BUDGET, FINANCE & INVESTMENT COMMITTEE

 

June 12, 2002                                                 5:30 P.M.                                        Courthouse

 

MINUTES:

 

Members Present:                            Others Present:                        Others Present:

Comm. Joyce Ealy                           Nancy Allen                                Paul Long

Comm. Paul Johnson                      Comm. Anthony Johnson         Elaine Cawthon

Comm. Tina Jones                          Jeff Sandvig

Comm. Robert Peay                        Jackie Pope

Comm. Steve Sandlin                      Joe McKenzie

Comm. Dwight Throneberry            Joel Johnson

Comm. Jimmy Evans, Chair.           Bryan Brooks

 

 

Chairman Evans presided and called the meeting to order with all members being present.

 

APPROVE MINUTES:

 

The minutes of the May 23, 2002 and the May 30, 2002 meetings were presented for approval.

 

Comm. Sandlin moved, seconded by Comm. Throneberry to approve the minutes as presented.

 

The motion passed unanimously by acclamation.

 

2002-2003 BUDGET REVIEW:

 

Finance Director Paul Long advised the committee he needed to revise the estimated revenue for the 2002-2003 General Purpose School Fund.  He explained he had previously reported total estimated revenue of $139,554,950 and it should be $139,457,904.  He advised with the recommended appropriations, the ending fund balance in the General Purpose School Fund would be reduced by $697,000, which was $97,000 more than previously discussed.  Mr. Long informed the committee that Mr. Sandvig reported there is enough capital expenditures that would qualify in that amount for the use of the fund balance.

 

2002-2003 GENERAL PURPOSE SCHOOL FUND BUDGET:

 

Comm. Sandlin stated at the regular meeting of the Budget Committee, that he had requested information regarding vending revenue in the schools.  He stated the Budget Committee does not traditionally meet in July and wanted to know when that would be presented back to the committee. 

 

Mr. Long advised he might have the revenue information available for the County Commission meeting on June 13.  He stated he could provide it for the committee members, and if it was agreeable, the committee could discuss it in detail at the Budget Committee meeting on June 20.  Mr. Long advised where it was going to be complicated, is that it could be reported how much each school is generating from vending proceeds and which activity funds that revenue was allocated.  He stated at that point, the description of the fund might be adequate to determine what the school did with the revenue.  He explained if the money is allocated to the General Activity Fund of a particular school, then it has to be used to benefit the entire student body of that school. 

 

Comm. Sandlin asked to discuss information that was distributed at the Public Hearing regarding the General Purpose School Fund and what $143,543,090 would provide, and what $143,008,775 would provide, and the $140,154,950 approved by the Budget Committee.  He stated he was somewhat confused about some of the comments made at the Public Hearing.  He stated the basic statement was that the school system would fail if $149 million were not funded.  He stated the superintendent initially presented the $149 million budget, but quickly reduced it to $143 million.  He stated the Budget Committee has approved $140,154,950, which is a $3 million difference. 

 

Budget Minutes                                                June 12, 2002                                              Page Two

 

 

He stated with the money provided being a $6.6 million increase, the Budget Committee is not cutting the budget.  He stated there is a lot of confusion about students not being picked up, people being laid off, etc.  He stated the superintendent has not mentioned anything about the Central Office staff and vacant positions not being replaced.  He stated he did not understand the difference in the suggested cuts, and what the Budget Committee is approving compared to what the School Board has to have to operate.  He stated there are teachers who are worried.

 

Mr. Jeff Sandvig addressed the committee.  He distributed a revised version of the 2002/03 budget alternatives.  Relative to the $6.6 million increase, he stated he had tried to explain at the meeting on May 30 that when considering the operating budget excluding capital transfers to the building program and the technology purchases in the 2000-2001 budget, the operating increase was $9.5 million.  He advised $6 million was transferred to the building program for building and equipping new schools.  He stated this is part of the difference between $6.6 million and $9.5 million.

 

Mr. Sandvig advised the School Board has approved a budget of $140,154,950.  He reported the Board requested the superintendent present, at the $1.44 property tax rate, the items that would be added back to the budget to bring the budget up to $143,008,665.  At the certified rate of $1.30 these items would have to be eliminated to bring the budget to $140,154,950. 

 

Mr. Sandvig advised with a budget of $140,154,950, there would be a 2% raise for school system employees instead of a 2.5% increase.

 

Mr. Sandvig advised there would be some changes made in the transportation to make it more efficient.  He explained they would be ending service for students who live within one and one-half miles of school.  He reported the State does not provide any funding through the BEP formula for students who live within that mileage range.  He stated the School Board has provided bus service for them in the past.  He stated it does not affect their State funding if it is ended, and it amounted to $250,000. 

