The Lebanon City Schools Community Audit Advisory Committee

Garrison.Kristy

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• Publié par: Ustley
• Nombre de lectures: 11
• Langue: English

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The Lebanon City Schools Community Audit Advisory Committee

Regular

700 Holbrook Ave., Lebanon, Ohio

45036

Regular Meeting 11/30/2006

The Lebanon City Schools Community Audit Advisory Committee met in regular session

on November 30, 2006, in the Lebanon High School Conference Room, 1916 Drake Rd.,

Lebanon, Ohio

at 6:00 p.m.

A copy of the audio tape version of the proceedings will be

kept on file at the Treasurer’s Office.

ROLL CALL

Members Present:

Natham Sorum; Dave Yelton; Mark North, Superintendent; Nancy

Fields; Mark Beisman; Ed Mueller; Steve Wilson; Lee

Weiderhold, Board Member; Donna Davis Norris, Board Member;

Jamie Scott arrived at (6:18) and Randy Bertram, Treasurer.

Absent:

Mr. Spence Cropper

Randy Bertram, Treasurer, called the meeting to order at 6:00 p.m.

A motion was made by Mr. Steve Wilson to accept the September 28, 2006 minutes.

A

Second was made by Mr. Dave Yelton.

CAAC Charter Renewal and Membership Changes

Mr. Bertram explained that the CAAC Charter expires on December 31, 2006 and that a

copy of last November’s mission statement for this calendar year was in the packets

provided to the members to look over and to make any changes if necessary.

Discussion

Mr. Yelton:

“I know we have reviewed year end and the forecast; I don’t recall

that we actually had an active roll in these meeting or in

preparation for these meetings of getting and reviewing monthly

financial statements.”

Unknown Speaker:

“What it says “for accuracy”, what do we have to check that

against?

We have no way of knowing, we have nothing to

compare it to unless you want an audit, and we help hire an auditor

who does that. I don’t have a problem reviewing monthly and year-

end financial reports if we have a way of doing that.”

Randy Bertram:

“They are posted on-line each month, and I’m trying to get them

out the first week after each meeting.

I am working with the Board

on changing the format of the financials.

I brought a copy that I

shared with the Board, and you can look at it at your leisure.

It

would be something that would be posted on the web as well.

At

this time, if you want to change the mission statement, you

certainly can and we can submit it to the Board.

Unknown Speaker:

“It sounds like you are wanting to delete the words “for accuracy”.

Unknown Speaker:

“Question is: should it be change to say presented quarterly

financials?”

Randy Bertram:

“I don’t know if it has to be done by every member.

I think if I’m

getting review and feedback, I think that would be justified. I will

be happy to bring them to all the meetings for review.

There is one

more thing that you probably need to decide.

Under bullet 2, for

term ending, do you want to put an extension date or do we want to

take that out?

You can change it to 2007.

Do you want one year

or more than one year?”

Unknown Speaker:

“Let’s go a year.”

Mark Sorum:

“One thing you might want to include in this is to look at

alternative ways to get funds to bring money into the District to

help with the school finances, like Donna was talking about a one

percent increase, like an income tax or educational tax whatever

you want to call it.

Maybe that should be a part of this too before

we look at different options.

Unknown Speaker:

“Let’s add an item to review revenue options.

We can also add

expenses on there too.”

A motion was made by (Unknown Speaker) to approve things discussed, and was

seconded by Nancy Fields.

All were in favor.

Update of Five-year Forecast Approved 10/30/06

Randy Bertram:

“I gave you a copy of the Oct. 30

th

Board of Education approved 5

year forecast along with the assumptions, and I also included on

the very last page in this packet, Cary’s last forecast as well just to

give you a comparison of numbers.

I am not going to go thru all

the assumptions that I have.

I would like to point out in the

forecast, this forecast looks better than Cary’s last forecast.

Cary’s

forecast looked better than the one before, and this is where my

optimism is coming into play.

The cutbacks that were made before

my arrival of the $2,000,000.00 in cuts have made a difference in

the expenditure side of things and helping with the carryover side

of things.

Going down the bottom line of unreserved fund balance,

we have enough carryover to at least have a positive balance

through the five year cycle. There are some concerns that I have

and the second to last page, “the page before Cary’s forecast,” is

kind of an analysis that I shared with the Board and some of the

things that I think really need studied to help us find way to make

cuts: transportation services with Laidlaw and ESC services.

Going back to transportation, we are currently spending $1.4

million to Laidlaw.

I haven’t reviewed the contract.

ESC services

have gone up drastically. We are spending about $2.1 million.

using about 2.1 million.

