SUPERINTENDENT S SY BUDGET PROPOSAL

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SUPERINTENDENT S SY 2018 19 BUDGET PROPOSAL Weston

2 SUPERINTENDENT S SY BUDGET PROPOSAL Weston R. Young, CPA, Chief Financial Manager March 5, 2018

3 overview

4 budget philosophy 4 Utilize the Board s Core Commitments and Beliefs to support budget development Continue to reorganize for effectiveness and efficiency Increase transparency in redirecting more resources to schools Maintain the levels of staffing to support educational programming Support IPS 2015 Strategic Plan initiatives through budget redirections and/or seek external financial support

5 budget process 5 timeline When What Who January February Project revenues, and determine school and operational needs Administration and Staff February 15 Conduct initial review of Budget Appropriation Administration and Board February 20 and 22 February 23 March 2 March 5 March 15 April June Conduct additional review of Budget Appropriation Publish first advertisement of Budget Appropriation in newspaper and on website Publish second advertisement of Budget Appropriation in newspaper and on website Conduct Budget Appropriation Public Hearing (10 days before adoption) Approve Budget Appropriation Utilize authorized appropriation to develop line-item budgets Administration and Board Administration and Staff Administration and Staff Board of School Commissioners Board of School Commissioners Administration and Staff

6 6 Student Demographics

7 student demographics 7 historical perspective: enrollment 35,000 33,408 32,595 32,543 32,470 31,473 30,979 30,921 31,917 32,212 30,000 25,000 1,986 1,974 1,903 1,563 1,563 1,602 1, ,398 3,425 4,082 1,762 2,897 2,781 20,000 15,000 33,408 32,595 30,557 30,496 29,570 27,988 26,145 24,032 23,786 10,000 5,000 0 SY SY SY SY SY SY SY SY SY IPS Operations Innovation-LEA Innovation-Non-LEA Turnaround Projection

student demographics 8 English as a Second Language Enrollment 6,000 5,000 4,000 3,000 4,850 4,789 4,978 3,932 3,645 4,290 4,728 2,000 1,000 0 2011 12 2012 13

8 student demographics 8 English as a Second Language Enrollment 6,000 5,000 4,000 3,000 4,850 4,789 4,978 3,932 3,645 4,290 4,728 2,000 1, IMPORTANT CONSIDERATIONS Numbers represent a point-in-time count and consistently increase over the course of the year

9 student demographics 9 8,000 Special Education Enrollment 7,000 6,000 5,000 7,059 6,797 6,646 6,265 6,003 5,705 5,558 4,000 3,000 2,000 1, IMPORTANT CONSIDERATIONS Numbers represent a point-in-time count and consistently increase over the course of the year SPED enrollment from Compass differs from what IPS SPED department submits to the state each year SPED funding is based on the 12/1 DOE-SE report, which is higher than what is reported in Compass

10 student demographics 10 expenditures: students with special needs 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 17.0% 14.5% Special Education Students with Special Needs SY IPS State 14.4% 4.5% English-Language Learners While all Indiana districts experience special education and english-language learner encroachment, IPS educates a higher proportion of learners with special needs

11 11 Funding Sources Historical perspective and projections

funding sources 12 historical perspective: federal-fund budget comparison $80,000,000 $71,743,312 $72,333,382 $72,482,161 $70,000,000 $60,000,000 $54,993,403 $58,277,413

12 funding sources 12 historical perspective: federal-fund budget comparison $80,000,000 $71,743,312 $72,333,382 $72,482,161 $70,000,000 $60,000,000 $54,993,403 $58,277,413 $58,165,134 $54,648,585 $60,714,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ Projected

funding sources 13 historical perspective: state-fund budget comparison $350,000,000 $300,000,000 $250,000,000 $292,737,209 $276,904,446 $242,190,759 $254,120,979

