Board Meeting - public_hearing

Good afternoon. It is now 4 o'clock p.m. on September 10th, 2026. At this time, we will have our budget meeting, our annual budget meeting conducted by our CSFO, Mrs. Pamela Watkins. Mrs. Watkins?

Good afternoon. Can you hear me? Okay. So, welcome today to budget hearing number one for fiscal year 26, 27, Dr. Byrd, Board President. Excuse me, Madam President.

I'm sorry to interrupt, but you've called the meeting to order, but we haven't established a quorum or approved the agenda.

Excuse me, Ms. Watkins. We have established a quorum. And did you say I need to approve the agenda? Is it for the budget hearing? Yes, ma'am. Okay. I need a motion to approve the agenda for the budget hearing. Madam President, I move that we approve the agenda for the budget hearing. I second. It has been moved and second to approve the agenda for the budget hearing. May I see a show of hands of all of those in favor? It is unanimous. Thank you, Ms. Watkins. You may proceed.

Okay. Good afternoon again, Superintendent Byrd, Ms. Portis, board members. Welcome to budget hearing number one for fiscal year 26-27. You should all have a digital copy and probably a hard copy in front of you as well. We will start with the budget process. As we are aware, the budget process is inclusive, interactive, and required by the law. So inclusive meaning that we include communication from all of our district administrators. We have conversations with our board members, community stakeholders, and suggestions even from the community. We're required by the accountability law of 1995 through 96 that we hold two budget hearings, and of course this is our first budget hearing. The next one will be on Monday, September the 14th. The hearings, these hearings are for the benefit of you all and the public as well, so therefore we actually welcome input. In the back, if you have a budget booklet, in the back of the booklet, is a sheet for questions as well as the last page includes an email address that you can email and ask questions. Each district across the state of Alabama is required to do just what we are doing tonight. The budget parameters and guidelines. While preparing the budget, consideration is given to several different things. The U.S. Department of Education as it relates to federal funds, The state legislature and the guidelines that they have in place that we must keep in mind when we're budgeting, as well as the State Department of Education and Cognia also has financial guidelines that we are required to meet and maintain. Certain funding allocations require that we have a local match, and we'll go a little bit deeper into that as we go along. The foundation match for us this year is $38.5 million. That is up $2.3 million more than it was last year. And then our capital match is $1.3 million. Some of our financial highlights before we get into the budget, some of our financial highlights for fiscal year 2027 is that Montgomery successfully completed the issuance of bonds to fund the construction of Percy Julian High School. So this significant milestone is a highlight because it signifies the advancement of the district's capital improvement plan while maintaining sound fiscal management during the process. Also during the process of issuing the bonds, the district had to go through another credit rating review with S&P and we were able to come out with that as maintaining our credit rating of an A plus stable. That too is very good, it indicates to the community a strong financial position, our reserves are stable, and that we are being responsible with our spending and our financial stability. The district has successfully completed also a highlight district-wide inventory. We do an annual inventory of capital assets, but we've not had a district-wide inventory in several years. And so we implemented that this summer, and we'll be getting the reports for that as we close out the fiscal year. This process provides strength in financial reporting, internal controls, and asset management and compliance. Montgomery continues to maintain the approximate fund balance. The state requires that we maintain a one-month reserve. We actually currently have a three-month, and that is good.

