Board Meeting - public_hearing

Good evening. Today is September 14th, 2026. The time is 4 o'clock p.m. We are now about to call to order the special call meeting for the budget hearing two. At this time, we do have a quorum established. Is there a motion to approve the agenda?

Madam Vice President, I move that we approve the agenda.

Is there a second?

I second.

It has been moved and seconded. Any discussion? Hearing none, all those in favor do so by showing of hands. It is unanimous. All right, Ms. Watkins, receive as information the presentation of the fiscal year 2027 budget.

Good afternoon, Superintendent Byrd, Vice President Smith, board members. You are here this evening for budget hearing number two. And we will go ahead and get started with that. You should have it in front of you on your monitors unless you have your hard copy. This is again the second hearing for our 2027 budget. for fiscal year 2027, as I just stated. The budget process, of course, is interactive, inclusive, and required by the law. There are certain state requirements that we are required to accomplish, one of which being two public hearings, and this, of course, is the second one. There is departmental participation, as mentioned previously. We don't just sit up and finance and pull the numbers and prepare the budget. We do meet with all department heads, all chiefs, and discuss with them the needs of their departments as it relates to the superintendent's and the board's initiatives. The accountability law also, again, requires that we hold the two budget hearings and that these hearings are also for the benefit of the public and we welcome always input from the public. Each school district across the state is required to do the budget hearings and present the financial data in reference to their projected revenues and expenditures for the upcoming fiscal year that starts October 1. Board approval is also required for this, which you all will do tonight, and then our budgets must be uploaded to the State Department by September the 15th, which is tomorrow. While preparing the budget, of course, consideration was given to several areas that we must do, the U.S. Department of Education, which provides our federal funds, the Alabama State Legislature, Alabama Department of Education, and COGNIA. The Alabama Legislature have several guidelines that we must also follow as it relates to state funds that we receive or certain appropriations. We have also recommendations by Cognia as it relates to our financial compliances and management. And so there are legalities that are involved in how public schools can spend public dollars. One of the guidelines that we do have as it relates to the state legislature or the State Department of Education is the foundation match. You'll see that our match for this upcoming fiscal year 27 is $38.5 million. which is $2.3 million more than last year. And then we also have a capital match that we're required of $1.3 million, $1,287,000 to be exact. Before we get into the budget, we kind of want to focus on a couple of financial highlights from this past fiscal year. The district has successfully completed the process of the issuance of bonds to secure the funding of the construction of Percy Julian High School. This was a significant milestone as it signifies the advancement of the district's capital improvement plan, also while maintaining sound fiscal management. We will go before the bond market again in 2027 to secure funding for the building of Capitol Heights. Also, during fiscal year 2026, when we went before the bond market, we were also required to have another credit rating review. Our credit rating review, if you remember, in fiscal year 2025, we received a three-notch increase, and in fiscal year 2026, the review that we just completed, we were able to maintain our credit rating of an A-plus stable. That is considered very good because it indicates to the community our strong financial position, our stable reserves, and the responsibility of controlled spending that we practice, as well as financial stability. The district also completed this year a district-wide asset inventory. We actually inventory our capital annually. We had our last district-wide inventory of other assets in fiscal year 2022, so we knew that We needed to go around and do that again to make sure that all of the assets in the district are properly accounted for. Again, as I stated, our capital assets are inventoried annually. This process provides also strengthened financial reporting, internal controls, also demonstrates our asset management and compliance as it relates to that as well. Montgomery Public School continues to maintain an approximate fund balance of three times the state one month requirement. This has positioned the district to have the ability, or it positions the district to have the ability to absorb various funding changes and rising costs. As I mentioned in the last budget hearing, there are things that are leveling or stabilizing as it relates to the state funds that we receive, and so we have to consider some things to maintain that three-month fund balance to help us with changes that may occur with state funding down the road. I don't want, as I mentioned last time, I don't want us to think of these as excess funds. I want us to think of these as funds that will help us if the need arises along the way. When reviewing districts across the entire state of Alabama, we receive this information annually. The average fund balance of all school districts across the state of Alabama is actually four-month reserve. So to have a three-month reserve is actually pretty good. We want to make sure that we maybe can consider holding on to that. Why should we consider, again, the more than the one-month reserve? As I stated, unexpected declines in state revenues. Sometimes our local funds can fluctuate. meaning our state funds or our property tax funds, and those funds have not been fluctuating tremendously over the last few years. They've actually kind of stabilized as well and are somewhat stagnant. And then sometimes you have rises or increases in our fixed costs, and we realize that some of those costs will continue to rise. Specifically, as we go into fiscal year 2027, we realize