June 5 - Meeting Information

2020 Levy Development Committee 5:30-8:00 p.m., Wednesday, June 5, 2019

Location

Administration Building, 565 N.W. Holly St., Issaquah

Agenda

  1. Welcome and Introductions
    • Ron Thiele and Technical Team
  2. Charter Review and Time-line
    • Jake Kuper and Technical Team
  3. Operating Norms
    • Jake Kuper and Technical Team
  4. School Finance Overview and Educational Programs and Operations Levy Springboard.
    • Jake Kuper and Technical Team
  5. Next Steps and Closure
    1. Technical Team

Mini Summary

Official Action:

The committee voted 31 out of 35 that approval from at least 80 percent of members in attendance is the threshold needed to pass a vote, and voting will be conducted by raised hands. To pass a vote, the quorum is 60 percent. 

Discussion:

For the inaugural meeting, committee members introduced themselves and went through the charter and meeting operation norms. The Technical team presented an overview of Public School Finance. They also discussed what the Educational Programs and Operations Levy funds add to the district budget. They received the springboard proposal.

Up next:

Committee members will return June 19; They will be tasked to critique, challenge and provide rationale for the potential levy.


Meeting Minutes

2020 Levy Development Committee – Official Minutes – June 5, 2019

The meeting was convened at 5:36 p.m.

ATTENDANCE

In attendance: Jennifer Kessler, Mark Clemens, Karissa Mobilia, Minal Kode Ghassemieh, Meredith King, Amy Bettinger-Werner, Andrew Guss, Dana Rundle, Claudia Huzar, Michael Tarlowe, Jenny Jirsa, Stephanie Olson, Alisa George, Lori Riskin, Jonathan Koshar, Martin Buckley, Stacy Morford, Nichole Wengert, JoEllen Tapper, Kathy Keegan, Drew Terry, Stacy Cho, John Gardiner, Erin McKee, Tammy Unruh, Loren Krogstad, Keith Hennig, Leslie Kahler, Alicia Veevaert, Gary Arthur, Jody Mull, Erin Eaton, John Gorow, Kelly Munn, Mike Sullivan

WELCOME

Superintendent Ron Thiele opened the 2020 Levy Development Committee by welcoming members.

He mentioned that this EP&O levy was formerly called the M&O levy. In addition, the two-year cadence is a little different from typical but will bring all our levies back into alignment.

He noted while the McCleary decision was favorable to Issaquah, there is still a need for local levies to provide beyond the definition of basic education.

Superintendent Thiele then introduced two members of the Technical Committee: Jake Kuper, CFO and Josh Almy, Deputy Superintendent.

The Superintendent explained that this is a Superintendent’s Committee meaning a recommendation would be presented to him for his examination and then ultimately passed onto the Board for their evaluation. Once approved by the Board, the measure would hopefully be placed on the ballot for a February 2020 election. He emphasized that the Board and he appreciate the time, thoughtfulness, and energy that the Levy Committee brings to the process. Although no Board members were present at this evening’s meeting due to another commitment, the Superintendent said members would attend future meetings with him as observers.

INTRODUCTIONS

Mr. Kuper welcomed the Committee and asked if they would be comfortable with recording the meeting. There were no objections. He reiterated the goals of the Levy Committee.

Deputy Superintendent Josh Almy introduced himself and welcomed the committee as well. He also introduced the members of the Technical Committee: Martin Turney, Executive Director of Finance and Support Services; L. Michelle, Executive Director of Communication; and Lisa White and Teresa Arends who will provide administrative support. The role of the technical team is to serve the Committee by providing information, clarification and answers to member questions.

The members of the committee then introduced themselves to each other and what community they represent.

COMMITTEE CHARTER

Mr. Kuper reiterated the goals of the Levy Committee: the Committee is an advisory to the Superintendent who in turn will recommend a ballot measure to the Board potentially for a February 2020 election. He mentioned that we would present the materials at this initial meeting, allowing the committee to review. The second meeting will involve more action from the committee as they bring their questions and feedback to the technical team. After the conclusion of the two meetings, Mr. Kuper will bring a recommendation to Superintendent Thiele who would then make a proposal to the school board. The school board will make the decision to place on the ballot.

The District operates with a Springboard proposal approach to present District administration thinking; amounts are transparent and everything is up for change.

