22nd meeting of the Finance Committee to order
at 4:00
and welcome our four citizen advisors.
Thank you very much for
for being willing to serve and and joining us
and we look forward to your contributions.
I did attach and I'm not going to go over it now,
but I did attach to the agenda
what the role of the committee is
and also
two things I think were on that attachment,
the responsibility
of the committee and the role of the committee.
So they're both in the attachment.
You can just review that at your leisure and if you have any any questions,
you can ask any one of us.
So I'll proceed to
roll call.
And just when you introduce yourself, please turn on your microphone.
This meeting is being
audio
recorded, right, Mike?
It is, yes. Okay.
So when you speak whether at any point,
just press on the button of the mic, it'll turn red and that means it's on.
And when you introduce yourself, just indicate
whether you're a board member or a citizen advisor. So I'll start.
Terry Singer Board member
Go ahead.
Darby.
Like a citizen advisor.
From typical on board member,
like friends, business manager.
Todd Schaefer.
Citizen Advisor.
Jeff King, Citizen Advisor.
Lindsey Jury School Board.
Faisal ISS Citizen Advisor.
Cathy Singer School Board.
Hey, thank you everyone.
I'd like to allow, I don't know, 30, 45 seconds
each for the citizen advisors, if they'd like to say a couple of things
about themself. There's no need to.
We have your resumes and information about you.
That's obviously the basis upon which you were selected.
So but if you'd like to say a few things, just to orient your
your citizen adviser colleagues as well as us, that we appreciate it.
Some.
Sure.
My name is Darby Valegro.
I've been here for been in Hershey for about four years.
I've got a daughter in fifth grade and a four year old citizen
who will be coming to kindergarten next year.
My background is all in research and analytics, data analytics
and marketing analytics, and I currently work for the Hershey Company
Leading pricing strategy for the U.S..
It's great.
Thank you, Darby
High emphasizes our two kids, so we've been in Hershey for about eight years now.
My son is in eighth grade and my daughter is in sixth grade
and one of the reasons I wanted to be a part of this committee was
because I really like the school.
We came here from Ohio and we were sending our kids to private schools there.
And I was we were very impressed as to the standard
of education and the school size and the class size was
was matching to the private school for profession.
I'm a vascular surgeon and I'm currently chief of surgery at Penn
State Hershey Medical Center.
Thank you. Thank you,
Jeff King.
We've been in the district for ten years.
We have a son who has gone through the system and has gone on to university.
And we currently have a daughter who, as a sophomore,
I my background, I work for the Hershey Company.
I've been in marketing and currently I currently run our global
sustainability and social impact Group,
though the two Hershey people know each other,
know,
My name's Todd Schafer.
I've been here three years.
I have two daughters, one in third, one in fourth grade.
Never been involved with a school board by any means,
but hopefully I think I can bring a unique skill set and help wherever I can.
I work for teachers.
The pension fund, as you know.
So I manage about 6 billion for the pension fund and
I really enjoy the area and hope to be here for.
A long, long time and assist wherever I can.
So thanks for having me.
It's great. Thank you. Thank you.
Welcome again.
Next item on the agenda, the approval of the summary minutes.
This is only our second meeting of the reconstituted Finance Committee.
So unless you've had a chance to look at them
for citizen voters, you wouldn't be familiar what's with
what's what was discussed because you weren't here.
But for the floor board members, did you get a chance to read the minutes?
And do you have any comments, additions, revisions,
motion to approve.
Second.
Okay. All in favor.
I opposed.
All right. Thank you.
Okay.
On to unfinished business.
Mike our our treasurer will
business manager
will review the unaudited.
If I'm correct.
Mike 17 and 18 financials.
Yes. Thank you, Terry.
Attached a very short executive summary
to some of the pertinent information that is there.
As you can see from the expenditure side, we did
over expand
in a couple of areas.
Most notably, I want to bring your attention
and this is still as because it is unaudited,
we are actually going through the audit process now. We
probably have about another month and a half to go through until that is finished.
But we did find in that information
as it was pulling this together last week,
that there were some accounting items
that still need to be backed out from the prior year,
most notably the retirement.
This is an amount
set by Peter's that is provided to us.
And in this year it was just a little over 32%
for 1718 as a percentage of payroll.
If you do the math on that 9.4 million, that comes out to be about 34%.
That's because there's some carryover from the prior year
that actually needs backed out of those expenses,
which is a normal part of the process of the audit
and just hadn't been done by the time we pulled these these numbers together.
So based on what we booked last year
for retirement and what you have to do is because
some of our or most of our teachers are paid
in July and August for the prior school year, essentially all most of the teachers
we split their pay over 26 pays just like anybody else would have
most of that coming during the school year.
But then they also receive payments
that come to them after the school year is over.
We have to make some adjustments to line up the taxes
and everything that goes along with those correctly
and a normal part of our process that didn't get backed out
yet is those is that additional teachers payment.
So when that is backed out, which we estimate to be around $490,000,
that will bring the total expenditure down to under the budgeted amount
in total,
we had a very
a very tough year for our health insurance and just for citizen advisors.
We are self-insured for our health insurance.
We cover about 500 employees, but overall with dependents
we cover right around 1000 lives in our structure.
We do have catastrophic
stop loss insurance.
So any one individual that reaches $170,000 in their claims in any one year,
anything over that 170,000 is paid
back to us by the insurance.
