##VIDEO ID:DAmvMKrcPt4## good evening I'd like to welcome you to the TW September 26 2024 minetonka School Board special meeting I'd like to go ahead and call the meeting to order let's rise and say the Pledge I pledge of delance to the flag of the United States of America and to the Republic for which it stands one nation under God indivisible with liberty and justice for all can I have a motion to adopt the agenda so moved Dan is there a second second Chris any changes or additions we have a motion and second all in favor please say I I I any opposed we have an agenda uh first up on the agenda tonight is an approval of bond refundings superintendent law Madam chair members of the board on an annual basis as it is financially beneficial to the district and to our taxpayers our district has a pattern of refunding bonds that save our district tonight Executive Director of Finance and operations Mr Paul bis is going to talk about two specific Bond refundings 2024 C and 2024 D Mr bis thank you superintendent law Madam chair members of the board uh as superintendent law indicated we've always tried to get the best deal possible for the taxpayers of the district and for the district and uh since 2008 uh We've refunded 48 different bonds and uh with these two bonds uh we're we basically at about 26 million and what these two bonds are going to be closer to $27.5 million of cumulative savings over 50 individual Bond refundings the reason we refund these bonds is because we can lower future payments reduce par value and and uh cut the cost of the bond refunding to for the for the benefit of the taxpayer uh the um we haven't done as many in the last few years although um although we're starting to be able to pick them up again but back in 21 when rates were going up or interest rates and inflation were expected to go up really quickly uh or they're they're calling for that we basically furiously did 10 Bond issues refunding 18 different Bond issues to try to lock in the lowest rates possible so we got in ahead of that and and we called that one right and got a lot of savings out of that now that interest rates are are coming down uh well we asked you to to fund the or to refund these because it looked like rates were going to start coming down back in June we asked you to for permission to look at refunding these and we thought that we we were going to save about $452,000 rates have continued to drop uh and so we're going to be basically saving $1,160 th000 over these two transactions um the uh you know the uh um as rates continue to drop uh we have 13 other Bond issues that to borrow a a phrase from um Captain Jack Sparrow and Pirates of the Caribbean when they said on Tortuga we wanted to take the Black Pearl back he said he needed leverage well the lowering interest rates gives us leverage or leverage in uh normal English um to uh be able to take our bonds that are reaching a call date and then basically uh sell a bond to replace them at a lower dollar amount and we can actually sell less power value because we invest in something called slug state and local government securities that are bringing in a higher interest rate than what our interest rate is that we're paying but the combination of the the new bonds plus the interest they earn in time to make the bond payments on the old bonds result in the savings so we have more opportunities like that coming up I'm hoping knock on wood that we'll be able to push this the savings over 30 million in the next year to year and a half or the I should say the cumulative savings so with that um I would like to uh um uh request that you approve the refunding of the uh 2024 C certificates of or the sale of the 2024 C certificates of participation back in June we thought that we would be able to drop our interest rate from 4.97% down to 4.16 and we thought that we would be able to reduce power value by 350,000 with the uh I know as luck is when preparation meets opportunity right and uh so with the drop in interest rates just the the just the week before we sold um we basically were able to have the the lower p uh lower payment by three of 3.90 Total interest cost so we dropped from 4.97 to 3.9 or 1.07% uh you know basically that's about a a little over 20% cut in the in the rate of interest overall so then basically uh we got a total reduction in outstanding power value on this this particular transaction of 760,000 oh I'm so if with that I like ask you to please approve the sale thank you Mr B I think you missed talk by a pirate day like by like a week or so so just we we should have had the meeting last week uh but as always uh if we have a motion to approve the approval of of uh Bond sale 2024 C is there a motion so moved Chris is there a second second Patrick uh we have a motion and a second uh is there any discussion any questions or comments I would just say great news that we got it even lower than expected and um more money back into the district so thank you we have a motion in a second all in favor please say I I I any opposed motion carries thank you um next up is approval of 2024 d uh Mr B uh thank you um Madam chair members of the board uh for the 2024 d uh back in June when we first looked at this it was worthwhile doing we thought we could lower the interest rate from 4.28% to 3.92 and reduced power value by 250,000 and again so with it being prepared uh we actually I sold these bonds at 3.66% which is a 62% interest rate uh reduction which is about a 15% reduction in the rate and then the net uh well the net present value of 185,000 but based on an outstanding power value which is the cash that we won't have to pay back of $400,000 so with that we asked uh that you would approve the sale of the 2024 D bonds thank you thanks Mr bis uh can I have a motion to approve the sale of the 2024 D bonds so moved Patrick is there a second second Kary uh any questions or comments Chris uh just a quick comment and uh uh thank you and kudos to you and your team for always keeping an eye on this um obviously I was a part of of the great refunding uh the past couple of years and uh starting to see that but you know 1. oneish million dollar over time of course but that's more money that we can put back into the classroom and help Sol solve other issues and so all of this stuff adds up um and you and your team do such a great job so thank you thank you w continue to keep a weather eye out for that thank you uh we have a motion and a second all in favor