Budget Committee Members

ROSEBURG PUBLIC SCHOOLS Roseburg, Oregon

No. 2 Budget Committee Meeting April 15, 2010

BUDGET COMMITTEE MEMBERS: ADMINISTRATORS: X Denny Austin Exc Rick Barnes X Larry C Parsons, Superintendent X Rodney Cotton X Keith Cubic X David Hanson, Assistant Superintendent / HR X Joseph Garcia X Brian Davis X C. Lance Colley, Chief Operations Officer Exc Dan Huff X John Markovich Exc Dawne Huckaby, Director of Teaching & Learning X Charles Lee X Stacy Stiefel X Matt Brausam, Director of Student Services Exc Theresa Lundy X Bernis Wagner Exc Paul Meyer X Gary Wayman

Attendees: Gary McFarlane, Technology Coordinator Cheryl Northam, Budget & Accounting Manager Dennis Randolph, Physical Plant Manager Tim Stoelb, OSEA Representative Janet Kischel, Budget Committee Secretary

NOTES OF THE BUDGET MEETING

TIME, PLACE: The second meeting of the Budget Committee of Douglas County School District No. 4 to approve the Budget for the 2010-11 fiscal year was held in the Board Room of the Central Office at 7:00 p.m. on Thursday, April 15, 2010.

ATTENDANCE: Committee members present were Denny Austin, Rodney Cotton, Keith Cubic, Brian Davis, Joseph Garcia, Charles Lee, John Markovich, Stacy Stiefel, Bernis Wagner and Gary Wayman. Rick Barnes, Dan Huff, Theresa Lundy, and Paul Meyer were excused.

Administrators present were Larry Parsons, David Hanson, Lance Colley, and Matt Brausam.

CALL TO ORDER: Budget Committee Chair, Keith Cubic, called the meeting to order at 7:01 p.m.

FLAG SALUTE: Mr. Cubic asked Mr. Davis to lead the pledge to the flag.

APPROVAL OF MINUTES – APRIL 08, 2010: Mr. Wayman moved to accept the minutes as presented. Mr. Garcia seconded and the motion passed unanimously.

REVIEW OF AGENDA: The committee requested no changes to the proposed agenda format.

PUBLIC PARTICIPATION: Chair Cubic asked if any parties wished to offer a comment to the committee, and there were none.

BUDGET DELIBERATIONS

Lance introduced Dennis Randolph, Facilities Manager, and noted he has been doing a fabulous job for the District over the past three years. He also introduced Gary McFarlane, who was asked to speak

of 6 to the group about our Technology Plan, as well as Tim Stoelb, our local classified bargaining group president and technical expert in our Technology area.

Capital Projects Fund and Major Maintenance Lance explained that in the mid-90’s, District facilities were becoming run down and we weren’t in a position to make much needed replacement/repairs. The community passed a 5-year serial bond levy, the proceeds of which were used for projects including roofing, windows, flooring and exterior envelope items. In return, the District committed to keeping those facilities in as good of shape as possible. We have been taking a balanced approach to the entire organization, understanding that a safe and reliable environment is good for kids. The financial commitment was to spend 1.25% of general fund resources to keep facilities in good repair. To date, that would amount to $7,135,172. As time passed, we committed funds not only from the General Fund but also other sources of revenue, resulting in actual expenditures of $9,641,737. Resources included funds from the Qualified Zone Academy Bonds (QZAB), SB1149, Business Energy Tax Credits, and another Full Faith and Credit Issue. With immediate needs being offset in prior years, and to the extent that we cannot spend that money for the next year or two, this year we have allocated those resources back into the classroom. We have not under-spent for our facilities for the past 14 years, nor do we have any intention of doing so over the long run. The committee questioned last week where we are in our major maintenance scheduling, and if we could do some things, what would they be? If we don’t do those things for a year or two, what is the impact? Mr. Cubic inquired what 1.25% would be in this year’s General Fund, and Lance responded that it would be $575,000.

Dennis shared that research through reference resources such as the American School and University indicate that entities should be targeting .75% of their budgets for capital improvements to avoid having deferred maintenance.

Prior to 2008, we were doing roofing, paving, sealing, exterior painting, flooring, bathroom renovations and planned discretionary expenditures. The last of our large expenditures occurred in 2007-08. We spent approximately $50,000 in 2008-09 remedying safety issues at the Melrose Elementary parking lot. This year we anticipate spending a little over $50,000 for another safety issue at the high school. Those projects were not budgeted. Dennis assured the group that the “sky is not falling”. We probably have between 2.5 and $3 million in deferred maintenance identified through the Community Action Committee (CAC) meetings. When we do not make transfers of $400-600,000 per year, it does escalate deferred maintenance. We had been utilizing funds from QZAB and the remainder of the high school bond.

Currently, we are patching roofs, spending $10-15,000 annually. The maintenance crew is doing a great job extending the life of equipment. In 2008-09 we made a 6% mid-year reduction in budget and staffing. Dennis noted that we are proud of the work order system that has enabled us to monitor needs and prioritize effectively. We have been successful in focusing our energy on preventative maintenance rather than reactionary work orders. Our preventive maintenance items have increased 19% over last year. Lance stated that the buildings are in better repair than they were 15 years ago.

