BUDGETARY

OVERVIEWMarch 11, 2013

By Fred J. HofmanSuperintendent/Principal

Harrison Public Schools

IMPACTS OF SB 175

Current General Fund Budget: $1,021,755

Without 175 we are looking at the following budgetary limitations: Minimum: $824,619 Maximum: $990,613 Maximum w/ voter

levy: $1,026,256 Difference from

current 2012-13 budget: -$31,142

With 175, we are looking at the following budgetary limitations: Minimum: $876,579 Maximum:$1,042,573 Maximum w/ voter levy:

$1,090,721 Difference from

current 2012-13 budget: +$20,818

GENERAL FUND BUDGET This budget is pretty much

set by ANB, Basic Entitlement, as well as a few other factors set out in statute

Schools operating at a maximum budget get more flexibility …

Rather than simply using current enrollment or Avg ANB enrollment, schools running with a MAX Budget get more budgetary authority the following year, when ANB declines.

Importantly, too many schools dump MAX Budget funds into teacher salaries, which then makes declining enrollment an almost automatic R.I.F. mandate

If you are using the funds wisely, however, striking a balance, you can protect yourself some for the following year.

I am not, necessarily, advocating for such; I am just explaining how it might impact our budget situation.

BASIC SCHOOL ENTITLEMENTS

Current High School Basic Entitlement: $260,099 SB 175, 2013-14 Basic H.S. Entitlement: $290,000 SB 175, 2014-15 Basic H.S. Entitlement: $300,000

Current Junior High Basic Entitlement: $66,275 SB 175, 2013-14 Basic J.H. Entitlement: $80,000 SB 175, 2014-15 Basic J.H. Entitlement: $100,000

Current Elementary Basic Entitlement: $23,402 SB 175, 2013-14 Basic EL Entitlement: $40,000 SB 175, 2014-15 Basic EL Entitlement: $50,000

This part of SB 175 is what will provide the most long-term help to Harrison as the basic entitlements are NOT tied to enrollment (at least for Class C Schools)

PER ANB ENTITLEMENT Current H.S. ANB Entitlement: $6,497 SB 175 2013-14 ANB Entitlement: $6,555* SB 175 2014-15 ANB Entitlement: $6,691

Current J.H. ANB Entitlement: $6,497 SB 175 2013-14 J.H. ANB Entitlement: $6,555 SB 175 2014-15 J.H. ANB Entitlement: $6,691

Current EL ANB Entitlement: $5,075 SB 175 2013-14 Elementary ANB: $5,120* SB 175 2014-15 Elementary ANB: $5,226

* remember this number

ACTUAL ANB / PROJECTED ENROLLMENT NUMBERS FOR HARRISON

EL 2012-13 ANB: 51 HS 2012-13 ANB: 47

2013-14: EL: 50 HS: 43

2014-15: EL: 47 HS: 38

2015-16: EL: 47 HS: 31

2016-17: EL: 42 HS: 29

2017-18: EL: 41 HS: 26

5 year change EL: - 10 HS: - 21

WE USE THE 3 YEAR AVG. ANB NUMBERS IF THEY ARE HIGHER

Current, 2012-13 EL ANB: 59

Current, 2012-13 HS ANB: 47

2013-14: EL: 52 HS: 45

2014-15: EL: 49 HS: 43

2015-16: EL: 48 HS: 37

2016-17: EL: 45 HS: 33

2017-18: EL: 43 HS: 29

5 year change EL: - 16 HS: - 18

PER ANB ENTITLEMENT Doing the math…

Losing 18 High School ANB over 5 years in 2013-14 numbers (x $6555*) = -$117,990

Losing 16 Elementary ANB over 5 years in 2013-14 numbers (x$5,120*)= -$81,920

Basic Entitlement will remain the same; our ANB Entitlement will not. Our budgetary loss will be approximately $200,000 over 5 years.

FUNDS

SB 175 does not automatically solve our long

term problems but will make it easier to maintain a

functional budget with declining enrollment

SB 175 buys us time to get things in order, long term. It’s like the Alamo,

buying time for Sam Houston & the Texans!

General Fund Bus Depreciation Transportation Building Reserve Technology Flex Adult Education Retirement Other minor funds

too

General Fund is the main fund; the one that causes all the headache and heartache.

We have long term issues and short term ones… Regardless of the fate of SB 175

DECLINING ENROLLMENT

If we are going to save our school, we need to be

creative

We’ll need help from the Legislature. Will Rep. Ray

Shaw be our Davey Crockett?

Because our primary budget is pretty much set by our enrollment, or ANB, we will see a smaller budget every year over the next 5 years, & possibly even beyond that.

SB 175’s bump in basic entitlement does not rely upon ANB, at least for Harrison, which is a very good thing.

Make no mistake, the impacts of SB 175 not passing the Montana House, will only expedite our situation.

SB 175 gives us a year or two to phase in changes and prepare for the budgetary shortfalls to come.

“WE ALL KNEW THAT

DAY WAS COMING”

That day may well be upon us…

THE PRICE OF STABILITY AND

SUCCESS …An Uncomfortable

Truth:Our Average Teacher Salary / Insurance package is more than $39,000.We are simply too top heavy in teacher salary for a school our size to continue on, with our enrollment declining at the rate it is.