We had a tough year this year, though, in that
while it was still below budget,
we had our our total costs were a lot closer to
to the actual budgeted amount than we normally have.
And we budget our health insurance based on prior year's information.
There's really no way to accurately depict what it's
going to be in next year or even two years down the road.
So we look
at what our history has been and try to make an educated decision on that.
In this one year, we had five individuals
that those five individuals, when you add their claims together, equate
to over $1,000,000 of that $5 million, which just from from five people.
Once again, very serious health conditions, nothing
for us out of the ordinary.
But they hit you sometimes all in weird ways and those costs coming at one time.
So because we are self-insured, we pay the claims as they arise.
And this year was a bit difficult for us
in that way.
Just some other areas I have lumped so
all of the building and department budgets,
just for simplicity's sake, we're lumped together.
You can see that there was about
just shy of $90,000 over budget for them.
The main driver of that was our special education costs.
Special education was about $330,000
over what we had budgeted for that year.
We do budget because of our fund balance.
We look at special education and once again tried to budget
for the needs of the students that we have, that we know of.
But with special education, a student can register tomorrow
with extreme needs, which usually come with extreme costs,
and by school code we have to provide those services. So
$330,000 is a lot to be over budget.
However, it's not a lot when you when you start to think
about what education can cost.
In our special education program, we have over five students
that in and of themselves cost about $250,000 each each year to educate
just based on the specialized needs that those children need.
And so we budget for those kids that we know about,
understanding that in some years
a student could register or a student could matriculate through our system
needing more resources at some point in time, and we provide those as needed.
We're lucky in having that fund balance that we wouldn't say that
the special ed Department Stop spending money your age, your budgeted amount.
They provide the services that they need to provide for those students
and we're able to make up for it.
But that is a large portion of why the buildings and department budgets
were about $90,000 over budget.
I'll review the revenue side of the budget, but I wanted to see
if there are any questions here for for just the expenditures that were listed.
Just to give a little color context
description, we're just starting to build the budget
for 1920.
So budget for the year that we're in that ends June 30th 19 is
set and operating and this is a review of expenditures.
And in June 30th last year and some of the other things
we'll be doing today are about giving us all the kind of background information
we're going to need to have and understand to
to work with Mike and and move forward and develop
a budget for 20 1920.
Mike, I have one question.
I'm just curious.
The unemployment
payments,
unemployment compensation,
is there any particular reason for that?
No, We have a very minimal
amount in terms of unemployment
because mostly because we are about four years ago
we outsourced our
our substitute teachers.
So when we use that, we actually go to a service
and those individuals are not our employees any longer
because of the way the unemployment structure
worked, we had a lot of payments that would normally be made.
For once someone starts working with us as a sub,
they get caught in our kind of net,
if you will, when they go to to apply for unemployment compensation.
So we end up making payments only because they work for us,
not because they quit or anything else that we're just in that that loop.
So the
$12,000 has been what we've noticed
over the last couple of years.
This year we had some other individuals that just
that left us on.
And once again, with the way the unemployment law works,
someone can leave and resign from us, not qualify for unemployment,
go get another job somewhere else, leave that job, apply for unemployment.
And then you're looked at back in that 18 month window
when they go to apply for benefits.
So since we were paying part of their salary
when they applied for benefits,
we get knocked for a portion of their unemployment as it goes through,
but no real connection or correlation for anything we can do.
And that's where those costs increase there.
And and so when the adjustment is made for retirement, it looks like we're going
to have just under 2 million
unspent that was budgeted for last year.
Am I reading that right? Correct. Correct.
And we'll talk a little bit about, though,
that 600,000 and that's a very much a one time payment.
We'll talk about that.
We get the revenue.
Okay.
If questions for expenses,
looks to me
like you hit pretty darn close on a lot of them.
Yeah, well, this was so I joined the district,
came to the district in 2014, and one of the things
the board wanted to look at was, was that budgeting, as Mr.
Hancock would put it, closer to the pin.
I love golf.
I hate golf.
So what used many of those analogies, but
two to look at that
and from a better structure of
and virus will see as we work through this process
we have a lot of needs and of course is the school district.
But we have a finite amount of of resources that we can work from.
And so a lot of our budgeting is just prioritizing.
This is what needs done next year or the year after that.
And the more fluff that is built in the budget,
the more you find yourself making decisions
about things that may or may not to be to be cut
because the numbers are telling you that it needs to happen.
Well, if we can get our budgets
closer to the actuals, then we know when we're going through those discussions,
that we're having them in real time, that,
you know, if we want to reduce our expenses,
we don't have to just wait for the fluff to go away.
We're at the point now where we're we're as close as is
comfortably possible being with some of these.
And so our planning moving forward
doesn't have to take into account, I think I know
we have X amount just hanging out there, so why we don't show it?
We can make those decisions and just trying to make those numbers
be something new.
For more, rely on the actuals will be what the budgeted amount is.
And fortunately
here in Derry Township, our local
tax revenue drives a lot of what we
what we collect.
And as has been the case in the last four years, our local
tax structure remains strong
in looking at the revenue from local sources and for the citizen
advisors.
The largest portion of local source of revenue is real estate taxes.
Of that $48 million that was collected, about
35 million of that is just from real estate taxes.
The next largest revenue item from local is earned income tax.
We receive a half of 1% of every earned income
or every earned dollar made by anyone living in Derry Township.
And in that budget, it's about $4.7 million.
Also, had
we budgeted about $4.4 million for local income tax,
that has been our historical collection.
