Tomball ISD Annual Budget

Transcription

1 Tomball ISD Annual Budget

2 About TISD Formed in 1937 the district encompasses por ons of Harris and Montgomery coun es, in Tomball, approximately 20 miles northwest of Houston's central business district and 15 miles southwest of the Woodlands. The 2016 district enrollment is 14,184, about 6.22% more than the previous year, which is largely a ributable to absorp on of students brought to the area because of major employment growth at Noble Energy Inc. (800 jobs south of Tomball) and Exxon Mobil Corp. (8,000 jobs; just 15 miles away in the Woodlands area) headquarters facili es in An expansive Grand Parkway thoroughfare opened in late 2015 and will enhance residents' access to Tomball from Cypress and Spring. This development, in addi on to other roadway and economic developments, will con nue to s mulate both enrollment and economic growth for several more years. The tax base is diverse with the leading taxpayers comprised of Hewle Packard Co., at just 5.2% of market value; Baker Hughes, at 2.1%; Tomball Regional Hospital, at 1.7%, and Noble Energy at 1.5% of market value. ACTUAL ENROLLMENT P R O J E C T E D 2

3 Introduction Awards and Recognitions Financial statements of Tomball ISD are annually submi ed to both The Associa on of School Business Officials (ASBO), Interna onal and The Government Finance Officers Associa on (GFOA) for review. These organiza ons encourage excellence in financial repor ng by state and local governments, and enforce strict disclosure requirements on en es reques ng review. Tomball ISD is commi ed to significantly higher standards in financial repor ng and has received awards for financial statement presenta on and disclosure from both associa ons for 17 consecu ve years. It should be noted that less than 4.3% of the school districts in Texas receive both these awards. STANDARD & POOR S RATING On March 9th, 2016 Tomball ISD announced Standard & Poor s Ra ng Services raised the district s financial ra ng to AA+ from AA. The district is one of only 16 school districts of 1,024 districts in the State of Texas to earn the AA+ financial ra ng. The ra ng was upgraded based on the district s con nued and projected maintenance of a strong tax base, tax raising flexibility, very strong reserves, and moderately high debt burden. This is an outstanding accomplishment for our school district, Superintendent Huey Kinchen said. Tomball ISD has maintained a history of fiscal responsibility, but this recogni on affirms that our district is among the best in Texas. The district s Chief Financial Officer Jim Ross has been working toward this goal for a decade. When I joined Tomball ISD 13 years ago, I was confident the district had the poten al to be a financial leader among school districts across the state. Through the years, we ve adopted a conserva ve approach to spending, which is one of the contribu ng factors resul ng in the increase of our financial ra ng. According to Standard & Poor s ra ng report, addi onal underlying factors that led to the ra ng increase were the district s very strong finances, coupled with opera onal revenue raising flexibility under the current state funding formula. The report further cited the district s good financial management prac ces and policies. According to Ross, the ra ng increase will benefit Tomball ISD in future bond issuance. The AA+ ra ng will save us millions of dollars. We have such a strong financial reputa on and we will see investor demand for our bonds. Tomball ISD administrators maintain a history of being good stewards of tax dollars, and making financial decisions that are in the best interest of students and their educa onal needs. For seven consecu ve years, Tomball ISD held a flat tax rate of $1.36. In 2015, the district lowered the total tax rate to $1.34. The decrease is a reflec on of an increase in the tax base. Another component in the district s approach to managing finances included se ng aside funds in prepara on for opening new schools. During the last nine years, voters approved two school bond referendums one in 2007 and another in These bond programs funded the construc on of seven new schools enabling the district to meet the needs of a growing popula on. Creekside Park Junior High Tomball ISD s fourth school under Bond 2013 is scheduled to open in the fall of

