Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
Budget BriefOctober 9, 2018
Investing in our Priorities
1
Investing in our Priorities
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
Investing in our Priorities
“The budget is not just a
collection of numbers, but an
expression of our values”
October 9, 2018
3
Investing in our Priorities
Budget Process (Best Practices)
Plan &
Prepare
Set
Instructional
& Operational
Priorities
Pay for
Priorities
Implement
Plan
Ensure
Sustainability
Investing in our Priorities
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
Investing in our Priorities
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
Investing in our Priorities
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
Investing in our Priorities
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:
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
Investing in our Priorities
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:
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
Investing in our Priorities
5 Year Budget Forecast
• 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:
Investing in our Priorities
Balancing the Budget
October 9, 2018
11
Revenues
Local (Taxes)
State (Subsidies)
Federal (Grants)
Expenditures
Mandated
Non-Mandated
Programmatic
Operational
Fund Balance
Investing in our Priorities
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
Investing in our Priorities
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
Investing in our Priorities
$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.
Investing in our Priorities
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 )
Investing in our Priorities
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%
2024 – Employee Costs
represent 70% of Budget
• Benefit Costs ~ 28%
• As a % of Salary ~ 66%
Historical Perspective:
2009 – Employee Costs
• Benefit Costs ~ 27%
• As a % of Salary ~ 38%
• $12.5MM for PSERS
Investing in our Priorities
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
Investing in our Priorities
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?
Investing in our Priorities
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
Investing in our Priorities
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
Investing in our Priorities
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
Investing in our Priorities
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