Barbara Shanahan - Principal, Madison School | Community Consolidated School District 181
Barbara Shanahan - Principal, Madison School | Community Consolidated School District 181
Community Consolidated School District 181 Board of Education Finance and Facilities Committee met April 9.
Here are the minutes provided by the board:
Call of Meeting
The Board of Education Finance and Facilities Committee meeting of Community Consolidated School District 181, DuPage and Cook Counties, Illinois, was called to order by Board Member and Finance Committee Chair Sinead Duffy at 5:00 p.m. on Tuesday, April 9, 2024.
Roll Call
Finance and Facilities Committee members present were Asim Aleem, Margaret Kleber, Jerry Mejdrich, Lois Mejdrich, Rich Giltner, Ellen Dunlap, Mindy Bradford, Meg Cooper, Mike Duggan, and Catie Norton.
Guest: Robert Lewis, PMA, joined remotely.
Pledge of Allegiance
Mindy Bradford led the Pledge of Allegiance.
Public Comment
No public comments.
Approval of Minutes
Sinead Duffy made a motion to approve the minutes from the March 12, 2024, Finance and Facilities Committee meeting. Meg Cooper seconded the motion. The motion carried.
Celebrations
Ms. Bradford noted the following celebrations and reminders:
● Operating Expense Per Pupil
● Budget workshops to be held with building principals on April 15, 2024
● The tentative FY25 Budget is to be presented in May with the Final FY25 Budget approval in June
Committee members discussed the relationship between high academic achievement and the average operating costs per student.
Discussion Topics
Full-Day Kindergarten Financing and Five-Year Projections Update
Ms. Mindy Bradford, Assistant Superintendent of Business and Operations, provided a report on the Full-Day Kindergarten Financing and a Five-Year Projections update.
An estimated $26 MM facility investment was originally included in the FY24 budget for the Full-Day Kindergarten project (which included a $2.5 MM annual bond & interest payment). The Administration has continued to refine those estimates based on updated information from the architect and bidding process. Based on the construction bids approved by the Board and an updated architect estimate for other ancillary costs, the final projected cost estimate is $19,175,000.
Based on feedback, the District plans to use $1.2 MM from the fund balance and finance the remaining $17,975,000. The Administration worked with PMA to analyze financing options, including 15-year, 12-year, and 10-year scenarios. Each scenario gives the district different annual bond and interest payments. The table below summarizes the yearly payments for the three different terms.
| Annual Bond &
Interest Payment | Total Amount Paid | Total Interest Paid | |
| 15-Year @ 3.86% | $1.6 MM | $24,180,250 | $6,205,250 |
| 12-Year @ 3.65% | $1.9 MM | $22,668,958 | $4,693,958 |
| 10-Year @ 3.52% | $2.2 MM | $21,792,854 | $3,817,854 |
| Operating Fund Balance - Borrowing $17,975,000 - 15-Year | |||||
| FY25 | FY26 | FY27 | FY28 | FY29 | |
| PROJECTED
YEAR-END BALANCE | $38,166,115 | $38,443,956 | $38,659,671 | $39,114,474 | $39,657,989 |
| FUND
BALANCE AS % OF EXPENDITURE | 49.27% | 46.97% | 45.69% | 44.14% | 44.14% |
| Operating Fund Balance - Borrowing $17,975,000 - 12-Year | |||||
| FY25 | FY26 | FY27 | FY28 | FY29 | |
| PROJECTED
YEAR-END BALANCE | $37,885,657 | $37,886,998 | $37,825,713 | $38,008,766 | $38,276,281 |
| FUND
BALANCE AS % OF EXPENDITURE | 48.90% | 46.29% | 44.70% | 43.76% | 42.60% |
| Operating Fund Balance - Borrowing $17,975,000 - 10-Year | |||||
| FY25 | FY26 | FY27 | FY28 | FY29 | |
| PROJECTED
YEAR-END BALANCE | $37,596,761 | $37,308,102 | $36,956,817 | $36,845,620 | $36,825,635 |
| FUND
BALANCE AS % OF EXPENDITURE | 48.53% | 45.58% | 43.68% | 42.41% | 40.99% |
She noted that the District previously issued Debt Certificates in 2009 for general improvements and renovations. Those certificates were refinanced in 2019 for a present value savings amount of $310,600. Those debt certificates have an annual bond and interest payment of approximately $460K and will mature in 2028. Debt certificates do not require a referendum; instead, there is only a legal requirement for the Board of Education to adopt a debt certificate resolution. This is because the annual debt service payments will be made from the District’s Operating Funds and do not require a separate bond levy payment from taxpayers.
