1

SCHOOL SCHOOL FUNDING FORUMFUNDING FORUM

Farmington Public SchoolsFarmington Public Schools

Revenues Expenditures

2

School Aid Structural DeficitSchool Aid Structural DeficitSpending Pressures Outpace Revenue GrowthSpending Pressures Outpace Revenue Growth

School Aid Structural DeficitSchool Aid Structural DeficitSpending Pressures Outpace Revenue GrowthSpending Pressures Outpace Revenue Growth

• Retirement Contributions—Rapid Growth• Employee Health Insurance—Rapid Growth• General Pay Raises• Other—Fuel, Utilities, Supplies• Revenues Growing Slowly

3

School Aid Revenues & School Aid Revenues & Spending PressuresSpending Pressures

School Aid Revenues & School Aid Revenues & Spending PressuresSpending Pressures

• Spending pressures grow 5% per year• Revenues grow 3% per year• Shortfall of 2% each and every year without spending and revenue policy changes

4

School Aid Problem (SAF)School Aid Problem (SAF)School Aid Problem (SAF)School Aid Problem (SAF)

• Economy

• Shifts in Revenue Sources

• Less Revenue from the GF

• Budgeting for items not originally intended for the SAF

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GF Transfer to SAFGF Transfer to SAFGF Transfer to SAFGF Transfer to SAFFiscal Year $ - Millions

1995 $665

1996 621

1997 278

1998 376

1999 421

2000 420

2001 385

2002 198

2003 384

2004 378

2005 164

2006 63

2007 35

2008 35

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How Are Schools Funded?How Are Schools Funded?How Are Schools Funded?How Are Schools Funded?

• Pre-Proposal A– Local Property Taxes Stay

Locally– Sales & Use Tax - 4% (60% to

Schools)– Income Tax - 4.6– Cigarette Tax - 25 cents

• (.02 to schools)– Other Tobacco - None– Real Estate Transfer - None – Property Tax 34 mills

(average)– Cap on Property Tax- None

• Post-Proposal A– Local Property Taxes go to State– Sales & Use Tax – 6%

• (60% of 4% and 100% from 2%)

– Income Tax – 4.4 (was 3.9, now 4.35)

• (14.4%)– Cigarette Tax - 75 cents

• (63.4% of collection)– Other Tobacco – 16%– Real Estate Transfer -.075%– Property Taxes (6/24)– Cap on Property Taxes – Lesser

of 5% or Inflation– New Use Tax???? Repealed

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SOURCES OF 2007 SCHOOL AID REVENUE

Other Tax Revenues 0.94%

Other Funds1.89%

Lottery Profits5.85%

Real EstateTransfer Tax 1.85%

IFT/CFT1.09%

Liquor Tax0.28%

Tobacco Tax3.52%

Income Tax16.48%

State Education Tax16.25%

Federal Funds10.80%

Sales and Use Tax40.83%

Other Revenue0.23%

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Farmington Schools FundingFarmington Schools FundingFarmington Schools FundingFarmington Schools Funding

• Pre-Proposal A – 1993-94– Homeowner Property

Taxes – 32.77 Mills– Hold Harmless Mills – 0– Debt Mills .74– Total Homeowner

33.51Mills– Total Business 33.51Mills– State Funding – 0%– Local Funding – 96%– Federal Funding 2%– Other 2%– Adds up to $8,407 per

Student

• Current Under – Proposal A – 2007-08– Homeowner Prop. Tax – 6 Mills– Hold Harmless 8.3784 Mills– Debt Mills 1.8 Mills– Total Homeowner 16.1784 Mills

• Reduction of 17.3316 Mills– Total Business – 25.8 Mills

• Reduction of 7.71 Mills– State Funding – 50%– Local Funding – 37%– Federal Funding 2.2%– Other 10.8%– Adds up to $10,500 per Student

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Without Proposal AWithout Proposal AWithout Proposal AWithout Proposal A

• Current Funding– Foundation Allowance

•$10,500– (22% Increase Since

1994 Average of 1.57% Increase

Inflation Average 2.6%)