one of our costs that the district is required to maintain is PEEHIP. As I mentioned previously, PEEHIP has actually increased, and we'll see that on a slide down the road, has increased approximately 31% since 2025. It had been stagnant for years, and then in 2025, it went up a significant amount, and it will go up a significant amount again going into fiscal year 2027. for a total increase of about 31%. So those are the type things that we really should keep in mind as we move forward in fiscal year 2027 in the maintaining of those reserves. The Avaloram Referendum continues to provide our students with expanded opportunities. Those funds for us are providing investment in art, music, foreign language, advanced placement, career tech teachers. It's affording us the opportunity to provide assistant principals in all of our schools, and then it's providing additional student support needs. These investments ensure that the students were well-rounded with an education that prepares them for the future. And then finally, we continue to provide financial professional development to our principals and our bookkeepers and other district leadership. We do this because it helps maintain and strengthen our financial management, provides accountability. The more we communicate and share that information, make sure that they stay compliant, and then it also demonstrates responsible stewardship of the district's resources. Just as we have highlights, we also have financial challenges. As I mentioned previously, our PHIP benefits continue to rise, and I think it's worth mentioning again, because they also anticipate that those rates will continue to rise even more over the next several years. While we have increase in costs and services demands, our revenue growth is limited. I actually looked at state sales tax earlier today through August, and we are down, the state as a state as a whole, we're actually down as a whole fiscal year to date for 2026. Those are revenues that actually fund the Education Trust Fund. So just a little side note is that 92% of the funding for the Education Trust Fund comes from sales tax and income tax. And those numbers are all down year to date as of August compared to the same timeframe last year. Economic challenges, instructional supplies, so of course We will all face the effects of increased cost of inflation and imported goods. There has been and will continue to be a significant decline in advancement in technology funds, and we'll talk about that a little bit more down the road. And then our enrollment as well continues to decline as it has done so consistently since 2016. Of course, this has a negative impact on our revenue as it relates to our foundation. I pulled the numbers just I think last Friday, and so we reflected a loss at that time going into 2027. I realize that we are in the middle of our 20-day count, and so those numbers may even fluctuate a little bit more, but right now we're reflecting a loss of about 317 students. Of course, again, that number may change between now and the end of the 20-day count. This is a visual of what the ADM loss looks like. And we realize that statewide, the state as a whole is experiencing a loss in enrollment, but this is a visual for Montgomery. And since 2022, we have lost approximately 2,600 students district-wide. The projected number that I have there for 2028 is based on what we anticipate the 20-day count will be. which is the number I just referenced, the loss of 317 kids based on the information that was provided about a week ago. As we shift into the budget, a couple of things to explain is the financial funds that we're going to talk about. So we will talk about our general fund, our special revenue fund, capital projects, debt service, and fiduciary. Our general fund represents our operating funds. Those are the funds that we look and lean on the most to operate the district. Those include our state funds, foundation, our property taxes, any local appropriations that we received, and any potential private donations that we may receive as well. We also have our special revenue funds. Our special revenues are the funds that are federal funds, so those are very specific in use. We don't usually have any type of flexibility with those funds. So those include our title funds, our Title I, Title II, our Child Nutrition Fund, and then it also includes the local school public funds, so the funds that are housed at each of our schools in the district. We have our capital projects funds. Those are the funds that are for acquisition or construction of major capital expenditures. any of our capital needs that we have, renovations or HVACs or building of our new schools. As you're aware, we have two new schools that are in progress, or any type of upgrades that we have coming along as it relates to some of our schools. We also have our debt service fund. The debt service fund is the fund that is used to pay our long-term debt. So, of course, we just closed on the bond issuance for Percy Julian. And we will start making debt service payments for that bond issuance in fiscal year 2027 as well. And then you have your fiduciary funds. Those are the funds that are housed at the school for our clubs and our outside organizations that the students may have at the school level. This is our total annual operating budget, so our total budget across all funding sources. You will see the revenues that are anticipated for general, special revenues, as we just said, debt service, capital projects, and our expendable trust. Our total revenues that are anticipated across all of those funding sources, $424.9 million, okay? We have total expenditures that are anticipated at $557 million. We're going to focus first on our general funds, and those are the funds that are really operating the district. So those are the funds that we have a little bit more flexibility on. The grand majority of those funds, about 80% of them, pay for our teachers and our instructional support in the building. As I just went over, general fund is at about $311 million, $312 million rounded. We have about $58.5 million in special revenue. Again, those are our federal funds. And then we have a little bit of debt service there, which is reflective of the funds that