Board of Education Finance Committee Meeting Part II

April 23, 2009

Dr. Cook said that in November, there had been a meeting with Mr. Hamilton about how the budget was being created. Mr. Hamilton said that he was comfortable with the numbers that the District. Dr. Cook said that he would love to see Mr. Hamilton set up an account for health benefits that had $25,000,000 or $26,000,000 and if there is a surplus, it remains there. In the event of deficit, then the City assists. With a few years of surplus, the City could put it in a funding account.

The 300 series has some large legal fees, but the with three months remaining, there is a possibility that there will be able $165,000 deficit. The monthly legal report was emailed to the Board on Wednesday in order for them to have it before the meeting. Dr. Cook pointed out that legal activity has decreased.

The 400 series is namely assigned to the Facilities department and currently there are no deficits on any of them. At the end of the year, these accounts will go down to zero. The repair maintenance account is being monitored carefully because the expenditures have taken approximately 94% of that fund with two months left in the school year. No major problems are expected.

The 500 series covers the out of district special education tuitions, which are mandated. They continue to be on the deficit, but some of this should be offset by the Educational Cost Sharing funds and Medicaid reimbursements. The Student Transportation accounts are currently in the black and a surplus of $122,000 is expected in the account at the end of the year.

The 600 account will have all the funds spent down by the end of the year. Electricity consumptions should be lower than estimated. Natural gas is running higher because the District is trying to avoid the purchase of oil at this time. After July 1st, the District’s cost for oil will be much lower and the tanks will be filled at that time. After combining all the utility account surpluses, there could be a total surplus of $100,000.

The 700 series, which is Equipment and Software, will also be spent down by the end of the school year. There will be no deficit and there are no major red flags. This is also true of the 800 series for Dues and Fees. Monitoring on the all the accounts will continue, particular the 200 series.

Ms. Bishop-Pullan asked that the report be presented to the full Board on May 14th. Dr. Cook said that the Committee had wanted the Board to receive this report quarterly and have a monthly report during Committee meetings. Ms. Jimenez said that it should go to the Board more frequently because the Board would like to know what the state of the finances are. Dr. Cook said that he would like to wait a few weeks after June 30th before presenting the final numbers. Ms. Bishop-Pullan said that the Committee would like a report before then, either at the late May or early June meeting.

Dr. Corda then addressed the Board about the 2009-2010 Operating Budget. He said that the Administration had advised the Board in March that Naramake would need two portables because of the increased enrollment. When the bid for Rowayton went out, the two portables for Naramake were included. The bids have come in and the Administration is working against the $190,000 in the Operation for the original cost of the Rowayton portable leases. The bid for the four portables is about $180,000 total. The good news is that the resources for the portables at Naramake and at Rowayton will be covered in the original appropriation for Rowayton. This will be one less thing to factor in at reconciliation time.

The Board of Estimate has indicated that the expected increase over the 2008-2009 budget will be 1.9%. This means that the District will have to reconcile $2,188,007 from between the BOE approved budget and the budget that the BET approves. Work has begun on this, focusing on the Operational side, which includes further reduction in staffing and instructional programming. Meetings have been scheduled with all three levels of school administration to keep them apprised. May 4th is the day when the BET will adopt a final number.

Ms. Jimenez said that she had been reviewing the quotes and had some questions. Specifically to Naramake, Ms. Jimenez said that the need for the portables at Naramake had not been anticipated. On page 44 of the Board book, the Naramake figures are listed. She then asked what would happen if the Naramake community was told that they needed to keep the school at the same size that it was last year. Currently, there are 71 students in the kindergarten. She felt that putting another aide in the classroom to assist with overload would be a more prudent solution than to add a portable. Portables have a rental cost, but also there are additional costs such as installation. She said that she has already asked what the impact on lunch would be, but had not gotten an answer. When additional students come into a school, the lunch room does not grow. It has a finite number of students that can be seated at one time and there are also logistical scenarios regarding multiple lunch shifts and how it impacts art and gym.

She said that her suggestion was one possible scenario on how to deal with the increasing populations that is coming into the schools. Another factor could be the movement of students from private schools to public schools, and this could turn around if the economic situation turns around again. She said that before the District goes too far down the decision making road regarding this situation, she would like to see the District look at some creative solutions on how this could be handled.

