Community Unit School District 308 Finance and Operations Advisory Committee met August 21.
Here is the minutes provided by the Committee:
I. Roll call
The meeting was officially called to order at 5:35 p.m. by Board of Education Member Lauri Doyle.
The sign-in sheet was used in place of an official roll call.
Members in Attendance: Kenneth Blue, Dominick Cirone, Keith Craven, Mariah Sloan, Pranil Vaidya, Willis Jordan, Lauri Doyle Board Member Co-Chair, Brent Lightfoot Board Member Co- Chair, Jeff Ryder Director of Finance, Asif Dada Assistant Superintendent for Business Services & Operations
Guests in Attendance: Bob Lewis from PMA, Heather Moyer Board of Education Member
Members Absent: Patrick Stiles
Recording Secretary: Carrie Szambelan
II. Approval of Minutes from July 17, 2017 Meeting
A motion was made by Lauri Doyle to approve the minutes from July 17, 2017 meeting. All members in attendance agreed unanimously to approve the minutes as presented.
III. Bond Restructuring Discussion
Mr. Bob Lewis mentioned a lot of school districts were waiting to see the outcome of SB1 before selling any bonds. For a review, he displayed a PowerPoint presentation going over the different versions with the committee. He focused mainly on Version 2 and 3 seeing that was a favorable choice of the committee. In these versions, the debt is actually being paid off sooner.
Mrs. Doyle asked Mr. Lewis if he sees anything that would make Version 2 more appealing than Version 3. He stated overall Version 3 is shortening the term. The shorter the term, the less interest is paid. He personally likes Version 3 the best. This version has an expected substantial decrease in the debt levy six years sooner and reduces the aggregate debt levy while the other versions increased it. The estimated aggregate debt service is expected to decline by about $4 million dollars.
Mr. Craven expressed his concern with choosing Version 3 in paying the debt down sooner, he would hate to see the district go into a downward fall as in the past. Mr. Cirone agreed the debt cannot be carried out any longer, it must be stopped. Mrs. Doyle stated that is a good point, and we will have more phasing in the future to adjust to these unknown changes. Mr. Lightfoot suggested delaying the decision to select a version tonight, however the majority of the committee agreed to recommend Version 3 to the board.
IV. FY18 Tentative Budget & Levy Presentation
Mr. Dada presented the Budget at a Glance to the committee. He explained the budget is an estimate of the District’s expenses and revenues. The revenue comes from mainly three sources, local property taxes, general state aid, and federal funding. The breakdown consists of $108 million in local property taxes, general state aid of $79 million and federal funding of $8 million. The total estimated revenue for FY18 is approximately $195 million dollars.
He explained to the committee the main expenditures consist of teacher’s salaries plus benefits. These benefits include TRS, IMRF and health care insurance, which totals $161 million. The other main expenditures are purchased services, supplies and other objects. The total estimated expenditures for FY18 are $196.8 million dollars.
Mr. Dada mentioned the FY17 fund balances are unaudited revenues and include the fourth quarter categorical payments, which have not been received yet. Mr. Lightfoot questioned what would be the deadline to include that revenue in FY17. Mr. Dada stated that August 30th would be the deadline. Mr. Ryder confirmed, if the 4th quarter categorical payment is received in September, the district can’t accrue it to FY17. As a result, FY17 will have an increased deficit, and FY18 will have an increased surplus.
There is a bill that the governor vetoed with a new funding formula that would allow the district to receive an additional GSA of $4.8 million dollars called SB1. Mr. Lightfoot questioned if the FY18 budget should reflect this additional revenue. He wants to make it clear to the committee that it is safe to assume the district will be receiving additional funds, if passed. Mr. Dada confirmed the FY18 budget will be estimated based on SB1.
Mr. Blue questioned about FY17 budget being off by the unaudited preliminary FY17 budget for approximately $2 million dollars. Mrs. Doyle was also curious in what the cause was being off this much. Mr. Dada stated the sale of property was delayed and caused revenue not being collected. Mr. Craven mentioned if we potentially sell it this year, couldn’t we put this in the FY18 budget to offset the projected deficit. Mr. Dada stated he did not want to put it in FY18 budget. He doesn’t want to make the same assumption in case it doesn’t sell again this year.
Mrs. Doyle clarified for Mr. Blue that the property is the Old Traughber building with a parcel of land adjacent to it. Mr. Dada mentioned this can’t go on the market until after the New Year when Opportunity and Goal programs are moved over to East View. Mrs. Doyle stated the Senior Citizens cannot be displaced either.
The committee discussed further that one of the past variances was due to general state aid being over stated. This is the last year for repayment back to the state. Mrs. Doyle expressed that it’s a shame this has happened in the past. However, we need to focus on doing a better job being conservative with our estimates going forward. She appreciated the property sale not being included in the FY18 budget.