And there's some reasons behind that that I'll kind of

elaborate on a little bit more. So this positions the district to have the ability to absorb various funding changes and rising costs as we go throughout the year. So that's a good thing. I don't like to think of it as excess. I like to think of it as funds to kind of help us when there are changes that come along the way as it relates to state funding. Additionally, the Avalon funds that the community so graciously voted for us to start receiving a few years ago, those funds provide expanded student opportunities through investments in our students in providing additional art and music courses, foreign language, advanced placement, career tech. It provides additional assistant principals in our schools and also additional support services for our students as well. These investments have ensured that students with well-rounded education, and it also prepares them for the future. And then as a financial department, we continue to provide financial professional development for our principals, our bookkeepers, and other district leadership, making sure that they are aware of the financial guidelines and the policies and procedures that we have in place. When everybody is communicated with as it relates to that, everybody can follow the processes, and it helps the finance department, and the district when it comes to auditing and whether we're following the processes and procedures that have been established. Along with highlights, of course, there are always challenges as well. One of our biggest challenges this year and probably over the next several years, as I listened in on the state board meeting today, is P-HIP. Our P-HIP rates have increased tremendously over the last few years And the P-HIP is the amount that the district is responsible for paying on behalf of our employees. Just two years ago, the rate was $9,600 per employee per year. And it had been that amount for years. And so last year in fiscal year 2026, the current year that we're in, it went from $9,600 per employee to $10,848 per employee. This year, going into fiscal year 2027, it will go to 12,576 per employee. That represents an increase over the last two years of 31%. And so with that, that continues to put pressure on the district budget, or it will. Those rates are expected and projected to continue to rise over the next couple of years. One of the other challenges for us is limited revenue growth. While we do have the three-month fund balance, our revenues are not growing as much as our expenditures are. The available revenues with us you would hope would keep pace with expenses, but of course we realize that there are economic challenges in the community or overall across the nation that affects our instructional supplies, operational supplies, technology will also face the effects of that, just the cost of inflation and imported goods. Those things continue to rise for us on an annual basis. However, like I said, the growth in our revenues are limited. There has been and there will continue to be a decline in our advancement in technology funds. Those are the funds, and we'll see that a little bit further along, those are the funds that we receive from the State Department to help us with capital improvements. Those funds have dropped for us. I think the effect was about $10 million this year. The overall effect of that is some of those funds that we utilize or we use to pay for operation and maintenance expenditures will have to be captured in other funding sources. Some of it will come out of local funds potentially, and some of it may come out of some other funding sources that are available to us in the capital realm. When reviewing, I want to go back to the fund balance just a little bit. And I think I mentioned this last year, too. When reviewing the fund balance, we get the fund balances for all districts across the state at some point during the year, at the end of the year. The average fund balance across the entire state is four months. And for us, we are rightly, the way it's budgeted right now, we're anticipated to end fiscal year 2027 with about a 3.3 month fund balance. compared to a 3.6 was the projected amount last year. So why is it a little bit less? It's a little bit less because our expenditures are more, and our expenditures are a little bit more, as you'll see, or a little bit more than our actual revenues for this fiscal year, which means that we will dip a little bit into that three-month reserve. I think that it's important that we have the reserve. As I mentioned earlier, I hate to think of those as excess funds. Because if you have the reserve and you establish a set amount of a reserve, it helps us with unexpected declines in our revenues. We have state funds that we're constantly are being told are leveling off. The monies that fund the education trust fund sales tax are leveling off. And so at the end of the day, that will affect us. Our local revenues can fluctuate. And when they fluctuate in a different direction, you want to be sure that you have somewhat of a cushion to fall back on. And then there are the rise in the fixed costs, as I mentioned earlier, the insurance benefits, our retirement rate changed this year, but not drastically. And so the reserves just provide a time for us, that cushion gives us time to adjust our budget strategically when we have to, rather than making immediate program cuts. So I do think establishing a reserve is a great idea. Move on from our challenges. One of the things that is a challenge for us, I think I missed the last one, but this slide will take care of it, is the decline in enrollment. As you see, our enrollment from 2022 through 2027, 2027 reflects what we will currently be funded for for fiscal year 2027. And then there is a projected amount for fiscal year 2028. Based on information that I received just earlier this week, We do always make an effort to project what our enrollment will be for fiscal year, for the following fiscal year. However, those numbers will not be finalized until we get to the 20-day count. So it may fluctuate a little bit, but it usually traditionally is not very much. Right now, that shows a difference of about 300 and I think 350-something students. I think the count I got yesterday, it may have dropped by 20 to about 300 and about 19 students for a decline in enrollment. So when we have a decline in enrollment, of course, that affects the funds that we receive from the State Department. It also affects the number of units that we earn, teaching units that we earn as well. So those are things to really keep in mind as we