Tentative Timeline for Sale:
● Board approves Parameter Resolution Authorizing the Sale - May 13, 2024
● Administration delivers credit rating presentation - May 20, 2024
● The district receives credit rating- May 28, 2024
● Debt Certificates sold; delegates approve final results -June 4, 2024
● Debt Certificates close and proceeds received - July 2, 2024
She said the Administration is recommending the issuance of $17,975,000 of debt certificates over a 10-year term to help fund the renovations required for Full-Day Kindergarten and other enrollment changes.
Ms. Bradford explained that to meet the total cost estimate of $19,175,000, the District plans to use $1.2 MM from the fund balance and issue $17,975,000 in debt certificates for a 10-year term at a currently assumed rate of 3.52% (based on market conditions as of March 5, 2024). This results in an annual debt service payment of approximately $2.2 MM, funded from operating funds.
Committee members discussed the decision-making process for recommending the 10-year option. Mr. Lewis explained how they determined the call date and how it provides flexibility.
Mr. Lewis left the meeting at 5:33 p.m.
Investment Update
Assistant Superintendent of Business and Operations Mindy Bradford shared that the district’s investment firm, PFM Asset Management, provides quarterly updates on the district’s investment program.
Below are highlights of the program based on last quarter and since inception:
● Market Update
○ The U.S. economy is characterized by:
■ Economic resilience but expectations for a slowdown
■ Cooling inflation that remains above the Federal Reserve’s (“Fed”) target
■ The labor market coming into better balance
■ Consumers that continue to support growth through spending
● Federal Reserve signals end to the rate hiking cycle
■ The Fed projected to cut the short-term Fed funds rate by 75 basis points by
December 2024, with the overnight rate falling from 4.50% to 4.75%
■ Markets are pricing a less aggressive three rate cuts by year-end
■ Fed officials reaffirm that restoring price stability is the priority
● Treasury yields ended the quarter materially lower
■ After peaking in October, yields reversed course on dovish Fed pivot
■ Yield curve inversion persisted throughout the rally
■ Credit spreads narrowed sharply on increased expectations for a soft landing
● Long-Term Portfolio
○ Total Market Value as of December 31, 2023 = $10,256,583.95
○ Duration = 1.71 years ○ Yield at Cost = 3.75%
○ Yield at Market = 4.46%
○ The district’s long-term portfolio has outperformed the related benchmark by 26 basis points since inception (March 31, 2022)
● Short-Term Portfolio
○ Total Market Value as of December 31, 2023 = $41,566,110.96
○ Duration = 0.16 years ○ Yield at Cost = 5.52%
○ Yield at Market = 5.08%
○ The district’s short-term portfolio has outperformed the related benchmark by 11 basis points since inception (December 31, 2021)
Because the yield curve is still inverted (meaning that shorter-term investments are paying higher returns than longer-term investments, which is not the typical experience), the District’s portfolio continues to be more heavily weighted to short-term investments to move additional funds to longer-term investments as the yield curve returns to more normal levels.
Per a question, Ms. Bradford commented that the District is pleased with PFM, especially their customer service.
District Office Building Update
Mike Duggan, Director of Facilities, updated the committee on the status of the District Office. He said the Buyer and Seller signed a purchase and sale agreement (PSA) for 133 Ogden on May 22, 2023. After an extensive and extended due diligence period, the purchase was closed on September 26, 2023. During the initial due diligence period, the following documents were reviewed by the District’s Attorneys, architects, brokers, environmental consultants, and members of the administration:
● Existing leases
● A survey of the property from 2017;
● Floor plans
● An environmental assessment report from 2017;
● Rent roll and Owner (D.W. Burke & Associates) profit and loss reports from 2020-2022;
● Property tax records from 2019-2022;
● Title policy from 2017 and an updated title commitment; and
● Various utility easements.
