Detroit FRC School District Special Meeting Draft Minutes 6-8-2020
DETROIT FINANCIAL REVIEW COMMISSION?
DETROIT PUBLIC SCHOOLS COMMUNITY DISTRICT (DPSCD) SPECIAL MEETING
Monday, June 8, 2020
Beginning no earlier than 2:05 p.m.
Remotely Using Microsoft Teams
I. Call to Order
Chairperson, Rachael Eubanks called the meeting to order 1:45 p.m.
II. Roll Call
- Members Present - 6
- Rachael Eubanks
- Chris Kolb
- David Nicholson
- Ron Rose
- Nicholai Vitti
- John Walsh
- Members Absent – 4
- Stacy Fox
- Brenda Jones (non-voting
- Dave Massaron (non-voting)
- Iris Taylor
Let the record show that 6 Commission members eligible to vote were present. A quorum was present.
III. Old and New Business
- DPS FY 20 Budget Amendment No. 1
- Mr. Vidito presented DPS FY 20 Budget Amendment No 1 to the Commissioners. He stated that revenue is based on a conservative projection of remaining tax collections in May and June, and support services include expenses for audit and staff expenses associated with the administration of DPS. He also noted that debt service expense includes both interest and principal for the Stabilization Bonds, MPSERS and Emergency Loan repayment, and as part of the restructuring, it was assumed that a portion of the 18 mills property tax collection would ultimately be transferred to DPSCD for legacy obligations. He also stated that during the FY19 audit, the final transfer of $6.9 million in remaining cash to DPSCD was recorded.
- DPS FY 21 Proposed Budget
- Mr. Vidito presented DPS FY 21 General Fund proposed budget through the year ending June 30, 2021 to the Commission.
- He stated that due to the COVID 19 pandemic and resulting forecasted revenue reduction, DPS is projecting a 5% reduction in FY21 property tax collections. However, with the forecasted reduction, he stated that DPS still expects to be able to meet its debt obligations. He continued to say that support services include expenses for audit and staff expenses associated with administration of DPS; the debt service expense includes both interest and principal for the stabilization bonds, MPSERS and Emergency loan repayment, which is based on established schedules. Mr. Vidito also noted that additional operating payments will be made as funds are available to pay down outstanding MSSERS debt more rapidly.
- DPSCD Budget Adoptions:
- DPSCD FY 20 Budget Amendment No. 1 – Food Service Fund
- Mr. Vidito presented an overview of the proposed changes to the FY 2020 adopted budget amendment No. 1 to the Commission, noting that Federal revenue is projected to decrease by just over 30% as a result of reimbursements for fewer meals served due to school closures in response to the COVID 19 pandemic and subsequent Executive orders. He further stated that while continuing to serve breakfast and lunch at 17 District sites throughout the pandemic, expenses for food supplies will be lower than expected due to the types of food offerings; the District has continued with projects and expenditure consistent with the food surplus Spend Down plan approved by MDE, and the fund balance is targeted to be 3 months of average expenditures.
- DPSCD FY 20 Student Activity Fund
- Mr. Vidito stated that prior to FY 2020, student activity accounts were accounted for under fiduciary activity and the District was not required to adopt a budget. In 2019, the Governmental Accounting Standards Board established new criteria for identifying fiduciary activity and because of this a budget has to be proposed and approved by the Board of Education and the FRC. Mr. Vidito presented an overview of the proposed FY 2020 budget to the subcommittee. Mr. Vidito stated that the proposed budget consists of $2.5 million in revenue from school fundraisers, student activity fees, and donations of less than $0.1 million and $2.5 million in expenditures related to field trips, student events, and fundraiser expenses. Typically, all the revenue is expensed by year end, the budget has an ending fund balance of $1.7 million from prior years scholarships funding.
