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2019-11-26 Work SessionPage Kodiak Island Borough Assembly Work Session Tuesday, November 26, 2019, 6 p.m. School District Conference Room Work Sessions are informal meetings of the Assembly where Assembly members review the upcoming regular meeting agenda packet and seek or receive information from staff. Although additional items not listed on the work session agenda are discussed when introduced by the Mayor, Assembly, or staff, no formal action is taken at work sessions and items that require formal Assembly action are placed on regular Assembly meeting agenda. Citizen's comments at work sessions are NOT considered part of the official record. Citizen's comments intended for the "official record" should be made at a regular Assembly meeting. CITIZENS' COMMENTS (Limited to Three Minutes per Speaker) 2. AGENDA ITEMS 3-44 a. Joint Work Session With The School Board 1. FY20 Budget Dialogue 2. FY21 Budget Projections 3. Facilities Memo school construction - Manager Powers FY19 Fund Balance Budget Revision Request KIBSD KIBSD Memo to KIB - Completed Projects 11-22-19 KIBSD Inkind Agreement 2004 KIB KIBSD inkind Agreement 3-2-2015 FY 20 BUDGET FB FACILITIES 11-22 Proposed KIBSD Budget KIB FY 21 PRELIM 11-21 Proposed KIBSD Budget KIB 45-52 b. Funding of School Bond Debt Output Document (AS - 1090) - Pdf 3. MANAGER COMMENTS 4. CLERK'S COMMENTS 5. PACKET REVIEW Items may be added during the work session for inclusion on the Regular Meeting agenda. The item title needs to be provided/developed at the work session in enough detail to give assembly and public reasonable notice. PUBLIC HEARING Visit our website at91 www.facebook.com/Kodiakislandborough Q@KodiakBorough www.kodiakak.us Page 1 of 52 State Of Alaska Alcohol And Marijuana Control Office (EI Chicano Inc.) UNFINISHED BUSINESS Reorganization of the Kodiak Island Borough Assembly NEW BUSINESS CONTRACTS Contract No. FY2020-09 Baler Building Fuel Tank Procurement Contract No. FY2020-08 Agreement for Lobbying Services with Hickey & Associates Change Order No. 4 Amending Contract No. FY2018-28 Architectural and Engineering Services Term Contract for the Providence Kodiak Island Medical Center Seismic Analysis and Project List Development. RESOLUTIONS Resolution No. FY2020-02A; Fee Schedule Amendment - Animal Impoundment Fees Resolution No. FY2020-16 Adopting An Alternative Allocation Method For The FY20 Shared Fisheries Business Tax Program And Certifying That This Allocation Method Fairly Represents The Distribution Of Significant Effects Of Fisheries Business Activity In FMA 13: Kodiak Area ORDINANCES FOR INTRODUCTION Ordinance No. FY2020-11 Write-off of Noncollectable Personal Property and Vessel Delinquent Tax Accounts Ordinance No. FY2020-13 Amending Title 3 Revenue and Finance Chapter 3.10.120 Facilities Fund Ordinance No. FY2020-15 Amending Title 3 Revenue And Finance Chapter 3.10.030 Permissible Investments And Chapter 3.10.120 Facilities Fund OTHER ITEMS 2020 Kodiak Island Borough Annual Calendar Declaring A Seat On The Parks And Recreation Committee Vacant (Mr. Shane Thompson) Declaring A Seat On The Womens Bay Service Area Board Vacant (Mr. George Lee) EXECUTIVE SESSION Matters Involving Negotiations With the IBEW 6. ASSEMBLY MEMBERS COMMENTS 7. MAYOR'S COMMENTS Visit our website at91 www.facebook.com/Kodiakislandborough @KodiakBorough www.kodiakak.us Page 2 of 52 AGENDA ITEM #2. a. Kodiak Island Borough OFFICE of the MANAGER 710 Mill Bay Road Kodiak, Alaska 99615 Phone (907) 486-9301 Fax (907) 486-9374 E-mail: mpowers@kodiakak.us Memorandum Date: November 22, 2019 To: Mayor and Assembly From: Michael Powers, Borough Manager Subject: School Projects funded by Excess Funds Tntroduction At a meeting between the Kodiak Island Borough and Kodiak Island Borough School District on November 13, 2019, KIBSD provided information on a higher than expected available fund balance and a list of projects they have proposed to complete with those funds. Subsequently on November 18, 2019, the Board of Education formally approved a list of 23 projects to be completed using the available fund balance. Most of the projects on the list are directly related to School District responsibilities, such as purchasing supplies and computers. However, several of the projects are larger scale construction projects to provide improvements to Borough owned facilities. Two of these projects in particular — North Star Elementary Siding Replacement and the Auxiliary Gym Renovation (old High School pool) — are concerning to Borough staff for the reasons outlined below. State Statutes / Previous Agreements Per Alaska Statute, school construction projects are a responsibility of the Borough, not School District. Alaska Statute 14.14.060(f) states "The borough school board shall provide custodial services and routine maintenance for school buildings and shall appoint, compensate, and otherwise control personnel for these purposes. The borough assembly through the borough administrator, shall provide for all major rehabilitation, all construction, and major repair of school buildings. The recommendations of the school board shall be considered in carrying out the provisions of this section." Paragraph (i) of the same section allows for an agreement between the school board and borough assembly that the responsibilities can be divided differently, but at present no such agreement exists. There have been agreements in the past that have since expired, but even those agreements made construction projects a Borough responsibility, and minor maintenance the School District's responsibility. Previous agreements set the limit of minor maintenance at $10,000, although the State of Alaska Department of Education and Early Development increased the amount several years ago to $25,000. Past attempts to complete a new agreement that would be in line with the updated state dollar thresholds have been unsuccessful. Timeline The Borough's understanding is that these projects need to be complete and paid by June 30, 2019 to avoid jeopardizing future state funding for KIBSD. Both projects will require some design efforts, and Page 3 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. likely wouldn't be put out to bid until after January 1. Assuming the required open bid period and then a fast track award process, a notice to proceed likely wouldn't be issued until March I at the earliest. Following that would be a submittal period, and then a contractor would order materials and have them shipped to Kodiak. Construction would not be able to start until the end of school, roughly June 1. That leaves 30 working days to complete construction, complete all closeout paperwork, and make final payments, all of which is extremely optimistic. To get the project done in such a short timeframe would require multiple shifts, increasing overall cost. Because the design process would be fast -tracked there would be the possibility of change orders during construction due to incomplete design, increasing cost and construction duration. Any material delays or unexpected issues during construction would again have the potential to delay the project and increase costs. A majority of past project work in the schools has been traditionally been accomplished during the summer months due to the impact on students created by construction noise, dust, debris and simple distractions. In this case, specifically regarding the North Star Siding project, KIBSD has indicated it would be acceptable to work on the facility before the end of the school year. This would help accomplish the work by the projected June 30 completion date but may cause operational issues for the school. Considering the timeframes described by the School District, the Borough should be prepared to assist in the timely use of the funds including receiving funds and completing projects. Recommendations 1. Direct Borough Staff to prepare and present to the Borough and the School District an agreement for the School District to undertake construction type activities as specified in State Law. This agreement would be a multi-year agreement intended to address not only the projects currently proposed, but future year projects. 2. Direct Borough staff to prepare a draft agreement that would address the timeliness issue. 