Jun 26, 2023 Special Board Meeting

[1. Call to Order Open Session in the Board Room at Little Elm ISD Administration Building on 400 Lobo Lane, Little Elm, Texas 75068]

[00:00:03]

>> IT'S STILL 05:30 PM.

WE GOT THE MICS WORKING NOW, I'M STARTING TO WORK WE WILL GO INTO INTRODUCTION AND ROLL CALL. MS. FLORES.

[2. Introduction and Roll Call]

>> PRESENT [INAUDIBLE]

>> THANK YOU, MA'AM. I WILL NOW GO INTO THE BUDGET WORKSHOPS.

MS. ADAMS, PLEASE [OVERLAPPING] TAKE IT AWAY.

>> IS MY MIC WORKING? I THINK IT IS HERE AND I GO.

ALL RIGHT, THEY WEREN'T SURE. WELL, THANK YOU ALL FOR COMING OUT A LITTLE BIT EARLY.

[3. Budget Workshop Presenter: Shay Adams]

AS YOU ALL KNOW, IT'S BEEN AN UNUSUAL SPRING AND I APPRECIATE YOU GIVING ME THE TIME TO PREPARE THAT.

BECAUSE THERE WAS GOING TO BE SUCH A LONG PERIOD BETWEEN US MEETING, I WANTED THE BOARD TO BE ABLE TO HAVE AN OPPORTUNITY PRIOR TO THE BUDGET HEARING THAT WE HAVE AT SIX O'CLOCK.

I WILL GO OVER ALL THE TYPICAL INFORMATION THAT I GO OVER THERE.

I'M GOING TO SHOOT THROUGH IT REALLY QUICKLY HERE.

I WANT YOU TO STOP ME IF YOU HAVE ANY QUESTIONS ABOUT THAT.

BUT SPECIFICALLY, THERE'S SOME INFORMATION AT THE END THAT JUST SUMMARIZES WHAT WE'VE BEEN DOING OVER THE LAST SIX MONTHS THAT I WANTED TO REFRESH THE BOARD'S MEMORY AND REMIND YOU OF BECAUSE LATER TONIGHT AFTER THE BUDGET HEARING AT SIX O'CLOCK, DURING THE 6:30 MEETING, WE WILL ASK YOU TO ADOPT THE BUDGET.

AND SO I WOULD WANT TO GIVE YOU AN OPPORTUNITY DURING THIS WORKSHOP TO ASK QUESTIONS, AND THEN OBVIOUSLY YOU HAVE AN OPPORTUNITY DURING THE HEARING TO ASK QUESTIONS, BUT IT'S MORE SPECIFICALLY FOR OUR CITIZENS.

AS ALWAYS, WE WILL START AND GO THROUGH OUR STRATEGIC FOCUS AND MISSION AND SO FORTH.

I EMAILED YOU THIS NOTICE ON MAY 31ST THAT I HAVE SUCH ISSUE WITH NOT BECAUSE IT DOESN'T TELL A STORY, BUT BECAUSE IT DOESN'T TELL THE STORY THAT PEOPLE WANT IT TO TELL.

BY PEOPLE, I MEAN THE LEGISLATURE ORDERS THAT WE PUT THIS IN AS A TRUTH IN TAXATION NOTICE, BUT IT TENDS TO CONFUSE PEOPLE MORE THAN IT DOES CLARIFY, HOWEVER, IT IS REQUIRED.

SO THAT WAS PUBLISHED ON JUNE 3RD AND YOU ARE GIVEN A COPY OF THAT ON MAY THE 31ST.

I THINK YOU'VE ALL FOLLOW THAT AND I HAVEN'T REALLY HAD ANY QUESTIONS FROM YOU, BUT I JUST LETTING YOU KNOW THAT THAT BOX WAS CHECKED.

ON THE SAME DAY THAT WE DO THAT, WE ARE TO PUT ON OUR WEBSITE OUR PROPOSED BUDGET FOR THE 2023-'24 SCHOOL YEAR AND FOR BOTH PIECES OF OUR TAX RATE, THE MAINTENANCE OPERATION AND THE DEBT SERVICE.

THIS ONE ALSO IS JUST REALLY I'M NOT SURE WHAT PURPOSE IT'S SUPPOSED TO SERVE, BUT IT'S A COMPLIANCE BOX THAT WE HAVE TO CHECK.

SO YOU'LL NOTICE ON THAT THAT WE'RE PROPOSING AN ANNUAL BUDGET, WHICH MAKES SENSE.

BUT WE COMPARE IT TO OUR SPENDING THROUGH THE TIME THAT WE PUBLISH IT.

AT THE TIME THAT WE PUBLISHED THIS, WE WERE STILL A MONTH AWAY FROM FINISHING THE FISCAL YEAR.

AS I STAND HERE TODAY, WE STILL HAVEN'T FINISHED THE FISCAL YEAR, BUT WE HAVE TO COMPARE THE EXPENDITURES THAT HAVE ACTUALLY OCCURRED TO THE EXPENDITURES PER FUNCTION THAT ARE GOING TO OCCUR.

WE'VE COMPLIED AND WE'VE PROVIDED THAT INFORMATION.

I'M JUST NOT QUITE SURE HOW HELPFUL IT IS TO ANYONE, BUT WE'RE REQUIRED TO DO THAT IN SUCH FORMAT, AND SO WE HAVE.

BUT AS A REMINDER TO YOU, BUT MOST SPECIFICALLY TONIGHT DURING THE HEARING TO THE PUBLIC, THAT THIS IS NOT A CULMINATION OF A ONE MEETING WENT AND DONE BY ANY MEANS THAT WE AS AN ADMINISTRATION MADE THROUGHOUT THE YEAR AND REALLY START DEVELOPMENT OF THE NEXT YEAR'S BUDGET WITHIN A COUPLE OF MONTHS OF WHENEVER OUR FISCAL YEAR BEGINS.

WE WORKED ON THAT THROUGHOUT THE FALL AND THEN BEGAN WORKING WITH THE BOARD TYPICALLY IN EITHER DECEMBER OR JANUARY THIS YEAR.

IT WAS JANUARY THAT WE BEGAN WORKING WITH THE BOARD ON WHAT OUR FORECASTS LOOKS LIKE.

THIS HAS BEEN A MOST FRUSTRATING YEAR IN MANY WAYS.

BUT ONE OF THOSE FRUSTRATIONS IS THAT WE HAD REALLY HOPED AND EXPECTED THAT WE WOULD HAVE SOME ASSISTANCE FROM LEGISLATIVE CHANGES.

AS YOU KNOW, THAT DID NOT OCCUR AND IT HAS NOT OCCURRED IN THIS SPECIAL SESSIONS AND IS NOT LIKELY GOING TO OCCUR.

IF IT DOES, CERTAINLY NOT GOING TO BE IN TIME FOR US TO HAVE AN ASSISTANCE IN 2023-'24 TO OFFSET NEARLY 18% INFLATION OVER THE LAST FOUR YEARS.

BUT AS SCHOOLS DO, WE ARE RESILIENT OR FOCUSES ON SERVING OUR STUDENTS, AND SO WE INDIVIDUALLY EACH FIGURE OUT OUR PATH AND WHAT OUR WAY IS GOING TO BE AND THAT'S WHAT WE'VE BEEN TALKING ABOUT SINCE JANUARY.

SINCE THEY CALLED THE SESSION TO ORDER, WE'VE TALKED ABOUT THE POSSIBILITY OF THEM DISTRIBUTING $30 BILLION IN SOME WAY TO HELP SCHOOL DISTRICTS.

BUT WE HAVE NOT BUILT A BUDGET THAT WAS DEPENDENT ON THAT.

WE BUILT A BUDGET THAT WOULD BENEFIT GREATLY FROM THAT, AND WE'LL HIT ON SOME OF THOSE HIGHLIGHTS.

BUT SPECIFICALLY, THE BOARD TOOK UPON ITS OWN ALONG WITH ADMINISTRATION'S RECOMMENDATIONS, BUT REALLY TOOK ALONG WITH ITS OWN FINANCIAL SUSTAINABILITY AND ITS OWN FINANCIAL PLANNING OF HOW WE WOULD APPROACH EACH OF THE HURDLES THAT WE HAVE THIS YEAR.

[00:05:03]

OUR FUTURE BUDGETS ARE DEPENDENT ON THAT, OURS AND EVERYONE ELSE IN TEXAS.

SO I WANT TO BE VERY CLEAR ABOUT THAT.

BUT BEGINNING IN JANUARY AND THROUGHOUT EACH ONE OF THOSE BUDGET WORKSHOPS THAT WE HAD AT LEAST ONCE A MONTH AND SOME OF THEM WE HAD MORE THAN ONCE A MONTH, WE WALKED THROUGH THE MAJOR CHANGES TO OUR 2022-'23 BUDGET.

WHAT WOULD LOOK DIFFERENT FOR THAT IN 2023-'24? I WOULD SAY THE MOST SIGNIFICANT THINGS THAT WOULD LOOK DIFFERENT FOR THAT ARE THE OPENING OF SELLERS.

WE HAD SOME ADDITIONAL STAFF FOR THAT.

WE HAVE ADDITIONAL STAFF FOR THE SCHEDULE CHANGES THAT WERE APPROVED FOR THE HIGH SCHOOL AND WE HAVE NECESSARY INFLATIONARY MEASURES FOR OUR NON-PERSONNEL, WE INCREASED ABOUT 8% ACROSS THE BOARD FOR OUR NON PERSONNEL EXPENDITURES.

THAT DOESN'T QUITE COVER SOME OF THEM AND IS STILL REQUIRED SOME CUTS ON OUR PART, BUT IT IS CERTAINLY APPRECIATED AND MUCH NEEDED.

THEN WE HAVE A 3% INCREASE THAT WE PASSED ALONG TO OUR RECOMMENDING, IF YOU APPROVE IT OR NOT THAT WE WOULD PASS ALONG TO OUR STAFF.

IN ADDITION TO THAT, WE ADDRESSED A MUCH NEEDED ADJUSTMENT FOR OUR SCALES THAT PAID $15 AN HOUR AND BELOW, SO THAT ANYONE THAT MADE BELOW $15 AN HOUR WOULD BE ADJUSTED AT LEAST TO $15 AN HOUR.

I WOULD THINK THAT THOSE WERE ALL PROBABLY THE MOST SIGNIFICANT IMPACTS ON THE EXPENDITURE SIDE OF THINGS.

THEN THE MOST SIGNIFICANT IMPACT ON THE REVENUE SIDE IS THAT OUR STUDENT GROWTH IS SLOWER STILL THAN WHAT WE HAD ORIGINALLY EXPECTED BY OUR DEMOGRAPHER.

SO WE'VE MADE ADJUSTMENTS FOR THAT AS WELL.

AS I'VE SHARED BEFORE WITH YOU, THIS IS WHAT STATE FUNDING LOOKS LIKE.

THIS IS ACTUALLY A SIMPLIFIED VERSION, I THINK.

SO WE WON'T ATTEMPT TO UNTANGLE ALL OF THAT, BUT JUST THE HIGHLIGHTS OF THAT, THAT WE WILL TRY TO MAKE SURE THAT WE ARE INTERESTED CITIZENS AND CERTAINLY THE BOARD AND STAFF WALK AWAY WITH THE FACT THAT THE WAY THAT OUR FUNDING FORMULAS ARE WRITTEN, THE LEGISLATION THAT HAS PASSED IN THE PAST.

HOW THAT HAS REALLY WORDED ITSELF INTO THAT COMPLICATED MACHINE COMES DOWN TO A PRETTY SIMPLISTIC ILLUSTRATION, AND THAT GIVEN SOME OF THE ELEMENTS THAT ARE INCLUDED IN THE STATE FUNDING FORMULA, THAT IS THE SAME FOR ALL 1,200 ENTITIES THAT ARE SUPPORTED BY IT.

OUR ENROLLMENT OF OUR STUDENTS, ACTUALLY, OUR ATTENDANCE OF OUR STUDENTS, WHAT SPECIAL NEEDS THEY MAY HAVE, WHAT BACKGROUNDS THAT THEY COME FROM, AND WHAT OUR PROPERTY TAXATION ABILITY IS BASED ON OUR PROPERTY TAX VALUES WITHIN THE DISTRICT.

