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February 17, 2021, Meeting Minutes

School District of the City of Muskegon Heights

Receivership Transition Advisory Board Meeting

Wednesday, February 17, 2021

Virtual Meeting via Microsoft Teams



  1. Call to Order
    1. Chair Jessica Thomas called the meeting to order at 4:02 p.m.
    2. In accordance with Public Act 228 of 2020, this meeting will be held by remote participation. 
  2. Roll Call

Members Present-3

  • Dr. Dale K. Nesbary – Muskegon, MI
  • John Schrier – Muskegon, MI
  • Jessica Thomas, Birmingham, MI

Members Absent - 2

  • Dr. Patrice Johnson
  • Clinton Todd

A quorum was present.

  1. Approval of RTAB Minutes
    1. Motion made by Dr. Nesbary and seconded by Mr. Schrier to approve the draft minutes of the RTAB February 3, 2021 meeting. The RTAB members unanimously approved the meeting minutes as presented.
  2. Communications
    1. None
  3. Old Business
    1. District Financial Update
      1. January Financial Status Report- Liabilities Report
        1. Mr. Lewis reported that interest payments in the amount of $174,000 were made on the district’s Emergency Loans which is reflected in the report.
      2. Cash Flow Projection
        1. Mr. Lewis reported that cash flow continues to remain stable for the next year, even with the increase in insurance premiums.  He also noted that enrollment increased from last year by 11 FTE’s, which gave the cash flow a boost in the amount of $2,100.
      3. Comparison of Budgeted Revenue and Expenditure to Actual
        1. Mr. Lewis reported that the district is expecting to receive tax proceeds for the winter levy this month.  He also reported that approximately $145,000 in the miscellaneous revenue account is earmarked for repairs at the high school and the Martin Luther King buildings.  Mr. Lewis stated that there will be a significant increase of approximately $30,000 for building insurance because the previous insurance carrier decided not to renew the district which forced them to seek the services of a new carrier.  He noted that even though it is an unseen event, they were able to secure a new carrier. He further reported that the MHPS board voted to approve the new carrier and the budget will be amended to reflect this change.
        2. Chair Thomas queried the cost and invited Mr. Lewis to provide a detailed breakdown of what was being covered. 
        3. Mr. Lewis stated that 4 buildings were included in the coverage: Edgewood, Martin Luther King; the high school and the Administrative building.  He reported that even though they had a low claims history, he believed that the main reason the insurance company dropped them was because of the recent claims that were filed for wind damage at the high school and for repairs to a section of the roof at the Martin Luther King building, which were expensive claims.
        4. Chair Thomas queried if the costs would have been lower if consideration were given to joining pools and was informed that it was considered but went with the new insurance company because the rates were better at the time. He stated, however, that there was no objection to revisiting joining a pool going forward.
        5. Mr. Lewis also reported that the contract between the former district and the academy provided specific details for the type of insurance that was needed and stated that the district was adequately covered based on the requirements outlined in the contract.
        6. Mr. Lewis gave a detailed overview of the budget to actual report and stated that the document is somewhat obsolete at this time, because the board voted on a proposed budget amendment since this document was prepared.  He continued to say that the revenues were higher than predicted due to the money collected from the insurance company for building repairs.  He also reported that there is not much to report in terms of the actual expense because at the time the report was prepared there were no expenses; expenditures are high, but that was addressed in the February report.  He further noted that they are currently working to open communication channels with PSA so that everyone will be made aware of their roles and responsibilities and the district can move forward.
        7. Chair Thomas invited the Board to share any questions or concerns they have relating to the January Financial Status Report.
  4. New Business
    1. District Financial Update.
      1. February Financial Status Report - Liabilities Report
        1. Mr. Lewis reported that there was no change from the previous report.
      2. Cash Flow Projections
        1. Mr. Lewis reported that the cash flow continues to remain positive.  He stated that a new revenue and expenditure line was added for property insurance claims so that the costs can be separated from the day-to-day expenditures.
        2. Chair Thomas asked Mr. Lewis to clarify how special projects are defined and was informed it is for insurance.
      3. Comparison of Budgeted Revenue and Expenditure to Actual
        1. Mr. Lewis reported that the district received approximately $47,000 in tax revenues last month and is expecting to receive approximately $260,000 in winter levy revenues this month.  He stated that the transfers are much higher than originally projected, which has been accounted for in the approved budget amendment.  The change is attributed to building insurance payouts for damage at the high school and Martin Luther King buildings.
        2. Mr. Lewis reported that the district is expecting significantly higher expenditures in certain cost categories.  He further stated that legal fees will be much higher than originally expected but was accounted for in the approved budget amendment.  The increase in building costs is as a result of the new insurance premiums.
      4. 2020-21 Proposed Budget Amendment
        1. Revenues:
          1. Mr. Lewis reported on the FY 2020-21 proposed budget amendment that was approved by the MHPS board on February 1, 2021.  He stated that the fund balance will be lower than originally projected due to unforeseen circumstances but noted that it was still positive for the fiscal year.  He reported that $50,0000 was allocated for unpaid auction and delinquent tax fees, noting that the district was not charged these fees in the past two years, and there is a possibility that it can happen again this year or be lower than projected. All cost category changes are detailed in the tabs of budget amendment file.
          2. Chair Thomas noted that there was an increase of $11,000 and queried if it was reflected in the current 3% authorizer fees.  Mr. Lewis stated that the increase was reflected in the current 3% authorizer fees.
        2. Expenditures
          1. Mr. Lewis reported that the district is projecting an additional $5,000 in legal fees per month over the next six months and stated that it is difficult to project at this time, given the amount of work that needs to be done.
          2. The meeting was also informed that there will be an increase of $179,000 for insurance payments, which includes additional payments for projects: weather related repairs to the administration building and a new water heater.  He stated that the district was not renewed by their insurance carrier, which was no fault of their own, which has caused them to find a more expensive alternative insurance carrier.
          3. Chair Thomas asked what the ending fund balance is and was informed that they are adding to the fund balance even though it is not as much as they had hoped for.  Mr. Lewis stated that they were projecting the fund balance to be $115,000 initially, but it is looking more like the ending fund balance will be $43,220.  He stated that there is an amount of $33,000 for unpaid taxes and $50,000 was set aside to cover that expense, which may or may not come to fruition. If it comes, he is anticipating that it will be at a much lower cost than originally projected; if it does not come, the $50,000 would be added to the fund balance, which will bring the ending fund balance closer to the projected $115,000.
          4. Chair Thomas asked if he knew the timeline from the county and was informed that he does not have that information until he receives all the documentation from the Treasurer’s office.  Mr. Lewis stated that typically, they would receive the information in March, but due to the COVID situation, he is expecting to receive it late June, at which time the final budget amendment will be prepared.
          5. Chair Thomas noted that this is the third consecutive year the district added to their fund balance.
          6. Chair Thomas invited the Board to share any questions or concerns they have relating to the February Financial Status Report.
  1. Public Comment
    1. None
  2. Board Comment
    1. Dr. Nesbary queried the status of the information to be provided by counsel regarding the future existence of the RTAB.
    2. Chair Thomas reported that an invitation will be extended to legal counsel to provide the requested information at the March 2021 RTAB monthly meeting.
  3. Adjournment
    1. There being no further business, Chair Thomas adjourned the meeting at 4:32 pm.