4 Superintendent s Legal Responsibilities The Superintendent of the District is required to follow Sec ons through of the Texas Educa on Code that establish the legal basis for budget development in public school districts. The following six items summarize the legal requirements from the code: The Superintendent is the budget officer for the District and prepares or causes the budget to be prepared. The District budget must be prepared by August 20 th for the following fiscal year. The President of the Board of Trustees must call a public mee ng of the Board, giving ten days public no ce in a newspaper, for the adop on of the District budget. Any taxpayer in the district may be present and par cipate in the mee ng. No funds may be expended in any manner other than as provided for in the adopted budget. The Board does have the authority to amend the budget or adopt a supplementary emergency budget to cover unforeseen expenditures. The budget must be prepared in accordance with GAAP (generally accepted accoun ng principles) and state guidelines. HUEY KINCHEN Budgets for the General Fund, the Food Service Fund and the Debt Service Fund must be included in the official district budget. The leaders iden fied in the organiza onal chart below are responsible for preparing the budget for their areas of responsibility. It is also their responsibility to wisely u lize the resources made available in the adopted budget. Leadership Organizational Chart 4

5 B o a r d o f Tr u s t e e s Sam A. Gregson Kathy Handler Mark Lewandowski John E. McStravick School Board Trustee Elected 2001 School Board Secretary Elected 2010 School Board Trustee Elected 2003 School Board Asst. Secretary Elected Nov Lisa Nicholas Ken Odom Michael J. Pra School Board Trustee Elected 2004 School Board Vice President Elected 2004 School Board President Elected

6 Message from Chief Financial Officer The Tomball Independent School District uses the Priority Based Budge ng method in budget prepara on. Priority Based Budge ng is a way for local governments to spend within their means by con nuously focusing on the results most relevant to the community and the programs that influence those results to the highest possible degree. The process involves a systema c review of exis ng services, why they exist, what value they offer our students, how they benefit our students and community, what they cost, and what objec ves and student and parent demands they are achieving. The measurement of budget process success is found in data analysis conducted by the Texas State Comptroller s office and reported in the Financial Alloca on System of Texas (FAST) reports that have now been renamed TXSmartSchools reports. This report can be found at The descrip on of the report on the homepage is TXSmartSchools uses academic, financial, and demographic data to iden fy school districts and campuses that produce high academic achievement while also maintaining cost effec ve opera ons. Using both academic progress and spending levels each district has been assigned a Smart Score of one to five stars, indica ng its success in combining cost effec ve spending with the achievement of measurable student academic progress compared with their fiscal peers. Five stars reflects the strongest rela ve progress combined with the lowest rela ve spending. JIM ROSS Of 1,219 public school districts and charter schools only 44 received a five star ra ng. Of the 1,024 public school districts only 26 school districts received a five star ra ng. Tomball ISD was one of the 26 Texas public school districts receiving a five star ra ng in May In preparing the budget the District faced a number of challenges from both internal and external sources. Internally the focus was maintaining our current educa onal programs while focusing on our success with students that have English as a second language. There was also the $2 million start up cost of opening a new junior high campus in The Woodlands, which creates a deficit for the year. Externally the focus was posi oning all programs for changes driven by statements at the state level of crea ng a School Choice educa on system in Texas in the next legisla ve session that begins in January The District will also be losing revenue to the State s revenue recapture system designed to redistribute funds from wealthier districts to less wealthy districts. And finally the District had to prepare a budget considering a September 1, 2017 repeal of the hold harmless promise by the Legislature to replace revenue lost due to a forced tax rate reduc on in The revenue recapture amount of $1.9 million will occur in the fiscal year. The loss of the tax rate reduc on hold harmless revenue will be $2.3 million in the fiscal year. 6

7 Statistics Behind Tomball ISD Schools EMPLOYEES 1,855 Maintained by District custodians, maintenance and ground staff STUDENTS BUSSED DAILY 6,828 BREAKFAST SERVED 252,222 BUILDING SQUARE FOOTAGE STUDENTS 14,184 3,113,147 BUSES IN FLEET GRADUATES 801 TOTAL ACREAGE OWNED 907 ATTENDANCE RATE 96.3% MILES DRIVEN DAILY 7,480 LUNCHES SERVED 1,527,055 7