Mr. Lightfoot commented that the district’s continual deficit has to be stopped. His expectation is to see a balanced budget at the end of year. He understands that unexpected expenses arise and it’s out of the district’s control. For last year, over $800,000 in additional expenses arose due to hiring more teachers for students with IEP’s because it was a mandated law. This should be a learning curve if this is anticipated to happen again, then we need to budget for it now. Another concern for Mr. Lightfoot is the ending fund balances. The longer we can hold those numbers higher; it will give us more flexibility in the cash flow basis. We don’t want to be the school district that has to go out for tax anticipation warrants every year. He doesn’t want to keep borrowing against future tax revenue and pay for interest increasing costs.
Mrs. Doyle mentioned the major budget cuts presented to the board by administration were increasing class sizes and a reduction of teachers. She stated the board decided to take a hit for one year only, if state did not get their act together. Even with the new funding formula in place, the district cannot wait another year to make the cuts necessary in order to balance the budget. Also, the funding balances cannot continue to decrease every year. The state is not going to solve our problems for us; we need to solve them ourselves. So either, riffs will have to be decided and/or classes will have to be increased. Mr. Blue questioned how many riffs will have to be given. Mrs. Doyle responded this topic will be discussed at a different meeting date in the future and cannot be determined at this time.
Mr. Dada stated this is a very tight budget and it will be a challenge to find more cuts. We will be very limited due to the healthy teacher’s contract for another two years. Mrs. Doyle explained the history of the teacher’s contract regarding a salary freeze in 2011. They weren’t allowed to move up a step. At negotiation time, the teachers wanted to make up for that step and it was decided to put that step back in because it seemed like a fair thing to do. Mr. Lightfoot added that they were trying to eliminate making up that step all together, but it didn’t work as anticipated in the district’s favor. Some teachers were getting 8% raises while others were getting 3% based on their schooling and years of service. The main problem is that revenues were increasing only two percent, while costs are increasing three percent, so something needs to be done.
Mr. Dada displayed the certificate of tax levy and calculation page worksheet. This will need to be filed with the counties by the last Tuesday in December. He explained the extension is the amount received, while the levy is the amount being requested. Last year the district received $94.9 million plus bond and interest of $29.9 million totaling $124.8 million dollars. This year the district is levying $99.4 million dollars plus bond and interest of $29.9 million totaling $129.5 million. The reason the district is levying for more is because the numbers for EAV and new construction are unknown at this time. So this year, the amount the district is levying is 3.67% more than last year’s extension. Last year, the levy was only.8% while expenses were increasing. Mr. Lightfoot asked how this would affect real estate taxes. On average, a 2% tax increase should be expected. For example, if you have a $200,000 home, you should expect an increase of $200 on your taxes.
Mr. Lightfoot suggested inviting the Village of Oswego and Montgomery to attend the finance committee to discuss their future plans and give them a brief overview of the district’s finances. There will be new members of staff and community joining the next finance meeting. It would be a good idea to do this at the same time. The committee agreed.
V. Discussion of Impact Fees
Mr. Lightfoot attended the Village of Oswego meeting to speak on behalf of the district. The village has decided to reduce impact fees by forty-five percent. They have full authority to do so. He expressed his concerns about the future of the school district if there are new developments. He also shared with them the state’s lack of funding and the impact it has on the district. The district relies on impact fees for future developments to help offset those costs. In his opinion, we are in no financial state to borrow any more money to build any schools.
There is not much for the committee to do as of right now. However, Mr. Lightfoot is recommending to the Board for a resolution so that the district is speaking one voice regarding impact fees. If the school district was ever asked what they thought of the village’s decision to lower impact fees, the district will have it on record. Now that Village of Oswego decided to reduce these fees, more communities may be reading about it and want to do the same. Mrs. Doyle recommended the action the finance committee can take is to learn more about impact fees and the financial impact it has on the district.
Mr. Blue mentioned that he has lived here for many years and doesn’t recall these impact fees ever being used for new construction. Mr. Lightfoot stated impact fees started about ten years, when the district paid $10,000 to have a study done to determine what the future need of the school district was going to be. Most of the communities agreed with the district and came up with a fee schedule for new construction based on the type of house being built. Legally, we have no authority to make the village charge any fees for our schools. Mrs. Doyle commented that one could argue that the village mentioned that didn’t want to make any decision without asking the district for their opinion first. However, they made their decision anyway.
The committee agreed to move the next finance meeting to September 18, 2017 instead of September 11th since the board meeting date was changed till then.
VI. Public Comment (3 minutes each)
There were no public comments.
VII. Adjournment
A motion was made by Lauri Doyle to adjourn. Keith Craven seconded the motion. Then all present were in favor to adjourn.
Meeting was adjourned at 6:55 p.m.
https://www.sd308.org/site/handlers/filedownload.ashx?moduleinstanceid=9951&dataid=42011&FileName=8.21.17%20Finance%20Committee%20%20Minutes.Approved.pdf
Alerts Sign-up