ALL ARE MIXED TOGETHER TO DETERMINE THE SIZE OF OUR GLASS.

THE SIDES OF OUR GLASS IS HOW MUCH REVENUE WE'RE GOING TO RECEIVE THROUGH STATE AND LOCAL FUNDING.

IT DOES NOT CHANGE UNLESS LEGISLATION CHANGES, THE SIZE OF OUR GLASS DOES NOT CHANGE EXCEPT FOR ONE THING AND THAT IS IF WE HAVE MORE STUDENTS.

IF WE HAVE MORE STUDENTS, WE GET MORE MONEY.

IF WE DO NOT HAVE MORE STUDENTS, WE MAY COLLECT MORE MONEY FROM OUR PROPERTY TAXPAYERS, BUT WE DON'T GET TO KEEP MORE MONEY.

IT JUST MEANS THE STATE WILL PAY US LESS, AND SO WE'LL WALK THROUGH SOME PIECES OF THAT.

THE STATE FUNDING TEMPLATE AS IS REFERRED TO QUITE OFTEN, IS THE THE TOOL THAT WE USE TO ESTIMATE HOW MUCH OUR FUNDING IS GOING TO BE.

AS WE PROJECT FOR A YEAR SUCH AS 2023-'24, WE OPERATE IN NEW ADOPTED BUDGET BASED ON WHAT OUR PROJECTIONS ARE.

BUT THEN AS THE YEAR MOVES ALONG, WE ENTER NEW INFORMATION, ACTUAL INFORMATION AS IT BECOMES AVAILABLE THROUGHOUT THE YEAR TO SEE HOW CLEAR OUR CRYSTAL BALL WAS.

WHEN WE DO THAT, WE REPORT THAT TO YOU AND INTERIM FINANCIAL STATEMENTS AND AN INTERIM BUDGET REPORTS.

THAT'S WHERE WE KIND OF SEE HOW DID WE DO, HOW DID OUR GUESSES ON WHAT OUR PROPERTY VALUES ARE GOING TO BE? HOW OUR GUESSES ON HOW MANY STUDENTS ARE GOING TO COME TO THE DISTRICT, HOW OFTEN THEY'RE GOING TO COME TO SCHOOL, AND WHAT SERVICES THEY'RE GOING TO NEED.

THAT PRECISION OF ESTIMATING THE FUTURE, THE STUDENT AVERAGE DAILY ATTENDANCE ALONG WITH THE PROPERTY VALUE GROWTH, IS REALLY THE PART THAT MATTERS MOST.

IF YOU'LL RECALL BACK IN FEBRUARY, WE HAD OUR DEMOGRAPHER COME AND PRESENT TO YOU DIRECTLY BECAUSE THERE HAD BEEN SUCH A CHANGE IN THE ECONOMY THAT HAD CREATED BUBBLES THROUGHOUT THE STATE AND THE NATION ON THE NUMBER OF STUDENTS THAT ARE MOVING IN AND THE HOUSING CLOSES THAT WE'VE HAD AND SO FORTH.

SO YOU RECEIVE THAT UPDATE.

ONE THING I DO WANT TO POINT OUT TO YOU THAT AS YOU'VE SEEN, THIS LINE CONTINUED TO INCREASE AS OUR TOP PROPERTY TAX VALUES HAVE GROWN.

AGAIN, AS THESE GROW, OUR GLASS DOESN'T GROW.

IT JUST CHANGES WHERE THE MONEY COMES FROM.

BUT RIGHT NOW OUR PRELIMINARY CERTIFIED VALUE THAT WE RECEIVED ON APRIL THE 30TH IS $10 BILLION UP FROM LAST YEAR $7.7 BILLION, WHICH WAS UP SIGNIFICANTLY FROM THE PREVIOUS YEAR $6.3 BILLION.

THEN YOU CAN READ THE CHART AND SO FORTH, IT'S UNPRECEDENTED.

SO WE OBVIOUSLY COLLECT MORE MONEY HERE IN THE DISTRICT.

[00:10:02]

PART OF OUR HEARING TONIGHT, ONE OF THE BIGGEST PIECES THAT I WILL COVER IS HOW THAT CULMINATES INTO A BUDGET FOR LITTLE ELM ISD.

AGAIN, THE GLASS DOESN'T GROW.

IT JUST CHANGES WHO PUTS THE MONEY IN.

IF YOU ENVISION THAT THE PROPERTY TAX VALUE GOES IN FIRST AND OUR REVENUE IS COLLECTED BASED ON THOSE PROPERTY TAX VALUES, FOR 2023-'24, WE ARE GOING TO COLLECT 92% OF THAT HERE IN THE DISTRICT.

SO WHEN WE CALCULATE HOW MUCH OUR GLASS IS GOING TO BE BASED ON THE FUNDING FORMULAS FROM THE STATE, THEN 92% OF THAT IS EARNED HERE IN THE DISTRICT, AND 8% OF THAT WILL BE PAID BY THE STATE.

IN ADDITION, UNLESS THERE ARE CHANGES TO THE FORMULAS BASED ON CURRENT LAW, WE WILL PAY $5.3 MILLION IN RECAPTURE.

THAT IS UP FROM $1.2 MILLION THIS YEAR, WHICH WAS OVER DOUBLE WHAT WE PAY THE PREVIOUS YEAR.

SO AS OUR PROPERTY VALUES CONTINUE TO GROW BUT OUR STUDENT BASE DOESN'T, OUR RECAPTURE GROWS BECAUSE WE BECOME WEALTHIER PER STUDENT.

JUST AS A COMPARISON, I LEFT ON THE SCREEN FOR YOU THE 2022-'23 DISTRIBUTION.

THAT REALLY ENDED UP BEING CLOSER TO 80, 20 AND WE PAID RECAPTURE OF ABOUT 1.2.

ACTUALLY, I'M SORRY, THIS IS 2017-'18, THAT'S ACCURATE THAT WE WERE PAYING 70%.

THAT'S AN ERROR ON MY PART.

FIVE YEARS AGO WE WERE PAYING 70% AND THE STATE WAS PAYING 30%.

THIS NOW SHIFTED TO 92% AND 8%.

BUT THEN WE WENT BACK 10 YEARS, ALMOST 11 NOW, AND THERE WAS A 48-52 SPLIT BETWEEN THE TWO.

THE MOST DIFFICULT THING TO EXPLAIN TO SOMEONE WHO'S TAXES CONTINUED TO GO UP, BUT YET THE SCHOOL DISTRICT DOESN'T RECEIVE ANY PART OF THAT FOR THE MAINTENANCE AND OPERATIONS SIDE OF OUR OPERATION.

THAT REALLY LEADS ME TO THOSE REVENUE SOURCES, AND REVIEWING THOSE REVENUE SOURCES THAT THE MAJORITY OF OUR FUNDING COMES FROM THAT STATE AND LOCAL REVENUE, FROM THAT GLASS, IF YOU WILL.

BUT WE DO HAVE SOME OTHER FUNDING SOURCES.

WE HAVE SOME LOCAL FUNDING SOURCES.

THEY'RE MINOR, BUT WE DO HAVE INTEREST INCOME.

WE HAVE GATE MONEY WHEN WE COLLECT FOOTBALL GATE AND VOLLEYBALL GATE AND SO FORTH.

SOME OTHER REVENUE SHARING MECHANISMS THAT ARE ALL MINIMAL, BUT WE CERTAINLY DEPEND ON THEM.

THEN WE HAVE SOME FEDERAL FUNDING SOURCES BECAUSE LOCATED WHERE WE ARE, WE HAVE SOME IMPACT AID FROM THE FEDERAL GOVERNMENT, FROM FEDERAL FLOOD RELIEF AND THINGS THAT ARE RELATED TO US HAVING THE CORE OF ENGINEER PROPERTIES.

BASICALLY THOSE ARE FUNDED TO US BECAUSE WE CAN'T TAX ON THAT PROPERTY.

THEREFORE, THEY FEEL THAT FOR US AND THEN REALLY SMALL OTHER PIECES OF STATE FUNDING, BUT THEY ARE REALLY SMALL.

BUT THAT COMES DOWN TO THE TWO TAX RATES, AND WE'VE TALKED A GREAT DEAL ABOUT THIS IN THE DISTRICT OVER THE LAST COUPLE OF YEARS BECAUSE WE'VE HAD BOND ELECTIONS AND IT'S IMPORTANT FOR PEOPLE TO UNDERSTAND A BOND ELECTIONS.

SOME OF IT PROBABLY FEELS LIKE REPEAT INFORMATION.

BUT RIGHT NOW, 81% OF OUR TOTAL BUDGET IN THE MAINTENANCE AND OPERATION SIDE COMES FROM PAYROLL AND PAYROLL RELATED COST.

IF YOU'LL NOTICE THAT GLASS UP THERE, THAT'S THE PORTION OF OUR TAX RATE THAT IS FUNDED WITH THAT TEMPLATE REVENUE, WITH THAT DAY-TO-DAY OPERATION.

ANYTIME YOU SEE THAT GLASS, THAT IS AN INDICATOR THAT THAT IS RELATED TO OUR MAINTENANCE AND OPERATION SIDE OF THE BUDGET.

IN ADDITION TO THAT, THOUGH, WE HAVE OUR INTEREST AND SINKING SIDE OF THE BUDGET AND IT'S OUT OF THE TAX RATE.

THAT CAN ONLY BE USED TO REPAY DEBT.

THAT PORTION IS 100% EXCLUSIVELY USED TO REPAY DEBT THAT IS AUTHORIZED BY OUR TAXPAYERS.

WE CAN'T JUST ISSUE THE DEBT BECAUSE WE WANT TO BECAUSE WE NEED TO, WE HAVE TO ISSUE THE DEBT WHENEVER THERE IS NECESSARY FOR A PROJECT IN THE DISTRICT THAT HAS BEEN APPROVED BY THE TAXPAYERS AND THOSE FUNDS CANNOT BE USED FOR ANY OTHER PURPOSE WITHIN OUR BUDGET.

CURRENTLY, WE HAVE A 94 CENT TAX RATE ON THE MAINTENANCE AND OPERATIONS SIDE AND WE HAVE A 47 CENT TAX RATE ON THE INTERESTS AND SINKING SIDE.

AGAIN, THAT GLASS AND THOSE BUILT THAT BUILDING IS THERE TO INDICATE WHICH SIDE OF OUR TAX RATES.

OUR CURRENT TAX RATE FOR THE '22-'23 SCHOOL YEAR IT'S ACTUALLY $1.4129.

I JUST DIDN'T GO OUT THAT FAR WITH IT AND WE WILL NOT ADOPT A NEW TAX RATE TONIGHT, THAT WILL BE DONE IN AUGUST.

WE ADOPT A NEW BUDGET TONIGHT BECAUSE WE'RE FISCAL JULY 1 DISTRICT.

BUT WE HAVE PROJECTIONS AND WE'VE INCLUDED THOSE BASED ON CURRENT LAW, BUT TEA WILL NOT ISSUE US OUR MAXIMUM COMPRESSED TAX RATE FOR OUR MAINTENANCE AND OPERATIONS SIDE UNTIL THE BEGINNING OF AUGUST.

THEY DO THAT AFTER THEY GET CERTIFIED VALUES, NOT CERTIFIED ESTIMATES, BUT CERTIFIED VALUES AFTER EVERYONE'S HAD THE OPPORTUNITY.

[00:15:03]

ONCE THOSE ARE RECEIVED, WE REPORT THOSE TO TEA AND THEN THEY ASSIGN AS A MAXIMUM COMPRESSED TAX RATE.

WHAT WE'VE DONE HERE IS INCLUDED WHAT WE EXPECT THAT TO BE UNDER CURRENT LAW AND WE WOULD EXPECT A DROP OF ABOUT $0.08.

OUR M&O TAX RATE, WE'D EXPECT THE SAME INTEREST AND SINKING RATE, WHICH IS 47 CENTS.

THAT'S WHAT WE SHARED WITH OUR TAXPAYERS DURING THE BOND.

WE HAVE WORKED THAT EVEN THOUGH WE'RE ISSUING NEW BONDS, WE ISSUED $191 MILLION BONDS, BUT WE'RE ALSO REDEEMING AND REFUNDING AND WORKING OUR PORTFOLIO TO BRING DOWN THE COST OF BONDS THAT WE HAVE ALREADY HAD IN PLACE.

