Budget Committee

Minutes

October 29, 2008

Official as of January 5, 2009

Chairman Daniel McNally calls the meeting to order at 7:00 p.m.

PRESENT: Chairman Daniel McNally, Vice-Chairman Robert Holden, Selectmen Representative Ken Curley, School Board Representative Colleen Pingree, Robert Bailey, Nona Holmes, Kate McNally, Babette Morrill, Ken Rick, Herb Johnson, Kevin Ash and Board Administrator Linda Smith.

ABSENT: Lucy Edwards, Board Secretary Lisa Fellows-Weaver, and Shelley Bobowski excused. Water District Representative John Jacobsmeyer, and Ken Witham.

PUBLIC: Business Administrator Allan Demko and School Board Member David Ruth.

MINUTES:
October 1, 2008
Ken Curley makes a motion, second by Colleen Pingree, to accept the minutes. Amendments are made as follows:
***Page 4: $17,000 or $20,000
Page 7: Remove: …Herb Johnson…
Page 7: Change: Ms. to Mr. …
Herb Johnson makes a motion, second by Nona Holmes, to accept the minutes with the amendments. Motion passes unanimously; 11/0.

School:
Colleen Pingree is present representing the school. She explains that she did not receive a packet from the school so she is not sure as to what the members received; however, provides the board with additional copies of current financial statements. Other documents previously requested are also provided.

Ms. Pingree explains that the school’s bookkeeper has resigned. She has given a two weeks notice; however, has been calling in sick and has not been in to work since the resignation was given. Ms. Pingree notes that the financial statement that was provided has been reviewed by the school board; however, was not reviewed with the bookkeeper and she is not sure it will be reviewed at this point. Ms. Pingree continues and states that the school board found a number of items that were incorrect meaning that this is not a correct statement; however, it is the current financial statement. She states that they are currently working on addressing this matter. The position is currently being advertised and they hope to fill the position quickly.

Colleen Pingree explains that the school board will be providing information as soon as possible to the public when it can be released and she will make sure that the budget committee is well informed.

Ms. Pingree states that according to the special education director at the SAU, the school is underfunded in the special ed area by $270,000. She states that at this time they do not have an understanding of why this has occurred. She refers to the budget process when cuts were made and explains that they were asked to cut $256,000 from the budget. Special ed. was discussed at the meetings and the information provided at that time was that the budget for special ed was in the black by $109,000. for this current school year. Based on that information provided by the former superintendent, the school board used $90,000. from the special ed line and applied it towards the cuts that were being made. Ms. Pingree states that with the new people on staff, it has been brought to the attention of the school board that the amounts were incorrect information. She adds that at this point the figures they are working with are provided. Mr. Demko states that he is not confident in the numbers and that it has been difficult in getting together with the special ed staff. He explains that these numbers are not in line with the projected amounts and hopes that the next report will show full encumbrances. Ms. Pingree states that the school board does not know if the numbers in special ed are correct or not.

Kate McNally asks if the figures may have been a result due to changes in students in the program. Ms. Pingree replies that this may be the case; however, the school board is not getting the answers needed and there is no accountability. Mr. Ruth adds that it is noted in the report that three students were added at a cost of over $200,000. Ms. McNally notes that one new student can create a huge affect on the budget.  Ms. Pingree states that it could be new students and adds that the school board believes that there are still some miscalculations.

Dan McNally asks if encumbered funds could be a part of the overages. Mr. Demko states that encumbrances could be a part of it; and he adds that there is also some shifting of funds within areas, which makes it difficult to track. He notes that there were additions to the staff that came onto the payroll that were not budgeted for.

Ms. Pingree states she understands that there is a need to report on the special ed funds more clearly and how many children are being served in Northwood.

