middletown public schools · since sy2013-2014, middletown’s budget has hovered between $83m and...

© 2017 DISTRICT MANAGEMENT GROUP

D R A F T

Middletown Publ ic

Schools

Assuring Connecticut’s Educational

Excellence

Finance Committee Meeting: May 13th, 2019

Board Meeting: May 14th, 2019

2

Agenda

Introduction and Objectives

National, Connecticut, and Middletown Context

Middletown Financial Forecasts

Strategic Budgeting Best Practices

Takeaways

3

DMGroup was founded in 2004 to help school districts address

their most pressing and important challenges.

DMGroup membership and client services are underpinned by

three key aims: raise student achievement, improve operational

efficiency, and allocate resources more effectively.

The District Management Group (DMGroup)’s mission is to achieve systemic improvement in public education.

Mission

4

DMGroup has partnered with hundreds of school districts across the US, helping them address their most pressing needs.

DMGroup brings best practices from across the country

Selected DMGroup Partners

All Sizes

of Districts

Nationwide

Experience

All Types

of Districts

6,800

Suburban

100,000

Urban

1,700 students

Rural

10,600

Gateway

Arizona Minnesota Texas South Dakota ConnecticutMaryland

55,000

Urban

5,000

Suburban

5

DMGroup has worked with many districts in the state of Connecticut.

Selected DMGroup Engagements and Projects

Special Education Projects

dmCouncilProfessional

Learning Community

Members

Other Consulting

Projects

39 Member

Districts

12

Participating

Districts

6

The partnership with Middletown Public Schools was established to study and develop a blueprint to address the changes ahead.

Project Overview

DiagnosticMonths 1-2

Scenario ModelingMonths 3-9

ImplementationMonths 10-18

1. District-Specific Diagnostic

• Conduct ACE2 kick-off

• Perform district diagnostic

• Leadership interviews

• Gather data

• Preliminary data analysis

2. Research & Share Best

Practices

• Leverage DMGroup’s network of

districts and research addressing

issues impacting ACE2, and

share with district leaders

3a. Scenario Planning

• Hold joint meeting

discussing impact of

external effects in CT

• Identify internal & external

model assumptions

3b. Scenario Development

• Hold monthly progress

update calls

• Outline potential scenarios

based on assumptions

• Create future-state models

• Conduct scenario analysis

3c. Assessing Impact

• Align on most likely future

scenarios

• Analyze the impact of

select scenarios

4. Implementation

Planning

• Hold planning retreat

• Develop initial

implementation plan for

each district

7

Given the strategic decisions facing Middletown Public Schools, stakeholders must have a shared understanding of the resource implications.

Meeting Objectives

2 Understand financial impact of the near and long-term decisions facing the

district right now.

4 Consider the district’s vision for applying a thoughtful, coherent, and

impactful strategy to implementing this decisions.

3Identify areas for investment and efficiencies at a high level, noting where further

detail and exploration by the Board and District would be valuable.

1 View the long-term funding gap the district may face in future revenue

scenarios given Connecticut’s funding challenges and Middletown’s declining

enrollment.

The objectives of this presentation is to build a shared understanding of the

financial outlook for Middletown Public Schools.

8

Agenda





Takeaways

9

National spending trends and projections show minimal changes in education and increases in spending related to pensions and health care.

US Historical and Projected SpendingTotal nominal dollars, in billions

* Note: Education incorporates all education and is not only K-12Source: https://www.usgovernmentspending.com

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Education*

Defense

Pensions

Health Care

Projected spending

through 2022

shows a slight, but

minimal increase is

educational

spending

10

Connecticut districts must address increasing student needs, while managing enrollment and funding decreases.

State Trends

Connecticut enrollment is declining…

…while the student population is

diversifying with increased needs.

The Condition of Education in Connecticut, 2014-15; http://edsight.ct.gov/relatedreports/Condition%20of%20Education%202014-15.pdf“Projections of Education Statistics to 2023.” The US Department of Education; https://nces.ed.gov/pubs2015/2015073.pdf.

27.0%

5.5%

11.6%

36.7%

7.2%

14.8%

ELL

+31%

+28%

Students

in poverty

+36%

Special

Education

400,000

600,000

2013-14 2014-15

Number of Students (PK-12)

2017-182016-172015-16

-3.6%

2017-182009-10

• Percent K – 12 enrollment change from 2013 to

2018: 3.6% Decline

http://edsight.ct.gov/relatedreports/Condition%20of%20Education%202014-15.pdf

11

Though Middletown’s enrollment has decreased, the city’s ECS funding has not been dramatically impacted.

Past Middletown Enrollment and ECS Funding

4,785 4,717 4,616 4,620 4,545 4,569

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

$15.0M

$20.0M

$0.0M

$5.0M

$10.0M

$25.0M

$30.0M

2013-2014

$19.8M

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

$18.6M $19.9M$19.6M $19.9M $19.3M

ECS FundingEnrollment

En

rollm

en

tE

CS

Fu

nd

ing

12

Since SY2013-2014, Middletown’s budget has hovered between $83M and $92M.

