UNEDITED AI transcript: MPS Finance Committee, May 27 2025

10:46PM May 27, 2025

Speakers:

Keywords:

finance committee

budget amendment

financial statements

district risk

liability insurance

fund balance

revenue

expenditures

property insurance

cyber insurance

state aid

vacancy

policy committee

grant revenue

meeting minutes

twenty twenty five finance committee meeting to order. ryan, will you please call the roll.

director shafty, director callahan is not present. director bucha, director emerick

here, chair abdi here. thank you. we have a card. please let the record reflect that as As indicated the meeting that the emirate is participating in this meeting. Using interactive technology per se of Minnesota open laws all the votes tonight will occur, will be taken. The Hong Kong to help with the sound list. Off when recognized. Next, may I please have a motion to approve the agenda? Is there a second? Our agenda has been moved a second. Is there any discussion?

See no further discussion. Brian, will you please call the roll? Shafty

Callahan is not present. Bucha Emerick,

Aye abi,

the Motion carries, and we have approved agenda. Next is approved. Minutes from April 29 2025 Can I please have get a motion to approve these minutes? Say a second, the minutes have been approved, and second, is there any discussions?

Seeing no further discussion. Brian, will you please call the roll chef Dean

Callahan is not present. Bucha Emerick

aye, Ave aye, the Motion carries, and we have approved minutes Next, we will remove the reports and discussions under which we will take two items, the April finance statement, an overview of district risk and liability insurance program, but first superintendent service items, would you believe? Would you please make the opening comments?

Thank you, travti and good evening, Director, staff and those joining us this evening, as noted for tonight's meeting, staff are ready to present the monthly financial statements and offer an overview of district risk and Liability Insurance Program. Our finance team is also presenting a current year budget amendment for the Committee's consideration. Since this is the final committee meeting before the summer recess, I wanted to personally thank the committee members and chair Abbey for your leadership throughout the budget development process for the coming year, and I'm grateful for this committee and its critical role in the process of moving the proposed budget forward. Thank you tracking my team and I stand ready to respond to the committee members questions this evening. Thank you.

CEO, Mr. Diep, please go ahead with the financial statement, which we will take any questions do we have

to ask? We have to

watch the same thing again? Thank you. Chair Abdi, thank you. Chair Ishii, I would have Aaron Gilbert, the controller, the one that prepares the financial statements, present the highlights, and then we'll answer to the questions that you would have after the presentation. Aaron,

thank

you. Senior officer, dia Good evening, Superintendent, members of the board and others attending this after this evening finance committee meeting our presentation of the April 2025 financial statements will follow the same PowerPoint format that we previously used last few months. The numbers in this financial package should be considered on audit. These statements have been created using a combination of the cash basis and modified COVID basis of accounting. I will now go to the first PowerPoint over a few monthly highlights from April. So these are also noted on page three of the full financial statements the. Strict general fund balance for the month into April 30, 2025 was approximately $52.7 million our fund balance fluctuates due to the time and recorded revenues and expenditures throughout the year. The food service fund balance was a negative seven point approximate 7.1 million. A reason for this decline is represented by the reimbursements of the mills that have not been fully processed through April 30 of 2025 by MD. MD allows the school district up to 60 days to admit their reimbursements for mills. Also we should be seeing another $1.9 million coming in revenue, which we'll discuss later, that will increase this fund balance next month, the community education fund balance has approximately $10.3 million the

on the general

fund revenue for April was approximately 59 point 8 million the year to date fund, general fund revenue was $458 million compared to 482 point 5 million during the same period. Last fiscal year, the food service revenue was approximately 266,000

total. The year to date, school food revenue was 13 point 6 million, compared to 16 point 7 million during the same period last fiscal year, currently, community service revenue was approximately 1.4 3 million year to date to. Total was 29 point 1 million compared to 24 point 9 million during the same period last fiscal year, we will see these revenue balances going up as we have received our first half tax settlement of $62.9 million as of today. So we will see these balances increase next month. Now, if we move on to the expenditures during the month of April, the general fund total expenditures is practicing 60.4 64 point 6 million. Year to date, general fund expenditures through April, total approximate 50 557 point 1 million, compared to $530.1 million in the same period last fiscal year, expenditures and the full service fund total approximate 2.18 Million. The year to date, total expenditures for food service was approximately 22 point 4 million, compared to $19.8 million in the same period last fiscal year. Now if we move on to our last governmental fund, the expenditures in our community service fund totaled approximately 3.8 million. The year to date, total was 30 point 1 million. This is compared to a $26.4 million and the same period last fiscal year,

at the end of April the district, we held approximately 355 point 6 million and our Miss loft accounts are cashing equivalents. 246 million of this represents our bond. Five. Proceeds that are held in our capital, funds that are used for our capital approved projects. And the district held another 626 approximately two 626,000 in our non Miss loft account, which is represents our student accounts. And also we hold 30, probably 36 point 1 million in our fiscal agent account, which are dedicated to paying on proceeds. So this brings our presentation to an end, but I would like to. One up for any questions. Director

Emerick, Director

Gilbert, I just wanted to thank you so much for including those here over years in the presentation. I always appreciate how you would incorporate my asks around presenting information. Presentation every month. So just acknowledging appreciation for that. Thank you. Applause.

