Board of Education - Regular Meeting

We've reached the appointed time. I will call this meeting of the Education Committee to order on May 26, 2026. I don't see any citizens' communication. So we'll dispense with that. Next item on the agenda is approval of minutes from the May 7th, 2026 meeting. Those are in your packet. I will entertain a motion. Motion. Second. Motion and second. Any question or comment? If not, all those in favor of approval of the minutes as presented signify by saying aye.

Aye.

Any opposed? I'm just abstaining because I wasn't here.

Okay.

Show one abstention.

Yes.

All right. First resolution. Resolution appropriating $300,000 in the general purpose school fund budget from current revenues for related trustee commission. Move to approve. Second. Proper motion and second. Mr. Jason, do you want to speak to this? Mr.

Thank you, Mr. Chair. This is a required transfer based on state law to the Trustee's Office based on property tax collections. We budget for that. This $300,000 represents an excess amount over budgeted because the total came in above budget.

Mr. And this is something that other departments deal with as well in their budgets? Mr. Yes. Any question, comment? I do, Mr. Chair.

I don't know if this puts you in an awkward spot. There's one against for the school board. Do you know what the rationale was behind the one against?

Yes, sir, I do, in general. On basic principle, that particular board member said it bothers me that we that it shows up as if we were spending a blank amount of money and a chunk of it goes to the trustee. So on principle, I'm voting to oppose it, even though it is required by state law. OK. That's kind of what I thought.

My other question is, would This trustee commission, is that a fund?

We pay it to the trustee's office. Okay.

It funds the operation of the trustee's office. It's the line. It's just the statutory line.

We budgeted 5-3. I'm putting 3 in. I don't think we'll necessarily need all 3, but it was just in order to get me through to make sure I had enough within the year. I'm estimating it will be about 5-5.

Okay. It changes because of the tax revenue.

It's based on... Yeah, that much I understand.

So it's somewhere around $5.5 million of our revenue goes to the trustee. It goes back to the trustee. All right. I think I understand that.

It's a calculation that is a statutory calculation, 2%.

So that's one of your pages that the county trustee to visit our banker in the county. That's right. So we're giving you money, and then you're giving us back money. Yeah. Everybody understands that, but I'm not smart enough to know how that works.

I see none. All in favor of the resolution as presented, signify by saying aye. Aye. Any opposed? Next resolution. Resolution to transfer funds to the rural and general debt service funds to pay principal and interest on energy systems conservation debt 1.18384258. Move to approve.

Proper motion.

Mr. Second. Mr. And second. Mr. Thank you, Mr.

Chair. This represents our annual payment of the ESCO debt, the Energy Savings Program debt that we use to fund energy improvements, including LED lights and all our school buildings. I'm going to estimate 11 years ago. Mr. 2017. So, okay, nine years ago. This actually came up as a topic at the Budget Committee meeting as well, just as an FYI for you all. The proposal from the Budget Committee for our budget includes forgiving this as a means to increase our fund balance to fill our gap. But we do have that responsibility to take it to you annually. So that's what this represents. Mr. All right.

Can I ask you a question, Chairman? Sure. So knowing that, do we, would we still take action or would we amend it to?

You would take action on this as you would any other resolution. Would we amend it though to do forgiveness or? I need to amend this for that reason. Okay. Phoebe will have to answer that, whether it's required to actually ship the funds. Okay. But for your purposes tonight, you don't need them.

Okay. And Phoebe did tell me to bring it to make sure that we did bring it so it could be voted on by the commission.

Right. Okay. So the idea is we can... I'm sorry. Go ahead. The idea is we can... prove this, but maybe use it later?

Right. Well, basically, you're under contract with the school. You have a contract with the school. By contract, we're supposed to pay this amount, too. So what that resolution is doing, it's basically satisfying that.

Okay. Can I ask a question? Yes. Okay, so it's costing us $1.8 million a year to service this debt. Are we getting that much benefit or more from from the savings for, and how do we know that?