8 Tax Base Change & Tax Rate History Tomball ISD has two major sources of revenue: local property taxes and state funding. Local property taxes are dependent on the tax rate set on the assessed taxable values of the district. These assessed taxable values are determined by the Harris County Appraisal District (HCAD) and Montgomery County Appraisal District (MCAD). State funding amounts are an offset to local tax revenues designed to limit funding in revenue per pupil from local taxes and state sources to a specific target revenue amount. If the local tax base increases and local tax revenues increase, Tax Base Change Tax Rate Methodology, History and Proposed Rates Current law requires all districts to compress their Maintenance & Opera ons (M&O) tax rates to a level equal to 66.67% of the M&O tax rate. Tomball ISD s compressed M&O tax rate is $0.96 ($1.44 * ). The District is allowed to add pennies to this compressed rate as long as the total added does not exceed a voter approved legal maximum tax rate of $1.17. The maximum allowable tax rate without a tax rate elec on for general opera ng is one of two tax rate calcula ons. The first rate is calculated as the maximum M&O tax rate defined in state law of $ [($1.50 X 66.67%) + $0.04] plus any voter approved M&O pennies. State law allows local district voters the authority to add as much as 13 cents to the $ The second rate is the calculated effec ve tax rate plus 4 cents. The effec ve tax rate is calculated using a worksheet from the Texas State Comptrollers Truth in Taxa on handbook. The effec ve tax rate is $1.00. Adding four pennies to the effec ve tax rate is the state aid decreases. If local tax revenues decrease, then state aid increases. second tax rate maximum and would be $1.04. The maximum M&O tax rate, or rollback rate, for general opera ng is the lower of these two rates. The lowest rate for is $1.04. Each addi onal penny above the compressed rate, up to 6 pennies, is equalized to the per penny revenue yield per weighted average daily a endance (WADA) of Aus n ISD. Because of the addi onal funding related to these six addi onal pennies, they are typically called golden pennies. The district passed a $1.01 M&O tax rate in , , , and in The , and M&O tax rates were $1.02 and the proposed M&O tax rate is $1.04. The district passed a $0.35 Interest & Sinking (I&S) tax rate in , , , and in The I&S tax rate is assessed to pay bonded debt. Due to taxable value growth the adopted I&S tax rate was reduced to $0.34. Con nued taxable value growth allowed the District to again lower the I&S rate to $0.32 in order to lower the total tax rate for the year. Again taxable value growth allows the District to lower the proposed I&S tax rate to $0.30. The combina on of the M&O tax rate and the I&S tax rate is the total tax rate. The total tax rate was $1.36 for seven consecu ve years from through The total tax rate for last year was reduced from $1.36 to $1.34. The proposed total tax rate is $1.34. These stable tax rates are the result of steady increases in the taxable values. 8

9 Budgeted Operating Revenues A spreadsheet on the following page compares actual audited financial data from prior years to the budgeted revenues and the projected revenues. This spreadsheet shows a decrease in state funding and an increase in local taxes for due to the increase in the taxable property values. The total projected opera ng revenue is $119,750,000 and is 9.16% higher than the previous year. The total opera ng revenue per pupil (WADA) is $7,009 and a 3.35% increase over the prior year. This increase in revenue is primarily due to the increase in the Weighted Average Daily A endance projec on. Below is a general summary of the budgeted opera ng revenues. State funding has decreased by 34.2%. Local funding has increased by 19.8%. Federal funding has increased by 41.7% State Funding $ 21,833,617 $14,357,535 Local Funding $ 87,116,383 $104,329,965 Federal Funding $750,000 $1,062,500 Total $ 109,700,000 $ 119,750,000 Percent Change 11.06% 9.16% Chapter 41 Recapture $ 0 $ 1,942,259 WADA 16,056 17,084 9