3. Direct Borough staff to craft and negotiate a revised agreement to address maintenance, in-kind and related issues. Page 4 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... Kodiak Island Borough School District 722 Mill Bay Rd Kodiak, AK 99615 (907) 486-7556 To: Board of Educat' n Through: Larry LeDoux, h.D., Superintenden From: Sandy Daws, Chief Financial Officer Janette Agmata, Business Office Supervisor ti Date: November 14, 2019 Subject: FY19 Fund Balance Budget Revision Request Our FYI 9 Fund Balance numbers were higher than projected as of June 30, 2019. Several factors contributed to our fund balance numbers. PERS/TRS Forfeiture from the state $763,739. Defined Contribution Retirement forfeiture funds are created when a non -vested or partially vested employee terminates employment and returns a portion or all their DCR. The large amount returned to the district was over a span of many years. The $20 million onetime grant based on SB142 was not revieced until June 13, 2019. KIBSD portion was $415,514. Districts around the state did not know when or if this money would be received. Self -Insurance $2,014,897: Kodiak Island Borough School District (KIBSD) health insurance is self- insured. Meaning we fund our plan each year based on our brokers advice in consultation with actuarial tables to cover the District's potential liabilities. Also, $1,743,336 from a mild winter and other unexpected 2019 fiscal year budgetary savings contributed to our fund balance. Always, when School District fund balances are discussed it's important to remember that the District must keep between $1,000,000 and $2,000,000 dollars in fund balance reserves to bridge accounts payable before receivables arrive and to cover District obligations should unforeseen changes in either expenses or revenue occur. Currently, KIBSD spendable fund balance is $6,318,213. Each year, after the District's annual audit is complete, the School Administration and the School Board review the District's fund balance and the District's strategic plan and policy priorities. If there is fund balance beyond projected needs, the District then authorizes use of excess fund balance for District projects; many of which are capital projects that Kodiak Island Borough as the owner of school facilities would otherwise need to pay for. For the reasons outlined above, the 2019 School District excess fund balance is substantially more than the District's fund balance in previous years. The administration is recommending a set aside of $1,500,000 to maintain an adequate fund balance through FY 2020. Next the administration, referencing the District's strategic plan and educational priorities, has identified a number of safety and educational Page 5 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... needs that should be addressed. In addition, the administration has identified maintenance projects needing immediate attention and an important community needs project. (see attachment) Nevertheless, $1,632,815 of the District's 2019 excess fund balance remains uncommitted. This year, the Kodiak Island Borough Assembly is dealing with an unbudgeted and unexpected expense because the State of Alaska reduced the State's contribution to KIB bond debt by about $2.5 million dollars. Given the School District's excess fund balance beyond allocations for immediate safety, educational, maintenance and community use needs, Superintendent LeDoux is also requesting board action to allocate $1,632,815 to Kodiak Island Borough (KIB) recognizing the economic challenges the community is facing with the bond debt reimbursement. KIBSD is requesting board action on this use of fund balance as outlined above, budget revision to the function, and object code as outlined in the projects list. Page 6 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. KODIAK ISLAND BOROUGH SCHOOL DISTRICT (A Component Unit of the Kodiak Island Borough) Statement of Compliance AS 14.17.505 Year Ended June 30, 2019 Reserved: Inventory Encumbrances Impact Aid Prepaid homeschool rollover Self-insurance Unreserved: Designated for compensated absences Undesignated General Fund Reserved Unreserved Total �cl�7f $ 378,554 - 378,554 525 - 525 2,731,049 - 2,731, 049 15,615 - 15,615 28,368 - 28,368 2,750,182 - 2,750,182 - 571,758 571,758 - 3,568,031 3,568,031 $ 5,904,293 4,139,789 10,044,082 Unreserved fund balance as a percentage of current year expenditures: Unreserved fund balance _ 4,139,789 9.89% Current year expenditures 41,847,324 This Statement of Compliance is prepared in accordance with the regulations specified in AS. 14.17.505 which is another basis of accounting other than generally accepted accounting principles. Se Insurance Undesignated Tota Insurance subtotal Hold FB subtotal Pro ects Remaining FB 130 Page 7 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... �cl�7f �ix3� �Y�I�7C�T�TiI tl��s1�►�ic1♦ il[:ic�►aF:iily 130 Page 7 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... r 0 0 CD cn U) FY19 Fund Balance Project list : �cho�`I'a'd'Stud'entiafet Site Project Estimated Notes Cost Function Object Auditorum ADA Door openers and access card readers $15,000 605 450 C�1 Auditorum Phased R&R $200,000 Phase I = Fire curtain and rigging? 605 410/440 Chiniak Playground only fencing $24,921 300' of 6' (1) 3' and (1) 10' gate 605 440 District Wide Town Elementary data network upgrades $800,000 CAT 6 POE Data network, VOIP phones, cameras and access card readers 360 410/440/450 0; East Playground equipment $40,000 Replacement of end of life cycle equipment 605 510 KHS F -wing Entry doors & frames R&R $20,000 F -wing doors, windows and card readers were canceled at end of HS project 605 440/450 KHS F -wing ADA Door openers and access card readers $24,000 6051440/450 KHS Interior classroom window treatment $50,000 Window film, curtain or other to obscure occupancy. 605 450 KHS Card readers $25,000 Completes HS security zone 605 440/450 KHS Retrofit classroom doors $50,000 Inside classroom push button lockable. 605 450 Main Playground equipment $40,000 Replacement of end of life cycle equipment 605 510 Pre -K Pre -K Playground equipment and fence $50,000 Support of Pre -K move 605 510 SL$ Peterson Playground security fence $80,000 900' of 6' with lockable gates 1 6051440/450 Subtotal 1 $1,418,921 .v. : Inatuctional and Bducaton�tl'Su port P ' District Wide Restore FY20 Supply accounts $215,000 supplies media materials 100 450 KHS/KMS Musical Instruments $15,000 $7,500 each HS/MS 100 450 1f KHS CAD Lab PC Upgrade $20,000 360 450 KHS Plasma cutter $20,000 100 510 18 KMS Supplies and materials $15,000 Lab fees for students 100 450 Special Services Desk op rinters $9,450 Already purchased 200 450 ,310 Special Services Apple Computers $9,988 Already purchased 200 450 KHS Aux Gym Renovation $300,000 "Old pool community gymproject" 1 6051410/440/450 Subtotal $604,438 al t Urget� pai hM , 22 NorthStar Siding replacement $502,039 Estimate from DEED cost model 6051410/440/450 23 Main Roof moss removal $160,000 (Still evaluating less expensive options) 605 440/450 Subtotal $662,039 v Total $2,685,398 Z 0 v 11/15/2019 Cn n N Kodiak Island Borough School District 722 Mill Bay Rd Kodiak, AK 99615 (907) 486-7556 To: Michael Powers, Boro gh Manager From: Larry LeDoux, , Superintendent Date: November 22, 201 Subject: Completed Projects Below is a list of Completed Major Projects over 5 years that KIBSD managed and paid for with KIB partnership. Completed Projects over 5 years Cost Auditorium Reupholsters, Paint, Carpet $ 156,135.00 F -wing Bathroom Renovation included design work $ 238,679.00 F -wing heating/renovation/upgrade/installation $ 61,764.00 Pool Re -Tile $ 56,378.00 Pre -K Project F -Win (included design work) $ 305,027.00 KMS Network Upgrade $ 263,687.00 Generator purchase replaced 30+ year old units that the Borough bought $ 53,804.00 Old Pool/Auxiliary Gym - Fire/Sprinkler System $ 58,185.00 Total $ 11193,659.00 There are many projects and upgrades, over the years, above $1 OK that KIBSD has successfully completed here are just a few: • Replacing doors o Throughout the District • Hot Water Heaters o Port Lions • Pool o Sand Tanks o Diving Board/Stand • Fire Alarm Panels o Akhiok School o Karluk School o Port Lions School o East Elementary o Peterson Elementary • Fuel Tank — Old Harbor Special Projects Director, Gregg Hacker and Facilities Director, Alan Beck have a combined experience of over 30 years with managing large projects and purchases. KIBSD also has a long history of working in close cooperation with the KIB Projects team. Page 9 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... KODIAK ISLAND BOROUGH AND KODIAK ISLAND BOROUGH SCHOOL