Tonight we will be asking you to pass a resolution that will allow us to put on public display the proposed final budget.

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Myles Hudson
5 years ago
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1 Tonight we will be asking you to pass a resolution that will allow us to put on public display the proposed final budget. Passing this resolution tonight will not commit you to any final budget amounts. This budget can be changed between now and June 15 th when you will be asked to vote on the Final version and the millage or tax rate. 1

2 What are our other opportunities to discuss the budget? Between now and June 15 th we have another two Board work sessions, two Finance Committee meetings and two Board meeting scheduled where we can discuss and make adjustments to the budget. 2

3 Was does a summary for our budget look like? The Proposed final budget total revenues without any increase in the tax rate is $48,264,980 Our total proposed expenditures are $50,721,802 Resulting in a deficit of $2,456,822 Our Act 1 index for is 2.4% which will result in $693 thousand in tax revenue reducing our deficit to $1,763,000. This deficit can be funded with the use of Fund Balance in the amount of $1,763,000 to balance the Budget. 3

4 The budget expneditures are an increase of $1,510,904 or 3.07% increase over Total salaries are lower by approximately $87,000. This budget has the same staffing level as the budget, including $58,000 for four unfilled technology ades. The decrease in total salaries is due to resignations or employees in the budget who have been or are being replaced by lower salaried employees in Total benefits are increasing by $992,484. Of that increase $825 thousand is from PSERS or retirement increases. The PSERS rate is increasing from 21.4% to 25.84% in Medical Benefits are increasing by 6.95% or $167 thousand. Outside Services are increasing by $519,225. Like many other school districts we are seeing increases in the costs for special education which accounts for the majority of this increase. Transportation/insurance/ tuition is increasing by $263,501. Tuition for occ ed is decreasing while other tuitions to charter and aps is increaseing however the majority of the increase in this area is in transportation. Our contract calls for a 1.85% annual increase however as we add additional runs for special education students our total costs increase. Both Supplies and Capital or Equipment are increasing slighlty. Supplies by less than 2% and Capital by less than 1% Dues fees and interest is decreasing mostly due to a decrease in Debt Service Interest however Debt Service Principal in the next line is increasing by the same amount. Overall the Fund transfer/principle item is decreasing because the transfer to other funds line is decreasing by $273 thousand. The bottom line is a total budget increase of $1,510,904 or 3.07% over budgeted expenditures. 4

5 Of our $1.5 million expenditure increases the largest item is our PSERS increase. As you saw our total increase is $825 thousand in gross expenditures however we will receive half of that back in the form of a state subsidy, the net affect to our budget for PSERS will end up being $412,500. Netting this increase against the increase in the PSERS subsidy revneue results in an increase of only $1,098,404 or 2.2% overall increase over as opposed to the 3.7% I mentioned earlier. As you can see the projected PSERS rate will continue to increase into the low 30%s and are projected to stay at those levels for many years. However the district has taken steps in the past to reduce the impact of PSERS on the budget by reducing the total number of employees and utilizing contracted services where possible. 5

6 As we saw earlier total salaries are budgeted lower now than they were in even though we have seen some increases in total salaries since the most recent low in the fiscal year, as you can see on this chart, total salaries are below the highest salaries from fiscal year. This helps minimize the PSERS impact as well as maintain salary expenditures. 6

7 Again you can see the PSERS impact on general fund expenditures represented by the green portion of the stacks on this chart. Other increases we saw in the budget are due to Health Insurance, the red portion and charter school tuitions the green area. In the past PDE used to reimburse school districts for charter school expenditures however that funding ended. Next year s proposed governor s budget proposes to cut our charter school expenditures by $300,000. Health care expenditures, the red portion of the stacks is projected to increase by 6.95% or $167 thousand in under the current plan. As you can see on the chart, health care expenditures are the red portion, we experience wide variances from year to year. This is due to the fact that we use a self funded insurance model. At the end of the fiscal year we will be setting up an internal service fund to help smooth out these variances in the General Fund. We will use the internal service fund to fund the differences between budget and actual expenditures. Debt Service, the yellow portion of the stacks, increased in and has maintained the same level until this year. Last year the Board approved a refinancing of older debt at a lower rate and enjoyed a one time savings spread over two budget year s. 7

