Quincy Reporter

Community Consolidated School District 181 Board of Education Finance and Facilities Committee met Feb. 18.

Here are the minutes provided by the committee:

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 5:02 p.m. on Tuesday, February 18, 2025.

Roll Call

Finance and Facilities Committee members present were Dr. Hector Garcia, Asim Aleem, Ellen Dunlap, Mindy Bradford, Meg Cooper, Lois Mejdrich, Adam East, Jerry Mejdrich, Margaret Kleber, Sinead Duffy, Mike Duggan, and Catie Norton. Also present, Jean Duggan, Recording Secretary.

Guest: Matt Hanigan, Senior Managing Consultant at PFM

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 December 10, 2024, Finance Committee meeting. Meg Cooper seconded the motion. The motion carried.

Celebrations

Mr. Duggan noted the following celebration:

● Oak School Full-Day Kindergarten progress and completion.

Discussion Topics

Investment Update

Mr. Matt Hanigan, Institutional Sales and Relationship Manager from PFM Asset Management presented a quarterly update on the District’s investment program.

Mr. Hanigan shared the following highlights of the program based on the quarter ended December 31, 2024 and since inception:

Market Update/Current Market Themes

○ The U.S. economic soft landing remains on track

■ Inflation and labor markets are in line with Fed expectations despite slower recent progress

■ Strong economic growth prospects remain intact, aided by a resilient consumer

■ Changes to fiscal policy under the new administration may impact growth & inflation trajectory

○ Fed easing cycle moves forward, as expected, but looks to slow in 2025

■ The Fed cut the Federal Funds target rate by an additional 50 basis points (bps) during the 4th quarter of 2024 to 4.25% - 4.50%

■ The Fed’s December “dot plot” implies another 50 bps of cuts in 2025 (less than the potential 100 bps of cuts previously projected as of September 2024)

■ Fed Chair Powell noted the slower pace of cuts reflected “stickier” inflation heading into 2025

○ Treasury yields responded to expected monetary and fiscal policy

■ Yields on maturities between 2 and 10 years rose 60-83 bps during Q4 2024

■ The yield curve disinversion continued and was flatter at the front end and positively sloped beyond 1-year (closer in line to what we would generally expect)

■ Yield spreads remain near historically tight levels across most sectors, aided by robust demand and strength in the economy

Long Term Portfolio

○ Total Market Value as of December 31, 2024 = $10,680,604 (up approximately $425K from 12/31/23)

○ Duration = 1.75 years (up .04 from 12/31/23)

○ Yield at Cost = 4.31% (up .56 from 12/31/23)

○ Yield at Market = 4.35% (down .11 from 12/31/23)

○ At a return rate of 2.67% (annualized, net of fee), the district’s long-term portfolio has outperformed the related benchmark by 17 basis points, net of fee, since inception (March 31, 2022). Portfolio performance has exceeded the benchmark's return, net of fee, for the past quarter (3 bps) and the last year (1 bp).

Short-Term Portfolio

○ Total Market Value as of December 31, 2024 = $44,916,902 (up approximately $3.4MM from 12/31/23)

○ Duration = 0.21 years (up .05 years from 12/31/23)

○ Yield at Cost = 4.67% (down .85 from 12/31/23, as yield curve has inverted and rates have reduced)

○ Yield at Market = 4.56% (down .52 from 12/31/23)

○ At a return rate of 3.98% (annualized, net of fee), the district’s short-term portfolio has outperformed the related benchmark by nine basis points, net of fee, since inception (December 31, 2021). Portfolio performance has exceeded the return of the benchmark, net of fee, for the past quarter (3 bps), the last year (6 bps), and the 3 years (9 bps).

Investment Strategy - Overview

Segmenting Portfolio

● There are two operating investment portfolios based on the District’s cash flow requirements.

