Detroit Financial Review Commission

SCHOOL DISTRICT REGULAR MEETING

Monday, June 29, 2020

Following the City Regular Meeting

(Begins no earlier than 1:30 p.m.)

Remotely Using Microsoft Teams

MINUTES

Approved: July 27, 2020

1. Call to Order
   1. Madam Chair, Rachael Eubanks called the meeting to order at 1:20 p.m.
2. Roll Call         

Members Present – 7

• Rachael Eubanks
• Chris Kolb
• Stacy Fox
• David Nicholson
• Ron Rose
• Iris Taylor
• Nicholai Vitti
• John Walsh

Members Absent – 4

• Brenda Jones (non-voting)
• Dave Massaron (non-voting)
  1. Let the record show that 8 Commission members eligible to vote were present. A quorum was present.

3. Approval of Proposed Minutes from the May 18, 2020 School District Meeting
   1. Motion made to approve the draft minutes of the Commission’s May 18, 2020 School District Meeting as presented. Motion moved and supported; the Commission approved the minutes of the May 18, 2020 meeting as presented.
4. Approval of Proposed Minutes from the June 8,2020 FRC School District Special Meeting
   1. Motion made to approve the draft minutes of the Commission’s June 8, 2020 School District Special Meeting as presented. Motion moved and supported; the Commission approved the minutes of the June 8, 2020 special meeting as presented.
5. Old Business
   1. Consideration of the Detroit Public Schools (DPS) FY 20 budget amendment #1 requests per MCL 141.1637(c) (FRC Detroit Public Schools Resolution 2020-3)
      1. Mr. Vidito presented DPS FY 20 Budget Amendment No 1 to the Commissioners. He stated that revenue is based on a conservative projection of remaining tax collections in May and June, and support services include expenses for audit and staff expenses associated with the administration of DPS. He also noted that debt service expense includes both interest and principal for the Stabilization Bonds, MPSERS and Emergency Loan repayment, and as part of the restructuring, it was assumed that a portion of the 18 mills property tax collection would ultimately be transferred to DPSCD for legacy obligations. He also stated that during the FY19 audit, the final transfer of $6.9 million in remaining cash to DPSCD was recorded.
      2. Motion made to consider and approve Detroit Public Schools (DPS) FY 2020 Budget Amendment #1 (Detroit Public Schools Resolution 2020-3) as presented. Motion moved and supported. The Commission approved Detroit Public Schools (DPS) Resolution 2020-3 as presented.
   2. Consideration of the Detroit Public Schools (DPS) FY 21 budget submission per MCL 141.1637 (c) (FRC Detroit Public Schools Resolution 2020-4)
      1. Mr. Vidito, Chief Financial Officer gave a brief overview of DPS FY 21 General Fund budget through the ending of June 31, 2021. He noted that DPS is projecting a 5% reduction in FY 21 property tax collections due to the COVID 19 pandemic and resulted forecasted revenue reduction. He stated that DPS still expects to be able to meet its debt obligations.
      2. Motion made to consider and approve Detroit Public Schools (DPS) FY 2021 General Fund budget as presented. Motion moved and supported. The Commission approved Detroit Public Schools (DPS) Resolution 2020-4 as presented.
         
         DPSCD Budget Adoptions
   3.  Consideration of the Detroit Public Schools Community District (DPSCD) FY 20 Budget Amendment #1 Food Service Fund request per MCL 141.1637 (c) (FRC School District Resolution 2020-10)
      1. Mr. Vidito presented an overview of the proposed changes to the FY 2020 adopted budget amendment No. 1 to the Commission, noting that Federal revenue is projected to decrease by just over 30% as a result of reimbursements for fewer meals served due to school closures in response to the COVID 19 pandemic and subsequent Executive orders. He further stated that while continuing to serve breakfast and lunch at 17 District sites throughout the pandemic, expenses for food supplies will be lower than expected due to the types of food offerings; the District has continued with projects and expenditure consistent with the food surplus Spend Down plan approved by MDE, and the fund balance is targeted to be 3 months of average expenditures.
      2. Motion made to consider and approve the Community District’s FY 20 Budget Amendment #1 as presented. Motion moved and supported. The Commission approved the Community District’s resolution 2020-10 as presented.
   4. Consideration of the Detroit Public Schools Community District (DPSCD) FY 20 Student Activity Fund submission per MCL 141.1637 (c) (FRC School District Resolution 2020-11)
      1. Mr. Vidito gave an overview of DPSCD’s FY 20 Student Activity Fund and stated that prior to FY 2020, student activity accounts were accounted for under fiduciary activity and the District was not required to adopt a budget. In 2019, the Governmental Accounting Standards Board established new criteria for identifying fiduciary activity and because of this a budget has to be proposed and approved by the Board of Education and the FRC.
      2. Motion made to consider and approve the Community District’s FY 20 Student Activity fund as presented. Motion moved and supported. The Commission approved the Community District’s resolution 2020-11 as presented.
   5. Consideration of the Detroit Public Schools Community District (DPSCD) FY 20 budget amendment #2 request per MCL 141.1637 (c) (FRC School District Resolution 2020-12)
      1. Mr. Vidito presented an overview of the proposed changes to the FY 2020 adopted budget (amendment No. 2) He stated that the COVID 19 pandemic and ensuing “Shelter in Place” Executive order has dramatically altered school operations and state revenue. Budget amendment no. 2 includes anticipated changes from the pandemic and is based on actual expenditures through April 30 and projected expenditures for May and June.
      2. Motion made to consider and approve the Community District’s FY 20 budget amendment #2 as presented. Motion moved and supported. The Commission approved the Community District’s resolution 2020-12 as presented.
   6. DPSCD 3 Year Projection – General Fund (No budget adoption)
      1. Mr. Vidito gave a brief overview of the preliminary three-year budget projection to the Commission and stated that based on preliminary assumptions from the State’s Revenue Estimating Conference in mid-May, DPSCD is projecting a balanced budget through FY 2023.
   7. Consideration of the Detroit Public Schools Community District’s FY 21 General Fund budget submission per MCL 141.1637 (c) (FRC School District Resolution 2020-13)
      1. Mr. Vidito presented an overview of the proposed FY 2021 budget to the Commission and stated that the FY21 proposed budget is balanced while protecting core school-based programming. The proposed budget: anticipates a 10% reduction in overall state funding while assuming that enrollment remains steady for fall 2020; includes a projected $3M contingency; maintains all school-based positions; does not include any position reductions, salary reductions or furloughs; includes an anticipated 10% increase in healthcare costs and includes $43M in CARES Act funding with an additional $42M available to address continual budget deficits in FY 22.
      2. Motion made to consider and approve the Community District’s FY 21 General Fund budget as presented. Motion moved and supported. The Commission approved the Community District’s resolution 2020-13 as presented.
   8. Consideration of the Detroit Public Schools Community District’s FY 21 Food Service Budget submission per MCL 141.1637 (c) (FRC School District Resolution 2020-14)
      1. Mr. Vidito gave a brief overview of the proposed FY 2021 budget to the Commission, noting that revenues are expected to increase to pre COVID-19 levels based on a resumption of in-person instruction of the District’s campuses. He also stated that student enrollments is expected to remain constant from FY 20 levels; personnel expenses are expected to increase based on the addition of more resources to serve students to maintain and adhere to social distancing requirements; the district will continue to make one-time purchases for the purchase and installation of equipment and capital consistent with continued implementation of the Food Surplus spend down plan approved by MDE, and the fund balance is targeted to be 3 months of average expenditures.
      2. Motion made to consider and approve the Community District’s FY 21 Food Service Budget. Motion moved and supported. The Commission approved the Community District’s resolution 2020-14 as presented.
      3. Consideration of the Detroit Public Schools Community District’s FY 21 Student Activity Account Fund submission per MCL 141.1637 (c) FRC School District Resolution 2020-15)

