Our Budget Summary

Transcription

1 Our Budget Summary

2 Beth Sheridan, Director of Business Services This report presents a summary of financial results, as well as a budget summary for the upcoming school year. The budget summary contained herein is consistent with the May Budget Proposal approved by the Board and as such, does not reflect new assumptions or estimates as released by the State or Department of Public Instruction. The full version of the OASD budget is available on the District website. A Look Back: Financial Results for We are pleased to report that General Fund financial results for the year ended June 30, 2014 were very favorable. During the development of OASD s May budget proposal, the State s budget for was still pending. This created a number of uncertainties for revenue estimates, assumptions, and guidelines. OASD s operational budget approved by the Board in November 2013, reflected key factors then solidified in the State budget: The Revenue Limit Formula by which the state controls K-12 spending increased by $75 per pupil. OASD s three-year rolling average of September student enrollment grew by 76 students. School districts were eligible for a new one-time state categorical aid of $75 per pupil. This amounted to approximately $392,000 of additional aid for OASD. State Equalization Aid, which is OASD s largest funding source other than local property taxes, was increased statewide. As a result of various factors, including OASD s shared costs in comparison with other Wisconsin districts, OASD received $3.5 million more in aid over the school year. This represents a 68% increase rather than the initial estimate of a 15% decrease in Equalization Aid. ($65,000), and increased transportation aid ($62,000). Realized revenues also included the new one-time categorical of $75 per pupil ($392,000) and the second half of the property tax chargeback for the Target Distribution Center tax settlement with the City of Oconomowoc ($171,396). Under Wisconsin Act 10, school boards were granted much greater authority ( tools ) to manage school operations, costs, and personnel. For purposes of the OASD budget, Act 10 was presumed to be in effect and various tools were utilized to manage OASD expenditures. Resource reallocation and expenditure discipline continued to be as important as ever. An efficient staffing plan, realistic labor costs, and cautious capital expenditures were required to meet or exceed budget expectations. Despite rising healthcare costs throughout southeastern Wisconsin, OASD has been able to maintain a favorable benefit plan design while containing costs. The health insurance renewal was negotiated at a 1.5% increase, primarily through active management and favorable claims experience. Several significant projects began and/or were completed during the school year, including a boiler replacement at Park Lawn, Athletic Fields Forever, phase one of the OHS cafeteria remodel, and modular, relocatable classrooms at Meadow View and Ixonia. Pressure was also placed on the operational budget to absorb increased spending on utilities and snow removal as a result of the long, harsh winter and fuel for transportation due to slightly higher gas prices and an additional June delivery. Favorable outcomes in several expenditure categories of the budget offset the expenditure overruns and fund balance utilization for the various projects noted above, combined with the additional revenues previously highlighted, resulted in an increase to OASD s financial reserves of approximately $390,000. OASD revenues out-performed the budget by approximately $480,000. While line item revenue performance varied (being both over and under budget), key contributions to additional revenue collections included prior year Medicaid cost reimbursements ($368,000), additional rebate revenues Budget Summary 46