Our next item is eight. Overview of district risk and liability insurance senior officer Herron, go ahead and. Abuse this item,

Director, members of the committee, thank you for the opportunity to share. Little bit about district's insurance profile for this coming year, I'd like to introduce our Director of Risk Management, Bengal, ogunbi. You to share a few slides showing current and forecasting costs for this program.

Thank you very much. You know this, uh. At top joint Good evening Board of Director members and also the superintendent. So I would like to quickly go an overview of the current our. Risk and liability insurance program for the districts and of course, having a quick look into what we expect to see next year, looking at the. First slide here we have about four major insurance lines of coverage, the first one being the property insurance. So. So based on our market rates, we are anticipating up to 20% rate increase of next policy year, which starts from. July 1, and runs to June 30. Just wanted to say here that the actual numbers would have been known until 45. This to renewers and policies. Renew on July 1. So 45 days to that time will be June 15. So that is where you're going to have your actual numbers. So these are pretty. Elections for casualty insurance, which includes general liability insurance or insurance, we are expecting a 15 to 25% rate increase, and the main reason for that. Is due to the increasing frequency and severity of some of some claims cyber insurance, we're anticipating a 5% reduction possibly the premium for Executive Risk, that includes Commercial Crime and active assailant. We also. Also anticipating a flat rate or a 5% rate increase in that as well. And then, since a couple years ago, the insurance broker on record is brown and brown, which the district moved. To this broker, I think a couple years ago, I'm going to the next slide a quick overview of our current coverage. So we have property insurance by AFM global, so which stands at 1.1 million. So this is a little increase from previous policy year so. So commercial casualty, which mainly includes the general liability and orange short coverage, is the current carrier is Berkeley, and that starts at 430, 4008 $38 cyber risk. We just moved to star supply lines last year, and the current premium is 61,800 active I'll say that. And that's standard, 62,001 26 and the Commercial Crime and the current career is Travelers Insurance. So moving on to the next so the total premium right now is $1.7 million so that takes us to the projected coverage for next policy, and this runs from July, 1 of this year to June 30 of next year. So the first one is. Still, we are retaining all our current carriers, so nothing is changing right there, although we did market a couple of them, the property and also the casualty. However, the numbers we got did not beat the ones we currently have. So EFM global is still going to be the insurance carrier for providing insurance. And they were like I said, estimating an increased premium, profitable 20% however. Based on what I'm hearing from the broker, it may actually be about a 6% increase, even though what is projected right now is 20% so right now, the projected premium is 1.3 million. However, that may be less than that based on what I'm hearing from my broker, also for the casualty package on. So the carrier is backlash insurance, and right now the estimate is based on 25% increase from last from the current policy year. However, we are estimating a 21 a six, 12% increase, I should say so that will bring it to about 470, 4000 if that number stands of. Also for cyber risk insurance. Right now we are estimating a 5% increase on current policy year, and then active asylums also a 5% increase that's down at $65,000 234, and in the last one, Commercial Crime by Travelers Insurance with a 5% increase that takes it to 14,006 81, so I. Um, over the last over the current premium, sorry, current policy here thinking we are looking at a rate increase that is actually lower than what the industry average is, and that is actually due to the fact that we are also improving us risk control programs. Because since we are self insured, there is a need for us to have a you. Ah, the well rounded risk control programs. So that is actually taking place right now and then. The The hope is that as time goes by, these numbers will continue to decrease. I would like to make a very quick comment concerning the cyber insurance. Ah, we collect that in 2003 there was a an attack. So that led to having. A very challenging situation. However, the IT department actually came up with a lot of very wonderful programs. So right now, last year, we expressed a 29% decrease in our premium, and this year, we are also anticipating a decrease. So that shows that the event of 2023 was turned around as a positive. So I think there's a good shout out to the IT department. And of course. As the district leadership for actually bringing up those programs actually led to a decrease in our insurance programs. So we are also planning to extend that to other fields and also other other areas of insurance, COVID. So I believe that ends a little presenter for today. I don't know if there are any questions. I'll be. Interested in responding to them. Thank you.