10 Proposed Budget Revenue Analysis Proposed Budget REVENUES 10

11 General Fund Budgeted Appropriations The proposed General Fund budget is $121,750,000, which is 7.46% higher than the adopted budget. The budget is divided into five major expenditure categories, with these expenditure categories called object codes in school accoun ng. The object codes indicate expenses in payroll, contracted services, supplies and materials, other opera ng costs, and capital outlay. Educa on is a service oriented business, and typical for this type of business, payroll costs are a very high percentage of expenditures. As can be seen in the pie chart, payroll is the largest expense in the General Fund budget at 89.21% of the total budget. The total General Fund budget increased by $8,450,000 over the previous year. Payroll increased by $8,681,033 or 8.7% over the previous year. Contracted Services is primarily the cost of u li es and 6.45% of the total budget. This category increased $460,902 or 6.2% over the prior year. Supplies and materials is 2.8% of the total budget and decreased slightly by $114,655 from the previous year. Other Opera ng Expenses is 1.23% of the total budget and primarily includes the costs related to travel for students and staff and property casualty insurance. This budget category decreased $367,280 or 19.7% from the prior year. Capital Outlay is 0.31% of the total budget and is the costs primarily related to equipment replacement. This category decreased $210,000 or 36% from the prior year Payroll $99,934,642 $108,615,675 Contracted Services $7,391,609 $7,852,511 Supplies & Materials $3,529,325 $3,414,670 Other Operating Exp. $1,861,424 $1,494,144 Capital Outlay $583,000 $373,000 Total $ 113,300,000 $ 121,750,000 Percent Change 14.71% 7.46% 11

12 Definition of Function Codes Texas public school accounting expenditures are coded by function codes to identify the purpose of the expense. Budgets must be approved by fund and by function. 10 Instruc on and Instruc onal Related Services This func on code series is used for expenditures/ expenses that provide direct interac on between staff and students to achieve learning, and provide staff members with the appropriate resources to achieve the appropriate student learning outcomes through either materials or development. 30 Student Support Services This func on code series is used for expenditures/expenses that directly support students. 40 Administra ve Support Services A func on code series for the overall general administra ve support services of the school district. 20 Instruc onal and School Leadership This func on code series is used for expenditures that relate to the managing, direc ng, supervising and leadership of staff who are providing either instruc onal or instruc onal related services. This func on code series also includes the general management and leadership of a school campus. 50 Non Student Based Support Services This func on code series is used for expenditures/ expenses that are school district support services. 60 Ancillary Services This func on code series is used for expenditures/expenses that are for school district support services supplemental to the opera on of the school district. 70 Debt Service This func on code series is used for expenditures that are used for the payment of debt principal and interest. 80 Capital Outlay This func on code series is used for expenditures that are acquisi ons, construc on, or major renova on of school district facili es. 90 Intergovernmental Charges This func on code is appropriate where one governmental unit transfers resources to another. 12

13 Budget by Detail Function Codes The General Fund budget must be approved by the Board of Trustees by Fund and Func on. Direct instruc on of students (func on 11) is 61.8% of the total budget appropria ons and is the largest single cost. Plant maintenance and opera ons (func on 51) is the second highest cost and includes costs of building maintenance and repairs, ligh ng and condi oning of facili es. This func on is 10.2% of the total budget. Campus leadership (func on 23) includes the costs for student and staff management at the campus level. This func on is 6.8% of the total budget. Frequently discussion focuses on the high costs for extracurricular ac vi es such as athle cs. This cost is included in func on 36 and is only 2.7% of the total budget. Another issue of conten ous discussion is the high cost of administrators not at the campus level. Func on 41 and Func on 21 account for these costs and combined are 4.4% of the total budget. What should be considered in the costs for func on 41 are the inclusion of staff needed for payroll processing, staff needed for repor ng to federal and state agencies, and staff needed for processing payments to vendors. Func ons are classified by code in five general categories. Instruc on is made up of the func on codes beginning with a 1 and are 63.95% of the total budget. Campus and Instruc on Administra on are the func on codes beginning with a 2 and are 8.36% of the total budget. Student Support are the func on codes beginning with a 3 and are 11.91% of the total budget. General Administra on is the single func on code beginning with a 4 and 2.88% of the total budget. Non Student Support are the func on codes beginning with a 5 and are 12.11% of the total budget. Other less significant func on codes beginning with a 6, 8, or 9 and are only 0.79% of the total budget. 13

