other $800,000 or so are because of our good, strong local
economy, as I noted, made some increases in the budget
for earned income tax and real estate transfer tax.
Being to that, I've noted
looking at the trend and looking at past information, we're going to assume
that those local revenues continue at the same pace.
I have trepidation in those because those are directly related
to how strong the economy moves and I found out in 2008 and 2011
that that downturn can happen fairly quickly.
But we're looking at next year.
I don't think that it will occur that soon.
And so we may have more trepidation as we get closer to maybe
presidential elections.
But as we look at next year for next year's 1920 budget,
I think we can remain strong there.
As you can see, we're just a little over
$18,000 to the good
that will be adjusted as we go back through our process.
As I said, there's some of the reductions in the curriculum expenses
as well as work that we continue to do through all the budgets,
will hopefully, hopefully get us to a reduction.
And my goal would be to bring something back to the board,
the committee that is a tax increase below 2%,
still a tax increase, but I
think we can get it under definitely under the 2.3.
And my goal would be to come back with a tax
increase under 2% for 1920
as we work through and continue our process, our work
administratively with the budget information has been provided.
Thank you.
Just to
we you would have done this presentation to full board last year, correct?
We had the finance.
You're doing it here because I want to think about next year and the goals.
So this is good because we freed up a lot of time
at the 7:00 meeting.
Okay. Thank you.
Mike.
Any costs related to Granada
and anything we do related to Granada next year, where would
those costs be?
There are there are none in here.
So the I mean, the money we borrowed for the project we're doing
has already folded into our our debt service payments over the next
seven years.
So there there
is, there are no dollars and anything we would look to do for next year.
I would have to be borne out of the money that we're collecting as rent
front from.
So there's we've talked in the past about a business plan.
Sure.
So to the extent we spend time on that, it would be our internal staff
then were not.
That is correct.
Okay.
Carry any other questions on
budget requests.
These are that this was a summary of the amounts of funds
being requested by the various departments across the district and
Mike, you're going to
get into the next line.
I don't know that I'm just in the interest of time, get into
too much of the revenue items unless there's any specific questions.
What I did with the
information here and what was reflected and we just went over
was making the adjustments to some of the budgeted revenue items
that that I felt were were were necessary
given prior trends in collection of those revenues.
So the only thing from a revenue standpoint that would change
from this iteration to a final budget
I will get in April,
I'll get assessed value information from the county
that will change the amount of revenue
that is there based on our projected increase in taxes.
But it wouldn't intend to make any other adjustments to any of the other revenue
moving forward unless we got something from the state or they made a decision.
But I highly doubt that's going to happen before the end of June.
So relative
to to the 1920 budget, then we'll
continue to review refined budget requests
projected expenditures are revenue projections for next year
at our next meeting in April and then in May, we would be making
recommending to this committee would probably be recommending
to the board to approve a preliminary budget in May.
Well, actually,
this committee would need to make that recommendation at our next meeting,
our final meeting in April, so they could make it
so that the full board could then have that
before we would provide it at our first meeting in May.
We provide that information with the intent that then
the full board would approve the preliminary budget,
which needs to be approved before May 31st.
Okay.
And then final budget has to be approved by June.
30th, correct? Yeah, It'll be our second board meeting in June.
Does anyone have any questions at this?
Any additional questions at this time for Mike related to the items
for A and B?
Okay.
We have about 9 minutes left.
There's really no update on the vendor fair.
Mike and I still need to
talk to
flesh out a little bit more
what what we're thinking about there and bring something back
to the committee and I can
make sure we try to do that between this meeting and our next meeting.
And I know we probably don't have enough
to cover the utility contract review in detail, as do we.
Could we start this discussion? Okay. Yeah.
This maybe give us an overview of what where we are with that.
So I put some of this in the right up under the agenda item
we have
coming up at the end of our contracts for energy
for I'm sorry, electricity and natural gas,
which are the two largest things we use to heat
and cool our buildings
throughout the year
for electricity.
I've worked with a third party vendor,
third party consultant, and what they do is access
the electricity suppliers in the market for bids for electricity.
What they'll do is they'll have our yearly usage numbers
that are in there and pretty much just shop
those around for our our best possible cost.
This is an item
that we have some control over
when we look at the electricity cost.
And it's one thing that we don't know probably because it happens
during the summer, many people aren't aware of it.
But we we cut back energy drastically on days that are high usage days
throughout the summer.