please say I any opposed motion carries thank you uh next up tonight we have certification of the 20124 pay 2025 preliminary leavey uh superintendent law Madam chair members of the board just a few minutes ago at our work session we ran through the statutory requirement of the annual board approval of certifying the levy as a reminder of the timing of this the board certifies the levy tonight but formally votes on it in December so tonight we run through the categories of the levy the changes that they've happened since the previous year what that maximum dollar amount would be and we certifi the max because there could be adjustments that happen throughout the time but then the formal hearing happens in December and then the formal approval Mr bis thank you superintendent lot mam members of the board uh we are going to be reviewing for the public the preliminary Levy uh we went through this in in line by line detail at the study session and so we'll be going through more of a synopsis but we'll have the key points and of course we are available for anybody in the district who has questions to be able to answer any questions or provide any information about Po's Levy that they would want to have additional information about so we have nine major Levy categories that uh make up 94% of the total the total Levy overall and the biggest one is operating referendum Revenue local optional revenue is something that used to be operating referendum revenue and then the technology referendum which is technically capital projects but we' known as the tech Levy those are our our biggest levies uh we also have a Debt Service Levy for bonds for long-term maintenance and um other post-employment benefits uh our operating referendum Revenue uh this is one that's probably the most notable to the public because it's talked about a lot and we have to run a referendum to get it approved every 8 to 10 years uh or just recently we able to do it by um by board vote since we did not increase the rate uh but $28.2 million uh and it's a $1 million increase over the prior year uh that is driven primarily by $63 and 42% inflation increase from from uh last year and that's about 2.3% inflation increase uh which is estimated by the Department of Revenue uh local optional Revenue again $724 per adjusted pupil unit uh the this used to be part of the uh operating referendum but it was moved off and made into a permanent Levy category uh it's been frozen at $724 though so no inflation adjustment and uh basically if it was adjusted for inflation it would be up to about $1,000 this year uh but uh we still get that $724 8.9 million $78,000 increase our technology referendum uh is based on the uh 6.56 n% of the net tax capacity of all the property values in the district and um so the property values this past year actually went up 8.1% over the prior year so this is increasing by $88,000 up to from 9.24 million up to just over 10 million dollar in uh for this current Levy uh Equity Levy is a is a uh small dollar well not small it's a significant dollar amount but it's it's much smaller than the other items that we just talked about but it is uh a in additional $69 per pupil it's actually up from 50 because it's based on what type of revenues we get and how we compare to the 95th percentile of all the districts in the state and um and so if you're above the 95th percentile you only get $50 if you're below you you get more than that and based on a calculation and so last year we were actually below or above the the 95th percenti this year we're below so we're getting it's going up from $50 up to just under $69 Q comp alternative teacher compensation is uh relatively flat uh it's funded at $260 per our October 1 enrollment uh which based on the estimate and then it's also always true up uh and we get 35% of the total revenue of 2.9 Million the remaining 1.9 million comes as state aid operating Capital Levy is a a dollar amount that we get it's about $2295 uh per pupil so that that's also not inflation adjusted it's B the only adjustment comes on the the fact that our buildings are getting older older every year and there's an a building age factor in there so that went up 47 so uh we're at $2295 uh it's a $1.6 million Levy and uh uh it's an increase of $211 but it's not because of the 47% increase it's because there's a portion of it our total revenue is 2.9 Million and the state makes up the difference between the levy and the total uh and the the state has been uh contributing a smaller and smaller portion over the last several years uh four years ago they uh paying 64% of the of the total uh this year uh they're only going to be paying about 42% of the total so we're we went from paying 36% of the total up to 58% of the total uh via the local Levy instructional facilities lease Levy is uh uh $212 per pupil it's also been frozen uh since 2014 uh but we uh use this the these dollars to pay for uh Bond payments on some of the construction that we did to build the capacity of the district uh to house uh additional programs to house enrollment growth um with the enrollment growth of course every uh open enrolled student uh brings in enough money to cover all their incremental costs and have enough money left over to increase uh uh the uh dollars for all Resident students for regular instruction by 23 to 25% annually which is a significant amount uh so uh that that's kind of how the whole open enrollment thing has worked for us and uh we were able to increase capacity so we could keep the uh virtuous cycle of Revenue growth going and have an 18-year run of no no budget increases while everybody around us was having uh annual or biannual budget reductions um our debt service Levy is uh our our bonds for mainly long-term facility maintenance we bond to take care of our buildings uh we uh have a 10.9 million uh Levy for coming up for our bonds uh for everything that we've done in terms of uh continuing to uh keep our buildings in a state of good repair so that they last for the long term our buildings are insured for $985,000 worth of replacement cost I'm sorry 985 million almost a billion dollars uh it's incredible what school construction costs now so the fact that we're putting uh three to four to5 dollar a square foot maybe some your $7 a square foot into our buildings uh it's it's a much more costeffective way to be able to provide facilities and keep them in a state of good repair for the long term they in we're also in essence