That's a great question. The answer is yes, based on engineered work that the ESCO contractor happened to be trained, T-R-A-N-E, we know them traditionally as HVAC contractors. They did an engineering study about the difference in energy savings compared to our old lights. our old water systems, et cetera, and they recommended improvements based on this state structure of improvements that would pay for themselves. If I'm not mistaken, it was a 20-year on a 15-year debt service. If it did not pay for itself, they actually, under the contract, would owe us the gap to guarantee it. And so the engineer work indicates that it is paying for itself.

I evaluate it once every year.

So we have the numbers that we can look at this year and show that we're...

I do not have them as of now. I don't know at what point, but I do know. Is that something we can get a hold of? We get a manual. I'd love to see it. We get a manual.

I don't think we've gotten it for this year. Okay. I'm not. Okay.

And probably because the year is not over. My guess is it's going to be after the fact, but I'll double check it.

But so far in those eight years prior to this one, it has paid for itself so many years ago. I'm going to give you one example of what did not pay for itself. They studied the athletic field lights, and the conclusion was those are on, they're not on, you know, every day. And so they concluded those would not give an ROI justifying that state program, whereas the in-school lights did give a return on investment that justified it.

But it's something we can quantify. Yes.

Yes, and they do quantify. Okay.

Other questions or comments? If not, all in favor of the resolution as presented, signify by saying aye. Aye. Any opposed? Next resolution is the resolution amending the 2025-2026 General Purpose School Fund budget by $4 million for letter grade bonus. Move to approve. Second. Proper motion and second.

Thank you, Mr. Chair. This is a revenue item for something that Senator Johnson actually initiated a year ago, two legislative meetings ago, that awards some additional funding for schools that have a majority of their, school systems that have a majority of their schools get a letter grade of an A. And we actually anticipated we were going to get about $2.3 million this year, because in year two, a few more school systems qualified for it. Late in this cycle of the legislature meeting, they added some additional funds to the current year's budget. which brought us up to the max that that particular law allows of $4 million. So nobody from the state is here to hear this thanks, but I'm going to verbalize the thanks to them for bumping that back up. My opinion is it mitigates at least a little bit the impact on us from TISA, and more specifically the fiscal capacity.

Yeah. Commissioner?

Did you account for this when you were doing the budget?

It was 2.4 is what I knew we were going to get, so I had accounted for 2.4, but not the 1.6.

So it narrows our gap.

What are you down to now? I'm still working on my numbers.

But since you asked, let me mention one other thing that we just got Thursday. It's another example of what happens in these weeks leading up to the final budget vote. We got notice from the Tennessee Department of the Treasury on Thursday that they are offering school systems who meet particular categories, and one of them is this A category, and it also includes some with high poverty, et cetera, funding for construction and maintenance of $25 per enrolled student. That is, again, in this current budget year. If we have to have an application process in, they expect to actually provide us the funds by June 30th. And so there's a lot of detail related to that we don't know. Because the window of time in the budget year is so tight, we've got five weeks. Rachel, I'm speaking for you some, Rachel has called the Department of the Treasury and asked, hey, can we make this retroactive for projects we've already done? out of the current operating budget to cover that. So we anticipate that we will get close to a million dollars from the state for that program this year. So I'm going to give that preface to ask Rachel for...

The other thing, I'm going to go back to the letter grade, too, is in conversation. I think this has all been in the last, well, I know it has been. That was Thursday. This was the week before, maybe the Thursday before the letter grade. We actually had people at our spring fiscal workshop and they told us then that's when we were going to get the additional money. And so we did not know that ahead of time. But in conversation, I'm going to go ahead because they have put, there was $17 million in the budget. They had to add $11 million in order to make this whole. They put $17 million in the budget for next year as well. We were told not to budget for that because you couldn't guarantee you were going to receive any of that money. It depended on if you had met the criteria and how many people qualified. I am going to go ahead and budget $2 million for that. So that helps cut into the gap as well. So that's the letter grade. Then going back to the maintenance slash construction number. I'm waiting on information from the state. We never get anything from the Department of Treasury, and this came from them. It normally is coming from the comptroller's office who tells you this is how you need to report it, or the Department of Education. And so, again, super fast turnaround. I'm waiting for them to tell me how to actually account for it. But I'm going to account for a million dollars this year, and it is in the budget for next year. So a million dollars next year.