we will receive from the State Department to pay off one state debt that we actually still have a bond that was issued I think back in 2010. We also have our capital projects fund and our fiduciary fund, which are the funds that belong to the clubs and outside student organizations, I'm sorry, that belong to the clubs and student organizations that are at the school level. Again, those total revenues are $424.9 million. You see there that our total revenues are approximately $312 million. And you'll notice that our total expenditures are about $317 million, with a net effect of expenditures exceeding revenues by $2.5 million. The reason that's $2.5 million is that other fund sources is not necessarily a revenue, but it is funds that we receive as indirect costs from some of our federal funds, an administrative fee that we can receive from our federal funds. Like I said, you will notice that our expenditures are a little bit higher than our revenues this year, which means that we will eat a little bit into those reserves going into fiscal year 2027. What makes up the revenues that we're receiving in General Fund? We've got $210 million coming from the State Department. We have $296,000 that are federal funds. Those are funds that we receive to pay for our ROTC personnel that are in the schools. We have approximately $101 million that are local funds. And then we have other revenues and fund sources. As I just stated, the grand majority of that are the administrative fee funds that we receive from federal funds, so indirect costs. Yes, indirect costs, which is revenue for general funds. What makes up the state funds that we're receiving? We have $163.9 million that will come in the form of foundations. So that's the money that we receive from the state to cover the foundation. There's a little bit more of a breakout of that on the next slide. We also have our specialized treatment centers, and you can see the variation in the change over what we received in fiscal year 2026. I will say the projected change in foundation is related to the 2% increase that is state mandated this year as well as the increase in benefits. And so just to give an example as it relates to the benefits, PHIP was $10,848 per employee last year. That number this year or for fiscal year 2027 is $12,576 per employee. So that is a significant increase that's there. And so those things taken into consideration reflects the change in foundation for the upcoming year. We have our specialized treatment centers. We have teams. We have the RAISE Act, which was a question at the last budget hearing. And the RAISE Act did increase just a little bit. But the RAISE Act does reflect the funds that we receive for poverty, our poverty allocation. our EL students, and then we receive an allocation for SPED students based on the tiers that they fall in. We also received an amount for gifted and then an amount for the charter schools as well. So those funds are used to support those programs and initiatives across the district. We have our ARI, our OMI, so our math programs, our reading programs. You will also notice a significant increase in our transportation. Again, that too is relative or related to the 2% increase, as well as benefits. And then also, I think transportation is also being funded at 100% this year, where in the past it may not have been. We also are receiving governor's turnaround funds again, and we have a little bit of a summer school appropriation for next year's summer school that we've already received in fiscal year 2026. The other state grants, as one of the board members pointed out last year, has a huge variance there. And the reason for that is because a lot of those state grants we do not receive until well after our budget is approved. So once the amended budget is done later in the fiscal year, we make adjustments for that grant line item at that point. But we have a significant amount of grants, reading grants, additional summer school grants, that we do not receive until well after the budget is due to the State Department. This is a visual of our general fund revenue comparison. As you'll see, 60, approximately 67% of our general fund revenue comes from the state. And then we have about 32% that comes from local support, meaning our sales tax and our property taxes. you'll notice that if 67% of our general fund revenues come from the state, we're still pretty heavily dependent on the state for support. While this is a little bit better, and we appreciate the support that we get from the community as it relates to local funds, we're still heavily dependent on the state for funding. This 32% does not include the portion that is related to capital. So the Avaloram, the additional Avaloram funds that we receive, half of that goes to general and the other half has to be obligated to capital needs. And so it is part of our capital revenues that we'll talk about a little bit later. Even with those funds included, then we still are about 37% in local support as it relates to our support that we receive from the community. State funding process administers, it allocates or appropriates funds to all LEAs based significantly on our student enrollment. So each district receives a proportionate share of state funding based on enrollment. So, of course, for fiscal year 2027, MPS is funded based on 24,908 students. That reflects our 20-day count last year. So last year in October, we reported that we had 24,908 students, and that is what we're being funded for for fiscal year 2027. So MPS has slightly under 3.5% of the total student population across the state of Alabama. That means that... districts that we just talked about local support so districts that have a little bit more local support than we do are able to employ more locally funded units than we can but we again we are grateful for the support that we do receive from the county as it relates to our local funds this is our foundation program units and so you will notice that The foundation funds that we are receiving for fiscal year 2026 is about 316 students more than what we will receive funding for in 2027. So again, you'll see that this reflects a loss in enrollment of 316.5, I'll just say 317 students for fiscal year 2027. We lost about 11.62 teaching