While soliciting for committee members in June has been challenging, for the most part, the committee is representative of the entire community. 

DISTRICT FINANCIAL OVERVIEW

Dr. Almy discussed how the Committee makes decisions. Historically, the Committee has chosen a quorum requirement and a threshold requirement for what it takes to change, alter and/or put forward the Springboard proposal. 

The Committee was then asked to take a short break to determine how it would make further decisions. Dr. Almy noted that historically the group had a 60% quorum requirement.

When the Committee reconvened, a motion was made and seconded to adopt a 60% quorum of members present.

The Committee then discussed the historical size of the quorum of the last levy committee, which was a 60% quorum. Further discussion included the impacts of a higher quorum on taking a vote. The committee is striving to strike a balance of responsibility and practicality.

A vote was then taken on the motion. By a show of hands, the vote was 34 in favor and 0 not in favor of adopting the 60% quorum of members present  Note: one committee member arrived following this vote.

The committee was then asked to decide what the threshold for the passage of a measure. Dr. Almy stated that historically the threshold has been 75%. The committee took another break to discuss the options.

When the committee reconvened, a motion was made and seconded to adopt a 80% threshold to amend or change the Springboard proposals.

A vote was then taken on the motion. By a show of hands, the vote was 30 in favor and 5 not favor of adopting the 80% threshold to amend or change the Springboard proposals.  Note: An additional committee member had arrived by the time this vote occurred.

Mr. Kuper then directed the committee to their binders, which include a power point of the presentation, district maps, roster, and charter. All information is also available online at our District Website under the 2020 Levy Tab.

Mr. Kuper gave an overview of the presentation. We have also changed the terminology to Enrichment Levy. This fundamentally changed the way districts are able to spend Levy revenue.

Moving to the Guide to Understanding the Budget, Mr. Kuper explained that each year we create a community friendly budget guide. This explains where the money comes from and where does the money go. With the McCleary decision, the ISD was able to make the largest change to staffing and programming in the District’s history. We were a beneficiary of the decision. This was a court case in which the state took more responsibility in funding basic education. They were able to do this by raising property taxes for some and lowering for others. We lost local taxing authority to the tune of 14 million over 2 years. Our local school district taxes went down, but your state taxes went up. In property rich districts, the taxpayer is paying more state taxes and less local taxes. In 2019, the state increased the taxes before the districts could respond with lower levy authority creating a spike, and then subsequently a drop.

So, where does the revenue come from? Mr. Kuper directed the committee to the pie chart within the guide. Budgeted Revenue is $312,317,852. 71.4% is State Funding; prior to McCleary during the recession, this was lower at around 60.4%. Most of our money comes from per student funding from the State of Washington. The local enrichment levy is 14.2%, not an insignificant amount. Levy authority is currently $2500 per student adjusted by CPI (Consumer Price Index) or $2.50/$1000 of Assessed Value, whichever is less. In Issaquah, we will be using the $2500 per student. Given our socio-economics, we have a small amount of Federal Funding, 2.2%. Tuition and Fees is 12%, the biggest chunk of that is our School Age Care. We currently are running the largest in-district program in state, which is at capacity due to staff and space. In addition, sports fees, parking fees, fines and lunches add to this amount.

Mr. Kuper went on to explain where that money goes. He directed the committee to another pie chart showing budgeted expenditures of $314,770,652. The largest expenditure is spent directly in the classroom, and this is 65.6%. This does not include special education. 11.8% is classroom support. This includes Administration, which Mr. Kuper pointed out is one of the lowest in King County and one of the lowest in the State of Washington. Special Education accounts for 9.4%. Echo Glen, which is a juvenile detention facility that we partner with the State of Washington, is 7%. Food lunches is 1.7%. This program is self-funded. Transportation is 3%. This program has one of the highest rider ships in the state. Lastly, other expenditures is 7.8% and goes to support special programs such as Learning Assistance Program (LAP) and Traffic Safety as well as Issaquah Schools Foundation (ISF) and Parent Teacher Student Association (PTSA).