move forward. We're going to move into the budget. And so the first thing that we're going to talk about are the funds. We're going to look at the, when you see the whole budget, you're going to see all the funds that are factored in. And so when I say the funds, we have the general fund, which is basically our operating. The general fund encompasses the funds that we receive from the state, our ad valorem, our property taxes, any local appropriations or private donations that we receive. So those are our funds that we use mostly to operate the district that we have a little bit of discretion over. Special revenue funds are our federal programs funds and CNP. So those funds come with very specific federal guidelines that we must follow. We have our Title I, Title II, our Child Nutrition Program, in any of our local school public funds. That's what's under special revenue. So those funds are very specific in how they can be used. We have capital projects funds, which is for our construction, acquisition and construction of major capital expenditures. Debt service, which is payment for long-term debt. And then our fiduciary fund, which encompasses monies that belong to non-public organizations at the schools. such as our clubs and student organizations. So let's see, let's look at our operating budget for fiscal year 2027. As you can see, we have general fund with expected revenues, anticipated revenues of $311.8 million. Special revenues with an anticipated revenue of 58.5 million. Debt service of 63,000. And capital projects, and this is money that's coming from the state. I know that number looks very low compared to years past, but Montgomery has had several debts that have fallen off from the State Department this year, and that amount there represents the very last one that should fall off before December of this year. And then we have our capital projects, $53.5 million, and then those expendable trusts, the funds that I just mentioned, that belong to the students at the schools, so represents our clubs and student organizations for a total revenue of $424.9 million for fiscal year 2027. You also see our expenditures for the coming fiscal year as you'll see as I mentioned the expenditures, total expenditures for general fund, special revenue, debt service, capital projects, expendable trust for a total of $557 million, which is a lot more than our revenues, but we'll talk through that. There's a reason for some of that, so we will talk through that. We anticipate an ending fund balance, as you can see, the ending fund balance of $88 million in our general fund, which is 3.3 months reserve. We're going to start with our general fund, or our Yes, our general, well, our revenues. This is a summary, I think, of what I just said. General fund, 311.8 million. Special revenues, again, so total revenues of 428.87. Let's focus on our general fund right now. So the general fund has 300, right here you'll see 315.1 million. That 315, I know I just said 311, But that 315 also factors in other fund sources. So not necessarily revenues that we'll receive, but other fund sources in this instance represents indirect costs. So those are the revenues that we can, administrative fees that we can charge against the federal funds, and those monies come into our general funds. So that's what that $3.7 million represents. Again, you see the state revenues at 210 million, our federal at $296 million in general fund, and then our local revenues are anticipated to be $100.9 million, or right at $101 million for fiscal year 2027. Let's break down those funds just a little bit. Our state funds, as you can see, this is kind of the funds that we anticipate receiving from the state. So what makes up the $210 million? You have foundation that will be $163.9 million. We receive funds for our specialized treatment centers. We receive funds for teams. And you can see the breakout of the various funds that we will receive from state funding sources, from the state department. Now, you will notice that the change in foundation from 2026 to 2027 is kind of large. You're probably wondering why. Well, the reason why is that the personnel that are paid for out of foundation, the state has also factored in the 2% raise, there is a 2% raise this year, as well as the PHIP, the increase in the benefits, that's factored in. So those two things together account for that $7 million increase there. You'll also notice a big increase in transportation. I think transportation is being fully funded this year where it has not been in the past, as well as to compensate for the raises and the benefits increases there also. Any of the ones, the grand majority of these, ARI, where you see the increases, there is a factor in to cover up, to take care of benefits as well. You'll notice there is a decline in the textbook appropriation because we were not given a textbook appropriation this year. So you'll see a huge decline there. And then I think the other decline is with the turnaround funds. Those funds we did not anticipate receiving this year for those three turnaround schools. However, they were gracious enough to provide those funds to us for another year, but they're not quite as much as they were the prior year. So our largest source of revenue in general fund is the State Department. you'll see on the graph there's 60 approximately 67 percent of our general fund revenues come from the state so what that tells me is that we're still kind of heavily dependent on the State Department for funding 32 percent is local okay so our local funds is about 32 percent this the local portion of includes, if you remember, the ad valorem funds that we receive. Half of those funds, the additional ad valorem funds, are 12 mills that were voted for a few years ago. Six of those mills have to go to capital, and six of them remain in the general fund. So the 32% is reflective of the six mills that are remaining in the general fund. If you'll notice the little note at the bottom, if I factor in the portion that goes to capital, that takes our local percentage to 36%. However, That's just as a reference point because those funds cannot be used for anything in general funds. They have to specifically go to capital fund and be used on capital improvement. The state funding process, the State Department administers legislative appropriations to the Education Trust Fund and then all LEAs or the foundation program appropriates funds to all LEAs based in part or on a significant part of student enrollment. The enrollment for fiscal year 2027 was 716,565 across the entire state of Alabama. For Montgomery, we represented about 