Financial Foresight: Jefferson R-VII - Ameren Closure - Spring 2024 Budget Preparation - Part 2

As our district stands on the precipice of change with the Ameren Rush Island plant closure, we unpack the intricate tapestry of financial and community implications that await. We venture into the complexity of the securitization process in Missouri, unwrapping the layers of strategy our school district is employing to stay afloat amidst the fiscal unknowns. Confidence resonates through our discussion, bolstered by the strong current funding structures and the potential for district growth. Join us for an earnest conversation as we extend a heartfelt thanks to Ameren for their transparent collaboration and to our own Stevie, whose communication efforts are the glue holding us together as we prepare for a sustainable future.

This episode also delves into the profound impact of the Ameren plant's closure on our community's spirit, drawing inspiration from Harry S. Truman and the wisdom imparted by my mentor on the importance of teamwork. We share an uplifting analogy that likens our current challenges to decluttering a closet, emphasizing that the clutter does not diminish the value of what lies within. The recent budget presentation and the surge of community engagement it sparked are testament to the district's resilience and commitment to our children's prospects. We're not just charting a path through the storm; we're setting the sails for a journey towards a thriving future for Jefferson's next generation.

Transcript

David Haug: 0:06

Before I jump into the long form part of this podcast, I wanted to allow those that just need a quick update of what this is about for about four to five minutes of your time and then if you want to continue, you're welcome to do so. This is referencing the Ameren Rush Island plant closure. Ameren did meet with us and let us know that the plant is scheduled to close on October 15th of this year, 2024. As a district we still don't know exactly how that will affect our budgets long term as there's still a lot of unknown with that closure process. It was put to be that since it's a monopoly, since it's a public utility and they basically have the monopolist area, the free market actually plays out in the court system. That process right now is called securitization. That filing has been made in Missouri. This explained a little bit further in the podcast. We are the first school district to be a part of anything like this, so we're kind of an uncharted territory. But long story short, as far as the actual impact on our budgets with Ameren, there's still a lot of unknown about how that closure would look to the totality of the closure, if that plant would be repurposed, if it would completely go offline and never come back. There's so many unknowns with that I can't give you that information today. What I can tell you is that the closure itself, if it went through on October 15th, does not affect our current budget and would also not affect next year's budget planning. Any changes to the budgets would happen in 2025, specifically, the 2025-26 school year is when the first time, if it were to close, the reduction of tax dollars would hit our districts. We have a little bit of time to prepare for this.

David Haug: 1:54

I also wanted to make a quick note here that Ameren's been a great communicator through this. I have the utmost respect for their leadership teams. They have answered every email I've sent them. They've answered every phone call. They came down and met with us and, as you'll see in the podcast later, they've also provided us unique opportunities to connect this district into the county and have more of a cohesive working relationship with our county. I'm happy to have them enough for this opportunity and their guidance and their professionalism and consideration for this. The podcast kind of outlines some other things they're dealing with too, as far as their securitization process.

David Haug: 2:32

So what I'm here to tell you today, your takeaway today for this, is this. If the school funding apparatus stays the same as it currently is in Missouri as well and we see James Hardie Industries coming in and we see the growth that's anticipated in the school district and again I keep going back to, if the school funding apparatus stays the same, this district will be able to withstand the Ameren enclosure. I'm not saying it wouldn't be a little bit bumpy, a little bit bumpy, and we are doing things now to prepare for that. But I really believe the Ameren enclosure would not be catastrophic to the district moving forward. If you want to continue to watch this podcast. But I'll also encourage you to watch the upcoming podcast because there's things going on in our legislature right now that if those things happen, it's gonna put our district in a real bind in a couple years if those things go through, even maybe without an Amher enclosure, because of the impact it has on small school districts, small rural school districts. So please stay tuned for that one. If you want the full kind of lowdown with everything going on with Ameren and that we know of right now, continue to watch this.

David Haug: 3:46

Thank you for your time. Please stay engaged. Always take care of our kids. Place kids first. Everything always turns out okay, thank you. Hey, welcome back. This is David Haug again at Jefferson R-7, superintendent.

