2026 building. Present at this meeting are school board members. Superintendent member and assistant school clerk. Will you please call the role? Director >> Director >> here.
>> Director Marvin >> here >> the board acknowledges this site and all sites are situated on the land of the Dakota people and we honor the nations and sacred land. At this time we offer the opportunity to
say the flag of the United States of America to the stands indivisible andice for all. Our next agenda item is the public schools mission, vision, and values.
Board members, I'd like to draw your attention to the connection to one of agenda items and our mission, vision, and values. And I welcome your comments on this and any other connection during our agenda item discussion this evening. Our vision, our prep for action item on the proposed
budget for next year explicitly connects this budget to our RPS mission, vision, and values. The budget translates the district's strategic plan into fiscal terms. Every dollar allocated represents a choice about educational priorities from class sizes and course offerings to student support services and facility
maintenance. Resources follow the district's educational mission directing funding to student outcomes while making necessary tradeoffs transparently. Our next agenda item is approval of the agenda. Are there any changes to the agenda?
>> Approve. >> Second. >> It has been moved and seconded to approve the agenda. All those in favor say I. I. Opposed. The agenda has been approved. The agenda and documents for this meeting are available at rochesterschools.org backsembly.
Our next item is comments to the board. The school board welcomes communication from our stakeholders via email, phone call, and here at comments to the board. The purpose of comments to the board is to give community members an opportunity to provide input directly to the school board about issues that fall within our
authority. The board and superintendent do not respond directly to the speaker's comments during the meeting, but may follow up with the speaker if requested and appropriate. Persons who want to make comments to the board must fill out the online form by 5:00 p.m. the Monday before the schoolboard meeting. It's
available on the RPS website and on the assembly main page. Comments to the board are governed by policy 206 and procedure 206A. And by participating in the public comment period, each speaker agrees to abide by this policy and procedure. Members of the audience are reminded that clapping, cheering,
booing, vocalizing approval or vocalizing disapproval for a speaker is prohibited during the school board meeting, including including during comments to the board. Speakers, when your name is called, please come to this table. If you have written materials for the board, presside provide them to our assistant schoolboard clerk, and she
will provide them to the board. Choose a microphone to speak into and be seated. Please direct your remarks to the school board. You will have three minutes to speak and the timer will be displayed on this timer in front of me. Please begin your remarks by stating your name. Our
speaker tonight is Jared Lucker. updates. Does any board member have updates from their committees or any other information to share? >> Director Marvin. >> Well, we have been to a number of graduations um as ceremonies this last
week. uh the three major high schools will be graduating on Saturday, but there have been so many special programs that we have in Rochester with amazing students and incredible opportunities for these kids and it's been our pleasure to be able to attend and
celebrate with those students as they graduate. Um tonight we do not have a student school board member Oh, sorry. >> No, go ahead. >> I'm moving on. Um present. It's the end of the school year and they
have things to do. Um, but I do want to say that our last meeting um in Sarah Louise Henry working with um Mr. Will Ruffen have been amazing at guiding this program this year and uh the students had a chance to reflect on two things.
one the superintendent came in and asput on a specific aspect of the strategic plan and as always they had plenty of opinions and I just so admired that he really listens to what they have to say about whether it's a good idea bad idea
needed to be modified and the other thing that struck me is they were uh looking back on what they had accomplished this year and they have come a long way and done some really important work but the one thing they said is that they were glad that to be
on the student school board, anybody can apply. You don't have to be an A student. You don't have to be a teacher's pet. You just have to want to make a difference. And that because of that, we get a really good cross-section
of students. Um, those who love school, those who want to change school, those who have a lot of ideas, those who want to learn from others. And I I hope um and I know that that model is going to continue.
>> And I had the pleasure of talking to some of the student schoolboard members when I was at Century for another reason and heard also not only their enthusiasm at seeing Dr. Marvin um and talking about the last meeting which they said
was just amazing and how exciting how excited they are and I was that they're going to continue on student school board that they weren't graduating seniors. But we also saw them in the context of um their multi- um lingual learning class. Uh Jen Warnament from Century invited us to attend um an
endofthe-year um uh read uh reading of letters that they had written telling their stories about what they had experienced the past year. Um and they were asked to write it to a decision maker. So it could be a local decision maker, it could be a national decision maker, it could be an
international decision maker and all of those are represented. Um it was uh it was quite um an experience. Um we went to two different classes. is they also illustrated each of their letters and all of those are going to be gathered into a book that is going to be sent to
all of us and all the decision makers that are involved. And um the fact that they were willing to share such personal stories um of their struggles this past year and some really concrete recommendations for improvements in the
school environment and in relationships between students in the schools and in communities and the world. Frankly, um and between going to the graduations of our uh programs that we went to last week, that
multilingual learning class today, um Director Marvin and I were on a Zoom call with our Minsc Rise um ASD students. Uh we pop into their parties quarterly and to see how the teachers are using this technology to serve some
of our students with um high needs and the engagement and it in every single situation. the students over these past few weeks. They're impressive all year, but particularly seeing it all uh one after another after another, especially
those who have overcome challenges to achieve what they've achieved this year and how our staff is just pouring themselves into supporting their success. Um it was a great way to end our connection with students this year and certainly is something that I keep
in mind. uh visiting there is something important for me to keep in mind when I'm sitting here. So, thank you to all of you who are inviting us and having us come, keep doing it because they're great opportunities. Anything else, board members? Director Whitehorn. >> Um so, just to mirror that, uh yes, it
was wonderful to be at the graduations. Also, as school is winding down, I just want to remind our families out there that we have lots of community events that are coming up. uh Junth uh has a couple celebrations that are coming up in the next couple of weeks and it's so
good to see young people be involved which is why I'm bringing it up. We'd like to see continue to see our RPS students at community events. Um and then the date has already been set I know a little prematurely for the backpack um event for this next upcoming school year and I believe that's August
the 17th. But, you know, that just shows that education continues and we want to continue to be involved with our families. Um, because that's part of what makes RPS so great. So, I'm looking forward to seeing all the families over the summer as well um in the community. Uh, I think those are great
opportunities for us to connect. So, if you are unaware, please uh check your calendars and hopefully we'll see our families at some of the social events this summer as well. >> Any other reports, board members? Then we will move on to the consent agenda. Items 5.1 through 5.5 um are on the
consent agenda. Would any board member like any item removed for separate consideration? >> Point of information from the superintendent. >> Um uh thank you, Madam Chair. I know there was uh at least one uh board member who noticed a coffee shop at John
Marshall um uh on the agenda and I want to just give a little brief explanation of that. Um that is an effort that will be fully funded by our student nutrition services fund which has got a significant surplus in it. And the state of Minnesota has only very recently given school districts flexibility to
spend some of those dollars on functions that are um related to uh nutrition services and uh more to the point of the question I got today. What about um uh Mayo High School and Centry High School? And so we're planning to put the same in with the indoor air quality upgrade at
Mayo and eventually we'd like to do the same at Sentry. So, we believe in coffee parody. Um, we also hope that the students will be able to use it for fundraising and student entrepreneurship, but they will have to follow the healthy snack guidelines. Thank you, Michelle Obama. So, um, but
that is the that is the source of the coffee shop. Um, and the students are are very excited. They've been very involved in the design at JM and we anticipate that we'll do that at Mayo and Century as we get around to that. >> Thank you. All right. Um, hearing no other discussion. Um,
all those in favor of the consent agenda say I. I. Opposed. The consent agenda has been approved. We will now move on to our prep for action item, approval of the 2027 2028 district calendar. We're scheduled to take action at the June 16th meeting.