units, And then one assistant principal unit was gained going into fiscal year 2027. So we had a net loss of 10.62 total units for fiscal year 2027. You'll see the breakout of what the state says, this is how much it's going to cost you to run your district this year. So salaries and benefits, based on the units that we've earned, is $102 million. Then you have the benefits of $44.7 million. And other current expenses, we'll get $50.3 million. Other current expense revenues that we receive reflect funds that we receive for support in our schools. So your custodians, clerical personnel in the office, in any of those support positions that are not certified positions. Additionally, you'll see our instructional support and you will see the loss reflected there because we did have a loss in student enrollment. If we had not had the 2% increase or the increase in benefits, you would actually see a loss in those salaries and benefits as it relates from fiscal year 26 to 27. However, we had a significant, we have the additional funds that we're receiving for benefits as well as the additional funds we're receiving for the 2% raise in fiscal year 2027. So for fiscal year 2027, the total foundation program is $202,454,715. So that's how much we will get to support or to run our school district as it relates to instruction of our students. However, the state is not going to send us the full $202 million. They're going to send us $163.9 million. That's what they will send us for the foundation program. So where does the other $38 million come from? That comes from our local funds. So while you see $101 million approximately in local revenues on our total revenues page, five of that will automatically come up to support the foundation to get us to that $202 million. We have funds that we'll receive for the nurses program, technology, transportation. We also get fleet renewal and then our capital purchase. So the total funds that we will actually receive from the State Department is $188 million, so about $9.5 million more than last year is what we will actually receive from the State Department. As I mentioned, again, the foundation program required from our local funds this year is $38.5 million. The capital purchase funds that we receive also requires a match. For us this year, that's $1.3 million, so $39.8 million of our local funds must be used to make the match or to bring us up to the amount that the State Department says we need to fund our instructional needs of the school district from foundation. Again, that's about a $2.3 million increase over last year. Our other revenues out of general fund, I mentioned earlier that we had about $296,000 for federal revenues. And the grand majority of that is the ROTC support that we receive from the federal government. You'll see our local revenues of $101 million. $48 million of that is our regular property, or our ABILORM, so that's our property tax that we talk about. Then we also have our regular property tax of $11.5 million, our business privilege tax, and then our sales and gasoline tax, and then we have some other donations that we receive. as it relates to city, county donations and some interest that we may earn off of some of our revenues that are in the bank. Again, our other revenues and other fund sources, 3.7 million, the grand majority of that is in direct cost. That kind of summarizes and finalizes our local or our general fund as it relates to state revenues and then other revenues that we receive. As it relates to our expenditures in general funds, there are eight functional areas as it relates to expenditures. So we have instructional services, we have instructional support services. So our instructional services are the activities that deal directly with the students. So those are the people that are actually in the classroom working with our students. Instructional support are the personnel that are providing supervision and support to facilitate the instruction of our students. So your principals, your assistant principals, your librarians, your counselors, that's what the instructional support services are. Then we have our operations and maintenance, the keeping up with our buildings, making sure that our buildings are comfortable and safe for all of our students to receive the proper instruction. We have our auxiliary services, In our general fund, auxiliary services actually refers to transportation. So that is the transporting of our students back and forth to school. We also have capital outlay. Those are going to be building improvements, construction, architectural or engineering, as it relates to expenditures at that line item. We have our debt service, which you won't see any of that in general funds. And then we have other expenditures. And so other expenditures are activities that are related to our extended day and then our pre-K program. Those expenditures for us for fiscal year 2027, instructional services, so those that actually in the classroom with the students are about $178 million. We have instructional support services of $66 million. $61.6 million. And then we have our operations and maintenance at about $46 million. You'll see auxiliary again, that's transportation. Our general administrative services are going to be the people that are mostly in your central office providing support. And then we have a little bit of capital outlay out of general fund, which you don't normally see, but we do have some capital outlay that's coming out of transportation funds. which I think Chad presented at our last board meeting. We also have the other expenditures, and the grand majority of those other expenditures are actually tied to pre-K and some other fund uses. So our total expenditures again are at about $317.7 million. This is a good visual of that. Instruction, that is our instructional services and our instructional support services combined. So that takes us to about 76%, which is good. I like to focus on our general administrative services. The state actually likes to see that number below 5, at 5% or less, and we're at 383%, which is good. And then we have operations and maintenance at 14.6. That's good as well. And then our auxiliary services, which is our transportation, at about 3.36%. Again, our projected