But this year we did receive
about $330,000 more than we had budgeted for that.
So a great thing to have, not something you can always count
on, though, for coming through for the next year.
So we will bump up as
we budget for 1920, what our expectations are for it.
I probably won't go as high as this collection until we see
some better information through the next couple of quarters
as we move through this year.
But very strong and very,
very good information from from that side of the coin.
The other is real estate transfer tax.
We receive a half of a percent
of the sale price of all real estate.
That's transaction transacted within Derry Township.
The tax itself is 2%, 1% goes to the state and then the other 1%
is divided by the township, Derry Township and the school district.
So we get a half a percent.
We usually budget
or the last couple of years we budget around $700,000 for that.
This year we received about $850,000.
Once again, a really good bump,
but once not something that can be counted on.
We cannot assume to know what real estate
transactions are going to happen within the next 12 months.
And as I dig deeper into this data, this could have been one or
two entities here in Derry Township that were that changed hands
and thus created some of that extra revenue for us.
Mike, how much did you say earned income tax was up?
That was up about $330,000
from. Anything, so.
Not quite 10%, but about eight
to include commercial Or is it just
residential?
Does that include commercial or is that just it is net profits as well?
So there is that 1% tax or whatever net profits that the company may see.
But that company has to be located
within Derry Township for us to receive that
that tax.
Moving on to the state revenue,
this is our state revenue collection was up.
However, a large portion of that was due to
well,
Derry Township School District.
If you ranked school districts in order of state funding,
one being receiving the most state funding, we have 500 school
districts in the state and 500 receiving the least amount of state funding.
We are number 497.
So the state has had its budget problems,
which you may or may not have read about over the last 3 to 4 years.
I've been a school business manager in one way or another
for 13 years and it seems like every year I do it.
They have a problem with their budget. But
for three years ago they
didn't pass the state budget for nine months into the fiscal year.
That meant the school district didn't receive any money
for the first nine months from the state and it was around $10 Million.
We have a fund balance.
We have a savings account that got us through that time period.
But I bring this up because as we look at what the state budgets each year,
it's kind of a fake process or what
they provide at one point in time is not what actually gets passed at the end.
So we've taken a stance to say
we're just going to assume they're going to do no harm
so that we will get the same amount next year that we got this year
and we'll budget for that
if things come through.
And the more funding comes our way that that will just be kind of gravy.
And that's really what this
little over $300,000 represents
is increase in basic education
funding and special education funding from state sources
that did come through, but once again was not budgeted
because we have to have our information completed by June 30th.
The state is supposed to do that, but they very rarely
have their budget done by June 30th.
So we have to make some kind of educated assumption
of what's going on.
The last few items
federal revenue and other revenue.
Other revenue is a
once again for the citizens advisors.
We have a trust that was set up by Milton Hershey.
It is completely 100% separate than the trust that was set up for
the Milton Hershey School.
Much, much, much, much smaller.
So it's about $45 million that is in a permanent trust.
And that trust is managed by Fulton Financial.
We do get the essentially the interest and some calculation
of the increase in the size of that trust on a yearly basis.
We so in this year we got about $1.9 million
coming from the trust that we use to balance
our budget on a yearly basis.
That money has been reducing by a little bit.
So like in this year, it's $1.8 million
that we're expecting to come from that fund.
But that's the majority of of that Other
are those dollars that are coming in to us
from that permanent trust.
One item to note and want to talk about
spend some time on here at the committee, there is the other portion of that.
You can see here that
there is about a $600,000 increase in those dollars
over what was budgeted.
And most of that was to the fact that
the Harrisburg City School District
take even a step back further.
Some districts in Dauphin County have got together
to operate the Dauphin County Technical School.
So that school exists because the schools got together and said,
we want to support the Dauphin County or create.
And so each of the districts pay an amount of money to the vertex.
But that's the only way they get
their revenue in is through the support of the school districts.
Most of that is is is calculated based on how many students we send.
But there's also a calculation based on wealth that more wealthy school
districts participate a little bit more in in the debt structure.
Two or three years ago, the Harrisburg City school
districts came and said they had a need for where to send their students.
They had actually operated their own kotek a long time ago and had to close that.
So we're looking for options for their students.
And for a couple of years
those students attended the Dauphin County Vo Tech as tuition students.
They were they they just paid a tuition.
Their school district paid the tuition bill to the Dauphin County Voter Act
based on the number of students that they had
because they were sending a great number of students
and that they saw this as a better way to provide that vo tech experience
or that technical school experience, rather than doing it on their own.
They approached and wanted to become a member of the Dauphin County.
VO Technically for tech.
So a process happened in which all of the
all of our all of our sending schools
are responsible for a portion of the debt that was incurred by the vo tech.
The technical school I'm sorry are not called vo tech.
One day in my life, but it is a technical school.
Basically.
The same is true here.
Debt is incurred by most school districts for their building.
There isn't enough money to to build all at one time,
so usually a large bond is floated to pay for those
and then over a period of time that gets renewed because buildings age
and that's how they will do renovations or those types of things.
So what Harrisburg City School District was doing by
buying in was buying a portion of the debt of that.
So this year we received a payment of $590,000 from the vote back.
And that is noted in that other revenue.
I bring it to the attention because of it being strictly a one time payment.
The payments for the vote check we were receive
for more additional payments of around $60,000
over the next four years for the remainder of this buy in.
But the large portion of it was was paid at that time.