Superintendent Pickup. >> Thank you, Chair Nathan and board members. Um, our executive director of human resources, Carl Bachan is coming up. Carl once again aly led the process of developing this calendar proposal that we are recommending that you approve. The uh proposal was developed
in collaboration with the Rochester Education Association and the Rochester Principles Association. I want to thank the representatives uh from both of those organizations. We had elementary and secondary representation. They were extremely helpful. Um uh in many ways this calendar continues structures that
we've put in place over the last several years but to a discussion that uh we've had at the board table I am recommending that the uh holiday of Eid alada um that uh falls on a school day um not be a school day in this year because we have
seen as Carl will mention significantly higher absenteeism on those days as students are celebrating their faith and so that our lawyers tell us is an appropriate reason uh to not schedule uh a day because those students uh we know from multiple years of evidence will be
uh likely otherwise engaged. So Carl, thank you for bringing us to this point. >> Thank you. Let's keep it further away from Thank you for the introduction. As as Dr. El said said, "I'm here to
review the 2728 calendar, which seems hard to believe to be saying those dates, but it's they'll be here before we know it." Um, as Dr. Pel said, we had a team of principles, teachers, uh, Dr. McCuel and myself were uh on the team. We met three times in March, April and
May with this group and they took some of the draft calendars back to their group, got us brought feedback and we made some changes based on that. As you see in the assembly there, um, just to highlight some of the proposals on the
calendar, back to school week would be the week of April, I'm sorry, August 16, 2027. As we've done the last couple of years, we would have the step into elementary school on August 23rd as as well as the we're rebranding it the step into middle
school for sixth grade students only and then step into high school for 9th graders. Then our first day of school for secondary would be August 24th with another that would also be the second day of step into elementary school at the elementaryaries. Um then August 25th would be the first day for elementary
students. The last day for this school year would be May 26, 2028, which is a little earlier than normal. Normally, we push into the first month of June because of where the winter break fell and where the holidays fell within that and a little bit earlier start a couple of days earlier in August. That's why we
are finishing before Memorial Day this year as proposed. This is our fourth year going to a semester calendar. We've been on a quarter calendar. Then we were in trimesters for a while. This will be the again the fourth year with a semester schedule and then we will continue the
plan is to continue to have the four designated curriculum and development days and those would be on September 29th, November 2nd, January 3rd and March 27th. And we anticipate these days would be approximately 50% for professional
development and 50% for teachers to review data and make curricular adjustments. Uh we will have a professional development day which we've done traditionally on President's Day on February 21st and as Dr. McCuel mentioned new for the 2728 calendar May
5th 2028 would be a non-duty day for instructional staff and a non- studentent day due to expected lower attendance of students whose families observe the holiday of Eid alada. Um we have been tracking that student attendance. There's a significant drop in student attendance on the day leading
up to the holiday, the holiday, and the day after the holiday. And with that, I'm ready to take any questions. >> Jack, >> uh just one comment of appreciation. I know years back when uh students uh
initially approached us about the uh this uh particular uh day um uh I'm I'm thankful that we did the research questions were raised as to the attendance was it up down flat uh I
appreciate the fact that you uh that the district uh did its research and it only makes sense uh to uh move as this calendar reflects and uh job well done. Uh and I think it's also important that
uh not that messaging needs to occur but but uh I think uh there's a value to be drived by uh uh student participation and and for me that's where uh the
impetus for this uh occurred. Uh, and I'm thankful that our students are I I can kind of remember seeing it was a brother and sister uh you know uh who spoke before the board and I just appreciate the fact that uh and I hope
they're uh still a part of the district or they will hear about this uh momentous uh decision. So, thank you uh Carl for uh working with the union and uh community to allow this to to occur.
Just thank you, Dr. B. I want to thank Will Ruffin also who was key in bringing uh some members of that community together for the conversations as well. >> Dr. >> Yeah. And I just want to echo uh Dr. Director Barlo's um comments about Eid. I think that's really really a good
decision. And also thanks to you and to also the education association for getting these calendars out so far in advance. We have busy families. they they need to know, employers need to know, and having this calendar ready to
be certified now is I is really useful. So, thank you. And I also appreciate the creativity with scheduling the CAD days um that we have them um abuing or at the beginning or tail end of some of our breaks. so
that some of the concerns that parents have shared with us about having them midweek um uh is resolved and can tie into um other plans they might have for that time off of school. Um and I agree having having these calendars out two
years ahead of time. I know uh personally we're being asked to talk about vacations already for 27 and 28. So many people are in that same boat. So this will be really welcome news for our families. So thank you. Anything else board members? Dr. Dr. White. >> Oh, I just want to say uh again, I was
going to also mention I like that the uh that we don't have a lot of days in the middle of the week. I think that'll be good for parents. And I'm also glad to hear about the Eid that we were able to find a day. I know that was um one of our concerns early on that it's not a set date. Um so I'm glad that we were able to come to consensus um with their
faith that it will work for them, which we did. So, >> anything else? All right. This will come back to us uh for action at the next meeting. of June 16th. Thank you. Our next prep for action item is
approval of the fiscal year 2026 2027 budget and we are scheduled to take action on this at the June 16th meeting. Superintendent Pel. >> Thank you, Chair Nathan and board members. You can see our director of finance, Andy Crogstead, is uh coming up and he will be walking us through a very
complex uh budget proposal, but one that I think um meets the needs of the district's educational agenda while also uh being a responsible fiscal stewards of the public's resources. I want to thank Andy and his whole team for um really herculean work. Um for the second
year in a row, as board members are aware, we were reinventing the airplane while we were flying it. um this year redesigning the central office cost structures that uh govern how we allocate resources that are not directly in schools uh for the most part and last
year the team led the redesign of the budgets in those schools and so it has been a fullcourt press for two years uh running um but one that I think has brought us to a good place there are also difficult decisions in this budget as the board is well aware so turn it over to Andy and then uh look forward to
the conversation >> thank you Dr. Pel, members of the board, I'm very happy to be here and present this budget. Um, before we get started though, I would like to again take a moment to acknowledge the team behind me. As I said at the CPAC the other day, I I may be out here presenting to you,
but without a solid team um working on this behind the scenes, uh it wouldn't happen. Uh just so you know, part of the cost center work required us to go through each and every general ledger account we have, even if it's not a general ledger account being used in this current fiscal year. But in order
to pro provide historical reporting, we needed to update all of those by attaching a cost center. And there's over 90,000 account codes in in in the historical database. We're using about 19,000 of those account codes in this budget. So that took a lot of time. It's
not as though they had to do one by one, but uh there was some mass editing, but it took a lot of time, and we're finding some some accounts we still need to move around, and we're going to continue to do that through the course of the probably the next year as we begin to spend some of those funds. Uh but again, my my appreciation to that team. Um they
are an incredible group of people and uh this wouldn't happen without them. Oh, there it goes. Okay. Um, it looks like the font got a little I this was built in PowerPoint and I think we might be using it in Google. The font got a little screwed up, but I think I think
generally it's going to show up. Okay, these are just some of the highlights I I want to make sure that we touch on tonight. Of course, I know a question is going to be around the budget gap and we're going to touch on that as well and and how we address that. Um, what does next year look like? How do we spend those dollars? So just some of the key
points we want to make sure that we uh land on in our discussion tonight. I know that generally these um discussions are followed with questions. I would have no concern if it would be okay with the chair that maybe questions
be asked while we're on a particular slide if that makes sense. That's up to you. But um certainly that's your your choice. But it may it may help the conversation as we review individual slides as opposed to maybe going back. But um I I certainly can be interrupted at any point.
So first of all, we're going to talk about the general fund. And of course, this is the district's main operating account where all of our well almost all of our day-to-day operations are funded with the exception of uh school nutrition services and the community education fund.
that fund uh is expected to generate almost 1300 or 1300 $316 million um offset with expenses of 322.7. Therefore, that's the $ 8.3 million gap that we spoke about previously last July
when we brought that forward to you initially. It was much higher. It was at 13.5 million. and and we'll review what's changed, but obviously that was the gap that we needed to look at this year for next year. Uh and that was based on an
enrollment assumption of 17,441. And I know we've had a conversation about our enrollment uh uh projections for next year as well. And we'll get into that in just a moment. Uh but but some of the things that changed obviously um the reduction. Why did that
change? because we had increased enrollment this year, which we anticipate carrying through to next year. And so those are dollars that we didn't have in this year's budget. They became available to us because those students became available and we anticipate them rolling forward.
Obviously, um we also had, if you recall, our audit produced an additional $2 million of unassigned fund balance from last year's uh fiscal year. And the board decided to also use that $2 million in addition to
the other $3 million that had been previously committed from the unassigned fund balance to help help um in the fiscal year 27 mitigation of some of those reductions. And finally, as Dr. Dr. Kell mentioned, we expanded the balance budget model to
all of the central office and we'll get into some of those details. As we all know, enrollment is everything. Enrollment drives all of almost all of our our revenues. Um, our tax levy revenues are generated or are based on uh enrollment. Our I should say our operating referendum revenues. Uh,
our state aid is based on uh enrollment. And so it's really critical that we one maintain enrollment, two that we maybe I should have said it the other way, we gain enrollment, we maintain that enrollment, uh and then make sure that we're we're uh building upon that to the
best of our ability. As I mentioned uh last fall, we came back to this board and and we're happy to produce um or say that we had uh on October 1st almost 500 students, more than we had anticipated for this school year. And that in and of
itself generated that additional revenue that we had this year. Again, we anticipate for next year. Those numbers then became the baseline for next year's enrollment projections. We had previously used different numbers, numbers that were almost
entirely based off of our demographic study um or excuse me, our enrollment study done by the former state demographer last spring, Hazel Reinhardt. We had used those numbers initially when we produced the forecast for you last
July, but in October of this year, well, this school year in October when that enrollment was up, we made a determination that that became the new baseline. And so that allowed us to increase our revenue projections for fiscal year 27.