WE WOULD ANTICIPATE UNDER CURRENT LAW THAT WE WOULD HAVE AT LEAST A DOLLAR OR THAT WE WOULD HAVE AT MOST $1.33 PROPOSED TAX RATE.

AS YOU KNOW, UNLESS YOU'VE JUST COMPLETELY IGNORED ANY OF THE NEWS, THERE IS STILL A GREAT DEAL OF DEBATE OF OTHER PROPERTY TAX RELIEF, IS JUST A MATTER OF HOW IT WILL BE PASSED ON, WHERE IT WOULD BE THROUGH EXEMPTIONS OR IF IT WOULD BE THROUGH TAX RATE COMPRESSION.

WE WOULD HOPE FOR OUR TAXPAYERS THAT THEY WOULD ACTUALLY GET MORE OF A BREAK.

WE JUST NEED TO MAKE SURE THAT THE SCHOOL DISTRICT IS STILL FUNDED, AND THOSE DECISIONS ARE MADE IN A DIFFERENT BUILDING AT A DIFFERENT MEETING, MULTIPLES.

JUST INTERESTING, OUR HOME VALUE AVERAGES AFTER EXEMPTIONS AND EVERYTHING ARE STILL NOW UP IN THERE UP TO $390,000.

I THINK THAT'S UP ABOUT $40,000 FROM WHAT IT WAS LAST YEAR.

OUR AVERAGE HOMEOWNER WOULD PAY ABOUT $5,210 IN TAXES TO THE SCHOOL DISTRICT.

THEN OF COURSE, THERE'S OTHER TAXING ENTITIES AS WELL.

DURING THE HEARING PORTION, WE WILL GO THROUGH THOSE THINGS THAT ARE FUNDED WITH THE GENERAL OPERATING 86 CENT SIDE OF OUR TAX RATE.

RIGHT NOW, I'M NOT GOING TO TAKE A GREAT DEAL OF TIME TO GO THROUGH THIS UNLESS SOMEONE HAS SPECIFIC QUESTIONS, BUT YOU'RE ALL PRETTY SEASONED AND KNOW THIS.

DURING THIS WORKSHOP PORTION, I WON'T GO THROUGH ALL THE FUNCTION AND PIECES OF THAT, BUT WE WILL DO THAT FOR OUR PUBLIC WHO ARE NOT AS FAMILIAR WITH THESE PIECES.

I'M GOING TO JUST CLICK THROUGH HERE REALLY QUICKLY, NOT EXPECTING YOU TO READING THAT.

THE ONLY THING I DO WANT TO KNOW IS JUST THE TOTAL OF OUR BUDGET IS $98 MILLION.

YOU CAN SEE WHAT WE ARE QUICKLY APPROACHING.

BUT ONE OF THE REASONS FOR THAT SHARP INCREASE IN THAT TOTAL NUMBER IS THAT $5.3 MILLION IN RECAPTURE, EVEN THOUGH WE'RE REQUIRED TO PAY IT, WE'RE ALSO REQUIRED TO BUDGET FOR IT.

OUR BUDGET GOES UP ANYTIME THAT OUR RECAPTURE GOES UP BECAUSE YOU HAVE TO APPROVE FOR US TO PAY AS YOU ALSO WILL IN A DIFFERENT AGENDA ITEM TONIGHT.

YOU HAVE TO APPROVE FOR US TO PAY THE MONEY THAT WE DON'T HAVE ANY CHOICE BUT TO PAY.

I DID WANT TO POINT OUT THAT $98 MILLION NUMBER THERE.

BUT WHEN YOU LOOK AT PURELY TEMPLATE REVENUE, IF YOU LOOK AT THE CURRENT YEAR'S REVENUE THAT WE'VE EARNED IS AROUND $74 MILLION AND WE PROJECT THAT WE'RE GOING TO LEARN ABOUT $78.5 MILLION NEXT YEAR BASED ON AN INCREASE OF 327 STUDENTS AND AVERAGE DAILY ATTENDANCE.

THAT GROWTH IS REQUIRED FOR US TO REACH.

THAT IS SOMETHING THAT WE WILL DEFINITELY HAVE TO MONITOR THROUGHOUT THE YEAR.

MORE THAN ANYTHING THAT WE'RE GOING TO HAVE TO BE PREPARED TO PIVOT IN '24-'25.

THAT STILL SOUNDS FUNNY TO SAY, IN '24-'25, IN THE EVENT THAT THOSE STUDENTS DID NOT COME.

WHEN YOU LOOK AT THAT HOME VALUE, THE VALUATIONS OF $10 BILLION, YOU WOULD CERTAINLY THINK THAT THEY'RE GOING TO BE SOME STUDENTS MOVING INTO THOSE HOMES.

BUT UNTIL THOSE [INAUDIBLE] AVERAGE DAILY ATTENDANCE, THEN WE WON'T SEE A MOVE IN OUR [INAUDIBLE] HERE.

JUST IN COMPARISON, I THINK THIS IS THE SAME THING I WAS TELLING YOU EARLIER.

IN COMPARISON TO THE CURRENT YEAR'S BUDGET OF THAT WAS ADOPTED LAST YEAR AT 86207.

WE'RE RECOMMENDING A FINAL BUDGET AMENDMENT TONIGHT THAT HAS SOME MOVEMENT IN THAT JUST FOR A YEAR-END APPROPRIATIONS.

BUT WE'RE STILL LOOKING AT IT.

TEN PLUS MILLION INCREASE IN SIGNIFICANT PORTION OF THAT IS THE RECAPTURE AMOUNT.

WE WILL ASK YOU TO ADOPT A GENERAL FUND BUDGET AND DEBT SERVICE BUDGET, WHICH AGAIN IS 100% SUPPORTED BY THAT 47 CENT TAX RATE.

THEN BECAUSE IT'S FEDERALLY FUNDED AND WE'RE REQUIRED TO ALSO BRING YOU A STUDENT NUTRITION BUDGET, WHICH IS A SELF-SUSTAINING FUND.

BUT BECAUSE IT IS PART OF THE NATIONAL SCHOOL LUNCH PROGRAM, WE WILL HAVE YOU APPROVE THAT AS WELL.

I'M SORRY, I DIDN'T BRING MY PHONE UP HERE.

JASON, HOW MUCH TIME DO I HAVE?

>> TEN MINUTES.

>> GOOD. WE'RE IN GOOD SHAPE.

I WANTED TO JUST REVIEW WITH THE BOARD BECAUSE WE'VE TALKED ABOUT THIS IN PIECES FOR THE LAST SIX MONTHS.

WE TALKED ABOUT IT IN SUMMARY, THE LAST TIME WE WERE TOGETHER, BUT I WANTED TO REVIEW IT AGAIN,

[00:20:01]

IF WE'RE GOING TO GO INTO A DEFICIT BUDGET, THEN WE HAVE A PLAN TO SUSTAINABILITY FOR THAT, AND THE BOARD HAS WALKED ALONG WITH THAT.

I'LL SPRING ALONG WITH THIS.

I JUST WANTED TO DO A QUICK REVISIT.

LAST YEAR AT THE END OF '21-'22, WE WERE FINISHING FIRST JULY 1 FISCAL YEAR, AND THAT MEANT THAT WE ONLY HAD 10 MONTHS IN THE FISCAL YEAR, WHICH CREATED ABOUT $10 MILLION TO PUT INTO FUND BALANCE, THE BOARD RECOMMENDATION AND DECIDED TO MOVE THAT $10 MILLION, WAS $9.8 MILLION, INTO A TRANSITION FUND.

THAT AS WE TRANSITION OFF OF THE SR MONEY THAT WE HAVE HAD AND AS WE TRANSITION INTO THIS NEWER WONKY GROWTH, GROWING SOME YEARS, NOT GROWING SOME YEARS, THAT WE HAD A PLACE FOR A GLIDE PATH.

OUR GENERAL FUND BALANCE, IF 33,900,000 HAS NOT CHANGED AND DO NOT THINK THAT YOU WILL SEE THAT CHANGE UNLESS THE BOARD CHANGES ITS MIND ON HOW WE'RE GOING TO APPROACH THIS.

INSTEAD, WE CREATED THIS $10 MILLION TRANSITION FUND THAT WE WOULD USE IN THE EVENT OF ENROLLMENT FLUCTUATIONS.

ENROLLMENT FLUCTUATIONS ARE THE REASON THAT OUR EXPENDITURE LEVELS DON'T MEET OUR REVENUE LEVELS.

THESE WILL LOOK FAMILIAR TO YOU.

WE WENT THROUGH A PROCESS OF DECIDING HOW WE'RE GOING TO APPROACH THIS '23-'24 BUDGET.

WE ANTICIPATE THAT EVEN THOUGH WE HAVEN'T GROWN THIS YEAR BY THE NUMBER OF STUDENTS THAT WE HAD ESTIMATED WHENEVER WE ADOPTED THE BUDGET, WE ALSO HAVE NOT BEEN ABLE TO FILL THE POSITIONS THAT WE HAD BUDGETED TO FEEL FOR THE YEAR.

OUR REVENUE IS DOWN, BUT OUR EXPENDITURES ARE DOWN AS WELL.

WE'RE ABLE TO RECOVER SOME OF OUR SOME OF OUR OPERATING BUDGETS FROM THE [INAUDIBLE] MONEY THAT'S EXPIRING AT THE END OF THIS YEAR.

WE ESTIMATE THAT TO BE $1.9 MILLION.

EARLIER IN THE YEAR, WE THOUGHT THAT'LL BE AROUND $1.6 MILLION.

OBVIOUSLY, AS WE MOVE TOWARD THE END OF THE YEAR, WE HAVE MORE ACCURATE INFORMATION.

I FULLY ANTICIPATE THAT NUMBER IS GOING TO BE NORTH OF THAT, BUT I WORKED WITH WORST-CASE SCENARIO WHEN I PRESENT IT TO YOU.

RATHER THAN PUT THAT SURPLUS AT THE END OF THIS '22-'23 SCHOOL YEAR, FISCAL YEAR, WE WOULD RECOMMEND THAT WE MOVE THAT ALSO INTO THE TRANSITION FUNDS.

BASICALLY GROWING THAT TRANSITION FUND UP TO THE $11.8 MILLION.

THE TOTAL OF THOSE TWO IS 46.5% OF WHAT WE'RE RECOMMENDING FOR THE '23-'24 BUDGET.

LOOKING AT WHERE WE ARE AS A PERCENTAGE AND FUND BALANCE IS THE TOTAL OF THE 33 AND THE 11.8. THE OPERATING DEFICIT ON THE 23-24 BUDGET THROUGHOUT EACH ONE OF THOSE ITEMS THAT I'VE LISTED EARLIER.

THOSE TOTAL OF $4.8 MILLION DEFICIT AND WE DO NOT RECOMMEND THAT WE TAKE THAT FROM THE 33 MILLION, BUT RATHER MOVE THAT OVER FROM THE $11.8 MILLION.

BUT STILL LOOKING AT THE TOTAL OF THE TWO, THEN THAT WOULD REDUCE THIS TO 41.6% OF THE 23-24 OPERATING BUDGET.

WE WOULD HAVE $7 MILLION IN THE TRANSITION FUND WITHOUT TOUCHING THE 34 MILLION THAT HAS BEEN SITTING IN THAT FUNDS SINCE 2021.

IS ANYBODY HAVE QUESTIONS ABOUT THAT? THAT'S THE BIGGEST PIECE THAT I WANTED TO COVER WITH YOU.

>> ANY QUESTIONS FROM NEW BOARD MEMBERS?

>> I KNOW WE'VE COVERED IT MULTIPLE TIMES, BUT IT HAD BEEN ABOUT A SIX-WEEK PERIOD AND IT'S A SIGNIFICANT AMOUNT OF MONEY AND OUT THAT THE LAST PIECE THAT I HAVE ON THE YEARS IS JUST THE BREAKDOWN.