This is being reviewed by myself, Bonnie

Stock, and Jenny Moormeier.

We’re looking at bringing some of

these services back into the District.

These

are all cost studies that

I’m going to prioritize and try and knock off my list my first 12

months. Utility contracts, currently paying a company to study our

utilities each month is something we want to look at to see if this is

a service we want to continue. Health insurance.

We will talk

about more later.

Currently being studied, cell usage, policy and

contracts, copier contracts, workers comp, and available programs

to find some reductions there.

We previously used a retirement

incentive and I don’t know, this is something that might be out

there again if we find it feasible in the future and then of course we

want to get the results of the performance audit, study their

recommendations and see how it could benefit the District as well.

These are just a few as my list is a little longer in the office.

We

have been told that we should see that performance audit in the

month of December.

Looking at the forecast, the purchase services

line, this is all the items.

ESC and transportation costs fall in this

line.

Employee retirement insurance benefits. Those are my

biggest concern.

Our insurance is out of control a little bit, and

we’ll talk more about that as well.

I’m certainly optimistic when I

look at this, and I see the changes that can be made that will

dramatically improve this forecast and we know we have a PI levy

and a emergency level we’re going to need renewed as well to

survive.

Line 7.02 another cash balance June 30

th

, this is assuming

we do not renew the $4.2 million emergency levy, you can see how

we go in the red real fast.

So that is certainly a concern.

If we

don’t pass that levy, we need to make 4.2 million in cuts.

This

could be very dramatic to the District if that happens.

All else

being equal with the community we have, we can survive this and

move in a positive direction.”

Unknown Speaker:

“When the tri-annual re-evaluation, tri-annual update, where does

that fall into this.

Would that help anything?”

Randy Bertram:

“Well, no.

It does for the fact we’re at the 20 mill floor and with

that, if the valuations go up, our tax collections go up.

The

problem we’re running into is the tangible personal property tax,

line 1.02.

That’s the beast House Bill 66, prior House Bill 95,

prior House Bill 383 where those are going away.

Good news is

the District didn’t have a lot.

Looking at Cary’s forecast, Cary

phases this a little quicker than it should have been because tax

collections are a little bit behind in my estimate anyhow.

You will

see some numbers on this line where he zeroed it out, the

difference is he moved the numbers down to

property tax

allocation where the state reimburses so the revenue are in there on

both forecast.

We just had them on different lines, just so you

understand that.”

Unknown Speaker:

“The delinquency charge for those who do not pay their taxes, does

that go to the auditor or do we get part of that?”

Randy Bertram:

“Our delinquency is only 2 or 3 %; it’s a small number but any

number helps.

The bad number is the number they charge us to do

the collections, but that’s the cost of doing business.”

Unknown Speaker:

“Randy, I notice that expenses are higher versus what Cary’s

forecast was year to year to year.”

Randy Bertram:

“First of all realize that my forecast is from 2007-2011, versus his

from 2006-2010.

We had to flip a year.

Some of the assumptions

are just different philosophies in trending, looking at prior

experience and trends.

I added into the assumption knowing things

that you can’t control, I added three teachers per year, knowing

that special education is going to probably drive those teachers.

Even though we’re adding kids each year, when we think that

we’re going to need them for shear numbers in the classrooms, we

know that special education

certainly comes in and dictates some

of those new positions right off the top, so those are what’s driving

some of my costs up from philosophy anyhow, I also show

revenues coming in higher as well, so there is a balance there.

Unknown Speaker:

“I have a quick comment. I’ve said this before, and I’ll probably

continue to say it. When I look at these financial numbers, as

someone who’s been in this situation, you are today, you say that

you have a budget here that’s going to call for $5.7 million or $10

million dollar cuts in 2011.

If you don’t know how you are going

to fund your revenue, and here you got a levy, so one of two things

are going to happen, you are going to get out to year 2010, and you

going to have to make $6 million worth of cuts in this School

District, and that’s going to be real popular.

Or you are going to

have to cut $1.5 million this year now for the next three years.

You are going to have to figure out, and again I’m focusing a little

less on expenses knowing that 70 % of expense is payroll costs, so

it’s going to be hard to manage that.

So you know I think the

Board is going to have to answer in the next year cause we’re in

the school year 2007, what is going to be the leadership that says,

ok, we’re going to let this forecast roll, until we get to 2010 and

then roll the dice on a levy or make $6 million in cuts, or how are

you guys going to position this?

I’ve said that before, and I know

I’m being redundant.”

Financial Audit

Randy Bertram:

“Inga is finishing up the financial statements.

Hopefully they will

be done early next week.

The auditors have two more days in the

District to come in and do a little more testing if you will.