It's still a decline. We're still expecting a decline over our enrollment, what it is today, of about 340 students, but that's still significantly higher than what we had anticipated having for enrollment next year because of this modeling. What we did do with the
enrollment from October 1st, as we projected out for next year, we did continue to use what I refer to as the attrition rate, just basically the change from day one to the end of the school year. that is about 2% at the K through 12
level. So um for every 100 students we have on October 1st, we'll lose about two two of them at the end of the year, therefore affecting our revenue. We also then for kindergarten used the um enrollment study because we felt at
that time it was still the best numbers we had for kindergarten enrollment projections. Of course though those are the most fluid at this point in time. And you can see where we expect to be. Where we are this year was that that top line. You can see we went up slightly
from last year 17581 up to excuse me I'm I'm having a hard time. 17 358 up to 17441. And then uh the box is where we expect to be. Now the decline is still the trend that is projected in the
enrollment study. However, we are hopeful. We're not certain, but we are hopeful that our October one numbers this next school year may be similarly improved and at which time we would likely and we may likely anyway want to do an additional or do another
enrollment study to say maybe we maybe the curve has been bent. Maybe maybe the decline may not be as steep or maybe we will see begin to see an increase in enrollment as as opposed to a decreased enrollment as we're projecting right now. But just understand those years further out are still based on that
enrollment study and have not been remodeled based on any current enrollment numbers in the school year. So the budget gap as you recall when we came to you in July that was about 13.5 million. In
January, we came back to you with those other um uh additions of the $2 million, some additional revenues, and therefore that reduced it to $8.3 million. And again, this is really more of just a snapshot of of how things changed from a
year ago to this January to where we are today. So, it was really the January forecast that we built our budget from and used those numbers as um as our baseline for uh the balanced budget. I should note um that that point below
again we did not think a single year of enrollment increase created enough of a certainty in our budget projections that we should use those numbers in perpetuity and so therefore we continue to use uh our past
enrollment projections. The board did authorize uh strategic use of fund balance. And as we think about the unassigned fund balance specifically, those are the dollars this board has to use at its discretion. And so this can be used in any purpose you so choose. They're not restricted in any
way other than by law. And so therefore, we had previously agreed to $3 million. Uh the additional $2 million. In addition to the unassigned fund balance, the board also did approve the use of reserved restricted dollars. Now,
although you approve the use of those dollars, those particular expenses automatically get charged to those restricted accounts. And so, what you'll see in the budget is we actually are using more restricted reserved than what was authorized. And I would say
authorized, we really used that 2.2 to as a mechanism to balance the budget knowing we would draw from the reserved and restricted dollars in some way. That was our best estimate at the time. In in reality, we're drawing more restricted and reserved dollars for those very
specific purposes in this budget. What that does then is lessens the amount of unassigned fund balance use that we have in this budget. And so you can see um we we still project a very healthy fund balance into the future even with the use of these
dollars. This is the unassigned fund balance here as a percentage of our general fund expenses. And uh we we we expect it to stay uh again very very solid and healthy well above the 8% that the board has authorized a little deeper into the reductions. And
so we categorize the reductions into two buckets. learning sites and cost centers. Um really following the model of the balanced budget model. And so therefore, in terms of the overall budget for fiscal year 26, the year that
we're in right now, we simply said, what's the percentage of that budget that's been allocated to the learning sites? What's the percentage of the budget that's been allocated the cost centers? We took that same approach then in terms of the reductions. Those same percentages were then used and backed into the $ 8.3 million. And you can see
here where we've come up with some of those savings. I would add at this point that the CBAC had some conversation about um vacancy and budgeting. We've chosen to use historical vacancy essentially at the bottom essentially what does it look
like if we bring it off the bottom. And um there was some discussion about perhaps that shouldn't even be considered meaning you shouldn't even add those dollars into the budget to begin with. There may be some conversation about that in the future, but we maintained this philosophy this year because one, we started it last
year and we do think it's prudent. And what I'll I'll say about those particular positions is we we we have the principles chose positions, central office chose positions, cost center managers chose positions, but we know historically not every position will be
filled 100% of the time, every single day of the year. And we have that history. We do those calculations each and every year to determine approximately how much of every position that's requested will actually come to fruition. And so those positions at the
learning sites, so we're talking about general education staff, ESPs, and teachers, there's about a million75 1.75 million of unassign or excuse me, unfilled positions throughout the course of the year. That doesn't mean it's a position that goes all year long, but
it's the aggregate value. It's the total value of unfilled positions or what I would say vacancy throughout the course of the year. I'm just going to hop over to the cost center side and talk about that for a minute. On the cost center side, remember that cost centers include
uh positions that are determined and allocated from a cost center from a budget manager at the central office, but those positions go out to the sites. They serve the sites. So, special education, health services, uh, advanced learning, those are examples of
positions that are determined in terms of quantity and location. That determination happens with a central office budget manager, but those positions go out and work into the sites. And so, we've broken those numbers out in the memo. I don't think we have it in here, but it is in the
memo in terms of cost centers. How many FTE are what we would deem central office? So that would be really district operations. And how many cost center FTE go out into the buildings? It's it's certainly much larger. Um I think it's
about 11 I'd have to look at my actually I do think there's a slide and we'll get to it in a minute. Capital projects um or and so let me I'll finish on the cost center historical vacancy first. Um that that primarily or large part is special
education and um Mr. Bachan can also speak to the fact there's a tremendous there's a really a tough it's tough to fill some of the ESP positions in the special education world. Certain other special education positions become more difficult to fill as well. And so historically there's been a large amount
of unfilled special education FTE remaining at end of year which means we have budget that we've not used up. We also have certain positions within our maintenance and our operations teams as well that again through just normal churn um those dollars are available or
or I should say uh are unused. Now I'm going to head back to learning sites because those two things go together. I wanted to make sure we touched on those together. Middle school uh staffing ratio adjustment. In year one of the balanced budget
model, we determined that through the reallocation of title dollars, middle schools became along with high schools, basically every school became eligible for title one dollars. In addition, at the middle school and at the high schools, we also
adjusted their staffing ratio. So, what is that student to FTE ratio both at the middle school and at the high school? at the middle school and high schools. What we do is we take that enrollment, we divide it by that number and we say principles, here's how much FTE you have
to fill your course schedules or to to accommodate your course schedules and the other needs that you have from a teaching perspective. When we did that work with our middle schools in year one of the balanced budget model, it became clear that the
reduction of the student to FTE gave them an advantage at the middle school level that none of the other level that the elementary and the high schools did not have because of the addition to the of the title one dollars. high schools uh continued to be very
very tight and we had one that um was was really tight in meeting their staffing needs last year and and this year again a little bit better but that was not a concern at any of the middle schools in year one and as we looked at how much FTE they had available to them
and um some of them actually had unused compensatory dollars at the end of the budget process um the balanced budget committee made up of Dr. Mel and several others. This was one of the recommendations we made to the board in terms of how
in terms of how we are um are making the reductions. And so these two particular items on the left side were recommendations from the reduction um budget reduction committee that was formed in the fall to look at the learning sites.
Wrapping up on the cost center side, capital projects alignment. Essentially, that's just taking our expenditures and aligning it to our revenue. And in doing that, we have less revenue available to us through the um LTFM levy next year in
the general fund uh than we have had previously. So, that meant we had to reduce our expenditures that use those revenues. And therefore, that was ultimately a $1.3 million reduction. That $1.3 million reduction was in the forecast. and and because it was in the
forecast, we had the ability to pull it out without impacting uh our operations. There just simply isn't matching revenue. Now, one of the reasons why that's occurring is because we are bringing in additional we are issuing additional bonds and taking on additional debt out of our construction
fund to do some of these really large IAQ projects. And so in order to maintain a fairly stable tax impact to our um our community, we are adjusting what goes into fund one under what's called PIGO. Essentially, we get the
money in that fiscal year. We have that fiscal year to to use those dollars versus the dollars that go into our paying off our debt service. Those are both levied dollars. They go in they have two different uses. One pays for projects in the year for the year.
That's PGO. The other one is the other um larger amount is the um debt service and in order again to maintain that tax impact um the philosophy has been we're going to adjust those two numbers to
keep that impact as as flat as we possibly can accounting for tax um uh tax value growth and it's other other factors. Uh budget manager adjustments came up with several others. Again, out of 53 cost centers, they were able to
arrive at another million46 in cost savings. Uh various various things. It it it was it's salary, not salaries, it was supplies, materials, contracted services. In some cases, we cut some we're able to reduce some software subscriptions, things of that nature.