DISTRICT JOINT AD HOC COMMITTEE REPORT ON IN-KIND SERVICES October 18, 2004 Introduction: AGENDA ITEM #2. a. During the summer of 2003, the Kodiak Island Borough (KIB) and Kodiak Island Borough School District (KIBSD) commissioned an ad hoc committee of four members to jointly review and formulate draft policy concerning the in-kind contributions that are part of the annual local component of the funding of public education. The committee was made up of Kodiak Island Borough Assembly members Robin Heinrichs and Pat Branson, and Kodiak Board of Education members Norm Wooten and Jeff Stephan. Support staff from the Kodiak Island Borough (KIB) and the Kodiak Island Borough School District (KIBSD) assisted with research and materials. The goal was to establish common rules to govern the application of and accounting for the value associated with these in-kind services. Background: The need for this process arose from past confusion and disagreements over the proper method to determine and account for in-kind services. This was in large part a result of a lack of direction at the State level about how to implement the statutory requirement that the value of in-kind services be a part of a school district's annual report. The controlling statute is AS 14.17.990 (6), which states that local contribution "means appropriations and the value of in-kind services made to a district by the local city or borough." These terms are further defined as "appropriation," which is a combination of money appropriated to a district's school operating fund by the city or borough, and "value of in-kind services" as the value of in-kind services performed for a district by the city or borough as reported in the district's school operating fund. The definitions offer little guidance for the community, since, in many cases, a city or borough may perform services on the school district's behalf that the school district may not wish to include in their annual report. The cost to the community is still there, but the school district may not agree that the value should be counted as part of the local contribution to public education. When communities such as ours reach the funding cap, the proper analysis of and accounting for local funding contributions becomes critical. An understatement of in-kind services may result in the State withholding formula funding from the district. In the case of overstating the amount, the State may take away formula funding on a dollar- for -dollar basis. The stakes are high for both the Borough and the School District to accurately report the in-kind contributions as part of the local contribution to public. Pagel of 5 Page 10 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. In light of the history associated with the accounting for in-kind services, the Assembly and School Board felt the need to direct the in-kind committee to review the various categories of in-kind services and make recommendations to rationalize this accounting. The committee met numerous times and methodically reviewed and analyzed each of the in-kind categories. The conclusions of the committee are listed as follows: Findings: The committee began by reviewing historic examples of in-kind contributions. The goal was to review the known history and to resolve any issues associated with past practices. The following is an outline of the review: • Insurance Premiums: Accounting for the actual cost of the insurance premiums is fairly straightforward. It is the amount of property and liability insurance the Borough pays for KIBSD buildings, vessel, vehicles and general liability. Since this is directly attributable to the School District's operation, it was agreed that all of these expenses should be accounted as an in-kind contribution. • Mental Health Services: These are provided by the Borough by contract to insure the access of high quality licensed mental health services for the students. Historic areas of concern involved the quality and cost of these services. The committee agreed that there should be accountability provisions within the contract, but that the cost of the contract would be accounted as an in-kind contribution to public education. • Allocation of MIS Expenses: These allocated costs to the KIBSD are for the provision of hardware, software, operational costs and technical support based on the proportion of the total cost for the Borough's MIS department. KIBSD is currently charged around 20% of the total budget. KIB covers the cost of a mainframe, custom KIBSD software and the proportional technical and operational service. Based on past experience, it was agreed that the allocated cost for KIBSD would be the actual costs of direct services, plus a proportional share of the common charges as a percentage of system time (please see "Attachment A" for current allocation), plus the loaded hourly rate for direct staff support. • Audit Expenses: This item is the actual cost of the KIBSD audit required by state statute. The borough provides this as part of a master contract with an auditing firm as part of the duties of running the central treasury. The annual audit is important to insure clear and direct oversight over both KIB and KIBSD operations. The committee agreed that the KIBSD portion of this audit is to be fully applied as an in-kind contribution. Page 2 of 5 Page 11 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. • Allocated Costs of Grounds Maintenance: Historically, this category has been limited to expenses associated with snow removal and ice control within KIBSD parking lots. To insure cost efficiencies and safety, the Borough has administered this service under a master contract with a local snow removal contractor. The expenses associated with snow removal and ice control at KIBSD facilities are accounted for separately under the master contract. The committee agreed that the allocated contract expenses for the KIBSD had been appropriate in the past should be treated as an in-kind contribution. • Minor Maintenance: Minor maintenance has not been adequately defined by the State or by the local government. The committee discussed establishment of a threshold dollar value to help define this body of work. The committee agreed that minor maintenance would be that body of maintenance and/or repair work costing less than $10,000 per occurrence per site. Painting of a classroom in a school would likely be minor maintenance. Painting of the entire interior of a school, or of several schools, would likely exceed the value limitation and be considered as a major repair. It is clear that minor maintenance could quickly become major repair if not addressed in a timely fashion. This would not be in the best interest of either the KIBSD or the KIB. The committee agreed that an annual maintenance program be developed through collaboration between the KIB Engineering and Facilities Department and the KIBSD Maintenance Department. The joint list resulting from this effort would be prioritized and submitted to both KIB and KIBSD by the end of October to become part of the annual budget process. Minor repairs that are taken from the mutually agreed list of projects for the fiscal year and are funded by the Borough would become part of the in-kind contribution. Major repairs would not be part of the in-kind calculation. • Crossing Guards: The committee agreed to not count this cost within the in-kind contribution and to not view this decision as establishment of any precedent relevant to future disputed services. • Disputed Services The committee discussed where the School District and the Borough might disagree that a provided service should be included within the in-kind contribution as a component of the local funding of public education. The committee determined that a standing committee comprised of members of both bodies should be established to review these issues until a resolution is reached. In addition to a review of the historic examples of in-kind contributions, the committee attempted to address other situations that might impact the in-kind contribution calculation. Of particular interest was the subject of joint use of school facilities. The following is a recap of one example of a joint use of a school facility: • Allocation of School -related Swimming Pool Expenses. The high school swimming pool is used as part of the instructional program. Other members of the community not associated with a school program also use it. The School District maintains that the non -curricular use of