SCHOOL FINANCE UPDATEDELTA COUNTY SCHOOL DISTRICT 50J SCHOOL BOARD

DECEMBER 2011

Where The Funds Come From

4.20%

57.68%

24.55%

3.91%

3.16% 2.93% 3.57%

General Fund 2011-2012 Budget

FederalState EqualizationProperty TaxesSpecific Ownership TaxOther Local RevnueUse of Fund BalanceOther State Revenue

Where The Funds GO

57.46%16.49%

5.46%

7.00%

2.85% 9.06% 0.91% 0.76%

General Fund 2011-2012 Budget

SalariesBenefitsPurchased ServicesSuppliesUtilitiesTransfers to Other FundsEquipmentOther

Without inter-fund transfers, Personnel costs = 81.3% of total costs.73.95%

Total Budget $36.7 Million Numbers reflected are

the percentage of the total budget

Source 2010-2011 Actual

2011-2012 Budget

Federal $ 1,602,153 $ 1,541,120

State Equalization 20,256,471 21,178,601

Fed. Portion Equalization 1,334,734 -0-

Property Taxes 10,166,661 9,015,800

Specific Ownership Tax 1,399,022 1,435,000

Other Local Revenue 983,429 1,160,243

Use of Fund Balance -0- 1,077,256

Other State Revenue 1,639,300 1,312,073

Total Revenue $37,381,770 $36,720,093

State PPR $6,478.18 $6,152,07

Revenue Comparisons

Understanding PPR(Per Pupil Revenue)

Property Tax Specific Ownership Tax State Equalization Full Day Kindergarten Factor (.08) Factors

PersonnelAt-RiskCost of Living

PPR is how schools are funded in Colorado through the School Finance Act adopted annually. It is made up of the following:

Property TaxEach December, we set the mill levy assigned to our

District by the State. This becomes part of our PPR. The current Mill Levy is 22.656.

Assessed valuations from the County Assessor are applied to the mill levy to determine the District’s portion of the property tax.

Mill levies were frozen 3 years ago which is increasing the percentage of local funds into school districts and decreasing the State share.

Current economic conditions causing assessed valuations to decrease will cause property taxes to decrease and State share to increase.

Current property taxes account for $9.7 million.

Specific Ownership Tax

We collect a portion of taxes assessed on: car sales, boat sales, atv, license plate renewals, etc…

Sales are down due to the current economic situation which creates more pressure on State Equalization.

Specific ownership accounts for $1.4 million.

State EqualizationState Equalization funds the balance of PPR

after Property Taxes and Specific Ownership taxes.

District Board Resolution 2011-08 continues to restrict $300 per student for capital reserve. We call this the District PPOR (Per Pupil Operating Revenue)

State Equalization accounts for $21.2 million.

Full Day Kindergarten In 2007-2008 the State added a factor to

increase payments for districts providing full day kindergarten with an additional .08 FTE. Previously, kindergarten was funded at .50 or ½ FTE. This addition increases to .58 FTE which is over $490 per kindergarten student included in our PPR.

Factors Personnel costs are factored for the

geographical area the District is in and either adds to or reduces from base PPR.

Cost of Living At-risk factors include:

Free and Reduced LunchELLSpecial Education

All Factors adjust PPR up and down from the base funding. Our District is the 6th lowest funded district in the state.

Amendment 23Amendment 23 was passed in 2000. It guaranteed an

increase in base funding of inflation plus 1% in an attempt to increase funding to schools in Colorado through 2010-2011. In 2011-2012 and beyond, Amendment 23 will provide for an increase of the inflation factor only*. (Denver-Boulder Index) The intention of the legislation was to close the gap in funding compared to other states. However, it has become the floor for increases to education funding rather than the ceiling.1

1. Source: Donnell-Kay Foundation

• *This 1% reduction started in the 2011-2012 budget.

• Currently PPR is not being funded as designed and there is a “negative factor” to achieve budget reductions from the State. (Total negative factor reduction of Amend. 23 $4.9 Million)

FAQ: School Finance General Fund Furlough Day = $122,600 per day PPR = $6,152 per full time student Transportation cost per mile = $3.29 District contribution for health care

Single = $350, Family = $650 Average salary scale step

Certified 2.38% Classified 1.89%

Cost of step increase (including benefits) ($491,000) Certified = $324,000 Classified = $ 70,000 Activities = $ 10,000 Admin. = $ 27,000 New Bottom Steps = $60,000

Beginning teacher salary/benefits Single health plan = $39,605 Family health plan = $43,205

Senior Teacher – “top end” Single health plan = $76,172 Family health plan = $79,772

