october 9, 2018 - boarddocs.com€¦ · • assume no new grant funding • loss of competitive...

Budget BriefOctober 9, 2018

Investing in our Priorities

1


Budget Process

October Administration provides 5-year financial projection including budget

deficits (immediate and 5-year), health care costs, PSERS, assessment appeals, fund balance and other major cost/revenue drivers as applicable

Administration presents information on grants and funding streams

October 9, 2018

2


“The budget is not just a

collection of numbers, but an

expression of our values”

October 9, 2018

3


Budget Process (Best Practices)

Plan &

Prepare

Set

Instructional

& Operational

Priorities

Pay for

Priorities

Implement

Plan

Ensure

Sustainability


Budget Framework (Board approved)

The School Board has expressed interest in establishing a framework to ensure consistent levels of transparency, oversight, and accountability in budget deliberations year to year, regardless of changes in the Board or Administration composition. This framework will address SDoL’s philosophy, timeline, priorities, and expected practices.

October 9, 2018

5


Budget Development Process & Philosophy (Board approved)

The Superintendent, Administrative Team, and Board have adopted the following philosophical guidelines for the creation of a proposed preliminary budget supporting the District’s vision, mission, and goals.

• Support quality learning opportunities for all students;

• Maintain a safe school learning environment for students and staff;

• Consider external related expenses before personnel reductions;

• Identify strategic savings rather than across-the-board reductions;

• Promote operational efficiencies and consolidation of services;

• Consider stakeholder input;

• Consider aligning local subsidies to state and federal categorical programs;

• Pursue additional revenue sources as appropriate; and

• Ensure all students have equitable opportunities

October 9, 2018

6


5 Year Budget Forecast

We have used estimates based on the best available information to date to create a 5 year forecast of both expenditure and revenue data:

Revenue Assumptions• Economic recovery is moving slowly (10 years from 2008 recession)

• Local revenues are maintained at status quo with NO ASSUMPTION for real estate tax revenues on current ACT 1 index

• Slight adjustments to a few line items using 2018 year end estimates

• State subsidies do not increase past 2020

• FICA/PSERS Subsidies correlate with Payroll expenses

• Expected increase from 2020 budget ~ $2.0 MM or 8.4%

• Federal subsidies do not increase for entitlement grants

• Assume no new grant funding

• Loss of Competitive Funding

• GEAR UP (Expires 2019) ~ $350K in 2019

• School Climate Transformation (Expires 2019) - $730K in 2019

October 9, 2018

7




Expenditure Assumptions• Payroll moves at a rate of 2.6% annually (average)

• PSERS increases are based on current published rates

• Healthcare increases are based on historical trend of .05% annually (no increase in 2019 budget)

• Debt Service is based on actual payment schedule (need for future projects)

• Other expenditures are increased at 1-2% annually (variable on line items)

• Included all new investments approved in prior 3 annual budgets• ARC continuation

• Instructional Technology Plan at the Middle Level

• Voluntary Professional Development Model

• Learning Sciences (LSI)

• Principal Residency

• Others (to be reviewed in November)

• Does Not Include• Instructional Technology Plan for Year 2

• Continuation of resources from the School Climate Transformation Model

• New Debt Service (when needed) for the continuation of our Phase 3 Projects

October 9, 2018

8




Fund Balance Utilization• Fund Balance is assumed to be utilized to balance the Actual Budget Shortfall in our Fund Balance Summary

slide.

Deficits• Budget Surplus (Deficit) – Represents the cumulative budget or “structural” deficit for each year assuming

the District did not rebalance or utilize fund balance in any given year.

October 9, 2018

9



• PlanCon Reimbursement• Currently budgeted at $2.0 MM annually

• All funds in “arrears” have been received

• Will the state continue to fund, cut or modify the program?