So when we're looking at this
revenue over expense number of $1.4
million, that's in that 17, 18 year,
we brought in about $1.4 million more than we spent.
Almost 600,000 of that is made up of that one time payment.
And so as we go forward, I'd like to have the committee
talk about this, but I want to be able to earmark
those that $590,000 so that it essentially doesn't
lose its identity if if we were to end the fiscal year
at this point and these figures were, for argument's sake, audited,
we would just transfer that $1.4 million into our capital reserve fund
and spend it over the next three years on various items that are needed there.
I'd like to earmark or keep that $590,000
for the technical school paid through the vote,
and the administration is recommending that the board commit that in the general
fund for safe school renovations, we know we're going to have
some need for.
We just have over the last
six months or so, the
district has gone through a safety audit,
so brought a company in
to try to identify those things that from
a system wide perspective, that we could do better and things
that we may need to improve to improve the safety
for the students and the staff,
pretty sure
there's going to be a pretty hefty price tag attached to that.
And want to start with at least noting that the school district
would have this approximately $600,000 to start in on that project.
The money came to us because that was part
of what the
Harrisburg City buying the debt
because we are the the debt for the votes we are paying.
At the same time as of the other six sending school districts
paying it down is not an option.
It's on a schedule.
And we could park the money somewhere and it would be pulled as necessary.
But because of that sharing, we don't have the ability to go in
and pay it down early and start paying on it.
So that is why I'm noting
that we should earmark it for the safe school renovations
to note we have some dollars going through there.
But then that 1 to 1 correlation that if anything, hey,
what did you do with that money Harrisburg sent you?
We decided to spend it on on our safe school renovations
rather than it kind of losing its identity and just getting thrown into the
the $1.4 million moving over.
So think that's an excellent suggestion.
I strongly support it.
I think
I like the idea, too.
Is this the first time you've proposed this?
Because we had talked about around a $500,000 budget for safe
and supportive schools, but this is the first time we're hearing
taking that and putting.
It is we knew we had this hanging out there
and honestly was thinking before to earmark it
for any expansions that might be needed at the technical school.
Very.
But seeing that we have
we know we have a need that's coming up and we have these dollars.
And realistically, any expansions at the technical school
will require additional debt.
So having cash at the beginning of it, because once again,
we're sharing with with other districts, if not everybody has cash, that
those deals don't always work out the same way.
It makes sense.
So we felt this would be the best the best way to utilize those dollars.
We really have no concept of how much money it's after
we get our risk and vulnerability study back on the safe and supportive schools.
We don't know if it's going to be $100,000 for a new door
here, one building, or it's going to be $1,000,000 for
we we're just kind of making up
a number, waiting for the assessment to come back from.
Okay. Yes. Yes.
I, I stepped out for a second.
Did you update the citizen advisors on what we are doing with safe
and supportive.
Schools just very shortly that we have that that risk assessment.
Done and that we're getting that information back in the next month,
I believe.
So it's do you need a decision
on that tonight or no, you're just proposing it, correct?
Yeah.
We can wait for the risk and vulnerability assessment to come back,
see where we are with dollars.
And then at their next finance committee, we could. Absolutely.
Go to.
The final commitment of that would need to be done by the full board,
but would need to be done until January.
Essentially, it needs to be done around the same time or is completed.
And this would
essentially just be taking the $500,000 that had been
discussed around January, February last year.
We didn't have that in the five year capital plan.
So this would be funding that.
Might the
the Milton Hershey Trust
pay out that that is
that's been balanced to go out how far
would I say balance to pay outs and interest
and all that we're hoping it goes on ever forever forever.
Yeah yeah that's what I thought The
the money that we had reserved for, for pizzas
Is that still reserved two point just for pizzas.
Yes it is.
Okay.
So that can enter into this discussion in terms of when that safe schools number
if that should be above 500,000.
That's money in our fund balance.
That is which we call our savings account
just for citizen advisors.
Yeah. Which is about 8 million. Right.
Correct. Okay.
And that 2.3 can be moved.
It doesn't have to remain in the
as a reserve for peace.
For peace or is it by board action.
Yes. Right.
So the board committed it to pizzas stabilization fund.
Now that we are
at I guess it's on a peak plateau of the pizzas rate,
that stabilization fund is not as necessary for us.
We're able to to pay the bills that's coming forward.
So kind of freeze that up.
And that money doesn't have a three year life cycle the way other funds do.
Correct that is correct,
because it's not in the capital reserve, correct?
Yeah.
Mike, I pulled up a document from our last a month ago up for board
meeting about the the capital Fund and there is a line item on that.
It said budgeted transfer as of June 30 of 2019 of $1,000,000.
Is that what you were kind of it anticipating transferring over of
the capital fund is for 4.3 million.
So when we when we're developing our yearly budget,
we plan each year to transfer $1 million over.
So what I have that unfunded amount
essentially
becomes this number of what's left over.
So I don't know exactly what that is from an auditor perspective, but that's,
that's where those two things.
So the million dollars is always transferred over.
There could be additional money transferred over depending on
what's leftover.
So that 885,592 is additional to the 1 million.
We already have planned that
if that. Yes.
Okay. Yes,
that's correct.
Okay.
Any other questions, Mike?
I don't know if you are you basically through with this item?
Yes. Yes.
Okay. Is there any other questions before we move on?
So just for clarification, you said we have about $8 million
in the savings account in a fund balance, in a fund balance, and the budget, we
we came in 1.5 million higher in budget and that would be transferred over
to the savings account into the Capital Reserve Fund, not the fund balance.
