A. SECTION 125 PLAN
            We recommend the implementation of a Section 125 Flexible Fringe Benefits Plan for
             the benefit of employees to pay for out-of-pocket insurance premiums and out-of-pocket
            medical and dependent can expenses using pre-tax dollars. With the rising cost of
            insurance premiums more employees have had to make up the difference using after tax
            dollars. Adopting a section 125 plan will increase employees’ spendable income and
            reduce their income taxes. The District will reduce our payroll costs and enhance our
            current benefit package at no additional cost. This plan will be implemented in two
            phases with the use of salary reduction agreements between the employer and each
            employee. The first phase covers the premium conversion (coincide with insurance plan
            year) and will be implemented on December 1, 2002 on a short plan year and the second
            phase covers the out-of-pocket medical and dependent care expenses (calendar year) and
            will be implemented on January 1, 2003.

                  RECOMMENDATION:       That the Board of Education adopt a Section 125 Flexible
                  Fringe Benefits Plan for the employees of the Molalla River School District to be
                  effective on December 1, 2002.

            The Student Handbook for Rural Dell Elementary School has undergone some changes
            since the one you approved last spring.

                    RECOMMENDATION:      That the Board of Education approve the revised student
                    handbook for Rural Dell Elementary School

C. DICKEY PRAIRIE PROPERTY
            The school district has received an offer on a piece of property located in the Dickey
            Prairie Area

                    RECOMMENDATION:      That the Board of Education accept the offer to purchase
                    the 3.46 acre parcel near Dickey Prairie.