That in effect reduces
or helps us reduce about 20% of our energy costs
you get, which is I struggle with this every year,
but 20% of the electricity costs that we are given to us are determined
by how much electricity we use on the five highest days of the year.
Five highest days are usually those days that are extremely hot.
That's when people are using a lot of electricity to cool obviously
their spaces.
And so I will will get email notifications from our third party
that I think today will be one of those days.
And so from 3 to 6:00, we reduce our energy
as much as we possibly can, shutting down
or turning back our
our air conditioning to setback mode.
So essentially, even though we're here having the system
treat it like we're not, that helps reduce those those numbers.
And our third party provider you are is a huge portion of helping us through
that you are a is not
makes their money by the amount of electricity we sell.
So part of the pricing that we get for our electricity
baked into that is the reimbursement for YURA.
So we have no direct cost going to them.
But I do know that they are obviously reimbursed for their time
based on those costs given back to us.
There are only
a limited number of electricity suppliers, which is where
we're buying our energy from our from those suppliers.
And so there's not really a need for us to go through a huge procurement process
because this comes back to me as apples and oranges
and I need somebody in intermediate to make it all apples
so that we can make the comparison and go forward.
Prior years for our natural gas, we were part
of the central Pennsylvania Energy Consortium
and that's how we accessed the suppliers for natural gas through that market.
In 2018.
Cpec stopped operation essentially folded.
So there is no longer a central Pennsylvania energy consortium.
And so I would look to you array to provide the same support they did
for electricity
I could offer.
If this is one of the areas
that we spend
a lot of time on when we need to, the contracts usually are
from anywhere from 3 to 5 years that you're purchasing the energy.
And once the purchases are locked in,
natural gas still has a portion that we have to go every six months
and look at pricing for the actual nine max versus the transportation.
But there are a lot of moving parts that go into electricity
and natural gas.
Sure.
The question about the electricity portion of it, do we as all of this works,
have any exposure or vulnerability to anything
surrounding the TMI,
the legislation for potential bailout of TMI
and some of the information saying that there would be a drastic
increase to energy costs?
You're talking about the drastic increased energy costs
if we bail out TMI, not because
because I believe that that's not realistic information,
that if they go under that electricity costs will skyrocket.
But they're also saying that the bailout is done,
that that could also still, because then the way the bailout is structured,
that a portion of that would then go towards a different type of energy.
It kind of redirects what's there.
Oh, it's not.
So the supply that TMI, TMI generates
for us would be reduced,
if I'm understanding it correctly.
Correct. But
so we access the market
where we purchase now from Constellation Energy.
I have no idea where that energy comes from,
what its sources are or anything to that fact.
So my comments would be to that greater market level that obviously
if we are going to if somebody is going to be propped up
and even though they're offering electricity
at a higher dollar value, people are still forced to buy that.
That's, of course,
going to drive the costs back up to us because those suppliers are being forced
in which my understanding as part of that legislature
is people are being forced to buy that energy at that cost.
And I believe that gets passed on to to the consumer
for us, though, our
electricity, the way it is purchased, it is locked in.
So some of that could be for timing issues
that if if we're going to this market
at the same time that bailout happens,
there could be some some fallout or cost to us from there.
But that would be the only way that I see it,
as if it's the time we're accessing the market
and the bids.
I've actually asked you are two to start that process already.
They can go back to the market as many times as they want,
but we've already received pricing through 23 year
contract through 2023.
So to the extent that it had any effect that we wouldn't, we won't.
We may not see it this time around.
Okay, thanks.
So Mike, you
are a is to utilities as air assets to insurance.
Yes yeah
I could have air
or you are a command and provide a presentation to the group
because this would be one area that is highly technical
and I don't want to get too many things confused
or go through too much of this process without
without them here.
But if there's more information that's garnered
or understanding of of what we go about here,
that's a little bit of what this process is about, is to make sure
that the committee members are as up to date as they need to be.
I'll leave that up to the
the board members feel they'd like to learn a little bit more
about this, or you can read what Mike is
attached to the agenda and go from there and feelings.
I'm neutral.
Okay.
So that no presentation. No. Okay.
So if anybody has any additional questions
after further reviewing or they can they can direct them to you.
Mike, that brings us to almost 5:00.
I assume that the people in the audience are here for the next meeting, but
is that true?
Anyone here have any questions for the Finance Committee?
Okay, thank you.
I can have a motion to adjourn.
So moved.
Second. On favor. I.
Okay. Meeting adjourned at 459. Thank you.