As a result of this review, the District, Healy Bender’s architects and engineers, and Integrity Environmental performed additional walkthroughs of the property and conducted Phase 1 and Phase 2 environmental investigations. All reports indicated no environmental, structural, or mechanical concerns. The existing leases examined by the district’s brokers and the attorneys suggested that the tenant occupying the entire first floor had an option that, if exercised, would allow her to occupy her space until 2029. The tenant occupying the second floor had a lease with an option that, if exercised, would allow her to occupy her space until 2032. Before the execution of the agreement, negotiations began with the first-floor tenant to have her vacate that premises as soon as possible (as the inability to use the first floor would have been a deal breaker). The due diligence time period was then extended to August 4, 2023, and to give more time to negotiate any potential buyout of the first-floor tenant’s 5-year extension option, the due diligence period was once again extended to September 5, 2023.
The District was successful in working with the Seller and the first-floor tenant in negotiating a Seller buy-out of the Eye Care Center’s 5-year lease extension option, which included a short extension of her current lease to September 30, 2024.
Since the second-floor space was less than 900 square feet, it was decided to close on the property and attempt a buy-out of that lease and any extension option post-closing. Alternatively, if a fiscally responsible buy-out could not be arranged with the second-floor tenant, the District was prepared to plan for renovations around her space.
On March 17, 2024, negotiations between the second-floor tenant and the district were terminated with the result being that the tenant expressed her intention to stay until at least the expiration of her current lease term (May 2027) and possibly to the end of her additional lease extension option period (May 2032).
Mr. Duggan said the District recommends that the design work be completed, that all bidding and construction documents be prepared, and that the project be bid according to the timeline as presented.
Items for Recommendation
Monthly Financials
Ms. Bradford shared the following:
Operating Funds Year to Date:
● $28.1 MM: Trending on track
○ Includes relief to the taxpayers and purchase of district office building
● Revenue $46.4 MM: Trending on track
● Expenses $48.0 MM: Trending on track
The committee agreed and supported the recommendation to bring this item forward for Board approval.
Quarterly Financials
Ms. Bradford shared the following:
Operating Funds Year to Date:
● $28.1 MM: Trending on track
○ Includes relief to the taxpayers and purchase of district office building
All Funds Year to Date:
● Revenue $48.6 MM: Trending on track
● Expenses $58.0 MM: Trending on track
The committee agreed and supported the recommendation to bring this item forward for Board approval.
Resolution Designating the Existence of Safety Hazards
Ms. Bradford shared that Section 29-3 of the School Code (105 ILCS 5/29-3) allows local school districts to receive reimbursement from the State Superintendent of Education for the busing of pupils for distances of less than 1½ miles when conditions are such that walking, either to or from the school to which a pupil is assigned for attendance, or to or from a pick-up point or bus stop, constitutes a serious hazard to the safety of the pupil due to vehicular traffic or rail crossings. It provides that this transportation shall not be provided if adequate transportation for the public is available. The local school board determines what constitutes a serious safety hazard by guidelines promulgated by the Illinois Department of Transportation, in consultation with the State Superintendent of Education.
Annually, the Illinois School Code requires the school board to adopt a resolution reaffirming that the conditions still exist that initially qualify each location as a serious safety hazard. Approval from IDOT or the Board of Education is not required when a previously approved Serious Safety Hazard no longer qualifies. In 2017, a thorough review of the existing 12 approved Illinois Department of Transportation (IDOT) Serious Safety Hazards was conducted. There have been no changes in the existing safety hazards discussed last year.
The committee agreed and supported the recommendation to bring this item forward for Board approval.
Future Agenda Items
● Cash Flow Outlook / Investment Update
● Full-Day Kindergarten Financing
● Budget Presentation
● Monthly Financials
● Approval of the Tentative Budget for Public Display
● Resolution Approving Treasurer’s Bonds
● Resolution: Appointing a School Treasurer and Fixing the Treasurer’s Compensation
Adjournment
Sinead Duffy made a motion to adjourn at 6:25 p.m. Margaret Cooper seconded the motion. The motion carried.
https://go.boarddocs.com/il/hccsdil/Board.nsf/files/D4WMU95CE6A0/$file/2024_04_09_Fin.%20and%20Fac.%20Com.%20Mtg.%20Min..pdf
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