This is not a million dollars.

that we're in right now.

And when you say construction and maintenance, is that like...

Yes, we're trying to get the details on that. We have no information on it.

They weren't... I'm going to speak for you again. Most of the questions she asked, the response was, that's a good question. Great question.

We don't know yet. We're going to get with the comptroller's office. We'll see about that. So I just don't... There's no actual guidelines. There's no web page for the information.

It's all new. But... We know, based on the email we got, that the letter grade qualification of more than half of your schools having letter grades was based on the retroactive year. So this year was based on the prior year. Next year would be based on the most recent year, which we already know we qualify for. So it does allow us to budget that in next year's ops budget as well.

So we got this notification Thursday. thursday morning i guess and i've been corresponding with the person from the department of treasury and she is still trying to give me some answers so once i have so when you ask about what our gap is i'm still trying to get how i can actually make all this work plus today is the last day we can enter in anybody can enter in requisitions for us for any purchases for the rest of the year. So also we'll have the 531 payroll, which is our last payroll. So all of that, after we can get through that payroll, I will have a whole lot better idea of what the gap is.

So what we know for sure is, Rachel correct me if I'm wrong, there's about a 1.6 more in revenue from the letter grade. There's about a million from From this year's new announcement about maintenance about a million from the next year's For next year's budget The the and then the fourth piece is Jumping back to our letter grades. We did not budget for it based on advice from the state finance office not to budget for it But we've qualified twice and we we had a discussion about If we have a reasonable expectation of it, we ought to budget for it, just to let you all know. Sure. And if it doesn't work out, have to come back to you.

But that's for next year. Correct. Yeah, next year's budget. That doesn't affect this year's budget.

It does not affect the current year's budget, but it would affect next year's. But it would affect our projections for revenue for the next year's budget.

When you say next year's budget, you mean starting... 26-27.

26-27.

Yeah. Okay.

This particular item that you all are voting on affects the current year's budget, which will increase our fund balance by about $1.6 million more than we projected because they added to it. Okay, so this is adding to our fund balance. This one is adding to our fund balance. But in answer to the question that Commissioner Herbert asked about, projection for the gap we are talking about changing our budget for that letter grade bonus to based on some subsequent conversations we had with the state when they originally told school districts don't budget for it yeah we've had an additional conversation and we feel like we should budget for We're comfortable budgeting the $4 million for this coming year.

I'm only budgeting $2 because, and here's why, this year our allocation would have been $2.4 because of what was in the budget, the same amount as in the budget for last year. and so if more schools did qualify we might not even get 2.4 we would get less which is why i said i would i'm comfortable budgeting too but not over that the legislator had legislature had to vote to add additional funds this year in order to make us whole and they may do that or they may not it's up to them but because of what's in the budget is the reason why that extra that brought us

from 2.4 to 4 was after the budget vote of the legislature. Next year's budget includes the original amount.

So this format is just for this year?

Correct. But we are projecting that we should expect to get Some out of it next year. But they have not put enough in for us to project that we could get $4 million next year. It could happen again, but it's not in the budget. And again, to close it out, to cycle back to my original comment, this is an example of those things that happened at the last minute with the state.

Get down to the nitty gritty.

Yeah, and I will tell you also, I'm of the opinion, without any good evidence, that when the issues come up, legislators recognize, you know, oh my, you know, inflation's going up, the governor's increased pay and required, you know, a pay increase. We need to find a way with what we have available to meet some of the locals' needs.

Do you see anything else possibly surprised?

