Action of the School Board Action of the School Board 01/26/15 | Page 2

problems declined from previous years.
He also provided comparisons of school districts’ revenue and expenditures, noting that
Anoka-Hennepin received $100 more general fund revenue per student than the state average, but $377 less per student than the metro average for 2013 (the latest year for which
comparisons are available). The district’s total general fund expenditures are $166 less per
student than the state average and $651 less than the metro average. The district’s unassigned general fund balance decreased slightly from 9.9 percent of total expenditures in
2013 to 9.7 percent in 2014, though it remains well above the 5.6 percent balance in 2010.
The general fund covers the costs of educating students – such things as teachers, textbooks, and transportation.

Investments for Other Post Employment Benefits (OPEB) reviewed

Bob Cass, senior vice-president and financial advisor for Wells Fargo, reviewed the district’s investments to pay for Other Post Employment Benefits (OPEB). By statute, the
district is required to allow retirees to purchase health insurance from the district at the
current rate until they are age 65 and Medicare-eligible. The additional cost to provide the
benefits at the active employee rate is considered an OPEB; a long-term liability is attached
to this cost. The district does not pay for retirees’ health insurance.
In 2009 the district issued OPEB bonds to fund this long-term liability. The bonds were
invested and are being managed by Wells Fargo to last for 20 or more years. The district
can draw annually the difference in premium and actual cost to insure retirees. The fund
portfolio has increased by nearly $6.5 million since the trust was funded, according to Cass.
He said it is widely diversified with moderate risk investments so it can tolerate volatility
in the market.

Debt management policy proposed

Michelle Vargas, chief financial officer, proposed adoption of a Debt Management Policy.
Anoka-Hennepin’s financial advisor suggested the action be taken in order t o improve the
district’s annual debt rating. It would be used for issuing new debt as well as managing
current debt.
“Everything that’s in this policy and the guidelines is what we do, we just haven’t had it
documented,” said Vargas. The proposed policy lists the following debt management practices:
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Maintain financial stability and flexibility.
Preserve public trust.
Minimize cost to taxpayers.
Maintain a prudent level of financial risk.
Preserve access to financial markets.
Demonstrate adequate administrative oversight of debt programs to credit rating agencies and governing authorities.

It also outlines ways the district can borrow funds in accordance with state law, the Minnesota Department of Education (MDE) regulations and other district policies.
“[It’s] showing that we have an eye on our debt,” said Vargas.
The proposed policy can be seen in its entirety on the Jan. 26 School Board meeting agenda.
A vote will likely take place at the upcoming School Board work session.

Preliminary budget for fiscal years 2016 and 2017

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ACTION

Michelle Vargas, chief financial officer, shared preliminary budgets for the 2015-16 and
2016-17 school years. Vargas said the information presented will be shared with local legislators in discussions of the district’s needs during this year’s funding session. These discussions could impact the level of funding school districts will receive the next couple of years.