3.5% of that. To be exact, 3.48% of that is Montgomery. So we're being funded for 24,908 students That was the ADM on the 20-day count from last year in October of 2025. So it's important for us to have the local support. We appreciate the local support that we do get. But when we don't get enough local support, districts that get more local support than we do, then they're able to do a little bit more with the funds that they receive from their communities. It allows them to employ more locally funded personnel, whereas we may not be able to do that. And then it allows the ability to enhance learning opportunities for their students as well. As we go through the foundation program and look at how we were funded, as I just mentioned, we're funded for 24,908 this year, a loss of 316 students from the prior year, okay? With that, that means that we lost 11.62 teaching units and we gained an assistant principal. So the net number of units that we lost for fiscal year 2027 is 10.62. Look at our state and local funds. As you look, this is the breakdown of what the state says it would cost us to fund our teachers. principals, all of our personnel for fiscal year 2027. You've got salaries, you've got the benefits, and you've got other current expenditures which takes care of some of the support personnel in our buildings. And then the instructional support that we receive. So, according to the state, it's going to cost $202,454,000 for us to support or to employ the teachers, principals, our support staff for fiscal year 2027. So that's up $9.3 million from the year before is how much it's going to cost us. But when I go to the next page, the state is only going to send us $163.9 million for foundation. That's all they're going to send us. So where does the rest of it come from? The difference of 38 point, I think it's $38.9 million, that comes from our local funds. So you have to have local funds and a school district has to be able to contribute, I'm sorry, $39.8 million is our match for this year. So $39.8 million up $2.3 million from the prior year is what we will have to have available out of local funds to get to the $202 million that the state, that's required to fund our district for this year in foundation. We're also gonna get funding from the school nurse program. We get funding for our technology director. Transportation, as I mentioned, is up $2.3 million. We get fleet renewal. Capital purchase is also funds that we can use for debt or capital projects. And then our career tech allocation. So total state funds that we'll receive is $188 million. Then we go to this match, which I just mentioned. So our match for fiscal year 2027 is $39.8 million. So right off of the top of the $100 million that I mentioned in local funds, $39.8 million has to go towards foundation. So right at $40 million goes towards foundation, which leaves from our local side about $60 million. So those are the things to kind of think about as it relates to our local funds. Additional breakdown of those local funds also are our general fund. We have federal revenues. Those are the funds that we receive from the federal government to cover our ROTC personnel that are in the school. So you've got the ROTC. They send us half. The other half comes out of our foundation. You also got a breakdown of our local revenues. As I mentioned, right at $101 million. $39.8 million of that is coming right off and going to foundation. We've got our district regular property taxes of $48.7 million, our regular county at $11.5 million business privilege, and then our sales and gasoline tax right at $34.4 million. And then we receive other revenues throughout the year from the city and the county donations and then interest that we earn off of some of our accounts. Other revenues, as I mentioned earlier, I think the total that we see on the front page is $311 million, but then you saw $315 million, and I mentioned that the grand majority of that is indirect costs, and here's the breakdown of that. So you've got indirect costs, that's the grand majority of that additional $3.7 million. That falls into the category of other revenues and other funding sources. We've talked about the revenues. We're going to talk a little bit about our expenditures for the upcoming fiscal year. So our expenditures are broken up into eight functional areas. You have instructional services. Those are expenditures that directly affect the interaction of the student and the teacher. So those are your people that are in the classroom working directly with students. You have instructional support services. Those are activities that are providing supervision and support to facilitate that instruction. So your principals, your counselors, your librarians, instructional accountability intervention is those personnel. We have operations and maintenance. Those are the activities that are concerned with the upkeep of our buildings, keeping our buildings comfortable and safe for our students and maintaining the grounds in our buildings and all the equipment, all the things that we want to be in proper working order for our students. We have general administrative services. Those are the activities concerned with establishing and administering the policies of the district. Capital outlay. Again, I mentioned earlier that's acquiring land, buildings, and improvements, construction. We have our debt service. And then we have other expenditures. Other expenditures will actually include extended day expenditures as well as our pre-K program falls into that line item. These are our expenditures, our anticipated expenditures for fiscal year 2027. Of this amount, approximately 80% of that 317.7 million is salaries and benefits, okay? And we'll see that, I'll probably round up a little bit up to the 80%, but it's fairly close to that. We've got instructional support, operations and maintenance, our auxiliary services, general admin, and the other expenditures that we mentioned here, capital outlay. There's a little bit of capital outlay out of our general fund this year because it's coming out of transportation. Transportation is a state funding source that falls under general fund, and they have some construction going on out there with one of their buildings on the property out there. This is a visual of our expenditures for the upcoming fiscal year. Instruction includes the instructional services and the instructional support services. So I said 80%. This is 75.5, right at 76% close. But you'll notice that the grand majority of our expenditures are salaries and benefits. We have operations and maintenance at 14.6. We got general admin