revenues for fiscal year revenues and the other fund sources is about 315 million. Our total expenditures and other fund uses, 317.7 million. which means, again, as you can see, our expenditures will exceed our revenues for the fiscal year 2027 by two and a half million. We are projecting our beginning fund balance to be at about 90.6 million, and we're projecting with that excess of expenditures over revenues to end fiscal year 27 at about 88 million. Our required fund balance for fiscal year 2027 will be a $26.5 million. That number comes from taking our total expenditures and dividing it by 12, and that gives us our one-month fund balance for the coming year. So that's about $26.5 million, which puts us at about 3.3 months reserved for fiscal year 2027. We do have reserve accounts that were established I think in fiscal year 2025 or 2024 was the first year that we set these up. We have our capital replacement technology security and vehicle replacement reserves. We have been able to add to those each year except for this year was the first year that we were not able to increase those any. I think that it's important that We maintain these and look at these for things that may come up down the road, specifically our technology replacement and repair. One of the things that was mentioned when I listened to the state board meeting a couple of weeks ago was the technology cliff, kind of like the ESSER cliff. Once we lost those ESSER funds, we had to make adjustments to pick up some of those expenditures. So the same thing with technology, and what was said was that a lot of school districts across the entire state purchased technology during COVID, which was now six years ago. So the technology that was purchased at that time is now starting not to be as efficient, yes, the word I'm looking for, as it would have been six years ago. I'm sorry. And so we really have to anticipate the need to purchase additional technology, either fiscal year 2027 or specifically in 2028. We all did. Back during COVID, we made sure that all of our students were one-to-one with devices. We made sure that the technology needs of the district were up to par to accommodate that. But as I stated, now six years later, some of those devices are not as effective or efficient as they were six years ago. Again, what does the projected beginning fund balance come from? So a lot of, as I break that down each month, a lot of those funds have to be expended by September 30. We anticipate spending all of those. Transportation is one of those we can have a little bit of carryover so we do have, we do anticipate transportation will be about 7.9 million at the end of the fiscal year. We still have charter funds on our books so that's about 2 million and we anticipate our local general fund will be at about 78 million and then some other miscellaneous beginning fund balance to get us to that general fund balance of 90.6 million dollars as we begin fiscal year 2027. Special revenue. So as I mentioned, special revenue is actually our federal funds, right? And so those are our Title I, Title II, Title III, all the federal funds that we receive as well as child nutrition. The local sources line item and special revenue reflects the funds that are at our school. at each of our schools have an account and so that's what those local funds there reflect and then we have some other sources. So $58.5 million are in revenues that we anticipate from special revenues, so from our federal funds, our CMP funds. And then we have anticipated expenditures of $60.7 million. You will also notice that our expenditures are anticipated to exceed revenues as it relates to special revenue as well. The reason for that is specifically tied to Child Nutrition. Child Nutrition has about a three-month fund balance. However, they are very tied to how many months they can have. And so they have until 2027 to spend down some of their excess revenues, and they have submitted a plan to the State Department. And so you have CMP expenditures that are budgeted that we have to spend down, that we're required to spend down, based on what they have submitted and have had approved at the State Department level. Special revenue, again, we have our federal, we have local, and we have other revenues and fund sources there. Again, the grand majority of our revenues and special revenue comes from the federal dollars that we receive from the state. as well as Child Nutrition. So you will see 92, approximately 92% of our federal revenues are tied to Child Nutrition, Title I, Title II, Title III, all the Title funds. So when I talk about our Title funds, you'll notice that Title I compared to last year had a very slight decline. We also have our Title II revenues, Career and Technology, our IDEA, Title III, Title IV, and we have 21st century this year, which we did not have. We've not had in a few years, actually. And then you will see our negligent and delinquent revenues that are a little bit higher than last year. One of the significant decreases that popped out to me was our Title IV allocation. And so Title IV, some of those funds are used for safety and security. And we actually had quite a bit of security coming out of Title IV. So to make the adjustment of the funds that we lost, we will move those positions to a local funding source for fiscal year 2027. You'll see our local and other revenues. Those are reflective of the local school public funds that I mentioned earlier. So those are the funds that are at each of the schools. And then you have some CMP daily sales. The daily sales are where students can go in and buy additional or teachers go in and purchase or parents go in and purchase. Those are our CMP daily sales. We also have other local fund sources. Those are internal transfers that we may have to our local schools. And then you see we have a comparison of our special revenue expenditures next to our general fund expenditures as well. Again, here a good portion of it is instructional, but C&P takes up a good portion of federal dollars as well, and so you'll see the 4.6% and other expenditures of 8.29% as it relates to our special revenues. Again, we have our total revenues that we anticipate for fiscal year 2027. We have our total expenditures that we