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 11, 2013
District Office
Present: Budget Advisory Council members Kathy Cason, Colleen Dolan, Mike Groneberg, Karen
Harrold, Gary Krueger, Chad LaBahn, Bob Leuth, Jeff Little, and John Wollersheim; School Board
member Gary Huusko, director of finance and operations Jeff Solomon and coordinator of finance
Stella Johnson. Absent: Budget Advisory Council members Jason Elias, Bill Gorton, and Kris
Nelson. Guest: Merle Waters, Senior Vice President & Senior Investment Strategist, Wells Fargo
Bank.
Co-Chairperson Colleen Dolan called the meeting to order at 6:30 p.m.
Public Input –No one was present in the audience.
Welcome, Introduction – The new BAC member, Jeff Little, was introduced and Mr. Solomon
asked everyone else to introduce themselves and tell a bit about their involvement in District 196.
Review Agenda and Minutes – The agenda was reviewed and the OPEB Trust Overview was
moved to agenda item 4. The June 12, 2013 minutes were approved.
OPEB Trust Overview – Mr. Solomon began by reviewing what the OPEB Trust is and why the
district decided to sell bonds to fund the revocable trust. Senior Vice President/Senior Investment
Manager, Merle Waters, of Wells Fargo Bank reviewed the investment objective (balanced – with
an income bias), risk tolerance (moderate) and current target allocation of the district’s Revocable
OPEB Trust. The trust’s current asset allocation is consistent with those stated in the Trust’s
investment policy statement. Since the inception of the Trust (February 12, 2009), the asset has
grown from $37.15 million to $45.4 million (September 10, 2013). Mr. Waters reviewed the
executive summary highlights that included the rebalancing of the portfolio in August, along with
the performance of the trust. The annualized return from April 1, 2009 to July 31, 2013 of 5.86% is
very close to the district’s target return of 5.50 %. As of September 10 our YTD return is closer to
7.35% due to a good first couple of weeks in September. Mr. Waters also shared the Wells Fargo
OPEB client summary listing the 13 metro districts Wells Fargo works with managing their OPEB
Trusts. It is a good way to see how we compare with other districts. Mr. Waters reported that
after receiving approval from Wells Fargo legal and compliance departments, he plans to build in
an allocation of 3%-4% in commercial real estate at the end of September. The dividend yield on
that fund is 5%-5.5%, paid quarterly, and is a way to capture more income. The funds will come
out of fixed income.
Mr. Solomon reminded the BAC of the guidelines regarding under what circumstances the district
can draw from the trust.
 If School Board chooses and they feel it is necessary they can access at their discretion

Trust is in excess of 100% funded for the liability (Estimated to be fully funded for FY 14-15 and the

district plans to draw $1.4-$1.5 million to add to the general fund)
The general fund balance is depleted
Budget Advisory Council Leadership – Colleen Dolan and Chad LaBahn volunteered to continue to
serve as co-chairpersons for the 2013-14 school year. All members voted in favor to approve
Colleen and Chad as co-chairpersons
Beginning of School Overview – Mr. Solomon reported that school is off to a great start. District
directors visited each site on the first day of school and were happy to be a part of the excitement.
The coordinator of transportation, Randy Dukek, met with elementary principals at the end of last
school year and suggested a “start of school activity” where a teacher would ride the bus with
students the first few days of school year to help the students feel more comfortable and help out
the bus drivers. Mr. Solomon witnessed this at Echo Park Elementary. In addition to showing
parents our concern for safety and efficiency, the teaching staff came away with a much better
appreciation for all the work bus drivers and chaperones do to get the right students on and off the
bus safely each day. With a few tweaks to the process, the district plans to continue this activity
next year.
John Wollersheim shared that at Rosemount High School to help the 9th graders experience a
smooth transition to high school they begin with an orientation in August and an open house the
Tuesday before school starts. On the first day of school RHS has only 9th graders in the morning.
The 9th graders are greeted by teachers at the school as the buses arrive, and then are brought to
an assembly in the gym and finally to their homeroom to pick up schedules and attend mini
classes. At 11:00 the 10th -12th graders arrive and they follow the same process. He mentioned
how this year the schools will be playing a large role in getting the word out to parents about the
levy referendum on November 5.