David Haug: 4:01

Thank you for the second podcast as part of this series. This will deal with the Ameren enclosure. Where we move forward, though. I want to thank Stevie Holdinghausen for all of her hard work on a day-to-day basis, but also, I know, over the next year she's got some great plans for our communication. We're gonna work together to team. I'm excited about what that future holds, but I can't say enough about the work she does around here. So thank you, Stevie, for what you do.

David Haug: 4:26

I do want to kind of start by saying, as far as the Ameren enclosure, I think it's important right out of the gate. This does not affect this year's budget. In fact, we are very solvent and very healthy right now as a school district and the closure would not actually impact anything for next year's budget, and that was made very clear to us in a meeting we had, and I'll get to that in just a minute. So this is truly looking down the road the first year. This could possibly affect us for 25, 26, and we are doing things now to prepare for that, and I wanted to get that out there in the public first, if this is not something that would change something we're trying to do tomorrow. But we're just trying to be as smart as we can. From the get go, we said there's a bunch of unknown with this In 2021, we found out about it, so we're now in it. We're now in the middle of it and we're still preparing. You're still out of unknowns.

David Haug: 5:14

The second thing is is that we are actually part of what's called a securitization process. Ameren has filed for securitization. The long story short on securitization is that it's sort of like restructuring the debt on your house. The plant was built, it has so many years to be paid off, but since essentially it's been, the federal court has ruled that it has to close or something has to be done for the. I shouldn't say it has to close, but it has to adjust to the way it's being operated, either by putting a filter on it, not going to all that. But since they're just trying to restructure their debt on their house, essentially is what they're doing and to reallocate that money to do other things to get relief.

David Haug: 5:58

Essentially, the unique part of it is is that Ameren has requested that some funds be set aside for this school district and some lack local taxing entities or something to do with growth, and really there's nothing designated right now at 3.6, it's simply a request. It's not guaranteed, it has to go through this whole process. We wouldn't know anything till possibly June how this looks, if we even even receive anything, and then that money would kind of be looked at from a different lens, if it's rewarded, to see how it would either help us or help things in our district. I commend Ameren in for thinking of us in that way. I think there is an argument to be made here for a serious argument and that will be another discussion, that at the March Board meeting and I will be sharing that with our public of our filing on that behalf. But essentially, with the abrupt closure of the plant, we've not had. We knew it was gonna close in 2039, under the schedule closing that's been ramped up to 2025 and now 2024. Really, I think there's some justification for it to stabilize our budgets and keep us healthy. That's a whole other argument I'll share at a different time.

David Haug: 7:07

But thirdly, Ameren has a right to do their business. I think if I take a step back and everything that I've learned about this process, there's part of me, maybe as a government teacher that thinks about the Ameren situation that how is it really that a federal judge and a group that's a non-elected officials to the EPA is basically dictating how we do business in Missouri? That's a little puzzling to me at different times. I really commend Ameren's efforts to keep that plan open as I keep going through this process and meeting with different groups. Really, that federal ruling has put parallel on that plant. That's part of the securitization process. The securitization process. The thing about Ameren is that it is a public utility because you don't want to build two coal plants next to each other right on the same area of the river competing. It's like that game Monopoly. They actually have the Monopoly on the energy business in this area. So as it was described to me and I thought quite well, is that their free market actually plays out in the court system. There's different filings through this and different outcomes. Then I was really really fascinated and I got farther into discussions of this about how the energy is managed throughout the Midwest. It's a tough business.

David Haug: 8:24

I will just say this about Ameren and the representatives that have been meeting with us. They didn't have to do this. They didn't have to communicate with us. They could just send us notice but, to their credit, they have answered every email I have sent Since October. I just started to ask a general question how will this affect our local budgets? October goes through.