Nothing that was essentially FTE driven. One thing that we did do though um and some of the sites were able to or some of the budget managers were able to do is make some adjustments by utilizing restricted source funding for some of our um our FTE in the cost centers. And
so therefore that lessened the amount lessened the impact on the general fund. And so in some ways there was a trade-off, but ultimately it did impact the general fund pos uh positively by moving certain expenditures that would qualify into some of those uh restricted
uses. And then finally, the one that uh uh the the reduction that the board made um a month or so ago with the central office leadership reorganization that accounted for um a little under half a million dollars of reduction as well. So, uh, that's a that's a a long
explanation, but I think it was important for us to focus on how did we get to the $8.3 million. Um, and um, and I think this this lays it out. >> Josh, >> just quick question. So, with the middle school ratio adjustment, that just kind
of puts us level with the other schools. You said the elementary and the high schools are about at this level. >> They're the impact. What it does actually, and I should have mentioned this, it puts the middle schools back to where they were. So, two years ago they were at 24.75.
They went down to 22.86. We moved them back. So, it wasn't a it was a one-year increase and then we just put them back to where they were. They also did retain the title one dollars on top of that as well. So, they still did get that additional title one funding. We just
restabilized their FTE to student ratio. And I guess my question around that is just around class size because we've had so many discussions about it and so many of the studies brought forward. I just wanted to know is there going to be any impact on that or is are we not really going to see much? >> Superintendent.
>> Um yeah, thank you Dr. Whitehorn. Um at the middle and high school levels due to our contract with the Rochester Education Association, we actually don't staff out class size in the same way we do at elementary. It's each teacher can
see um the 260 students. Did I get that number right? >> 160. >> Let's raise it further. I'm kidding. Kidding, Carrie. I don't I want it lower, too. Um now, there is a class size, but it's not We allocate more by number of uh students per each teacher.
Essentially, what this change did, I mean, we would always like more money at every level. Essentially what this change allowed I'm confident that our middle schools are all able to fund their core program um including Dakota um with their more innovative program which they were nervous about being able to keep but we were able to work with
them to make sure that they could still maintain it. Um at the high school level we might have had some significant challenges too ex uh because we also uh made a change last year where we couldn't keep double funding them for post-secary options. As you'll recall,
we allocated teacher positions to the high schools like the kids were there, but the kids were at RCTC or University of Minnesota Rochester and we were essentially paying twice. We had to back out of that. That's not how PSO was designed. For most of our high schools, that was about 7 FTE last year. So, the high schools were really tight. We
really couldn't go deeper in the high schools. Elementary schools, as you correctly note, class size is an existential issue there. And so, we didn't want to change things there. Um I think this was an acceptable uh adjustment at the middle school level. Would I love to have kept them where
they were last year? Yes. Um but in the big picture, I think that um our leaders made it work. >> Thank you. Moving on now to um the balanced budget model. Just talking a little bit about that. Of course, that's our kind of north star in terms of our budgeting.
How how do we do this within the district in year one? uh I know we've talked about but just to review it really was focused well was all focused on our learning sites and working with our principles and establishing uh that uh process at our our learning sites year two now this year um obviously
we've talked about the cost center establishment and we'll get into that a little bit more in a m moment but what it it allowed us to do with the establishment of cost centers is really provide uh hopefully transparency to those budget managers who each cost center now has a budget manager one they
can see exactly how they're spending, where they're spending, and they're making the decisions on where to allocate their dollars. So, the way the process worked is we finance worked through the reductions and cost center by cost center provided a target number
for them to do or to make rather. The reductions at the cost center was ve were very similar to how we handled the the whole shift and that is a cost center. What is the cost center's percentage of their overall cost center budget? So what's their pr-rated portion
of all cost centers? And that was the percentage we asked them to find to the best of their ability reductions within their cost centers to that to that number. And I would say they all did a really good job for for year number one. I would say they all did a really really
good job. They took it very seriously. They came up with some great ideas. Um I know that next year we're going to do some things a little bit differently. uh always a learning opportunity, but frankly um I'm really happy with how year one um
transpired with with all of them. The other thing that we did this year, and I know we've talked about this, I'm not going to talk about it a whole lot. We made a couple of changes with the supply budgets and moving some of that into the principal's decision-making authority at the time that they're doing their staffing. Also, then the
compensatory revenue reallocation. talked about this at a couple of different board meetings as well. So, um I just wanted to remind you of what this did. Essentially, it allowed us to take some compensatory from schools that had um that had a lot. Um, one could argue
it's appropriate. I'm not going to make an argument one way or the other, but they had a lot and we had certain schools that had very little to none. And so, what we were able to do is take some of that 20% that the district is allowed to retain. We reallocated that back out to some of those sites that did
not one qualify for title and number two had very little compensatory dollars because we know they have the needs as well. They have students that can't read well. They have students that are struggling as well. So, so that was again another one of the components that the BBM committee um determined was
appropriate. We also then were able to with the retainage of that of some of those 20% dollars at the district level, we gave back the sites general fund money. That was one thing we heard last year. If you recall, we had this conversation earlier where they had
these compensatory dollars, but because of the restricted uses in statute, it really um handcuffed them in some ways. We gave all sites back some general fund money that just kind of opened up the horizon for them and they could use those in any way they wanted to. We then
figured out how to um use up the those those compensatory dollars that were that were left at the uh the district level. So those were sort of trade dollars but um principles really appreciated that. Uh I know at the high school level and the middle school level especially where they have assistant
principles that's one category that's not permitted. uh along with clerical and we know that there's more of that staff at the secondary level than at the elementary and so uh this was a a a much appreciated and I think this went over very very well. Um a couple of the schools that I can you without naming
names that that were some of those low compensatory earning schools uh I I I heard nothing from them in terms of problems meeting their staffing needs. That was different a year ago. So this this I can tell you worked.
Let's talk about the revenue side of the general fund. Now um we obviously uh plan to earn about 3 almost $316 million. As you all know, the vast majority of that or not the vast majority, a huge percentage of it comes through our state general aid and other state uh funding and cutie including
special education and some categorical aids. Uh, our local dollars account for about 21%. That's made up of our operating referendum and our other property taxes that we generate for other um board approved levies.
What rounds out then is the uh federal uh at 3% and and a little bit of other local. The other local dollars are going to be things such as um uh sports fees, registration fees, just monies that we earn, interest, things
like that. That's those are local other local dollars. On the federal level, I'll just touch on that for just a moment. Uh the federal level, um we Congress, as you you likely know, did appropriate similar levels of funding in
the title uh and special education areas. We we have received our allocations for title uh from MDE because all those dollars flow through MDE and they were similar levels as past years. And so therefore, um, we were able to adjust
our revenue target or revenue up from where you were a year or excuse me, in January even. We adjusted it up because we received those allocations from from MDE since uh the forecast in January. We had originally planned on about a 20%
reduction in the federal funding. And so therefore, we we essentially uh tred that up to about 100% of where we've been in the past. And so although it's not um the largest share, it certainly is impactful at over $9 million. And so it's important that we continue to
receive those dollars. Uh anecdotally, I will say there seems to be there seems to be at least generally um in terms of the at least title one and special education um pretty broad support um for those particular programs uh within the administration at least from what we can
gather. On the expenditure side now of our general fund, uh it should be no surprise that staffing is our number one cost. That's about 80%. And we're expecting that to go up almost 3%. That's about what we've put in the budget. Um on average, we put in a 3%
salary um cost of living adjustment, but then certain categories of folks go, you know, are a little bit higher, a little bit lower, but as a whole, that equates to about 2.9%. Excuse me. I did want to point out the benefits though. Obviously, uh I know we've had
some conversation with all of you as well in terms of some of our benefit costs. Benefits in this category aren't just health and dental benefits or life insurance. It also includes anything that's a payroll tax. So, our FICA, um workers compensation. So, as our
salaries go up, those are all percentagebased and so those are going to go up as well. It's paid family medical leave or the new state program. So, those things go up as well. But a large large percentage of this increase is directly tied to our health care costs.
