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BUDGET, FINANCE & INVESTMENT COMMITTEE
May 30, 2002 5:30 P.M. Courthouse
MINUTES:
Members Present: Others Present: Others Present: Others Present: Comm. Joyce Ealy Nancy Allen Jeff Sandvig Celeste Arman Comm. Paul Johnson Hulon Watson Brian Robertson Ginger Scott Comm. Tina Jones John Hodge Jones Joe McKenzie Jill Walls Comm. Steve Sandlin Gary Patton Terry Alexander Jackie Pope Comm. Dwight Throneberry Ed Jordan Floretta Armstrong Bentley Shofner Comm. Jimmy Evans, Chair. Rick Wise Marion Joyce Kathy McMahan
Mike Blanton, Amy Blanton, Laura Harper, Carol McCauley, Diane Mackey, Lisa Bogle, Sara Jackson, Comm. Trey Gooch, Comm. Anthony Johnson, Bryan Brooks, Paul Long, Elaine Cawthon
Chairman Evans presided and called the meeting to order with six members being present.
APPROVE MINUTES:
The minutes of the May 15 meeting were presented for approval.
Comm. Jones moved, seconded by Comm. Sandlin to approve the May 15 minutes as presented.
The motion passed unanimously by acclamation.
REVENUE UPDATE:
The Finance Director addressed the committee regarding the projected revenue for 2002-03. He informed the committee that the certified rate, as it has been received from the State of Tennessee, has been lowered two cents – from $2.53 down to $2.51. He advised one cent of that will come from the General Fund and one cent will come from the General Purpose School Fund.
He advised, as a result, the revenue in the General Fund would be about $304,000 lower than projected at the last meeting, and the utilization of the fund balance will increase accordingly if the certified property tax rate is adopted.
In the General Purpose School Fund, the projected revenue at the certified rate of $1.30 would be $139,554,950, and at the current property tax rate of $1.44 the projected revenue would be $143,008,565.
GENERAL PURPOSE SCHOOL FUND 2002-03 BUDGET:
Mr. Hulon Watson, Superintendent of Schools, addressed the committee regarding the 2002-03 General Purpose School Fund. The estimated expenditures total $149,180,002.
Mr. Watson stated the School Board has built, with the County Commission’s cooperation, eight schools in the last five years and there are others under construction to meet the growth demand.
Mr. Watson stated the budget reflects the goals and objectives set by the Board of Education. He explained the budget is designed to continue providing the quality education that the children deserve. The budget meets the commitment to the technology program for the children in the 9th and 10th grades.
Mr. Watson requested that Mrs. Amy Blanton and some of the other staff members be allowed to address the committee to give an update on what the school system is doing in the area of technology. Mr. Watson advised that the Rutherford County School System has one of the best
Budget Minutes May 30, 2002 Page Two
technology programs, not only in the State of Tennessee, but also in the nation. He stated it is now used as a model.
The following individuals addressed the committee relative to how they are using technology in their classrooms: Amy Blanton, Instruction Technology Supervisor; Terry Alexander, Blackman High School; Floretta Armstrong, Daniel McKee Alternative School; Marion Joyce, Eagleville School; Carol McCauley for Holloway High School and Oakland High School; Celeste Arman, La Vergne High School; Ginger Scott, Riverdale High School; and Jill Walls, Smyrna High School.
Comm. Sandlin addressed the issue of school fundraisers to raise funds for school supplies. He asked what part this plays relative to technology?
Mr. Watson advised the Board provides almost $1 million to offset fees and to offset fundraisers. He said the fundraisers now are primarily done through the booster clubs and the PTO’s. He stated the fundraisers are not used to buy paper and other classroom supplies. He stated the Board provides the materials to the teachers. He stated it has been done in the past, but through the Board and the Commission it has been provided.
He advised the Board provided to the schools $25 per student in the elementary grades and $45 per student at the high school level.
Mr. Watson distributed copies of the Kindergarten Assessment Test that indicated 99% mastery. He provided copies of the Gateway Algebra Test results and the Gateway Biology Test results. He explained these are exams that are required to meet graduation. He advised they are being constantly assessed on how well they are performing as a school, as a teacher, and as a system as a whole. He stated they are being held accountable for how well they are performing.