anticipate, again, meaning that our expenditures will exceed revenues by about $1.7 million. Again, that is tied to child nutrition. And then we anticipate a beginning fund balance of about $10 million in our special revenue funds. for a projected ending fund balance at the end of fiscal year 2027 of about $8.3 million. Debt service. As I mentioned, debt service are the funds that we used to receive a significant amount from the state. However, we have paid off, I think, two of our public service fund debts in fiscal year 2026, so that 63,000 reflects the very last one that is obligated to the State Department. The debt service of the 18 million that you see there that we will pay in fiscal year 2027 is tied to the Percy Julian bond issuance that we just completed. So that debt is about $12 million. And then we will hopefully close on the Capital Heights bond issuance in 27. And we anticipate that that debt service payment will be about $6 million. So that's where the $18 million comes from as it relates to our debt service. Revenues are derived, so you see other fund sources. That $18 million is actually funds that go into our capital projects. So the funds that we receive from the county, the Avalorum funds that we receive, those funds are for capital improvements and for the debt that we'll actually incur for the building of the new schools. So that $18 million is actually a transfer from our capital projects fund, mostly from the local sources that we will receive. Of those local sources that you see up top under capital projects, that $24 million, $18 million of that will transfer out of capital projects over to debt service to pay the debt for Percy Julian and Capitol Heights. So as I say that, let's move over to capital projects. And you see that we have anticipated revenues of $53.5 million anticipated expenditures of $160 million. And you may ask, why is that so large? So the debt that we, the bond issuance that we just did with Percy Julian, those funds are in our capital project fund. And so we have expenditures to complete the building of Percy Julian that are reflected there in that $142.5 million. Which takes me to the beginning fund balance. I'll go down. So the beginning fund balance you'll see is $185 million as it relates to capital projects. So $100 million of that is the funds that we received from the issuance of the bond for Percy Julian. About $40 million of that, and I may have to go back to my notes here, But let me just say the grand majority of that are the funds that we have already received as it relates to Percy Julian. And so those funds are transferred within the capital project funding source from one fund source to the other to cover the expenditures for the building of Percy Julian. State revenues, of course, $29.1 million, $19.8 million of that. is reflective of our advancement in technology funds. We also have state capital purchase of 7.2 million, and then our fleet renewal of 1.4 million. And so those are the funds that we receive as it relates to state revenues from the State Department. Then we have our local and other revenues. Of course, the local ad valorem that we anticipate receiving for fiscal year 2027 is 23 million. And then we have our state capital match of 1.3 million. Other fund sources, of course, 195 million. The 70 million are the proceeds from the bonds that we anticipate to receive in fiscal year 2027 as it relates to capital heights. So if we left the bonds for capital heights in fiscal year 2027, we would receive $70 million. So that's part of that 195. The remaining 125 reflects the proceeds that we have already received as it relates to Percy Julian. And so those are the other fund sources. They're listed as other fund sources because we transfer those funds from within that funding, that capital projects fund, from one fund source to another fund source to pay for the expenses that are occurring right now as it relates to Percy Julian. As it relates to the advancement in technology funds, I thought it was important to share that, as I stated last time, those funds are declining. And you'll see that in 2022, all the way up to 2025, there was a climax. And then, all of a sudden, you'll see that those funds started to decline. This year, we actually received 19.8 million. And next year, we've already been told that those funds will probably drop in half or even more. So I have a projected amount of $10 million there, but I've been told that might be a little bit too generous. And then we may not receive those funds at all in 2028. So that is how those funds look as we anticipate the decline of those funds. So those funds have been used to pay for capital operations and maintenance. And so what had to happen this year is some of the expenditures that we've had in that funding source over the last couple of years, specifically as it relates to operations and some of the maintenance of our buildings have been moved to local funds as well. Our capital expenditures that we budgeted and anticipated, instructional, 1.6 million. Operations and maintenance, 14.2 million. And then we have the capital outlay and debt service as it relates to capital projects. That debt service under capital projects is tied to the fleet renewal that we receive and the buses that we're paying for in transportation. And this will be our last year on that debt as well. Extendable trust. Again, those are the funds that are at the schools that belong to the clubs and student organizations. And so we have a small amount there as well as the expenditures that are tied with those funds based on information that was budgeted and received from the local schools. You'll see here again a recap of our full budget as it relates to general special revenue and debt service, capital projects, and expendable trust. Before we move into any questions, I do want to address the two questions that I got last week. And I think I've already emailed those to you, but I do want to just address them publicly as well. So one of the questions was, why are the advancement in technology funds declining so much? And so as I've mentioned over the last couple of years, and it was probably mentioned even before I came into this role, that state funds that support the Education Trust Fund are declining.