the pool should not be funded on the back Page 3 of 5 Page 12 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. of the KIBSD budget. Identification of the operational costs associated with each use is difficult since the utility systems for the pool are not separate from the rest of the high school facility. The committee agreed that swimming pool operational expenses associated with school programs and instruction will be funded within the KIBSD budget. Expenses associated with swimming pool operations not related to the instructional program should not be borne by the KIBSD operational budget and should not be part of an in-kind calculation. The committee agreed that the KIB and KIBSD staff should work to determine an equitable allocation of the pool expenses that are not related to instruction use of the pool. Funding for these expenses should be provided outside the KIBSD budget. The KIBSD committee members were asked if the School District believed that other joint use situations should be examined. KIBSD has the ability to charge for other facility usage through the Community Schools program. Therefore, the swimming pool was the only significant example of a joint use that placed a burden upon the School District budget. Summary and Recommendations: It is clear that this process has been good for both the Borough and the School District. Even though informal, it allowed for relatively quick and constructive dialogue with all participants working towards a common goal of reducing confusion and achieving a higher level of predictability for KIBSD funding and the budgets for each entity. The discussion was straightforward, centering on services that are bid or direct cost items like audit or insurance. Allocated costs were more complicated to analyze. The principle issue with allocated costs is the overall fairness of the allocation. Issues like minor maintenance will require continued dialogue and discussion. Nevertheless, a program was set forth to bring some structure to the process of identifying maintenance project timeframes and documentation for inclusion within the annual budgets. In addition to the review and establishment of policy relating to historic and foreseen practices of in-kind contribution accounting, the committee agreed upon several recommendations to the parent governing bodies. • Establish the practice of "calibration" of the annual Borough in-kind contribution. Simply put, this would require an annual audit of the actual in-kind expenditures. The calibration would also require that a percentage of the local contribution to public education be retained to be used in a final reconciliation of the actual in-kind contribution. The actual costs of in-kind services would be compared with the budgeted amounts for the year. If the audit revealed that the Borough had not expended the budgeted amount, the Borough would remit the difference to the School District in cash. If the Borough expended more than the budgeted amount, the Borough would reduce the retained funds by the amount of the over -expenditure. The actual amount of the retained funds would be negotiated between the Borough Manager and the School District Superintendent. In this way, the School District would receive the exact amount of local contribution represented by the Borough budget. This process should eliminate the danger of the State auditing the actual in- kind expenditures and reducing the formula payment as the result of an overstatement or understatement of Page 4 of 5 Page 13 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. local contribution. The reconciliation of the actual in-kind contribution shall be completed by the 30' of July following the close of the fiscal year. • Establish this committee as a standing committee of the two parent organizations. The purpose of the standing committee would be to review future disputes related to in- kind contributions and to act as a forum to resolve other disputes between the parent elected bodies. The committee was of the opinion that the small size of the standing committee would be more conducive to conflict resolution and productive joint tasks. Conclusion: The committee has done its best to address many of the chronic disputes relating to the accounting for in- kind services that have existed between the Kodiak Island Borough and the KIB School district for many years. The committee not only reached consensus on these issues, but also established a mechanism to deal with future disagreements. The committee was always mindful of the impact these deliberations might have upon the welfare of the Borough's public education program. This is especially important in light of the fact that the Borough has reached the State "cap" on local funding of education. This report is respectfully submitted to the Kodiak Island Borough Assembly and the Kodiak Island Borough School Board for consideration and adoption. We urge the governing bodies to include the provisions of this report within a Letter of Understanding to be adopted by both the KIB and the KIBSD. This Letter of Understanding will establish a procedure for governing the accounting and application of in-kind services. Respectfully submitted, Norm Wooten KIBSD Robi Heinrichs KIB 4 w.,,..._...__ 4# f In t Branson KIB Page 5 of 5 Page 14 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. Page 15 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. F lT \0 7 00 O O� M 0� ' t �c � 00 O O rn v1 m �t 110 rn i., �O d' O �-O N �0 CC N x .ti 0 F • M U � 0 it N O a� PLI U it CYj U O � Y N cC •V O F. Vim] S] Y y O O m N r. W W Q U .��+ .� N • F,cn >~ > U i '� 2 o U 40. U A i> -i 5 ^' U y 2 rn U O Vl F+ '? ;�� >O 0 o R. U° S0. o O U 60 w w w u, m y y ti + N O 0 0. Q N U O OU O O � bA cNd i + p N y b p N W U Ucd cd TS O Y Y � cd O Y 0t O' Ri "d t'" Q O O � U •cd � o � � � '� ami � ¢ � �' T'iie Schoofboard'FY'2O`8udget Dialogue FY21 Budge... A z = ¢¢ta U z z z z N U OO m — •--� N --� �O M���� 00 O O 110 �O h r- �O kn D1 V) M �t � 00 r O W) r� O-4 Im. O p\ � M11O O� N C ON — N 1O F lT \0 7 00 O O� M 0� ' t �c � 00 O O rn v1 m �t 110 rn i., �O d' O �-O N �0 CC N x .ti 0 F • U � 0 O a� PLI it CYj U O � Y •V O •.^.� Y y O O m N r. O w C Z O ciC�+, -g0 O U N Q. Q _N V % .��+ .� F,cn >~ > U i '� 2 o U 40. U A i> -i 5 ^' U y 2 rn U O Vl F+ '? ;�� >O 0 o R. U° S0. o O 60 w w w u, m y y ti O 0 0. Q N U O OU O O � y. N � � � � m � � Ute+ U � U❑ � N N W U Ucd cd TS O Y Y � cd 0t O' Ri "d t'" Q O O 0 Z U U a ¢ ¢ atgi ° a Page 16 of 52 Joint Work Session T'iie Schoofboard'FY'2O`8udget Dialogue FY21 Budge... AGENDA ITEM #2. a. Page 17 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... - AGENDA ITEM #2.a. KODIAK ISLAND BOROUGH AND KODIAK ISLAND BOROUGH SCHOOL DISTRICT MEMORANDUM OF UNDERSTANDING IN-KIND SERVICES March 2, 2015 The purpose of this document is to clarify the application of AS 14.17.990(6) to the Kodiak Island Borough School District and the Kodiak Island Borough. The Kodiak Island Borough provides a number of services to the Kodiak Island Borough School District but accounts for these services in the Kodiak Island Borough budget and expenditure reports. This document defines those services and the common rules to govern the application of and accounting for the value associated with these in-kind services. In-kind services include: • Insurance Premiums: The actual cost of the insurance premiums is the amount of property and liability insurance the Borough pays for KIBSD buildings, vessels, vehicles and general liability. All of those expenses should be accounted as an in-kind contribution. • Mental Health Services: These services are provided by the Borough by contract to ensure the access of high quality licensed mental health services for the students. Historic areas of concern involved the quality and cost of these services. There should be accountability provisions within the contract, but the cost of the contract would be accounted as an in-kind contribution to public education. • Allocation of MIS Expenses: These allocated costs to the KIBSD are for the provision of hardware, software, operational costs and technical support based on the proportion of the total cost for the Borough's MIS department. Based on past experience, the allocated cost for KIBSD will be the actual costs of direct services, plus a proportional share of the common charges as a percentage of system time, plus the loaded hourly rate for direct staff support. • Audit Expenses: This item is the actual cost of the KIBSD audit