Mr. Watson advised the School Board approved a budget totaling $149,180,002 for the 2002-03 fiscal year.
Chairman Evans asked the Finance Director what percentage increase the budget represented?
The Finance Director advised it was a $15 million increase, which is 10.8%.
Mr. Watson advised the Board would be opening two new middle schools this year, which means more costs will be incurred. He advised there are 1,918.4 existing certified staff members. They are proposing 53.5 new certified teachers for a total of 1,971.9 certified staff members. He stated there are 71 existing classified monthly positions and are proposing three new positions for a total of 74. Mr. Watson reported there are currently 479.5 classified hourly positions, and they are proposing 30 new positions for a total of 509.5. The grand total of positions are 2,555.4 including the staff for Rock Springs and Blackman Middle Schools, and the initial staff for Siegel High School and Christiana Middle School.
The total salaries with taxes and benefits are $116,457,579. The total recurring items, not including labor is $29,976,875 for a total operating budget of $146,434,454. The budget also includes $2,745,548 for the 4th year of the technology plan, making a total budget of $149,180,002.
Chairman Evans asked the Finance Director at the certified tax rate what was the amount of dollars available?
The Finance Director reported the total amount was $139,554,950. The Finance Director reported this represents about a $6.1 million increase over what is expected that the School Board will spend for recurring purposes this year. He advised that is based on the fact that $134.6 million was funded for recurring budget purposes. He reported it is expected that the Board would revert approximately $1 million to $1.2 million of those appropriations at the end of the year.
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Comm. Sandlin asked what was the projected ending fund balance at the end of June?
Mr. Sandvig advised it was expected that the fund balance would be about 5%. He reported it is now at 4.7% or about $6.4 million. He stated he was expecting it to be close to $7 million at the end of June.
Chairman Evans stated it was important to note what is on hand and the request versus what is available and the equivalent that it would take in property tax increases, etc. to fund that. He stated it is also important to note the increase that is available, according to the Finance Director, is about $6.1 million in additional dollars. He stated the County is in a difficult year. He stated there is a lot of uncertainty on Capitol Hill, and a consideration of a property tax increase to approve the school budget is something that is worth considering. He stated he believed they must look at the potential of a sales tax increase along with an income tax. He stated all of those things combined could place a hardship on senior citizens, people on fixed incomes and every Rutherford County citizen.
Comm. Sandlin asked Mr. Watson if $139,554,950 was proposed what that would do to the school budget?
Mr. Watson distributed alternative budget cut proposals in tiers that he would recommend to the Board. The first tier would cut the budget from $149,180,002 to $143,008,665. These cuts include the 9th & 10th grade technology plan, the state pay increase being reduced from 3% to 2.5%, reducing new positions, reassigning existing positions, eliminating positions due to retirements, eliminating existing positions, eliminating stipends for summer in-service, other scheduling/raise adjustments, medical insurance savings from eliminating 22.5 certified positions and 24 classified positions, eliminating allocations to schools by going back to charging academic fees, transportation changes, eliminating the raise for substitute teachers, reducing fee waivers and cutting back on field trips, reducing various instructional supplies and equipment, mixed administration expenditures, and eliminating all increases in non-staff expenditures for Maintenance. The first tier cuts totaled $6,171,337.
Mr. Watson explained the second tier of cuts if the certified property tax rate of $1.30 is adopted. They include pay increases of 1.723% for certified staff, which would be no local raise, half of the increase for medical insurance would be passed on to the employee, eliminating existing positions, eliminating positions due to retirements, reassigning existing positions, medical insurance savings from eliminating 5 certified positions and 54 classified positions, cover 7-8 and 11-12 technology using 7th & 8th grade technology funds, eliminating band and music allocations, reducing the amount for textbooks, reducing contracted services for Special Education, and additional transportation cuts. The second tier of cuts totaled $3,453,715.