3 continued from previous page A Look Back: Financial Results for OASD had favorable results in several categories of the operating budget, including these major items: A potential land purchase in Ixonia, budgeted at $500,000, was not finalized as of June 30, This potential future transaction remains a budgeted line item for The local cost share of the Special Education program was $433,000 under budget due to higher aids and Medicaid reimbursements combined with strategic cost containment. Personnel costs were $404,000 under budget. This amount represents a reasonable margin of 1.65% on the $24.5 million budgeted salaries. Employee benefits were $312,000 under budget including WRS, FICA, 403(b) employer match contributions, and health/dental/life insurance expenditures. General supplies were $141,000 under budget as a result reduced grant spending and savings in the Buildings & Grounds department. Student transportation was $42,000 under budget. Route mileage and/or additional routes planned for were not necessary. Oconomowoc High School. The campaign, Athletic Fields Forever, has raised over $809,000 in collections and another $642,000 in pledges to-date. OASD has committed $185,000 in operational budgets and $2.29 million of surplus revenues and financial reserves to fund the project. An additional $661,000 will be advanced by OASD to complete the project in In its entirety, the $4.5M project includes expansion and renovation of facilities for football, soccer, track, baseball, softball, and tennis. A portion ($661,000) of OASD s General Fund Balance may be assigned to complete the remainder of the Athletic Fields Forever project. These funds may be held aside for use in the upcoming year. We are pleased that OASD continues to adapt to state-wide changes and to adjust without compromising the instructional mission of the District. Each site and department utilizes its budget wisely with every effort to maximize the results of spending. We continue to seek new and innovative ways to improve the District and its outcomes while being fiscally responsible with resources. The November 2013 property tax levy decreased by 4.07%. The equalized tax rate decreased by 3.85%, slightly less than the levy decrease, as a result of falling property values. Lower than anticipated unemployment compensation and worker s compensation insurances resulted in $43,000 and $37,000 in cost savings, respectively. General Fund Revenues were $55,561,345 and General Fund Expenditures were $55,167,510. In September 2013, the OASD bond rating was AA2 (Moody s Rating), which is a solid rating typical for Wisconsin school districts that demonstrate good financial characteristics. Based on these results, the General Fund Balance (financial reserves) increased from $11.86 million as of June 30, 2013 to $12.25 million as of June 30, This places OASD in a strong financial position for the new school year. The District s General Fund Balance remains at a level consistent with sound financial practice and Board policy. Over the past several years, OASD has partnered with the Oconomowoc Area Sports Booster Club to build a state-of-the-art outdoor athletic complex at Budget Summary 47

4 A Look Ahead: Financial Forecast for The District s budgetary financial framework is determined primarily by the State of Wisconsin budget. With this being the second year in the State s biennial budget, many key revenue variables are known and hence built into OASD s budget. OASD s budget is based upon the best estimates of likely financial conditions, including the following: The Revenue Limit Formula by which the State indirectly controls K-12 spending will increase by $75 per student. Per student revenue limit authority has varied over recent years from $100 s/student to -$250/ student. The additional revenue authority helps a district to balance the inflationary and operational escalation of its expenditures. In , school districts received additional categorical aid of $75 per student. For OASD, this equated to approximately $392,000. For , this aid will recur and an additional $75 per student in categorical aid will be provided a total of approximately $796,000. The State s budget provides additional funding of $60M in Equalization Aid. Distribution among districts is unknown and extremely difficult to predict. State Equalization Aid, which is OASD s largest funding source other than local property taxes, is expected to decrease by 15%. A decrease in State aid shifts more of the funding burden to the local property tax levy. OASD can be viewed as state-local funding partnership. The actions of one funding partner greatly impacts the other funding partner. Open enrollment revenue will operate at a slightly higher per student rate: $6,635 compared to $6,485 in in OASD s revenue limit authority, additional categorical aid, and increased student enrollment. This increase is the result of the following factors: The state revenue limit formula provides $75 per pupil in new revenue authority. The budget included additional categorical aid of $75 per pupil. For , this aid will recur and an additional $75 per student in categorical aid will be provided approximately $404,000 in new funds for a total of $796,000. Student enrollment is expected to grow modestly. An assumption of 50 additional students is factored into the revenue limit formula. This estimate appears reasonable based on OASD s historical enrollment growth trend. OASD s long-term trend of growing enrollment continues to be a positive revenue factor. Under the State revenue limit formula, districts with growing enrollment have more financial flexibility than districts with declining enrollment. General Fund Revenue (based upon information available during May budget preparation): The District expects moderate General Fund revenue growth next year. A boost of $1.76 million or 3.19% is expected as a result of growth Budget Summary 48

5 continued from previous page A Look Ahead: Financial Forecast for General Fund Expenditures General Fund expenditures conform to available revenues and result in a balanced OASD budget. The proposed budget is balanced, while incorporating key initiatives, through careful control of costs and strategic allocation of limited resources. This budget supports the instructional mission of OASD as demonstrated by sustaining these key initiatives: Pupil-to-teacher ratios which are appropriate for each grade level and which support a positive environment for learning A Response to Intervention system that meets the needs of all learners and decreases the need for referral to special education A long-term vision for special education services supported by additional resources and realignment of existing resources Consistent annual funding for curriculum materials, instructional technology, and staff development, all of which place OASD among the leading school districts in Wisconsin Additional staff to deliver OASD s Mandarin program Expansion of English Language Learners (ELL) services A commitment to facility preventative maintenance, renovation, infrastructure improvements, and long-term capital project funding An improved, sustainable salary model that provides a clear pathway, fair compensation, and attracts and retains OASD s high-quality certified staff Increasing student access and use of mobile technology supported by OASD s high speed fiber network and wireless infrastructure While financial conditions for K-12 school districts are challenging, there are also opportunities to create new and innovative solutions. This proposal presents a balanced operating budget for which supports and advances OASD s mission. There is little margin for error in this budget. Careful administration of the budget plan is essential to achieving the established financial targets. We look forward to an exciting and successful school year in Budget Summary 49

