General Fund, Food Service Fund Budget WorkshopAlternate Capital Funding Sourcespf
Minutes
Tuesday, June 21May 17,
2005 – 610:00
pa.m.
School Board
Meeting Room
Members Present
Susan Hershey –Chairman
Dr.
David Anderson
Laurie
Gaylord
Nancy Kline
Dr. Sara A. Wilcox, Superintendent
Tom
Elfers, School Board Attorney
Members Absent
Nancy Kline
Kristin Conradatie Gillen, Student Representative (JBMCHS)
Staff Present
Ruth
Pietruszewski, Darla
Miloszewski, Nancy Marin, Helene Baxter, Darrell Miller, Deana
NewsonRodger Osborne, Cathleen Brennan, Steve Rusnak
Public
Press PBPost
– Mike Bender Stuart
News – Kelly Tyko
MCEA – Diane Falvo,
Jeannette Phillips No representation AFSCME – No representation
Call to order by the Chairman and
Pledge of Allegiance to the Flag of the United States
.
Sue Hershey called the meeting to order at 11:27
a.m. Because the prior workshop ran
late, Sue asked if Board members wished to recess and reconvene this meeting at
1:30 p.m.
Lorie
Shekailo moved that the meeting be recessed until 1:30p.m., Nancy Kline
seconded, and the motion carried unanimously.
Sue Hershey reconvened the meeting at 1:35 p.m.
1. Open to the Public No
representationFunding
Options for Capital Facilities
Darla Miloszewski, Executive Director of Finance,
presented three different funding possibilities, so that Board members would be
informed about options available to them to complete pending projects
sooner. Using other funding sources for additional
capital funds would free up capital revenues that would allow projects to be
moved up on the 5-year budget plan. The three different types of financing she
explained were:
Half
Cent (surtax) Sales Tax
Certificates
of Participation (C.O.P.s)
General
Obligation Bonds
Darla compared the finance options and discussed
the pros and cons of each type. Steve
Rusnak, Special Projects and Contract Accountant, gave a power-point
presentation on all three alternative funding choices. He explained what they were and expounded on
the pros and cons of each funding source. Darla stated that sales tax would
shift some of the burden away from residents, since visitors would pay sales
tax on the purchases they make in Martin County; however, it would take more
than a year to see any revenue. Darla
estimated the expected revenue generated to be approximately $75 million over a
5-year period. The revenue would come
from the State, after vendors turned in their sales tax collected on taxable
purchases. The possibility remains that
it would not pass through voter referendum. Darla requested an expert be
consulted on using sales tax to generate additional funding. There are limitations on the tax percentage
and specific allowances for the expenditures. Certificates of Participation
(C.O.P.s) is borrowing funds in a type of lease-purchase financing to be repaid
with 2 mill tax revenue over 25-30 years.
There is a credit rating required with this source of funding, which
takes about three weeks to obtain. The
Bonding capacity would be up to $227 million, which is 75% of the 2 mill
capital. The Board can approve the
insured thirty year certificates. A
referendum is not needed. The loan can
be processed quickly. The Board can
approve the amount it deems necessary up to $227 million. The downside with this option is that it is
not additional money. C.O.P.s require
annual principal and interest payment for Term of Financing from 2 mill
revenues. The annual appropriation would
1. Funding Options for Capital Facilities
(Con’t)
be established in the budget. Darla reminded Board members that they need to
be careful that enough funds are left to maintain the schools. Asset ownership comes at the end of the
Term. A C.O.P. for the amount to fund
the new Middle School and the new Elementary School ($60 million) would create
a debt service amount of approximately $3.9 million annually for 30 years paid
from local 2 mill funds. General Obligation Bonds would generate additional new
funding by Bond Issue with voter referendum to be repaid from a millage levy
over 20 years. By pursuing a General Obligation Bond issue over a 20-year
period, a bond issue of $60 million over 20 years would create an annual debt
service of $4.8 million. Average
property tax would be .284 mills; therefore, a house valued at $300K would pay
an annual tax of $78.10 for debt service. Debt service payments would be
required over a 20 year period.