So the yeah, the, the fund balances is of that general fund savings account.
We then have a completely separate fund that is dealt or that
pays for large capital items.
However, the money only gets
into that fund by transferring it out of the out of the general fund.
So there's approximately four
and a half million dollars in that capital fund right now.
But I believe there's $3 million of that planned to be expended.
And we're planning the next year, which would would take care of the rest.
So most of that money is is accounted for in capital needs.
Well, there's just a that's a big increase.
And I just wanted to say, Chris,
a very high level question.
Sorry.
We're over the next year working towards a budget for 2019, 2020.
Correct. And this is 2017. 2018.
Where's the interim year of 2018, 2019, this calendar year?
So that's as Terry noted, this is just part of our process to look back.
Usually the board receives monthly
updates on the current level budgets and where we're at.
Obviously with it only being, you know, September,
what we've gotten through, there's just not a lot of good information.
We'll start to focus more on those as we get part
four more through the school to see where we're at with those numbers as well.
That's a good question because I did want to tell you guys about something.
So this Finance committee is going to work on specific
tasks and goals, but we still are operating
to some extent as a finance committee at the whole board at 7:00 tonight.
And the first meeting of every month, the second meeting every month, we do
approve a list of items that you can look on Agenda manager at the 7:00 meeting
and so we still approve activity funds Treasurers report.
We see the the paid bills, unpaid bills, expenditures capital reserve fund.
So there are things that we'll still talk about at the full board meeting,
but we can still, if you see anything there
and you have questions about it, you can always bring it to the Finance Committee.
Another question
the structure of the trust is that a structured payment system
every year of you can spend interest or half of the interest, or
how is that structured set to provide equity
guidelines for what can and cannot be done that.
So now it is a it's left me as well.
So I'm going to provide you the example, but these years might be
a little different.
March 31st of every year.
Well, there's always the value of the trust is always noted,
but using the value as of March 31st of every year,
there is a five year
average of that taken at those,
and then we get 4% of that.
So that's how that's calculated every year that actually has worked.
We were getting 5% before on a three year average.
We've worked with 14 financial
because they had concerns about the trust fund being permanent and paying
that structure
and reduced it.
One of the things we've noted, default and financial was a school district
we can deal with increases
or in this case decreases of revenue.
But for us it can't really be drastic.
If it's if it's a small slope, we can plan and deal with those.
So the bank has been helpful in working through that process
over four years to get it to where it is today.
But that's that's the structure of how those payments come to us.
And then we get that money.
So it's calculated based on that from the prior
March information so that when we're in this case, developing our 1920 budget,
I'll know exactly what they're going to be paying us,
you know, after March for the for the next fiscal year.
Don't you get paid out four times a year as opposed to one time now or something?
I remember it's always been quarterly.
It's always been quarterly and quarterly payments.
But we changed something a few years ago.
In terms of the calculation structure, but not how the money gets to us.
That's always been the same.
Okay, we have about 20 minutes left
and we do want to reserve some time to talk
about the goals of the committee because we haven't done that yet.
So Mike,
relative to the five year budget projections,
is that's something you feel
only the information in there because we haven't
gotten our actual information close enough for me to put it into the model yet.
So if you want to move on from that, it's the same as
that's been reviewed by the the committee in prior or prior meeting.
Okay.
Is that is are those budget projections,
can they be shared with citizen advisors?
I mean or not?
The information can
and I can
I mean,
so I can share reports.
I wouldn't provide the the actual five year budget projections.
I think it really only makes sense to a couple of people.
Okay.
In terms of usefulness and how it's used and gone through there.
So as we get to four, this is an advisors when we look
starting to plan for the 1920 budget, well,
I look a lot at what we've done in the past
and what the projection tells me doing in the future.
We'll start to gather
or I'll get a lot of the actual information in February
from the departments and those types of things.
But we like to to use
the information first to try to point us in the direction
we're going rather than some districts ask their departments
to provide their budget requests essentially now for next year.
And I find that that's because of the early ness of it.
Just a lot of bad information comes through.
So we look at it a little differently and use the budget projection model
to help us see where we're going and see if just small tweaks
will get us there at the end.
So probably with our next meeting we'll start to look at
what that projection model says, where we're at
and what you know, what we can plan to do moving forward.
Okay,
why don't we move on unless anybody has any more questions
about the financial information that Mike reviewed with us,
why don't we move on to establishing goals for the committee since this is a
newly reinstated committee,
we haven't got to set goals.
Generally speaking, the goals for the committee are set by June 30th.
So for the following school fiscal year, we we work,
we work forward from there.
Just a couple of things, I guess,
to set the stage.
There are
certain many deadlines
related to the budget development and approval process.
Many of them are covered in the minutes, in the summary minutes.
But and obviously some
decisions may need to be made earlier,
earlier than others as we as we progress
the first set of decisions, our first decision
and make you correct me if I'm wrong here is we have to decide whether we're
going to live within the 2.3%
increase that the state allows
us to to to incur unless
we provide additional information
to the state indicating we need to go above and beyond that.
And that would have to be approved by by the board.
And then
I think that those decisions have to be made.
I think we're supposed to this committee
was going to make a recommendation to the board
by the by the end of our November meeting as to whether we would live
within our two point the 2.3% allowed or we would we would seek
we would opt out, I guess, to
to to seek to go above that if we if we felt we needed to.