6 Budget Proposal Snapshot The following table summarizes significant factors known during the May budget development time period. (In some cases, these factors may not be reflective of more recent data or estimates.) Factor Trend Budget Impact Student Enrollment Increasing Increasing 1%. This is a conservative enrollment estimate of approximately 50 additional students next year. Increasing 3.19%. Revenues will increase as a result of enrollment General Fund Increasing growth, additional categorical aid, and $75/student in new revenue Revenues limit authority. State Equalization Aid Decreasing Decreasing 15%. This is the 'worst case' reduction scenario. Decreasing aid will increase the local property tax levy. Local Property Taxes Increasing Increasing 5.26%. This increase is driven by three factors: (1) loss of state aid (2) enrollment growth, and (3) expenditure increases. Equalized Tax Rate Increasing Increasing 1.28%. The maturing TIF is expected to add 180,000,000 in value to OASD's Equalized Tax Base. This increase significantly offsets the impact of the increased tax levy. Increasing 3.51%. A majority of the District's expenditures increase annually. Compensation, benefits, utilities, insurance, and General Fund Increasing transportation are driven by increased enrollment and inflation. In Expenditures addition, the budget included a budget surplus for the property tax chargeback. Increasing 1.5%. A 'pool' of funds equal to 1.5% of base wages was Wages & Salary created to allow for salary increases (including steps for support staff) Increasing Allowances for each of the various employment categories. A pool of 3.0% was created for certified staff to implement a new compensation model. Increase 9.03 FTE for all staffing categories. Teacher FTE is increasing by 7.09 and support staff FTE is increasing by The significant Staffing Level change in certified staffing is primarily the result of intermediate level Increasing (Overall) enrollment growth, program selection at OHS, and contingency planning. The change does not necessarily represent 7+ additional certified staff members. No Change. The overall impact of health, vision, and dental renewals is neutral. The health insurance renewal was brought down to an Health/Vision/Dental increase 1.50% as a result of provider negotiations and plan design No Change Insurance changes. With plan design changes, the dental plan renewal was down 17%. Implementing a 50/50 employer and employee premium share on the vision plan net a 3.5% renewal increase. Open Enrollment No Change. Open enrollment estimate for assumes no change No Change Expense from current level, which is net 197 students Out. General Fund Balance No Change. The budget as presented is balanced with expenditures No Change (6/30/15) equal to revenues. Bond Rating No Change Holding at AA2 as of September This is a favorable rating. Student Fees No Change No Change. The budget was built assuming no increase to basic student fees. Course fees may be adjusted based on actual cost of consumables. Budget Summary 50

7 Enrollment Summary School district revenues are based on a 3-year rolling average of resident enrollment. Most school districts in Wisconsin have either flat or declining enrollment. However, OASD has recorded eleven consecutive years of positive enrollment growth as defined by the 3-year rolling average calculation. Note that OASD s projected results for are conservative. The table at left illustrates the tremendous enrollment growth in OASD beginning in Enrollment has surged by over one thousand (1,000) students during this period. However, it appears that OASD s rate of enrollment growth is slowing. Open Enrollment In the District had a net open enrollment loss of 178 students, or 4.06% of total resident enrollment (178 / 4,384). In , District had a net open enrollment loss of 197 students, or 3.65% of total resident enrollment (197 / 5,408). Open enrollment results have been slowly but steadily improving in OASD for the past decade, despite new challenges such as online virtual schools. Data shows that most of OASD s students who opt for open enrollment out reside along the eastern border of the District. Total Enrollment and Open Enrollment: to Present: OASD Enrollment Summary Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate Resident Head Count: PreK-4 thru Grade 12 4,206 4,303 4,469 4,603 4,729 4,842 5,027 5,073 5,114 5,211 5,261 Open Enroll In (All Grades) (38) (48) (57) (87) (91) (121) (117) (129) (149) (168) (168) Open Enroll Out (All Grades) Adjusted Resident Enrollment 4,384 4,467 4,640 4,771 4,890 4,992 5,211 5,235 5,270 5,408 5,458 % Increase over Prior Yr. 1.89% 3.87% 2.82% 2.49% 2.09% 4.39% 0.46% 0.67% 2.62% 3.57% PreK-4 thru Grade 12 enrollment is strictly 3rd Friday head count and does not factor in percentages for part-time students (4k). Open Enrollment - includes tuition waivers. NET Adjusted Resident Enrollment = Basic Head Count minus Open Enroll In plus Open Enroll Out. Budget Summary 51