Chairman Evans stated he was very concerned that Rutherford County and the State of Tennessee is in this position. He stated students and teachers should not be punished because of revenue shortfalls and because of the consistent uncertainties this year. He stated last year, with a $6 million increase, the School Board was able to open, staff and operate some new schools and did not have to eliminate any teacher positions. He asked this year with receiving an additional $6 million, why staff positions would have to be eliminated?
Mr. Sandvig stated if the 2001-02 operating portion of the budget is compared to the 2000-01 actual operating expenditures, it was a $9.4 million increase. He stated there was $7.5 million in non-recurring items in 2000-01 versus $1.9 million last year. He stated if you compare operating to operating, it was $9.4 million.
Chairman Evans stated that there still was no staff elimination.
Mr. Sandvig stated $6 million was transferred to the School Building Program in 2000-01 and $1.4 million was used for the technology program from the ending fund balance.
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Mr. Watson stated he has done everything in his power to stay out of the classrooms. He stated he was still concerned about what was going to happen at the State level. He stated if they are forced to cut again, he did not know what the Board would do.
Chairman Evans stated he would like to formally request that the students and funding for the teacher positions and their raises and everything associated with that be revisited. He stated he wanted to ask that whatever was recommended by the committee, that the Finance Department draft a letter that reiterates the Budget Committee’s commitment to the classrooms. He stated he wanted the classrooms touched absolutely last and hopefully not at all. He stated he would hope the Board would look at any option besides the elimination of teacher positions and reductions of Educational Assistants and provide an adequate raise for the teachers.
Mr. Watson discussed the new position cuts in tier one totaling $1,005,779. He stated they are utilizing what staff they have the best way they can.
The committee discussed the transportation changes totaling $440,965. Mr. Watson advised they wanted to add three new buses this year, but will not be able to do that. He advised they would be eliminating the mid-day runs for special needs children. He stated they would be looking at better utilization of the buses they have. Mr. Watson also stated he would be recommending that students who live within one and one-half miles of school not be transported. He stated they are not required by law to do that, but they have been providing that service.
He also advised in the tier two cuts, the employees would be requested to pay 50% of the medical insurance increase. He stated that basically would eliminate whatever raise they would receive in the next two or three years.
Comm. P. Johnson asked Mr. Sandvig to explain $600,000 that would be turned back into the fund balance.
Mr. Sandvig stated that between the revenue shortfall and the expenditures not being spent, he anticipated the ending fund balance would increase and get more in the 5% range by about $600,000.
Comm. Ealy asked Mr. Watson or Mr. Sandvig to discuss the tier one cuts and the impact on the BEP requirements.
Mr. Watson stated he believed they would still meet the BEP requirements with the tier one cuts.
Comm. Ealy asked about the tier two cuts.
Mr. Watson stated, for the record, it depends on the number of students coming into the county. He advised the growth has been 3% plus for the last several years. He stated with the tier two cuts, there is a risk of not being able to maintain the BEP requirements relative to pupil/teacher ratios.
Comm. Ealy asked what were the consequences for not maintaining the BEP requirements?
Mr. Watson advised for classes that require the student population to be 20 to 1 ratio, there is a $50,000 penalty for classroom that is over. For classes that require the 25 to 1 ratio, the penalty is $62,500 per classroom. He stated for the high schools where there is a 30 to 1 ratio, the penalty is $75,000 per classroom.
Comm. Ealy asked if there was a possibility, with the revenue crisis the county is in, that there would be some leniency?
Mr. Watson stated it was the law. He stated until the law is changed, he did not think there would be any leniency. Mr. Watson stated either the law had to be changed, or accreditation had to be looked at, or the third thing that would have to change is what parents expect.
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Following discussion, Comm. P. Johnson moved, seconded by Comm. Throneberry to approve the certified property tax rate of $1.30 for the General Purpose School Fund with revenue totaling $139,554,950 along with the additional $600,000 in ending fund balance for a total of $140,154,950, with the $600,000 to be used for classrooms and raises.
The Finance Director asked Mr. Sandvig to address what the qualified uses of the $600,000 would be. He stated he believed it could only be used for one time non-recurring expenses, so it could not be used for pay raises. He stated it could be applied for some of the capital items that are throughout the budget, which in turn would free up some of the original estimate to apply for other things.