Further review of the report is held and Ms. Pingree explains the student activity fund. She states that with the new interim staff members there has been discussion of this fund. She states that some of the funds that were cut by the school board from the operating budget were being put back into the budget through this fund. She explains that they were not aware of this fund that could have covered some of the programs. She states that the principal provided a ball park figure for the fund of $30,000 - $40,000. Ms. Pingree mentions that the money for this fund is raised by fundraisers and photography sales. In addition, she explains that the money is for scholarships for students for various programs if they were not able to pay and also for programs not in the budget. She states that this report was provided upon request and it is noted that there is $58,000. in this activity fund. Ms. Pingree states that in the Town of Nottingham there is only $11,000 in the student activity fund and Strafford has $28,000. She adds that there are concerns about how the money was raised and that it includes some accounts that had been being included in the operating budget. Ms. Pingree states that there are only three years of records on this account, everything else has been shredded or does not exist. Therefore, the school board is not sure as to how this occurred, where the funds came from, or if this will ever be resolved. Mr. Demko is checking into this matter. Mr. Holden asks if the money is really in the account and Mr. Demko replies it is, it is in a separate account at TD Banknorth.

Kate McNally states that these funds could be used for science camp for 6th graders, which would be the responsibilities of the tax payers, not fundraisers.  Mr. Demko explains that he has been working to determine this and there are a lot of records to go through, including matching expenditures and revenues. Further discussion is held regarding the way these funds have been obtained through fundraisers and spent as scholarships. Mr. Demko states that over the past 4 years, the funds have doubled. Ms. Pingree provides another example of the spending as the principal has used funds from this account to fund the Artist In Residence program as the school board had cut this program from the budget. She adds that funds are also raised for this program though taxation.

Ms. McNally states that when the cuts were made it was noted that there would be other ways to fund certain programs. Ms. Pingree states that she specifically had asked about the Artist In Residence program and was told that there were grants available for this program. She adds that this answer was provided often. She notes the Lego robotics program was also cut and is still ongoing in the school and no grant is available. However, she adds that there was a kit purchased last year and yet there were funds allocated in the budget for this: $9,000. Ms. Pingree states that she can only provide the board with information that has been made public and will make sure that it is available to the board as soon as it can be.

Mr. Johnson asks if the final audit will be public information. Ms. Pingree replies yes. Mr. Demko adds that the possibility of a first draft is about 6 weeks out. He further explains the process and the anticipated highlights of the report. 

Ms. McNally refers to the teacher appreciation line and states that this was funded through the school board costs and should be raised through taxation not through fundraisers. She states that fundraisers are for the benefits of the students. She believes that it was noted at a meeting as being funds from pictures. Mr. Demko states that there needs to be better accounting overall and better administration of the funds so that the students truly get their benefits.  Ms. Pingree states they are working on this now.
Ms. Pingree states that information has been withheld from the tax payers, public, and school board and this has been very frustrating. She adds that the bookkeeper is the person who manages the funds. Ms. Pingree notes that there is a lot of information that the school board has requested and has not been provided.

Discussion on the previous audit is held and how the information was disseminated to the past and present boards. Mr. Holden asks if a new process has been put in place at this point regarding the funds. Ms. Pingree adds that there is accountability now.

Ms. Pingree explains that the school board is still in the appeals process with the former superintendent and does not want to speak about anything that may jeopardize the process for the Town of Northwood.

Further discussion ensues regarding the timing of receiving the 06-07 audit. Mr. McNally states that the outcome of the audit was presented to the budget committee by the administrator and business office. Ms. Pingree states that she and Mr. Ruth attended the last meeting of the former school board prior to elections and they had not been provided with the audit and should have been for a formality of the end of year. At that meeting Mr. Bujno asked when the audit would be received. The answer was that the audit had not been received. Ms. Pingree adds that she asked for the audit twice after she was elected. She states that a balance audit was finally received; however, she feels that there should have been additional information provided.      

Ms. Pingree refers to the food service department and explains that at the end of the year a salad cart was purchased for the cafeteria based on the information provided and the understanding that there was a substantial surplus. She adds that a new director has been hired and equipment needed to be upgraded in order to make more money in food services. Ms. Pingree states that we now know that there has been a serious deficit in the food service department and this has been occurring for many years. She explains that the school board was unaware of this as they had been provided with different statements showing other information.