THERE ARE DISTRICTS THAT REALLY STRIVE AND DREAMED TO GET TO 25% OF THEIR OPERATING FUND, WHICH IS WHAT'S RECOMMENDED IS A MINIMUM FOR CASHFLOW AND SO EVEN WITHOUT THE TRANSITION FUND THAT WE'VE ESTABLISHED HERE, WE'RE AT 34.5% OF OUR 23-24 BUDGET IN THE GENERAL FUND AND THEN WE HAVE ANOTHER 7% IN THE TRANSITION FUND.

IF WE EVEN EXPERIENCE THE FULL DEFICIT, WHICH IS ALWAYS A WORST-CASE SCENARIO, SO WE WOULD STILL BE AT A TOTAL OF 41.67.

BUT REALLY, I THINK THEIR BIGGEST MESSAGE IS THAT DURING THE 23-24 SCHOOL YEAR AND ESPECIALLY AROUND THE SEMESTER MARK.

ASSUMING A DEEP DIVE, AND ANALYSIS OF WHERE ARE WE IN THAT STUDENT ENROLLMENT, AND WHAT CHANGES MIGHT WE NEED TO MAKE FOR 24-25, GIVEN THAT WE OBVIOUSLY DID NOT WANT TO HAVE A RECURRING DEFICIT, EVEN IF WE HAVE A PLACE TO FIND IT BY, THAT WE WOULD HAVE A GLIDE PATH FOR THAT AND A PLAN AND THAT WE DO STILL HAVE $2 MILLION IN SALARIES THAT ARE FUNDED IN ESSER, THAT 23-24 IS THE LAST YEAR.

I WON'T TAKE ATTENDEE QUESTIONS RIGHT NOW, BUT I'LL CERTAINLY DO THAT IN JUST A MOMENT WHEN I REPEAT MUCH OF THE INFORMATION I JUST SHARED WITH YOU.

YOU DON'T HAVE ANY QUESTIONS FOR ME?

>> I THINK WE'RE GOOD ON THIS ITEM, THANK YOU.

>> THANK YOU.

>> GOING ONTO THE NEXT ITEM, ANY BOARD COMMENTS?

[00:25:01]

DO I HAVE A MOTION TO ADJOURN?

>> SUBMIT.

>> DO HAVE SECOND?

>> SECOND.

>> HAVE A MOTION BY MARY SECOND BY KEN.

ALL THOSE IN FAVOR RAISE YOUR HAND.

ALL OPPOSED. WE WILL CLOSE AT 05:56 PM.

WE WILL NOW GO AHEAD AND OFFICIALLY CALL THE PUBLIC HEARING MEETING FOR THE LITTLE ELM BOARD OF TRUSTEES AT 06:00 PM,

[00:30:02]

INTRODUCTION ROLL CALL, MISS FLORES.

[INAUDIBLE] THANK YOU, SO WE'LL GO INTO THE PUBLIC HEARING FOR THE PROPOSED 2023-2024 BUDGET.

MS. ADAMS, ONCE AGAIN, TAKE THE STAGE.

>> GOOD EVENING, BOARD, AGAIN.

GOOD EVENING TO ANY OF OUR GUESTS THAT ARE HERE, AND OUR STAFF THANK YOU FOR ATTENDING OUR ANNUAL BUDGET AND TAX RATE HEARING.

I'M GOING TO WALK THROUGH A QUITE A FEW PIECES OF INFORMATION OVER THE NEXT 20-30 MINUTES AND AT THE CONCLUSION OF THAT, IF ANYONE HAS SPECIFIC QUESTIONS, THERE'LL BE A TIME FOR YOU TO ASK ME THOSE QUESTIONS.

I'M SORRY, MY BACK IS TO THE MIC, BUT I WILL DEFINITELY TURN AROUND AND ADDRESS ANY QUESTIONS THAT YOU MAY HAVE.

AS WE DEVELOP OUR BUDGET EVERY YEAR OR ANY OPERATING BUDGET, WE KEEP IN MIND ALL THOSE THINGS THAT ARE HAVE BEEN PRIORITIZED BY THE DISTRICT AND BY EDUCATORS, AND SO THERE ARE COUPLE OF CHARTS IN HERE THAT WOULD JUST KEEP US GROUNDED AS WE WALK THROUGH AND LOOK AT, WHAT IS OUR STRATEGIC PLAN HAVE IN IT? WHAT IS OUR MISSION, AND OUR VISION, AND SO FORTH.

WE REFLECT ON THOSE AS WE MAKE BUDGETARY DECISIONS AND AS WE BRING OUR RECOMMENDATIONS TO THE SCHOOL BOARD TO MAKE DECISIONS.

FOR TONIGHT, SPECIFICALLY, THIS IS OUR BUDGET HEARING THAT IS REQUIRED BY OUR TRUTH IN TAXATION.

THE COMPTROLLER'S OFFICE ACTUALLY ADMINISTERS THAT, IS ORDERED BY THE LEGISLATURE AND IT'S ADMINISTERED BY THE CONTROLLER'S OFFICE.

ONE OF THE FIRST PIECES FOR US TO ESTABLISH A DATE THAT WE'RE GOING TO HAVE THIS HEARING AND THAT WE GIVE THE PUBLIC OPPORTUNITY TO ASK ANY QUESTIONS ABOUT OUR BUDGET AND TAX RATE.

OUR TAX RATE WILL NOT BE ADOPTED AT THIS MEETING, BUT WILL BE ADOPTED IN AUGUST.

OUR FISCAL YEAR BEGINS JULY 1ST, AND BECAUSE OUR BUDGET IS SUPPORTED BY TAXES THEN IT IS A COMBINED HEARING AND IT'S NOT HANDLED SEPARATELY.

AT THE SAME TIME THAT WE PUBLISHED THOSE THINGS AND THOSE ARE CALCULATED BY OUR TAX ASSESSOR.

AT THE SAME TIME THAT WE PUBLISH THOSE CALCULATIONS THAT ARE REQUIRED IN THAT NOTICE, WE ALSO PUBLISH ON OUR WEBSITE.

THIS SPREADSHEET, WHICH INCLUDES THE SECOND COLUMN THERE, THE FIRST GOAL COLUMN THAT YOU SEE ARE PROPOSED BUDGET FOR THE 23-24 FISCAL YEAR.

THAT IS TO BE COMPARED BASED ON THE TRUTH IN TAXATION REQUIREMENTS.

THAT HAS TO BE COMPARED WITH OUR ACTUAL SPENDING, NOT OUR BUDGETED SPENDING, BUT OUR ACTUAL SPENDING THROUGH THE DATE OF THE PUBLICATION AND THIS YEAR OUR DATE OF PUBLICATION WAS MAY 31ST, SO WE WERE ABOUT A MONTH AWAY FROM FINISHING OUR FISCAL YEAR AS WE STILL STAND HERE TONIGHT, A WEEK AWAY FROM FINISHING OUR FISCAL YEAR.

BUT THOSE NUMBERS ARE THERE AND PRESENTED FOR YOU AND IT HAVE BEEN ALSO ON OUR WEBSITE SINCE THAT DATE.

I WANT TO REMIND EVERYONE, I KNOW THE BOARD IS VERY AWARE OF THIS AND CERTAINLY STAFFS IS AS WELL, BUT FOR OUR GUESTS, THAT OUR BUDGET HEARING IS THE CULMINATION OF MONTHS OF PREPARING A BUDGET AND THEN FINALLY PULLING THAT INTO A COMPILATION.

THIS HAS BEEN A MOST UNUSUAL YEAR AND I'M READY FOR THE YEAR THAT WE DON'T SAY THAT ACTUALLY, BUT WE HAVE BUILT THE BUDGET AND SHARED THE INFORMATION WITH THE BOARD AND TAKEN RECOMMENDATIONS THAT WOULD HAVE A MAJOR IMPACT ON THE BUDGET SINCE THE BEGINNING OF THE CALENDAR YEAR AND THEY ARE JUST A FEW BULLET POINTS UP THERE.

SPECIFICALLY, I WOULD THINK THAT THE HIGHLIGHTS OF THAT, AS THEY IMPACT THE BUDGET HAVE BEEN CHANGES IN DEMOGRAPHY, WHICH WE STARTED TALKING ABOUT IN FEBRUARY, CHANGES IN OUR SCHEDULE THAT WAS APPROVED IN APRIL.

A RECOMMENDATION FOR ADDRESSING OUR COMPENSATION THROUGHOUT OUR DISTRICT, WE ARE RECOMMENDING A 3% INCREASE IN OUR COMPENSATION, I'LL COVER MORE OF THAT IN A BIT. THE OPENING OF OUR ZELLARS PRE-K, WHICH ALONG WITH THAT COMES SOME POSITIONS THAT WE NEEDED IN ORDER TO IMPLEMENT THAT.

AND SO THOSE ARE ALL LISTED THERE FOR YOU AS THIS DID NOT HAPPEN IN ONE NIGHT OR IN ONE DAY.

STATE FUNDING ITSELF IS A REALLY COMPLICATED MONSTER.

AND EVERY YEAR THAT WE HAVE A NEW PIECE OF LEGISLATION ADDED TO THAT, WHETHER IT'S GOOD OR BAD, IT TYPICALLY TENDS TO COMPLICATE THAT A LITTLE BIT MORE.

SO MY GOAL TONIGHT IS TO MAKE THAT A LITTLE SIMPLER FOR THOSE THAT HAVE ANY INTERESTS IN HOW IS IT THAT WE END UP WITH THE MONEY THAT WE HAVE TO EVEN PUT INTO A BUDGET.

AND SO ONE OF THE THINGS THAT I ALWAYS LIKE TO SHARE AND EXPLAIN IS, BECAUSE IT'S COUNTERINTUITIVE, IS THAT OUR LEGISLATURE PASSES LAWS THAT ARE THEN GIVEN OVER TO THE TEXAS EDUCATION AGENCY, WHICH IS OUR GOVERNING BODY AND THEY IMPLEMENT RULINGS AND PROCEDURES THAT REALLY END UP WITH, OKAY, THIS IS HOW MUCH MONEY EACH INDIVIDUAL DISTRICT HAS TO OPERATE ON.

BUT IN A NUTSHELL, THE AMOUNT OF MONEY THAT WE GET AND THAT WE'RE ABLE TO KEEP TO OPERATE OUR SCHOOL DISTRICT FOR OUR DAY-TO-DAY OPERATIONS, WHICH IS CALLED OUR MAINTENANCE AND OPERATIONS SIDE OF OUR TAX RATE,

[00:35:04]

NOT EVEN THAT THEY'RE ENROLLED.

WE DO NOT GET ANY MONEY FOR A STUDENT THAT ENROLLS, ANY.

WE ONLY GET MONEY WHEN A STUDENT ATTENDS SCHOOL, SO OUR AVERAGE DAILY ATTENDANCE.

AND THEN THERE ARE SOME SPECIALIZED SERVICES THAT SOME OF OUR STUDENTS REQUIRE.

SO THERE ARE FORMULAS INCLUDED IN THOSE BECAUSE STUDENTS THAT REQUIRE SPECIAL SERVICES, THERE IS AN ADDITIONAL COSTS FOR THAT AND THE STATE RECOGNIZES THAT, AND SO THEN THEY GIVE US MORE MONEY PER STUDENT FOR THOSE STUDENTS, AND THEN WE USE THAT MONEY TO SERVE THOSE STUDENTS.

THAT, IN ADDITION WITH OUR PROPERTY TAX VALUES, ARE REALLY PUT INTO THAT COMPLICATED MACHINE THAT I SHOWED YOU EARLIER TO SPIT OUT, THIS IS THE SIZE OF YOUR BUDGET, THIS IS THE SIZE OF YOUR REVENUE, THIS IS THE SIZE OF THE GLASS THAT YOU'RE GOING TO HAVE.

THIS TEMPLATE SCREENSHOT THAT IS HERE INVOLVES ABOUT 28 DIFFERENT DATA POINTS THAT WE PUT IN AND THAT WE USE TO ESTIMATE WHAT OUR REVENUE IS GOING TO BE FOR THE COMING YEAR.

THAT IS JUST HOW SCHOOL FUND AND SCHOOL LAW WORKS IN SCHOOL FUNDING THAT WE ESTIMATE HOW MUCH WE'RE GOING TO OPERATE ON AND THEN WE ADOPT THE BUDGET AND WE MOVE INTO THE YEAR, AND THEN LEARN WHAT WE ACTUALLY EARN FOR THE YEAR.