While reducing our paint crew down to one individual, we are still completing interior painting and feel comfortable that we will continue to meet our 8-year cycle. Fir Grove’s exterior will be painted this year. Our smaller facilities can be painted using our crew, but larger projects such as some buildings at the high school do require a commercial company.

of 6 Dennis also noted that we are working with our elementary schools in an attempt to reduce energy costs. In the next few years we expect to need upgrades to the Green boiler and Melrose septic system. Our preventive maintenance program helps us monitor equipment as repairs are becoming more immediate. The work order system prioritizes requests as low, medium, high and emergency in nature. We are also becoming more proactive with repairs to the rentals behind the high school, rather than delegating services to a contractor as a cost-saving measure. The work order program tracks costs, and this allows us to predict in coming years what we might expect in terms of anticipated repairs/replacements in terms of life expectancy of equipment and materials.

While reality tells us we are in the worst economic circumstance since WWII, Lance assured the group that our teachers and students are working in an environment conducive to teaching and learning.

After much discussion, Mr. Cubic summarized that the group would like to know what some real capital outlay needs may be over the next 3-5 years. This could include HVAC, roofing, electrical, technology, and sewer.

Technology: Lance introduced Mr. Gary McFarlane, Technology Coordinator, who was invited to discuss the District Technology Plan and implementation.

Gary shared that the Roseburg School Board recommended in 1997 that the Technology Department develop a replacement schedule, including a 7-year computer replacement cycle. Technology purchases are driven by our District Technology Plan, which operates on a three-year cycle. The technology replacement fund is used to keep equipment up to date and meet the needs of students and staff throughout the District. A careful inventory is maintained, and each spring the tech staff visits each site to document equipment and monitor condition. Gary coordinates with the buildings and our staff endeavors not to be intrusive or disruptive to the classroom. This results in much of this work being performed in the late spring or over the summer months.

Over the past year, we were able to transfer $50,000 to the fund, less than the amount we normally would have allocated. One of the impacts was that we did not initially purchase new computers that had been targeted for instructors at the high school. However, through Federal Stimulus Funding, we received between $50-60,000 that enabled us to purchase 39 computers, printers and software for the benefit of our Special Education classrooms. Remaining funds will be utilized to enhance wireless technology at our elementary schools.

In spring of 2010, Gary plans to purchase approximately 80 computers for the high school. Mr. Davis inquired if we typically try to purchase equipment en-masse, and Gary explained that from an instruction standpoint it’s easier if we have the same technology, particularly in the computer labs. We usually target replacement one building at a time. Mr. Stiefel questioned if it’s cheaper to replace rather than repair equipment, and Gary indicated that while over time our number of computers has risen, the purchase price has dropped. We buy quality products, so it depends on the needed repair. Mr. Cubic inquired what is planned for 2010-11, and Gary responded that $100,000 is budgeted, which will include the high school computer replacements as well as updating computers at two of our elementary schools. We hope to set aside $50,000 for the following budget year. Since we have networks established at all schools, including switches, we do not anticipate any sizeable unexpected expenses for repairs or replacements. The budget includes planned software subscriptions, internet content filters for safe internet access, and anti-virus software.

of 6 Wireless technology in our schools allows teachers to work more efficiently and gives them greater freedom of movement throughout the classroom. Wireless access points do require electricity which can be a problem in our schools. However, we use Ethernet connections to provide both data and electrical needs. Douglas Fast Net is our provider for fiber connectivity between the buildings, and we have been able to discount our costs up to 75 percent through the federal E-Rate Program.

Many of our programs are now centralized, such as the Destiny Program (our library software) that services all schools via a server at central office. Mr. Garcia inquired if we budget for training, and Gary explained that we try to provide training through our existing staff, and have used some grant dollars for professional development. We are spending 3/5-2/3 of what we normally would budget. Mr. Lee inquired if there are things that we should be doing, and Gary responded that we are constantly looking ahead and evaluating products and needs. There is an amazing amount of free material available on-line, and our teachers have become very savvy searching out those resources. Smart Boards would be helpful, as well as student response systems, AKA “clickers” that make it easier for students to participate in class discussions. We have also been successful in updating our access to video by utilizing fiber connection to the ESD.

Curriculum: Lance referred to the “Annual Costs to Support Current Adoptions” handout illustrating that our total on-going costs of support are $156,000. Dawne Huckaby has provided information for the 7 year cycle beginning in 2008/09 covering curriculum for Health, K-8 Math, 9-12 Math and K-12 Science. Estimated costs for materials currently deferred are $1,080,000. We did not have resources to accommodate these adoptions.

In addition, we have anticipated costs for adoptions in the next four years of Second Language, Social Sciences, The Arts and Language Arts for a total of $1,700,000. The 7-year adoption costs would be $2,780,000 with an average cost of $397,000 for each of the seven years, with an on-going cost of $156,000.00. The average annual cost to sustain the program would be $553,142.00.