Current Enrollment (October 1 count) Students 5,315 Funded FTE Count 4,909.50

PERA Increase ($195,000) Education Increments ($65,000)

School District Funds General Fund: General Operating Fund ($36.7 Million) Food Service Fund: Lunch/Breakfast Program ($2.0 Million) Federal Grants Fund: Title I to IV ($1.6 Million) Capital Reserve Fund: Large Maint/Building projects ($1.8

Million) Bond Redemption Fund: Payment of 2003 Bonds (2.0 Million) Delta-Montrose Technical College: Funding from State Higher

Education, Tuition, Federal Student Aide ($3.2 Million) Insurance Reserve Fund: Part of $300 Capital Reserve to pay

for Property Insurance and Worker’s Comp: ($229K) Colorado Preschool Fund: BELA preschool Program ($645K) Transportation Fund: ($1.5 Million)

DCSD50J Budget ProcessSchool Budget Law School Districts must provide a proposed budget to the Board 30

days prior to the start of the new fiscal year. (We do this in the May Meeting.)

School Board must adopt a budget and appropriate the funds before July 1st. (We do this in the June Meeting.)

Budget must be presented in a format that allows comparisons of revenues and expenditures that any “layperson” can understand.

School Boards must authorize the use of fund balance by resolution in which revenues are less than expenditures.

Budgets can be adjusted up to January 31st each fiscal year taking into account enrollment and other revenue and expenditures not known at the time of the original budget approved in June. (We do this in the November Meeting)

Budget Process We use a modified zero based budget

procedure that goes through every line in the budget.

We use position control to account for personnel.

Each account is analyzed and compared to the prior 2 years and the current projected year.

Revenues are budgeted based on enrollment projections. This accounts for 86% of District revenues.

Budget Process January-February: Update spreadsheets with current year

projection and historical detail. Updated employee information. January-February: Load current known changes into the budget.

(i.e. PERA increases) January-February: Process the information coming from the State

and project what increases or decreases in funding might occur. January-February: Meet with principals individually and directors

to begin planning to meet the budget expectations. February: Start budget projections for COLA, Steps, Furlough, and

other issues as appropriate. February: Start the Board approved process for prioritizing

cuts/increases. (The past 2 years this has been accomplished through the Budget Task Force.)

Budget Process March: Apply all information to the budget

worksheets and evaluate the need for cuts. March: State report comes out mid- month

and make adjustments accordingly as this is usually the report the JBC uses to set the State’s budget.

April: Prepare a preliminary look to the Board and get the Board’s direction. Board work session at April’s meeting.

Budget Process May: Proposed budget to the Board. Budget

work session before the May meeting and budget hearing during the meeting and present the proposed budget with recommendations to the Board and public.

May: Take input from the Board and public to make adjustments.

Budget Process June: Finalize budget to be presented to Board.

Include State mandated budget reporting requirements. June: Budget hearing during the meeting for budget

presentation showing changes from May and final line item budgets.

June: Board reconvenes the regular meeting and approves the budget and appropriation resolutions for each fund.

October: Actual student enrollment numbers and additional information is factored into the budget.

November: Final budget and appropriation resolutions are approved during the November Board meeting.

2012-2013 Budget Timeline January 2012:

Budget template updated with current information and prior year’s history.

Gather data on potential budget reduction ideas.Meet with Principals regarding personnel and

budget reduction ideas. February 2012:

Directors start planning proposed budget reductions based on State projections.

Activate the Board desired process for budget discussions. (BTF in the past)

2012-2013 Budget Timeline March:

Apply budget reduction ideas to budget template to analyze progress towards budget reduction goals.

Adjust budget reduction goals after the State forecast and JBC initial budget scenarios.

AprilPrepare preliminary budget for a work session for

School Board meeting.Take input from the School Board to create the May

proposed budget.

2012-2013 Budget Timeline May:

Prepare 2012-2013 proposed budgetPresent proposed budget to School board in a work session.Present proposed budget during budget hearing during the

board meeting. Take input from School Board and adjust the budget

accordingly. June:

School Board adopts 2012-2013 budget and appropriates the funds after budget hearing.

November:Adjust budget based on enrollment and other known factors.School Board adopts revised 2012-2103 budget and

appropriations.

Budget Reduction Process 2010-2011: School Board created the BTF

(Budget Task Force) Met from Nov – March with a presentation of

their recommendations to the School Board in April.