Referendum Update – Mr. Solomon shared several handouts and a PowerPoint presentation
regarding the levy referendum question scheduled to be on the November 5 ballot. This summer
the district hired Decision Resources, Inc. to conduct a resident survey regarding the general mood
of the community towards the school district and our performance. Also questions were asked
about the general financial support of the district and if there would be any support of increasing
local financial support. The results indicate our community is highly supportive of the school
district and thinks we are doing a great job, especially our teachers (87% rated the performance of
the teachers as excellent or good.) When asked about renewing the current level of taxation they
were very supportive, but the level of positive support for additional taxation fell off fairly quickly.
Decision Resources indicated the district could look at the likelihood of success with an increase of
$4-$8 million to the levy total. The five year plan in June 2013 showed we were in need of $18
million in additional support. After taking the survey results into consideration the School Board
made the decision to ask for $10 million in additional support. Mr. Solomon reviewed a handout
that will be used with the community to show the survey results, why we need a levy vote, the net
cost and what happens of the levy is approved and the projected budget cuts needed for 2014-14
and 2015-16 if not approved. The net tax impact of revoking the existing levy and replacing it with
the new levy would be approximately $15 per month to the owner of the average- value home in
the district which is $225,000.
Because the survey indicated an overwhelming support of our teaching staff, the School Board
decided to continue to build on those relationships by asking the schools to help them with the levy
vote information campaign. Schools have been asked to inform their employees, site councils and
advisory boards about the levy. In addition, schools will hold parent meetings, hand out flyers and
book marks at events and have information boards displayed in their building. By state statute the
district is unable to advocate for a YES vote but is only able to provide information as to why a
levy vote, the need and outcomes with a yes or no vote.
There is parent/community group (Unite 196) forming to help advocate for a YES vote.
Levy Certification Process –Mr. Solomon has begun working on the levy certification process. The
School Board will be asked to adopt a levy limitation for Payable 2014 levy at its September 23
regular meeting. At the December 9 School Board meeting the public will have the opportunity to
comment on the proposed levy and the School Board will be asked to certify a final levy after input
from the public.
Mr. Solomon received the initial run of the levy certification from the state on September 11. At
this time there are a few things that need to be corrected at the state level before Mr. Solomon can
determine the change in the levy amount. Based on the first run it does look like there will be a
reduction in the gross levy from last year. If the levy referendum question is approved that
amount would be added to the levy amount.
2012-13 Audit Update and Financial Plan – Mr. Solomon shared the pre-audit close and impact on
financial plan document he presented to the School Board at the August 19 special board meeting.
Based on the pre-audit close information we used $1 million in fund balance. The district had
budgeted to use $9 million of fund balance. The savings was due to about $1 million in additional
revenue and $7 million in expenditure savings. Ms. Johnson informed the council members that a
draft copy of the district’s 2012-13 Comprehensive Annual Financial Report will be presented to
the School Board at the October 28 meeting with approval expected at the November 12 meeting.
Mr. Solomon thanked Ms. Johnson and her staff for the good job they did preparing for the audit.
The district is anticipating a clean audit with no significant findings. In the past we have been
cited for cash handing issues but due to the fact that last year the district began using the new
FeePay option this has reduced cash in the buildings and greatly reduce our exposure to cash
handling errors. The use of FeePay through food service has increased 300% from FY11-12 to
FY12-13. At the high school level 80% of fees are collected through FeePay while 30% of fees at
the middle schools are paid through FeePay. At the elementary level the district has begun a beta
test at a three schools to collect field trip and club fees. The district plans to focus on collecting
admissions through FeePay within the next couple of years to further reduce cash handling at the
schools.
Mr. Solomon reviewed the financial plan with and without new levy money. Without additional
levy money the district anticipates budget adjustments of $10 million in 2014-15 and $20 million
in 2015-16. With the additional referendum money the adjustments would be $4 million and $12
million in those years. If the district put off adjustments in 2014-15 (assuming new levy money
and no additional money from the state) adjustments in 2015-16 are estimated to be $19.75
million.
Adjournment - The meeting adjourned at 8:30p.m. The next meeting will be November 13, 2013.