Approximately one year would be needed to gain support of voters;
however, the General Obligation Bond may not pass through voter referendum. Board members discussed the three alternative
options and Darla answered their questions.
Dr. David Anderson informed Board members that there has been only one
bond issue in the District’s history, and it was in 1976 to build South Fork
High School. Darla informed Board members that the sales tax or General
Obligation Bonds would take at least a year to implement before seeing any
revenue. Lorie Shekailo asked if C.O.P.s
were the only alternative feasible if the Board wished to move projects up on
the time line. Darla answered yes to her
question. The one way to expedite the
funds now was to use Certificates of Participation. Lorie Shekailo asked Darla if the Board chose
to use C.O.P.s to move projects up on the schedule, would it be possible to pay
off the C.O.P.s early with sales tax revenue?
Darla answered yes to her question.
There was no pre-payment penalty, but Darla added that there were specific things
that could be done with the half-cent sales tax. She believed that land could not be purchased
with sales tax revenues. Lorie Shekailo
asked what the maximum would be on the sales tax. Darla explained that there are two different
taxes. She continued to say there is an
infrastructure tax and this is limited to 1 cent. If you go under the District’s capital
outlay, that is a half cent. Darla
requested the Board obtain an expert’s opinion before pursing anything with
sales taxes. She had not researched all
of the Attorney general’s opinions, and there were several of them. Sue Hershey
stated that she had received a note from the City of Stuart encouraging the
Board to go the sales tax route. Jeff Krauskopf
said that the reason was to spread the costs across with visitors and not put the
entire burden on residents. Sue Hershey
asked Darla if bonds or sales tax had any affect on impact fees. Darla answered, “No, not anything that I am
aware of,” to her question. Lorie Shekailo asked what was involved with the
Moody’s rating and how long it would take.
Darla explained the process of submitting financials and looking at project lists. She estimated that
it would take three weeks. Sue asked if
the Board could buy land with C.O.P.s.
Tom Elfers answered no to her question.
Lorie Shekailo explained that with a C.O.P., the funds must be used to
build a physical new building, not to make renovations on an existing school.
She continued to inform them that interest is paid right from the beginning on
the C.O.P.s when they are issued. What
can be done is to pass another resolution and increase them later. Lorie Shekailo stated that it is important to
many to keep the School District debt free, so she recommended that Board
members consider investigating a sales tax to pay off C.O.P.s. She told Board
members that using C.O.P.s’could jump start the projects and get those schools
going. Lorie Shekailo asked Rodger
Osborne to furnish a list of priorities.
Rodger stated that in order to complete a list, he would need the
funding stream to prioritize. He stated that the dynamics of the financing will
change the plan. Sue Hershey stated that the middle schools were a priority to
her. She feels the Board should take a
critical look at Stuart Middle and Murray Middle School. She had concern with the construction prices
rising 30% per year. She stated that if
we waited three years we could have built another school. She pondered how do we do this safely and
protect the public at the same time. .Dr. David Anderson said he hates to have
to phase a school over 15 years. Sue
Hershey added that phasing is so expensive. She stated that she didn’t want to
do a patch and a patch. She wants to look at the Capital Plan very carefully.
Her thoughts were that if you do a school in a 15 year phase, you never get
ahead. By the time you are finished,
other parts of the school will need work. Dr. David Anderson felt even though
C.O.Ps would mean they were borrowing, he felt less of an invasion against the
public than going out for the sales tax.
He stated that we are borrowing against our own money. Dr. David Anderson desired to be furnished
with an expert’s opinion to certify that what we are doing is right. He wants
to be given a rubber stamp of approval from the District Finance Department and
an outside agency. Dr. Sara A. Wilcox
agreed that we need to look at Murray Middle School, Stuart Middle School,
South Fork High School, Martin County High School and Spectrum. She felt that these schools were the neediest. Rodger Osborne stated that there have been
renovations done at the schools, and they all meet code.
