Finance Committee Minutes – 11.14.22

Finance Committee Meeting Minutes

Monday November 14, 2022, at 12 PM

Call to Order

  • Finance Committee Chair Brian Hastings called the meeting to order at 12:06PM. 
  • All finance committee members were in attendance, including Lori Kaari [Controller], Dan Furhman [Board VP], and Brian Hastings [Board Treasurer].
  • Additional attendees included Kristina Vourax [Board President], Tim Peterson [Board Member], Margaret Daigneau [LCCA Head Principal], Todd Gray [LCCA Advisor], and Benjamin Payne [Hillsdale].
  • There was discussion surrounding committee meeting communication.  Non committee members are welcomed to address the committee at the beginning or end of the meeting, but once the agenda commences non-members are asked to refrain from speaking unless called upon.

Monthly Financial Report – by Lori Kaari

  • Lori presented the financial reports.  October ending cash balance of $723,598.32 net of outstanding checks that hadn’t yet cleared.  The next DPI payment is expected to be received on 12/5/22.  6 month cash projections were updated, and we are not expected to need to make a draw on the LOC at this time.
  • There was some discussion around the income statement format being difficult to follow and too granular for the full Board meeting review.  Lori will set up a meeting with Todd Gray and Cesa 5 to explore what custom reports could be developed out of Skyward that would look similar to the annual report format.  Additionally, we would like to have a supplemental GAAP formatted report in addition to DPI required WUFAR.
  • The 21-22 fiscal year audit is in the final stages.  Expected to wrap up in the next 1-2 weeks.  One finding from the audit was the need to create fund 49 such that restricted funds for the capital campaign are isolated.
  • Wisestaff DPI compliance report was due 11/17/22 and has been submitted.

Old Business

  • None.

New Business 

  • Bond Underwriting Update – 5YR Projection Discussion
    • Dan and Brian have met with 2 investment banking firms to date to better understand the process.  Will meet with a 3rd before making a formal recommendation to the Board on which firm to use.
    • The goal is be in “One Campus” the summer of 2025 ahead of the 25-26 school year.  Assuming construction takes 18 months to complete, our financing must be in place approximately end of December 2023 (about a year away).  The underwriting process will take 4-6 months, which means we need to be going to market early Q1 23-24 school year.  The investment banking firm will assist us in refining all the documents needed, but we need to engage them in earnest Feb/Mar 2023 to be ready for going to market in Q1.  The 5 year projection will have to be developed ahead of this, so that process must start in earnest now.
    • Two primary underwriting requirements:
      • 45-60 days cash on hand.  This would be calculated using 6/30/2023 financials.  Based on 22-23 budgeted expenses of $6.3MM, 60 days cash on hand would be $1,050,000.  We already are close to 45 days cash on hand, so if we can build to 60 days by 9/30/2023 that would be ideal.
      • EBIDA coverage ratio of 1.2x debt services.  EBIDA means earnings before interest, depreciation and amortization expenses.  By way of example only, if we had a $25MM bond at 8% interest on a 40 year note, the annual debt service would be $2.1MM/YR.  Multiply this by 1.2 means we need $2.52MM of EBIDA.  In the 5 year projection, we will need to show that we can achieve that in year 1 of one campus, which would be year 3 of the 5 year projection.
  • Finance Committee Job Description Discussion
    • It is expected there will be edits to this for the Board’s consideration.  There are no edits suggested at this time.
    • It was that Committee Chair can appoint new member at its discretion without approval by the full Board.  Generally speaking, this would happen after a volunteer had been contributing for a period of time and was interesting in getting more involved.
  • 22-23 Budget Reconciliation Report
    • Lori and Margaret provided some additional details to the reconciliation report that had been submitted to the Board previously.
    • It was noted that $100,000 increase was to cover the inaugural year of a retirement plan for staff.  $60,000 increase to cover mid-year election changes that employees may make.  $59,000 to add another resource in Special/Ed; this covers salary + benefits.  Additionally, $91,000 increase for Cesa 5 to continue supporting LCCA as they had in the prior fiscal year.  It is expected their involvement will get less and less towards the end of the school year.

Confirmed the next meeting will be virtual via Microsoft Teams on Wednesday, December 14th.  All future meetings are expected to occur virtually on the 2nd Wed of the month 12-1PM unless otherwise noticed.

The finance committee meeting adjourned at 1:29PM.