• If No Proposal A– Foundation Allowance

• $14,611 or $56 million in Additional Revenue (if we had not passed Proposal A or made any other changes to funding)

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Per Pupil Foundation FundingPer Pupil Foundation Funding

Homestead

Nonhomestead

State Aid

$5,721$2,067

$2,712

11

20J20J

• Part of Farmington’s foundation allowance• Separate Categorical established in the

Engler administration when a flat $ amount was allocated for a particular year

• Topic of discussion during budget • If taken away, harms hold harmless

districts inversely• Any reduction proposal should be

equitable to all districts

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REVENUEREVENUE2007-08 General Fund Budget2007-08 General Fund Budget

50%

37%

13%

State Aid Property Taxes Other

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EXPENDITURES BY OBJECTEXPENDITURES BY OBJECT2007-08 General Fund Budget2007-08 General Fund Budget

58%

30%

4%

6%

2%0%

0%

Salaries Employee BenefitsPurchase Services Supplies & OtherTransfers Capital OutlayIntergovermental Payments

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EXPENDITURES BY FUNCTIONEXPENDITURES BY FUNCTION2007-08 General Fund Budget2007-08 General Fund Budget

20%

11%

14%

13%

26%

14%

2%0%

EL Instruction MS InstructionHS Instruction Other InstructionPupil & Staff Services Support ServicesIntergovernmental Transfers Transfers

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BUDGET FACTORSBUDGET FACTORS BUDGET FACTORSBUDGET FACTORS

• Foundation Allowance

• Wages/Benefits

• Retirement Rate

• Students - Enrollment

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BASE FOUNDATION BASE FOUNDATION

Year 2003 2004 2005 2006 2007 2008

$ Increase $192 $0 $0 $175 $210

$48

% Increase 1.9% 0 0 1.7% 1.7% .4%

MID-YEAR

REDUCTION ($59) ($74) 0 0 0 ?

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Farmington Public School DistrictCumulative Rate of Inflation vs Percent Increase

Per Pupil Foundation Funding 1993/94 to 2007/08

02468

101214161820222426283032343638

93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Per

cent

Rate of Inflation Percent Increase

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Retirement Rate HistoryRetirement Rate HistoryRetirement Rate HistoryRetirement Rate HistoryFiscal Retirement Total Retirement

Year Rate $ Expenditures % of Expend

2008-09* 16.54 14,466,652  152,201,667 9.50%

2007-08 17.00 14,618,703  150,741,462 9.70%

2006-07 17.74 15,936,633 155,815,010 10.23%

2005-06 16.34 14,470,279 153,140,544 9.45%

2004-05 14.87 12,756,878 146,693,465 8.70%

2003-04 12.99 11,011,128 137,946,733 7.98%

2002-03 12.99 10,364,921 129,322,464 8.01%

2001-02 12.17 9,749,551 135,120,933 7.22%

2000-01 12.16 9,457,888 130,635,736 7.24%

1999-00 11.66 8,932,394 126,818,259 7.04%

1998-99 10.77 7,786,855 116,191,697 6.70%

1997-98 11.12 7,689,843 110,976,962 6.93%*Estimated

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Enrollment HistoryEnrollment HistoryEnrollment HistoryEnrollment History

Year February September Blended Blended Change

Feb to Sept Change

Sept to Feb Change

2002/03 12,171 12,204 12,197 (12) 33 (85)

2003/04 12,136 12,322 12,285 88 186 (68)

2004/05 12,257 12,355 12,331 46 98 (65)

2005/06 12,296 12,380 12,359 28 84 (59)

2006/07 12,344 12,210 12,244 (115) (134) (36)

2007/08 12,199 12,222 12,217 (27) 23 (11)

2008/09 12,062 (124) - -

2009/10 11,976 (86) - -

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Enrollment HistoryEnrollment HistoryEnrollment HistoryEnrollment History