Mr. Kuper directed the team to the investment document. This fiscal year was different. This last fiscal year 2018-19 was the largest investment of taxpayer money in district history. McCleary gave us a huge chunk of money up front and then flat. This fiscal year we added 165 full time positions, which is still less than Bellevue. McCleary leveled this playing field so that we could provide similar programming levels. We had a mix of program enhancements as well as salary increases. During the recession, salaries were flat. What you saw around the region was market adjustments to salaries with the increased funds. This averaged about 15% around the region. There was pent up demand for the salary increases and so it was the intent of the state to fund these. Issaquah also made investments in programs such as mental health, guidance counseling and behavior counseling. Since Superintendent Thiele took the helm, there has been an increase of $5-6 million dollars for mental health initiatives and support. We believe this is best for kids and families and has been a wise investment. We have also collaborated with the ISF and Swedish Hospital. We have also directed dollars to class size; K-3 has a target of 19-1. We added 13 third grade positions to lower those class numbers. We also increased Special Education staffing by 13 certificated staff so they can better manage the IEP caseload and increase small group instruction. Principal Drew Terry interjected how critical this extra staffing has been to fully implement our inclusion program. We also added $1.2 million to mentor staff to increase retention and effectiveness across the district, additional para support, a new family partnership liaison and added more administrators and principals.

Mr. Kuper shared that the community has asked for a 7th period day for years and so at the direction of a High School Planning committee, we will be implementing a longer day starting Fall 2019. This gives students more opportunities as well as more time for credit retrieval.

A community member asked how much was the increase in teachers’ salaries. Mr. Kuper answered that there was an increase of 48 million. The state increased the salary amounts and added a regionalization factor to compensate for a higher cost of living.

Continuing with the presentation, we turned to the topic of Other Levies and Bonds. The district is allowed to run several types of supplemental taxing measures. What we are considering is a Levy. In order to pass we need a simple majority plus one. Formerly called the M&O Levy, It has been renamed Educational Programs and Operations Levy. We also run Transportation levies, and this was done in 2018. We are also in the middle of a four-year Capital Levy, which covers the years of 2019-22. Those are kept intact and are running. We ran a bond in 2016, which modernized several properties and included property acquisition for 4 parcels.

Moving onto What is ISD’s levy authority, Mr. Kuper explained that schools are capped on what they can tax. The Issaquah School District’s authority is either $2.50/$1000 or $2500 per student (adjusted by CPI beginning in 2020), whichever is less. In a property poor district a lower rate would not raise the same dollars as it does here. So that lift from $1.50/$1000 to $2.50/$1000 was to help those districts. Here that would raise $84 million dollars, which would be in violation of statue. For our work here, we will be using the $2500 per student. This would result in an authority of $51,375,000.

On the next slide, Why do we need a local levy, Mr. Kuper discussed that state apportionment is an imperfect system. 14.2% of the districts revenue is local levy dollars. Every community has different needs and wants. Typically, we run four-year levies but with the given increase in state revenues the uncertainties of state funding, we ran a two-year levy under full taxing authority. We were conservative with our ask as historically we have always run the maximum authority due to the fact that out of 295 districts statewide, we were at 290 in funding. We have always had a structural deficit. The committee at the time recommended a full authority levy, yet with input from representatives in Olympia, the Board was convinced to run a lower levy and wait and see what state funding provided. A community member asked if the state delivered on this promise. Mr. Kuper answered yes, for the most part except for special education. We are now at parity with neighboring districts such as Bellevue. Another community member asked if it was true that some of the tax dollars were to go to homeless programs, not just education? Mr. Kuper answered what we saw was McCleary fatigue. Legislators were under pressure from the Supreme Court to make some decisions

The meeting was convened at 7:15 for a 5-minute break.

The meeting was reconvened at 7:20

Continuing the presentation with what is an Enrichment, defined as under State Law, Mr. Kuper stated that it was anything beyond what the state provides. It is not clearly defined. This can include sports and clubs, curriculum and extended school year. We have used it to add seven additional staff days; 5 of which are paid by local levy. Since early learning is covered, we have made the decision to add a tuition based preschool program. We already have two ECAP, which is the state equivalent of the federal Head Start program. Other items that are allowable: salary cost for administration. We do however need to submit to OSPI for approval. That approval process is new and is not clearly defined, but we have learned from others that it is easy. Although the guidance is minimal, we feel confident we are legally correct. Mr. Kuper directed the committee to the slide Issaquah’s Current Enrichments.  Firstly, Special Education. The background is we sued the state of Washington along with several other districts for not fully funding Special Education and lost in Supreme Court. So now, we must backfill with $6.1 million dollars for what we are legally obligated to provide. A committee member questioned if the state will agree that the state will agree that backfilling Special Education will be considered an enrichment. Mr. Kuper answered that we have a proven track record of 17 years of clean audits by the state. He feels confident we have interpreted correctly. By definition, if is not in the State Funding Formula then it is an enrichment by default. Mr. Kuper continued down the list of enrichments starting with Mental Health Counseling, Liberty Block Scheduling, and numerous other enrichments listed on the presentation sheet.