Middletown Historical Expenditures

$60M

$70M

$80M

$90M

$100M

$50M

$0M

$10M

$20M

$30M

$40M

2016-20172015-20162014-20152013-2014 2017-2018 2018-2019

(Expected)

13

City funds are the primary source of revenue for Middletown Public Schools.

2018-2019 Budgeted Revenue

Federal

Funding

ECS

(Includes

Alliance)

$63.5M

Other City

Funding

$3.0M $1.6M

Other State

Funding

$2.0M

Adult

Education

$0.1M

Private

Funding

$1.1M

Receipts

$91.2M

Total

Revenue

(and

Expenditures)

$19.9M

14

However, with expenditures projected to increase each year, there will be additional pressure on other funding sources to cover the gap.

Middletown Expenditures and ECS Funding Forecast

Percent increase shows the Compounded Annual Growth Rate (CAGR)

$90M

$70M

$100M

$80M

$110M

$40M

$0M

$50M

$10M

$20M

$30M

$60M

2024-

2025

$106.6M

2020-

2021

$91.2M

2018-

2019

2019-

2020

2021-

2022

2022-

2023

2023-

2024

+2.6%

$12M

$8M

$10M

$20M

$0M

$2M

$4M

$6M

$14M

$16M

$18M

$22M

2023-

2024

2018-

2019

2019-

2020

2020-

2021

2021-

2022

2022-

2023

2024-

2025

$19.9M $19.9M

+0.1%

Projected Expenditures Projected ECS Funding

15

The majority of Middletown’s expenditures go to wages and benefits, which is typical of school districts.

2018-2019 Budgeted Expenditures ($91.2M)

$0.1M

Purchased

Professional

Services

Purchased

Property

Services

Wages Employee

Benefits

Purchased

Other

Services

Supplies

$0.2M

$91.2M

$0.2M

$1.6M

$3.4M

$12.8M$1.7M

$15.5M$47.9M

Capital

Assets

Non-

LEA Exp

$7.8M

Other

Objects

Total

Expenditures

(Anticipated)

Miscel.

16

Agenda





Takeaways

17

The model uses past revenue and expenditures, as well as enrollment trends, to establish Middletown’s projections through SY 2024-2025.

Illustrative: Unadjusted Future State

$80M

$0M

$40M

$120M

2015

<$1M

2016 2017 2018 2019

$5M

2020

$1M

2021

$2M

2022

$3M

2023 2024

+2%

Monetary increase of Town fiscal burden

Total revenue (incl. federal grants, state, and LEA funding)

Total expenditures

Note: Represents sample district data, does not reflect actual projections for Middletown Public Schools

Historical Financialsyearly increase in

Town fiscal

burden

Sample Scenario Projections

3 FORECAST

18

If the city increases funding by 2% annually each year and spending continues, Middletown will have a $4.5 million shortfall by SY2024-2025.

Steady Increase Projection (2%) 3 FORECAST

The budget gap will

continue to widen as

expenditure growth

outpaces anticipated

revenue growth.

$40M

$30M

$90M

$20M

-$10M

$0M

$50M

$10M

$60M

$70M

$80M

$100M

$110M

SY2020-2021

SY2018-2019

SY2019-2020

SY2021-2022

$2M

SY2022-2023

$3M

SY2023-2024

$5M

SY2024-2025

Surplus / Deficit

Total Revenue

Total Expenditures

19

Expenditures for Middletown Public Schools in SY 2024-2025 are expected to be about $15.5 million more than they were in SY 2018-2019.

Comparing FY19 Budget to Forecast FY25 Budget

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$14.7M

$12.8M

$106.6M

$51.9M

$7.8M

$22.5M

$5.8M

$15.5M

2024-2025

Expenditures

2018-2019

Expenditures

$7.8M

$47.9M

$3.8M

$91.2M

$3.9M

$3.4M

+8.4%

+17.5%

+16.9%

Increases in wages and

benefits drive the majority

of these additional costs.

3 FORECAST

Other

Employee Benefits

Wages

Supplies

Purchased Other Services

Non-LEA Expenditures

20

Below are two additional potential scenarios for consideration in Middletown.

Two Additional Scenarios

Smaller Increases

• 1% annual increase in city funding starting in in SY 2020-2021 through SY 2024-2025

• 2024 - 2025 Potential Budget Gap: $8.1M

Larger Increases


• 2024 - 2025 Potential Budget Surplus: $3.1M

Incorporated Into All Scenarios

• City Funding: 6% increase for SY 2019-2020

• Increase in Statewide ECS Funding: 2% annually

• Middletown % of State Funding: 1.03% (constant based on proportion of SY ’19–’20 state funding)

Steady Increases


• 2024 - 2025 Potential Budget Gap: $4.5M

21

Changes in the amount of annual city funding dramatically impact Middletown’s financial projection for SY2024-2025.