We didn't know about them.

a million dollars until thursday i mean not that we know of but i can remember y'all leslie that was one before she'd come at the very end it's like all of a sudden the budget was met with this additional money yeah and those are examples that's examples of it we just don't know nothing that we project the the things that we expect to come in have come in

We always get information, and I think all those things we expected to come in. The fiscal capacity difference has come in, and we lost on that. Our numbers compared to Franklin's specials have come in, and that's basically a wash. I think we came out maybe $100,000 ahead of last year, so for budgeting purposes, that's negligible. And that, they pay us in Franklin Special under the same ratios, based on average daily attendance, not average daily enrollment, not average enrollment. So they actually had to get all our attendance data in before they give us that. That's basically a lot slightly ahead. And those are the ones that we .

our current year is going to be 93.49 last year was 93.42 that percentage of what we get in total for the county so it went up just a tad but not it has worked against us in the past we'll say that so it didn't work against us seriously so short which i rarely give is no we don't know of anything else at this point you don't want to vote on a tax increase and this is cut it cut down a little bit yeah

Because I noticed what the budget committee did.

Rachel's going to continue to look at that, and we'll know more. We projected our fund balance. She'll be able to tighten that up to various specifics based on us closing out those last purchase orders with school having ended. We'll get you information before June 18th. Okay. And our board is actually having their regular monthly meeting on June 15th as well.

Is there any chance of them thinking of something that could be cut, too, to help?

Don't know the answer to that, but, you know, you've asked questions at the last meeting regarding some of the board's discussions. We have shared with them that if we cut anything else, it's going to have an impact on instruction because we have cut it. the budget committee did and what ran in the newspaper did include a 2.2 million dollar cut going back to which they can't we can't line out of this but that was the idea of the textbooks that were added so that has so we'll the board will talk about that I don't know at this point if the board will vote after your June 18th meeting or before last year the board voted to amend their budget after the June 18th meeting when we got some A real number of directives from you all.

Any other questions or comment on this particular resolution?

I'm just proud for it.

Yep. If not, all in favor of the resolution as presented, signify by saying aye. Aye. Any opposed? Show of hands. Next resolution is resolution amending the 2025-2026 general purpose school budget, $200,000 for additional student support services.

Motion to approve. Second.

Thank you, Mr. Chair. This is one of those line items. It's special education legal expenses. It's very unpredictable for us. We have about 10,000 students with individualized education plans over 504 plans. We budget, if I'm not mistaken, 360,000 at least the last three years. Last year we came slightly under that. The year before, we were over it. And so this year, we do anticipate that it's a very minuscule raw number of issues that we have, but each one does have a substantial expense. So Rachel projects a need to add another $200,000 in it. Two years ago, you got something larger. This year, it's – last year, you didn't get one at all. This year, it's $200,000. Mr.

Question?

Superintendent, I know your attorney has resigned. Have y'all got a replacement? And would your replacement be able to start doing some of these special ed more so we don't have to hire a special attorney?

Thank you for that. We have not hired yet. We're still looking. In the special education setting, our general counsel works as a traditional general counsel, managing that with specialists, special litigators who are familiar with the IDEA, which is the federal law and the state laws. I do not anticipate that we will hire somebody who has the skills to litigate that, is so specialized, they can make so much money, I'm just telling it like it is, actually litigating from multiple districts that our pay pales in comparison. I just, I think it's extremely unlikely we'll find somebody who has the capacity to litigate that peculiar area of law.

It would be nice if they had learned some of that knowledge to where we don't get in these situations.

I will say, in my opinion, we do a really good job with that. The individual cases that come up are painful because they're very personal to folks. But statistically speaking, they are a fraction of a percent based on our total numbers. That doesn't mean that we don't need to keep working on it. I will tell you also, the work we do is a human effort. The positive side of that, it's done with love. The negative side of that is it's never perfect. If we determine that we've made a mistake, we do what we can to make it right. So a lot of these long-time, you know, the litigation cases that go a long way are where we're convinced we did the right thing. And there's an expense.

I've talked to an attorney that does just that. It talks about going against our system, too. It's not always the, as I've told you, it's not always the school that causes the problem.

Can you speak to the no vote from the board?

I can paraphrase with a suggestion. You can actually see the discussion at the board meeting. The board had a pretty detailed discussion about that, and there were questions related to some particular public comments about litigation. Gotcha. Okay.

Gotcha. I presume. I just wanted that validated. Thank you. Any other questions on that, Commissioner?