required by state statute. The Borough provides this as part of a master contract with an auditing firm as part of the duties of running the central treasury. The KIBSD portion of this audit is to be fully applied as an in-kind contribution. • Allocated Costs of Grounds Maintenance: Historically, this category has been limited to expenses associated with snow removal and ice control within KIBSD parking lots. To ensure cost efficiencies and safety, the Borough has administered this service under a master contract with a local snow removal contractor. The expenses associated with snow removal and ice control at KIBSD facilities are accounted for separately under the master contract. The allocated contract expenses for the KIBSD should be Page 18 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2.a. treated as an in-kind contribution. Minor Maintenance: Minor Maintenance is (1) unscheduled repair or replacement of faulty components, materials, or products caused by factors beyond the control of maintenance personnel (2) The day to day and periodic cleaning, painting, and replacement of disposable supplies to maintain the facility in safe, clean and orderly condition as to not cause any deferred or major maintenance. Minor maintenance is defined currently as maintenance (preventive and or corrective) work costing less than $10,000 per occurrence per site and is funded completely through the KIBSD maintenance budget. Major Maintenance/ Preventive Maintenance Major maintenance is currently defined as major repair or rehabilitation to protect the structure and convect building code deficiency or preventive maintenance (example exterior painting) that exceeds $10,000 per project per site. The current State regulations are any project costing more $25,000 could be eligible for state funding (4 AAC 31.900(21). It must be demonstrated, using evidence acceptable to the KIB that (1) the district has adhered to its regular preventive, routine and/or custodial maintenance schedule for the identified project request, and (2) preventive maintenance is no longer cost effective. The KIB Engineering and Facilities Department and the KIBSD Maintenance Department shall create a prioritized major maintenance list to be submitted to both KIB and KIBSD by the end of April to become part of the annual budget process. Emergency repairs will be handled on a case by case basis and may require reimbursement to the school district. The Major repairs that are taken from the mutually agreed list of projects for the fiscal year and are funded by the Borough would not become part of the in-kind contribution. The KIB Engineering and Facilities Department and the K113SD Maintenance Department shall update annually, the major maintenance/ renewal and replacement list and a Capital improvement Plan to be submitted to the School Board for review and adoption before submission to DEED. The KIB Engineering Faculties Director and the KIBSD Facilities Director will first work on any question on the interpretation of this document. If they cannot come to an agreement the Borough Manger and the School Districts Superintendent will decide any issues. Deferred Maintenance Deferred Maintenance is Custodial care, routine maintenance, or preventive maintenance that is postponed for lack of funds, resources, or other reasons. End of Year In -Kind Accounting Adjustment Page 19 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2.a. Before the end of May in each fiscal year, the KIB and KIBSD Finance Departments shall determine the actual costs of in-kind services for the year to date. The actual in-kind expenditures will be compared with the budgeted amounts, and any differences will be corrected by adjusting the cash appropriation from KIB to KIBSD. A standing committee is established compromised of members of both the Assembly and School Board to review issues where the two parties might disagree that a provided service should be included within the in-kind contribution as a component of the local funding of public education. The committee would recommend a resolution to such disagreements. The committee will also act as a forum to resolve other joint tasks or disputes between the two parties. Page 20 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... #2.a. Kodiak Island Borough School District 722 Mill Bay Road Kodiak, AK 99615 Office of the Superintendent (907) 481-6202 MEMORANDUM FROM: Superintendent, Stewart McDonald TO: Borough Manager, Michael Powers DATE: December 6, 2016 RI;: In-kind Regulation Changes Information Update Alaska Changes with In -Kind Effecting KIB/KIBSD Local Contribution The In-kind Appropriation counts towards local contribution for education funding. Local contribution can come in the form of a cash appropriation or through a cash equivalent of In-kind contributions. The In-kind contributions are regulated to utilities, energy, insurance, audit services, and maintenance of plant. These limitations are regulated by 4 AAC 09.990 (b)(2) and Alaska's Uniform Chart of Accounts, which was adopted by the Alaska State Board of Education & Early Development in September 2012 by reference 4 AAC 06.120(a)(2). 2014 Alaska Chart of Accounts 012 CITY/BOROUGH - IN-KIND SERVICES APPROPRIATIONS - In-kind services provided without charge b% the local governmental unit (City or borough) in lieu of a cash appropriation or in addition to such an appropriation. Amounts credited to this account are for services that %could otherwise be purchased by the school district, valued at fair market value and supported by appropriate documentation, including a billing from the governmental unit (city or borough). The alloxvable services that may tx provided or paid l'or are. utilites, energy, insurance, audit services, and maintenance of plant. A billing for uulites and energy is to include the quantity used and price. A billing for insurance and audits is to include the actual invoices from the provider that clearly shows the districts portion. Billings for maintenance of facilities are to include time spent by city or borough employees on maintenance ol'district facilities and the rate for their time. (Required) What this means for KIBSD is that In-kind cannot include rent, or services other than what is specified by regulation. ` Page 21 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... AGENDA ITEM #2. a. In-kind for Kodiak College- The Ocean Science Discovery Program (OSDP) The In-kind designation of $96,000 for Kodiak College is not allowable by regulation. Therefore in order for the fiscal year 2017 budget to be approved and payments made to KIBSD the line item was converted to indicate $96,000 in the facilities line of In-kind appropriation. There are two ways the $96,000 designated by the Kodiak Island Borough for the Ocean Science Discovery Program (OSDP) can be accessed for the intended use: 1. Leave the In-kind designation as is and it will convert to cash at the end of the school year. The Kodiak Island Borough School District has contracted services for the OSDP. These funds will then cover the cost of the program. 2. KIB can follow its processes to remove the $96,000 from the budget ordinance and place it into the cash side of the local contribution. Either action will allow the $96,000 to be spent on the intended activity. In-kind Mental Health Services KIBSD was able to convince DEED School Finance Manager Elwin Blackwell to allow In-kind designation for Providence Mental Health services for this year only. Looking towards the development of the FY2018 Budget, the mental health will not be allowed as an In-kind contribution. These services can be delivered through the following accounting methods. 1. The Mental Health Services be removed from In-kind and all other local contribution funding. The KIB may contract with Mental Health as they always have, but within the KIB budget only. KIBSD may continue to receive services, but cannot count the services as In-kind. 2. The Mental Health Services funds of $400,000 can be moved into the cash contribution side of the local contribution and KIBSD's accounting department disperses the funds through contracted services to Providence Mental Health. In-kind Conclusion The regulations limit what can be counted as non-cash In-kind and reported as local contribution. The 2012 and 2014 regulations and chart of accounts will be fully enforced for the development of FY 2018 budgets. Moving forward In-kind contributions are limited to utilities, energy, insurance, audit services, and maintenance of plant. 