Independent School District 196
Rosemount-Apple Valley-Eagan Public Schools
Educating our students to reach their full potential
Budget Advisory Council Minutes
6:30 p.m., September 10, 2014
District Office
Present:BudgetAdvisoryCouncilmembersKathyCason,ColleenDolan,JasonElias,MikeGroneberg,Karen
Harrold,GaryKrueger,ChadLaBahn,JeffLittle,ChasMcCready,KrisNelsonandJohnWollersheim;SchoolBoard
memberBobSchutte,directoroffinanceandoperationsJeffSolomonandcoordinatoroffinanceStellaJohnson.
Absent:BudgetAdvisoryCouncilmemberBobLeuth.Guest:MerleWaters,SeniorVicePresident&Senior
InvestmentStrategist,WellsFargoBank.
Co‐chairpersonColleenDolancalledthemeetingtoorderat6:30p.m.
PublicInput–Noonewaspresentintheaudience.
Welcome,Introduction–ThenewBACmember,ChasMcCready,wasintroducedandeveryoneelseintroduced
themselvesandtoldabitabouttheirinvolvementwiththedistrict..
ReviewAgendaandMinutes–TheagendawasreviewedandtheJune11,2014minuteswereapproved.
BudgetAdvisoryCouncilLeadership–ColleenDolanandChadLaBahnvolunteeredtocontinuetoserveasco‐
chairpersonsforthe2014‐15schoolyear.AllmembersvotedinfavortoapproveColleenandChadasco‐
chairpersons.
BeginningofSchoolOverview–Mr.Solomonreportedthatschoolisofftoagreatstart.
AsofSeptember10,enrollmentisupby404studentsoverprojections.Thereare146morekindergartenersthan
expected.Mr.Solomonbelievesthisisduetofreefull‐daykindergartenthatbeganthisyear.Inthepastparents
mayhavesenttheirkindergartnersoutsidethedistrictforotherfull‐daykindergartenoptions.Thereisusuallya
falloffofstudentsbetweenthebeginningofschoolandOctober1whenthedistrictreportstheirofficial
enrollment.TheOctober1enrollmentnumberswillbeusedtofinalizethe2014‐15budget.Againthisyear
elementarystaffmembersrodebuseswithstudentsthefirstcoupleofdaysofschool.
OnFriday,September5neartheendoftheschoolday,therewasabombthreatatSouthviewElementary/Valley
Middle.Studentswereevacuatedandpoliceandfiredepartmentsresponded.Oncetheschoolsweresearchedthe
all–clearwasgivenandstaffwasabletore‐enterthebuildings.Studentsweresenthomeclosetotheregular
dismissaltime.
LevyCertificationProcess–Mr.Solomonhasbegunworkingonthelevycertificationprocess.TheSchoolBoard
willbeaskedtoadoptalevylimitationforPayable2015levyatitsSeptember22regularmeeting.Atthe
December8SchoolBoardmeetingthepublicwillhavetheopportunitytocommentontheproposedlevyandthe
SchoolBoardwillbeaskedtocertifyafinallevyafterinputfromthepublic.
Mr.SolomonreceivedtheinitialrunofthelevycertificationfromthestatepostedSeptember8.Basedonthe
resultsofthefirstrun,therewereafewthingsthatneedtobecorrectedatthestatelevelbeforeMr.Solomoncan
determinethechangeinthelevyamount.Thefirstrunindicatesareductioninthegrosslevyfromlastyear.Mr.
Solomonshareditemswhichcontributedtothereductioninthegrosslevy;theanticipatedendoftheCapital
ProjectsLevyfunds,thereductionofdebtservicelevyduetothepay‐offofbondfundingforEastviewHighSchool,
increaseinthelevyamountforOPEBdebtserviceduetoaplantobeginpayingdowntheprincipleafter6yearsof
payingprimarilyinterestonlyandtheincreaseinboththeReferendumMarketValueandAdjustedNetTax
Capacitywhichindicatestheincreasedpropertywealthofthedistrict.Mr.Solomonsharedsomepotentialoptions
availabletotheSchoolBoardtoreducetheimpactofthegrosslevydecline.TheBACmembersindicatedsupport
ofthestrategiessuggested.