SO OUR ESTIMATES, THEY HAVE TO BE AS ACCURATE AS POSSIBLE.

THEY ARE OUR CRYSTAL BALL, WE USE HISTORICAL DATA, WE USE DEMOGRAPHERS AND SEVERAL OTHER DATA POINTS THAT ARE SUBSTANTIATED.

AND AS WE PUT THOSE TOGETHER, AGAIN, THAT STUDENT DAILY ATTENDANCE AND OUR PROPERTY VALUE AMOUNT AND THE GROWTH THAT WE HAVE THERE, CULMINATE INTO HOW MUCH WE ARE ABLE TO KEEP.

OUR DEMOGRAPHY AND OUR DISTRICT, BECAUSE WE'RE A FAST-GROWING DISTRICT, HAS SUBSTANTIAL IMPACT ON WHAT OUR FUNDING WILL BE.

BECAUSE IF WE HAVE STUDENTS MOVING IN DURING THE YEAR, WE HAVE TO PLAN NOW TO HAVE THE TEACHERS FOR THOSE UNDER CONTRACT NEXT YEAR.

THEY MAY NOT MOVE IN UNTIL NEXT FEBRUARY, WE HAVE TO HAVE THE TEACHERS ON CONTRACT AND AVAILABLE TO EDUCATE THOSE STUDENTS, AND SO WE SPEND A GREAT DEAL OF TIME STUDYING OUR DEMOGRAPHY AND TRACKING IT AS WE MOVE THROUGHOUT THE YEAR.

ONE THING THAT ANYONE WHO IS A RESIDENT OF LITTLE ELM OR TEXAS, OR PROBABLY THE NATION, WILL SEE IF YOU'RE A PROPERTY OWNER, THAT YOU HAVE INCREASED PROPERTY VALUES, YOUR TAXABLE VALUES INDIVIDUALLY HAVE INCREASED.

AND THEN JUST LITTLE ELM ISD ARE PRELIMINARY CERTIFIED VALUES WHICH WE GET ON APRIL THE 30TH, AND THOSE WILL BE CERTIFIED ON JULY THE 25TH, HAVE INCREASED TO $10 BILLION, UP FROM 7.7 BILLION LAST YEAR AT THIS TIME.

AND YOU CAN SEE THE SHARP INCLINE OF THOSE OVER THE YEARS, THEY'RE THERE.

THE INTERESTING AND THE INTERESTING SITUATION THAT WE'RE IN RIGHT NOW, ALONG WITH SEVERAL OTHER SCHOOL DISTRICTS IN THE STATE OF TEXAS, IS THAT OUR VALUES ARE GROWING FASTER THAN OUR STUDENTS ARE.

THERE WAS A TIME THAT STUDENTS GREW FASTER, OR AT LEAST GREW MORE AND CONGRUENTLY WITH OUR VALUES, AND THAT'S NOT HAPPENING RIGHT NOW AT THE SAME PACE.

WE ARE STILL GROWING VERY SLOWER THAN WHAT WE HAD IN THE PAST.

IN FACT, WE'VE HAD ALMOST A FLAT YEAR THIS PAST YEAR.

BUT YET OUR PROPERTY VALUES, YOU SEE WHAT'S HAPPENING THERE.

AND SO THAT HAS REQUIRED SOME STRATEGIC PLANNING ON THE PART OF THE BOARD FROM A FINANCIAL STANDPOINT.

BUT AS I SAID EARLIER, THE MAINTENANCE AND OPERATION SIDE OF OUR TAX RATE, I REPRESENT THAT BY THIS GLASS, AND ANYTIME YOU SEE THIS GLASS THROUGHOUT THE PRESENTATION, THAT MEANS THAT'S OUR DAY-TO-DAY OPERATIONS.

THAT'S THE MONEY THAT IS USED TO PAY OUR TEACHERS TO KEEP THE ELECTRICITY ON, ALL OF THE THINGS, THE SUPPLIES THAT WE NEED, PAYING OUR TRANSPORTATION AND SO FORTH.

AND SO THAT SIDE IS SET BASED ON THE NUMBER OF STUDENTS IN AVERAGE DAILY ATTENDANCE IN OUR DISTRICT, ALONG WITH SOME OTHER VERY SMALL ADJUSTMENTS TO THAT.

SO THAT GLASS, IF YOU WILL, DOESN'T GROW.

THAT AMOUNT DOESN'T GROW UNLESS THE NUMBER OF STUDENTS THAT WE HAVE IN AVERAGE DAILY ATTENDANCE GROWS.

BUT WHERE THE MONEY COMES FROM DOES CHANGE.

AND SO THIS COMING YEAR, 92% IS THE ESTIMATED AMOUNT THAT WE WILL HAVE FROM OUR LOCAL PROPERTY TAX COLLECTIONS.

TO FILL UP THE REST OF THE GLASS, THE STATE WILL ADD ABOUT 8%.

IN ADDITION, WE WILL PAY ABOUT $5.3 MILLION IN RECAPTURE, SOME PEOPLE CALL THAT ROBIN HOOD, BUT WE ARE REQUIRED TO PAY THAT AMOUNT BACK TO THE STATE.

THAT IS AN ERROR ON THE RIGHT SIDE AND I DIDN'T REALIZE IT UNTIL I GOT THEM HERE, SO I APOLOGIZE.

THE 2017,'18 SPLIT WAS 70% FROM OUR LOCAL TAXES AND 30% FROM THE STATE.

SO YOU CAN SEE HOW THAT'S DECLINED.

AND IF YOU GO BACK EVEN A LITTLE FURTHER AND GO BACK ABOUT 10 OR 11 YEARS, IT WAS MORE OF A 50-50 SPLIT OR 48-52 SPLIT.

AND SO WHAT'S HAPPENED, AS THE SCHOOL DISTRICT'S PROPERTY VALUES HAVE GROWN, EVEN THOUGH OUR TAX RATE HAS GONE DOWN, AND IT HAS EVERY YEAR GONE DOWN, DOWN, DOWN, BUT THE PROPERTY VALUES HAVE GROWN SO WE COLLECT MORE TAXES HERE,

[00:40:05]

DURING THIS YEAR, ONE OF THE MOST FRUSTRATING THINGS THIS SPRING IS THAT WE HAD SUCH A HUGE SURPLUS AS A STATE, BILLIONS OF DOLLARS AS A STATE, AND WE HAVE NOT SEEN AN ADJUSTMENT TO THE SIZE OF THAT GLASS SINCE 2019.

BUT WE'VE SEEN ANYWHERE FROM 14-19% INFLATION ON ALL THE COSTS.

YOU'VE SEEN IT IN YOUR HOMES AND WE SEE IT IN THE SCHOOLS ON ALL THE COST RELATED TO THE GLASS BEING THE SAME SIZE, BUT WE HAVE THE SAME AMOUNT OF MONEY TO PAY FOR EXPENDITURES THAT ARE LARGER.

WE'D REALLY HOPED AND DEPENDED ON OUR LEGISLATURE TO GIVE US SOME RELIEF THAT YET HAS NOT HAPPENED.

AND SO WE ARE ANXIOUSLY AWAITING ARRIVAL OF SOME ASSISTANCE IN THAT MANNER.

BUT UNTIL THEN, OUR BOARD HAS CONTINUED TO PLAN FOR OUR SCHOOL DISTRICT, BECAUSE STUDENTS ARE STILL COMING TO SCHOOL AND WE'RE STILL GONNA DO THE VERY BEST WE CAN TO EDUCATE THEM, AND GIVE THEM A SECOND TO NONE EXPERIENCE.

BUT THOSE REVENUE SOURCES THAT COME INTO OUR BUDGET AND THE BUDGET THAT YOU ADOPT TONIGHT WILL BE SUPPORTED BY THREE DIFFERENT REVENUE SOURCES.

THE MAJORITY OF THAT BEING FROM THAT GLASS, FROM THE STATE AND LOCAL INCOME FROM THAT CALCULATION, THAT IS THROUGH LEGISLATION, BUT WE DO GET A PORTION OF OUR FUNDING FROM FEDERAL FUND SOURCES BECAUSE WE ARE CORE OF ENGINEER LAKE'S AND WE HAVE LAND AROUND THE LAKE THAT IS WITHIN OUR DISTRICT THAT WE'RE NOT ABLE TO TAX.

WE RECEIVE FEDERAL FUND RELIEF AND IMPACT AID FROM THAT AS WELL AS SOME SHARS, WHICH IS STUDENT HEALTH AND RELATED SERVICES FOR OUR STUDENTS WHO ARE ON MEDICAID THAT WE ALSO SERVE THROUGH THE SCHOOL DISTRICT.

SO WE GET A PORTION THROUGH THAT AND SOME VERY SMALL EARNINGS AS WELL IN OTHER LOCAL REVENUES, SUCH AS INTEREST EARNINGS ON OUR INVESTMENTS, GATE COLLECTIONS AT SPORTING EVENTS AND SO FORTH.

BUT THE MAJORITY OF IT COMES FROM THE MACHINE THAT I SHOWED YOU EARLIER.

AND SO THAT BEING SAID, THERE ARE TWO PORTIONS OF OUR TAX RATE.

THE FIRST PORTION IS OUR MAINTENANCE AND OPERATIONS SIDE.

IT'S ALSO CALLED GENERAL FUND OR GENERAL OPERATING.

AND I OFTEN TELL PEOPLE WHEN YOU THINK ABOUT THE SEPARATION IN THE TAX RATE, BECAUSE MOST PEOPLE REALLY ONLY CARE ABOUT THAT BLACK BOX AT THE BOTTOM THAT SAYS THE TOTAL AMOUNT THAT YOU'VE GOT TO PAY IN YOUR TAXES.

THAT'S WHAT IS NATURAL, BUT OUR JOB IS TO IS TO SHARE WITH YOU WHAT PORTIONS OF IT THE SCHOOL BOARD HAS ANY INFLUENCE OVER.

AND SO STATE LAW PRETTY MUCH MANDATES WHAT OUR TAX RATE IS GOING TO BE, AND IN FACT, IT'S ASSIGNED BY THE TEXAS EDUCATION AGENCY.

BUT THAT MAINTENANCE AND OPERATION PORTION IS WHAT PAYS THE DAY TO DAY EXPENSES THAT I WAS EXPLAINING EARLIER.

AND OF THAT PORTION, 81% IS PAID IN HUMAN CAPITAL.

THAT'S THE BUSINESS THAT WE'RE IN, AND THE PEOPLE THAT ARE MOST IMPORTANT STAND UP IN FRONT OF A ROOM OF STUDENTS, NOT LIKE ME THAT STAND UP IN FRONT OF A ROOM OF ANYONE ELSE.

I MEAN, Y'ALL ARE IMPORTANT TO ME, BUT OUR STUDENTS ARE REALLY WHAT ARE IMPORTANT, AND SO WHERE WE INVEST THAT MONEY IN OUR STAFF IS REALLY IMPORTANT.

AND SO THE OTHER SIDE OF OUR TAX RATE, THOUGH, THAT IT'S MADE THESE COME TOGETHER TO HELP CALCULATE WHAT'S IN THAT BLACK BOX AT THE BOTTOM RIGHT SIDE OF YOUR TAX STATEMENT, IS THE INTEREST AND SINKING, AND THAT'S ALSO KNOWN AS DEBT SERVICE.

AND THAT'S THE AMOUNT OF MONEY THAT WE COLLECT, AND IT 100% GOES TO PAY BASICALLY THE DISTRICT'S MORTGAGE.

SO TAXPAYERS HAVE TO, AND VOTERS HAVE TO AUTHORIZE THE SCHOOL DISTRICT TO ISSUE BONDS IN ORDER TO BUILD BUILDINGS OR BUY EQUIPMENT OR WHATEVER THAT BOND AUTHORIZATION SPELLS OUT.

OUR VOTERS SUPPORTED THAT LAST PAST NOVEMBER.

SO UNTIL THEY AUTHORIZE IT, WE CANNOT ISSUE THIS DEBT.

BUT ONCE WE ISSUE THE DEBT, THEN THIS PORTION OF THE TAX RATE IS 100% WHAT REPAYS IT.

IT'S BASICALLY THE MORTGAGE PAYMENT FOR THE DISTRICT.