David Haug: 8:46

We find out about the securitization filing in November. It had constant contact. Every phone call has been answered, every email has been responded to. They can't always give me answers I'm looking for and I respect that, but at least they communicate with us. And then they did meet with us myself and Pete McPeters on January 12th to kind of break the news that we didn't want to hear. I mentioned earlier in the first podcast, you know, and you don't always want to hear things. But they came and talked to us and I do respect that and do appreciate it About what the potential could be, and there's still some unknown out there about how this is actually going to look and I wish I could tell you how it's actually going to look and I'll get to that a little bit more in a minute. But I can't thank Ameren enough for meeting with us, answering all our phone calls, answering the emails and then some of the things they provided I'll get to in a minute as well. So one of the reasons we're kind of smiling here is because we do work between bell schedules here, so phone goes off, so be it. But they're also changing lunches and it's kind of fun. We have to have a little fun with this sometime, right, it's part of the charm of being in a school.

David Haug: 9:52

I do know if you do want to make sure you go back and reference that first podcast on the local finances. That's important and also understanding the local, the state funding formula and how it affects us as well I'll talk a little bit about here. I'm not going to go into great detail since that first podcast, but I do want to reference you back to that and also told you in the first one I wanted to kind of share some things about maybe my leadership style, things that have influenced me. I guess one person's been important in my life is my dad. I was a very successful high school football coach at North County, Dexter and Potosi.

David Haug: 10:24

I do know as a kid when I was little I kind of watched Tony Dorsett and those guys run his running backs and kind of enamored by him, like first to second grade. One day he said did you see him want to be a running back? I said yeah, and so he got all these pills and put them out in the living room there they were cold outside and some football games on. He said, all right. He said there's the end zone. He kind of stood between me and him, got down on his knees. He said, all right, try to score. And I'm a little feller trying to get the end zone. He just kept tackling me and putting down and over and over and after it went on probably like I probably seen like an hour. It's probably like 10 minutes. It probably wasn't that long because I wasn't real tough. But he goes. So did you enjoy that? Well, not really. He said, great, you're going to be a quarterback. And that's how my quarterback career started. Stevie, can you believe that? But anyway, his influence on me.

David Haug: 11:14

When I was little about that age I started to read some of his quarterback manuals and one of the quotes on there was Harry S. Truman's. It's amazing what you can accomplish when you do not care who gets the credit. I think so much of that quote. It's a lot of our literature. It's on Mr. Rouggly's wall in there plastered it on. That's who we are at Jefferson. We're going to do it unselfishly. That's had a great impact on me. It's my job to represent you there's the belt. It's my job to represent you and your kids and everything that we're doing in this district. I take a lot of pride in that and we try to do it in a very professional, unselfish way because that truly benefits kids.

David Haug: 11:51

The second thing was is when I became a head football coach. I was a head football coach. I taught one year. That became was probably too young, but I do remember calling him and saying hey, how do you run your weight room? What's the successful part of a weight room? And I think most people in this business think in terms of well, they need to be doing this type of lifting or reps or anything. He said you know, he said if you just treat every student that comes in like your starting quarterback because he was a PE teacher all day long he goes, you treat them all with that mindset of how important they are to everything you're doing and give them that respect.

David Haug: 12:26

That was a big deal that I really took heart to, that that mindset, okay, and that opened my eyes up to some different things and think, okay, what around me I always has value, what's the value of everything. And that's kind of how I look at the world. It's kind of how I look at the school building I was in for 10 years as principal, and now how I look at this district, not just the school district but the district as a whole. And I can tell you this with that mindset everything has value and this district has tons of value, whether it be the people, especially the people, the potential for growth out here and I think that's the one thing I've learned through the Ameren Group is how to better connect, and they provided tremendous opportunities for us Through this adversity. It's the one thing to hear the plan is closing and how it may affect your budgets. Again, there's a lot of unknown. We'll be careful with that. But at the end of the day, to find a great partner with the leadership at Ameren that we found to really start connecting us and showing us how and helping us have meetings to make connections, has been invaluable for this community. And that's why I truly believe and I'm going to make a statement here about the school funding as it stands right now If the school funding remains the same, if that apparatus remains the same, the Ameren situation, we're going to be fine. I truly believe that because I think there's so much other potential for growth out here. It's imperative we do get James Hardie here and we're working with people to help get that done, but we're going to be okay. So here's kind of where I'm at with it.