• Future project revenue is not built into our model

• Building Projects• Current debt service load is paying for current and

completed projects

• New debt service would be required to complete remaining phases of construction

• 2019 Target year for the next financing of General Obligation Bonds

• Based on increasing costs, may need to attribute a portion of any tax increase towards completion of Phase 3

• Collective Bargaining Agreements• AFSCME – Expires June 2019

• Technology Plan• $1MM in new dollars needed to continue plan

• Real Estate Tax Revenue• No increases included

• State Subsidies• No increases for Basic Education or Special Education

October 9, 2018

10

Major Considerations for the Forecast:


Balancing the Budget

October 9, 2018

11

Revenues

Local (Taxes)

State (Subsidies)

Federal (Grants)

Expenditures

Mandated

Non-Mandated

Programmatic

Operational

Fund Balance


5 Year Forecast

October 9, 2018

12

BUDGET

2019 2020 %∆ 2021 %∆ 2022 %∆ 2023 %∆ 2024 %∆

REVENUE

Local $85,943,598 $85,440,598 -0.59% $85,440,598 0.00% $85,440,598 0.00% $85,440,598 0.00% $85,440,598 0.00%

State $113,193,210 $115,434,944 1.98% $116,402,213 0.84% $117,372,416 0.83% $118,521,830 0.98% $119,282,672 0.64%

Federal $14,674,341 $14,261,520 -2.81% $13,461,520 -5.61% $13,461,520 0.00% $13,461,520 0.00% $13,461,520 0.00%

Transfers In $3,150,000 $3,150,000 0.00% $3,150,000 0.00% $3,150,000 0.00% $3,150,000 0.00% $3,150,000 0.00%

TOTAL REVENUE $216,961,149 $218,287,062 0.61% $218,454,331 0.08% $219,424,534 0.44% $220,573,948 0.52% $221,334,790 0.34%

EXPENDITURES

Salary and Benefit Costs $146,073,365 $150,143,212 2.79% $154,047,763 2.60% $158,026,376 2.58% $162,341,610 2.73% $166,155,285 2.35%

Other $56,143,549 $56,132,608 -0.02% $56,425,293 0.52% $56,720,906 0.52% $57,019,474 0.53% $57,321,028 0.53%

Debt Service $15,903,360 $15,903,360 0.00% $15,903,360 0.00% $15,903,360 0.00% $15,903,360 0.00% $15,903,360 0.00%

Capital Outlay $1,265,875 $0 -100.00% $0 $0 $0 $0

TOTAL EXPENDITURES $219,386,149 $222,179,180 1.27% $226,376,416 1.89% $230,650,642 1.89% $235,264,444 2.00% $239,379,673 1.75%

SURPLUS / DEFICIT (STRUCTURAL) ($2,425,000) ($3,892,118) ($7,922,085) ($11,226,108) ($14,690,496) ($18,044,883)

BEGINNING FUND BALANCE $25,576,933 $23,151,933 $19,259,815 $11,337,730 $111,622 ($14,578,874)

PROJECTED YEAR END BALANCE $23,151,933 $19,259,815 $11,337,730 $111,622 ($14,578,874) ($32,623,757)

FUND BALANCE AS % OF EXPENDITURES 10.55% 8.67% 5.01% 0.05% -6.20% -13.63%

FUND BALANCE AS # OF MONTHS OF EXPEND. 1.27 1.04 0.60 0.01 -0.74 -1.64

REVENUE / EXPENDITURE PROJECTIONS


Closer Look

October 9, 2018

13

Overall Budget increasing 1.27%

Reduction of $1.2MM in Capital

Outlay

Maintaining Debt Service levels

to increase future construction

capacity

Deficit Projection of $3.9MM(Prior Year started at $3.6MM)