WE CANNOT USE ANY PORTION OF THAT TO PAY OUR AMAZING TEACHERS.

WE CANNOT USE ANY PORTION OF THAT TO PAY OUR DAY-TO-DAY EXPENSES.

IT CAN ONLY BE USED TO EXTINGUISH DEBT EITHER NEW OR OLD, AND SO WE MANAGE THAT TAX RATE VERY CAREFULLY.

THE TWO TOGETHER FOR OUR CURRENT SCHOOL YEAR, IT'S $1.41.

WE HAVE A 94 CENT TAX RATE ON OUR MAINTENANCE AND OPERATIONS SIDE, AND WE HAVE A 47 CENT TAX RATE ON OUR INTEREST AND SINKING SIDES.

THOSE COME TOGETHER FOR THE $1.41 PER HUNDRED DOLLARS OF TAXABLE VALUE.

FOR NEXT YEAR, FOR '23, '24, BECAUSE OUR LEGISLATURE HAS NOT MADE ANY CHANGES AND ADOPTED ANY CHANGES TO OUR STATE FUNDING, THEN WE HAVE TO MOVE FORWARD WITH CURRENT LAW.

AND ON CURRENT LAW, OUR ESTIMATE IS THAT OUR TAX RATE WILL BE COMPRESSED, IF YOU WILL, OR REDUCED BY EIGHT CENTS TO 86 CENTS ON THE MAINTENANCE AND OPERATIONS SIDE.

OUR 47 CENTS WILL REMAIN THE SAME ON THE INTEREST AND SINKING SIDE, SO WE ANTICIPATE A TAX RATE OF $1.33, SO ABOUT EIGHT CENTS LESS THAN WHAT IT IS FOR THE CURRENT YEAR.

THE FRUSTRATION COMES FROM TAXPAYERS IN THAT THEIR TAXABLE VALUE IS ARISING EVEN THOUGH THEIR TAX RATE IS GOING DOWN.

[00:45:04]

AND THAT'S WHY A DECISION HASN'T YET BEEN MADE BECAUSE ONE CHAMBER WANTS TO DO IT THROUGH ONE MECHANISM AND THE OTHER CHAMBER WANTS TO DO IT THROUGH ANOTHER, BUT THEY BOTH WANT TO GIVE TAXPAYER RELIEF.

THEY HAVEN'T GIVEN US THE AUTHORITY TO DO THAT, SO WE HAVE TO MOVE FORWARD.

HOWEVER, AGAIN, TONIGHT, WE ARE NOT ADOPTING A TAX RATE.

THAT WON'T COME UNTIL AUGUST, IT CANNOT COME UNTIL AUGUST, BECAUSE WE DO NOT HAVE THE INFORMATION FROM THE TEXAS EDUCATION AGENCY'S ASSIGNMENT TO DO SO. JUST AS AN EXAMPLE, OUR AVERAGE HOME VALUE ONCE WE APPLY HOMESTEAD AND OTHER EXEMPTIONS IS $390,000, AND WITH THIS TAX RATE, A TAXPAYER WILL PAY ABOUT $5,210 INTO PROPERTY TAXES FOR SCHOOL PROPERTY TAXES.

THERE ARE OBVIOUSLY OTHER THINGS INVOLVED IN THAT.

THERE ARE COUNTY TAXES, THERE ARE COLLEGE TAXES, THERE ARE CITY TAXES.

BUT OUR PORTION OF THAT, AND WHAT WE'RE DISCUSSING TONIGHT IS THE $5,210.

I'VE SAID THIS SEVERAL TIMES.

SO JUST TO REITERATE, THAT THE GENERAL OPERATING SIDE OF THE BUDGET IS FUNDED, WILL BE 86% TAX RATE UNLESS THE LAW HAS CHANGED BETWEEN NOW AND THEN.

THE BOARD IS REQUIRED TO ADOPT AN ANNUAL BUDGET, AND THEY ARE REQUIRED TO BREAK THAT INTO FUNCTIONS.

I'LL TALK ABOUT EACH ONE OF THOSE FUNCTIONS HERE IN JUST A MINUTE.

WHAT I SHARE WITH PEOPLE, I'M TRYING TO SHARE OF SCHOOL LAW AND SCHOOL FINANCE WE HAVE, IS THAT WHEN YOU HEAR THE BUDGET IS BEING CUT OR THERE ARE BUDGET CUTS, YOU ARE ALMOST ALL THE TIME HEARING ABOUT THIS FUN, BECAUSE IT IS A MAJOR FUND THAT OPERATES OUR SCHOOL DISTRICTS.

AND SO WHEN YOU HEAR SOMEONE JUST REFER TO THE BUDGET, IT'S USUALLY THIS FUN.

ALTHOUGH WE HAVE LOTS AND LOTS OF OTHER VERY TARGETED AND SPECIFIC INTENT SIGNS THAT COME FROM OTHER SOURCES.

BUT THIS ONE IS THE ONE FOR US.

IT'S A $98 MILLION FUND, AND IT IS BROKEN INTO THESE INDIVIDUAL FUNCTIONS THAT ARE PRESCRIBED AND SET OUT IN TEXAS EDUCATION CODE SO THAT WE CAN ALL BE COMPARED, ALL 1,200 ENTITIES ACROSS THE STATE OF TEXAS CAN BE COMPARED WITH ONE ANOTHER AND HOW MUCH WE'RE SPENDING PER STUDENT ON EACH ONE OF THESE AREAS.

THEY'RE VERY PRESCRIBED AND TELL US WHICH EXPENDITURE WE PUT IN WHAT PIECE OF THIS PUZZLE THAT COMES TOGETHER.

WE REPORT ALL OF THAT INFORMATION, EVERY DOLLAR THAT WE SPEND, AND EVERY STUDENT THAT WE SERVE, AND EVERY MINUTE THAT WE SERVE THEM.

WE REPORT THAT THROUGH WHAT IS CALLED PEIMS, THE PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM, AND THAT'S HOW THEY CAN DO THE COMPARISONS ACROSS THE STATE.

IT'S ALSO LOW BECAUSE IT'S SUCH A MASSIVE STATE WITH MASSIVE AMOUNTS OF INFORMATION.

IT'S ALSO LOW AND SOMETIMES TAKES A YEAR TO GET THE COMPARISON DATA, BECAUSE EVERYTHING IS REPORTED IN ARREARS.

OF OUR GENERAL FUND BUDGET THAT IS SUPPORTS THE DAY-TO-DAY OPERATION, ABOUT 77% OF THAT IS PAID IN PERSONNEL.

NOW, THE REASON THAT SAYS 77% INSTEAD OF THE 80% PLUS, THAT IS ACTUALLY PAID IN PERSONNEL IT'S BECAUSE FOR OUR DISTRICT WE CONTRACT FOR OUR TRANSPORTATION AND WE CONTRACT FOR OUR SUBSTITUTE TEACHERS.

WE PAY THEM THROUGH A DIFFERENT CLASSIFICATION, BUT WE'RE PAYING HUMAN CAPITAL.

SO IT'S STILL ABOUT 81% OF OUR BUDGET THAT IS PAID FOR THOSE THAT SPEND THEIR DAYS EDUCATING OUR STUDENTS, OR TAKING CARE OF OUR STUDENTS, OR TAKING CARE OF OUR STAFF.

IN THIS SPECIFIC CATEGORY, SOME OF THE HIGHLIGHTS FOR TONIGHT THAT I WANTED TO SHARE WITH YOU ARE THAT YOU APPROVED EARLIER IN THE SPRING ADDITIONAL POSITIONS AT ZELLARS, WHICH IS GOING TO OPEN FOR OUR PRE-K STUDENTS.

WE'RE VERY EXCITED ABOUT THE SUNSHINE.

IT'S GOING TO COME IN AT THOSE DOORS EVERY TIME THEY OPEN.

THEN YOU ALSO APPROVED SOME CHANGES IN THE SCHEDULE AT THE HIGH SCHOOL.

YOU APPROVED THOSE IN APRIL, AND THOSE COME ALONG WITH SOME PERSONNEL UNITS AS WELL.

I WANT TO REMIND YOU THAT IN '23-'24, WE STILL HAVE INSTRUCTIONAL FTES FUNDED ABOUT $2 MILLION, FUNDED THROUGH OUR ESSER FUNDS.

AND THIS IS THE LAST YEAR OF THAT GRANT.

WE WERE IN YEAR 3 OF A MARKET EQUITY ADJUSTMENT FOR OUR LONGSTANDING EMPLOYEES WHOSE SALARIES HAD NOT GROWN AT THE SAME PACE AS OUR HIRING RANGES.

WE SET OUT AND THE BOARD WAS VERY DEDICATED TO MAKING SURE THAT WE EVEN THAT UP, AND IT TOOK US THREE YEARS, BUT IN '23-'24, WE WILL BE COMPLETE WITH THAT.

IN ADDITION, THERE IS A RECOMMENDATION IN YOUR AGENDA LATER TONIGHT FOR A 3% UNIFORM INCREASE ACROSS THE BOARD FOR OUR '22-'23 SALARIES.

THAT IS GREAT NEWS FOR OUR STAFF.

THE COMPENSATION PLAN ALSO ADDRESSES SOME POCKETS, WHERE THE HIRING RANGES NEEDED TO BE ADJUSTED AS WELL.

ASHLEY BROWN AND HER STAFF DO AN AMAZING JOB OF COMPARING US NOT ONLY WITH DISTRICTS SURROUNDING US, BUT DISTRICTS ACROSS THE STATE, AND MAKING RECOMMENDATIONS BOTH IN OUR SALARY RECOMMENDATIONS IN OUR HIRING RANGES.

BUT ALSO WITH OUR STIPENDS, WE HAD SOME CRITICAL NEEDS AREAS THAT HAVE BEEN VERY DIFFICULT TO HIRE,

[00:50:01]

OUR STARTING TEACHER PAY IF YOU APPROVE, THE COMPENSATION PLAN WILL BE $58,285.

ONE THING THAT WE'RE REALLY EXCITED ABOUT THAT YOU APPROVED EARLIER THIS YEAR IS THAT ANY OF OUR EMPLOYEES THAT WERE MAKING UNDER $15 AN HOUR WERE MOVED TO A MINIMUM OF $15 AN HOUR.

THAT HAD A GREAT IMPACT ON MANY OF OUR STAFF MEMBERS, THAT WERE VERY APPRECIATIVE AND IN MUCH NEED OF THAT.

THIS BUDGET INCLUDES AN ATTRITION RATE OF 98.5%.

IN OTHER WORDS, WE ANTICIPATE THAT WE WILL EXPAND ABOUT 98.5% OF THE AMOUNT THAT IS ALLOCATED FOR PAYROLL.

THIS PAST YEAR WE WERE AT AROUND 96.5%, BECAUSE WE WERE NOT ABLE TO FILL ALL THE POSITIONS AND THE VACANCIES THAT WE HAVE.

WE HOPE THAT THIS COMPENSATION PLAN WILL HELP US TO DO THAT MOVING FORWARD.

I'VE ALREADY SHARED THAT INFORMATION WITH YOU.

THE NEXT MAJOR CLASSIFICATION THAT WE HAVE IS IN OUR UTILITIES AND SERVICES.

THESE ARE OFTEN CALLED CONTRACTED SERVICES, BUT THAT IS MISUNDERSTOOD BY A LOT OF PEOPLE, AND SO I WANTED TO MAKE SURE THAT I SPILL IT OUT.

I'D ALREADY MENTIONED TO YOU THAT WE CONTRACT OUR TRANSPORTATION.

WE ALSO CONTRACT FOR SERVICES THAT WE DON'T HAVE FULL-TIME EQUIVALENT EMPLOYEES FOR.

SOME SPECIALIZED SERVICES THAT WE CANNOT EMPLOY 100% OF THE TIME, WE CONTRACT WITH INDIVIDUAL COMPANIES TO DO THAT WITH SOME OF OUR SPECIAL SERVICES SUCH AS DIAGNOSTICIANS, OTS, PTS, AND SO FORTH, AND THERE ARE SEVERAL OTHERS.

WE ALSO CONTRACT ALL OF OUR SRO OFFICERS.

WE PARTNER WITH OUR CITIES AND SEVERAL DIFFERENT ENTITIES THAT WE PARTNER WITH, AND THOSE GO INTO THAT CLASSIFICATION RECALCULATION AS WELL.