Ms. Jimenez then said that she didn’t understand enough about Pre-K classrooms to know if there were any classes that could be combined. She felt that the Committee should go back through the budget with a fine tooth comb and be creative about considering some solutions and reconciling the budget. Both budgets contain a statement that says, “We recognize and understand our responsibility for the wisest possible use of the significant public funds entrusted to us.” Ms. Jimenez urged the Committee members to take a slow walk through the budget, looking at it objectively to determine what is really needed and consider if this is the best way to approach the issue. Ms. Jimenez said that there would be a parade of people coming to the Committee to protect their particular issue.

Mr. Iannaccone said that there had been previous discussion about early retirement. Dr. Corda explained that the City’s early retirement plan does not connect to the District. Mr. Iannaccone acknowledged this but asked if that type of plan would save the District money. Dr. Corda said that any option could be considered but it might enter into the realm of informal conversations. Mr. Iannaccone asked if the District had done this before. Dr. Corda said that he had. Mr. Iannaccone asked if it saved the District money. Dr. Corda said that there were some savings associated with it and that what was done with the teaching staff was to increase the number of days that the retirees received for unused sick leave from the maximum of 61 to a maximum of 100. This was paid out over a period of time. Those kinds of concepts have to be considered carefully because the short term gain, the question is raised about what the implication is over the long term. There are also health insurance costs that come into play with this type of scenario along with the level of the teacher’s expertise.

Dr, Corda said that he believed that a revised estimated enrollment for Naramake had been sent to the Committee. Ms. Jimenez said that it did not change the figures. Dr. Corda said that he believed that there was a need for an additional section of kindergarten. Ms. Jimenez said that the new estimate was only one more child. Dr. Corda said that the issue that everyone needed to be aware of was that a determination about the portables had a timeframe. This needed to be made by the end of next month. Ms. Jimenez said that the P.O. was open. Dr. Cook said that there were options. Dr. Corda said that he was not talking about the structure of the bid because it was a wise way to go, but the time necessary to insure that if the decision was made to do it, the portables would be in place by September. He said that Dr. Cook could create a timeline showing the various steps needed to do this. Ms. Jimenez said that the Board would have to recommend the budget within a reasonable period of time and that both items were reasonably close. She then repeated that she was encouraging the Committee not to leap too far down the road.

Ms. Bishop-Pullan said that neither the Superintendent’s Budget nor the Board’s Budget contains the portables for Naramake, and therefore they had not been approved. Dr. Corda said that this was one reason why this was being discussed in order to make sure that the full Board was aware of the issue. Ms. Jimenez said that before it goes to the Board there needs to be some dialog about the enrollment. She said that she was not convinced that the school needs them. There are less expensive, educationally viable, fiscally responsive way to deal with this that doesn’t include portables. When the Committee is ready to discuss this, it needs to be fully discussed.

Ms. Bishop-Pullan said that before she became chair of the Finance Committee, she was concerned that this committee would need to meet more frequently than it is currently meeting. She felt that the Committee would need to have a series of meeting to discuss the reconciliation. She said that she would be willing to schedule a meeting next week to discuss reconciliation and then discuss some of the things that Ms. Jimenez had mentioned along with other issues. Mr. Chiaramonte agreed. Ms. Bishop-Pullan said that they should finish the agenda and discuss additional meeting dates under OTHER.

Ms. Bishop-Pullan said that she needs to know what the Committee thinks about moving this to the Board in terms of the explanation of the portables or if there should be more discussion of this before bringing it to the Board. The Board never approved those portables and secondly, the Board is unaware of the information that Dr. Corda just gave the Committee about the bid.

Dr. Corda said that there was no need to award the bid at the next meeting, which would not have happened in the first place. He said that he did not think that there was a need to award the bid at the second meeting, which is May 19th. He did ask the Committee to consider getting the information in front of the Board so that if there are other questions that have to be answered in terms of the bid, the answers can be prepared. Then when the Board is ready to make a decision, the information will be available about the portables.

Ms. Jimenez said that she did not think it needed to go on the agenda but felt that it should go as a comment so that people would know that this was being discussed. She said that she was concerned about the fact that one small piece of the project had changed to one large piece. Ms. Bishop-Pullan said that she was not moving on to the agenda for approval but under Information and Reports. She said that the information could come under the Finance Committee, but that because of the financial implications and the community impact, she felt it might be better if it was a separate agenda item. Mr. Chiaramonte said that the Board was already behind the eight ball in terms of time frame. Ms. Jimenez disagreed saying that this time frame happens every year when the City sets the cap and then the reconciliation happens. Mr. Chiaramonte asked what the Board was going to do with the new students coming in. He added that he wished that this option had been available earlier. Mr. Iannaccone pointed out that with portable classrooms, there was construction time to consider also. Ms. Jimenez said that the District would have ten weeks to install it and there were only some utilities that had to be hooked up. Mr. Iannaccone said that sewer lines have to be included, also. Ms. Jimenez said that it would be possible and commented that there were a lot of people out of work now.