Not exclusively but but um a pretty large uh share of that. We are currently um as a finance department u our employee service led by employee services division Laura Hullman. We're in the process of looking at at at everything. And one of those things that
we're doing right now is is actually we've been um working with um four different uh insurance brokers. These are the folks that go out and help us find the the carriers and we're interviewing them. We're trying to see who who can provide us with some
additional ideas and concepts and theories about how we can um make some changes within our health uh plan costs without changing benefits or or anything like that. So, we're going to have a larger conversation about healthcare, you know, in the in the coming uh
months, especially as we close out fiscal year 26 and understand uh what our fund balance looks like. But I I just want you to know we're working on this. Um we have we have some things that we're thinking about how we can address it, but we're not any different
than anyone else. No other school district is, you know, is is solvent. Well, they're solvent, but no, everyone has experienced similar issues nationwide. The trend right now um we we learned this morning is anywhere from 8 to 11% increase um for next year in
terms of just costs. And so what does that mean for premiums? That's yet to be determined. And then you'll see where we also have some additional um our purchase services, supplies, etc. And where we've made some reductions. Um you may ask the capital, and I'll just touch on that real quickly. uh that was simply
a movement of some debt that was uh considered that that was coded as capital uh expenditure within general fund. Uh that debt moved over to our debt service fund and so that happened this fiscal year uh and uh is incorporated into next year's budget and
this was part of our our levy as well. We discussed that during our levy certification uh earlier this year or I guess it was the time all runs together. When was that? December. >> Yes. >> So these are these are the highle categories of our our general fund
expenditures. Of course there's more details in the the memo. >> Uh just quick question >> Dr. Mury. >> Um so there has been talk about the state taking over the health care for the educators. Would the numbers still
look the same and have we considered that in the projections if that were to happen? I don't know where >> we're not right now because it's it is still just a bill and bill language and um frankly we don't know when or if that will occur. Um
there there's uncertainty around what that will look like for us. There's there's the proposal includes language in terms of of course all of us contributing and that a portion would be paid by the state. That would be the challenge. How is the state going to
come up with some additional funding? Obviously, we would still have our district contributions. Um, we know of of it. We talk about it. I will tell you that the three um consultants that we've been working with or talking to in the last couple of days, this hasn't I wouldn't say it's not on their radar,
but it's not something that's imminent. We know that we have probably at least a couple of years for sure because that program would take some time if it was if it was even approved or passed. It's going to take some time to roll that out. So, we have some more of our own work to do in the healthc care space
before that would ever happen, but we are aware of it. We're following and monitoring it. Our employee services manager, Laura Hullman, uh, has has attended a couple of webinars on that. There could be some positive for us. There could be some negative for us. I think it's right now just a little too fluid.
>> I'll refrain myself because that I'll take us down the rabbit hole, but I'm glad you're watching this. It's a very very important issue and um uh an underappreciated reality of the discussions in the last session is that there was bipartisan support for this. Um it's a major
priority for our friends at education Minnesota which I understand they did have uh Republican support for it. So I think it's very much something uh for us to be watching for. Um in any scenario it would be a massive increase in the total cost of funding for healthcare. The big question is who pays for that
increase? The proposal suggests that the state would kick in for it. The fear is that they do so by reducing our general fund allocation for teaching and learning. So, I'm glad you're watching this. It's going to be a very big deal next year. >> As we've said, there's still only so
many dollars at the state level to spread around. And so, what does that mean for our other funding exactly? >> And I just had another question. >> Go ahead. >> Um, and I I may have asked this before, but I'm not sure. And I know I'm going back a couple slides, but with the compensatory funding, um, is there is
there a use by date? I don't think I've asked that. If I have, is it just there? >> No, I mean, we we allocate out to them and we allow them to carry that over. There is a restricted fund balance for compensatory aid and so therefore we calculate that. If they don't spend it, we give it to them the following year.
>> Okay. Thank you. >> Let's get into our staffing levels now. And this budget is proposing 2,622 total FTE. That's across all of our funds. And so that's going to include community education. That's going to include our uh school nutrition services group as well, even though they're not
funded out of the general fund. So this is everyone districtwide. And as I mentioned, you can see those first two blocks are the cost center. So together there's a, you know, about 1450 FTE in cost centers. So those budgets
that are cost center allocated budgets, but the largest share of those folks uh are going out to service students in the schools. Again, I mentioned that previously what those folks, you know, what those um employees are. the rest of
them then the 11,00 1,174 those would be FTE that were allocated to the sites as part of the balance budget model and the formulas included in the balanced budget model and then it would also include
those FTE that principles um directly chose based on the uh the dollars the the al um we're trying to change it this month the district allocated dollar. So the district
allocates dollars and FTE and so those that number includes the combination of the allocated FTE plus the uh again the positions that principles choose on their own. And uh
again it's it there's there's more detail in here. There's a cost center breakdown in the memo. There's learning site breakdown. There's comparisons year-over-year for the learning sites because it was year two for them. we were able to do some of that comparison as a whole. It's a 27 almost a 28 FTE
reduction from where we are today. Um it's important to note that's not that is different than where if we compare year-over-year, but we added positions throughout the course of the year based on some grant
funding and some other revenue sources. And I'm not suggesting those positions necessarily are being reduct reduced, but as a whole, the entire district um will be down about 27 almost 28 FTE from where we are right now.
>> I guess I'll ask my question. Um so those represent people who were in positions. Um, of that 27.7 FTE, I try to ask this question every year and I never know if I get it right. How many of these people did we lose from
RPS or were some of them able to find positions elsewhere because there was an opening somewhere else? >> Uh, it's still in flux. Okay. >> Actually, because this is looking ahead to the next year. So, right now at this point, we can just tell you that it's that it's a couple dozen FTE. Um, as we
have the full staffing uh process. It's complete, but for us to do that analysis, people the transfer process has just finished. And so the the the dominoes are still falling into what domino is a bad domino falling is bad. What whatever the metaphor is of things falling into place. They're still
happening. We can certainly provide that for you. As Andy notes, there's a there's a certain sign significant share that we're pleased we're able to find other employment. Yes. Um but there also are some difficult reductions in here and I want to be um obviously clear about that. We know that's very difficult for the people.
>> Thanks. >> Next I want to talk about site specific and this kind of um really focuses on them and the balance budget model. Um I I I flipped these slides around from our CBACK. So those you know
um those uh board members who are at the seabback I I felt it was important to talk about this first and let me talk about this particular slide. As I mentioned we we are able to calculate and allocate dollars from the central office to sites for them to then make
their sight determined decisions, sitebased decisions. This year we were able to increase that number across all sites by a little over $3 million. And you can see how that broke out by by level. And
this leads directly to the next slide. So I thought it was important to stop here and just make sure that we we focused on this first because this FTE count that is that is um funded the FTE that's funded by this amount is directly
included in these numbers. And so you can see as a district-wide total uh as part of the balanced budget model, some of this is enrollmentbased. Uh there was a reduction across the system of 2.2 FTE.
So though though again that would be the allocated portion that is um given to the sites. Now, however, because we were able to increase by over $3 million, sites had additional dollars to use for sight determined or sightbased
decisions, that increased uh that number was 12, a little over 12 FTE, therefore accounting for an additional total across all three levels of 10. And so, yes, a little bit of reduction on the FT because of those additional allocated
dollars. Uh and so the model of balance budget drives the allocated FT. So that's that's formula based and that's what enrollment says and that's how that's determined. So be once we make that determination, we now know how much that's going to cost and we're able to
say, okay, now we know how much that's going to cost, how much we have to spend. We had a little bit more money to give to them than for some of the sitebased decisions. that actually is met with um with great um sites like that. They they enjoy that
additional flexibility. They use these u for um ESPs especially uh other support staff um intervention teachers uh reading teachers really the supports there is some added um uh classroom
teachers uh at the elementary level there were just a handful this year uh and so they're using in a broad a broad swath there's a there's a lot of ways in which the the sites are choosing to use those dollars um but we're they're making the decisions. We give them a
budget number for each position and they do the work of saying, "Okay, how much can I afford with the allocation that I've been given?" And they make all those decisions. >> Um uh thank you. And and um this came up the other night at the community budget advisory committee. Um
and directors um Mclofflin and Cook were there and I'm grateful that you were. Um there are certainly we didn't take a vote but there are certainly significant number of members of that committee that are urging us to go further with this model and provide additional sight determined flexibility. Um while I think
Andy's correct when he says that um they uh like this flexibility it's probably fair to say that principles like this flexibility and we have had some push back from some other groups. We have a very important discussion awaiting us next fall to uh come back to this conversation and so I'll be bringing a
recommendation to you about this. Um I just want to also own the tension that there are some folks as you'll remember school counselors I had initially recommended uh making a sight determined uh position and then concluded as we received some feedback about the very ambitious postsecary pathways work we
have going on that I could not adequately uh explain how that work would be moving forward um if there were more sight determined flexibility. I didn't say I was never coming back with that recommendation but I took the point that we had more homework to do and that's just one example of it. So, I I
think Andy's absolutely correct. There have been many positive aspects to this, but there's an inherent tension. And I think next fall um earlier than later in our process will be a good time to bring you as board members some um analysis of what Angie's Angie is just doing off the
top of his head. How have sites used this? What have the implications been? Um because I think next year, I would submit is probably I hope our last design year for our budget model. At some point you got to land the plane and you and you just have people know the rules and so that last year might be the
I mean nothing's ever permanent but that last year might be the last year we'd be making major design tradeoffs and I think this would be at the top of my list of things to come back to you with. But I but I've agree with Andy. I've been pleased with how sites have used um this in the big picture relatively
modest flexibility but it's been meaningful I think. Yeah. I mean again as total as 30.5 million $30 and a half million dollars. So that's a lot of money uh in this in you know in the grand scheme of of the general fund that's you know 10%. So it's it's it's
meaningful though and and and it's incredible to see how principles are making these decisions and they're really doing these tradeoffs and if I get this in that position cost much I can get this or I trade this for that. So there's a lot of thought that goes
into that. Um and uh we're there along with them to make those decisions. And also Eric Johnson and Jackie uh Peterson were tremendously supportive in that process and frankly they did a lot of that work day in and day out with those principles trying to balance and get them within the framework of their
allocation. >> And I know it wasn't part of the requirements this year, but are we starting to see principles talk about their current skips as they were making these considerations this year? Yes, absolutely. >> Great.