So related to our goals, you can see we talked about a couple of things
we thought we needed to know and there may be some others.
What what will our human resources projected
human resources needs be for school year 1920?
What what, if any, board priorities
are there that that would carry
a price tag with them
and at least those two things
and maybe there's some others we we can talk about now
will affect whether we feel we could live within that to 3.3% or not.
So why don't we talk about that for a few minutes and then
any other priorities
related to the budget
preparation of the budget for 1920
or otherwise related to
the financial affairs of the school board?
So with that as background,
any any other comments.
That I just we just talked about?
One other thing is I think you mentioned it contract review
and or trying to get better prices for bids somehow.
So you really have
three goals Budget Board priorities, human resource needs and the school
index before the end of December to decide whether we can stay within the 2.3%.
And then do we want to talk about contracts?
Contract review expanded on the schedule to get bids, trying to get lower price.
It talked about making that a goal so that we were
further ahead to understand what was coming up.
Oh, you know, like, say, 60 to 90 days in advance.
So that
would
if we were going to send it out to bid before the renewal,
that we would have that ahead of the existing renewal negotiations.
Yeah.
And we did we did talk about the possibility of
of after reviewing all the contracts and when they're up and so forth,
the possibility of maybe maybe rebidding some of them or opening up competition
for some of them.
Did we at one point get a list of all the current bids
and when they expire, we have that.
Yeah, you can talk about that for us. Correct.
So I would encourage the committee to look at that, look
at those things that are expiring,
you know, at the end of this school year,
sometime this school year, and probably prioritize those.
If you look at those first in terms, do we do we want to go out
for those to bid some of the others because of when the contract ends?
That's more of a discussion of we'll put this on our radar, but obviously
we can't go out and shop it around until the contract we have is over
one. I think one of the
things too is that we had the
that great
spreadsheet you had put together of the existing agreements
and contracts and when they expire it, we didn't have the actual contract
themselves to understand any of the information that was inside of them.
So I think that was one of the things we had talked about diving deeper into
from a committee level versus at the board
was that in September,
I know I was just going to ask, where is that?
It was it was added a full board attachment or was that it was.
In a board briefing.
In September?
I think it was actually on the actual board agenda.
I'm looking at trying to find out because
we discussed it
publicly, like during a meeting.
Oh, here I have it in a summary of contracts.
And it says, Turn on your mike.
Oh. You want to turn on your mike? No,
my down in the delegate.
Yeah.
No, those are the delegate reports
for the board liaisons to those different organizations.
This would have been maybe this is it
the first meeting of the was it the
it was with your finance report Mike
Maybe it was August
before the Finance
Committee met for the first time.
And so I'm looking to I remember providing it,
but I know it's in the August 27th meeting.
Yeah, in unfinished business on August 27th is the attachment
for the contract summary, and that is contracts
that expired in June 2018 or will during the 2018 2019.
But that document I'm waiting for to open,
I think we were looking at reviewing the actual contracts
because there's a description and a start and end date
and then the contract amount, but we didn't have the actual contract agreements.
Well, what
did you say about prioritizing ones that coming due?
And my expectation was not to provide all the contracts for review.
So if you want to provide some that you questioned, I mean, we can start
obviously, if those are the ones we want to
look at what we're doing,
I can provide those and be a good starting point.
I mean, I don't think like Comcast.
Yeah, so our ones are talking about I think we discussed it
maybe with like the Barley Snyder and
some of the other ones coming up in 2019.
So so I'll follow up with each of the board members
and we can talk offline about expiration dates
and which ones we might want to look, you know, learn a little bit more about
and then get back to you, Mike, with that and go from there.
Would that work?
Lynda You know,
I'm actually as I'm recalling that conversation, I think the follow up
item was on us for that to identify ones that we would want to review in depth.
So the other thing.
Our next.
Step, the other thing that was asked to update was in the one column,
I just have some of those, you know, what we're paying is per contract
because it was fairly lengthy in terms of of what was in there.
So I am working on updating those.
But as we're going through the audit, that's kind of fallen down
in terms of priority, but I'm working on that to provide that supplement.
So that may be also what you're what you're noting in terms of that
next piece of information that will help you see the dollar value kind of
dollar value of those
contracts and maybe help prioritize from there.
Okay.
There were a few other things.
So there's two buckets.
One is what do we need to do related
to making sure we move forward,
get the information we need to make the decisions we need
to make on the budget.
The other is what do we want to do outside of that
in terms of looking at the financial affairs of the district?
So looking at contracts and when they're up
and whether we want to learn a little bit more about them is one thing.
Another thing I had thought about
was looking possibly
talking about the trust agreement.
And and I know we my understanding is we don't have a contract in place now.
So just
talking about the possibility of rebidding re opening that up to bid
to see if we can get a better price on the on the fee structure.
That's something that we've talked about.
Was that following the trust
presentations
earlier in the year when they were talking about the basis points.
Where we left that off, Terry was having to solicit or provide
some information in terms of so the while we don't have a contract,
the trust is registered with the attorney General's office
and asked the solicitor to provide what that structure would look like
or what process we'd have to go through if we wanted to change that registration,
because we know how to go through the RFP process.
But I don't I don't know
what the
mechanism is to actually then change that
company that oversees the trust.
I thought that Fulton hasn't always been our trust administrator anyway.
Didn't we changed. The.
No, we have the trust.
No, the trust was originally administered by the Milton Hershey Trust.
