Bloomfield Hills Schools FY2014/15 Midyear Budget and Forecast Preview

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1 Bloomfield Hills Schools FY2014/15 Midyear Budget and Forecast Preview February 12, 2015 Overview: General Fund Special Revenue Funds changes 1

2 Mid-Year Budget Update Fiscal Year 2014/15 General Fund Fund balance as of July 1, 2014 (audited) $ 22,046,392 Revenue $ 83,094,598 Expenditures ($86,476,660) Expenditures over (under) revenue ($3,382,062) General Fund Fund balance as of June 30, 2015 (projected) $ 18,664,330 Fund balance as a percentage of expenditures 21.6% Mid-Year Budget Update Fiscal Year 2014/15 Special Revenue Funds Fund balance as of July 1, 2014 (audited) $ 7,797,018 Revenue $ 19,398,067 Expenditures ($ 19,289,695) Revenue over (under) expenditures $ 108,372 Special Revenue Funds Fund balance as of June 30, 2015 (projected) $ 7,905,390 Special revenue funds include: Center Programs, International Academy, Recreation/Community Service, and Food Service. changes 2

3 Mid-Year Budget Update Fiscal Year 2014/15 General Fund A Closer Look General Fund Current Year Budget Progression Fiscal Year 2014/15 Revenue Expenditures Revenue over (under) Expenditures Projected Fund Balance Original Budget $ 84,298,729 $ 86,622,535 ($ 2,323,806) $ 19,722,586 Mid-Year Budget $ 83,094,598 $ 86,476,660 ($ 3,382,062) $ 18,664,330 Better or (Worse) from Original Budget ( $ 1,204,131) $ 145,875 ( $ 1,058,256) ( $ 1,058,256) The increased spending deficit is primarily as a result of the fall enrollment decline. changes 3

4 Current Year Revenue Update Fiscal Year 2014/15 - General Fund Largest Revenue Source Our largest source of revenue is the foundation allowance totaling about $62 million, which comprises around 74% of our total General Fund revenue: Foundation per pupil x BHS General Fund blended membership $11,934 x 5,171 Blended BHS membership is a weighted average of the fall & winter counts 90% of fall 2014 & 10% winter 2015 (yesterday). We won t know our official blended membership for a several weeks. changes 4

5 Fiscal Year 2014/15 - General Fund Revenue by Source 7% 3% 11% 5% Foundation Allowance 74% State portion 38% Local portion 36% Interdistrict Federal State (categorical grants) Local (other than taxes) The Foundation Allowance is funded both locally, through non-homestead and hold harmless operating taxes, and by the State School Aid Fund. Approximately $62 million, or 74% of total revenue represents the per pupil Foundation Allowance funding. Blended Enrollment History School Year: General Fund Center Pgms Fund State Aid Membership Fall Winter Blend: 2014/ = % / 10% 2013/ = % / 10% Current school year Preceeding school year 2012/ = % / 10% 2011/ = % / 10% 2010/ = % / 25% 2009/ = % / 25% Notes: /15 includes preliminary fall 2014 count; winter 2015 based on fall The foundation allowance per pupil multiplied by the blended State Aid Membership determines the Foundation revenue amount for the fiscal year, including general education, center & non-center special education students. changes 5

6 Fiscal Year 2014/15 - General Fund Revenue by Source 48% Local 3% 5% State Federal 44% Interdistrict Best Practices State School Aid Act, Section 22f Do we comply? Policy holder for medical benefit plans Obtain competitive bids for non instructional services Accept applications for enrollment of non resident pupils (school of choice) Offer online courses or blended learning opportunities Provide parents and community members a website dashboard/report card with required financial information Teacher and administrator job performance is a significant factor in compensation determination Collective bargaining agreements do not include provisions contrary to prohibited subjects by statute Implement a comprehensive guidance and counseling program Offer K 8 students 1 credit worth of non English language learning experiences Yes Yes No Yes Yes Yes Yes Yes Yes changes 6