A community member asked is it true looking at the list, that the state will only fund 3 nurses for the entire district. Mr. Kuper answered this is correct. The state funds their formula, not what is really needed.

A community member asked if enrichment can help pay for teacher salaries? Mr. Kuper answered it is possible. He stated that the base salary is $81, 000. They also get 12% in supplemental pay. We could use enrichment for additional days, TRI pay, co-curricular contracts.

A committee member asked another clarifying question between basic education and enrichment. Mr. Kuper stated the funding formula is not perfect. These funds are for allocation purposes only. Enrichment can be quantitative or qualitative, as noted by the committee member. 

Other items they do not fund are substitutes in the classroom, sick day buy back which in the long run reduces pension obligations, competitive skilled trade salaries and transportation costs such as fuel and wages. Also the new state mandated benefit costs are not fully funded.

A committee member stated that librarians were being cut in other districts and if we planned to do the same. Mr. Kuper stated that those are mostly covered.

SPRINGBOARD

In 2021, the proposed amount would be $54,000,000 and then in 2022, $56,500,000. In his calculations, Mr. Kuper is using estimates of inflation and enrollment. Over 3 fiscal years this amounts to an increase of approximately $14 million. Mr. Kuper reminded the committee they also need to consider increased costs due to the state health benefits, which includes benefits for substitutes- which is a benefit not currently being offered. In addition, we have open labor contracts and new schools coming online that have associated startup costs.

Lastly, Mr. Kuper directed the committee to the Tax Impact sheet which provides historic context and future plans. AV (Assessed Value) represents the District’s current tax base. This can change due to increase in value or new construction. Bonds are the repayment of debt, what we are paying over time. M&O is the currently authorized levy. The pink line is the springboard, total taxes and resulting rates. Mr. Kuper shared how he sells bonds with the goal in mind of keeping the tax rate level. The Springboard proposal should result in a total combined rate of $0.10/$1000 less than current rate. Moving from $3.46/$1000 to $3.36/$1000 of assessed valuation.

A committee member asked if we are close to top-level authority? Mr. Kuper responded yes, this is the maximum on a per student basis.

A committee member asked if there is any risk that the bond market fluctuations could affect his number? Mr. Kuper answered no, that we have the ability to avoid any changes with varying strategies.

Mr. Kuper stated that not being at full levy authority saved us from layoffs. As stated, we were a beneficiary of the McCleary fix.

A committee member asked how we message this to the community? This levy is maintaining programs we already have and promises that we have implemented. If we do not pass this then we would reduce program. There is not a list of new programs.

A committee member clarified that we are essentially keeping the same programs. And as a result of that, you will pay 10% less then currently. Mr. Kuper confirmed this is true.

A committee member observed that enrollment has been flat and wondering if this could affect the projections. Mr. Kuper responded that he over estimated by 500 students last year but considered it an anomaly. Many students moved out of the area, less out of state families due to visa uncertainty are two issues that were also shared with surrounding districts. He believes enrollment is currently flat but will grow due to increased housing stock and that a possible recession could drive a return of private school students.

A committee member asked if we have any school-by-school ratios? Mr. Kuper responded no, we run the ratios district wide.

A committee member asked if we knew of other ballot measures? Mr. Kuper answered we do not know.

A committee member asked if a levy has a minimum threshold for passing and historically what is the voter turnout. Mr. Kuper answered there is no threshold, that is only for a bond. He said historically the turnout is 30%. 

A committee member asked what percentage of voters are parents of school age children. Mr. Kuper responded that typically only 25% have children attending Issaquah schools.

The committee was directed to study the materials before the next meeting and return with questions and comments.

The meeting was adjourned at 8:07 pm


Materials - June 5, 2019 Meeting