Director Amber,

thanks chair Bucha, thank you so much for the presentation. I had a question about the total amounts of the property liability and. Is that impacted by the number of properties? So for instance, if we were to close a certain number of schools in the future, would that likely have an impact on the total cost of our premium in that category? And would that impact likely be dependent on whether we sold the properties. Maintain the properties as close. Those properties, or use the properties for a different purpose?

Thank you very much for that very important question. So yes, that may may have an impact on the premium, and it may not, because the things that the underwriters will factor in when they are determining the premium will be, of course, the number of properties that you have the usage of the property as. The likelihood of having an incident happened there, of course, the history, the lost history. So even though you may have a reduction in the number of properties if the number of incidents are on the increase that may impact the premium. So yes, you're right, that may potentially have an impact in the premium. However, other things are also factored in. The other things that insurance carriers will look into is, what programs do we have in place to mitigate risk exposures right now, we are currently improving in those areas as well. So yes, the down the line the plan is actually to ensure. That we have reduction in premium, or the very minimum, a reduction in the rate of increase in the premium.

Thank you. Thank you. You're welcome

the projected increases that you were saying. First of all, I appreciate you putting that in there. So that was. Think 15, 20% 5% and whatnot. Is that pretty standard year over year, or is this a larger increase than you typically see?

So yeah, thank you with the way the insurance program runs. So the like a industry standard for. Or rate increase, which accounts for inflation, in some instances, also accounts for general losses. Because, as we know, any loss that happens, especially with big carriers, any loss, any loss that happens in other areas, can actually be spread all across their books or businesses. So in this case, something happening foreigner, as we know, can actually impact coverages. Here. Million story. So that would explain this, what we call the standard percentage increase in the premium. But having said that, however, they also take in concentration into what our loss experience is like. So they will look into the last 12 months, what I've been to, incidents or losses that we experienced, or the last three years. Those also will be factored in, just like. Somebody who has like, three speed citations, for instance, by the time the person is going to have the next insurance on the vehicle, that will go up compared to somebody who does not have any. So those are factors that will determine the percentage rate of increase. So they have a standard number for all the industries and then our personal. Experience will also determine what the number is going to be. So right now, we are outperforming the industry average, which is something that we really want to keep going. Thank

you so much your work.

I got one quick question for the cyber the assembly. It says like 5% the reduction. But if you look at year after year, it's increase of five percentage. Is that the number eight? Ryan, if you can just bring it up, yeah, I.

So the rate reduction we are anticipating is year over year. In other words, the current policy year, which right now stands at 6060, 61,000 62,000 Yeah, yes. So. So like I mentioned earlier, the when they are quoting some of these things, they tend to be aggressive. In other words, they link towards the worst case scenario. And like I mentioned, the actual numbers will not be out until 45 days before renewals. And the reason for that is, if anything were to happen between now and then, that would impact the premium. So. So of these numbers here are the worst case scenario. The numbers we are projecting are the worst case scenario. So hopefully by the time the numbers actually renew, by June 15, we're going to have, hopefully we're having that reduction. So right now, the projections here are the worst case scenarios. I don't know if I was able to answer that question,

but question, but the next anticipated, 2025 2026 66,000, it just, I went up, right?

Yes. So like I said, the rate increase is really like a range from zero to 5% so right now we know the worst case scenarios for all of them, but by the time they've well, they have to, for instance, for the for the catalytic package. It is from 15 to 25% rate increase for now we are using 25% which is the worst case scenario. But by the time the actual numbers renew, we are looking at the same thing, what the actual numbers are going to look like. All

right? Thank you. Thank you. Thank you. Thank you

very much. Applause.

The action item fiscal year 2025, budget amendment, our next and final item is the referred budget amendment to the full board senior officer, Gio, would you please walk us through with the amendment before I take any motion or forward this, right? I.

Thank you. Chair Abdi, I would introduce the budget amendment by saying that we're amending it because last year we were developing the budget. So for the current budget, we balanced it by saying that we would be recouping 23 million from vacancy, and we had vacancy at 4.7 I believe. Percent, and throughout the year, vacancy at that time was high. But towards the end of fall, mid to end of fall, it started getting low and got right. Now, I think it's at four, but the dichotomy of it, the way it's made up, would not allow us to recoup 23 million to cover for the expenses. We also, if you look at the where, whereas this, there are items that were not budgeted. But we. Needed, and so it's one of the whereas there that you that have listed, and with all and with all that, that means that our expected expense would be higher than what the board approved. So we're coming back to not one. Let you know that that's the case, and then to bring a solution to you as to why, how we would be covering that, we'd be covering that by having the increased revenue. In state aid come in and cover the it was about, I think, 6 million or so that would be over part of the vacancy work. So we covered before that. But the part that was not, we couldn't cover with vacancy. We're covering with new and additional revenue from the from the from state to make sure that the budget is balanced. By the time the fiscal year ends on June 30,