8 Staffing Summary The budget proposal is based upon a detailed staffing plan for the school year. The plan is centered upon student enrollment, appropriate class sizes, course offerings, student course selections and efficient use of resources. Personnel costs represent approximately 75% of General Fund expenditures. Personnel costs are driven by (1) the staffing plan; (2) wage and salary assumptions; and (3) employee benefit costs. Each of these personnel cost factors is discussed in detail in the sections that follow. The staffing plan includes a 1.64% increase in total staffing. The staffing plan is the result of an in-depth review of every OASD program and staffing assignment. A detailed staffing plan is included in the Addendum to this report. Staff Category to # % Change Change Teachers % Administrators % Sub-Total % Managers % Paraprofessionals % Admin. Assistants % Custodians % Technology Staff % Other % Support Sub-Total % Grand Total % The staffing plan summarized above maintains the OHS transformation plan which began in It also includes additional FTE to support information technology services, English Language Learners (ELL) services, and the Mandarin program. The plan includes two and onehalf (2.5) contingent FTE s to be used if needed based on actual enrollment next September. Budget Summary 52

9 Property Tax Forecast The OASD property tax forecast is based upon the following factors: (a) increasing student enrollment; (b) declining state aid; (c) an increase of $180,000,000 in the tax base value as a result of the TIF maturity; and (d) level debt service payments. The total property tax levy is expected to increase by 5.26% due to the factors described above. The tax base is expected to increase slightly, and the tax rate is expected to increase by 1.28%, from $ per $1,000 to $ per $1,000. The property tax forecast is an estimate based upon information available as of April The tax levy estimate will be updated at the Annual Meeting in August A final levy will be certified in November Property Tax Levy Summary: Actual Actual Nov Budget Prelim Budget Budget Budget Change Percent General Fund 42,895,859 44,848,937 42,800,389 45,340,174 2,539, % Debt Service Fund 39 4,892,000 4,896,000 4,898,263 4,898,138 (125) 0.00% Community Service Fund , , , , % Total Levy 48,399,859 50,306,937 48,260,652 50,800,312 2,539, % Equalized Tax Base 4,884,783,217 4,586,116,852 4,575,875,100 4,755,875, ,000, % Equalized Tax Rate Per $ % Note: The Department of Public Instruction s July 1 st Equalization Aid estimates indicate that OASD may not realize a 15% decrease in This change would positively impact the tax levy by reducing the taxpayer s share of OASD s funding. Pending Financial Considerations The District continues to study and prepare for the various changes included in the Affordable Care Act (ACA). The OASD staffing plan reflects adjustments necessary to comply with the ACA and avoid penalties under the new law. Under the law, employees regularly scheduled at thirty or more hours per week will be eligible for health insurance benefits. Over the past several years, a private fundraising campaign has worked jointly with the District to develop plans to build a state-of-the-art outdoor athletic complex at Oconomowoc High School. Many OHS athletic programs will benefit from the expansive scope of the projects, including football, soccer, baseball, softball, track, and tennis. The various projects are scheduled to be completed early in OASD continues planning for infrastructure needs. The future pace of residential development, especially in the Meadow View and Ixonia attendance areas, will determine if or when the school district will need to expand its school facilities. To address short-term capacity constraints at both Meadow View and Ixonia, modular relocatable classrooms opened for the start of the school year. These units increased OASD s elementary capacity by approximately 100 students. We sincerely appreciate the financial effort extended by our community to support the Oconomowoc Area School District. We attempt to demonstrate our appreciation each day by working diligently to develop great schools and great students while using resources wisely. Thank you for your interest in the Oconomowoc Area School District. Any questions you may have regarding this document may be directed to Dr. Roger Rindo, Superintendent ( ) or Beth Sheridan, Director of Business Services ( ). Budget Summary 53