Is there any way going forward, say next year, that shouldn't this come out of the regular budget rather than out of the fund balance?

Well, we do put it in the regular budget. It's just that it's a bit unpredictable. So we did budget $360,000. Last year, the total came in under that budget. So this is an end-of-year reconciliation.

What would you do if you didn't have the fund balance? Would you just ask us for extra money?

Well, the idea of having a fund balance is to cover issues like this. Okay. As I understand it, if we had zero fund balance, we would have to ask you all for extra money, but then that triggers a lot of legal issues on budgeting. I think the State Comptroller's idea for that 3% where they've said we're not going to approve without that is to cover issues like this. That's my impression.

So this would be considered an unexpected expense, wouldn't it?

I don't know from an accounting perspective.

It is, because we budgeted last year. We met budget, we were fine, and this was over budget.

I will say what we do try to look at... We can pay for the dollar fund balance legally. Yes. That's my understanding. Well, according to the code.

Any other questions or comments? We did get a motion in second while the discussion was going on. That was my mistake for not asking. I see none. All in favor of the resolution as presented, signify by saying aye. Aye. Any opposed? All right. Next resolution. Appropriating $2.4 million in the 2025-2026 general purpose school operating budget for liability and property insurance claims.

Motion to approve. Second. Okay.

Thank you, Mr. Chair. Likewise, this is actually insurance and claims from county government's risk management office with their recommendation for how much to add. Rachel, I'll let you speak to that in detail.

When we received the first, they bill us quarterly, so when we received the October bill for the first quarter, it was more than what the entire cost for last year was. and part of it was an increase in the actual premiums with $600,000 and so that was not anticipated when we did the budget obviously the prior year and so I will tell you though as we've been going through the whole budget process I knew this because of the already being over in the first quarter. And so I accounted for this in my fund balance totals. And so this does not change what I had already projected.

And I'm going to praise somebody else who's not here. Jim Rule has kept us updated on this. And so, again, we did not project this in their fund balance.

Must not have been a good year in the insurance business. Yes. As a premium payer, it's not a good year. Correct.

As a collector of premiums, it's not a good year. Just so I understand, we self-insure, correct? I mean, is the school system any different?

Yes, you're correct. We self-insure for, again, for non-special education issues. Through county government. Okay. And county risk management is our risk manager. Okay. So, yes, we are, in that sense, we are served by the county just like. Okay, but you had mentioned premiums. That's what confused me.

Yes.

Is it excess risk premiums? Is that right? Yeah. Okay. Just like county government. Stop-offs. Correct. Yeah.

Okay. All right. Thank you.

So one of the phrases I use sometimes when people call and say, you know, the proverbial, I slipped and fell in a school building, I will let them know county risk management in that sense serves like our insurance agent. We're going to give the claim to them and they evaluate it. Okay. Just like county.

And then there are backup coverages that come into play at certain levels.

Do you know what levels those are? Bobby might know. I'm not going to talk to him.

Jim will be able to answer those questions.

And Jim said we offer to be here tonight, which I told him if there were any questions, we would reach out to him.

It's not important.

Okay.

Any other questions or comments? I see none. All those in favor of the resolution as presented, signify by saying aye.

Aye.

Any opposed? Show unanimous. Aye. Any other questions or comments or business for the committee?

I was gone and some other commissioners were gone. You all voted on the budget for the school system. It was 1-4-0 abstain. Does that mean it passed?

No, it means it wasn't recommended by the education committee. Okay. It still goes forward, but that's what the vote means.

Okay, that's, okay. I misunderstood. Thank you for asking that question. I misunderstood it because I had thought, technically speaking, it is passed. That's why I didn't know the extension was different.

The extension is pretty much the same as it now.

Correct.

Okay. Okay. I'm sorry. I didn't know if in this case it was different. Well, it works differently.

I've seen the stakes. I saw one this year, a mistake in the word. Yeah, so that's the way it is. That's the way it is. I'm fine with that. Any other questions?

Any other business? See none. Without objection, we're adjourned. Thank you all.