District Budget Overview. State College Area School District October 20, 2008

Transcription

1 District Budget Overview State College Area School District October 20, 2008

2 Presentation Outline Types of Funds/Budgets Act 1 Overview Summary of General Fund Budget State Funding Items Needing Clarity Long Term Assumptions Local Revenue Questions

3 Types of Funds/Budgets District Budget normally refers to the General Fund Budget General Fund Budget most flexible of all budget types This Budget must be filed annually with the state on form PDE-2028 Appropriation may not exceed available funds Restrictions on undesignated fund balance if taxes are increased

4 Other types of Funds/Budgets Capital Reserve Fund May only be used for capital improvements even if money was originally transferred from General Fund Transfers from General Fund to Capital Reserve Fund can be compared to exchanging cash (unlimited use) for gift cards (specific type of expenditure) Construction Fund from Bond Proceeds May only be used for expenditures within the bond resolution Resolution may be modified by Board action to include other types of expenditures not anticipated when Bonds were issued

5 Other types of Funds/Budgets Debt Service Fund Used to account for outstanding borrowings and repayments of debt and interest Special Revenue Funds Athletic Fund Proprietary Funds Food Service Fund Printing Services Fund Many of the above Funds receive some level of support from the General Fund

6 Level of Support from General Fund Actuals Food Service $ 78,497 Capital Reserve $ 209,925 Athletics $1,436,801

7 Other types of Funds/Budgets Fiduciary Funds Not District funds, but held for others Cannot be used for general expenses Student Activity and Scholarship Funds

8 Other types of Funds/Budgets Fund Balances and Net Assets Entity-wide perspective must be maintained when considering fund balances and net assets Viewing General Fund balance while not considering outstanding Debt Service can lead to skewed conclusion District would be limited in its ability to sell off assets while continuing to operate

9 Designation of Fund Balance A District which intends to raise taxes by any amount that has a fund balance of greater than 8% of the budget must designate the portion of the fund balance above 8% for a specific purpose Debt Service Capital Projects Health Care Stabilization Designation may be changed annually by Board action

10 Act 1 Review

11 Act 1 Passed in 2006 Limits School District tax increases to an index comprised of the average increase of the Statewide Average Weekly Wage (SAWW) and the Federal Employment Cost Index for Education. Necessitates early budget decisions because of the potential for a question on the primary election ballot allowing for tax increases above the index with voter approval

12 Act 1 Provides for Tax Relief for approved Homesteads and Farmsteads Amount of relief will vary yearly based upon eligible properties and gambling revenue Application process to be approved through the County Assessment Office Mailing in December Last year the District received $1,424,253 of Gambling funds providing $112/homestead of property tax relief

13 Act 1 Index The Act 1 Index for SCASD in is 4.1% This is the percentage that the property tax rate can be raised without applying for exceptions Expenditure increases are not capped by the 4.1% Act 1 Index

14 Act 1 Index 4.1% increase in total expenditures from would be $4,336, % increase in millage rate would only generate $2,790,132 in additional current real estate revenue (assuming no assessed value growth) Difference of $1,546,254 would need to come through growth in other revenue sources Earned Income Tax, State Basic Ed Funding, Transportation Revenue, Assessed Value Growth

15 Act 1 Index Exceptions available for real estate tax increases above the Act 1 Index Special Education Expenditures above the index Various Debt Service Exceptions Retirement Rate Increases above the index Maintenance of certain revenue sources Maintenance of Actual Instructional Expenses per ADM

16 Courses of Action Three courses of action under Act 1 Approve a resolution limiting tax increases to the Act 1 index and resume normal budget schedule Prepare a preliminary budget which is balanced by allowable exceptions under Act 1 and submit those exceptions to PDE for approval Prepare a preliminary budget which is balanced only by a tax increase above the Act 1 index and allowable exceptions that is approved by a referendum vote in the primary election

17 Key Act 1 Deadlines for Budget January 29, 2009 Deadline to make proposed preliminary budget available for inspection or adopt resolution indicating that it will not raise the rate of any tax by more than its index. May 31, 2009 Deadline to adopt proposed final budget June 30, 2009 Deadline to adopt final budget

18 Index and Budget History Year ACT 1 Index SCASD Real Estate Tax Increase State Basic Ed % Increase Compound 12.2% 7.1% 8.7% % 3.7% 3.0% % -0.5% 2.1% % 3.8% 3.4%

19 State Funding for General Fund

20 State Funding- First steps to a formula Major shift in State Funding formula in Costing Out Study methodology used Criteria Base Cost Poverty Adjustment ESL Adjustment District Size Adjustment Geographic Price Adjustment Tax Effort Allocation

21 Final State Funding Changes Increase of $183,725$ for Basic Education Funding (3.0% Increase) Increase of $35,284 for Special Education Funding (2.3% Increase)

22 Overall State BEF Breakout 47% of Districts received a 3% Increase 31% of Districts received a 3.1 to 5% Increase 17% of Districts received a 5.1 to 10% Increase 5% of Districts received a 10.1 to 22.4% Increase Range 3.0% to 22.4% Increase Median: 3.1% Increase Mean: 5.5% Increase

23 Comparative Data

24 Market Value/Personal Income Aid Ratio <.41 Average Daily Membership 7,000 to 8,000 Cohort Equalized Mills MV/PI Aid Ratio Equalized Mills School District ADM Cumberland Valley SD , Seneca Valley SD , State College Area SD , Hempfield SD , Pennridge SD , Spring-Ford Area SD , Souderton Area SD , Abington SD , Norristown Area SD ,

25 Equalized Mills SCASD ranked 3rd lowest among the cohort Cumberland Valley Seneca Valley State College Area SD Hempfield Pennridge Cohort Avg Spring-Ford Souderton Abington Norristown Equalized mills are the total taxes collected for a school district divided by its market value. State College Area SD is in the lowest 30% for equalized mills across the Commonwealth.