○ Long-Term Portfolio:

■ Intermediate/Long Term Strategy: 1-3 Year Benchmark

■ Operating reserve funds invested longer term to generate investment income

■ Actively managed to maintain duration and enhance earning

○ Short-Term Portfolio:

■ Short-Term Strategy: 3-Month Benchmark

■ Cash flow-driven portfolio, optimized with targeted maturities to fund

anticipated cash flow needs

■ Ensure sufficient liquidity to meet daily operating needs while placing short term investments to increase potential investment income Diversifying the Portfolio

● Long-Term Portfolio

○ Diversified amongst investment types allowable under the Public Funds Investment Act & Investment Policy

○ Treasuries, Agencies, Corporate Notes, Agency Mortgage Backed, supranationals, etc.

● Short-Term Portfolio

○ Highly liquid, short-term investment types

○ Primarily utilizing LGIP, T-Bills, and high-quality Commercial Paper investments.

● Investment Strategy - Looking Ahead

○ Federal Reserve

■ Current Target Fed Funds Rate – 4.25% to 4.50%

■ Current Market Expectation for Fed Rate Cuts– 2 cuts in 2025

○ Yield Curve

■ Yield Curve remains slightly inverted on the short end

■ Liquid rates generally look slightly more attractive than 3-12 months investments (T Bills, Commercial Paper, etc.)

■ With one more Fed rate cut, the curve could very likely disinvert

○ Strategy Implications

■ Short-Term Portfolio: We will continue to monitor the value between the LGIP and fixed-rate short-term investment options. As Fed Rate cuts become more likely, we will look to lock in short-term investments more frequently than we have in this inverted yield curve environment.

■ Long-Term Portfolio: While short-term rates have declined recently in response to recent and projected Fed Rate cuts, the longer end of the yield curve has steepened more recently.

● Yields remain attractive from a historical perspective

● Active management should continue to add value as the curve disinverts/steepens.

● While spreads between corporates and Agency mortgage-backed have tightened, there is value relative to comparable maturity treasuries, roughly 40-50 basis points. Diversification should continue to add value.

Ms. Bradford indicated that she would be working with Matt to update the Annual Investment Income for the next 5 years to be included in the overall 5-year Projections that will be shared with the Finance Committee in March.

Construction Update (Financials)

Ms. Bradford presented information on the Full-Day Kindergarten spending through January 2025. The actual spend to date is $13,492,012, representing approximately 70% of the budget. Ms. Bradford shared that Walker is the only school that will have fully used its contractor allowance and will start using a portion of the contingency for that project. That being said, Ms. Bradford indicated that there were no concerns with being over budget on any of the school’s total budgets or on the overall budget at this time.

Ms. Bradford then presented information on the 133 Ogden project spending through January 2025. She noted that the total budgeted costs for this project are $5,105,500, and actual costs to date were $797,207 (16%). Mr. Duggan confirmed that more than 16% of the contractor work has been completed to date, but that the new contractor has been a little delayed in submitting their pay applications. Ms. Bradford indicated that the District is aggressively managing the contingency and is trending on track.

Items for Recommendation

Monthly Financials

Ms. Bradford shared the following:

Operating Funds Year to Date:

● $37.3 MM: Trending on track

○ Includes relief to the taxpayers in the spring

● Revenue $41.8 MM: Trending on track

● Expenses $37.5 MM: Trending on track

The committee agreed and supported the recommendation to bring this item forward for Board approval.

Abatement Amount Decision/Resolution

Ms. Bradford shared that at the November 9, 2020, Board of Education meeting, the Board initially approved the District’s Abatement Strategy recommendation. That initial strategy has remained consistent since its initial adoption. The Board has re-approved the plan annually after discussion and confirmation that it is still sound. She said that the strategy includes adjusting the annual proposed abatement amount if the District’s Operating Fund Balance is over 50% unless the Board has specifically restricted the balance to 50% for a specific purpose. With the assistance of the District’s financial advisor, Bob Lewis from PMA, the Administration worked to identify the best way to execute its fiduciary responsibility for the district and the community's taxpayers. This analysis led to the plan to abate some of the Bond and Interest Levy that were not required to fund the related bond and interest payments. Choosing to abate the Bond and Interest and not the Operating Funds helps to ensure a more stable/flexible rate without a permanent, compounding negative impact on the District’s Operating Funds. These proposed abatements reduce the debt service portion of the community's tax bills until the district's annual debt service requirements are lower.