10 OASD Three-Year Financial Summary Three-Year Financial Summary: Actual Unaudited Actual Budget Percent GENERAL FUND Change ASSETS 17,385,213 19,556,777 15,385, % LIABILITIES 5,524,878 7,302,607 6,370, % FUND BALANCE 11,860,335 12,254,170 9,014, % Actual Unaudited Actual Budget Percent Revenues & Other Sources: Change Local Revenue Sources 45,742,513 43,754,078 46,237, % Open Enrollment Revenues 876,015 1,003,810 1,114, % State Sources 5,877,212 9,506,811 8,552, % Federal Sources 560, , , % Misc. Sources 198, , , % Other Sources: Land Sale Proceeds 1,051, Total Revenues 54,305,640 55,561,345 56,830, % Actual Unaudited Actual Budget Percent Expenditures: Change Undifferentiated Curriculum (K-6 Instruction) 11,121,744 10,842,583 11,630, % Regular Curric. (English, Math, Science, Etc.) 10,060,354 10,721,596 11,148, % Vocational Curriculum 887, , , % Physical Curriculum (Health, Physical Ed) 1,212,068 1,264,572 1,272, % Co-Curricular Activities 792, ,793 1,017, % Gifted & Talented & Alt. Education Programs 316, , , % Instruction Totals 24,391,407 24,922,341 26,408, % Student Services (Guidance, Etc.) 1,443,696 1,462,354 1,473, % Instructional Services (Curriculum, Libraries) 1,494,690 1,627,070 1,624, % District Administration (District-wide) 662, , , % School Administration (Principals' Office) 2,493,566 2,636,784 2,799, % Business Srv. (Acctg, Transport, Facilities) 9,118,980 10,682,845 9,429, % Central Services (Telephone, Technology) 2,268,393 2,266,415 2,331, % District Insurance (Property, Liability) 366, , , % Debt Service (Interest Expense, Leases) 281, , , % Early Retirement Expenditures 2,447,667 2,339,226 2,414, % Support Totals 20,577,746 22,279,672 21,581, % Oconomowoc Arts Center 183, , , % Transfers to Special Ed. Fund and Debt Fund 5,345,257 5,403,502 6,061, % Open Enrollment Payments 1,871,938 2,320,827 2,479, % Other Payments (Tax Chargebacks) 3,582 1,289 20, % Non-Program Totals 7,403,795 7,965,496 8,839, % General Fund Totals 52,372,948 55,167,510 56,830, % Budget Summary 54

11 OASD Three-Year Financial Summary All Other Funds: Actual Unaudited Actual Budget Percent FUND 27 - SPECIAL EDUCATION Change Total Revenues 7,319,242 7,606,349 8,292, % Total Expenditures 7,319,242 7,606,349 8,292, % DEBT SERVICE FUND 39 - REFERENDUM DEBT Change Total Revenues 4,896,057 4,898,375 4,898, % Total Expenditures 4,957,288 4,954,550 4,956, % Remaining Debt Obligations 48,980,000 46,425,000 43,755, % DEBT SERVICE FUND 38 - NON-REF DEBT Change Total Revenues 760, , , % Total Expenditures 766, , , % Remaining Debt Obligations 7,965,000 7,540,000 7,075, % FOOD SERVICE FUND - (Preliminary Results) Change Total Revenues 2,123,930 2,116,366 2,200, % Total Expenditures 2,059,189 2,061,318 2,100, % Fund Balance, End of Year 248, , , % COMMUNITY SERVICE FUND Change Total Revenues -Property Tax Levy 596, , , % Total Expenditures 596, , , % PROPERTY TAX LEVY SUMMARY Actual Actual Budget Percent SUMMARY OF TAX LEVY FOR ALL FUNDS: Change General Fund 44,848,937 42,800,389 45,340, % Debt Service Fund 39 4,896,000 4,898,263 4,898, % Community Service Fund , , , % Total Levy 50,306,937 48,260,652 50,800, % Equalized Tax Base 4,586,116,852 4,575,875,100 4,755,875, % Equalized Tax Rate Per $ % Budget Summary 55