Mr.SolomonbrieflydiscussedhowtheStrategicPlanningFacilitiesandEquipmentTaskForceislookingatthe
long‐termneedsofthedistrictincludingtechnology,safety/security,earlylearning,STEMgoalsandintegration
andequityplans.HesaidthereisarealpossibilitythattheSchoolBoardmaybelookingtoaskabondrelated
questionnextyear.HewillworkwiththeSchoolBoardtominimizeanytaximpactontaxpayers.
OPEBTrustOverview/InvestmentPolicyReview/Discussion–SeniorVicePresident/SeniorInvestment
Manager,MerleWaters,ofWellsFargoBankreviewedtheOPEBclientsummaryshowingsincetheinceptionofthe
Trust(February12,2009),theassethasgrownfrom$37.15millionto$49.79million(September10,2014).The
annualizedreturnfromApril1,2009toAugust31,2014of6.26%isveryclosetothedistrict’stargetreturnof
5.50%.Watersmadearecommendationthatthedistrictmakearevisiontotheinvestmentpolicystatement.He
issuggestingthefollowingchanges:
 ReduceFixedincome‐40%to36%
 IncreaseEquities–40%to41%
 IncreaseOtherinvestments(Realassetsandcomplementarystrategies)‐20%to23%
Thecommitteedecidedtowaituntilthedistrictreceivesthenextactuarialreportbeforemakingadecisiononthe
revisionstotheinvestmentpolicystatement.
Mr.SolomonremindedtheBACoftheguidelinesregardingunderwhatcircumstancesthedistrictcandrawfrom
thetrust.
 IfSchoolBoardchoosesandtheyfeelitisnecessarytheycanaccessattheirdiscretion
 Trustisinexcessof100%fundedfortheliability(EstimatedtobefullyfundedforFY14‐15andthedistrict
planstodraw$1.4milliontoaddtothegeneralfund)
 Thegeneralfundbalanceisdepleted
2013‐14AuditUpdate‐Ms.Johnsonsharedapreliminaryauditsummary.Basedonthepreliminaryauditthe
generalandcommunityservicefundsperformedbetterthanexpected.Thesavingsinthegeneralfundwasdueto
about$2.3millioninadditionalrevenueand$3.6millioninexpendituresavings.Inthefoodservicefundrevenues
wereslightlyhigherthanbudgetedand,duetohigherfoodandmilkcost,expenditureswere$463,629higherthan
budgeted.Ms.Johnsoninformedthecouncilmembersthatadraftcopyofthedistrict’s2013‐14Comprehensive
AnnualFinancialReportwillbepresentedtotheSchoolBoardattheOctober27meetingwithapprovalexpectedat
theNovember10meeting.Mr.SolomonthankedMs.Johnsonandherstaffforthegoodjobtheydidpreparingfor
theaudit.Duetoherandherstaff’sworkpreparingthe2013ComprehensiveAnnualFinanceReport,thedistrict
receivedaCertificateofExcellencefromAssociationofSchoolBusinessOfficialsforthe12thyearinarow.
FinancialPlan–Mr.Solomonreviewedthreeversionsofthefinancialplan.Thefirstwastheplandevelopedlast
winterandspringprojectinganestimated$4millionsavingsfrombudgetanda$10.7millionuseoffundbalance.
Thisplanalsoshowednobudgetadjustmentsneededfor2014‐15,butanticipatedbudgetadjustmentof$9.75
millionin2015‐16and$14.5millionin2016.17.Thesecondplanwasupdatedtoreflecttheslightlybetter‐to‐
budgetperformancein2013‐14andindicatespossiblefuturebudgetadjustmentsof$5millionin2015‐16and
$17.5millionin2016‐17.Thethirdplanshowstheanticipatedadditionalspecialeducationandintegrating
revenueofapproximately$700,000,resultinginpossiblefuturebudgetadjustmentsof$3millionin2015‐16and
$18.75millionin2016‐17.
AtthenextBACmeetingthecommitteewillbeginworkingontheassumptionsforthenewfinancialplan.
Adjournment‐Themeetingadjournedat8:30p.m.ThenextmeetingwillbeNovember12,2014.