Independent School District 196
Rosemount-Apple Valley-Eagan Public Schools
Educating our students to reach their full potential
Budget Advisory Council Minutes
6:15 p.m. October 29, 2014
DistrictOffice
Present:BudgetAdvisoryCouncilmembersKathyCason,JasonElias,MichaelGroneberg,GaryKrueger,Chad
LaBahn,JeffLittle,ChasMcCready,KrisNelsonandJohnWollersheim;SchoolBoardmemberGaryHuuskoand
directoroffinanceandoperations,JeffSolomon.Absent:BudgetAdvisoryCouncilmembers,ColleenDolan,Karen
HarroldandBobLeuth.Guests:DesireeFlemingandJoeBertram.
Co‐chairChadLaBahncalledthemeetingtoorderat6:15p.m.
PublicInput–District196financialsystemssupervisor,DesireeFlemingandcontroller,JoeBertramintroduced
themselves.
ReviewAgendaandMinutes‐TheagendaandSeptember10,2014minuteswereapproved.
AuditReview‐Fiscal2014‐Acopyoftheschoolboardexhibit,summaryofthe2013‐14AnnualFinanceReport
andmanagementreport,weregiventoBACmembersfortheirreview.Mr.SolomonsharedthatJackieHuegel
ofMMKRpresentedanoverviewofthemanagementreportduringaSchoolBoardAuditandFinanceCommittee
meetingonOctober27.Themanagementreportisanexecutivereviewofthedistrictfinancialpositionandthe
auditfindings,inadditiontoanoverviewofthedistrictsperformanceinrelationtootherdistrictsinthestate.
TheSchoolBoardreviewedtheComprehensiveAnnualFinancialReport(CAFR)atitsOctober27regularboard
meetingandisscheduledtoapprovetheCAFRatitsNovember12regularmeeting.TheCAFRsummarizeskey
financialresultsoftheyearandexplainsdifferencesbetweentheprojectedbudgetandactualrevenuesand
expenditures.Mr.SolomonreportedthatthedistrictreceivedafavorableauditfromMMKRwithnodeficienciesin
theDistrict’sinternalcontroloverfinancialreportingandnoinstancesofnoncompliance.Onesignificant
deficiencywasreportedwithregardstomajorfederalprogramsnothavingadequateinternalcontolsinplaceto
assuretheDistrictwasnotcontractingforgoodsandserviceswithpartiesthataresuspendedordebarredfrom
participatingincontractsinvolvingtheexpenditureoffederalfunds.Extra‐curricularstudentactivitieswerealso
auditedwithacoupleoffindingsrelatedtoinappropriatecashdisbursements,approvalofdisbursementsand
receiptdocumentation.Thefinancedepartmentwillcontinuetoworkwithschoolstomakesuretheyunderstand
theprocedureforstudentactivityaccountsandwillconductrandomauditsoftheaccountsthroughouttheyear.
SincetheimplementationoftheFeePaysystemtheDistricthassignificantlyreducedtheamountofcashbeing
collectedatschools.Whilethereisstilloftenlackofsegregationofdutiesoverthecollectionofthesereceipts,our
auditorsfeeltheFeePaysystemhasmitigatedthecashhandlingrisktothepointthattheynolongerconsideritto
beasignificantdeficiency.Mr.Solomonreportedthat85%ofcashtransactionsarebeinghandledthrough
FeePay.Onerecommendationwasmadebytheauditorregardingelectronicpaymentofclaims(i.e.ACH).
Minnesotastatutesrequirethatwhenaschooldistrictissuesacheckforpaymentthereisadeclarationontheback
ofthecheckabovetheendorsementlinestatingtheclaimisjustandcorrectandthatnopartofithasbeenpaid.
Thiscannotbeaccomplishedifpayinganinvoicebycreditcardorelectronicfundstransfer.Theauditor
recommendsthattheDistrictexamineitspurchasingprocess,andassurethatMinnesotastatutoryrequirements
arebeingcompliedwithforallvendorclaimspaid.
Onpage7ofthemanagementreport,Solomonpointedoutthegraphshowingthefundbalanceasapercentageof
operatingexpendituresstate‐wideandforourdistrict.Overthecourseofthelast10yearsthedistricthashada
fairlystablefundbalance.Duetotheuseoffundbalancelastyeartheratiochangedfrom15.2percentin2013to
11.2attheendofthecurrentfiscalyear.Pages8and9showrevenuesandexpendituresonaperpupilbasis;
District196typicallyspendslessperADMthantheaverageMinnesotametroareaschooldistrict.Ashereviewed
thecashandinvestmentsonpages10and11,Mr.Solomonremindedthecommitteeoftheaidpaymentdelayand
propertytaxshiftthatoccurredduringtheeconomicdownturn.Cashandinvestmentswerenear$0inJuneof
2012buthaverisentojustover$60millionattheendJuneof2014.