Dr. David Anderson stated that a more vigorous
building plan over the next 5 to 10 years will save millions of dollars by not
getting the cost of escalation. Lorie
Shekailo suggested the Board take three steps:
1)0)Use C.O.P.s
for new elementary and middle school
2)0)Prioritize a
facilities list
3)0)Investigate
the half-cent sales tax
Dr. Sara A. Wilcox urged the Board to proceed
cautiously. “I am not a real big fan of
borrowing a lot of money, she stated. She continued to say that if we move in
that direction of the C.O.P.s, she would like for it to be well thought out
with the projects that were to be completed to be brought forward with a real
solid plan. She commented that it
doesn’t provide us with additional funding.
It provides us with funding earlier. She felt that taking a look at the
sales tax is additional funding and is a validation from the community that
they see the need. She commented that we are fortunate in Martin County to have
a high tax base, so the 2 mils generates a lot of money for us. We have to
consider the master planning. The plan
looks at what the needs are long range. She
expressed her concern that once it is out there, there is that tendency to say
I want it all now. Communication is very
important with the public. She continued to say that this is a complex
issue. You have brought out a lot of
issues that need to be addressed in putting this all together. I think we need to take our time to ensure we
have the best plan. She continued on to say there is the issue of manpower
within the District. She questioned, “How
can Rodger do everything?” There is an
issue of the availability of contractors, especially with all the construction
going on right now. Lorie Shekailo asked if we could talk about the timeline
and
1. Funding Options for Capital Facilities
(Con’t)
what our procedures were going to be at “Open to
the Board.” Dr. Sara A. Wilcox and Sue
Hershey said that it could be done at “Open to the Board.”
Lorie
Shekailo made a motion to adjourn, Laurie Gaylord seconded, and the motion
carried unanimously.
2. 2005-2006
Conference Report Revenue Compared to 4th FEFP Calculation for 2004-2005 (COPY ATTACHED)
Darla
Miloszewski, Executive
Director of Finance, explained the major FEFP formula components. She adjusted
the local school taxable value to what the Martin County Property Appraiser’s
Office thinks it will be. It shows a
10.76%
increase. The required local millage will
be rolled back to 4.853. The new change
in additional discretionary
of .112 will
provide $110 per student as opposed to $50 per student that it provided this
year. That will be a big
increase at
the local level. The base student
allocation increased by $72. The
District Cost Differential (DCD)
increased by
.00350. ESE guarantee allocation
increased by $219,579. A cost of
living increase was given to both
ESE
Guarantee allocation and supplemental Instruction.
Supplemental Instruction increased by $165,432. The
Supplemental Reading Instruction, which is to
be spent on the reading plan, was increased by $469,370. Safe Schools
went up
slightly by $8,314. The required local effort has gone up by $5,184,416; however, the
state FEFP has gone
down from last year by $263,856. Our state FEFP funding is $8,495,642, without the
McKay Scholarships included.
The
discretionary lottery was $1,009,239 and school recognition $1,083,664. She gave an overview of the change in
categoricals. Total
categoricals are up by about $4.2 million. Nothing was
given for Class Size Reduction Price Level.
Teacher lead
money has gone up by $110 per teacher, but teacher training has been reduced
since it was given to the
Supplemental Reading Instruction category.
Total state funding comes to $27.8 million. Total local funding expected
is $78.9
million. The total funding package comes to $116,603,580, approximately $10 million more than last year.
The per weighted
FTE is $5,691, which is a 6.05% increase. A question
and answer period followed.Open to the Public
§No
representation
3. Funding Analysis for Operating Fund (COPY
ATTACHED)
Darla
explained what money the District had to work with.