 

Mr. Sandvig advised there would be $1,570,000 in total staff cuts and reassignments, which does not include benefits.  He reported Mr. Watson is definitely including central office positions in any items that are being cut.  He advised the teaching positions that are being taken out of the budget are those that are currently vacant because of retirements or teachers who were not rehired.  He stated they believed they could combine some programs or eliminate them. 

 

Comm. Jones clarified that the teaching positions that are being cut are not currently filled.

 

Mr. Sandvig stated that was correct that no teacher who was currently in a classroom was being cut.  He stated with the cut of 11 vacant positions due to retirements, positions not rehired, or vacancies, there would still be a net increase of teachers in the classroom. 

 

Mr. Sandvig explained they were definitely tightening where the new positions would go.  He stated the new positions requested for La Vergne High School, might not go there.  He stated they would put the teachers where they need to be, meeting the BEP first.

 

Comm. Peay asked if the student/teacher ratio would be lowered?

 

Mr. Sandvig stated the student/teacher ratio would be increased. 

 

Comm. Peay asked if it would be increased to the extent that it would threaten the School System receiving the BEP money?

 

Mr. Sandvig reported he did not think so.  He stated they are not as comfortable with that.  He stated it would increase somewhat.  He stated it depends on where the students would be.  He stated at one school, two to ten students might require two new teachers while another school might be able to absorb 20 to 50 students depending on the grades.  He stated they would do their best to meet the BEP.  He stated there was a strong inducement to meet the BEP formula, because of the $50,000, $62,000 or $75,000 penalties per classroom if they do not. 
 

Budget Minutes                                                June 12, 2002                                              Page Three

 

 

The Finance Director stated he wanted to make sure the commissioners were not mislead on the BEP class size mandate issue.  He stated the class size average calculation is performed at grade level groupings.  He stated if any classroom exceeds the maximum that would definitely cause a penalty.  He stated the law specifies that the average in a certain level cannot be exceeded.

 

Comm. Throneberry stated on last year’s budget, if the technology was not considered, the budget would basically be the same.  He stated last year three new schools were opened, and this year only two new schools would be opened.  He asked why the cuts had to be made, when no cuts were made last year?

 

Mr. Sandvig reported the two middle schools being opened this year were more expensive to operate.  He stated it ties back to the $9.5 million increase for operating expenditures last year versus $5.5 to $6.6 million this year. 

 

Comm. Throneberry asked why $525,000 has been pulled out of the teacher salary line items this year?  He stated if the money was put into teacher’s salaries, it should all be used for teacher’s salaries. 

 

Mr. Sandvig advised they have teachers to come and go throughout the year.  He stated there are changes in degree and experience.  He stated there has been more turn-over than anticipated.  He stated they are heavily involved in negotiations with the REA.  He stated, even in October, the payroll can shift heavily.  He stated at that time, based on the information he had, he did not believe there would be enough money to provide more than a 3% increase at that time. 

 

Chairman Evans advised in the last three years approximately $1.3 million has been transferred from the teacher’s salary line item.  He stated many of those transfers have occurred in mid-year or later.  He asked if there was no way since the money was originally allocated for teacher’s salaries it could be used to bring in new teachers or give them raises for one-half year?

 

Mr. Sandvig advised the contract with the REA had already been negotiated.  He stated that at the time of negotiations, he was not comfortable that they would have the additional money.  Mr. Sandvig stated he was of the opinion if a budget had been approved for a certain number of teachers, he would not want to hire more than that.  Mr. Sandvig stated the transfers amounted to less than 1% of the total teacher line items.

 

Comm. Evans stated the committee approves a lump sum amount for the School Board.  He stated he did not think they would have a difficult time in adjusting line items, if the money was available, and it reduced the pupil/teacher ratio.

 

Comm. Throneberry stated he did not want the public to get the wrong idea.  He stated the Budget Committee has asked that the teachers receive a raise.

 

Mr. Sandvig advised with the additional $600,000, they held the employee insurance increase to the 90%/10% sharing and went from 1.723% to 2.0% on the raise.  He stated they did not believe they should cut positions further than that in order to give a 2.5% to 3% raise.

 

Comm. P. Johnson requested clarification on the positions being cut – 80 existing positions, 11 vacant positions, 7 eleven-month employees being reduced to ten-month employees, and 7.5 specialized positions were being reassigned to the classroom?  He asked if these were individuals who were currently working?