WE CONTRACT FOR OUR SUBSTITUTE TEACHERS IN ADDITION TO THAT, BUT INCLUDED IN THOSE UTILITIES AND CONTRACTED SERVICES ARE UTILITIES.

THAT'S A MAJOR EXPENSE, THAT A LOT OF PEOPLE DON'T REALIZE IS INCLUDED IN THAT TOTAL.

THE ELECTRICITY, AND THE WATER, AND ALL THOSE THINGS, THESE AGAIN ARE PRESCRIBED BY THE TEXAS EDUCATION CODE AS TO WHERE WE PUT THEM.

THEN ANY MAINTENANCE THAT WE DON'T PERFORM ON OUR OWN, THAT WE CONTRACT WITH ANOTHER COMPANY THAT IS INCLUDED HERE AS WELL AS INDICATED THERE. BUT THESE ICONS.

ALL OF THOSE GO INTO OUR OBJECT CLASSIFICATION OF ACROSS ALL OF OUR FUNCTIONS.

WE SPEND ABOUT 15% OF OUR TOTAL BUDGET AND THESE UTILITIES AND SERVICES.

SOME OF THE HIGHLIGHTS OF THAT FOR YOU IS THAT ABOUT 4% OF OUR BUDGET IS SPENT ON TRANSPORTATION.

WE SPEND ABOUT A LITTLE OVER ABOUT 1.3%.

AND FOR OUR SECURITY CONTRACTS WITH OUR CITIES AND OUR PARTNERS, THEIR UTILITIES ARE JUST NORTH OF 3% ARE SUBSTITUTE, AND STAFF IS ABOUT 1%.

AND THIS YEAR, WHICH HAS REALLY BEEN A DIFFICULT THING ON THE BUDGET, IS ABOUT 5.5% TO RECAPTURE.

AND THAT IS THROUGH STATE FUNDING FORMULAS.

NOW WHAT WILL HAPPEN, IS IF THERE IS AN ADJUSTMENT TO OUR FUNDING FORMULAS, IF OUR TAXES ARE COMPRESSED AND WE'RE COLLECTING LESS TAXES THAN WILL OWE LESS RECAPTURE.

SO THERE'LL BE A RELATIONSHIP BETWEEN THOSE TWO.

BUT WE HAVE NO IDEA WHAT IT IS, AND SO WE HAVE TO MOVE FORWARD WITH CURRENT LAW.

THIS ONE IS ALWAYS SURPRISING TO A LOT OF PEOPLE WHO ATTEND A BUDGET HEARING FOR THE FIRST TIME, AND THAT THE THINGS THAT WE BUY, THE TANGIBLE THINGS ARE VERY SMALL IN RELATION TO OUR TOTAL BUDGET.

THE THINGS THAT WE PURCHASED, THE SUPPLIES, THE EXTRACURRICULAR ITEMS THAT WE NEED, TECHNOLOGY, ALL THOSE THINGS ARE REALLY A PRETTY SMALL PORTION OF OUR BUDGET.

PARTIALLY BECAUSE WE ARE A FAST GROWTH DISTRICT, OUR BONDS HAVE PAID FOR BRAND NEW THINGS, AND SO WE HAVEN'T HAD TO BUY AS MANY REPLACEMENT THINGS.

THIS WILL GROW AS THE DISTRICT CONTINUES TO AGE.

THAT'S JUST THE NATURE OF TANGIBLE ITEMS. THERE ARE A FEW LITTLE HIGHLIGHTS FOR YOU THERE, THAT EVEN THOUGH THEY'RE LARGE AMOUNTS AND WE CERTAINLY VALUE EVERY DOLLAR WITHIN OUR BUDGET, A LOT OF PEOPLE PROBABLY DON'T REALIZE THAT $400,000 SPREAD OVER 8,500 KIDS IS NOT A LOT OF MONEY PER STUDENT IN EXTRACURRICULAR COST.

THOSE ARE JUST A COUPLE OF PIECES.

THEN FINALLY, OUR FEES, TRAVEL, AND OTHER.

SO THAT INCLUDES FOOD, IT INCLUDES TRAVEL COSTS FOR OUR STUDENTS AND FOR OUR STAFF.

THEY'RE ACTUALLY PRETTY SMALL AMOUNTS COMPARED TO WHAT OUR LARGE BUDGET IS.

BUT THE OTHER COSTS ARE FOR OTHER INTANGIBLES.

SO WHEN THERE IS A COST THAT DOESN'T FIT INTO THE PREVIOUS THREE CATEGORIES THAT I JUST SHARED WITH YOU, THOSE ARE DEFINED HERE.

THE TOTALS ON THERE BY CLASSIFICATION ARE PRESENTED FOR YOU.

AGAIN, REMEMBER THAT SEVERAL OF THE EXPENDITURES WITHIN THAT 15% ALMOST 5% OF THOSE ARE REALLY PAYING HUMAN CAPITAL, BUT THEY'RE NOT CLASSIFIED IN PERSONNEL AND PAYROLL, BECAUSE OF THE MECHANISM THAT WE USE TO PAY THEM

[00:55:01]

THOSE ARE THE SAME NUMBERS, BUT IN DOLLAR VALUES.

MR. OLSON, CAN YOU GIVE ME MORE TIME? I'M SORRY. ARE WE GOOD? THIS IS OUR PROJECTED REVENUE FOR NEXT YEAR THAT GOES THROUGH THAT COMPLICATED MACHINE THAT I SHARED WITH YOU.

USING OUR DEMOGRAPHY FOR NEXT YEAR VERSUS WHAT WE EARNED FOR THIS YEAR.

SO WE ANTICIPATE ABOUT $4.5 MILLION MORE.

WE WILL MONITOR THAT AS WE MOVE THROUGHOUT THE YEAR.

THIS IS THE ESTIMATED BUDGET OF $98 MILLION FOR '23-'24 AS COMPARED TO WHAT WE ADOPTED IN THIS TIME LAST YEAR OF THE $86 MILLION.

REMEMBER THAT A VERY LARGE PORTION OF THAT IS $5 MILLION OF RECAPTURE.

THAT IS JUST RIGHT OFF THE TOP.

BUT THE REASON I PUT THIS IN IS FOR THAT PIE CHART FOR YOU TO SEE THAT REGARDLESS OF WHICH SIDE YOU LOOK AT, THOSE ARE ACTUAL PIE CHARTS CALCULATED FROM THE PERCENTAGES SPENT IN PAYROLL, CONTRACTED SERVICES AND SUPPLIES, AND SO THOSE PROPORTIONATELY CHANGE VERY LITTLE.

AND SO THE BUDGET THAT YOU WILL BE PRESENTED AS AN ADOPTION DURING YOUR REGULAR MEETING HAS THREE COLUMNS.

THE FIRST ONE IS THIS GENERAL FUND BUDGET, THE DAY-TO-DAY OPERATIONS AND YOU'LL SEE AT THE BOTTOM OF THAT, THAT OUR EXPENDITURE LEVEL EXCEEDS OUR REVENUE LEVEL.

AND WHEN THAT DOES THAT, THEN WHERE WOULD THE DELTA COME FROM? AND THE LINE ITEM THAT YOU SEE ACROSS THE BOTTOM THERE IS MOVING THE TRANSITION FUND BALANCE INTO THE GENERAL FUND TO BALANCE THAT BUDGET, SO THAT IF WE SPENT EXACTLY THE AMOUNT THAT YOU ADOPTED AND IF WE COLLECTED EXACTLY THE AMOUNT THAT WE ESTIMATED, YOU WOULD HAVE A 4.8 MILLION DOLLAR DEFICIT AND THAT WOULD COME FROM THOSE TRANSITION FUNDS THAT WE WENT THROUGH WITH YOU EARLIER IN THE WORKSHOP.

THIS IS JUST A TEC CODE THAT I'M SHARING WITH YOU.

THE DEBT SERVICE FUND WE COVERED WHAT THAT PAYS FOR, BUT HOW MUCH IS THAT? THAT FOR NEXT YEAR, THAT'S NEARLY $35 MILLION.

AND THAT IS SUPPORTED THROUGH THAT 47 CENT TAX RATE.

AND THAT IS USED EXCLUSIVELY TO PAY FOR ALL THE SCHOOL BUILDINGS AND THE EQUIPMENT THAT YOU SEE ACROSS THE DISTRICT.

THAT IS A FLAT CALCULATION.

WE CANNOT CHARGE MORE FOR THAT TAX RATE THAN WHAT THE DEBT PORTFOLIO REQUIRES.

SO THE DEBT PORTFOLIO FROM THE TIME OF ISSUE THROUGH MAYBE A 30-YEAR NOTE ON A BUILDING, THERE'S AN ANNUAL PAYMENT THAT WE PAY TWICE A YEAR.

SO THERE'S AN ANNUAL PAYMENT. THOSE ARE ALL PUT TOGETHER CUMULATIVELY AND A CALCULATION IS MADE TO COME UP WITH WHAT THAT PERCENT WOULD BE.

WE USE THE DEBT SERVICE TAX RATE ALSO TO REFUND AND REDEEM OLD DEBT THAT WE WOULD EXPERIENCE A SAVINGS ON.

SO IT'S BASICALLY A REFINANCING.

IF THE TIME WE ISSUED THEM, THERE WAS A 6% INTEREST RATE AND WE'RE IN AN ENVIRONMENT WHERE WE COULD GET 4% ON THAT, THEN WE CAN REFINANCE THAT AND THERE ARE A LOT OF CAVEATS THAT WE LOOK AT, BUT WE MANAGE THAT CAREFULLY FOR THE DISTRICT.

THAT IS THE LAST COLUMN BEFORE THE TOTALS THAT IS INCLUDED IN YOUR COMBINED FUNDS BUDGET THAT WE'LL ASK YOU TO ADOPT.

AND THEN THE FINAL THING THAT WE ASKED YOU TO ADOPT IS THE STUDENT NUTRITION BUDGET AND THE REASON YOU HAVE TO ADOPT THAT ONE IS BECAUSE WE ARE PARTICIPANTS IN THE NATIONAL SCHOOL LUNCH PROGRAM, WHICH IS A FEDERALLY FUNDED PROGRAM AND THAT REQUIRES THAT THE BOARD ADOPT THIS BUDGET, BUT IT IS A SELF-SUSTAINING BUDGET.

AND THAT IS IN THE CENTER COLUMN THAT YOU HAVE THERE.

SO WITH ALL THAT INFORMATION, I KNOW WE'VE SUMMARIZED A LOT IN A SHORT TIME PERIOD.

DOES THE BOARD HAVE ANY QUESTIONS? > QUESTIONS, BOARD?

>> THAT LOOKS I DO. I'M SORRY I DIDN'T THINK ABOUT THIS BEFORE.

>> NO PROBLEM.

>> IT TOOK TWO TIMES FOR ME TO HEAR IT BEFORE I CAME UP.

SO WE HAD SEVERAL VACANCIES THROUGHOUT THE YEAR, NO DIFFERENT THAN ANY OTHER SCHOOL YEAR OR ANY OTHER SCHOOL.

WITH THOSE VACANCIES, I IMAGINE THERE'S A SAVINGS IN DOLLARS.

I KNOW WE USE SOME OF THEM FOR SUBSTITUTE, SOME ARE FOR MAYBE OVER TIME, FOR MAINTENANCE.

HOW MUCH WAS THAT SAVINGS IF YOU HAPPEN TO KNOW AND HOW DO WE USE THAT MONEY?

>> SO OVER THE ENTIRE SPAN OF THE YEAR, WE PAID ABOUT $2.5 MILLION LESS THAN PAYROLL THAN WHAT WE BUDGETED FOR PAYROLL.

AND THAT HAS BEEN THE REASON THAT WE PROJECT WE'LL PUT MONEY IN FOR AMOUNTS AT THE END OF '22, '23 BECAUSE WE ACTUALLY HAD FEWER STUDENTS.

SO WE EARN LESS REVENUE WHEN WE HAD ADOPTED A BALANCED BUDGET.

SO HAD WE BEEN ABLE TO HIRE AND FUND AND HIRED ALL THOSE VACANCIES, WE WOULD HAVE HAD A DEFICIT BUDGET FOR THAT YEAR, BUT WE EARNED LESS REVENUE BECAUSE WE HAD LESS STUDENTS.