They

are looking at a possible findings for the management letter.

No

citations at this point have been noted on their end.

Some of the

items are non-payroll disbursement issues, eight then and now’s,

possible budgetary findings as far as over appropriating beyond the

revenues.

All are management letter issues.

That is good news.”

Performance Audit Update

Randy Bertram:

“We discussed that a little bit.

I talked to Edna Frezgi today and

she said that they have pushed back the drafts to early January.

I

did let her know our urgency to get that in because we’re basing a

lot of important financial decisions on the result of this

performance audit.”

Financial Planning Discussion

Randy Bertram:

“With the carry-over balance we are showing each year, I barely

have enough to cover a payroll of $850,000, not to mention the

benefits that go along with that.

Just for cash management

purposes, we should be carrying over 10% of our annual budget,

and I think as a committee and as a District, as a community,

we’ve got to find a way, to have a plan, to have whatever it may be

to get there.

As a committee, we need to work together to find a

solution.

We should have a minimum goal.

We should work on

getting this up to $3 or $4 million.

Unknown Speaker:

“How do we best support you in that - a motion that says as per the

recommendations that come from this committee, as per Treasurer

recommendation, we will recommend to the Board an increase in

carryover to approximate 10% of budget?”

Steve Wilson:

“We want to know what we’re doing here, but without a doubt I

would bet that everyone around this table believes that there should

be an adequate carryover - any business would dictate that.

So

maybe it would be wise for the chairman to ask for input from

committee members between now and the next meeting and to ask

the Treasurer to bring some recommendations as to where we

could do it and how fast we can get up to a reasonable level and be

prepared at the next meeting to make a formal recommendation.”

Unknown Speaker:

“It’s pretty simple.

You can project your revenue, you’ve got your

expenses. Once you’ve covered your expenses, you can bring in

more revenue.

The Board has to prioritize this.

One would be the

priority of your spending or carrying a cash carryover, or for every

dollar you can save, 40% of it will turn into additional educational

services that we think we need to provide for a better school and

60 % goes into the cash carryover.”

Steve Wilson:

“Why are you slicing your dollars?

You cannot forget what we

spent most of the meeting on last time and is it unreasonable to go

five to seven years and not take some of that dollar and give it to

your teachers?

You have to somehow strike a balance.”

Mark Beisman:

“I know that we have some teachers in the District who make less

than $50,000, and they definitely need to have an increase and it

needs to be a priority.

Medical Insurance

Randy Bertram:

“I met with the insurance committee my first week.

Looking at the

prices, I think we’re paying Mercedes prices for this plan.

We’re

at almost $7,000.00 per employee.

Our consultant from Horan

mentioned that we are on course for a 28% increase.

That usually

starts high at the beginning of the year.

Big fear is standing alone,

if we have one or two catastrophics it could price us right out, it

could kill any forecast we have.

Concerns are we can’t continue at

28% increases each year.

BCHP ran an analysis for us.

It would

save us a million a year and that compounds.

That’s one option.

If

we saved $1 million a year, we could build in two % percent raises

and still increase the carryovers.

These are all ideas I’m bringing

to the committee.”

Natham Sorum:

“This is going on too long.

Inga told us at the last meeting that this

guy was going to bring alternatives to the table as of the next

committee meeting. There’s been two subsequent meetings that he

has not done that.

It might not be a bad idea for the Board to hire

an independent consultant to explore the options on a fee basis

rather than someone who might be motivated by commission.”

Randy Bertram:

“I have some quotes that will be coming in from alternative

sources.

This is all the stuff that I’m bringing into the committee

to show on them what is going on.

BCHP requires all spouses to

get insurance through their employer if it’s a reasonable plan and

they determine reasonable by 50 % of the premium.”

Bond Fund Update

Randy Bertram:

“We currently just approved our second BA.

Last year, we had a

bond anticipation note because of the under collection in the

bonds, we borrowed $1.37 million so we could pay our bond debt.

We paid that off yesterday.

We’ve got a $850,000 BAN to cover

us for next year.

It looks like with that strategy, we will have to do

that two more times.

Another option is to refunded the bonds from

1999 issue, 2000 issue, and the 2005 refunding issue.

We could

go out and do a refunding.

The climates right.

We have about a

4.4 present value savings to go do this right now and where we

could drop the millage needed

this next year to 3.4 to 3.25 and pay

off the $850,000.00 and never have to have another BAN again.

This refunding would save the tax payers $1 million.

It’s going to

cost us about $200,000 more to do the refunding than it would if I

do the two additional BAN, but it’s still a $800,000 net savings to

the tax payers.