>> Not uniformly, >> right? >> Absolutely. >> So, let's wrap it up with the total budget because as we obviously come forward to you in two weeks, you'll be approving the entire budget. We spend most of our time talking about the general fund, but obviously there's an entire budget to to approve. And and
here are the numbers. And you can see again where we are expecting to use about $7.4 million of fund balance if everything uh played out exactly as we budgeted. We know that's not going to be exactly the case. Uh you know there were there will be um three budget revisions done um like we do now. There will be
three budget revisions for uh essentially they really budget revisions really should be and this is something I'm really focusing our team on trying to make sure that our budget revisions are driven by new revenues. So if we have new revenues we add that. That means we have some additional expenditures that we're able to put in
the budget as well. Um and so that's a focus of of of our team and and how we handle those revisions. Uh but anyway, uh again, we expect there to be that particular fund balance use across all of our funds. And you can see fund by
fund where some of that uh use is going. Uh in total, um you know, we're expecting $475.8 million of revenue with the $483.1 million. And so it would be that $483 million that we're going to be looking for an approval um from you uh
in two weeks. Well, finally, uh I know one of the things that we put into this memo this year uh was sort of anticipating some of those questions that well, and they're not even anticipating questions where there are certain questions we hear as well. Obviously, number one was uh you know, why are we still having to make
reductions when we had the referendum? And I know Dr. Pel has some some thoughts about this likely as well, but just honestly the the c the cuts would be catastrophic without that additional nearly $20 million. So, you know, think about that in terms of the $ 8.3
million, add almost $20 million to that. That's what we would have been looking to make reductions in this now for next year without those dollars. And so, uh, I know the commitments that we've made in that referendum are still being com and we're still making those commitments
and we'll be providing that information, um, like we did last year, uh, line by line and and ensuring the public that we've continued th those um, uh, those promises. Uh, but again, um, I I think it's important to note uh, that as we think about our enrollment and and where
it's heading, we hope that it's going to be going up. We don't know that but uh in case it's not we better we you know we need to take some some measures today and so I don't know if Dr. Pel has anything to add on this particular topic. Okay. What about facilities? Um you know the the group this group will
have a presentation next week about a a facilities uh report some additional changes at the facilities level. Um frankly we're working through um we've identified funding strategies. We have a little bit more work to do in terms of fine-tuning that funding. Uh but we know
how to do it. Um we just have to get a little bit more detail around the nuts and bolts of that and um I don't know that that will be coming to you next week. Uh but the plan I understand as it exists and sort of getting a a lay of the land so to speak of of what changes would be proposed um would be part of
that uh that discussion next week and we will highlight broadly the funding sources. Um but we think there's a probably some additional detail that this board should have before moving forward with final decisions in terms of the funding mechanisms. >> And then in any event, they would not be
uh uh expend expenses for the 2627 school year, right? >> So we're not presenting that to you now because it's not in this year's budget, but we'll talk about that um next week. I'm looking forward to the discussion. And just to remind the board, there there was $6 million allocated into a a
committed fund balance, which means it has to be spent at your dis. We as finance can't use those dollars. You determine how those dollars are used. And so therefore, those dollars remain uh tied primarily sort of earmarked for facilities and technology. We anticipate
using them, a lot of a lot of them for facility work. Cross subsidies, that's a question that's asked as well. And um we in 20 fiscal year 27 will be the first year of the English learner cross subsidy. We refer to it in a district as
multilingual learner. MD continues to refer to it as EL English learner but this uh this budget includes that first year of that cross subsidy reduction aid and that is about a million dollars. So, um we're getting a million dollars back
uh based on our expenditures um both in or in the um our EL services and of course then we continue to have the special education cross subsidy and that did increase in fiscal year 27 from 44% to 50%. Now, we do know there's a blue ribbon committee studying special
education and reducing special education costs across the the state. Where that lands, we are not sure yet. how this cross subsidy may be impacted. We're not sure yet. Um, next legislative session of course is a budget year for the state and I think a lot of this is going to be
um dealt with. Well, we hope some of it is at least dealt with and we have a little clarity on where they anticipate this going. Uh, but certainly those are things that we keep our eyes on because those are areas uh we know the state wants to make some reductions and those would have a direct impact on on our
budget without a doubt. And then fiscal year 2728. Um and I'm just going to go to the next slide and that really looks at um future years with the context around this is still based on FY28 and beyond is still based
on the projection that we did in July. And so we will do another projection after October one numbers this year. We'll do another projection for both next year and then four more years after that.
And that enrollment, again, I keep coming back to enrollment. There's obviously a a pattern here, right? We want to see what that enrollment looks like and that will uh drive what our forecast looks like um for those those out years. But ultimately, we have not changed these projections for the
future. We we we we still anticipate needing to make some reductions. Even if our enrollment grows, it would be hard to imagine it would grow to the extent that we wouldn't have to make some reduction still in the future. Uh we hope that they're less though and that's what we're hoping for when we see those
numbers in July, excuse me, October. And so here's just a summary slide. I'm not going to go through it. I mean, it's basically just summarizing everything we've talked about. Uh but that is that is my presentation and I I'm happy to take any additional questions. >> Dr. Mccclley.
>> Um, I hadn't really thought about this before, but the budget managers that you talk about, are those in people in the finance department or are they spread throughout the district? >> They're spread throughout the district. They're primarily those, well, they are all those that are, uh, closest to the programs they serve. And so, uh, special
education director, uh, our advanced learning coordinator, and that, uh, that director over that area. So, we purposely and and rightfully the budget managers are the closest to the programs and know how those dollars should be spent. Um a little bit different question the
compensatory revenue reallocation. It occurred to me that the timing of that might be an important part of this process that I don't understand that if the principles are working on their balanced budget model and creating budgets what is the timing of that compensatory revenue reallocation? When
does that happen? >> That was included in this year's budget and so therefore when they did their planning in January and February that was in there >> they already had that. So it doesn't come like midstream or something. >> No, nope. That's included. What they will get later on in the year is basically a true up. So,
>> you know, if they had $500,000 of compensatory allocated to them by MD and only spent $400,000, we're going to give them another $100,000 to be used as they deem appropriate and allowable by statute, but that's already included. >> Okay. And then one final question that I
think I asked this in our Q&A question about the purchase services. It jumped out at me that tuition obligations to outofstate education institutions. I'd never heard of that before. What is that? >> Well, we pay we do pay and and I think actually I probably should have not only is that an increase so we pay for
students who are placed in outstate um facilities sometimes for treatment treatment programs and so we pay for those programs out of our general fund dollars. Uh in addition that particular object code 394 is also used for PSO and we know PSO costs are rising as well. So
I should have probably included that item in the memo as well as I reread that today. Uh but that's that's um the out of state you know we have some place in in Wisconsin for example and that's just how MDE requires us to code those expenses. >> Okay. Thank you for the clarification.