Mr. Sandvig advised there would be enough capital items in the budget to qualify for the $600,000.
Comm. P. Johnson changed the motion, and Comm. Throneberry agreed to change the second to the motion to adopt the certified tax rate of $1.30 for the General Purpose School Fund with revenue totaling $139,554,950 along with the additional $600,000 in ending fund balance to be used for one-time non recurring items for a total of $140,154,950. Further, that the $600,000 being reverted to fund balance would free up money that was recommended to be used in the classroom and for pay raises.
Following discussion, Comm. Ealy noted her conflict of interest.
The motion passed by roll call vote with Commissioners P. Johnson, Jones, Sandlin, Throneberry and Evans voting “yes”; Commissioner Ealy voting “no”, and Commissioner Peay being absent.
It was noted at the meeting on June 20, 2002, the committee would review the General Purpose School Fund budget after the Board has addressed the recommendation of the Budget Committee.
REVIEW OF ALL 2002-03 BUDGETS
GENERAL FUND:
The Finance Director advised the General Fund 2002-03 budget was previously approved with a certified rate of 54 cents, which was going to make it $1.5 million under-funded. With the certified rate now being 53 cents, it will now be $1.8 million under-funded.
Comm. Throneberry moved, seconded by Comm. Sandlin to adopt the new certified rate for the General Fund of 53 cents making the General Fund under-funded by approximately $1.8 million.
The motion passed unanimously by roll call vote with Comm. Peay being absent.
SOLID WASTE/SANITATION FUND, INDUSTRIAL/ECONOMIC DEVELOPMENT FUND, LOCAL PURPOSE TAX FUND, DEBT SERVICE FUND:
The Finance Director advised there had been no changes to the Solid Waste/Sanitation Fund since the committee reviewed the budget.
Mr. Long advised Fund 119, Industrial/Economic Development Fund budget had been revised to reflect the appropriation for the Economic Strategic Plan. The total appropriation recommendation is $238,789, with estimated revenue of $137,752, drawing the fund balance down by $101,037.
The Local Purpose Tax Fund has been revised to include a transfer of $20,000 for a vehicle for the Correctional Work Center. The total appropriation recommendation is $3,598,395, and estimated revenue of $3,595,000. The fund balance will be reduced by $3,395.
The Debt Service Fund has not been changed. The tax levy is 65 cents. Budget Minutes May 30, 2002 Page Six
The total tax levy of $2.51 is the certified rate.
Comm. Throneberry moved, seconded by Comm. Sandlin to recommend for publication the certified tax rate of $2.51 and to publish the budget recommendations that have been approved through this meeting.
The motion passed unanimously by roll call vote with Comm. Peay being absent.
HUMAN RESOURCE DIRECTOR:
Comm. Jones stated given the fact that it is the discretion of the constitutional officers whether they utilize the Human Resource Director, she requested the Finance Director to draft a good-faith agreement and send it to all of the constitutional officers, so that the committee will know who will and will not be utilizing the Human Resource Director. She stated she thought it would be important to have that on file.
The Finance Director asked if it was Comm. Jones’ recommendation to include on the letter a place for the constitutional officer to sign acknowledging that they agree to utilize the Human Resource Director?
Comm. Jones stated yes, she did want the constitutional officers to sign the letter.
Comm. Jones moved, seconded by Comm. Throneberry to request the Finance Director to draft a good-faith agreement and send it to all of the constitutional officers and ask them to sign the agreement acknowledging whether or not they will utilize the services of the Human Resource Director.
For clarification, Chairman Evans stated they would be asking the constitutional officers if they would be willing to utilize the Human Resource Director and not turn over their authority to hire and fire employees and their current practices.
Comm. Jones advised that was correct.
Following discussion, the motion to request the Finance Director to draft a good-faith agreement and send it to all of the constitutional officers and ask them to sign the agreement acknowledging whether or not they will utilize the services of the Human Resource Director passed by acclamation with Comm. Peay being absent.
ADJOURNMENT:
There being no further business to be presented at this time, Chairman Evans declared the meeting adjourned at 7:30 P.M.
________________________________ Elaine Cawthon, Secretary
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