at 3.8%. That's good. The state likes to see us under 5%, so that 3.8 is pretty good. And then we've got auxiliary services, which would be our transportation expenditures and general fund. And then we have some other expenditures. As I mentioned, those are going to be extended day and our pre-K expenditures there. So our projected fund balance to end fiscal year 2027, you'll see that total revenues and other funding sources, 315 million. Total expenditures, $317.7 million. And you'll notice that that exceeds the revenues that we will bring in this year. Our projected beginning fund balance is $90.6 million. And our projected end fund balance for September of 2027 is $88,065,928. Our required fund balance, which is estimated, that's based off of our total budgeted expenditures divided by 12. So our required fund balance is $26.5 million rounded. And that's about 3.3 months in a reserve. And as I mentioned, that's a little bit less than where we projected to end last year. We do still have our reserve accounts. The goal would be to contribute to still build on those. The reserves in these particular instances are very important. We do have to go back before the bond market again in a couple of months to do a bond issuance for Capital Heights. So the maintenance of our funds and strategically planning the use of our funds are going to be very important. You notice that we have a technology replacement and repair. One of the things that I heard mentioned with the state board meeting was kind of like how we had an Esser cliff, a technology cliff. A lot of our technology that was in our schools was purchased during COVID, which was about six years ago. So a lot of our technology will need to be considered for updating either probably within the next couple of years for sure. But we do have these reserves that are currently in place for the district. Our projected funding balance or our projected beginning funding balance is based on funds that I think we will still have at the end of fiscal year 2026, the current year that we're in. So we do have a significant amount of transportation funds. They've been given permission to use some of that on capital, which you noticed on the general fund statement. About 2 million of those funds are still going to be charter funds. And we anticipate ending the fiscal year with about 78 million for a total of 90.6 million is the anticipated end, which is also our anticipated beginning fund balance for fiscal year 2027, which starts October 1. That was our general fund. And so now we're going to talk about special revenues. So as you'll see, our total revenues for special revenue is $58.5 million. The grand majority of that comes from federal funds, $54.4 million. We have some local funds there. The local sources are the monies that are at our local schools, okay? So the projected revenues there are at about $3.6 million. And then you have other sources as well at about $507,000. We have our expenditures there, instruction, instructional support, auxiliary service, general admin, and other expenditures. You will also notice that special revenue is anticipated to end with expenses a little bit over revenues there as well. The reason for that is that our CNP currently carries about a three-month fund balance. And if you remember a couple of months, we probably came before you. And they have to get down to a one month. So their spend is going to be more than their revenues. And so that over expenditures, over revenues there is reflective of CNP. So we have to budget for the expenditures that they anticipate having in fiscal year 2027. Quite a bit of that is probably capital, where they're doing some improvements in some of their cafeterias, as well as the supplements that you all voted on for them just a couple of weeks ago. Let's look at that again. Special revenues, $59.3 million, which also includes $1.3 million of other revenues. We have federal, $54.4 million. local revenues of $3.6 million, and then other revenue and fund sources of $1.3 million. So the special revenue funds included in the budget, again, are comprised of our federal funds, so like our Title I's, our Title II, Title IV. And those funds have very specific guidelines and limitations with them. So those are not funds that are discretionary to us. They come with federal guidelines that have to be followed and met as it relates to expending those funds. And then there's local school public funds as I mentioned and then CMP sales are also included in this as well. You will see that the grand majority of the revenues of course are coming from federal and then there's a little bit of local that's at about 6% and then other revenues that are about two and a quarter. So here's the breakdown of our special revenue funds. We have Title I that showed just a slight decline from the prior year. We have our Title II funds, our career tech funds, special education funds. Title III, and you'll see they're all fairly consistent. We had a good little increase in Title II, but we had a significant decrease of our Title IV funds. So out of those Title IV funds, you may wonder, well, what is Ms. Watkins going to do with what we were paying for out of there? We were actually paying for a good bit of security officers out of those Title IV funds. So to get... this fund source imbalance, those security officers will now have to be moved to local funds because we had to make some adjustments and personnel was probably a good portion of those Title IV funds that we could adjust fairly easily. So they will be moved to one of the local funding sources. Our NND allocation went up just a little bit and then Child Nutrition as well. The local other and other revenues, the 3.6, that's made up of, again, the CMP daily sales. So if students walk in and they want to actually purchase something, or if a parent walks into a cafeteria and wants to make a purchase, those are the CMP daily sales. And then you have the local school public funds. Those are the funds, again, like I said, that are at the schools. And then we have other fund sources, which are our local school internal transfers and other miscellaneous funds. Our special revenue expenditures for fiscal year 2027, you'll see our instruction, the breakdown of instructional services, instructional support, operations and maintenance, our auxiliary. So the same breakdown that we have on the general fund, you'll see those same breakdown of expenditures and special revenue as well. Lay out the expenditures. Of course, the grand majority of our expenditures are about 43.29% is instructional related. And then we have the CNP auxiliary services