They're leveling off.

And so when I sent the response, I actually did pull up our sales tax year-to-date statewide as well as the corporate and individual income tax because 92% of the Education Trust Fund comes from income tax and sales tax. And those funds are actually down in average by about 7.8% compared to last year at this exact same time.

So there's one month

left September, but the numbers for August are actually already down there. And then if I look at even last year, 2025, compared to 2024, there was a slight decline even that year as well of about 1%, not as significant as this year. But I guess the fact or the point to make is that those funds are declining, and those are the funds that fund your education trust fund. There was another question that was asked and it said that several times during your presentation you mentioned the loss of funds impacting future operations. Specifically, we have invested a lot of money in the construction of buildings and recreational sports and facilities. Are there any facilities Are any of the facilities expected to generate any revenue to offset the future cost or maintenance and upkeep of our buildings? So my response to this is, if I understand the question correctly, when I talk about operational expense, I'm talking about the operational upkeep and the maintenance of our buildings, and so not the operations of the district. So I don't anticipate any of the buildings generating the kind of revenues that would offset any of our operations and maintenance expenditures. And I said that the main purpose of investing in our new buildings and facilities is really to provide a safe and modern facility to support the needs of our students and the programs across the district. So really that statement was made as it relates to the advancement in technology funds that are used to support the cost of operations and maintenance. And we do have to be cognizant of the fact that those advancement in technology funds are declining. And so when I speak of operations and maintenance of our buildings, what I'm speaking about is that we don't have the support of that in our advancement technology funds like we've had over the years. And so those type expenditures will have to be supported out of local funds.

Thank you so much, Ms. Watkins. Another fine job. Any questions or comments? Ms. Smith?

Thank you, Ms. Watkins. A really good presentation. I had one question, and it came from page 38 and 39. I know the last meeting, the first budget hearing, it was mentioned by one of our board members about the mandatory or having a required reserve. Anything over the excess of that reserve, will it go into, let me go to, I told you the page number and I didn't turn to it.

Thank you.

Will the excess go into those reserve account balances? because you said that we didn't put anything in it this year.

That's a very good suggestion, and that is a possibility. That is what I would suggest, to continue to increase those reserves. We do have to go back to the bond market next year. We've got to go back for another credit rating review. Those are things that are looked at very positively for the district as it relates to our credit rating, if we can continue to to maintain, practice good fiscal responsibility, and to increase those reserves when we can. So, yeah.

That was basically my question, and I guess my, what I wrote down was why was there a decline in what we contributed.

And I guess The decline in what we've contributed really has to do with what I can see the revenues doing at the point that we've done the contributions in the past. We knew that this particular year we were not going to let that bond until the time that we did. And so those funds had to be available to support the building of Percy Julian as we transitioned along with that. So it may be that next year looks a little better. However, we are still building Capitol Heights. and we just have to see what things look like mid-year. I think the times that we've suggested increasing the reserves, we suggested that once we made it to the mid-year point and we knew what our revenues were going to look like and if there was the possibility to do that.