BUDGET

2019 2020 %∆

REVENUE

Local $85,943,598 $85,440,598 -0.59%

State $113,193,210 $115,434,944 1.98%

Federal $14,674,341 $14,261,520 -2.81%

Transfers In $3,150,000 $3,150,000 0.00%

TOTAL REVENUE $216,961,149 $218,287,062 0.61%

EXPENDITURES

Salary and Benefit Costs $146,073,365 $150,143,212 2.79%

Other $56,143,549 $56,132,608 -0.02%

Debt Service $15,903,360 $15,903,360 0.00%

Capital Outlay $1,265,875 $0 -100.00%

TOTAL EXPENDITURES $219,386,149 $222,179,180 1.27%

SURPLUS / DEFICIT (STRUCTURAL) ($2,425,000) ($3,892,118)

BEGINNING FUND BALANCE $25,576,933 $23,151,933

PROJECTED YEAR END BALANCE $23,151,933 $19,259,815

FUND BALANCE AS % OF EXPENDITURES 10.55% 8.67%

FUND BALANCE AS # OF MONTHS OF EXPEND. 1.27 1.04

REVENUE / EXPENDITURE

PROJECTIONS


$217

$218

$218

$219

$221

$221

$219

$222

$226

$231

$235

$239

2019 2020 2021 2022 2023 2024

REVENUES VS. EXPENDITURES(EXPRESSED IN MILLIONS)

Revenues Expenditures

Gap Analysis

October 9, 2018

14

Revenues are trailing

behind the growth of

expenditures. Keep in

mind the projection

does not include real

estate tax or state

subsidy growth.

PSERS Rates have

leveled off.


Fund Balance Trend(General Fund)

October 9, 2018

15

$2

3

$1

9

$1

1

$0

($1

5)

($3

3)

2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4

YEAR-END BALANCES( EX P R ES S ED I N M I L L I O N S )


Employee Costs

October 9, 2018

16

$88,5

29,7

10

$90,8

32,2

32

$93,2

01,7

78

$95,6

40,3

12

$98,1

49,8

56

$100,7

32,4

89

$57,5

43,6

55

$60,7

62,5

30

$62,3

19,8

24

$63,8

82,5

18

$65,7

13,7

29

$66,9

66,0

32

2019 2020 2021 2022 2023 2024

SALARY & BENEFIT TRENDS Salary Benefits

2019 – Employee Costs

represent 67% of Budget

• Benefit Costs ~ 26%

• As a % of Salary ~ 65%


represent 70% of Budget



Historical Perspective:




• $12.5MM for PSERS


PSERS…reaching the peak

7.13% 7.13%

4.76% 4.78%5.64%

8.65%

12.36%

16.93%

21.40%

25.84%

30.03%

32.57%33.43%

34.79% 35.26% 35.68%36.32% 36.32% 36.32%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Current Rate

33.43%

$28.7 MM

October 9, 2018

17

Expenses are climbing

annually ~ $2MM


PSERS Increase vs. New Tax Revenue

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Increase Tax Revenue (Using Act 1 Base Index)

October 9, 2018

18

Reven

ue

Gap

The PSERS

Panic is

Over….

However at

what cost?


Tax Increase vs. Act 1 Index

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20

Actual Increase Base Index Adjusted Index

October 9, 2018

19

Dark grey bars indicate year where the Board

approved an “Opt-Out” Resolution


ACT 1 Index

• Base Index = 2.3% from 2.4%

• $1,723,700 New Revenue

• Adjusted Index = 3.3% from 3.5%

• $2,473,000 New Revenue

October 9, 2018

20


Next Month

• Review additional demographic data and enrollment trends

• Review budget priorities

• Review fund balance and preliminary audit results

• Review the budget calendar and program evaluation process

October 9, 2018

21


Key Takeaways

October 9, 2018

22

$3.9 MMProjected

Starting

Deficit

Act 1

Index

3.3% or $2.4 MM (Adjusted)

2.3% or $1.7 MM (Base)

Starts the Clock on the

Budget Process

Investing in our Priorities October 9, 2018

23

october 9, 2018 - boarddocs.com€¦ · • assume no new grant funding • loss of competitive...

Documents