6. New Business:
   1. Presentation of DPS Monthly Financial Report
      1. Chief Financial Officer Jeremy Vidito presented the Financial Report for DPS. He noted that in April the District received $714K in 13 mills receipts bringing the year-to-date total to $71.5 million. The current 13 mill tax receipt reserves are $2.9M. He further stated that the District borrowed $89.3M from the School Loan Revolving Fund (SLRF) to meet capital debt payments and payments of $144.5M were made for all remaining FY20 capital debt obligations. He further stated that The District also received $287K in 18mills receipts bringing the year to date total to $58.9M, and a supplemental payment was made on the outstanding ORS debt. The ending general fund cash balance for April is $2.9 million, and the projected ending balance for June 30, 2020 is $2.9 million. He addressed questions from the Commission.
   2. Presentation of DPSCD Monthly Financial Report
      1. Chief Financial Officer Jeremy Vidito presented the monthly financial report and stated the District’s budget versus actual comparison has been adjusted to reflect budget amendment #1.
      2. He reported that the year-to-date revenues through February are running slightly ahead of budget by $4.4million; local revenue was slightly lower in April due to delays in expected enhancement millage payments.
      3. April Year-to-date expenses are running behind budget by $19.7million as a result of the school closure in response to the COVID-19 pandemic and Executive orders. He also stated that purchased services are running behind forecasts.
      4. Mr. Vidito reported that DPSCD’s cash balance as of April 30, 2020 is $67.8 million and the projected year-end cash balance for FY 2020 is $69.7 million; the internal service and fiduciary account cash balance is $17.9 million and the projected year-end cash balance for FY 2020 is $15.0 million; the rainy-day fund cash balance is $36.3 million; the MILAF investment account cash balance is $74.1 million, total available general fund cash is $232.0 million. The capital projects fund cash balance is $12.7 million; the food service fund cash balance is $22.1 million; the legal reserve fund cash balance is $1.2 million, and the capital projects cash balance is $12.7 million. He addressed questions from the Commission.
   3. Consideration of the Community District’s June 2020 contract approval requests per MCL 141.1636(6) (FRC School District Resolution 2020-16)
      1. Public Act 181 of 2014 requires the Financial Review Commission to review and approve contracts meeting any of the three criteria: 1) the contract exceeds $750,000; 2) the contract has a term exceeding 2 years; and 3) multiple contracts within a single entity that exceed $750,000 in aggregate.
      2. Chief Financial Officer, Jeremy Vidito gave a brief overview of the Community District’s Eighteen (18) contract approval requests and addressed questions from the Commission. All contracts have been reviewed by the FRC Advisory Subcommittee on Contracts and Procurement.
      3. Motion made to consider and approve the Community District’s June 2020 contract approval requests (FRC School District Resolution 2020-16). Motion moved and supported. The Commission approved School District Resolution 2020-16 as presented.
7. Public Comment
   1. Michele George
8. Next Meeting Date
   1. School District Regular Meeting: Monday July 27, 2020 following the City Meeting, beginning no earlier than 1:05 p.m. (venue to be determine)
9. Adjournment
   1. Motion made to adjourn. Motion moved and supported; the Commission approved the motion to adjourn.
   2. There being no further business, the meeting adjourned at 2:20 p.m.

FRC Committee Monthly Meeting

The City of Detroit Public Schools (DPS)

Resolution Roll Call

Monday, June 29, 2020

                       Signed by:---- Beverly C. Greaves---------                                                                                                                                              Date:___6-29-2020___

                                            Beverly C. Greaves- Secretary