We can also set it up in a structure that we do

usually which is option one on my page.

My scenario means we’re

going to collect the same amounts that the bonds are currently

collecting, except for the first year.

That’s going to give us the

money to pay that first BAN off or we can do reduction drops that

will allow us to come back later if we need to have another bond

issue say for $20 million in year 2010, 2011 and say “Hey, we’ve

been able to drop the millage from 5 to 3.75, one and a quarter.

We need 3 mills so we need to ask for 1.75 mills.

This gives us

some refinancing structure with our bonds that may help us along

the way.

I think that rather than continuing the BANs, this bond

refinancing option needs to be looked at.”

Unknown Speaker:

“Well, the other thing that you do is you have an incredible

opportunity right now with the inverted yield curve.

To do this

now today, soon, and make the most of this as opposed to those

BAN, if you leave them out there, you are leaving a great risk of

what your financing cost is in each of those on going BAN years.

Where as now you are locking in, you are done, you know where

you are. Fix versus variable.”

Randy Bertram:

“When I did a refunding in Edgewood, about 15 to 16 months ago,

BAN was ideal.

It’s the lowest it’s been in years.

The yield was at

4.18.

Today we’re at 4.16.

I mean schools are out there right now

refunding issues they did in 2005.

This is an option that was

brought to my attention that I thought needed investigating. I

wanted the Committee to hear it.

I wanted your input.”

Unknown Speaker:

“Do you have to recommend it to the Board and the Board has to

say do it?”.

Randy Bertram:

“Absolutely.

If the committee wants to give a motion that you

recommend it.”

A motion was made to recommend to the Board (by unknown speaker). It was seconded

by Nancy Fields.

All were in favor.

Unknown Speaker:

“A note to the Board that, that stuff could change pretty quickly, so

they need to move on that pretty quickly.

Just over the last six

months, we’ve seen some of those longer rates fluctuate 30/40

basis points one way or the other.”

Permanent Improvement Fund

Randy Bertram:

“We have one PI levy which was originally two mills that expires

in 2008.

We can renew it again as early as November 2007.

We

can start asking for that renewal so we don’t have two renewals on

top of each other.

Just a quick recommendation - We’re on a

variable rate with the OASBO pool financing for this and currently

that variable rate is at 4.33 % and I can lock that in at a fixed rate

of 4.05%.

My other suggestion is this is going to run out through

2014 as it currently exists.

We refinance it to end in June of 2013,

we renew one more PI levy, it will pay this off, that will expire in

2013.

We may not have to go back and get any renewals if we

don’t want to to carry this bus garage financing.

If we go out

to2014, we will still owe another $500,000 unless we can find a

way to pay some additional down between now and then.”

Unknown Speaker:

“Is 100% of the PI levy committed to the bus garage?”

Randy Bertram:

“No,

about 30-40.

Mr. North:

“What we did this past year with the PI money was I went to the

building principals and asked them to check with their people and

put together a wish list and prioritize, 1, 2, 3.

They did.

We will

do that again this year.

In doing so, we didn’t spend all of this

year’s PI money because we only addressed the top things.

I set

some of that back in case a roof blew off or a boiler blew up.

If

nothing happens, we have that PI money again and we know we

can work with that $700,000 to address our PI issues.

I would like

to know if you see any logic behind it if we have a carry over and

we do have money set aside to take care of

a certain amount of PI

items.

A certain amount of

money set aside in case something

happens to a roof and then we have an additional $200,000 left

over because we had a good year, put that money towards paying

off the bus garage earlier.”

Unknown Speaker:

“When you go to renew the PI levy, I don’t think the community

realizes that money went to the bus garage.

The sooner you get

that off there, the better off you will be.”

Randy Bertram:

“The good news with the PI levy is that originally for 2 mills it

collected a $1 million.

We still need only $1 million on the next

renewal so we will be able to drop that millage to still retain the $1

million in collections, so we’re going to be renewing it as a

decrease.”

Unknown Speaker:

“So if you don’t use the PI money then you carry it over.

4.05% is a pretty low interest rate to be paying for money, over a 7

year period, is it something you would pay down?”

Randy Bertram:

“I would like to refinance it for one year less, just for the fact that

the next five years for the renewal will cover the entire basis.

We

won’t have anything dropping into the general fund.

We’ll save

about $61,000 on this refinance.

I would like to ask this committee

for a motion to go ahead with that.

It’s not really a refinance, it’s

in the OASBO pool, it’s on a variable.

There just rolling it into a

fixed rate.

Ed Mueller made motion to approve.

It was second by Jamie Scott.

All were in favor.

The next meeting will be February 22, 2007 at 6:00 p.m..