any questions related to this amendment to passing to the full board director? Hammer,

thanks to Bucha. Great scenario, switching up, I know that this represents an increase in expenditures, or more of a negative right, we spend more so, so my my question is, what is the impact on our fund balance going into the. The next fiscal year, 2526 and in policy, my understanding and the policy committee meeting earlier tonight, my understanding is that there was maybe some conversation or recommendations pertaining to the percentage that the policy that governs the percentage. Do we have to COVID the fund balance are? Could you please share that information here with us in terms of any recommendations and if where the connection is to our current financial situation going into fiscal year 26 and the fund balance?

Thank you. Director Emerick, that's a great question, and so I would answer it in two, two phases. The first one is when. The we would this would be we're taking this from fund balance. And the answer is, No, we're not taking it from fund balance, though the additional revenue that comes when it comes will park it there. But the level of fund balance that we presented to you at the end of the fiscal year at 8% we are still at 8% and so that fund balance is. Has not changed. And so moving forward, how would what impact this would have on fund balance? Here again, it would not be impacting fund balance because we are not going back to the reserve to cover the expenses. We are using additional revenue to cover the expenses, and that's why we want to be touching fund balance. And as for. The conversation that took place during Policy Committee. I was we were merely recommending making, yeah, recommending the flexibility when it comes to fund balance, given the uncertainty that we see at the state level and at the federal level, the state we know as federal, we're still waiting to see and. We haven't given a percentage. We did indeed say that we would be bringing a percentage later on in the fall, after we go into further study as to what the impact would be. But we're just saying that to provide us with flexibility, should an action be taken that would be against the. School districts, or impactful, negatively impactful to us that we have the flexibility to use fund balance without really the risk of being downgraded.

Thank you so much for both of those answers. Enough, sir. And yeah, I will be, I can't say looking forward to, but I will be, of course, very interested to see. Your continued recommendations of the fall, I appreciate that update.

I have

the increase of the grant of 16 million. Is that a strictly. It, is it coming from the education department or what? Or does it have a specific like expenses title,

I would thank you, Director, Abdi. I'll have Aaron answer, answer that I.

Question, good question. Director, I'll be so I have to do research, because I know we get a Grants question. So your grant revenue is going to tied to your expenditures, but the increase is due to our title carry for 6.5 million. But we also. Had another 5.3 and non public title on one that we had the load that was not previously within our resolution. So that makes up 11.8 of that. And also we have small to large grants that were either new awards or carry forth those amounts we don't have when the resolution is brought in June. So we carry forth those after or. For once, most of those expenses are completed while we're doing our audit, and those could come from let's see. We have our Perkins grants. We have a new award of 187,000 we also had library services grants with 74,000 those are new awards. We also have halls solar panels, 183,000 so those are going to be your supplemental budgets for those grants. So. All

of those restricted budgeting purposes we

cannot go to the general fund. No those expenditures would be $1 for dollar match per s were reimbursed when we expend the money. I

and then, if I, if I can add for clarification, is that. If it is a federal double funding, it's all of them are under 100% reimbursable terms. And that means that we have to spend general fund and then submit the reimbursement request to the federal government and we get those revenues. So that means that that has to be dedicated to that it cannot be used for anything else, but for what the expense that COVID took place was.

Can I get. Are please a motion to label 2025, Dash 0032, to the full board. So is there a second? It has been moved and second to refer to the current budget amendment label item, 2025, Dash 0032, to the full board. Is there any discussion?

Yes, seeing no further discussion. Ryan, will you please call the roll

shafty Callahan is not present. Bucha

hemerich, yes, chair.

Abe aye, the motion carries an item is referred to the football. Do. That concludes our agenda today. This was the final scheduled meeting for our school board finance. Our next planning meeting will be August 26 2020 August. 26 5:45pm, Director,

if I may, for just a moment, I would like to thank you for your leadership as well. Here? Well, it's actually the last two years here as the treasurer here, there's been a lot that we've been working with, but I've really been impressed with how closely you've been working with with this senior officer and making sure that I am informed and other board members are informed, and your leadership in this role has been just advocating. I just really want to thank you for your leadership. Shipping and going on here.

Thank you. Thank you, and I am honored to be in this position for our students, and I will do whatever we can to improve and be transparent with our parents and students as well. I.

Without objection, I will adjourn this meeting. Good night.

You.