2 Page 22 of 52 Joint Work Session With The School Board FY20 Budget Dialogue FY21 Budge... FY 20 BUDGET (FUND BALANCE) AND FACILITIES PROJECTS Fund Balance Our FYI Fund Balance of $6,318,213 was higher than projected as of June 30, 2019. Several factors contributed to our fund balance numbers. PERS/TRS Forfeiture from the state $763,739. Defined Contribution Retirement forfeiture funds are created when a non -vested or partially vested employee terminates employment and returns a portion or all their DCR. The large amount returned to the district was over a span of many years. The $20 million onetime grant based on SB142 was not received until June 13, 2019. KIBSD portion was $415,514. Districts around the state did not know when or if this money would be received. Self -Insurance $2,014,897: Kodiak Island Borough School District (KIBSD) health I nsurance is self-insured. Meaning we fund our plan each year based on our brokers advice in consultation with actuarial tables to cover the District's potential Iia' A'. -so, $1,743,336 from a mild winter and other unexpected 2019 fiscal year budgetary savings contributed to our fund balance. KIBSD normally keeps $1 M - $2M in reserves 0 0 0 0 � • • ' Site Project Estimated Cost Notes U) 73 ADA Door openers and access card �I Auditorium readers $15,000 �t Auditorium Phased R&R $200,000 Phase I = Fire curtain and rigging? Chiniak Playground only fencing $24,921 300' of 6' 1 3' and 1 10' ate 0 0 District Town Elementary data network CAT 6 POE Data network, VOIP phones, Wide u rades $800,000 cameras and access card readers East Playground equipment $40,000 Replacement of end of life cycle equipment o F -wing doors, windows and card readers were KHS F -wing Entry doors & frames R&R $20,000 canceled at end of HS project Q F -wing ADA Door openers and access d KHS card readers $24,000 0 Window film, curtain or other to obscure `98 KHS Interior classroom window treatment $50,000 occupancy. KHS Card readers $25,000 Completes HS security zone fb KHS Retrofit classroom doors $50,000 Inside classroom push button lockable. 11 KMS/Main Pla round a ui ment $40,000 Replacement of end of life cycle a ui men Pre -K Playground equipment and 12° Pre -K fence $50,000 Support of Pre -K move N 13 Peterson Playground security fence $80,000 900' of 6' with lockable gates Subtotal 1 $1,418,921 0 0 0 0 0 0 A" 73 Site Project Estimated Cost Notes V'4 District Wide Restore FY20 Supply accounts $215,000 supplies media materials O 105 KHS/KMS Musical Instruments $15,000 $7,500 each HS/MS v ¢ KHS CAD Lab PC Upgrade $20,000 N KHS Plasma cutter $20,000 Q 8 KMS Supplies and materials $15,000 Lab fees for students 0 Special Services Desktop printers $9,450 Already purchased Special Services Apple Computers $9,988 Already purchased N KHS Aux Gym Renovation $300,000 "Old pool community m pro'ect" Q `° Subtotal $604,438 rn rn 3 Site Project Estimated Notes I0 I0 Cost J21 North Star replacement $502,039 Estimate from DEED cost model _Siding Q Main Roof moss removal $160,000 Still evaluating less expensive options N W Subtotal $662,039 Q CD o Total $2,685,398 Completed Projects over 5 years Cost Auditorium Reupholsters, Paint, Carpet $ 156,135.00 cn Fowin Bathroom Renovation included design work $ 238,679.00 F win heating/renovation/upgrade/installation $ 61,764.00 Q of Re-Tile $ 56,378.00 N O Pae-K Project F-Win included design work $ 305,027.00 Q KIAS Network Upgrade $ 263,687.00 generator purchase replaced 30+ year old units that the Borough bought $ 53,804.00 dd Pool/Auxiliary Gym - Fire/Sprinkler System $ 58,185.00 sTr@Qtal $ 1,193,659.00 QUESTIONS? 910 1, D Prepared by: Sandy Daws, Chief Financial Officer and Janette Agmata, Assistant Chief Financial Officer PRIOR YEAR Annual July 1 Audit/Fund Balance CURRENT YEAR July 1 Student Count (October) Final Revision (Year End) Winter Revision Spring Revision SUBSEQUENT YEAR July 1 Student Count (October) Borough Local Contribution (May) *"Now Projected Enrollment Due (November) BOE Approves Budget (April) Preliminary Budget (January) BUDGET CYCLES July 1 Student Count (October) Projected Enrollment Due Student (November) Count ft*O (October) July 1 July 1 Annual Audit/Fund Balance Winter Revision ►i Spring Revision Final Revision (Year End) Borough Local BOE Contribution Approves (May)*"logo Budget (April) Preliminary Budget (January) 2600 2550 2500 2450 f e, 2350 2300 2250 2200 L I JV — —Student Count o ADM FY21 Enrollment 6I.1[•U"MK1[• F: Annual Appropriation In-kind Services Use of Facilities AcademicAthletic Fees Village Rent E -Rate Reimbursements 0 Cre-Tre Sub -total Local Source • iC11001 D ludapt E FY20 Revised Adopted Budget 10,025,244.0( 430,000.0( 20,000.0( 11,000.0( 6,000.0( 2,000,000.0( 12,492,244.0( FY21 Preliminary Budget *10,025,244. * 430,000. 20,000. 11,000. 6,000. 2,200,000. 12,692,244. FY20 Revised Adopted Budget FY21 Preliminary Budget Foundation 24,747,091.20 * 24,665,376.41 One Time State Grant money 586,963.00 State Military Contract 879,582.00 879,582.0 - Quality Schools 81,565.12 81,169.92 TRS On Behalf 2,659,433.77 2,659,433.77 PERS On Behalf 471,527.22 471,527.22 Sub -total State Sources 29,426,162.31 28,757,089.32 ndiak Island Bora 0 Impact Aid -Military (thru State) Impact Aid -Military Spec Ed (thru State Department of Defense Impact Aid -Direct Sub -total Federal Source gh School D ary Rurlap_f 0 FY20 Revised Adopted Budget $3,068,893.97 $18,000.00 $63,716.00 S2,000.00 3,152,609.9 FY21 Preliminary Budget * $2,403,457.0 $18,000.0 $63,716.0 52,000.0 2,487,173.00 07 reftl!»CiTir000 reT T O -T I • ice►` Q• • 0 E FY20 Revised Adopted Budget FY21 Preliminary Budget Indirect Cost Factor 180,000.00 180,000.00 Sub -total Other Sources 180,000.00 180,000.00 TOTAL REVENUE 45,251,016.28 44,116,506.32 Anticipated Expenses • Annual contracted salary increase • Steps and columns with increased experience • Through Interest Base Bargaining (IBB) KIBSD and KBEA (Teachers) reached a 3 near agreement FY21 - FY23 • Three (3) remaining groups to settle • Insurance renewal INSURANCE (annual �o increase) • FY 12 +16% • FYI 3 +10.9'. • FYI 4 +9.67c • FYI 5 +10.11 . • FYI 6 +10.6'. • FYI 7 +9.97c • FYI 8 +1 % • FY19 + 2% • FY20 + Oc7o • FY21 estima FY21 Proposed Districts Reductions Is In order to maintain staffing and a zero growth in Non - Personnel and with the projected revenue as previously shown we would be $1.8M short KIBSD could reduce Non -Personnel categories to balance FY21 Budget 0 Cn Description FY20 ADOPTED FY21 PRELIMINARY +/- over FY20 (;-fRTIFIED. SALARIES $14,928,876 $15,228,876 $300,000 ASSIFIED WAGES $6,832,683 $6,932,683 $100,000 tASSIFIED, TEA $80,635 $80,635 $0 CLASSIFIED, OVERTIME $80,495 $80,495 $0 PLOYEE BENEFITS $14,097,433 $14,427,171 $329,738 14OUSING ALLOWANCE $120,000 $120,000 $0 ANSPORTATION ALLOWANCE $50,000 $50,000 $0 OF'L/TECHNICAL SERVICES $798,015 $798,015 $0 AFF TRAVEL $329,506 $329,506 $0 UDENT TRAVEL $412,892 $412,892 ILITIES/ENERGY $4,282,807 $4,282,807 $0 OTHER PURCHASED SERVICES M $1,239,995 $1,239,995 $0 5-JPPLIES/MEDIA/MATERIALS $1,710,046 $1,710,046 $0 OTHER EXPENSES $82,632 $82,632 $0 EQUIPMENT $25,000 $25,000 $0 1RANSFERS TO OTHER FUNDS $180,000 $180,000 0 lbTAL EXPENSE $45,251,016 $45,980,754 $729,X38 PR JECTED FY21 REVENUE $44,116,506 n Di#Lmrence Between Project Revenue and Projected Expense 1 -$1,864,248 y m Questions and Discussions AGENDA ITEM #2.b. KODIAK ISLAND BOROUGH STAFF REPORT NOVEMBER 26, 2019 :t ASSEMBLY WORK SESSION SUBJECT: Funding of School Bond Debt ORIGINATOR: Michael Powers RECOMMENDATION: It is recommended the Assembly consider the following issues for the unfunded school bond debt issue as well as the shortfall in the State Shared Fisheries Tax: 1. Amend Title 3.10.120.D.4 to allow up to 100% of the excess to be used to pay for school debt. (Ordinance FY2020-13) 2. Amend Title 3.10.030 and 3.10.120 to allow for borrowing against the Facilities Fund (Ordinance FY2020-15) 3. Direct staff to leave one (1) of the Planner positions vacant and to use the unfilled positions in planning (half year for 2 positions). 