TEACHER SALARY 15 Teachers 2012-13 2013-14 (no increase) 2% Increase Teacher 1$45,655 $45,655 Teacher 2$45,655 $45,655 Teacher 3$45,655 $45,655 Teacher 4$45,655 $45,655 Teacher 5$45,655 $45,655 Teacher 6$40,120 $41,323 Teacher 7 $36,715 $36,715 Teacher 8 $16,208 $16,693 Teacher 9 $12,794 $12,794 Teacher 10$36,715 $37,817 Teacher 11$35,646 $36,715 Teacher 12$18,358 $18,908 Teacher 13$18,641 $19,200 Teacher 14$26,524 $27,319 Teacher 15$25,002 $25,752 Total$494,998 $501,510

$46,558$46,558$46,558$46,558$46,558$42,150$37,449$17,027$13,050$38,573$37,449$19,286$19,584$27,866$26,267

$511,490

BENEFITS OF BUYOUTS

•Replacing 4 of our 5 top salaries with new, young teachers, would result in $80,000 in annual savings.

•Reward veteran teacher(s) with a well deserved , 1-time bonus, that will also bump up their 3 highest year average for retirement benefits.

TEACHER BUYOUT 101 Let’s just say, you

pay a veteran teacher $45,000.

Let’s say you buy out a teacher for $15,000.

Let’s say you hire a new teacher at $25,000

(Note: there are other costs associated with whatever buyout you opt with, in conjunction with Retirement Fund)

Year 1 Savings: $0,000 $25,000+$15,000 +$5,000

other incidental costs (F.I.C.A, T.R.S., Soc. Security, etc…)

Year 2 Savings: $20,000

Now, if buyout funds come from a source other than the General Fund, Year 1 Savings = $20,000.

That savings would then continue on thereafter…

BUYOUT FUNDING SOURCE(S)

Flex Fund dollars can be saved from one year to the next…

Flex funds can be used for a wide variety of expenses…

We do not currently have funds in any account that we could use for this purpose.

The Board may be able to transfer sufficient funds from Bus Depreciation to Flex, after a public hearing and/or approval from the voters.

The voters could, now or in the future, vote for a maximum levy and those excess funds could then be used for a 1 time buyout(s) of a teacher; but not put into the general salary.

We could all buy lottery tickets and hope for the best.

FUTURE

Transferring some funds from a limited use savings account… to

a savings account with flexibility, may hold the key to the Harrison High School’s survival and, in turn, Harrison’s survival.

We could set the students and this school up to survive the next decade in the face of budgetary shortfalls and declining enrollment.

4 years from now, we may not be in much of a position to replace the radiators or replace the convection oven in the kitchen, etc...

It is my belief we can: deal with some security upgrades, technology upgrades, and jump start a potential salary reduction plan, without new taxes.

It’s different, it’s outside the box, but it makes sense.

BUS DEPRECIATION PROJECTIONSINFO. BASED UPON CONSULTATION WITH HARLOW’S

TRANSPORTATION ON FUTURE BUS COSTS

School YearExpenditure

(-)Annual Depreciation

(+) Fund Balance (=)2009-10 $75,604.50 $37,194.00 $322,893.00

2010-11 $0.00 $37,194.00 $284,572.00

2011-12 $92,414.14 $49,927.00 $289,251.00

2012-13 $0.00 $44,177.73 $333,235.00

2013-14 $0.00 $44,177.73 $377,413.00

2014-15 $67500.00 $38,889.83 $344,803.00

2015-16 $0.00 $47,153.00 $391,956.00

2016-17 $0.00 $39,543.00 $431,499.00

2017-18 $100,000.00 $51,982.00 $383,481.00

2018-19 $0.00 $42,741.42 $426,222.002019-20 $125,000.00 $58,500.00 $359,722.002020-21 $0.00 $58,500.00 $418,222.002021-22 $0.00 $51,750.00 $469,972.00

BUS DEPRECIATION AFTER TRANSFERINFO. BASED UPON CONSULTATION WITH HARLOW’S

TRANSPORTATION ON FUTURE BUS COSTSSchool Year

Expenditure (-)

Annual Depreciation (+) Fund Balance (=)

2009-10 $75,604.50 $37,194.00 $322,893.002010-11 $0.00 $37,194.00 $284,572.002011-12 $92,414.14 $49,927.00 $289,251.00

2012-13$270,00

0 $44,177.73 $58,235.002013-14 $0.00 $44,177.73 $102,422.002014-15 $67500.00 $38,889.83 $73,811.002015-16 $0.00 $47,153.00 $120,964.002016-17 $0.00 $39,543.00 $168,117.002017-18 $100,000.00 $51,982.00 $120,099.002018-19 $0.00 $42,741.42 $162,840.002019-20 $125,000.00 $58,500.00 $96,340.00

2020-21 $0.00 $58,500.00 $154,840.002021-22 $0.00 $51,750.00 $206,590.00

FLEX FUND

For example, no current student would ever have a text

book older than 12 years… Long-term Set up

Funds could be used to overhaul technology, as has been discussed.

Funds could be used to pay for some security upgrades.

Funds could be used to replace most of our primary text books & load up on supplies for classrooms.

Funds could be used to buy out teacher contracts.

Funds could also be used to replace big ticket facilities items, such as new radiators and a convection oven.

Funds could be used for other unanticipated shortfalls

THE END OF THE

OVERVIEWHappy Monday …