at 42.2% is our auxiliary services. We have general admin and federal funds or special revenues at 4.6%. Our total revenues anticipated for special revenue going into fiscal year 2027, 59.3 million. Total expenditures, 61 million, as I mentioned. And you'll have an excess of revenues over expenditures of about 1.7. And as I mentioned, that's reflective of C&P. We anticipate a beginning fund balance of about 10 million. then our fund balance is anticipated at about 8.3 million for fiscal year 2027 to end September 30 of 2027. Our next fund source is debt service. The biggest number that probably pops out here is the debt service. So we know that now There's $18 million in debt service. About $12 million of it is the debt service for Percy Julian that will start in fiscal year 2027. We budgeted for the potential close of bond issuance, I'm sorry, of Capital Heights, so that's why it's $18 million. Those funds come directly from the capital projects funds, so the 24 million that's local funds that we receive from the local, from our ad valorem, we have to push some of those funds over to cover the debt for Percy Julian and Capitol Heights. But that's what those funds are for. The six mils that we put in capital are for capital improvements and for the capital debt that we'll incur for the building of our new school. As you see, I've got it circled there that the revenues are derived. So you'll see we're spending $18,063,000 in debt service payments. $18 million of that will come from a transfer from the new ad valorem funds and capital projects. So it will come from capital projects. That line item represents a transfer from capital projects to debt service to pay the debt. Next, we'll go to capital projects. Capital funds, you'll see the revenues from capital funds is about $53.5 million. The $29 million are state funds, and we'll break that down. And then the $24.4 million are the local funds that we receive from Avaloram. So six of the mills remain in general, and here's the other six mills that's specifically for capital improvements that we have to put there. So that's where that revenue is generated. And then we have expenditures that will align for instructional services, not personnel, but instructional services. So there are some things that are being purchased that are capital related, but are also tied to instruction. We have operation and maintenance expenditures, and then some capital outlay. Here's the breakdown of the state revenues that we will receive. So our state revenues are projected At $29.1 million, $19.8 million of that is advancement in technology funds. That's down, as I stated earlier, that is down approximately $9 million from last year. And I have a graph of that next. So last year where we received $28 million in advancement in technology funds, this year we only received $19.8 million, and those funds are projected to continue to decline. We have state capital purchase of $7.2 million. Those are the funds that have been previously used for debt. And then we have the fleet renewal for transportation to purchase fleet if we need. And right now those funds are being used to pay for bus debt that we've had that should fall off in fiscal year 27 as well. We have our local revenues that we'll receive. So that was state. Our local revenues, of course, as I mentioned, the local ad valorem revenues of about $23 million. And then our state capital match. So just like we have the foundation match and general fund, we have a capital match on capital projects. So that money comes from general fund over to capital to make the match that we need to make for the capital allocation or the state capital purchase funds that we receive. We have other fund sources of $195 million. So 70 million of that will be the proceeds from the bond issuance for Capital Heights that we anticipate completing in fiscal year 2027. And then the 125 million reflects the transfers in from the debt that we issued this year. So as those expenditures come up in the building of Percy Julian, you'll have transfers within capital, transfers within the fund from one fund source to the other. And I know that's a lot, but that's what happened. So it's an internal transfer in of the bond proceeds that we received this year to cover the building of Percy Julian. And I wanted to give just a little historical view of that advancement in technology funds and how they have grown over the last couple of years, and then now they're on the decline. And probably for me to project or estimate us receiving $10 million in fiscal 2027 is probably a huge stretch. It is anticipated that it will potentially be even less than that. And so as those funds decline, we have to think about how are we going to fund the capital needs of the district. And then the following year, I projected $5 million, but it may not even be that, if anything at all. So we have to really look and take into consideration and think about the potential loss of those funds and what those funds have been used for over the last few years. And as we lose those funds, how are we going to supplement and maintain the operations and maintenance and capital needs of the district? And this is a breakdown of the expenditures, which we've kind of talked through briefly a few minutes ago. And we have our Expendable Trust. Again, the Expendable Trust represents the funds that are at the school that belong to the club and the student organizations that are at those schools. And this is a quick overview again of our operating budget across all funding sources for fiscal year 2027. And so, as we move forward, I just want us to make sure that we remain focused on fiscal strategies, our fiscal sustainability, and fiscal stewardship as we move into fiscal year 2027. So, we have to be able to sustain our programs. We have to maintain responsible budgeting, which we tried to do as we entered the budget process for this fiscal year, making sure that every dollar was counted and allocated appropriately and conscientiously and strategically. So I think that's pretty much it, if you have any questions. I do want to take a second to, I know some of my staff members are probably in the audience But it's not just one person running finance. It takes a whole team to make sure that this budget comes together and quite a bit of work. The grand majority of it, as I said, is salaries and benefits. So it takes weeks of us combing through the personnel and the units to make sure that they are as accurate as possible. So that definitely takes more than one person. So I do want to thank my staff that's here, as well as the ones that may be watching.