paying it forward in terms of uh standing on the shoulders of Prior Generations who who sacrificed their dollars to basically get get our initial facilities built uh this is showing an increase of 3146 million but of that amount 1.4 million is the fact that we had something called an excess fund balance last year and uh that was based on property tax collections in essence in in that ended up being in excess of the annual payments and so that that had built up that's a statutory requirement by the way to make sure we can p that the bonds are always paid um but uh we use 1.4 Million last year to reduce the property tax last year so that makes it look like a $1.4 million increase when we're not using those or have those dollars available to reduce it again uh then about the other uh about $1.5 million is is based on the the bond schedule and the additional bonding that we have done for long-term facilities maintenance for the next couple of years and then other post-employment benefits this is a bond that we uh sold back in 2008 2009 originally we refinanced it a couple times to get the cost down but the uh Levy is basically flat it's down about $99,000 for the bond payment on that but the bond payment uh or the bonds paid for dollars to fund uh outstanding long-term liabilities for retirees that had been contracted for prior to July 1st of 2002 and uh since we uh set up this in a trust fund those proceeds in a trust fund we basically pulled uh $20 million out of that fund to pay for various U uh employee retiree benefits and if we had not done that we would basically have had to pay that out of ongoing operations so it's been very successful and uh there's a sufficient uh Corpus uh the Corpus of the fund is actually in sufficient shape to be able to continue making those payments until all those liabilities are completely paid off at which point in time hopefully though well actually there should be projected wise if we're conservatively projecting that we should have a fund balance that can be used for the benefit of the district at the discretion of the board so we have uh 13 other levies that the school district qualifies for uh we I'm not going to go through each one of them individually um a couple of interesting ones we have ice arena Levy we're one of 13 districts in the state that have their own ice arena Levy and so we can Levy for any expenditure cost over and above the revenue that we bring in that's about a $542,000 revenue uh we Levy for uh uh Levy called health and safety is one of the largest or other levies uh that actually goes for all kinds of things like sprinkler repairs replacing the fire alarm systems uh as best as a batement if we're doing a construction project and we need to remove as bestes as from some old material that might have been opened up during demolition uh those types of things and so um um that's one of the larger levies but the total the total of all those levies basically are are increasing about 350,000 from 3.1 million in 2324 Levy to 242 PR Levy at 3.4 million and then we also have something called prior year adjustments so every one of these U 22 levies that we qualify for are always Tred up and sometimes it takes two years to True them up so um uh we have trups and uh we have 9 161,000 in trops from prior years uh that compares to trups last year of 2.5 million of which the biggest chunk was related to the operating referendum and the inflation increases that were actual over and above what the original estimate had been by the Department of Revenue so the decrease of $1.5 million um again some of our prior year Levy adjustments we had a $2.2 million Levy adjustments in 22 pay 23 because of the operating referendum and inflation being higher in actual inflation that we were entitled to being higher than what the estimate was and last year was 1.7 million so we don't have that anymore but that results in a drop in the prior year Levy adjustments so our total preliminary Levy uh is proposed to be uh 70 million 63,65 5 it's a $4,285 th000 increase or 6.51% over the prior year of that amount 1.80 1, 89,000 is uh or 2.75% of the increases generated by the voter approved inflation increase on the operating referendum and the voter approved inflation increase on the capital projects referendum Levy uh 1.4 million of that increas is because we're we're don't have any uh dollars to apply from a Debt Service excess against the um um the bond Bond payments so that looks like an increase it's 2.13% of the change and then the other 1.63% or 1, 76,000 is generated by all the other Levy categories and so the last slide I have is to show a very very very initial estimate uh but uh this is uh the 23 pay 24 estimated taxes last year uh if they're increased at 6.51% what they would look like for 24 pay 25 there's all kinds of factors that can come into play such as whether a person's home got reassessed since a person if a person added on or did other improvements or renovated internally uh or if um there's been other property built in the district that actually could help lower things so there's a lot of ups and downs and ins and outs but if this this is just an example of if nothing changed on a $300,000 home their proposed taxes would be $98 um for the year uh increased uh to from 1509 to up to 1607 uh $500,000 home from 2526 up $164 to $2,690 $700,000 home from $3,657 up $238 to $3,895 and then a $900,000 home $4 4,768 a year ago increased by $310 to $578 so um with that um I'd be glad to answer any questions and um would request that you approve the uh the preliminary Levy so that we can file it uh by the statutory deadline of September 30th with uh the Minnesota Department of Education and hanpin County thank you thank you Mr BR can I have a motion to approve the certification of the 2024 pay 2025 preliminary Levy so moved Mike is there a second second Chris uh any questions comments I would just say uh like you said we did discuss this during the study session immediately prior to this and there were some more extra slides and more detail in that presentation so if folks want to see it they can definitely pull up the study session that we held right before this to kind of look a little bit more in depth uh we have a motion and a second all in favor please say I I any opposed motion carries thank you thank you can I have a motion to adjourn so I moved Dan is there a second second Patrick all in favor please say I I I any opposed we are adjourned thank you