David Haug: 14:00

This is my analysis today. The school funding formula and as long as it doesn't change and I want to make sure that's noted and that's also the reason for the upcoming video because I want to talk about some of the potential changes that are laying out there being discussed at the legislative level you understand we're very heavily locally funded. Again, go back to that first video in this pie chart right here. That will kind of lay everything out about how locally funded and how kind of perilous we are if one of the plants closes, and also understand the state funding formula is pretty antiquated for our situation Again, and you can go back and reference that video. But it's been a great formula for our district in the state for many years. A lot of state has saved a lot of money off of this school district because of Buzzi, because of Ameren and our local funding. But on the flip side, the advice I've been getting is that we're that unique district I keep using that term that if the plant closes, that really we aren't able to recruit funds off the formula and you can look at that other video for greater detail on that.

David Haug: 15:02

The best analogy I could come up with is this it's sort of like you're, you've got to house, you got a good, solid house, you're living in it, a lot of you got a great family, everything's going on. But there's one part of your house you keep walking by your closet. You know you need to clean a certain storage closet out. It's just full of junk and you keep walking by it and all of a sudden you know what you're going to tackle it and as you pull that, that closet open and you're pulling stuff out, you're trying to decide what you should throw away. You get rid of some junk, but you also find some things in there you didn't realize you had that have value. At the end of the day, and maybe over a period of time, you've cleaned that closet out. Your house was messy, it was kind of disheveled, it was kind of a pain in the neck and you had to jump through some different things, maybe ask different questions. But as you put the closet back together, your house is better for it. You may have found some things for value, but the thing is is your house didn't go anywhere. It was still solid and that's really how I see our school district through this Ameren closure.

David Haug: 15:59

And again I want to stress that the state funding formula for schools doesn't change. With the incoming of James Hardie and other tremendous growth that can happen in this area, this school district will be fine and I wanted to assure you of that. It's just right now as Ameren's closing. We're going to be cleaning our closet out and it may look a little bumpy at times, a little messy, but it's such a solid group out here, solid foundation, we're going to be fine. They did tell us on that January 12th meeting that the plant is scheduled to close October 15, 2024. That was a hard number to hear. And then to look at the different scenarios, this funding was difficult. I can't pin anything down. If I could I would, but right now you just need to know that's looming out there. And again, going back to the first statement of this podcast, this doesn't affect our budget now. It doesn't affect it next year. We just need to be planning for it and adjust accordingly and do the very best we can for it to take care of your money and our kids.

David Haug: 16:59

Ameren has filed for securitization. I mentioned that earlier. They requested 3.6 million to the district. With the closure Now, that fund would come to the district. There's no specific plan for the money, it's simply been requested. We appreciate Ameren's thought for us and our district and our situation on this. They didn't have to do this, but I will say that this is not guaranteed. This is a legal hearing that has to go through several different layers to it. But I think that, beyond that securitization and the request for money, amaran has really benefited in the following ways, and I'm going to just be as direct as I can and just let you know that they brought in a group called Missouri Partnership. You can look them up online. They do amazing things for our state.

David Haug: 17:42

The takeaway from that meeting this is the group when corporations are looking to relocate or start that they reach out to, and so if you could imagine being a part of this group they have. It would just be like sitting at your desk and getting an email. They may get an email from a court hey, we're looking for this type of property, this type of location. Does your state have it. That team has essentially seven days to respond to something positive to kind of start reeling in of that organization or that corporation. They do this frequently. I think they said they get about 50 to 60 requests a year for this and they have to be ready.