Made up of 5 Community, 4 DAC, 4 Coord. Council, 2 Class. Council, 2 Directors, 3 Principals. Mike and Terry were “consultants” to the group. (20)

Recommendation Amount BudgetInstall 2 Furlough Days for All Staff 300,000 260,002

Eliminate District Funding for College Classes* 150,000 20,000

Increase Employee Contribution – Health Ins. 360,000 352,136

Reduce Bus Transportation Costs 10% 114,000 108,194

Intra School Consolidation 850,000 920,549

Qualifying Hours for Health Insurance 20,000 10,000

Reduction in Food for Meetings 35,000 30,000

Eliminate General Fund Support for Food Service

150,000 150,000

Reduce Speaker Fees for In-service Training 9,000 0

Reduce Copier/Paper Costs by 10% 25,000 21,915

Reduce Extra-Curricular Activities 102,000 102,000

2010-2011 Budget BTF Recommendation Implemented

$2,115,000 $1,974,796Totals

BTF 2010-2011 Eliminated 17.5 Teacher FTEs

All but 2 were done through attrition Eliminated 12.5 Classified FTEs Total State funding cuts $1,544,360 Budgeted enrollment decrease $350,000

2011-2012 BTF School Board creates BTF for 2011-2012 school

year Met from January – March with a presentation to

the School Board in April Made up of 5 Community, 5 DAC, 6 Coord.

Council, 5 Class. Council, 2 Directors, 5 Principals. Composition was based on Board Districts. (2 Delta, 1 Ced. 1 Hotch., 1 Paonia/Craw) Mike and Terry were “consultants” to the group. (28)

Recommendation Amount Budget

Transportation Fee $ 150,000 $ 45,000

Intra-School (Certified) 240,000 283,297

Increase Activity Fees 8,175 0

Intra-School (Classified) 110,000 119,310

Health Insurance (Taken from Health Ins. Reserves to prevent a large increase to employees)

79,000 79,000

One Additional Furlough Day (Board Approved reestablish one furlough day to employees)

130,000 (106,297)

Crawford 6-7-8 (Board Approved 7-8 only) 209,738 194,293

2011-2012 BudgetBTF Recommendations Implemented

$ 926,913 $ 614,603Fund Balance was authorized to balance the 2011-2012 budget.

2011-2012 BTF Eliminated 6 Teaching and 8.5 Classified

positions. Board approved suspension of the Longevity

Policy encouraging long-standing teachers to consider retiring which was successful in reducing salary costs.

Total State funding cuts $1,658,217 Budgeted use of fund balance $1,077,256

Recap of the past 2 years Total staff reductions

Certified Teachers 23.50 FTEClassified Staff 20.50 FTE

Total Reduction Factor (Amendment 23 amount not funded) $4.9 Million

Total State reductions in funding $3,202,577

Potential Process for 2012-2013 BTF in its current form: Effective? Needs

Changed? Dropped? (Current Board’s Decision) District administration will put together

recommendations and priorities. School Board’s input on the recommendations Input will be received from DAC, Cord. Council,

Class. Council, Administration, and the Community.

Administration will make final recommendations to the School Board.

2012-2013 BudgetWhat we know today

State budget projections for cuts to school districts near last year’s cuts. $1.6 Million.

Amount held over from last year’s State budget will be used to offset cuts to school districts in 2012-2013.

Unrestricted Fund Balance available to help offset cuts. $4.1 million less the amount 2011-2012 actually used. (Budgeted $1.0 million)

Friday, the judge ruled in favor of the Lobato case. This may have a positive impact on the 2012-2013 budget. However, there does not appear to be any additional funds for the State to comply with this ruling. It is also expected to be appealed to the State Supreme Court.

2012-2013 BudgetItems to be Considered Activity Cuts Benefit Changes Class Size Increase Consolidation Four Day Week Fund Balance Furlough Days Program Cuts Salary Adjustments Other

(Alphabetic, no priorities have been assigned)

Fund Balance Analysis (Unrestricted)

2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013* 2014*

-$2,000,000

-$1,000,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

Projected Fund Balance

* Projections

Use of Fund BalanceThe use of fund balance has created a log jam in

the budgeting process. When you use fund balance to shore up a budget shortfall, it carries forward to the next year. If no additional funds are available, the budget will consume that amount of the fund balance again. We are in a predicament that may occur if additional funding cuts come from the State. This may require additional fund balance to be used to balance the 2012-2013 budget. This significantly increases the log jam.

Projected Use of Fund Balance (Unrestricted)

2012 2013 2014 2015$0

$200,000$400,000$600,000$800,000

$1,000,000$1,200,000$1,400,000$1,600,000$1,800,000$2,000,000

Projected Fund Balance