Mr. Iannaccone said that he had thought there would only be one portable with four classrooms at Naramake. Dr. Corda said that each unit had two classrooms. Ms. Jimenez said that the Committee still needed some answers about the lunch room. The enrollment was about 400 now. She said she did not believe it had ever reached 500.

Ms. Bishop-Pullan said that the kindergarten enrollment for 09-10 was listed as 68 and first grade was listed as 69, with a total of 408. The actual enrollment for Naramake in the Budget book cited 71 in kindergarten and 62 in first grade. The projected enrollment for kindergarten was 68 and 69 for first grade. Dr. Corda said that on April 1, there were 69 kindergarten students that were carried forth to 69 first graders in coming year. If there were three sections instead of four, that would be a first grade enrollment of 23, which is what the class size is this year. This is in excessive of the contract. When that number exceeded the contract, the District addressed it by adding an aide. When the budget projection is made for the coming year with an increase student enrollment, the District projects an additional section. The unknown factor is whether that projected enrollment may change over the summer by new students coming in or students leaving. The other factor is whether there will be retentions. When the Naramake kindergartens were analyzed, the teachers said that there were between four and six students they felt might be retained. Ms. Jimenez said that this was not in the notes for Naramake. Some buildings do provide these comments, such as Rowayton. There was nothing from Naramake in what was provided as a update. Dr. Corda said that what he had provided was the feedback from the principals. Ms. Jimenez said that some of the principals commented and some did not comment at all. Naramake did not comment at all. She said that she understood that it was a moving target. She said that the Board had to face this issue many times in the past and the Board has had to say, “We’re going to go in and we know this is an issue and if so, then we are going to have to add an aide.” She said that is a different cost scenario than adding portable and another teacher and other items. By the time that the District is done in the first year putting in the portable for $150, add the rental, plus the installation, plus the teacher, plus benefits, plus an aide maybe and other issues. And another issue is how it impacts on the school in terms of relief periods for the rest of the teachers and that is one more that you have to put into the mix in terms of number of teaching periods, the number of prep periods and therefore that will impact art, music and gym, along with other things, such as the cafeteria.

Dr. Corda said that the staffing concerns were outlined in the Friday report regarding concerns about covering the preparation periods or whether there are sufficient teaching periods in the section. Ms. Jimenez said that Dr. Corda had stated earlier that there were no staffing implications. She said that there would be staffing implications to adding two portables because that would mean adding two teachers. Dr. Corda said that two additional teachers were already in the budget, the portables were not. Ms. Bishop-Pullan said that the surprise was that there were no classrooms for those two teachers. Dr. Corda said that the staffing had been budgeted, but that the District had not known about space because the principal did not advise Administration that there was a space problem. It was the new principal who informed the Central Office. That was the surprise.

The other concern that Dr. Corda had was kindergarten classes of 23. He said that he tries to factor that in. The kindergarten students do better in smaller groups even if there are two aides in the classes. If an aide is added in three classes, that equals one teacher. Ms. Jimenez asked about this. Dr. Corda said that if there was an enrollment of 69 there would be two aides in the class. If there are three sections and each of them have an additional aide, that equals three additional aides, which is more than just a regular kindergarten class, which has only one aide. The salaries of three aides equal one teacher. Ms. Jimenez said that the District would have to provide a new classroom, books and everything else. She said that there was some practicality around this that needed to have discussion.

Ms. Jimenez then said that there needed to be a working session to toss out ideas and think things through. She said that budget reconciliation was never fun. It starts painful and becomes even more painful. Everyone is going to have a point to defend, whether it is a special program that has to be eliminated, or band uniforms, or gym programs that will need to be stopped. It will be painful. She said that this was one small issue, and cautioned everyone about not focusing too much on this issue because there were many out there. It would be important not to be too hardened into positions regarding what should be done. Ms. Jimenez said that what has to be done is that the Board has to make the best decision that they can for the entire system. It’s tough, but she doesn’t care because she doesn’t have any children in the system.

UPDATE ON THE 403b TAX SHELTER FOR EMPLOYEES.