Mr. Demko explains further that he has reviewed all of the audited financial statements. He refers to the document dated June 30, 2007, which the budget committee received tonight. He directs members to the fund balance for the beginning of the year and states that in 2006 and prior, the fund balance being carried forward, the food service made $6,837. He adds that looking at the activity as of June 30, 2007; the total revenue is listed as $102,000. Mr. Demko explains that $37,000 represent intergovernmental revenue, which is food and nutrition state and federal monies. Charges for services are cash money received through the cash register. He states that this ends up being a deficit of $39,615. He adds that $50,000 was transferred to the capital reserve fund for warrant articles and then there was another transfer to the food service account by the auditor of $32,778. This was from the general fund to cover the deficit and should have been used to reduce taxation.

Mr. Demko adds that with further review of expenditures, he states that there were no health care or dental benefits noted under the food service department. In asking about this he was told that health benefits were coming out of the general fund, rather than as an expenditure of food services. This created an even larger deficit in this department. He adds that this goes back to 2000. Ms. Pingree adds that there was much discussion at previous year’s budget meetings regarding part time food service workers having benefits. She states that the explanation given was that no part time workers were receiving benefits and that is not accurate. Ms. Pingree states that there will be further review of this as well. Mr. Demko adds that he believes the figures are based on the teacher’s contract.   

Mr. Holden asks how the cash registers are being handled. Mr. Demko explains there is a new food service director and also a new computerized system. Ms. Pingree explains that they have eliminated a lot of the cash coming in. The system is a prepaid purchase account and the students purchase is deducted from their account through the computer system. Mr. Demko adds that the numbers do not add up and there will be further review held.

Per request, Ms. Pingree provides information regarding the fuel bids. Mr. Demko explains that the school has a contract signed with Energy North Propane for $2.55 per gallon. For #2 fuel there is a contract for the school and town with Simply Green for $4.32 per gallon. Mr. Demko states that a down size protection should have been purchased for a few cents more. This would allow the contract price to vary should prices decrease; however, it protects the buyer should it increase any higher. Additional discussion is held and Mr. Demko notes that the contract is for 26-28,000 gallons. Ms. Pingree adds that Mr. Demko did attempt to renegotiate the contract, with no avail.

Ms. Pingree states that she feels very good about the direction things are headed and adds that the issues will get addressed and fixed.

Mr. McNally asks about the warrant articles that were said to be funded out of surplus; court yard and playing field. Mr. Ruth explains that the courtyard was approved by the town to come out of the 08-09 budget. The funds were able to be spent beginning July 1 and the issue was fixed. Ms. Pingree explains that the ball fields were to come out of the 07-08 budget surplus. She adds that they are not sure if they have any funds for the ball fields at this time. Mr. Ruth states that come June 30 if there was a surplus they were to use the money for the ball field repairs.

Mr. McNally states that if there is any surplus, the items in the ’07 meeting would take precedence over new items. Discussion is held on the warrant article for the courtyard and how funds are transferred to and from accounts and which accounts have had recent transfers. The consensus is that this has not yet been determined. Mr. Ruth noted that the school board has requested that the principal not plan to expend funds from the student activity fund at this time.

Mr. Johnson asks if the school board has considered a four day school week. Mr. Ruth states that this would have to be part of the negotiations within the teacher’s contract. Ms. Pingree notes that the Lakes Region schools have discussed this option and voted it down. 

Town
Ken Curley states the selectmen have started their budget process. He explains that there is a new format this year, which will include a breakdown of utility costs for different departments. This change is in hopes of being able to better determine energy costs and where there can be savings.

Mr. Bailey notes that the highway committee will be holding the line this year on any new construction. He requests that all departments try to do the same.

Other
Mr. Holden notes that there is a lot going on within the schools’ budget and  suggests that the committee have another meeting in 30 days. Ms. Pingree states that more information will be available and notes that the auditors are still 6 weeks out with their report. Bob Holden makes a motion, second by Herb Johnson, to meet December 3, 2008 at 7:00 p.m. Motion passes; 10/1. Mr. Rick is opposed. 

Mr. Rick asks if there will be a holiday party for volunteers. Mr. Curley states that a date has not yet been determined. Mr. Johnson notes that he would prefer to have it elsewhere as it was very crowded last year.

Adjournment
Ms. McNally makes a motion to adjourn, second by Ms. Pingree, at 8:30 p.m. Motion passes unanimously; 11/0.

Respectfully submitted,

Lisa Fellows-Weaver
Board Secretary