13 funding sources 13 historical perspective: state-fund budget comparison $350,000,000 $300,000,000 $250,000,000 $292,737,209 $276,904,446 $242,190,759 $254,120,979 $233,976,271 $232,340,348 $227,327,895 $231,853,734 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $ Projected

14 funding sources 14 historical perspective: state-fund budget $ per pupil $7,600 $7,400 $7,367 $7,332 $7,209 $7,265 $7,200 $7,000 $7,058 $6,971 $6,934 $7,014 $6,800 $6,732 $6,600 $6, Projected Content updated

15 funding sources 15 historical perspective: local-fund budget comparison $180,000,000 $160,000,000 $140,000,000 $120,000,000 $155,207,095 $132,238,752 $141,197,786 $135,698,404 $130,365,489 $123,968,654 $119,833,595 $115,558,659 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Content updated Projected

16 funding sources 16 projected total revenue for SY Content updated

17 17 Budget Proposal SY

18 budget proposal SY projected total operating revenues: $471, 731,000 Content updated

19 budget proposal SY projected total operating revenues: $471, 731,000 Content updated

budget proposal SY 2018 19 20 projected total

20 budget proposal SY projected total operating revenues: $471, 731,000 Content updated

budget proposal SY 2018 19 21 projected total operating revenues: $472M What Are the Sources of Funds?

21 budget proposal SY projected total operating revenues: $472M What Are the Sources of Funds? 7% 1% 12% 6% 12% 6% 2% 54% State Grants - $7,488,000 (1%) General Fund - $255,000,000 (54%) Bus Replacement - $7,706,000 (2%) Capital Projects - $27,613,000 (6%) Debt Service - $54,936,000 (12%) Transportation - $27,049,000 (6%) Federal Fund - $59,096,000 (12%) Operating Referendum - $32,843,000 (7%) Content updated

22 22 Budget Appropriation

23 budget appropriation 23 what is a budget appropriation? An estimate of maximum expenditures of the school corporation from each fund. Authorization from the Board to spend a maximum amount from each fund for a fiscal year. A submission to the Department of Local Government Finance (DGLF). A line-item budget to allocate resources to schools and divisions. A breakdown of expenditures by use (salaries, benefits, contracted services, etc.). A guarantee of district revenues.

24 budget appropriation 24 key terminology Levy Property-tax proceeds Appropriation Legal spending authority Structural Deficit Amount of spending required for a level of service greater than revenues in a budget year regardless of how well the economy is performing. A deficit which continues for a longer period of time, rather than a cyclical deficit which is related to short-term factors. Circuit Breaker Unpaid property tax resulting in reduced property-tax funds received by school district. Indiana law limits the amount of property taxes paid by a taxpayer based upon the type of property and the property s fair market value. The maximum limits are commonly referred to as property-tax caps. Rainy Day Fund Board-appropriated fund which accumulates prior-year excess cash balances from other Board-appropriated funds. Board Resolution (July 2015) provides guidance on use of funds. The funds are available to provide relief to support funding shortfalls, in any other fund, as necessary. Fund Balance % Amount of cash in an appropriated fund as a percentage of the fund s annual expenditures. Cash divided by annual expenditures multiplied by 100%.

25 budget appropriation 25 SY : proposal to maximize revenue Requested Levy (requested property-tax proceeds) Amount of cash requested from local property taxes; this amount is reduced by DLGF due to maximum levy and debt-service reserve limitations. Proposed Appropriation (spending authority/budget estimate) Current cash balance plus projected maximum annual expenditures; this is the amount needed to fund the desired activities of the school corporation. Funds Requested Levy Proposed Appropriation 1 General n/a $269,000,000 2 Debt Service $52,700,000 $36,300,000 3 Retirement/Severance Debt $4,250,000 $2,882,000 4 Referendum Debt 2008 $26,500,000 $21,063,000 5 Capital Projects $38,200,000 $51,400,000 6 Transportation $38,200,000 $40,300,000 7 Bus Replacement $12,400,000 $13,200,000 8 Total $172,250,000 $434,145,000 Note: Debt funds have levies which exceed appropriations due to minimum cash balance required by Indiana statute (IC ). Subject to change due to state, federal or local funding fluctuations Content updated

budget proposal SY 2018 19 26 general fund State Tuition Support ($ per pupil) Complexity Grant ($ per-pupil poverty measures) Special Ed Grant ($ per-student exceptionality) Honors Diploma Grant ($