They only wanted to manage
the Milton the things Milton Hershey was going to the Milton Hershey School.
So they actually pushed the trust back out to us.
The board at that time went through an RFP process
in which Fulton Financial was identified as having the lowest fees
and to provide all the other work and necessary along with it.
So that's the last time that that had been gone through.
Yeah.
So is there a timeframe by which when we would hear back from borrowing so.
Right.
I don't know that that I don't know that that question is officially been asked.
Okay.
Well, so if the committee wants to make that as a recommendation, we can
follow through as part of the information needs.
If you add the trust agreement, that's five goals.
That's a lot of goals for a committee.
Well, in one sense, you can say it's kind of it's kind of one of our contracts.
Right? Right.
That's four goals.
Yeah.
One other thought and I don't know,
I guess we'll just take this up in
the context of the budget.
Is the Grenada roof and how we're going to finance that.
I know that's a.
Larger. Discussion for the board.
I was to say that's not going to come out.
I would recommend that not be at the committee level
because that is already at the full board level.
You'll be hearing your presentation actually on that tonight.
Yeah.
So, Kathy, you want to review what we've talked about
with the real quick and see if these are the goals?
Yeah. What do you have them.
I have that we are going to review board priorities
human resource needs
decide about the school index
before the end of December.
And I just said review contracts before renewal.
But you had said financial affairs of the district.
Okay, no, that's fine. And what then?
Well, index score is going to be accomplished
by June of this year. Next month?
Yeah. Yeah.
What was the last meeting?
We had written out?
Goals We had said systematically review the budget process in order to incorporate
next budget priorities.
Five year budget projections and administrator recommendations.
Do we want to write it out officially in a sentence
because that that includes board priorities five year budget
projection and administrative recommendations?
And where did that come from?
We talked about that at the last meeting.
Oh. I wrote it down. Okay.
Was that in the minutes then?
I should have been in the minutes, I guess.
It's not in the minutes.
It's on the audio tape.
There was no audio tape.
Oh, that's right.
Sorry.
So I don't know.
I don't.
Well, let's just so we basically had the board priorities
we need to talk about, write
the contract review.
And what was the third one
each.
Our needs human resource needs. Yeah.
Well that's okay. Is that separate than a.
Well I'm going to make that separate from board priorities then.
Is that what you're saying.
Some board priorities and the index
human resources needs
and contract reviews.
Is that what we're talking about.
Yeah. Yep.
Anything further or.
I think the idea of human resources came out at the last meeting
because we have a human resources committee and if the administration
is recommending increase in staffing,
we thought they were supposed to give it to the Human Resources
Committee in February before it went to the full board.
And last year I guess that didn't happen.
So we wanted to memorialize that and say that if,
like, let's say you're going to your desk that you want to add a guidance counselor
at the high school or something and you're thinking about that, take it
to Human Resources Committee in February and I guess as well as this committee.
Right.
That's in preparation for the budget.
Yeah.
If we're going to hire a school resource officer,
I guess that would be covered through.
You just have to realize part of the discussion the committee is
is meets as an executive committee, right?
So the information can be shared there in certain ways about personnel
that we won't be able to share in this meeting because it's personnel.
Just so we're we're.
Asking you to find the last time that we had not received
the staffing recommendation from the budget process.
When we reviewed the budget calendar
and timeline, we were talking about moving the dates up
to talking about the board priorities
and then the staffing recommendations and saying that we were getting that in.
I want to say early March, we didn't receive those until last year
and typically it was supposed to have gone to the Human Resources Committee first,
but we had not received that in our committee for 2018.
So I mean,
basically the board priorities and our needs are needed
to make the decision about whether we're going to live within the index or not.
So that's really one goal.
To me, that's not.
Yeah, I read the the human resources need part of this
committee's function more from the overall long
term planning component versus the individual year budget
projections.
Because what we discussed in the in this committee meeting
was relative to the Human Resources Committee
receiving the staffing projections
inside of the budget calendar.
Okay.
So should we include the Milton
Hershey Trust agreement as a separate item then?
It seems like we could.
When we talked about this a form, might you cite that?
Fulton I mean, I guess when you went through the RFP process,
they were well below everyone else and they're doing a good job.
So do you see that as a priority that we need to do that?
I mean, the fees were significant, right?
Do you remember how much they were a year?
About 170,000 as my record per year. Yeah.
But in
yeah, I didn't go through the RFP process but found the information
that was in there.
And you know, Fulton Financial had
it's there the fee is based on 3/10 or 4/10
of a basis point.
Yeah.
If if there's knowledge of money people
managing money cheaper than that out there
that's one piece of information that we have not found yet.
So no I don't I don't think it would be a priority for us to switch.
But, you know, if if someone's aware of money managers
out there with with less of a fee range, then
yeah, I mean the starting point wouldn't be the sweats.
The idea is if we're if we're looking providing an opportunity for competition,
we might get a better rate.
But not saying that
it's going to necessitate that we switch.
I personally would like to see it as a goal,
but if the committee doesn't agree with that,
there won't be one.
So why don't we do one at a time then?
On the goals.
When was your RFP for the Trust?
How long? How long? We we didn't issue one.
I don't believe.
Well, we did when we trained in Hershey Trust, so it was about five years ago.
Now you're.
Five to at least seven.
Or eight years ago.
So it's been seven years since we've kind of gotten
a new pricing structure or an idea of what's out there.
Right.
So that's just that's a reasonable time frame.