4. Provide direction regarding the $1,632,815 of funds being returned by the Kodiak Island School District intends to return to the Borough. DISCUSSION: As previously noted, the Assembly expected the Governor to cave on his threats to reduce the School Bond Debt Reimbursement or for the legislature to override his veto but both failed to materialize. In effect, the Borough is facing a shortfall of $2.54M dollars. With the dedication of the Motor Vehicle Registration Tax ($220,000 net) and the budget amendment to include $350,000 in Facility Fund (Shuyak) revenue to the bond debt issue, the Borough has a shortfall of $1, 875,390 for debt repayment. It has been proposed that the Facilities Fund uses be modified to allow 100% of the allowable expenditures to go to School bond debt, which would generate an additional $417,595 if no funds were allocated to Renewal and Replacement or Insurance. Further, staff has been working with the Borough Attorney to potentially borrow funds from the Facilities Fund to cover the unfunded debt. Lastly unfilled positions (1 full time planner, '/2 year of Community Development Director/planner and '/2 of code enforcement officer) would generate would result in an additional $325,000 for use to pay bond debt. Subsequently, two additional factors have come into play: First, the State Shared fisheries tax will come in at least $407,739 less than the Assembly budgeted and second, the School District has indicated that they have received significantly more revenue than anticipated and are expecting to return $1.6M to the Borough. The State Shared Fisheries tax is a General Fund budget revenue. The KIBSD return of funds was not budgeted. There are many permutations of how to proceed with the fiscal difficulties faced by the borough. One such permutation, which would resolve the problem in this fiscal year in both the School Bond Debt and the General Fund without the need for the Borough borrow funds would be to enact the proposed ordinance to allow 100% of the Facilities fund for School Debt, utilize the reduced staffing to offset the State Shared Fisheries, and the funds returned by the School District to offset the school bond debt and the remainder of the Shared State Fisheries Tax shortfall. This would result in adequate funding of the required school bond debt as well as making up the shortfall in the Shared Fisheries Tax while eliminating any contribution to the R&R fund for this fiscal year. It would also result in a reduction of the fund balance for the School Bond Debt by $30,000 but would still be above the $275,000 required. Kodiak Island Borough Funding of School Bond Debt Page 45 of 52 AGENDA ITEM #2.b. KODIAK ISLAND BOROUGH STAFF REPORT NOVEMBER 26, 2019 ASSEMBLY WORK SESSION Other options would be to use the above referenced funds to address the bond debt issue while NOT committing to the use of Facilities funds at this time and then re-evaluating our position at a later date. While this option would preserve funds for R&R, they couldn't't be used to offset the general fund shortfall. Obviously, there are numerous way other ways to "move the money" depending upon the desired intent of the Assembly. Since the Assembly has not had the opportunity to discuss the unexpected funds from the School District, staff is hesitant to propose any other permutations until the Assembly provides a sense of the direction they would like to go. ALTERNATIVES: See above FISCAL IMPACT: See above OTHER INFORMATION: The two proposed ordinances are scheduled for introduction on December 5, 2019. Copies are included in this item for ease of reference. Kodiak Island Borough Funding of School Bond Debt Page 46 of 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AGENDA ITEM #2.b. Introduced by: Drafted by: Introduced on: Public Hearing Date: Adopted on: KODIAK ISLAND BOROUGH ORDINANCE NO. FY2020-15 AN ORDINANCE OF THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH AMENDING TITLE 3 REVENUE AND FINANCE CHAPTER 3.10.030 PERMISSIBLE INVESTMENTS AND CHAPTER 3.10.120 FACILITIES FUND WHEREAS, The Kodiak Island Borough Assembly finds that the Facilities Fund is an areawide borough reserved fund which contains sufficient funds to facilitate loans or grants when needed to allow the Borough to respond to unexpected fiscal challenges or budgetary demands; and WHEREAS, The Kodiak Island Borough Assembly finds that it is in the public interest to permit investment of funds from the Facilities Fund by interest bearing multi-year loan to Borough areawide, non-areawide or service area funds, provided that such loans comply with limitations on long term borrowing by Borough funds; and WHEREAS, The Kodiak Island Borough Assembly finds that it is in the public interest to permit the grant of funds from the Facilities Fund to other Borough areawide funds for areawide purposes; and WHEREAS, The Kodiak Island Borough Assembly finds that it is in the public interest to permit the loan of funds from the Facilities Fund to other Borough areawide funds for areawide, non- areawide or service area purposes under terms where repayment is subject to annual appropriations; and WHEREAS, The Kodiak Island Borough Assembly finds that it is in the public interest to prescribe rules for loans or grants from the Facilities Fund to other Borough funds; and WHEREAS, The Kodiak Island Borough Assembly finds that loans or grants from the Facilities Fund should be memorialized by ordinance. NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH THAT: Section 1: This ordinance is of a general and permanent nature and shall become a part of the Kodiak Island Borough Code of Ordinances. Section 2: That section 3.10.030 Permissible Investments of the Kodiak Island Borough Code of Ordinances is amended to read as follows: Kodiak Island Borough, Alaska Deletion — Red, Strikeout Insertion — Bold, Blue, Underlined Ordinance No. FY201X-XX Page 1 of 3 Version 1 Page 47 of 52 Funding of School Bond Debt 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 011, AGENDA ITEM #2.b. 3.10.030 Permissible investments. The finance director shall invest money only in the following types of security instruments: A. Bonds, notes, or other obligations, direct or otherwise, of the United States Government; B. Bonds and other evidence of indebtedness of the State of Alaska, or any municipality, or political subdivision of the State of Alaska; C. Savings accounts, certificates of deposit, banker's acceptances, repurchase agreements, and such other legal security instruments; er D. The Alaska Municipal League Investment Pool, Inc., made in accordance with the terms of that pool's "Common Investment Agreement; or E. Loans to borough areawide, nonareawide or service area funds, provided that such loans must be approved by ordinance setting out the term, interest rate and repayment schedule for such loans. The interest rate shall be not less than the most recent annual investment return rate for invested Borough funds. When such loans are not payable within one year, the ordinance must be ratified by the voters as required by law at a regular or special election. Section 3: That section 3.10.120 Facilities Fund of the Kodiak Island Borough Code of Ordinances is amended to read as follows: 3.10.120 Facilities fund. A. The facilities fund is established as a separate special revenue fund which is distinct from all other funds. The fund consists of all proceeds received from the sale of Shuyak Island property to the Exxon Valdez Oil Spill Trustee Council. All income from the fund shall be deposited to the fund. The assembly may, by ordinance, make additional appropriations to the fund at any time. Any additional funds added to the fund, aside of Shuyak Island proceeds, shall become part of the fund as a whole and subject to the regulations of the facilities fund. B. The fund may be invested only as provided in KIBC 3.10.030. The fund may not be appropriated or spent, except as provided in this section. The earnings or principal shall at no time run or supplement the running of government except as specified in this section. C. Repealed by Ord. FY2008-08. D. The excess income of the fund is defined as 85 percent of the annual investment income from the fund. The excess income of the fund is available for appropriation by the assembly in the fiscal year following the year in which the income is earned. The excess income of the fund may be appropriated only for the following purposes: 1. Maintenance and repair of existing borough facilities; 2. Insurance paid by the borough for borough buildings; Kodiak Island Borough, Alaska Deletion — Red, Strikeout Insertion — Bold, Blue, Underlined Ordinance No. FY201X-XX Page 2 of 3 Version 1 Page 48 of 52 Funding of School Bond Debt 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 AGENDA ITEM #2.b. 3. Upgrade and reconstruction of existing facilities; or 4. Debt service on general obligation bonds issued for facilities construction — up to 50 percent of excess may be used for this purpose. E. The Assembly may, by ordinance, appropriate the excess income, and such portion of the fund principal as the Assembly may determine, for grants to other areawide Borough funds or A pertieR of the fi ,nd may be .,.,.,repriated for another areawide Borough purpose. of an ordinance ratified by a two thirds Unless specifically waived by the appropriations ordinance, grants from the Facilities Fund may only be made by an ordinance approved by the qualified voters at a regular or special election. F. The Assembly may, by ordinance, appropriate the excess income, and such portion of the fund principal as the Assembly may determine, for a loan to a Borough areawide, non-areawide or service area fund which is not repayable within one year and for which the repayment is subject to annual appropriation. Any such ordinance shall set out the term, interest rate and repayment schedule for the loan. Unless specifically waived by the appropriations ordinance, an ordinance authorizing a loan under this section may only be made by an ordinance approved by the qualified voters at a regular or special election. Effective Date: This ordinance takes effect upon adoption. (Note: KIBC 2.30.070 states an ordinance takes effect upon adoption or at a later date specified in the ordinance.) ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH THIS DAY OF , 201X. KODIAK ISLAND BOROUGH William Roberts, Mayor VOTES: Ayes: Noes: Kodiak Island Borough, Alaska Deletion — Red, Strikeout Insertion — Bold, Blue, Underlined ATTEST: Tara Welinsky, Clerk Ordinance No. FY201X-XX Page 3 of 3 Version 1 Page 49 of 52 Funding of School Bond Debt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 AGENDA ITEM #2.b. Introduced by: Assembly Member Arndt Version 1 Drafted by: Assembly Member Arndt Introduced on: 12/05/2019 Public Hearing Date: Adopted on: KODIAK ISLAND BOROUGH ORDINANCE NO. FY2020-13 AN ORDINANCE OF THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH AMENDING KODIAK ISLAND BOROUGH CODE OF ORDINANCES TITLE 3 REVENUE AND FINANCE CHAPTER 3.10 PUBLIC FINANCE— MANAGEMENT AND ACCOUNTING SECTION 3.10.120 FACILITIES FUND WHEREAS, there is established a permanent fund for facilities in the Kodiak Island Borough to provide revenue for future buildings; and WHEREAS, revenue derived from this fund will be used to stabilize and reduce the property taxes in the Kodiak Island Borough ; and WHEREAS, the governor vetoed 50% of the school debt reimbursement from the state; and WHEREAS, this creates a financial hardship on the taxpayers of Kodiak NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH THAT: Section 1: This ordinance is of a general and permanent nature and shall become a part of the Kodiak Island Borough Code of Ordinances. Section 2: That section 3.10.120 of the Kodiak Island Borough Code of Ordinances is amended to read as follows: Chapter 3.10 PUBLIC FINANCE — MANAGEMENT AND ACCOUNTING 3.10.120 Facilities fund. A. The facilities fund is established as a separate special revenue fund which is distinct from all other funds. The fund consists of all proceeds received from the sale of Shuyak Island property to the Exxon Valdez Oil Spill Trustee Council. All income from the fund shall be deposited to the fund. The assembly may, by ordinance, make additional appropriations to the fund at any time. Any additional funds added to the fund, aside of Shuyak Island proceeds, shall become part of the fund as a whole and subject to the regulations of the facilities fund. Kodiak Island Borough, Alaska Deletion — Red, Strikeout Insertion — Bold, Blue, Underlined Ordinance No. FY2020-13 Page 1 of 2 Version 1 Page 50 of 52 Funding of School Bond Debt 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 AGENDA ITEM #2.b. B. The fund may be invested only as provided in KIBC 3.10.030. The fund may not be appropriated or spent, except as provided in this section. The earnings or principal shall at no time run or supplement the running of government except as specified in this section. C. Repealed by Ord. FY2008-08. D. The excess income of the fund is defined as 85 percent of the annual investment income from the fund. The excess income of the fund is available for appropriation by the assembly in the fiscal year following the year in which the income is earned. The excess income of the fund may be appropriated only for the following purposes: 1. Maintenance and repair of existing borough facilities; 2. Insurance paid by the borough for borough buildings; 3. Upgrade and reconstruction of existing facilities; or 4. Debt service on general obligation bonds issued for facilities construction — up to 50100 percent of excess may be used for this purpose. E. A portion of the fund may be appropriated for another purpose only upon approval of an ordinance ratified by a two-thirds majority of the qualified voters at a regular or special election. [Ord. FY2008-08 §4, 2007; Ord. 96-13 §2, 1996; Ord. 94-17 §2, 1994. Formerly §3.04.051]. Effective Date: This ordinance takes effect upon adoption. (Note: KIBC 2.30.070 states an ordinance takes effect upon adoption or at a later date specified in the ordinance.) ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH THIS DAY OF .2020. KODIAK ISLAND BOROUGH William Roberts, Mayor VOTES: Ayes: Noes: Kodiak Island Borough, Alaska Deletion — Red, Strikeout Insertion — Bold, Blue, Underlined ATTEST: Tara Welinsky, Clerk Ordinance No. FY2020-13 Page 2 of 2 Version 1 Page 51 of 52 Funding of School Bond Debt AGENDA ITEM #2.b. Page 52 of 52 Funding of School Bond Debt School Bond Debt and Shared Fisheries Tax School Bond Debt Shared Fisheries Tax Balance to fund $ (1,875,390.00) $ (407,739.00) Salary Savings $ - $ 347,525.00 Recent budget amendment $ 350,000.00 School Funds (portion) $ 1,550,076.00 $ 60,214.00 Facility Fund Ordinance change $ 417,596.00 Balance $ 442,282.00 $ - Notes Current starting balance of School Bond Debt fund is $472,706 Proposal does not include any changes to the Facilities Fund (Ordinance 2020-13 Draft) Reserve Policy for School Bond Debt is $275,000. Shared Fisheries Tax Deficit (projected) $ 407,739.00 Page 52 of 52 Funding of School Bond Debt Tara Welinsky From: BenanclBeate Daly <akdalyfamily@gmail.com> Sent: Wednesday, November 20, 2019 10:01 PM To: Tara Welinsky Subject: Please pass on to Assembly Members Borough Clerk Tara Welinsky, would greatly appreciate you forwarding my letter of concern to our Borough Assembly Members. I am hoping they will have it before their joint work session with the school board next week. Thank you kindly, Beate Daly Borough Assembly Members, I am compelled to write to all of you in regards to the proposed reconfiguration of our elementary schools proposed by the Kodiak Island School District. As you may already know, last winter the school district held public meetings at each elementary school campus to present reconfiguration as a proposed solution to challenges faced by the district. Based on the community feedback at the time, it seemed like our island community was not likely to support such a change. Furthermore, there has been no more open discussion or information presented to our community about this proposed change. Many community members, including myself, were under the impression this would not move forward. I am a parent with elementary aged children enrolled in the district. I consider myself to be active within the school community, attending school board meetings both in person and calling in. After attending/listening to many meetings this year, you can imagine my surprise to hear for the first time at the school board meeting this week that the school board will have a final vote on whether to adopt this change or not at its January 20th meeting. The lack of information being presented to our community about this potential large scale change that would have enormous impacts on our famililes is negligent. At your upcoming joint work session on November 26, please ask the school board if they and the district administration have done their due diligence in engaging and educating our community and parents before they place their final vote that would have a tremendous effect on our residents. If the school board and administration feels this change is in the best interests of our community, please encourage them to make that case publicly and in detail before moving forward. Thank you for your time and efforts in serving our community. Sincerely, Beate Daly Kodiak Resident