Summary of Scenarios

Note: All dollar values shown in nominal dollars, i.e. these are the expected numbers for each year’s budget in the dollars of that year

Smaller Increase – 1% Increase Annually, SY 2020-2021 through SY 2024-2025

Steady Increase – 2% Increase Annually, SY 2020-2021 through SY 2024-2025

Large Increase – 4% Increase Annually, SY 2020-2021 through SY 2024-2025

2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025

Revenue $91.2 M $95.2 M $96.0 M $96.4 M $96.9 M $97.7 M $98.5 M

Expenditures $91.2 M $93.6 M $95.7 M $98.2 M $101.1 M $103.8 M $106.6 M

Surplus

(Deficit)$0.0 M $1.7 M $0.3 M -$1.8 M -$4.2 M -$6.1 M -$8.1 M

2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025

Revenue $91.2 M $95.2 M $96.6 M $97.8 M $99.0 M $100.5 M $102.1 M


Surplus (Deficit) $0.0 M $1.7 M $0.9 M -$0.4 M -$2.1 M -$3.2 M -$4.5 M

2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025

Revenue $91.2 M $95.2 M $98.0 M $100.6 M $103.3 M $106.4 M $109.7 M


Surplus (Deficit) $0.0 M $1.7 M $2.3 M $2.4 M $2.2 M $2.6 M $3.1 M

22

Unless the city provides a 4% increase in funding annually, Middletown is expected to face a widening deficit in SY2024-2025.

Three Revenue Scenarios vs. Projected Expenses

$90M

$95M

$100M

$105M

$110MLarger Increases (4%)

Steady Increases (2%)

2022-

2023

2018-

2019

2019-

2020

2023-

2024

2020-

2021

2021-

2022

2024-

2025

Smaller Increases (1%)

Expenditures

23

Agenda





Takeaways

24

There are a number of areas that districts may consider when addressing a potential long-term budget shortfall.

Potential Areas

● Reducing costs in:

● Facilities

● Operations

● Out of district tuition payments

● Re-negotiating:

● Union contracts

● Vendor contracts

● Supplier contracts

● Adjusting:

● Class sizes

● District structure

● District-wide staff

Key Questions

• What decisions best align with our strategic plan and district goals?

• What decisions allow for continued student success?

25

Divergent stakeholder needs often create conflict over how best to allocate resources.

Conflicts Related to Resource Allocation

• More spending vs. tax reductions

• General education vs. special education

• Core subjects vs. STEM vs. the arts

• Technology vs. longer school days

• Coaches vs. conferences

Divergent needs and priorities

across stakeholders…..

… make it difficult to be sure that

resources use is optimal.

Actualized Priorities

Stated

Priorities

Actualized

priorities differ

from stated

priorities

26

Districts can budget strategically by considering three important factors to align resources to the strategic plan.

Strategic BudgetingAligning Resources

Align

Resources

$$$

PeopleUse of Time

Increasing investment for

top objectives

Finding resources by

repurposing, reducing, or

reallocating

Communicating to win

support for changes

These are hard decisions and require multi-year planning.

Funds

27

With Middletown’s strategic plan and priorities, district administrators can use these forecasts to make budgeting choices in the years ahead.

Strategic Budgeting Phases

● How can we prepare for

a potential budget gap?

● How can we ensure that

we fund our strategic

plan in a fiscally-

responsible manner?

● What decisions might we

consider to ensure our

district’s fiscal stability?

Strategic Planning District Priorities Budget Choices

28

Each decision can have varying impacts on students and finances.

Weighing the Impact on Students

Smaller classes

Special education

$2.7 MILLION $2.7 MILLION

Technology

Professional development

Teacher pay

Note: Represents sample district data, does not reflect actual estimates for Middletown Public Schools

29

Agenda





Takeaways

30

There are a few key takeaways from this presentation.

Takeaways & Final Thoughts

Expenditures Are Increasing

• Wages and benefits costs are quickly increasing and are projected to cost over $10 million more by SY 2024-2025.

Revenue May Not Keep Up

• The city would need to increase funding by more than 3% annually to close the budget gap.

• State and federal funding shifts could impact Middletown finances, though to a lesser degree than city funding.

Strategic Budgeting

Awaits

• Middletown has a progressive strategic plan with district priorities and goals in place.

• The district is in a strong place to make significant long-term budget decisions to avert a potential budget shortfall.

31

Q&A

32

If you have any comments or questions

about the contents of this document, please

contact District Management Group:

Tel: (877) 362-3500

Email: [email protected]

Fax: (617) 249-0910

Web: www.dmgroupK12.com

Mail: 133 Federal Street, Boston, MA 02110

middletown public schools · since sy2013-2014, middletown’s budget has hovered between $83m and...

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