We are currently investigating with COSA, OSBA and ODE to see if the adoption schedule may be rolled back. Our question is at some point, do we skip an adoption and go to the next? We will need to evaluate if the updated adoption is significantly different, or if we can supplement our existing adoption. Rod requested that a District representative initiate contact with ODE next week to try and find answers to our questions.

Larry shared that more and more, teachers are depending less on textbooks and more on other materials to help kids meet the standards. Throughout the country, instructors share on-line information with each other to enhance materials. Adoptions are no longer strictly textbooks, but include DVD’s and other materials, and therefore referred to as materials adoptions. He noted that he and Lance are scheduled to attend the superintendents’ “Off the Record” meeting next Friday, and hope to gain more information on the financial picture for education. These meetings are held four times per year.

Mr. Markovich inquired if materials will be available on-line in the future, reducing our dependence on textbooks, and David responded that we are not there technologically at this point. That would require a computer for each student.

Mr. Cubic summarized the discussion, stating we plan no new textbook adoption; our current textbooks appear to be satisfactory; ODE may consider adjusting the adoption schedule due to funding levels;

of 6 and our focus is on standards rather than on textbooks. As far as we know, there are no penalties for not making an adoption.

Early Retirement: Lance stated that we commissioned an actuarial evaluation of our Early Retirement Program three years ago. Our obligation will peak in 2012-13. This program, which began at least 30 years ago, was bargained out in the year 2000. Employees who worked for the District for at least ten years were grandfathered into the program, and no one hired after that date is eligible. Employees not eligible under that plan originally received a $15.00 per month contribution to a TSA. Eligible licensed employees receive a retirement stipend and a percentage of their insurance paid. When the program was initiated, insurance costs were nominal, and this program enabled the District to encourage senior staff to retire, hopefully reducing salary costs as new staff were hired. Over time, insurance costs have gone from $150 - $900 per month. An employee must retire from our District to qualify for the benefit.

This year, we propose a transfer of $950,000 increasing to $1.1 million in the following year. Transfers will begin to decline after 2013. We are seeing a trend of people not retiring as early as they had when PERS was at its peak. Those retiring at the earliest possible time are eligible for stipends at age 55 and insurance at age 58. A teacher who doesn’t retire at 58 and postpones one year saves us $20,000. Last year we reduced our transfer from $1,050,000 to $800,000. This year we propose increasing that to $950,000 for this obligation as the cost next year will be $1,350,000. The last year we will be making insurance payments for this group is 2034. In 2018-19, the numbers start getting a lot smaller.

In the last recession of 2002-03 we proposed a transfer of $900,000, and instead took $300,000 from the fund to balance the budget. We intend to schedule an actuarial valuation every two years. Rod noted that based on the state teacher experience average, we receive an additional $25 per student since our average exceeds the state-wide average.

Mr. Cubic summarized that we expect this required liability to increase over the next three years, and then decline. We are seeing a trend that employees are remaining employed longer, reducing our expense for this benefit.

Debt Service Fund: Lance explained that there were two bond issues in 2000-01 that paid for the high school renovation. These 20-year bond issues mature in 2020 and 2021. We levy property taxes for our General Obligation Bond issue, and will need to collect $1,863,000 in current and prior year taxes to satisfy this obligation. To pay debt service of $1,933,500 we estimate a collection ratio of 91.5 percent. The levy will slightly exceed $2 million. We anticipate the collection ratio to drop a little due to foreclosure issues facing constituents.

PERS Pension Obligation: Our District has saved over $6 million to date by issuing pension obligation bonds. Right now, we are paying PERS directly less than .51% of payroll, with debt service approximately 7-8%. Our side account lost in 2008 and gained back in 2009. If earnings approach reasonable historic rates (8%) we will remain dollars ahead. We anticipate an ending fund balance of $1,525,000 carry forward that will allow us in 2011-12 and 2012-13 to offset part of the increase we know will be coming in our PERS rates. It is anticipated they will go up 4.5-6 percent. Mr. Markovich commended Mr. Colley on his foresight in setting aside funds to satisfy PERS obligations. He noted that he is aware of other organizations that have not been able to do so.

of 6 Mr. Lee motioned that the Debt Service Fund be accepted as presented. Mr. Cotton seconded and the motion passed unanimously.

Discussion:

Lance shared that ultimately one of the difficult questions we have to ask ourselves, and our community, is what is our response when the state is not adequately funding education?

PUBLIC PARTICIPATION: Chair Cubic inquired if there was anyone interested in addressing the committee and there were none.

ADJOURNMENT: Chair Cubic adjourned the meeting at 9:45 p.m.

NEXT MEETING – TIME AND SITE: The committee will convene again on Tuesday, April 20, 2010 at 7:00 p.m. in the Administrative Office Board Room. Mr. Markovich and Mr. Lee may be a little late as they have other meetings.

______Janet Kischel, Budget Committee Secretary

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