David Haug: 18:22

If you think about that seven days just to get them initiated, then it may take another 10 years to get the business here. That's just the world of corporations and there's such a conflict. When I sit there and listen to that I'm like you know, in my world I can't have enough conversations fast enough of people to help kids and kids in their second grade. Now this, this deal may be getting done right now, but we don't even see it for another 10 years. They're seniors. It's really a kind of a. You know, I'm trying to balance that, what I feel like rush sometimes to do what we got to do for kids, but then, looking at this world, how can we be partners in that world? And that's really what Ameren has really opened my eyes to and I believe, our leadership's eyes to, and making those connections.

David Haug: 19:02

It didn't stop there. They actually had us meet with, connected us. During that meeting with the Jefferson County Economic Development Corporation we found. I think that's really a great landing spot for our school district. I mean, I'll be honest, everything's political on some level, but this is truly a non political entity that's looking for growth in the county and our district possesses so much opportunity for growth we, it's really natural fit. Ben Brown and Donna Litton have been amazing and connecting with them and getting our getting sort of our district kind of in different things and different viewpoints. We want to thank them for including us in things. Federal resources from Ameren Connie from Ameren's been awesome to work with and looking what options are there. Nothing is of now, but we will keep pursuing that. We've got a great partner in that with that as well. Then just local resources for our families and everyday function here at the school, including an analysis of what we're doing here, how energy efficient we can be and getting some guidance there.

David Haug: 20:08

I'm going to go back to that whole initial concept. It's kind of a bad deal to have to shut a plant down. They spent a ton of money in around 2006 to 2010 to upgrade that plant, believe they were in compliance, had a lawsuit and I just have a hard time believing they wanted to shut that spend that kind of money and shut that plant down in 14 years. This truly has to do with the federal court decision. They could just walk from us and not do anything. And I really appreciate not only the gesture of trying to get a sense of securitization, whether we get it or not, but these other tie-ins have been invaluable for our community. And there's a date I keep going back to. Since September 10th that was a Sunday. The next day I came in there was a chapter 353 letter on my desk. You know I think about how kind of lonely I was, but that's not the case anymore.

David Haug: 20:53

We've made a lot of great connections in the county and a lot of, a lot of reciprocation back as well, and really the mindset is is what can we do to benefit not only this school district, the county, but really the state of Missouri? I go back to that unique scenario. We've got three major corporation holdings, property holdings, in our district right now. It's a very unique scenario. So I want to thank Ameren for giving us these opportunities and being great, really great partners through what can. What is a challenging process, and closing is this I think that concept of Truman's quote is paramount right now. We need to be on selfish as a group whether it be a school district, the county, the state and look and see what's in the best interests of everything, and especially our kids. That is paramount. I will tell you this as well One of your great resources is your board of education.

David Haug: 21:48

I think sometimes in coming superintendent you talk to other people in the field and you either have seen over the years I've been in administration for over 20 years now and you see or hear things where you know boards are, you know, kind of like the boards are always kind of talking to the superintendent, ask what's going on. I think that's kind of a flip model. Right now I'm actually wearing the board out. I think it's the other way I'm wearing them out and the reason I'm doing that is because I look at each individual and their skill set. I don't mind to bounce ideas off them. It's a lonely job here being a superintendent sometime, but I think that model can be flipped and I think we're doing it at Jefferson right now. We look at some of the things going on. They each have a unique skill set. I've not hesitated to call them and they've also not hesitated to call. Have you thought about this. I can't say enough about what they're doing. They don't get paid. They're doing this for your kids and they are a tremendous resource for everybody involved in Jefferson R-7 School District.

David Haug: 22:43

Following this message, you are going, I'm going to go ahead and attach, in the February board meeting my budget presentation. I think there was a lot said there and really it's a it's really great process for the school district to be connected in. We had the I don't know, I will stand corrected, but I don't think we ever had a public hearing in this district. We had one with the roads meeting and I do believe your voices were heard and we had a great turnout that night. We've had several meetings with the county outside of that, either here or elsewhere. It's really been a great process. So if you want to keep watching that, I highly recommend it to kind of see the bigger picture and all the connections we're making. It's exciting times. We're going to be okay, we're going to keep grinding and we're going to make our our. The future for our kids is bright and that's what we need to focus on. Thank you.