Thank you so much, Ms. Watkins. A fine job. And thank you, staff. I know we've seen your cars as we ride by late nights and Saturdays and Sundays, so we cannot be in better hands. So we certainly do appreciate your work. Dr. Keith?

I have two questions.

First of all, you did a great job. And I'm not just saying that. I understood this better than anybody's ever gone over it. So I will tell you, I really got most of it. The two questions I have, and you may have given the answer. Why, I looked, go back to the technology, the graph. We're about 2 million. You said we're going to keep decreasing. Well, we're 2 million less than when we started in 2022. What's the reason for not getting, why is there a decrease? Why are we getting a decrease in those funds?

That's a good question. I think there's probably a reallocation of funds. I will send you an appropriate answer for that. Okay. But those funds are decreasing across all school districts, but I want to make sure I give you an accurate answer for that.

The other one is just a short thing. It was for me. I thought I had it all together. I looked at this, but if you go back to slide 44. You know, everything was really, you know, close from year to year, even though we lost 300 and, you know, I think, what's 300? Where did I write that down? Yeah, 316 students. Go down to where it says neglected and delinquent, that line. We were 187 million in 27, and that's the biggest difference down to 76. What?

That's actually an increase.

Oh, it is? Yes, ma'am.

So in 2026, we were at 76,000. And in 2027, we'll receive 187.

I was looking at it backwards.

Yes, ma'am. Thank you. No problem.

Okay, any other questions, board members? Ms. Brown?

Thank you, Ms. Watkins, for your excellent explanation. You kept honing in on a central theme, reserves, reserves, reserves. And if you say it enough times, we're going to believe it, right? So you're saying right now we're in good shape and we're about three and a half times

We're projecting, right, so we're projecting to end fiscal year 2027 with 3.3 months in reserve. Okay.

So, in your opinion, do we need to consider as a board to kind of put in policy that we will continue to have this type of reserve to ensure that we are stabilized in our allocation?

So as I mentioned, the reserves, I don't like to think of them as excess funds. And I think I mentioned this previously probably to several of you all. I think it's a great idea to establish a minimum monthly balance. because you don't want to continue. I mean, we see that a lot of the state funds are stabilizing. Our revenues are not growing as fast as our expenditures may be. And so, yes, establishing a reserve, a minimum reserve balance is a recommendation that I would make for sure. I realize, too, that the board has to vote on that, but that is a great suggestion. Okay. We will eat, as you notice, we have expenditures that will exceed our revenues this year, so we will eat into those reserves going into fiscal year 2027 for sure.

Thank you. Thank you. Ms. Gladwell? We don't want to make it a policy in case we have to dip into that and we put ourselves in a corner. We want to keep it as much as we can, but if we need to use it, that's why we're free to move it to where we need to put it. Is that what you're trying to say?

Well, the reserves that, it would be up to the board. So, for example, the reserves that are already shifted to capital, I would not move those back to general funds without coming before the board. If you choose to establish a minimum monthly balance, then yes, there would have to be some conversation if you're going to exceed that.

especially when technology is not being funded by the state as much as it has been. Thank you.

Dr. Coleman. I'm probably just echoing what I've heard being said, but I thought that was an excellent question. I was thinking the same thing, and I think you made it sort of clear that when we get all of these unexpected things coming up, whether it's transportation. I think, yeah, you talked about insurance and benefits. These unexpected increases catch us off guard. So if we don't have a reserve somewhere, we're going to find ourselves in trouble. And I think I asked once before, there's a word that I'm not supposed to use at the table. You know, we used to talk about proration. We don't want to talk about that. We want to talk about the fact that we need a cushion in order, even in our homes, we have to budget to make certain that we have enough money to cover our needs. So I'm thinking what I'm hearing from you and the question that was asked by Board Member Brown, that going to be essential that we at least come up with a minimum. And if we do have to go into those reserves, it would come back before us, and we as a body would make that decision.

I think what you have to consider is that, like I said, expenditures are not declining at the rate that our revenues are not increasing at the rate that our expenditures are. So those are the things that you have got to keep in mind moving forward. Our expenditures continue to rise. We already know there's anticipation of PEEHIP continuing to rise for the next fiscal year. There are already things that we're told that you have to be able to. One of the statements that I heard was that all LEAs need to plan for multiple tight year budgeting. And that was what I heard last month when I listened in on the state board meeting. So we do have to plan for those things and keep those things in mind as we transition forward.