The committee agreed and supported the recommendation of the Resolution Authorizing Abatement of the 2024 Bond and Interest Levy for $2,000,000. Subsequent to the Board approval of the related resolution, that document will be submitted to both counties prior to the February 28, 2025 deadline for submission.

Approval of Backup Internet & WAN Services and Associated Equipment

Ms. Bradford presented the recommendation for the approval of establishing a redundant internet and WAN infrastructure alongside necessary equipment upgrades. This initiative aims to enhance network reliability and ensure consistent connectivity while generating cost savings for the district.

Highlights:

● Redundancy Implementation: Propose establishing a 36-month backup internet connection with Comcast for our seven schools and with AT&T for the district office, complementing the primary Illinois Century Network (ICN) connection to the schools, which will be provided by AT&T. This ensures failover capabilities for both WAN links and internet access, allowing for continuity of service in the event of an outage.

● Infrastructure Upgrade: To support the redundant WAN and internet connections, the core switches at Hinsdale Middle School will be replaced. The current switches cannot handle the necessary fiber handoffs. This is a one-time expense of $65,578.72, budgeted for in FY26.

● Cost Savings and Efficiency: This initiative results in an approximate annual savings of $52,620 compared to our current primary service provided by Metronet. The total yearly cost for the backup connections will be approximately $115,380.

The committee agreed and supported the recommendation to bring this item forward for Board approval.

Digital Learning Device Refresh (Chromebooks)

Ms. Bradford shared that the administration seeks approval to purchase new Chromebooks for middle school students. She said that the Incoming 6th-grade students will receive a new Chromebook that they will utilize throughout their time at middle school.

The specifications of the equipment are as follows:

● 475x Lenovo 500e Chromebook (3rd Gen) - 12.2" - Intel N9100 - 8 GB RAM - 64 GB

● 475x Google Workspace licenses for Chrome

● 475x Targus Work-in Case (Model TKC001)

These are the same models purchased during the 2023-24 school year. The purchase price of the Chromebooks and related materials is $231,143.The District’s FY25 Budget included a placeholder of $250,000 for these devices, so the recommended purchase is within the previously approved FY25 Budget.

The committee agreed and supported the recommendation to bring this item forward for Board approval.

Summer Project Bid Approval and Awards

Mike Duggan, Director of Facilities, presented the Summer 2025 capital projects, including door and hardware upgrades, paving, and a door remodel project. He said that these projects align with the district's goal of maintaining high-quality facilities that support student learning and were all previously presented at the Board Meeting on October 21, 2024.

Highlights:

● Summer 2025 Capital Projects:

○ Elm - Flooring Replacement

○ HMS - Washington Field Upgrades

○ Madison - Window Upgrades

○ Monroe - LED Replacement & Retrofit

○ Oak - Hallway Tile Replacement

○ Oak - New Playground (Includes PIP)

○ Oak - Addition of Bollards along 55th St.

○ Prospect -Poured in Place

○ Walker - MRC Remodel

○ Walker - Flooring Replacement

○ Walker - Taraflex Floor Replacement

○ Elm - Elm Kindergarten Door

○ Prospect, Elm, and Madison - Door and Hardware Upgrades

○ The Lane - Paving Work

The total gross cost of the 2025 Summer Capital Projects is approximately $2.3 million (with a net cost of approximately $2.2 million after the School Maintenance Grant and the LED Incentive payment are used to help offset a portion of the gross costs).

The committee agreed and supported the recommendation to bring this item forward for Board approval.

Future Agenda Items

● Five-Year Forecasting

● Full-Day Kindergarten Construction Update

● District Office Building Construction Update

● Monthly Financials

● Digital Device Refresh (iPads)

Adjournment

Sinead Duffy made a motion to adjourn at 6:04 p.m. Asim Aleem seconded the motion. The motion carried.

https://go.boarddocs.com/il/hccsdil/Board.nsf/files/DEJRBU6D3E04/$file/2025_02_18_Fin.%20and%20Fac.%20Com.%20Mtg.%20Min..pdf