 

Mr. Sandvig advised they are all currently working, except for the 11 vacant positions.  In the 80 existing positions, there are some vacancies, but most of them are people who are currently employed.  He stated there were no teachers in the 80 existing positions.  He stated they are central office employees, aids, custodians, and other school support staff. 

 

Comm. P. Johnson clarified that with the approved budget of $140,154,950, and with the stipulation that the $697,000 from the ending fund balance be used for non-recurring items, that there was not anything traumatic about the budget?

Budget Minutes                                                June 12, 2002                                              Page Four

 

 

Mr. Sandvig stated he believed there were some very traumatic things about the budget.  He stated the schools would see some changes in the level of support.  He stated with the attendance reports that had to be filed and the accounting and bookkeeping needs at the schools, they will have fewer staff to work with those items.  However, they did not go into teaching positions, except for those already vacant.  He explained they would be reassigning some specialized positions back to the classroom.  He stated those people would have jobs, but they would be different from what they had this year. 

 

Comm. Ealy asked Mr. Sandvig to clarify changes in benefits and insurance.

 

Mr. Sandvig reported with the additional $600,000, they budgeted for the system to absorb 90% of the insurance rate increase next January.  On the tier two cuts, it was being proposed to charge the employee as much as 50% of the increase.  He noted that has been changed back to the system absorbing 90% of the increase. 

 

Comm. Throneberry stated he did not want the public to get the wrong idea.  He stated the County Commission had increased Wheel Tax, Development Tax, and Sales Tax and most of it was going toward schools.  He stated they have built eight schools and four stadiums and have not had to raise property taxes. 

 

Mr. Sandvig advised there was not a cut in the funding being provided.  He stated the School Board does not think they can match 100% of what was done this school year, handle the growth in students, and open two new schools with the amount of money being provided.  He stated the long-term projections that were prepared the last two years have shown the property tax rate staying at the current level for schools in the reappraisal year. 

 

Comm. Sandlin asked Mr. Sandvig if the Board had approved the budget at $140,154,950?

 

Mr. Sandvig reported that was correct, but that the Board had requested that the $145,543,090 and the $143,008,665 be presented also.

 

Comm. Jones stated at the public hearing, it was stated that 400 teachers were going to be cut.  She stated they are now hearing that there will be no existing teaching personnel eliminated.   She stated the Board of Education has recommended a 64-cent property tax increase. 

 

Mr. Sandvig advised Mr. Watson has stressed that, at this point, they have not eliminated teaching positions.  He stated there is a lot of talk about if the State does not fund the BEP, and how many positions that would be.  He stated with a budget of $140,154,950, that no existing teaching positions would be eliminated at the local level.

 

Comm. Peay asked with a budget of $143,008,665 what was the actual increase over last year?

 

Mr. Sandvig advised it was approximately $9.5 million. 

 

Comm. Peay stated schools are one of his priorities.

 

Comm. Peay made a motion to approve the current property tax rate of $1.44 for the 2002-03 General Purpose School Fund with expenditures totaling $143,008,665.

 

The motion failed for the lack of a second.

 

Comm. Peay stated he had specifically said no on the Animal Control facilities.  He stated this is telling the citizens that the commission cares more about their animals than about their children. 

 

Comm. Jones stated the commission had spent approximately $130 million over the past few years building schools and about $2 million for Animal Services.

 

Comm. Ealy asked Mr. Sandvig with a budget of $140,154,950 how comfortable was the School Board with the total?
 

Budget Minutes                                                June 12, 2002                                              Page Five 

 

Mr. Sandvig advised with the cuts that the Board has approved, they are comfortable they can operate.  He explained the area that they are not quite as comfortable with is meeting the pupil/teacher ratios. 

 

Comm. Ealy asked at $140,154,950, could the Board open two new schools?

 

Mr. Sandvig advised they would be opening two new schools with $140,154,950.

 

Comm. Ealy asked if the Board could plan for growth?

 

Mr. Sandvig advised he was more hesitant with that.  He stated they believe they can cover growth if growth is not unexpectedly high.  He stated if they have 3% growth, they will be okay.  However, if growth is 4% to 5%, he is not as comfortable. 

 

Mr. Sandvig advised some of the support areas at the schools and at the central office will not have the staff they have had in the past.  He stated they would meet the pupil/teacher requirements to the best of their ability.

 

Following discussion, Comm. Throneberry moved, seconded by Comm. P. Johnson to approve the certified property tax rate of $1.30 for the General Purpose School Fund with a budget of $140,154,950 utilizing $697,000 from the ending fund balance for one-time non-recurring items and forward the same to the full Commission for ratification.

 

The Finance Director advised the School Board would present a detailed budget at the meeting on June 20. 