Dr. Keith? I got your email and I got what you said. Here's my issue with that. I know it says we're going to have to go into local funds. We're also talking about, you know, maybe doing a policy, I'm putting more, you know, in our monthly reserve. When you look at, I mean, I really studied this, especially today. When you, I was looking at that last one, the low one at 5 million is 2026. Okay, I see now that that's 2028. That we've got 19 million right now. When you, you cannot turn on the TV today, whether it's CNN, Fox, local, that there's not something on AI technology, okay? We're going to continue advancing constantly, yet the state wants to look at us and not, and take us, you know, you said next year they're going to take us down to half, 10 million, then the next year down to five. Can we, I get their reasoning is, hey, that's all y'all got. We're looking at y'all's taxes decreased, that's where the money comes from, so that's all y'all are going to get. We should be able to make some type of an appeal because that doesn't make sense when you're advancing in technology to take away from that fund.

So I think, and maybe that's the case, but I think we have to look at what is funding those funds that we receive. So it's not just Montgomery, it's all the school districts across the entire state of Alabama. And the funds that are funding us who have had those funds in the past, the additional or excess revenues that are that are provided by the sales tax and the income tax, those are the funds that are declining. And so the availability of revenues are just not there like they were several years ago.

And I think, just to make mention of this, it's declining because we are moving from, think about the internet. We're shopping on Amazon. We're not getting the taxes that Montgomery normally got. And I think when they sit down and we, you know, and talk about this together, we know why it's declining, but what is increasing is technology. I will say a good point is the sales tax.

So people are not shopping in brick and mortar like they have in the past. So you do see the leveling off of that. Our revenues related to that have been pretty consistent for the last several years, but the sales tax that's generated from people shopping online have increased tremendously. But the school districts, at least Montgomery, does not receive a portion of those.

Thank you all. I think my only comment with that is that was one of the reasons I was so pleased in opening the new academy is because we have to branch out from who normally funds us and hope that we can attract other funding. I think those schools are going to be very pleasing to the military, to other sources that will pursue our students. And so I think that's a hope. A school board member in another district sent me something I thought was really, really interesting. Sent me an article that the number of children in America since 2023 has decreased by 11%. Isn't that interesting? So as we say, our schools are declining. Well, people are having less children. Children are hard to raise now. So I guess they've said no. So, but I thought that, I never thought about it like that, that America as a whole has less children to pull from. And then our special populations of children, people need different sources of education now for

One other thing I failed to mention is in addition to approving the budget tonight, you will also be approving the salary schedule for fiscal year 26-27. There are no changes in that other than the 2% mandated increase that the state mandates. And so we do have to prepare a new salary schedule. that includes that 2%, and it's part of the approval of the budget as well. It has to be submitted to the State Department also.

Okay. Everybody understands. Okay. Very good. Any questions from our viewing audience, our public audience? Another fine job, Ms. Watkins. All right, moving on to our consent agenda. Dr. Byrd. Yes, ma'am.

Thank you, Madam President and board members. We would request your approval of the consent agenda action items 5A through 5C.

Madam President, I move that we accept the superintendent's recommendation for consent agenda number 5A through 6. I second.

It has been moved and seconded to accept the superintendent's recommendation for consent agenda items 5A through 5C. Any discussions on that matter? Hearing? Yes, ma'am. Yes, that's the presentation that Dr. Williams made.

I know it's too late to pull it and vote separately, so I want y'all to know why I voted no.

OK. Any other discussion or questions? Hearing or seeing them, may I see a show of hands of all those in favor? OK. Got it. Thank you. Consider for approval, Dr. Byrd. Yes, ma'am. Thank you.

Superintendent requests your approval of action item 6A, funding year 2027, original budget.

Madam President, I move that we accept the superintendent's recommendation for a fiscal year 2027 original budget. I second.

It's been moved and seconded to accept the superintendent's recommendation to approve the 2027 original budget. Any discussion on that item? Hearing or seeing no discussion, may I see a show of hands of all those in favor? Thank you, Dr. Burke.

Thank you. Superintendent requests your approval of action item 6B, Personnel Report, Certified Personnel.

May I have a motion to accept item 6B, personnel?

Madam President, I move that we approve item 6B, personnel. Okay.

It has been moved. May I hear a second?

I second it.

It has been moved and seconded to accept the personnel report, certified personnel. Any discussions on that item? Hearing or seeing no discussion, may I see a show of hands of all of those in favor? It is unanimous. Thank you. All right, our next meeting date will be October 20th. I think that is the third Tuesday in October at 5 o'clock p.m. Thank you so much. This meeting is now adjourned.