Board Highlights

Summaries from the recent Board of Education meeting

Committee of the Whole

August 8, 2024

This summary includes agenda items that may be of interest to the broader community. Click here for complete meeting agenda and packet. Recordings of meetings are posted on our YouTube page.

Finance

FY 2025 Tentative Budget

The District’s budget is compiled using a zero-based budgeting method. Budget managers must itemize all expected non-payroll costs when submitting budget requests. This promotes better cost control because budget amounts are reevaluated annually and based on actual needs, as opposed to automatically rolling over costs from previous years.

Details about revenues and expenditures are available in the Board packet memo. Overall, in fiscal year 2025 (July 1, 2024, through June 30, 2025) revenues are expected to increase by $7.7 million from FY 2024 actual revenues, to a total of $108.6 million. Budgeted expenditures in FY 2025 ($140 million) are higher than actual FY 2024 expenditures by $24 million.

The fund balance is expected to increase by $14.9 million, to $84.3 million. The increase stems from issuing $45.3 million of debt certificates to help finance Project 2. Some of the proceeds from this issuance will remain at the end of FY 2025 and will fund FY 2026 Project 2 expenses.

The five-year projection forecasts that the operating fund balance will decrease sharply to 35% of operating expenditures in FY 2026, as the District’s reserves are used to fund the second half of Project 2 construction. That will be the first year fund balance will land within the targeted 25% - 50% range of the District’s fund balance policy. It is expected to remain in range the following three years, with the low point being 28% upon the completion of Project 2 in FY 2027.

A brief revival of fund balance occurs in FY 2028 with the expected receipt of the rebates from the geothermal project before another drop in FY 2029 caused by a spike in 10-Year Maintenance Plan work scheduled for the summers of 2028 and 2029.

Next steps: The District will hold a public hearing on the FY 2025 budget at the Sept. 26 regular Board meeting prior to the adoption of the final budget.

Debt Certificate Parameters and Resolutions

At its April 27, 2023, regular meeting, the Board approved a financing plan for Project 2 comprising $44.2 million from fund balance, $45.3 million in debt certificates, and $12.5 million in donations from the Imagine Foundation. Issuance of the debt certificates was tentatively planned to occur sometime in 2024, depending on the timing of construction expenditures and the interest rate market.

The Community Finance Committee (CFC) reviewed financing parameters, timelines, and market conditions at its June 11, 2024, meeting. CFC was in strong agreement to issue the debt certificates as soon as possible. This would allow the District to take advantage of the current interest rate market by investing the debt proceeds at a higher interest rate than the interest rate paid on the debt.

Ordinarily with tax-exempt debt issuances, any interest earnings above the bond yield must be rebated back to the federal government as arbitrage profit. However, because the Project 2 construction expenses are scheduled to occur so rapidly, the District expects to meet an 18-month spend-down exception that exempts it from having to pay arbitrage. Administration is moving forward with the recommendation to issue the debt certificates in August.

Next steps: For the Committee of the Whole to move forward the resolution authorizing and providing for the issue of not to exceed $46,500,000 general obligation debt certificates (limited tax) for approval at its August 22 regular meeting.