She showed a comparison to last
year’s funds and the percentage of changes. The chart showed a 2.47% increase over last year’s funding, which
totals $2,384,542 in total discretionary
funding. She informed the Board that the Teacher Class Size
Amendment money may be used by statute for raises or for
whatever we need it for, once our class
size is met. She noted
there is a decline in millage again this year in the local.
4. Budget
Impactors for 2005-2006 (COPY
ATTACHED)
Darla listed potential
new funds:
Additional FEFP discretionary
funding $2,384,542
Class Size
Reduction Categorical $3,930,104
FEFP funding for growth $1,257,957
State Hurricane Relief $ 250,000
She reviewed
fixed cost increases for 2005-2006.
Start-up costs for the new middle school that can’t be taken from capital total $500,000. She gave an
overview of the budget impactors. Additional
teachers needed to meet class
size are 15, which totals $782,698 in revenue, and additional teachers to meet
growth are 24, which totals $1,257,957 in revenue. The increase in
Core benefits is $464,002; the increased FRS rate totals $340,000; and the
increased SCREMP insurance is $429,170. The SRO contract resulted in an additional $14,327.
Other increases were caused by a new minimum wage and fuel costs. Additional increases were needed for county wide
utilities and additional staffing. The
district will need to budget more for the
5. Projected
Actual for 2004-2005 Compare to Preliminary Budget for 2005-2006 (COPY
ATTACHED)
Darla showed
the Board the preliminary budget for 2005-2006, comparing it to the projected actual 2004-2005
budget. The District
received about $150,000 more this year in interest. Voluntary Pre-K was not put in this budget
because enrollment is unknown at this point.
Darla pointed out to Board members areas where
funding had been decreased. Total
available funds last year was $127 million.
This year $133 million is available.
Darla hopes to end the year with a $9 million fund balance resulting in a $6
unreserved fund balance, which is 1% higher
than required. The District should come out with 8.75% ending fund
balance to recurring revenues, so the amount reduced to 5.95% would be what
would be available for raises.
6. Food Service Revenue/Expense Analysis (COPY ATTACHED)
Darla
praised Rae Hollenbeck, MCSD
Director of Food Services, for earning money in this fund and doing a wonderful job. This year a
$1 million fund balance is expected at the end of next year. Rae held the meal prices the same as last
year. She has bought equipment,
supported staff salaries, and purchased software. These funds must be spent in food
service. If too much
profit is shown, a plan must be submitted on how to reduce that, either to
buy equipment, give staff
raises, or reduce the price of meals to the students.
7. Open to the Board
Sue Hershey
Recommended
to Board members that they do Open to the
Board now, when they had time, instead of tonight. She complimented Darla on the good job she
did on this workshop
Dr. David
Anderson
Complimented
Darla. He stated that her presentation was clear and
understandable.
Lorie
Shekailo
Congratulated
Sue Hershey
on her election to Florida School Board’s Association as President-elect. Sue will serve
as President next year. She wanted to
thank Stacy Chados, Internal Auditor.
Stacy will be leaving at the end of this school year.
Nancy Kline
Congratulated the District for the phenomenal test
scores. She stated that our teachers and
Administrators continue to exceed our highest expectations. They do a
phenomenal job working together.
Laurie
Gaylord
Passed.
Sue Hershey
Remarked
that the FCAT scores were unbelievable.
She stated that Board members attended
the
FSBA conference last week that was held in
biggest item coming out of the legislative
session. She informed Board members that a series of
workshops will begin on this issue.
Open to the Board
Dr. Sara A.
Wilcox
Informed Board members
that Rodger Osborne would be attending a facilities
conference and he
would probably be receiving information on the Growth Management
bill. She stated
we will also get an overview at our joint
meeting with the County and the City of
§No
representation
There being no further business to
bring before the Board, the meeting was adjourned at 6:452:39 p.m.
_______________________________
VICE-CHAIR
(Lorie ShekailoSue Hershey)
_______________________________
SECRETARY
(Sara A. Wilcox, Ph.D.)