Dr. Cook gave the Committee an update on the 403bs and use of the tax shelter annuities that are offered to staff. This is no cost to the Board whatsoever and requires no budgeting. Under the new guidelines established by the IRS the District became compliant on January 1st, 2009. All databases have been developed and built by our staff under the supervision of ING at no additional cost to the Board. Word has been received that Vanguard and Fidelity, two vendors who left because they disagreed with signing the information sharing claims, have since had a change of mind and reconsidered their positions. They should be signing on to the District some time in May or June. If that happens, then the staff that had accounts with them will be able to use those vendors again. Also discussions have been held with UBS, who has set up a “sub account” for the 403bs and this information is being reviewed to insure that all the IRS goals and guidelines have been met by a third party administrator. If this is approved, UBS will be able to work with the staff also to provide their former services to their clients. A common remitter, which is a software program, will allow the individuals to view their own accounts on a secured webpage. The common remitter will also send the funds electronically from Norwalk to the vendors who requested the funds within the same day. This is a new program, so Dr. Cook said that the District was not rushing forward with this because he wanted some of the kinks ironed out of the road before enrolling. Dr. Cook said that Norwalk was well ahead of the curve on this system and he felt the new way will be much more efficient. This process is going well.

Ms. Jimenez asked if there was any cost to the District. Dr. Cook said that there was no cost to the District. Dr. Cook said that was one of the reasons that they has selected ING because the District could handle it. He repeated that there was no cost to the Board whatsoever. Ms. Jimenez asked if there were any cost savings as a result of auditing. Dr. Cook explained that if the District had gone with one of the other companies, it was estimated that it would have cost the District $6,000 a year annually along with the cost transferred over to the vendors of about $20,000 a year. He stated that he felt that within a month of these costs being incurred, it would have been passed on to the staff members. The District avoided those costs and generated some cost savings. Dr. Cook then said that the 403b are now being called 102s because they value has decreased so much.

Mr. Mellion said that the Committee might want copies of the letters that were sent home to parents because he had a few copies that did not information that would make the parent think they were important due to lack of a phone number, a contact person or other information. It looks less than significant in terms of paperwork.

Secondly, if a student doesn’t pay their lunch obligation, then why is their obligations less than what they are required to pay for their lost textbooks or graduation fees. Thirdly, he added that the parents should be informed when the outstanding debt reaches $15.00 rather than $10.00 because the meals cost $3.00 a day.

Mr. Mellion commented that regarding the band, originally the band played at football games that that was the extent of it. The competition portion was separate. He then asked if competition was part of the curriculum and whether the District had to pay for it. It would be good to determine whether the competition portion of the program was an add-on. He added that the parents had previously said that the obligation was $1,000, but they reduced it to $800, which is a substantial amount of money. The parents also said that they were paying for the repair of the equipment. He asked if this was an obligation of the Board or the parents.

Mr. Mellion also pointed out that there had been a number of mailings to the parents that were costly and if a household had more than one student enrolled in the same school, duplicate mailings were sent to the parents. He suggested that bulk mailings be utilized and that duplications on the list be eliminated.

Regarding Naramake, Mr. Mellion said the resource center occupies two classrooms at Naramake. He said that those were two classrooms that could be used and suggested that the 501c3 pay rent to the Board for the use of those rooms.

Mr. Mellion said that he was happy that Vanguard and Fidelity would be rejoining the system because there were about 600 people participating in the 403b program.

Ms. Mosby asked about the two portable classrooms at Naramake. Dr. Corda said it would be about $90,131. Ms. Jimenez said in the budget there were portable costs being $103,680 and an additional $88,000 for set up costs, $12,800 for a canopy along with security services for $7,800. She said that it would not be just the rental and that there were ongoing expenses. She said that was part of her question to Dr. Cook and she has not had a chance to go through this yet. There was a lot of financial information included. Ms. Jimenez said this was just for Rowayton and quoted a number group of figures that were inaudible on the tape. Dr. Corda was then asked to clarify what the bid cost would actually cover for the project before the next full Board meeting.

OTHER

Ms. Bishop-Pullan said that she did not know if the meeting had to be on a Thursday night. Mr. Chiaramonte said that he had Curriculum meetings. Ms. Bishop-Pullan asked if the Committee should try to schedule one before the 14th. Ms. Jimenez asked if the full Board meeting was on the 21st. She was told the next Committee meeting would be on the 14th. Mr. Chiaramonte said that he was not available before 7:30 p.m. It was decided that the next meeting would be held on May 7th at 7:30 p.m. in addition to the 14th and the 21st.

ADJOURNMENT

** MR. IANNACCONE MOVED TO ADJOURN ** MR. CHIARAMONTE SECONDED ** THE MOTION PASSED UNANIMOUSLY.

The meeting adjourned at 9:35 p.m.

Category: Committee Minutes