8 On this chart you can see that the budgeted debt service was approximately 6.15 million however as you heard last week our actual debt service expenditures this year will be 5.79 million which is a $380 thousand savings The one time debt service savings taken over two years and will also reduce our debt by approximately $380 however the next year, our 2017our debt service goes right back up the 6.15 million level. This is the reason for maintaining the original debt level in the budget. There are other opportunities in the future to refinance older debt with lower rate debt however the year that we will see savings has not been identified yet. Also to note about our debt service. According to our Financial Advisor and Bond Underwriter, our net debt service runs about 11% of our total budget which is in line with most other school they see in Pennsylvania ranging from the 10% to 15% of their budget. 8

9 As you saw in our summary our total revenues budgeted, including the 2.4% Act 1 increase of approximately $700 thousand totals $48,958,802. That total revenue plus the fund balance needed to balance the budget equals $50,721,802. Here you can see that of all or our sources of revenues 70% comes from current local revenues and 4% comes from fund balance. The state is providing approximately 24% and the federal government is providing approximately 2%. In early May we will be notified as to how much the total homestead/farmstead tax revenue will be. This amount will reduce the percentage of local revenue and increase the percentage of state revenue. This year the total was 1,124,919 Giving each homestead/farmstead tax bill a reduction of $267 9

10 Our local revenues make 70% of total revenues. The largest portion or our local revenue comes from RE taxes, 88% which includes the act 1 index revenue. Again this number will decrease and the state number will increase when we are notified of the homestead/farmstead revenue. Our EIT, our second larges local revenue as you can see is approximately 5% of our local revenue. We are budgeting a 1.6% increase in our EIT revenue for Currently we are trending just below budget for which would not support an increase for however this revenue has varied widely in the past three years with a high of 2.1 million and a low of 1.5 million so an average of the past three year actual do support a higher budget amount. Our Interim and transfer taxes for are both trending above budget this year. We are budgeting a 16% increase combined in these revenues. Investment income as we saw last week is projected to be higher than budget this year and we did budget for a 6% increase Our IDEA budget is lower in by a small % and our delinquent RE tax revenue all other local revenues are budget at levels. 10

11 On this slide you can see how the EIT revenue has varied widely the past three years and why we use an average to budget for

12 The Act 1 tax increase is about ½ of what it was in

13 What does a 2.4% tax increase look like for District Residents? Using the Chester County Median homestead property assessment you can see that the 2.4% act 1 index increase equals an increase of $105 on a tax bill of $4,524 for

14 When were tax rates last increased? Our current millage rate, for Chester County is mills. As you can see here this hasn t changed since the fiscal year. Also, we are in the lower third of Chester County schools for tax rate growth over the past 8 years. 14

15 Our total state revenues are 24% or our total revenues. This % will increase after the homestead/farmstead revenue has been calculated and we know the total. The last stack on this chart show our budget compared to prior year s amounts. As you can see we are keeping basic education level funded, special education level funded and transportation funding is increasing slightly. Social security remains constant however as you can see our PSERS subsidy increases due to the increase in the PSERS rate on the Expenditure side. In the Proposed Governor's budget would pass we would see an additional amount of subsidy revenue of approximately $300,

16 Federal Revenues make up approximately 2% of all or our revenues. Title I is by far our highest federal revenue. Unfortunately the ACCESS revenue, our second largest federal revenue, reimbursement rates have been decline and we may not be able to reach our budget. We will not reach our budget. 16

17 Finally, the budget calls for using fund balance to close the deficit. Our fund balance available to fund the deficit is projected to be approximately $7.4 million. Last year s fund balance was $8.256 million and last week we saw that we are projecting to use approximately $826 thousand of fund balance to balance the leaving us with $7.4 million in fund balance available to fund

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$01/23/2018 i:\budget\ Budget\ Budget Presentation and Finance Committee 1$ 01/23/2018 i:\budget\2018-19 Budget\2018-01-23 Budget Presentation and Finance Committee 1 Pennsylvania School Employees Retirement System (PSERS) Employer Retirement Contributions - 100 Year Term School