26 budget proposal SY general fund State Tuition Support ($ per pupil) Complexity Grant ($ per-pupil poverty measures) Special Ed Grant ($ per-student exceptionality) Honors Diploma Grant ($ per graduate) Career Technology Grant ($ per enrolled student) Other (rent, interest, chargeback and property sales) Teacher School Leaders Support Staff Central Services Supplies Other Day-to-Day Operations Transfer Tuition Payments

27 general fund 27 General Fund and Related Supporting Funds Calendar Year 2010 through SY Projected $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 Education Jobs Revenue Fiscal Stabilization Revenue Other Local Revenue Tuition Support Revenue Total Expenditures General Fund Cash Balance Content updated

28 budget proposal SY bottom line Year Item $ School Year (Projected) School Year (Budget) Revenues $252M Expenditures ($267M) Total ($15M) Revenues $243M Expenditures ($269M) Total ($26M) Deliberate investments in compensation and strategic plan create gaps Gaps funded by cash reserves Continued advocacy for adequate state or local funding Content updated

29 budget proposal SY debt service funds appropriations Revenue must be sufficient for annual scheduled payments Lease-rental payments to Indianapolis Public Schools multischool building corporation General obligation bonds issued in 2003 Public referendum November 2008 for school construction and repair Content updated

30 debt service funds 30 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 Debt Service Funds Calendar Year 2010 through SY Projected Other Local Revenue Misc. Tax Revenue Property Tax Revenue Total Expenditures Cash Balance Content updated

budget proposal SY 2018 19 31 capital project fund Property Taxes Vehicle Excise Taxes Financial Institution Tax

31 budget proposal SY capital project fund Property Taxes Vehicle Excise Taxes Financial Institution Tax Building Acquisition and Construction Buildings and Equipment Maintenance Skilled-Trades Staff Content updated

32 capital projects fund 32 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 Capital Projects Fund Calendar Year 2010 through SY Projected Other Local Revenue Misc. Tax Revenue Property Tax Revenue Total Expenditures Cash Balance Content updated

33 budget proposal SY transportation fund Property Taxes Vehicle Excise Taxes Financial Institution Tax Bus Drivers and Attendants Bus Operations and Maintenance (fuel, supplies, etc.) Other Operating Costs Content updated

34 transportation operating fund 34 Transportation Operating Fund Calendar Year 2010 through SY Projected $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 ($5,000,000) Temporary Loans Other Local Revenue Misc. Tax Revenue Property Tax Revenue Total Expenditures Cash Balance Content updated

budget proposal SY 2018 19 35 bus replacement fund Property Taxes Vehicle Excise Taxes

35 budget proposal SY bus replacement fund Property Taxes Vehicle Excise Taxes Financial Institution Tax School Bus Purchases Contracted Transportation Content updated

36 bus replacement fund 36 Bus Replacement Fund Calendar Year 2010 through SY Projected $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Temporary Loans Other Local Revenue Misc. Tax Revenue Property Tax Revenue Total Expenditures Cash Balance Content updated

37 budget proposal SY rainy-day fund Floating fund results in varying annual balance Excess cash balance from other appropriated Board funds Board Resolution , July 2015 Provide relief to support funding shortfalls, in any other fund, as necessary Content updated

38 rainy-day fund 38 Rainy-Day Fund Calendar Year 2010 through SY Projected $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Temporary Loans Other Local Revenue Misc. Tax Revenue Property Tax Revenue Total Expenditures Cash Balance Content updated