14 Proposed Budget Expenditure Analysis Proposed Budget EXPENDITURES 14

15 Staff Count History Staff Counts by Position The District currently has 1,855 employees. This staff is comprised of 1,106 (59.6%) professional and 749 (40.4%) non professional posi ons. Of the total staff 875 (47.2%) are teachers, 164 (8.8%) are professional support such as librarians and counselors, 48 (2.6%) are campus administrators, 19 (1.0%) are professionals that have district wide administra ve du es, 180 (9.7%) are educa onal aides providing direct assistance to teachers, and 569 (30.7%) are support personnel for providing food services, custodial services, clerical support, transporta on services, and maintenance of district plant facili es and grounds. From to the number of employees has risen at an average rate of 5.69% per year while student enrollment has risen at an average rate of 5.73%. During this me period the growth was 261 (62%) professional posi ons and 160 (38%) non professional posi ons. The percentage change in total employees from year to year was: increased by 1.85%, increased by 6.21%, increased by 7.09%, increased by 5.58% and increased by 7.72%. The primary driver for the staffing increases seen in , and was been the opening of new campuses. 15

16 Financial Overview Where the money comes from Property Taxes $0.85 State Educa on Funding $0.06 State Pension $0.04 Local Meal Revenue (2%) Misc. Local Revenue (1%) Federal Funds (1%) Federal Funded Meals (1%) Where the money goes... Extra Curricular $0.02 Technology $0.02 General Admin $0.02 Instruc onal Services $0.50 Counseling $0.04 Transporta on $0.04 Child Nutri on $0.04 Debt Payments $0.18 Facility Opera ons $0.08 School/Instr. Leadership $

17 Food Service Budget Payroll $2,467,225 Contract Services $136,840 Food & Supplies $3,005,000 Other Opera ng $20,450 Capital Outlay $47,000 TOTAL $5,676,515 The total proposed Child Nutri on and Food Service budget for is $5,676,515. This budget is an increase above the prior year s budget of 13.5%. Various revenues from local, state, and federal sources will fully fund this budget. Local revenue from local meal charges will generate $3,438,215 (60.6%) of the funding for this department. Federal child nutri on funds for subsidized free and reduced meal costs will pay $2,080,000 or 36.6% of the costs for this department. Other state matching funds of $158,300 will bring the total to $5,676,515 in total revenue. The cost of food is the largest expense in the food service budget, and totals 52.94% of the total budget. Payroll is second largest expense at 43.46% of the total budget. Other expenses included in the Food Service budget are for contracted services, miscellaneous opera ng expenses, and capital outlay. These account for the remaining 3.6% of the total budget. Total budgeted appropria ons is $5,676,

18 Debt Service Budget The Debt Service Fund is used to account for the accumula on of resources for the payment of general long term debt principal and interest and for is $28,500,000. A separate tax rate is assessed to fund the debt payments based on the scheduled maturi es. This debt tax rate, called the Interest and Sinking (I&S) tax rate, is approved by the Board of Trustees annually. The proposed Interest and Sinking tax rate for is $0.30, a reduc on from $0.32. Principal $12,175,000 Interest $15,978,868 Other $346,132 TOTAL $28,500,000 On March 9, 2016 Standard & Poor's (S&P) Ra ngs Services raised its underlying ra ng on Tomball Independent School District (ISD), Texas' general obliga on (GO) debt one notch to 'AA+' from 'AA'. The outlook is stable. The upgrade was based on the district's con nued and projected maintenance of strong tax base growth, tax raising flexibility, very strong reserves, and moderately high debt burden. Of the 1,024 Texas public school districts only 16 have an S&P ra ng this high. Rating Year Moody s Standard & Poors Fitch 2016 AA+ (Stable) 2015 AA Reaffirmed AA (Positive) AA Reaffirmed 2014 Aa2 AA Rating not requested 2011 Rating not requested AA AA 2009 Rating not requested AA- AA A1 A+ Rating not requested MILLIONS Future Bond Payments $30 $25 $20 $15 $10 $5 $0 Principal Interest 18