BUT WE HAD $2.5 MILLION WORTH OF VACANCIES THAT WE DID NOT FILL.

WE DON'T MOVE THAT MONEY INTO ANOTHER AREA.

SPECIFICALLY, WE DON'T SAY, OKAY, WE'RE GOING TO TAKE THIS MONEY AND MOVE IT THERE.

TONIGHT YOU'LL HAVE A FINAL BUDGET AMENDMENT THAT WE RECOMMEND FOR YOU TO ADOPT AND THAT SPREADS THE MONEY WITHIN FUNCTIONS TO OTHER AREAS OF THE BUDGET.

[01:00:04]

BUT SPECIFICALLY TO YOUR QUESTION OF HOW MANY, THAT'S AN AREA THAT I MONITOR VERY CLOSELY.

AND AT THE END OF THE SCHOOL YEAR, WE HAD ABOUT $2.5 MILLION IN POSITIONS THAT WE HAD BUDGETED TO PAY THAT WE EITHER HAD AS VACANCIES, EARLY RESIGNATIONS, AND SOMETIMES LIFE JUST HAPPENS AND PEOPLE HAVE TO GO ON LEAVE, BUT THEY DON'T HAVE LEAVE DAYS LEFT.

AND SO WE BUDGETED TO PAY THEM, BUT THEY'RE NOT HERE.

SO DEFINITELY ANYTIME THAT HAPPENS, DOES INCREASE OUR SUBSTITUTE COST, BUT WE DIDN'T MOVE MONEY OUT OF ONE INTO THE OTHER. THAT MAKES SENSE?

>> ANY OTHER QUESTIONS FROM THE BOARD?

>> ALL RIGHT. IF NOT, IF I HAVE ANY QUESTIONS FROM STAFF OR THE PEOPLE I HAVE IN MY BACK TO.

[LAUGHTER] I DO THAT ALL THE TIME.

DOES ANYONE ELSE HAVE A QUESTION ABOUT BUDGET? [NOISE]

>> BUDGET WAS [INAUDIBLE]. GREAT JOB.

>> [APPLAUSE] THANK YOU.

>> [INAUDIBLE].

>> I APPRECIATE THAT. DID YOU HAVE A QUESTION?

>> YES. AS FAR AS THE DEBT BUDGET RATHER THE BALANCE BUDGET, HOW CAN YOU SUSTAIN THAT? DO YOU SEE THAT HAPPENING MULTIPLE YEARS NOW? AND HOW WOULD THAT BE SUSTAINED?

>> ON THE DEBT SIDE IS WHAT YOU'RE SPECIFICALLY ASKING ME?

>> [INAUDIBLE] GO AND TALK INTO THE MIC.

I KNOW YOU WANT TO TALK TO HIM BUT YOU'RE TURNED THE OTHER [OVERLAPPING]

>> I SHOULD HAVE DONE THIS EARLIER.

[LAUGHTER] NOW I FEEL LIKE A GAME SHOW HOST.

ON THE DEBT PORTION SIDE THAT IS SOMETHING THAT WE COVER A GREAT DEAL, ESPECIALLY DURING THIS LAST YEAR WHEN WE WERE GOING THROUGH BOND ELECTION MATERIAL.

IT DOESN'T SOUND LIKE A SIMPLE CALCULATION AND I GUESS ITS NOT REALLY SIMPLE, BUT WE CAN ONLY CHARGE THE AMOUNT FOR TAXES THAT WE APPLIED TO OUR TOTAL TAXABLE VALUE THAT WILL SUPPORT THE PAYMENTS FOR THAT YEAR.

BUT WHEN WE GO OUT AND WE SELL BONDS, WE ONLY SELL BONDS THAT WE NEED.

SO FOR INSTANCE, IF WE WERE APPROVED FOR $300 MILLION WORTH OF BONDS, WHICH WE WERE BACK IN NOVEMBER WE DON'T GO AND SELL $300 MILLION WORTH OF BONDS.

WE SELL THEM AS THE PROJECTS ARE NECESSARY.

AND SO WE HAVE THE AUTHORIZATION TO SELL IT, BUT WE DON'T SELL IT UNTIL WE BEGIN BUILDING.

SO WE JUST SOLD $180 MILLION IN BONDS EARLIER THIS SPRING TO GET STARTED ON ELEMENTARY NUMBER 7 AND AN EXPANSION AT THE HIGH SCHOOL THAT WAS INCLUDED IN THAT BOND ELECTION.

WHEN WE SOLD THOSE FUNDS, WE ARE RATED BY NATIONAL RATING AGENCIES TO MAKE SURE THAT THE FINANCIAL INFORMATION IS REVIEWED BY A THIRD PARTY AND IT'S NOT JUST ME TELLING YOU, HEY WE'RE DOING GREAT.

SO THAT GOES THROUGH SEVERAL DIFFERENT AUDITS AND WE WE'RE RATED BY THEM BASED ON THAT RATING AND THE ENVIRONMENT OF THE BOND MARKET THEN THAT'S WHAT OUR INTEREST RATES WOULD BE AS WE SELL THAT.

ONCE WE SELL THAT INSTRUMENT, THEN WE GET THE AMORTIZATION OF WHAT OUR REPAYMENT WOULD BE.

WE HAVE TO ILLUSTRATE TO THE ATTORNEY GENERAL'S OFFICE THAT OUR DISTRICT HAS THIS VALUE THAT IS SUSTAINABLE DURING THAT TIME PERIOD THAT IF WE APPLY THIS YEAR'S INTEREST RATE TO THAT, THAT WE WOULD HAVE SUFFICIENT FUNDS TO PAY THAT TO THE END OF THAT DEBT.

THERE'S SEVERAL PIECES THAT COME INTO THAT, BUT THE BIGGEST AND THE EASIEST ANSWER, I GUESS, IS WE CAN'T ISSUE THE DEBT UNTIL WE CAN ILLUSTRATE THAT WE CAN PAY THE DEBT.

WE CAN'T ISSUE THE DEBT UNTIL OUR TAXPAYERS TELL US THAT WE VOTED FOR YOU TO DO WHAT OUR VOTERS TELL US THAT WE AUTHORIZE YOU TO ISSUE THE DEBT.

AND THEN ONCE WE DO IS VERY PRESCRIBED IN A HARD CALCULATION WITH OUR TAX OFFICE.

BECAUSE OF OUR GROWTH, FOR INSTANCE, IF IT ONLY TOOK $25 MILLION FOR US TO PAY FOR THIS YEAR'S EXPENDITURES UNLESS WE WERE GOING TO REFUND, AND WE DO THAT AS OFTEN AS WE CAN, WE REFUND AND REDEEM OLD DEBT THAT WAS ISSUED AT A HIGHER INTEREST RATE.

BUT ONCE ALL THOSE CALCULATIONS ARE DONE IF WE ONLY NEEDED TO TAX AT 40 CENTS IN ORDER TO MEET THAT YEAR'S OBLIGATION, WE COULD ONLY TAX AT 40 CENTS.

WE CAN'T JUST TAX EXTRA AND SAY, HEY, WE'LL SAVE IT FOR LATER OR WE'LL DO THAT FOR LATER.

WE HAVE TO HAVE EXISTING DEBT THAT WAS AUTHORIZED BY OUR VOTERS.

AND THAT DEBT CAN BE PAID IN THAT YEAR WITH THOSE FUNDS.

DOES THAT ANSWER YOUR QUESTION?

>> YEAH AND THANK YOU. I REALLY APPRECIATE THAT YOU [INAUDIBLE]

>> THANK YOU. I APPRECIATE YOU ALL COMING.

>> I HAVE A QUESTION.

>> OKAY. YOU BET.

>> I SEE THAT CHARGE IS A PART OF YOUR FUNDING.

HOW DO YOU COLLECT THAT MONEY AND YOU DON'T KEEP TRACK OF WHERE THE BILL GOES TO [INAUDIBLE].

>> YES. SO THAT PORTION OF IT IS VERY COMPLICATED.

I'M GOING TO LOOK OVER TO MY RIGHT.

SO OUR EXECUTIVE DIRECTOR OF SPECIAL EDUCATION.

SO THROUGH THAT PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM,

[01:05:01]

AND WE HAVE PROGRAMS WE CONTRACT WITH HOUSTON MEDICAID SERVICES, AND WE HAVE PROGRAMS WHERE OUR STAFF MEMBERS HAVE TO ENTER THE INFORMATION ON OUR STUDENTS AND ON THE TIME THAT THEY SPEND WITH STUDENTS AND WHAT SERVICES ARE REIMBURSABLE.

AND THEN IF THOSE STUDENTS ARE MEDICAID ELIGIBLE THEN WE RECEIVE BASED ON THOSE RATIOS AND THOSE MINUTES SERVE, WE RECEIVE FUNDS BACK TO THE SCHOOL DISTRICT BECAUSE WE PROVIDED SERVICES FOR THEM AS A SCHOOL DISTRICT AND PAID FOR THOSE SERVICES RATHER THAN THEM BEING PROVIDED OUTSIDE OF THE SCHOOL DISTRICT.

AND FOR INSTANCE, THIS YEAR, JUST TO QUANTIFY THAT, WE RECEIVED ABOUT TWO MILLION DOLLARS BACK INTO OUR BUDGET, THAT WE HAD EXPENDED OUT OF OUR BUDGET, TO SERVE OUR STUDENTS.

IT'S CALLED A REIMBURSABLE SYSTEM, SO WE RECEIVE THAT BACK.

BUT THERE ARE SEVERAL AGENCIES INVOLVED IN THAT, TRAININGS THAT ARE REQUIRED, AND THE LION'S SHARE OF THAT WORK IS DONE IN MS. ROBERTS OFFICE.

DO YOU HAVE ANYTHING, CHRISTIE THAT YOU WANTED TO ADD?

>> JUST THAT WE ONLY KNOW IN 15 MINUTE INCREMENTS.

WE KEEP VERY DETAILED RECORDS.

>> IN 15-MINUTE INCREMENTS.

>> SO DO YOU GO TO MEDICAID? IS THAT [INAUDIBLE]

>> WE FILE WHAT'S CALLED A COST REPORT.

WE FILE INTERIM COST REPORTS AND CASH REPORTS, AND WE FILE THOSE WITH MEDICAID AND THEN RECEIVE OUR PAYMENTS THROUGH THEM.

>> IS THAT FOR INDIVIDUAL STUDENT WHO'S RECEIVING THOSE SERVICES?

>> IT HAS TO BE A STUDENT THAT IS MEDICAID ELIGIBLE THAT IS ALSO RECEIVING THOSE SERVICES THAT WE CAN ILLUSTRATE RECEIVED ELIGIBLE SERVICES.

WE DON'T GET REIMBURSED FOR ALL SERVICES THAT WE PROVIDE TO A STUDENT ONLY FOR THOSE THAT ARE ELIGIBLE SERVICES AS DEFINED BY LAW.

>> I GUESS MY QUESTION IS, WILL YOU SAY THEN, LITTLE JOHNNY RECEIVED 15 MINUTES OF OT.

DO YOU SAY LITTLE JOHNNY OR DO YOU SAY 15 HOURS WAS SPENT WITH [INAUDIBLE]

>> NO, IT IS LITTLE JOHNNY AT THIS TIME AND LITTLE JOHNNY'S IDENTIFIER NUMBER.

YES, IT'S VERY DETAILED.

ANYONE ELSE? ALL RIGHT.

>> THANK YOU, MS. ADAMS.

>> THANK YOU.

>> ANY OTHER QUESTION FROM BOARD MEMBERS? MISS FLORENCE, DO WE HAVE ANY CITIZEN INPUT? THAT WAS IT.

OKAY, JUST MAKING SURE THERE'S NONE BEFORE I MOVE. GO TO THE BOARD COMMENTS.

[4. Board Comments]

>> SO MOVE.

>> ALL RIGHT MARY. DO I HAVE A SECOND?

>> SECOND.

>> BY KEN. ALL THOSE IN FAVOR RAISE YOUR HAND.

ALL THOSE OPPOSED? MOTION PASSES WE'LL ADJOURN AT 6:38 PM.

* This transcript was compiled from uncorrected Closed Captioning.