39 budget proposal SY operating referendum 2018 fund Floating fund results in varying annual balance Subject to referendum vote on May 8, 2018 Funds anticipated to be received June 30, 2019 Provide relief to support school and operational funding shortfalls, as necessary Content updated

40 40 Financial Landscape

financial landscape 41 SY 2018 19 revenues and expenditures A B C D E F Funds Recommended appropriations project structural deficits Requested Levy Projected Circuit Breaker Projected Net Revenue

41 financial landscape 41 SY revenues and expenditures A B C D E F Funds Recommended appropriations project structural deficits Requested Levy Projected Circuit Breaker Projected Net Revenue Projected Expenditures Projected Deficit 1 General n/a n/a $242,700,000 ($269,000,000) ($26,300,000) 2 Capital Projects $38,200,000 ($10,600,000) $27,600,000 ($32,000,000) ($4,400,000) 3 Transportation $38,200,000 ($11,200,000) $27,000,000 ($37,700,000) ($10,700,000) 4 Bus Replacement $12,400,000 ($4,700,000) $7,700,000 ($11,400,000) ($3,700,000) Total Projected Operating Funds Deficit ($45,100,000) Subject to change due to state, federal or local funding fluctuations Content updated

42 financial landscape 42 SY projected cash flows Funds Cash flows based on proposed budget appropriations Projected Balance Projected Net Cash Flow Subject to change due to state, federal or local funding fluctuations Projected Balance General $18,700,000 ($26,300,000) ($7,600,000) Capital Projects $10,000,000 ($4,400,000) $5,600,000 Transportation $0 ($10,700,000) ($10,700,000) Bus Replacement $1,000,000 ($3,700,000) ($2,700,000) Subtotal $29,700,000 ($45,100,000) ($15,400,000) Content updated

43 recommendations 43 authorize appropriations to address structural deficits Authorize appropriation of rainy-day funds Authorize appropriation of proposed Operating Referendum funds Funds Levy Appropriation 1 Rainy-Day n/a $18,919,896 2 Proposed Operating Referendum (1) $92,492,139 $46,246,070 Notes: (1) Advertised appropriation on February 23, 2018 based on December 2017 Board approved Referendum Resolution. As of February 20,2018 Revised Board-approved Referendum Resolution, SY proceeds and expenditures needed are estimated to be $32,842,891. Appropriation will remain at $46,246,070 and will not be exceeded. Content updated

44 recommendations 44 authorize SY cash flows based with rainy-day and operating referendum funds Funds Projected Balance Projected Net Cash Flow Rainy-Day Fund Referendum Proceeds (1) Projected Balance with Additional Funds Fund Balance % (2) General $18,700,000 ($26,300,000) $1,469,896 $32,842,891 $26,712,787 10% Capital Projects $10,000,000 ($4,400,000) $0 $0 $5,600,000 18% Transportation $0 ($10,700,000) $13,775,000 $0 $3,173,494 8% Bus Replacement $1,000,000 ($3,700,000) $3,675,000 $0 $962,668 8% Total $29,700,000 ($45,100,000) $18,919,896 $32,842,891 $36,362,787 10% Notes: (1) Proceeds to be received based on December 2017 Board-approved Referendum Resolution. As of February 20, 2018 Revised Board-approved Referendum Resolution, SY proceeds are estimated to be $32,842,891. (2) Fund Reserve Balance Policy (Board policy 6227) provides guidance on retaining reserves equal to at least 1 to 3 months or 8% to 25% of annual expenditures. Subject to change due to state, federal or local funding fluctuations Content updated

45 long-term budget planning 45 estimated fund balances without referendum proceeds $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 General and Rainy Day Debt Service School Lunch CPF/Transportation Other $ Fund Balances General and Rainy Day $72,000,000 $52,000,000 $37,000,000 $0 Debt Services $35,000,000 $26,000,000 $22,000,000 $21,000,000 School Lunch $30,000,000 $26,000,000 $23,000,000 $18,000,000 CPF/Transportation $33,000,000 $29,000,000 $11,000,000 $0 Other $30,000,000 $24,000,000 $16,000,000 $14,000,000 Total $200,000,000 $157,000,000 $109,000,000 $53,000,000 Content updated