19 Proposed Budget 19

20 Proposed Budget 20

21 Proposed Budget 21

22 Proposed Budget 22

23 (Rev. 4-16/3) NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE TOMBALL INDEPENDENT SCHOOL DISTRICT The will hold a public meeting at 5:30 pm on August 8, 2016 in the Boardroom at 310 S. Cherry Street. Tomball, Texas The purpose of this meeting is to discuss the school district s budget that will determine the tax rate that will be adopted. Public participation in the discussion is invited. The tax rate that is ultimately adopted at this meeting or at a separate meeting at a later date may not exceed the proposed rate shown below unless the district publishes a revised notice containing the same information and comparisons set out below and holds another public meeting to discuss the revised notice. Maintenance Tax School Debt Service Tax Approved by Local Voters $ /$ (Proposed rate for maintenance and operations) $ /$ (proposed rate to pay bonded indebtedness) Comparison of Proposed Budget with Last Year s Budget The applicable percentage increase or decrease (or difference) in the amount budgeted in the preceding fiscal year and the amount budgeted for the fiscal year that begins during the current tax year is indicated for each of the following expenditure categories: Maintenance and operations % 7.46 increase or % (decrease) Debt service % increase or % (decrease) Total expenditures % increase or % (decrease) Total Appraised Value and Total Taxable Value (as calculated under Tax Code Section 26.04) Preceding Tax Year Current Tax Year Total appraised value* of all property $ 10,160,308,417 $ 11,979,658,415 Total appraised value* of new property** $ 585,365,720 $ 518,147,424 Total taxable value*** of all property $ 8,957,338,225 $ 9,910,414,437 Total taxable value*** of new property** $ 518,944,954 $ 457,808,197 * Appraised value is the amount shown on the appraisal roll and defined by Tax Code Section 1.04(8). ** New property is defined by Tax Code Section (17). *** Taxable value is defined by Tax Code Section 1.04(10). Bonded Indebtedness Total amount of outstanding and unpaid bonded indebtedness* $ 373,955,750 * Outstanding principal.

24 (Rev. 4-16/3) (Back) Comparison of Proposed Rates with Last Year s Rates Maintenance Interest Local Revenue State Revenue & Operations & Sinking Fund* Total Per Student Per Student Last Year s Rate $ $ * $ $ 8,376 $ 57 Rate to Maintain Same Level of Maintenance & Operations Revenue & Pay Debt Service $ $ * $ $ 8,998 $ 632 Proposed Rate $ $ * $ $ 9,317 $ 533 * The Interest & Sinking Fund tax revenue is used to pay for bonded indebtedness on construction, equipment, or both. The bonds, and the tax rate necessary to pay those bonds, were approved by the voters of this district. Comparison of Proposed Levy with Last Year s Levy on Average Residence Last Year This Year Average Market Value of Residences $ 299,572 $ 309,168 Average Taxable Value of Residences $ 251,355 $ 267,494 Last Year s Rate Versus Proposed Rate per $100 Value $ $ Taxes Due on Average Residence $ 3,368 $ 3,584 Increase (Decrease) in Taxes $ 216 Under state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, may not be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value. Notice of Rollback Rate: The highest tax rate the district can adopt before requiring voter approval at an election is. $ This election will be automatically held if the district adopts a rate in excess of the rollback rate of. $ Fund Balances The following estimated balances will remain at the end of the current fiscal year and are not encumbered with or by a corresponding debt obligation, less estimated funds necessary for operating the district before receipt of the first state aid payment: Maintenance and Operations Fund Balance(s) $ Interest & Sinking Fund Balance(s) $ 24,139,914 1,500,436