 

The Finance director noted he wanted to make a point about the 2% raise for school employees versus the 3% raise for other county employees.  He stated this ignores the fact that school employees are the only employees in county government that are guaranteed a pay raise every year simply because they have worked one additional year.  He stated if this increase is added to the 2%, the total payroll for the school system would increase about 3.4% versus a 3% for total payroll for the rest of the county. 

 

Comm. Peay moved, seconded by Comm. Ealy to suspend the rules to allow Ms. Jackie Pope, President of the REA to address the committee regarding this issue.

 

The motion passed unanimously by acclamation.

 

Ms. Pope stated she believed that was a misrepresentation.  She stated she had 19 years of teaching experience, and in the last four years on the salary schedule she would have received a $200 raise.  She stated after the first 15 years, a teacher does not receive an automatic raise. 

 

Mr. Long stated no other county employee group could have a collecting bargaining agreement.  He stated law enforcement and fire officials throughout the State have been lobbying the legislature for many years to try to have a collecting bargaining agreement.  The legislature has denied them that ability.  He stated he believed it was more misleading to say school employees are only going to receive a 2% salary increase when many of them would receive much more than 2%.

 

Ms. Pope stated other county employees have provisions that teachers do not have, such as longevity pay.  She stated they are also county employees and requested the same treatment as other county employees.

 

Comm. Sandlin stated the superintendent and the School Board made the decision to reduce the teacher salary accounts and not the Rutherford County Commission, nor the Budget Committee. 

 

 

Budget Minutes                                                June 12, 2002                                              Page Six

 

 

Chairman Evans asked Ms. Pope what her feeling was on the $1.3 million that has been transferred from teacher’s salaries over the last few years?

 

Ms. Pope advised in the last few years the REA has negotiated for the money that was available.  She stated they are very aware of the money left over at the end of the year.  She stated at any time during the year, their contract could be re-opened and re-negotiated.  She stated it is her understanding that the Professional Negotiations Act provides that if both parties agree, the contract could be re-opened and renegotiate a specific item.  She stated, it is her opinion, that if the Board had chosen to give the teachers that money, they could have done that.  She stated it is also her opinion that the teachers have funded many items that the School Board has paid for.  She stated she is there to represent the teachers.  She stated because teachers retire or the positions are vacant now, that does not mean that the children go away or that the duties and responsibilities go away.  She stated someone would have to absorb those jobs.

 

Following discussion, the motion to approve the certified property tax rate of $1.30 for the General Purpose School Fund with a budget of $140,154,950 utilizing $697,000 from the ending fund balance for one-time non-recurring items passed by roll call vote with Comm. Peay voting “no”.

 

OTHER BUSINESS

 

LINEBAUGH LIBRARY ROOF REPAIR:

 

County Executive Allen reminded the committee that when Mrs. Laurel Best presented the 2002-03 budget for the Linebaugh Library, the committee was made aware of a roof problem.  She advised she has received some additional information.  She explained it is being discussed to jointly fund the roof repair with the City of Murfreesboro.  She stated the cost to repair the roof is being estimated at approximately $50,000, but that will not be known until a roof analysis is completed and the project is bid.  She advised before the City of Murfreesboro appropriates money for the project, they wanted to know if the county would participate. 

 

County Executive Allen suggested the committee consider designating up to $25,000 until the exact cost is determined.  She advised there is approximately $250,000 available in the Garage Remediation Project that could be used for this purpose. 

 

Chairman Evans asked if the City wanted the County to allocate specific dollars since they are not willing to allocate anything until they know the budget for the repairs? 

 

County Executive Allen advised the consultant company will be coming into town soon, and the City wanted this to be addressed at the same time they are here.  She stated at a minimum, the initial cost for the services to analyze the facilities would be about $7,500.  The County’s share would be $3,750.  She requested the committee designate $3,750 so the company can start the process of analysis.  She stated the City was interested in knowing if the County would participate. 

 

Comm. Sandlin moved, seconded by Comm. Jones to approve $3,750 from the Garage Remediation Project to pay one-half the cost for consultant fees to study the Linebaugh Library Roof to determine the total cost of the repair.

 

The motion passed unanimously by roll call vote.

 

MAINTENANCE FACILITY FOR EMERGENCY MEDICAL SERVICES AND EMERGENCY MANAGEMENT:

 

County Executive Allen advised there had been some discussion through the Public Safety Committee regarding a maintenance facility to store equipment for the Ambulance Service and Emergency Management.  She stated the estimated cost to construct the building is approximately $400,000.  She asked if the committee would like to include that in the next