46 budget proposal SY project total expenditures Content updated

budget proposal SY 2018 19 47 where the dollars go Projected Total Expenditures $485M 9% 4% 2%4% 2% Schools - $230,678,000 (48%) Debt - $56,164,000 (12%) Transportation - $49,070,000 (10%) 9% 48%

47 budget proposal SY where the dollars go Projected Total Expenditures $485M 9% 4% 2%4% 2% Schools - $230,678,000 (48%) Debt - $56,164,000 (12%) Transportation - $49,070,000 (10%) 9% 48% Operations & Support - $44,894,000 (9%) Innovation - $44,000,000 (9%) School Lunch - $21,000,000 (4%) 10% School Construction/Renovation - $7,604,000 (2%) Central Services - $19,405,000 (4%) 12% Turnaround - $12,300,000 (2%) Content updated

48 budget appropriation 48 key messages Budget appropriation authorizes maximum spending authority. Projected cash flows create structural deficits which exceed cash reserves. Appropriation of rainy-day and referendum funds addresses structural deficits.

49 budget proposal SY timeline of milestones When Who What January 2018 February 2018 March 5, 2018 March 15, 2018 Administration and Staff Administration and Board Administration and Board School-level and districtwide budget development Board reviews initial proposal and provides feedback Public hearing Board of School Commissioners adopts SY Budget

50 50 APPENDIX

51 example allotments 51 example: traditional school funding Local State Federal Combination Title I Program Student- Based Allocation Facilities & Transportation Special Education & EL School Admin. & Choice Programming Food Services Funds Distributed to School Through IPS Services Provided to School Funds Distributed Directly to School Content updated

52 example allotments 52 example: traditional school funding Allocation Source (Under SBA) $ PP Students Dollars Base Allocation $3, $1,390,765 Grade Weight $ $64,400 Poverty Weight $ $151,000 Baseline Supplement $45,000 Transition Adjustment $120,000 Strategic Support - Total: $1,771,165 Through SBA Restricted Funds (not comprehensive) Title I Allocation $124,238 Title II/III Allocation $16,799 Content updated Total: $141,000 Local State Federal Combination Locked Resources (not comprehensive) Custodial Services $120,338 Food Service $218,695 Special Education $342,000 English Learners $78,987 School Admin. and Central Services $253,251 Choice Programming $0 Transportation Services $400,695 Facilities Maintenance $500,695 Total: $1,915,000 Outside SBA

53 example allotments 53 example: innovation-lea school funding Local State Federal Combination Title I Program Student- Based Allocation Facilities & Transportation Special Education & EL School Admin. & Choice Programming Food Services Funds Distributed to School Through IPS Services Provided to School Funds Distributed Directly to School Content updated

54 example allotments 54 example: innovation-lea school funding Allocation Source (Under SBA) $ PP Students Dollars Base Allocation $3, $1,390,765 Grade Weight $ $64,400 Poverty Weight $ $151,000 Baseline Supplement $45,000 Transition Adjustment $120,000 Strategic Support - Total: $1,771,165 Per-Pupil Agreement Restricted Funds (not comprehensive) Title I Allocation $124,238 Title II/III Allocation $16,799 Content updated Total: $141,000 Local State Federal Combination Locked Resources (not comprehensive) Custodial Services $120,338 Food Service $218,695 Special Education $342,000 English Learners $78,987 School Admin. and Central Services $253,251 Choice Programming $0 Transportation Services $400,695 Facilities Maintenance $500,695 Total: $1,915,000 Services and Operations Per Agreement

55 example allotments 55 example: innovation-non-lea school funding Local State Federal Combination State Special Education Support Facilities & Transportation * Special Education & EL Special Education & EL Food Service State Tuition & Complexity Support Food Service Title Programs Funds Distributed to School Through IPS Services Provided to School (if elected in agreement) Funds Distributed Directly to School Content updated *Non-LEA innovation schools may utilize state tuition dollars to fund transportation and facilities; however, some innovation operators are provided transportation and facilities due to access to IPS property-tax funded services. See individual non-lea innovation agreements for more details.