Um I wanted to ask a question about um the stability in the expenditure projections. Um you're based uh you're basing them on our historical and then in increasing them
by what you think they might cost. How many of them like we approve the the food contracts and the milk bids and all that. So that's a certain because we have a contract. >> How much of our expenditures are that known because we have a contract amount
or we have a contract amount with inflation versus we know we're hearing about increased costs in the economy for various factors. >> How much of our expenditures could be affected by that? >> Not as large as you might think simply because of our staffing. How much of of
our costs are staffing related? And for example, our teachers contract is in place for next year. So we know exactly what each teacher at each step in each lane is going to make. So we can factor that in. Um exactly. Um I I wouldn't say to the penny, we do a little rounding, you know, but to make it to make the
math not to make the math work, but just to keep it simple. But those particular costs um we can we can really clearly hone in on um contracts that are not yet settled. Again, we have a we have an inflation factor that we build into. One of the areas and this is one of the
reasons we did want to include our contingent or increase our contingency allocation uh next year is um transportation costs. There is a a fuel escalation clause in our contracts and obviously if fuel costs continue to be
increased and high as they are right now, we would be paying more for our contracted services beyond what's already uh um in the contract. And so we put additional dollars in there in contingency to cover that along with utility costs. So those are probably the two that really are kind of unknown. The
transportation is a huge huge no I shouldn't overemphasize it's a large dollar amount. Uh it's not the hugest uh so I don't want to overemphasize but it's a large dollar amount and of course any um fuel escalation on top of that would would would be impactful. So, we
feel like we've saved those dollars uh for that purpose and and and are fairly comfortable with our um our estimations. Of course, we're only, you know, we only know what we know today. Um we we hope that we would had have adequate
contingency to cover in those cases, but otherwise, the vast majority of like our contracted or excuse me, our our software subscriptions, that's another large. We know that they generally go up about 4 to 8% a year. So, we put that cost in there. Some go up a little bit more, some go down a little bit more,
but in the whole they they uh balance out. So, I would say the vast majority of the things we're able to uh really get close. >> Superintendent. >> Um which I'm pleased about. The the one exception to that also that I don't know if you mentioned is healthcare. um in
the sense that uh I remember a couple years ago when we had a big increase and I sent out a note trying to explain it and I noted we have some people who take their healthcare from us who have very very serious and very expensive medical conditions and I am thrilled as actually
someone who had a spouse der diagnosed with terminal cancer with young children that we are able to support them but they are often six figure costs and when I sent that out I got a good amount of angry uh messages back saying it seems like you're shaming them for that. And I
that's the last thing that was my intent. But a lot of people don't understand that the uh cost of the treatments that individual employees um receive, which we are pleased to provide, shows up in our
premium increases quite directly. And so it's kind of explaining that hard reality to folks. And uh it's something that um is going to be part of this discussion that um Director Whitehorn was uh forecasting about a statewide pool because the bigger your risk pool,
the less the impact of two dozen employees with expensive conditions has on a system even of our size. >> I would I I should have in included that as well. Right. We are the budget includes about a 19% increase in
healthcare costs for fiscal year 27. Um this year the premiums went up 17 and a half percent. Uh I see no I don't see any way in which it will be less than that next year. Um simply based on where the spending is to date and the the
unfortunate negative fund balance we're running right now uh in our health trust. And so therefore it's possible it could be higher than 17.5%. Um that decision will be made later in the year. But again, those are all the strategies we're trying to um to work through with um potentially a new insurance
consultant. We're going through that process. We're trying to just flip over every rock and and turn over everything to see what we what we can do. We have our geographic location obviously increases our health care costs. Um utilization is way up and and Dr. Pel
touched on the the high claimments. That's exactly what it's for for them though. And but we know that that does have an impact on on the health trust and ultimately our total cost. And we do have a larger share of those premium increases than we did four years ago.
>> Um both in the slide deck and in the memo you mentioned um that looking ahead to next year that you're going to be using zerobased budgeting for our cost centers. Can you just >> we hope give us that preview. Hope you know we we have historically or as long as as long as I've been here when we've
had to make reductions the process has been starting at your top and saying how much how how what do I cut out? What do I cut out to meet to meet a a target? I think the better way to do that is saying here's your target. How do I build up to that? How do I have everything that I need or as much as I
think I need or every resource possible to get to that number? Um it's a philosophical shift frankly. Um, it may not be something that we can do immediately across the board, but I think ultimately it's about building a budget, not breaking a budget down is the philosophy I really want us to get
to. And ultimately, we need our budget managers to also think at a very granular level, account by account by account, as opposed to this large massive cost center. And that's going to take us some time to train them and get them to that level of understanding. Um, and so when I say we're going to roll it
out, I think it's going to be in bits and pieces. Um, but it's also it's ultimately just looking at everything within a cost center, both staffing and otherwise, and non-personnel expenses, and determining is it appropriate, isn't it appropriate, and if not, we put it aside for now, and we we work on what
is, and then we bring these other things in depending on what our level of of um our capacity is yet based on our our target. And my last um I guess comment question. Um you talked about the blue ribbon commission and the the legislated $250
million cut special education. When the superintendent asked board members for feedback about what they wanted on the ABCD for next year, I asked that we have either a study session or agenda item um where we really dig deep into what our special education funding looks like.
It's very complicated. I was on a Zoom call with MSBA this morning. I Everyone is terrifying when I talk about uh when they talk about this subject um and the very limited um the very limited ways uh that are available
to avoid uh some serious uh consequences of these cuts. Um, but I thought that maybe once the blue ribbon commission comes out with their recommendations, we can really dive in so we understand what those implications are prior to the legislative session because I think once a legislative session happens, things
are going to start happening very fast. You'll already be in your budget um discussion and we may may need to pivot on a dime depending on what the legislature does with that. So I I we have that on our list and same with compensatory funding, I would assume.
>> Dr. Barlo Quick question. Um the FTE by building contract groups. Um background information you provided. Um I had hoped to uh perhaps see the uh
change from you. Uh I have received and I'm sure other board members have received um letters of concern regarding uh some of our uh uh non-eing. They're
covered by contract group but uh not necessarily teachers and reductions. Um, and I was I suppose I was looking to see where those would appear, but perhaps they aren't. This particular budget isn't designed to show that, and I'm
okay with that, but I was nonetheless just curious um to see what the actual impact uh what the actual numbers were. Uh, and and maybe I can just talk privately about that. I'm not sure this is a forum designed to to bring
>> I think it may be in the memo that I see Andy pointed out that we may need to point it out for you. >> Yeah, there is some Dr. Barlo on page 20 >> and on page 20 that that particular table again looks at what the budget includes in one column and then uh both
a comparison with where this year's budget started and where this year's budget is ending. And so um ultimately if you take a look at the the very last column in terms of where we are today, you'll see there's been a reduction of one cabinet. We know
that there's been a reduction of two.7 clerical um 24 a half ESPs. So that is from where we are today to where we will start the school year. It's 24 and a half. And if you move down, you'll see operations professionals, there's a decline of 2.8. Um SNS went up 3.2.
Again, there's a different fund for them. um they monitor their growth closely, but there's some additional needs and you can see then the teachers and so there there was reductions kind of broadly across the board >> and if you're director Barlo wondering about a subset of any of these groups I
I'm guessing teachers um that is something we could provide you with. >> Yeah. Well, actually, um, social workers, that's I I assume that that was what you're thinking. Um, >> as as >> that I think is in one of the one of the attachments as well. There's an FTE
details. >> It's one of the really >> detailed lists, >> minding ones, detail, it's called. >> Okay. Thank you. >> You know, it's my favorite one. >> Yes. Actually, the reason that's in there and your wisdom is proven because I said, >> Kathy, no other board members ever
wanted that. And look what I was wrong about. >> Thank you. >> You've been redeemed. >> Yeah. No, you're Yeah. And and if you have other, you know, we are coming back in two weeks, so if you have other questions, I'd be pleased to answer that. I get some of those emails, too, and I recognize that we need to have
responses to that. >> Any other questions or comments? Anything to share from our CBAC board members about how that process went feeding into the budget?