Mr.SolomonrecommendedtheBACmembersreadthesummaryofthe2013‐14annualfinancialreportforarecap
ofthedistrict’sfinancialreports.
Mr.SolomonrecognizedStellaJohnson,CoordinatorofFinance,andherfinancedepartmentteamforthe
exceptionalworktheyprovidedfortheaudit.
EnrollmentReport/Forecast–Enrollmentprojectionsfor2015‐16through2019‐20willbepresentedtothe
SchoolBoardatitsNovember10meeting.Thedistricthasusedavarietyofmethodstoforecastenrollment.The
enrollmentcommitteeischoosingtousethecohortmethodforforecastingenrollmentwhichseemstobethemost
accurateforourdistrictinourcurrentpatternoffairlystablestudentnumbers.TheEnPromodelusesthe
weighted4‐yrcohortsurvivalratiowithdistrictdefinedkindergartennumbers.Thesenumbersarethefirstcritical
assumptionusedinthefive–yearfinancialprojection.
Solomonsharedtheprojectedenrollmentspreadsheetfor2015‐16comparingthecensusmodelresultstoEnPro
modelresults.Thecensusmodelisindicatingatotalenrollmentof27,187includingECSE,whiletheEnPromodel
calculates27,578.TheenrollmentcommitteeisleaningtowardstheEnPromodelatthistime.
FinancialPlanParameters–TheBACwasgivenlastyear’sminutesfromitsNovembermeetingindicatingtheir
suggestionsforbudgetassumptionsandbaseplanassumptionsusedforfinancialplanningandaskedbyMr.
SolomontomakeanysuggestionforchangetotheassumptionsthatcanbegiventotheSchoolBoard.The
suggestionswere:
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A1.5%‐3%increase(merit)fromcurrentbasesalary&benefits.
HealthcareisvolatileduetothenewAffordableCareAct.
Moreincentivestohaveemployeeschoosethehighdeductibleinsuranceplan/HSA/wellnessprograms.
5%‐8.5%costestimateforfutureyearsofhealthinsuranceseemsaccurate.(BeginningSeptember1,2012
thedistrictswitchedtoself‐fundedinsurance.)
Generalinflationtrendof2%seemedacceptable.
Nocommentonutilityandfuelcosts.Rightnowthedistrictusesmonthlyhistoricaldata.
Technologyandsecurityupgradescouldimpactfutureexpendituretrends.
StrategicFacilitiesandEquipmentTaskForceFocusGroups‐Mr.Solomonsharedthefocusofthetaskforce
andsomeofthetopicstheyhavebeenresearching.JulieOlson,MarkParrandSolomonco‐chairthetaskforceand
arejoinedbyelementaryandsecondaryprincipalsalongwithotheradministratorsfromthedistrict.Ithasbeen
10yearssincethedistricthastakenagoodlookatthefacilityandequipmentneedsofthedistrict.Theyhave
lookedatspaceneeds,safetyandsecurityissuesandtechnologyinitiatives.
TogatherfeedbackfromthecommunityandprovideinputtohelpshapetherecommendationtotheSchoolBoard,
thetaskforceplanstoholdfocusgroupsonDecember1,2and4andisaskingtheBACiftheywouldbewillingto
actasfacilitatorsandrecorders.MostmembersindicatedtheywouldbewillingtovolunteerandKathyCasonwill
arrangeadateforfocusgrouptrainingandsetupanonlinesign‐upformembers.TheLegislativeAdvisory
CouncilandCommunityEducationAdvisoryCouncilmemberswillalsobeaskediftheywouldbewillingtohelpon
thoseevenings.
2014(Payable2015)PropertyTaxLevyLimitation–Mr.SolomonsharedacopyoftheSchoolBoardexhibitand
PowerPointslidesfromtheSeptember22boardmeeting.OnSeptember22,theSchoolBoardadoptedatotal
proposedpropertytaxlevyatthestatemaximumlevylimitation.Theproposedfinal2014levy(payable2015)at
thattimewas$78,262,281.09,a0.03%increasefromlastyear.AttheDecember8SchoolBoardmeetingthe
publicwillhavetheopportunitytoprovideinputtotheSchoolBoardregardingthelevy.Theboardwillmostlikely
votetoapprovetherevisedlevyamountatthemeeting.
OPEBTrustandInvestmentUpdate–AnupdateoftheOPEBTrustperformancewasgiventothemembers.The
valueofthetrustasofSeptember30,2014was$48,957,460.65.
Other‐Acopyof“FinancingEducationinMinnesota2014‐15”wasgiventothemembers.
NextMeeting‐January14,2015
Adjournment‐Themeetingadjournedat8:02p.m.