56 example allotments 56 example: innovation-non-lea school funding Allocation Source $ PP Students Dollars Tuition Support $5, $1,840,277 Complexity Index Support $1, $580,038 Special Education Support Level 1 $ $5,000 Special Education Support Level 2 $2,300 3 $6,900 Special Education Support Level 3 $8,976 1 $8,976 Equity Retainer Total: $2,441,191 Restricted Funds (not comprehensive) Locked Resources (not comprehensive) Title I Allocation $124,238 Custodial Services ($120,338) Per-Pupil Agreement Local State Federal Combination Title II/III Allocation $16,799 Total: $141,000 *Non-LEA innovation schools may utilize state tuition dollars to fund transportation and facilities; however, some innovation operators are provided transportation and facilities due to access to IPS property-tax funded services. See individual non-lea innovation agreements for more details. Content updated Food Service $218,695 Special Education $321,300 English Learners $78,987 School Admin. and Central Services ($253,251) Transportation Services* ($400,695) Facilities Maintenance* ($500,695) Total: ($656,000) Services and Operations Per Agreement

57 long-term budget planning 57 Percent Change in Gross Assessed Value of All Indiana Property

long-term budget planning 58 historical perspective: certified assessed value $11,000,000,000 $10,500,000,000 $10,000,000,000 $9,500,000,000 $9,000,000,000

58 long-term budget planning 58 historical perspective: certified assessed value $11,000,000,000 $10,500,000,000 $10,000,000,000 $9,500,000,000 $9,000,000,000 $9,086,317,992 $9,024,119,677 $9,745,667,423 $9,667,203,109 $10,045,427,309 $10,738,720,168 $8,500,000,000 $8,000,000, Content updated

59 long-term budget planning 59 certified tax rates $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Referendum Debt $ $ $ $ $ $ Retirement/Severance $ $ $ $ $ $ Debt Service $ $ $ $ $ $ School Bus Replacement $ $ $ $ $ $ Transportation $ $ $ $ $ $ Capital Projects $ $ $ $ $ $0.3229

60 long-term budget planning 60 indiana forecast revenues Budget 2017 Budget 2018 Budget 2019 Average Change Revenues 15,389 15,780 16, % Sales Tax 7,433 7,630 7, % Indiana Income Tax 5,473 5,661 5, % Corporate Income Tax % Gaming % All Other 1,137 1,121 1, %

61 long-term budget planning 61 Indiana State Appropriations as Percent of Indiana Total Personal Income (estimated )

62 long-term budget planning 62 indiana budget appropriations Budget 2017 Budget 2018 Budget 2019 Average Change Appropriations 15,989 15,861 16, % K 12 Education 8,117 8,218 8, % Higher Education 1,902 1,935 1, % Medicaid 2,242 2,107 2, % Health/Social Services 1,267 1,353 1, % Public Safety 983 1,003 1, % All Others 1,478 1,246 1, %

63 63 long-term budget planning

64 expenditures 64 students with special needs Expenditures for special education and english language learners encroach on general fund budget allocations, capturing over 10% of state tuition support SY K 12 Special Education English Language Learners Total Federal Funds $8,797,364 $756,817 $9,500,000 State Funds $18,479,450 $895,359 $21,200,000 Total Revenue $27,276,814 $1,652,176 $28,928,990 Total Cost ($46,035,290) ($9,347,480) ($55,382,770) Total Gap Paid by General Fund ($18,758,476) ($7,738,394) ($26,496,870)

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