- DPSCD FY 20 Budget Amendment No. 2 – General Fund
- Mr. Vidito presented an overview of the proposed changes to the FY 2020 adopted budget (amendment No. 2) He stated that the COVID 19 pandemic and ensuing “Shelter in Place” Executive order has dramatically altered school operations and state revenue.Budget amendment no. 2 includes anticipated changes from the pandemic and is based on actual expenditures through April 30 and projected expenditures for May and June. He further stated that: State revenue is projected to decrease resulting in a reduction in school funding by as much as $700 per student or $35.2 million; federal revenue and corresponding expenditures were reduced by approximately15.6M to reflect anticipated expenditures through June, 30 and carryover funds will be spent in FY 21; the amendment includes ongoing salary and benefit payments to employees and payments to contracted vendors continuing to work through the end of the year; the projected surplus is after the District makes an anticipated Board approved transfer of $25.3M to the Capital Projects fund.He further stated that based on the anticipated changes, the amendment projects an end of year surplus of $718K, which would leave the district with a $140M fund balance.
- DPSCD 3 Year Projection – General Fund (No budget adoption)
- Mr. Vidito presented an overview of the preliminary three-year budget projection to the Commission and stated that based on preliminary assumptions from the State’s Revenue Estimating Conference in mid-May, DPSCD is projecting a balanced budget through FY 2023. He presented a model that assumes the Enhancement Millage if renewed in FY 2023, and the per pupil funding is expected to return to pre COVID 19 levels in 2023.
- DPSCD FY 21 Proposed Budget – General Fund
- Mr. Vidito presented an overview of the proposed FY 2021 budget to the Commission and stated that the FY21 proposed budget is balanced while protecting core school-based programming. The proposed budget: anticipates a 10% reduction in overall state funding while assuming that enrollment remains steady for fall 2020; includes a projected $3M contingency; maintains all school-based positions; does not include any position reductions, salary reductions or furloughs; includes an anticipated 10% increase in healthcare costs and includes $43M in CARES Act funding with an additional $42M available to address continual budget deficits in FY 22. He further stated that in order to address the projected budget reduction in funding, the following cuts are being proposed: no recurring salary increases, only negotiated one-time bonuses; a ten percent reduction in central office discretionary spending; reductions for the District office funding for in-person training, staff travel, conferences and student field trips; reductions to central office positions and strategically shift operations reoccurring expenses to one-time projects based on need. He also stated that there could be further budget modifications, noting that the School Board can amend the budget throughout the year as additional information becomes available.
- DPSCD FY 21 Proposed Budget – Food Service Fund
- Mr. Vidito presented an overview of the proposed FY 2021 budget to the Commission, noting that revenues is expected to increase to pre COVID-19 levels based on a resumption of in-person instruction of the District’s campuses. He also stated that student enrollments is expected to remain constant from FY 20 levels; personnel expenses are expected to increase based on the addition of more resources to serve students to maintain and adhere to social distancing requirements; the district will continue to make one-time purchases for the purchase and installation of equipment and capital consistent with continued implementation of the Food Surplus spend down plan approved by MDE, and the fund balance is targeted to be 3 months of average expenditures.
- DPSCD FY 21 – Student Activity Account Fund
- Mr. Vidito presented an overview of the proposed FY 2021 Activity Account Revenues and expenditures comparison noting that revenue consist of school fundraisers, student activity fees, and donations less than 10K. Revenue decrease is expected due to assumption of continued social distancing and less fundraising receipts. Expenditures consist of field trips, student events and fundraiser; expenses are expected to decrease due to assumption of continued social distancing and less field trips and other school events.
IV. Public Comment
- Shondra Hayes
- Ms. Yvonne
- Ms. Depecuna
- Ms. Moore
- Caroline Kasino
- Mr. I Philip, II
- Mr. Clarke
- Victoria Carter
- Mr. Williams
V. Next Meeting Date
School District Regular Meeting: June 29, 2020, following the City Meeting, beginning no earlier than 1:30 p.m, using Microsoft Teams.
VI. Closed Session
Madam Chair, Rachael Eubanks notified the public that the Commission will now go into closed session, at the School District’s request, to discuss confidential updates regarding negotiations on collective bargaining agreements. She noted that it is the last order of business except for the motion to adjourn, which will be done when the Commission returns to open session.
Motion made to go into closed session. Motion moved and supported, the Commission approved the motion to go into closed session.
Motion made to come out of closed session.Motion moved and supported, the Commission approved the motion to come out of closed session. The Commission did not make any decisions in the closed session.
Motion made to adjourn. Motion moved and supported, the Commission approved the motion to adjourn.
There being no further business, the meeting adjourned at 2:55 p.m.