Committee of the Whole- Budget Work Session
April 11, 2019
Members of the Committee of the Whole- Budget Work Session include Ms Tracy Lisi (Chair), Mr John Auerbach, Mr Charles Beatty, Mr Jeff Billig, Mr Rick Dumont, Mr Herman Engel, Ms Lynn Weber, Mr Bill Wood, and Ms Bonnie Wolff. All attended the meeting.
This meeting is the 3rd of 5 budget working sessions. The objective of the meeting was to continue the review the expenditures for the proposed budget by presenting the Operational department budgets. A discussion of the proposed budget for adoption is scheduled for the April 25th meeting. Two additional work sessions are planned for May 20 and 28th followed by the adoption of the final budget on June 6th.
The meeting began with Ms Lisi describing corrections to information being distributed to the public. The Daily Local News had indicated that the cost of the new construction would be “well-below” $127million. Ms Lisi stated that this is not true and that the school board has agreed to keep costs at $127million. Please note that at the March 21, 2019 Committee of the Whole- Planning and Construction Meeting, the cost of the current design was described as being over-budget though it was never stated by how much. A “value engineering” evaluation of the design is currently being conducted to generate ideas that can increase value by increasing function or by lowering costs.
Ms Lisi stated that information is also being distributed to the public that indicates that the cost of the project is $269 million. She emphasized that there are no plans to borrow more than $127 million for the project. Mr Dumont stated that the $269 million most likely includes the amount of money being borrowed as well as the amount of interest that will be paid on the loan. It is likely that the $269 million figure came from the $139 million parameters resolution approved by 5 members of the board on November 15, 2018. (https://www.avongrove.org/uploaded/District/Strategic_Plan/Facilities/New_AGHS_Design_Plan_Docs/11.15.18_BOARD_MTG_Parameters_Borrowing_Resolution_(ADA).pdf#page=10) .
Please also note that at the June 15, 2018 Capital Project Finance Review Meeting, representatives from RBC Capital Markets presented a slide that listed the “Total Net Debt” of $229,962,392 for a hypothetical financing plan to generate $127 million.
Mr Dan Carsley, the Chief Financial Officer of the school district, presented slide 15 at the April 11th meeting which includes updated information on the cost of borrowing $127 million. In this case the total debt would be $215,108,161 which includes $199,597,704 of new debt plus the current debt of $15,510,457. This is an estimate since the interest rate for the 3 of the 4 bond series has not been finalized though a hedge has been purchased for the 2 of 3 bond series which will help if interest rates increase to a higher than expected rate. Regardless of what the final number is, borrowing $127 million will incur significant debt for the school district which will be reflected in school taxes increasing to the maximum allowable amount for the foreseeable future.
The meeting progressed with a presentation of the Board Services Budget, the Superintendent Budget, the Business Office Budget, the Maintenance Budget, the Transportation Budget, and the Staff Services Budget.
The Superintendent Budget included $36,500 for a ROI initiative which has not yet been approved by the School Board. When Ms Weber questioned the Superintendent on this expenditure, he responded that if the amount is not approved by the School Board he will increase the General Supplies portion of the budget by the same amount. The General Supplies line item has currently been reduced to 12,000 (2019-20 budget) from $100,000 (2018-19 budget).
The Business Office Budget included a 112% increase in legal services ($130,000 in the 2018-19 budget to $275,000). Ms Weber suggested that the number be adjusted to reflect the costs expected for 2019-2020 and not the costs being experienced in 2018-19.
The Transportation Budget includes an increase of $24,295 to purchase software that will update the bus routes to improve safety, efficiency, and accuracy and also to purchase a small passenger vehicle that could reduce the need to use the larger buses for some select after school activities.
The Superintendent stated that no additional headcount are included in the proposed budget despite the Special Education Department requesting an additional supervisor in order to determine if the number of Personal Care Assistants (PCAs) could be reduced. He also defended the number of administrators (26) in the AGSD (Slide 31).
Money allotted in for Charter School Tuition will increase from $10,400,000 (2018-19 budget) to $11, 118,008 (proposed 2019-20). This is an increase of 718,008 over 2018-19 budget. Mr Billig requested an assessment of the cost of Full Day Kindergarten (Start-up Costs, Salaries and Benefits for 8 Full Time Teachers and Cost of Facilities/Supplies vs the amount of money saved in Charter School Tuition).
In addition to the proposed tax increase, $6,658,828 from the Fund Balance (Savings) will be needed to cover the proposed expenditures in the 2019-20 budget. Of this amount, $2,825,000 is not being spent but allocated for future use and $1,590,330 is allocated to cover the increasing cost of the teachers’ retirement fund (PSERS). Thus $2,243,498 is being used (Unassigned Fund Balance) to balance the budget. The administration is hopeful that this number will get lower.
According to the presentation, the next step is to approve the Proposed Final Budget on April 25th. The next Committee of the Whole- Budget Work Sessions will take place on May 20th and May 28th to further discuss the proposed budget. Approval of the Final Budget is scheduled for June 6th.
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