Blended Percentages February September

1994 – 1995 50% 50%

1995 – 1996 50% 50%

1996 – 1997 50% 50%

1997 – 1998 40% 60%

1998 – 1999 40% 60%

1999 – 2000 25% 75%

2000 – 2001 20% 80%

2001 – 2002 20% 80%

2002 – 2003 20% 80%

2003 – 2004 20% 80%

2004 – 2005+ 25% 75%

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FARMINGTON PUBLIC SCHOOLSFARMINGTON PUBLIC SCHOOLS

BUDGETED FOR 2007/08 AND 4 YEAR FORECASTBUDGETED FOR 2007/08 AND 4 YEAR FORECAST

FARMINGTON PUBLIC SCHOOLSFARMINGTON PUBLIC SCHOOLS

BUDGETED FOR 2007/08 AND 4 YEAR FORECASTBUDGETED FOR 2007/08 AND 4 YEAR FORECAST

2007/08 2008/09 2009/10 2010/11 2011/12

Revenue 154,457,280 150,864,330 150,301,780 149,600,532 148,916,618

Expenditures 150,741,462 152,201,667 156,569,885 159,700,955 162,117,542

Shortfall 3,715,818 (1,337,337) (6,268,105) (10,100,423) (13,200,924)

Beginning Fund Balance UNRESERVED

24,050,480 27,766,298 26,428,961 20,160,856 10,060,433

Ending Fund Balance 27,766,298 26,428,961 20,160,856 10,060,433 (3,140,491)

% of Total Fund Balance 18.42% 17.36% 12.88% 6.30% -1.94%

Days of School 33 31 23 11 (3)

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Projected Unreserved Fund BalanceProjected Unreserved Fund BalanceProjected Unreserved Fund BalanceProjected Unreserved Fund Balance

$32.9

$24.0$27.8 $26.4

$10.1

$31.1$34.8

$26.4

$20.1

($3.1)

($5.0)

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Fu

nd

Bala

nc

e (

De

fic

it)

(Milli

on

s)

Fiscal Year

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Reasons for a Fund BalanceReasons for a Fund BalanceReasons for a Fund BalanceReasons for a Fund Balance

• To smooth State Aid “Take Backs”• Federal/State Legislative Action• Assists in offering a continuous program,

avoids knee jerk reactions• Emergency Expenditures• Sound Fiscal Management• Cash flow• Interest Earnings

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Reasons for a Fund BalanceReasons for a Fund BalanceReasons for a Fund BalanceReasons for a Fund Balance

• Uncertainty of Revenues and Revenue Stream

• Unanticipated Expenditures

• Auditor Recommendation

• Budget Stabilization

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2008/09 STATE BUDGET2008/09 STATE BUDGET2008/09 STATE BUDGET2008/09 STATE BUDGET

• Legislature is currently working on their side of the proposal

• In the past not voted until well after our school year has started

• Current vote is on a $71 per pupil increase (.7%)

• Dividing higher foundation districts

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What Have We Done in the Past?What Have We Done in the Past?What Have We Done in the Past?What Have We Done in the Past?

• Reduced $33 million – tightened our belts– Includes 225 Positions– See Website for Detail Listing of the Past

Years’ Reductions– Budget Work Groups Submitted Reports– Conscious Effort Toward Three Areas:

Revenue Enhancements, Efficiencies and Cost Reductions

– Staff/community suggestions on website

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What is the District doing now?What is the District doing now?What is the District doing now?What is the District doing now?

• Tying goals of Budget Committee to Farmington Forward goals– Creation of a Proactive Financial Model– Learning Configurations and Facilities

Committee• Addition of all day kindergarten to

assist with student achievement

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What Can You Do?What Can You Do?What Can You Do?What Can You Do?

• Become informed on what the District has done to date and will continue to do

• Contact the Governor/Legislature to share your concerns about funding

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Important DatesImportant DatesImportant DatesImportant Dates

• Presentation of budget document 5/20/08

• Public hearing on budget and tax levy 6/3/08

• Adoption of 2008/09 Budget – 6/17/08

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Questions and SuggestionsQuestions and SuggestionsQuestions and SuggestionsQuestions and Suggestions

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