Thank you. That was the other term that I had heard that I thought was very important, these tight year budgets. So I'm hoping that we will seriously consider taking care of our finances in that way. Thank you. Ms. Brown.

I just have one other question. We will not receive the total number enrollment for a few days, right?

We will not. So, we're in the middle of the 20-day count right now. I think it started, was that yesterday or today, Dr. Bird?

Okay.

And so, that number will not come until probably the first few days of October will be the final number. So, the number that's in the PowerPoint is a projected number based on what it was, I think, yesterday. Well, I did this present. I sent it to you all on Monday. So, it's based on the data that I received on Friday. That number has changed by 20, but it'll fluctuate between now and that 20-day count. But in past, historically, it's not very far off from the numbers that we usually project.

Because it would be interesting to me, since we had the policy implemented this year for the out-of-district students to come to us and the virtual school. It will be interesting to see, you know, how is that impacting our number.

That I'm not sure of. I do know that we've We have the number of students projected in virtual. I think the goal was 250. We met the goal of the 250. And I did ask for a breakdown of that. I think about 10 to 15 of them may have been from without a district. The remaining were from within our district.

So it's like a three level that's making up our number, virtual, out of district, and local. I'm saying it's three components that's making up our number of total students. Oh, yes, ma'am.

Yes, your local students, and you have a few that are out of district. Yes, ma'am.

And I'm going to open it to the audience for their comments also. I know one of the things that stuck out in my mind is I know this is a snapshot of where we are with the state and in our current mindset as a district. I know districts all over the country are doing things and thinking outside of the box because funding is going to be so limited. One of the things that stuck out to me was our grant. There's a $4 million difference in just the grants that we have, and so that's an opportunity Is it not that we could seek more grants to maybe shore up some funding there?

Are you talking about the federal funds?

27. Yes. Other state grants. Well, and they don't have to be state grants. There are other grants that are out there also that it is

Yes, ma'am. I'm not sure which page you're on. Oh, 27. Okay, I'm sorry. So other state grants right there, those are other grants that we get from the State Department that are not as, they may be small grants that we get. So for example, our art teachers will write art grants. We have some grants that may be some additional reading grants. that our student instructional support or curriculum and instruction will write additional grants. So that's what that is. And you're right, there is a decline in those funds right there as well. So that may be some opportunities. So yes, other state grants are grants that sometimes our teachers write. Like I said, the art grants. There are some reading grants. And then there may also be some summer school grants that we receive that we just don't have yet. So that number may be off a little bit because some of those grants we don't get until sometime around January or February. So that's one of the reasons why you'll see that big of a difference. We budget as much as we can in the original budget, but there are several state funding sources or grants that we will not know if we'll receive until later down the road. And then that's when we do the amended budget.

Great. Thank you so much. Ms. Watkins, we have a few minutes, and I would like to open it to any community members that may have a question. If you would stand and state your question so she can hear you. If you have no questions, that means we've done very, very well. I see one.

was the RAISE Act. Oh, thank you.

Was the RAISE Act, and I know that that goes to students in poverty, special education students, English language learners, and a few other groups. Do you all know how those funds will be spent, or is there an allocation process for that?

So the RAISE funds, those are state funds that we receive specifically for poverty. The huge portion of that is poverty. And a good portion of that also replaced funds that we no longer receive. So with the poverty portion, there's at-risk students. There are some grants that we used to receive that were folded into those raised funds. There's also special education funds that are allocated there in tiers based on need. We have EL funds that are allocated there and gifted students as well. And so what those raised funds did was replace some funding sources that we actually used to receive from the state as well as create additional revenues for us as it relates to poverty students and special education students as well. So they will be spent very specifically as to how the state says that we can spend those and they are broken out a little bit deeper as well.

Great. Thank you so much for that question. Any other questions or comments? No? Ms. Watkins, that speaks to your tutelage this evening. You've done a fine job. We thank you all so much for coming out and attending. There will be another budget hearing, Budget Hearing 2, on Monday.

Monday at 4 p.m. At 4 p.m.

And we thank you so much for listening and learning throughout the year. I know one of the most profound things I heard from our family engagement coordinator for the district, as she spoke with federal funds. She said when they had these meetings, maybe 30 parents come out, where those 30 parents get to influence the spending of the district for certain funds. So you want to make sure that you're in touch and informed so you'll know where these funds are going and how they benefit the district and the schools that you send your children to. All right. Thank you. Our budget meeting is at this time adjourned.