To your point.
Fish around, what's your total
that.
$45 million trust.
For counselor based on GPA,
how they performed as well
and you get what you pay for.
So maybe we may be getting
more return things.
We're going to look at it.
Okay. Okay. Darby, do you have any or.
I see.
No, I agree. Seven years is a long time.
And let's look at performance and just saying
it might not necessarily necessitate a change, but it's worth it.
Right.
Okay.
Well, why don't we do one at a time on the three goals
in this instance, the board members
vote and the citizen advisors.
We want to know what your opinion is, even though it doesn't officially count.
We do want to know,
you know, what you think and what what you think on each of these goals.
So the first one is is to
identify board, bright board priorities and h.r.
Projections and understand those in terms of coming up with the
go no go on the index.
So can i get a feeling of the board on that one?
I would support that,
but i think that the staffing projections
are not included.
So we don't need the staffing projections you're saying just.
Now because that will be correct.
That'll be part of the entire budget proposal process in general,
but we're not drilling down all the way into specific positions being created,
whereas those are discussed in human resource.
And then going back to the reality, and this is how we've put together
our budgets, and one of the challenges we'll have is you're not
we won't have that information by the time you make your decision.
On the index. Correct?
Yeah, we make the. Decisions of the challenges.
We go through right.
At the final board. Yes.
So if the committee was looking for at the end of November
to be able to make a recommendation,
you're not will you won't have the you won't have the,
you know, being our committee won't have that information by the end of November,
which, you know, that's that's the reality of the challenges
are putting together the school district budget in the time frame that we have
to the citizen advisors all do have an understanding and we use the word index.
We talk about that. You'll know what that means.
Okay.
All right.
So we're talking about board priorities.
I think it goes without saying that the financial data and information
we need to make the decisions
in a timely manner and whatever we feel we need, you'll provide.
And but it's up to us, the board members on the committee, to find out
if our colleagues and correct we collectively as a board,
have any other priorities that we'd like
to be considered next year.
Right.
And then we would look at those on a deeper level inside of this committee,
because one of the things we talked about
was last year, while we identified board priorities,
there was not the time available to really dive into
what the financial implications of those priorities look like.
And so taking that to the committee level,
but the staffing projections are what's coming from the administration
and their recommendation for the full budget proposal.
Not that doesn't have anything to do with the board priorities.
Okay.
Second item, can I ask a question and I'm sure
I mean, fundamentally sounds like your priority number one is
set the budget right?
You have to stay within a certain guideline. You know what the budget is.
But I'm just curious if your salaries are roughly half of your budget,
how do you set your budget
without knowing the HRA recommendations, which help set your salary line?
Well, the our recommendations are we're going to be additions,
not we already know what we're rolling over h.r.
Which is possibly the new staffing as indicated by administration
or board priorities or at least say in the risk and vulnerability assessment.
It's recommended that we increase any type of supportive service position.
Those factors would be in it, but my understanding
based on previous conversations is that that's all factored
into the overall budget proposal process that Mike presents to us
and doesn't really change the game enough
as it relates to the index.
Yeah, it's the best information we have at the time.
I think what Mike was saying is sometimes we don't know,
but there is also a part of that process that once so from an H.R.
perspective, if we work through
and that truly is identified as a need we can't live without
and we no longer have, you
know, we only have the ability to raise the taxes up to a certain amount.
In reality, as we look at the other programs and say,
what are we going to take from somewhere else
so that we can afford that to these people?
Because the likelihood of being granted an exception to go above the index
for just personnel needs is
is slim, right, Mike
or that's not even one of it is.
It's completely arbitrary.
So special education is what we'll be looking at in terms of our cost increases,
whether we qualify for the index,
not necessarily because our special education
needs have changed or increased that drastically,
but that's the exception that's available and the only one we would qualify for.
Yes or no
there historically.
So I have
historically
this district has gone every other year with without a tax increase,
usually go up to the index, then it's nothing, then go up.
Starting in 2014, we try to look at it and say,
what does the information tell me that I should be doing?
Not politically or some pattern or anything like that.
So the last couple of years we've been able to live within that index.
The current year we're in, we expanded our staff, what I consider
by a quite a bit because of the full day kindergarten to Bryan for new teachers.
And from our perspective,
budgeting for people
equals a tax increase because they're going to
once we hire somebody that position, maybe not that person,
but that position is a need.
So it will theoretically be here for as long as the school district is here.
So we have to put permanent financing in place
so that we can make sure we're paying for that.
So we've been living within that that index and have had
historically positive variances where we're ending the year with
with a little bit more money than than we thought we would.
Okay, We're about 6 minutes over.
So I just want to bring I need to bring the meeting to a close
because we've got a
we're 6 minutes into another subcommittee meeting that started at five.
So on the board priorities, I just want to get the feeling from
the board members first.
I'm sorry, on the
Budget board, priorities being one,
just around the table real quick.
It sounds good.
Yeah. Okay.
The reviewing the contracts in general.
Yes. Yes. All right.
And looking at the Milton Hershey Trust in particular.
Yes, yes, Yes. Okay.
So as advisors, any different feelings on any of those?
Yeah. Okay.
Thank you all very much.
I'll be following up with minutes that you'll all get
and maybe provide
citizen advisors with some additional background information that might help
get you a little more caught up on
where we are in the budget process and what we'll be doing next.
So thank you all again for being there so much.
Motion to convene the meeting place.
So moved second.