26 REVENUE BY SOURCE SOURCE OF REVENUE DOLLARS OF BUDGET PERCENT OF BUDGET LOCAL SOURCES STATE SOURCES FEDERAL SOURCES 87,265,850 17,413,653 1,086,000 83% 16% 1% TOTAL REVENUE 105,765, %

27 Revenue by Source 16% 1% Local State Federal 83%

28 General Fund Expenses By Category Salaries $57,251, % Benefits 18,480, % Professional Services 2,016, % Purchased Property Services 2,370, % Other Purchased Services 8,835, % Supplies 3,568, % Equipment 2,477, % Other Expenses 1,037, % Fund Transfers 9,727, % Total $ 105,765, %

29 Expenses by Type 1% 9% 2% 3% 8% 2% 2% 18% 55% Salaries Benefits Prof. Srvcs Prop. Srvcs Other Purc. Srvcs Supplies Equipment Other Expenses Fund Transfers

30 Items needing clarity Debt service is the biggest long term decision facing SCASD Amount of future debt service depends upon outcome of planning process Without new debt issuance, net debt service will drop by nearly $300,000 in If new debt is issued in , it will impact the General Fund budget, perhaps significantly

31 Items needing clarity Charter School enrollments Medical benefits cost New special education placements Proposed new staffing Energy costs State revenues

32 Other Key Variables Charter School Tuition is unavoidable and somewhat unpredictable Special Education placements have similar characteristics Interest rates and Investment Income strongly influenced by Federal Reserve actions Impact of the economy on Earned Income Tax, State Revenues, other revenue lines

33 Revenue Assumptions in Previous Budget Projections Assumed assessed value growth of 2.5% Assumed EIT growth of 3.0% Assumed Investment Income growth of 3.0% Assumed State BEF growth of 1.5% Assumed State Special Education Funding growth of 2.0% All other revenues either increased by formula or 0%

34 Expenditure Assumptions in Previous Budget Projections 3% inflation in most items 10% inflation in energy costs 3 to 4% inflation in Salaries 15% inflation in medical insurance

35 Outcome Using Revenue Assumptions for Estimated Growth in all other revenue except real estate taxes: $734,094 Estimated Growth in real estate revenue due to 2.5% assessed value growth only: $1,665,653 Total natural growth in revenue if all assumptions hold: $2,477,863 Additional State Revenue in 08-09: $233,034 $2,710,897 in new revenue for covers up to a 2.6% increase in expenditures over

36 Local Revenue

37 Real Estate Tax Information Millage: Average Residential Property Assessed Value: $69,213 Estimated Real Estate Tax Revenue after Homestead Adjustment: $66,627,747

38 Net Real Estate Taxes Paid on a Residential Property with $69,213 taxable assessed value Millage Net Tax Bill $2, Millage Net Tax Bill $2, Millage Gross Tax Bill $2, Homestead Exclusion ($112) Net Tax Bill $2,222

39 Real Estate Tax Information Assume a 2.5% growth in assessed value by fiscal year end Est Real Estate Tax Revenue with no rate increase after Homestead Adjustment: $68,293,400 Est Real Estate Tax Revenue with 4.1% increase before Homestead Adjustment: $72,613,185 Value of 4.1% rate increase: $2,859,885

40 Tax Increase Ranges and Impacts on Average Residential Property RE Tax Inc % Avg. Residential District Real Estate Real Estate Tax Inc. Revenue Increase 1.0% $23 $ 697, % $47 $1,395, % $70 $2,092, % $96 $2,859,885

41 Decision Variables Cannot change any tax rate except real estate tax rate All other revenue changes based upon natural fluctuations, state formula, or state legislation The only revenue decision available to the Board is the real estate tax millage decision, which can generate a maximum estimated new revenue of about $2.85 million, without applying for exceptions

42 Summation of Revenue If all assumptions about revenue hold, $2,710,897 of revenue through natural growth and additional state funds above what was expected in Estimated $2,859,885 of revenue if a 4.1% real estate tax rate increase is approved, providing assessed value growth is 2.5% $5,570,782 total additional revenue without filing for exceptions if maximum tax increase under the index was enacted

43 SUMMARY OF REVENUE PROJECTIONS AND IMPACTS % increase in Real Estate Tax Rate Tax Increase to Average Homeowner Additional Real Estate Revenue Revenue Increase due to Growth Total Additional District Revenue % Increase in Total Revenue 0.0% $0 $0 $2,710,897 $2,710, % 1.0% $23 $697,533 $2,710,897 $3,408, % 2.0% $47 $1,395,066 $2,710,897 $4,105, % 3.0% $70 $2,092,599 $2,710,897 $4,803, % 4.1% $96 $2,859,885 $2,710,897 $5,570, %

44 Potential Bumps on the Revenue Road Most of natural growth comes from assumed 2.5% assessed value growth; could be challenging in current environment Investment income very unclear given current market conditions What will happen with state revenue if economy continues to struggle?

45 Wrap-up Discussion and Questions