It could be perilous to try and summarize because we didn't ask the committee to vote on anything. I mean, it was I think it was it was a very productive discussion. It was standing room only this uh year. The group I think agreed that they want to dive deeper into a limited number of subjects
next year. And so we're beginning to think what that might be. I don't know if Director Cook or Director Mclofflin has a has a different opinion, but you know I I myself would be nervous about characterizing the opinion because it was very much individual. Uh >> but it was useful in the development. >> It was extremely useful. Um and I think
the group has learned a lot and so I think we will get to the point next year where we're asking them to take votes on stuff. Um we haven't been at that point uh with their learning curve and with our understanding of what would add value in my recommendations to you, but I can see us getting there next year for
sure. Um my feedback was that I thought they were very engaged. Um which I wasn't necessarily um expecting. >> Yeah. To that level, >> it's an engaged group. The the one thing we haven't talked about at length uh
this evening that the the CBACK committee definitely spent some time on was uh understanding the enrollment projections and the uh the ramifications of a a deviation from the Reinhardt study um in kindergarten next year and
how that would sort of play out in terms of these budget numbers um and the 371 roughly uh student reduction that is forecast in terms of the the revenue side. Um, but I I think most of the rest of the conversation has already been
reflected here. It certainly is an engaged group of uh valuable perspectives that are represented. So, >> that's great. >> I would add to that too. It seems like perhaps the future value that they can add is as community members their
reflection on the assumptions that we're making about enrollment. I think they may have things to assist us with there from their perspectives. Well, if nothing else tonight, board members, we'll have one more chance at this when we take action at the July 16
or June 16th meeting. >> And I would say thank you, Andy, for your service, but we know you're up again next. >> Yes. Our next agenda item is an action item. Approval of issuance and awarding the sale of 33,800,000
general obligation facilities maintenance bonds series 2026A. >> Thank you very much. I'm sorry. Did >> go ahead. >> Oh, wait. I didn't know if Dr. Kell had an intro. I'm sorry to jump in there. >> Uh we we um as as the memo states, we um
had a bid opening today for bond issuance. Uh we had some some very good uh bids and some good results. I'm going to turn it over to the expert Jod Zespa from Ellers. She uh is the expert. I'm not as long as I've been here. Jod, it's usually been Aaron and so
>> I appreciate Jody. >> I appreciate Jod being here and we we love Jod and we love the Ellers team. They've been incredibly supportive of everything we're trying to do in terms of our finance uh funding and financing needs. And um again, she can walk through everything that you will be v
voting on tonight. and um we can ask questions after that. Thank you. >> Great. Thank you so much. Nice to be here again even though I haven't been here since Andy's been around. So, >> but hasn't been that long. >> Yes. Okay. So, um these bonds are being issued as part of the long-term
facilities maintenance program. You approve the plan, a 10-year plan as part of the program by July 31st each year as required by law. So, to finance the projects that are included in your 10-year plan, there are three different revenue sources. One is the bond
proceeds. The second is your annual levy. We often refer to that as the payo levy, which is included in the levy that you certify each year. And then the third is state aid. So you do get about a million dollars of state aid as part of the program every year, which is great. There are a lot of districts that
don't qualify for state aid, but you do. So that is the way that the uh the projects are financed. So we'll talk about the results of the bond sale that we had this morning. As Andy mentioned, things turned out very well. So, we're financing health and safety and deferred capital maintenance projects that are
included in the 10-year plan. Um, we did go through the rating process, which is required every time you issue bonds. So, that's with SNP. Um, and Andy and Andrew participated in that program and did an excellent job of representing you and the school district. So, thank you for
all of your work as part of that process. there's a lot that goes into it and you kind of feel like you're in a little bit of an interrogation session, I would say, because they're firing questions and so the two of them really did a a great job. So, we appreciate that as part of the process. Um, the
Minnesota State Credit Enhancement rating that is issued by S&P as part of their process is the highest rating that they give, which is a AAA. That is the same rating that our state has. So, under the state program, you get that AAA credit enhanced um rating. There's
no cost to participate in that program, but they do guarantee the payment of uh your debt should you not be able to make a payment. So, that's why you get that nice high rating. Your underlying rating is also very high at a double A stable, and that was affirmed. So, that's the same rating that you've had and um we'll
we'll have us will have as part of this bond issue. You received eight bids. We generally like to see three. So, when we saw eight biders signed up, we um assumed that was really good news. You can see the rates that we received. The low bidder was Mezero out of Chicago. Um
their low bid was a 3.87 and the high bid was a 3.95. So, very close, all under 4% which was nice to see. Uh the um estimate that we had in our pre-sale report was 4.30. So, we are
under that. And um the lower interest rate resulted in principal and interest payments that are about 1.1 million lower than what was in our pre-sale estimates. And I think Andy went through that report with you at your May 5th board meeting. So we have a resolution prepared by your
bond attorney for your um consideration tonight and I will just walk through some of the attachments that are included in the report and I assume you're all >> seeing that on. Perfect. Okay. So the first attachment is the bid tab. So that's a couple pages long because of
the eight bids that we received. So again, Mezero out of Chicago was the low bidder. And then you had bids from New York, um Dallas, Texas, a few bids from New York, Minneapolis, uh Piper Sandlord out of Minneapolis locally, and then uh Barrett out of Milwaukee, and then the
high bidder was TD Financial Products out of New York again at that 3.95% rate. The next schedules are um the same schedules that were included in the pre-sale report just updated with the results of the sale today. So we have
our sources and uses schedule that shows the amount that will be available for financing your projects. The uh detailed debt service schedule on page four. Our detailed long-term financial plan on
page five. It kind of looks like the levy report in about size four font, but it's just um showing all of your existing debt, your uh this current issue, and then our future funding, which we um if you turn to page or if
you look at page six, the bar chart, our goal is to keep your tax rate for your debt and capital levies nice and level. And then we do have a couple dropdowns um later in the schedule to provide some future capacity. The final attachment is the rating
report and I'll just point out a couple of things on that. Um, in the credit highlights at the bottom of sale day attachments, page seven mentions the district's strong financial track record, its sophisticated management
with robust long-term planning and its economic strength due largely to the presence of the Mayo Clinic. And then um there's some more detailed information throughout their report. And finally, you'll see on our attachments page 10
some metrics that they track with respect to the district. So that is everything that we have. We're certainly um very pleased with the results and we certainly appreciate the opportunity to be of service to the district again. And I am happy to answer
any questions that you might have. I I am a little curious if uh um if you could tell us something about the the entities that place bids for these bonds um if there's any qualifications in order to hold bonds of a public school district or if there's any diligence
done on the purchasers or if we know anything at all about them. I'm just wondering. >> Yeah, so we do see these underwriters very regularly. So, um most often they are um underwriters that are um active
in bidding on municipal bonds. So, um they are required to sign off on a couple of things as part of the proposal form, which I think um the chair and clerk will sign off on tonight, too. But, um otherwise, there's, you know, it's kind of an open bidding process,
but we we do generally see kind of the same group of bidders. um they don't often bid, we don't often have as many as we saw today, but certainly these are all firms that are that we uh recognize and that have been around for a long time.
>> Thanks. >> And I should have mentioned too that we did have rates that had kind of jumped up for a while. Rates have been a little volatile, but they've been coming down over the last week or so. So, the timing worked out pretty well in terms of the the rate that you received today.
And uh what do you attribute the uh increase of of biders to? >> I think there's a lot of demand. There has been a lot of demand and maybe not as much supply in the market lately. So I think they're interested and um generally when there's a little more
unrest in terms of the stock market and that sort of thing, we do see more bidders on municipal bonds because it's a nice safe investment. So >> thank you. Mhm. >> Anything else, board members, before I read the resolution?
>> Director Cook. >> Yeah, as long as you're here. Um because this the the school district strategy is to uh continue to issue bonds that are similar in scope generally on a sort of annual basis to finance some of these long-term uh
facilities projects. Um, is there anything in particular that you would uh counsel the school district to focus on in terms of our finances in order to receive uh favorable results like this and future offerings? >> Absolutely. So, there are some things
that are within your control and other things that are part of their rating methodology that are outside of your control. So, certainly maintaining the level of reserves is something that they focus on. We talk about that a lot. Um, you'll notice in the detailed credit opinion that they mentioned your operating referendum. So, that was a
credit credit positive for you for sure to have that support from your local community and know that you have that additional funding now secured for at least 10 years. Um, so that was positive. And then outside of your control is really the local economy and some of those indicators that you see on
the metrics. And you know, not much you can do about that, but you're you're really strong. So, um I don't think there's any concerns or any worries going forward, but really from a school district perspective, keeping your eye on the um reserves is a is a big deal to
them. >> And if you read the ratings report, um you will notice that that there has been some downgrades with c with some districts in the state recently. And so, we are in a very positive situation here um within our own district and our our
community. So, I'm I'm happy for that. Very true. Yes. >> Thanks again. >> Anything else? All right. Then I will read the resolution. Be it resolved that the school board of independent school district 535 does hereby authorize the
issuance awarding the sale prescribing the form in details providing for the payment of 34,788,694.50 50 cents general obligation facilities maintenance bonds series 2026A and authorizes the execution of documentation relating thereto as
provided in attachment two >> move approval >> second >> has been moved and seconded any final discussion or questions hearing none all those in favor say I opposed the resolution has been approved >> thank you very much
>> thank you very much thank you >> thank We move on to other business. Our ABCD, the current version is available in the agenda item for reference. And upcoming agenda items for June 9th, we have our school and program relocations and changes. Uh that's uh study session. On
June 16th, a prep for action on our social studies curriculum adoption. Our school and program relocations and changes is an action item 2027-28 school calendar proposal and 2026 27 budget proposal. Any other items board members
would like to raise for consideration for a future meeting agenda hearing? None. Our upcoming meeting dates, as I mentioned, June 9th, a study session, June 16th, July 7th, and July 21st are all regular meetings, and they
all begin at 5:30 p.m. And hearing no other business, this meeting is adjourned at 7:12