7 Foundation Allowance History Cumulative Change compared to CPI Fiscal Yrs: Foundation allowance history 1994/ / / /10* 2010/11* 2011/ / / /15 Cumulative Min. foundation allowance $ 4,200 $ 7,204 $ 7,316 $ 7,162 $ 7,146 $ 6,846 $ 6,966 $ 7,026 $ 7,076 Increase (decrease) (154) (16) (300) Percent change 1.68% 1.55% 2.10% 0.22% 4.20% 1.75% 0.86% 0.71% 68.48% Basic foundation allowance $ 5,000 $ 7,204 $ 7,316 $ 7,162 $ 7,146 $ 6,846 $ 6,966 $ 7,026 $ 7,076 Increase (decrease) (154) (16) (300) Percent change 1.68% 1.55% 2.10% 0.22% 4.20% 1.75% 0.86% 0.71% 41.52% Max. (Hold harmless) foundation $ 6,500 $ 8,433 $ 8,489 $ 8,335 $ 8,319 $ 8,019 $ 8,019 $ 8,049 $ 8,099 Increase (decrease) (154) (16) (300) Percent change 0.57% 0.66% 1.81% 0.19% 3.61% 0.00% 0.37% 0.62% 24.60% Bloomfield Hills Schools $ 10,454 $ 12,387 $ 12,443 $ 12,170 $ 12,154 $ 11,854 $ 11,854 $ 11,884 $ 11,934 Increase (decrease) (273) (16) (300) Percent change 0.39% 0.45% 2.19% 0.13% 2.47% 0.00% 0.25% 0.42% 14.16% Consumer Price Index (CPI) Percent change 3.23% 2.83% 3.86% 0.42% 1.73% 3.12% 2.09% 1.48% 61.25% *Fiscal yrs 2009/10 & 2010/11 are based on the effective foundation allowance, which is less than the published nominal foundation per pupil due to State budget actions. changes 7

8 Our primary funding source is not within our control & it has not kept pace with inflation All costs are NOT within our control - MPSERS changes 8

9 MPSERS Contribution History $12,000,000 $10,000,000 $8,000,000 Contribution Rates: % % % % % 2014 & beyond: Ongoing monitoring of effective rate is necessary for budgeting. Employer portion is up to 24.79% in 2014 and 25.78% in 2015 Beginning 2012, the State Budget provided relief funding to offset rising retirement costs & 2013 totaled approximately $1M, which was reduced to $700k for FY14 & FY15. $6,000,000 $4,000,000 Chart excludes amounts paid directly by the State toward the underfunded accrued actuarial liability for 2014 & 2015 as well as a new one time amount to fund the incentive offered in 2010 est dat $700,000. $1.1M $2.7M $4.5M $2,000,000 $ FY 2009 through 2013 Actual costs FY2014 & 2015 are projected costs Employee required (with mandatory 3% increase) contributions: $1,739,993 $1,698,505 $2,998,574 $3,263,968 $3,742,156 $3,803,270 (not available) BHS Staff contributions MPSERS & Medical premiums MPSERS contribution $1,739,993 $1,698,505 $2,998,574 $3,263,968 $3,742,156 $3,803,270 Medical premium contribution (not including the deductible/ co pays) Not readily available Not readily available Not readily available Not readily available $ 591,501 $ 732,033 changes 9

10 Current Year Expenditures Update Fiscal Year 2014/15 - General Fund Expenditures by Object 32% 51% 5% 6% 2% 4% Salaries Benefits Purchased services Supplies & other Transfers out (Capital Eqmt Fund) Tuition outgoing Our largest cost is our staff totaling about $72 million, which comprises around 83% of our total General Fund expenditures. changes 10

11 Budget Balancing Actions Implemented Custodial staffing reductions Custodial substitutes outsourced Custodial replacements outsourced K-12 overall staffing decrease Elementary, no net change Middle Schools, net increase of.5 FTE BHHS, net 2.37 reduction Additional, recent changes decreased paraprofessional staffing by 1.5 FTE beginning now ($37k for remainder of this year saved) Eliminated an administrator in a support position Social worker staffing down.6, effective this month Budget Balancing Actions Implemented Energy procurement savings gas supply beginning April 2015 and electric supply beginning January 2016 Further staffing reductions for next year at BHHS Accept tuition enrollments Eliminate staff meals/food purchases from non-hills funds Reduce professional development costs by only allowing that which is specially aligned to our strategic goals 10% reduction for all discretionary budgets Reduce vehicle/equipment needs Identify transportation savings opportunities and begin dialogues changes 11

12 General Fund History/trends? Revenue / Expenditures by Fiscal Year $105 $ * State funding of the unfunded accrued actuarial liability (UAAL) is recorded as a revenue and an expenditure for FYE 2013, 2014 & 2015 totaling $1.1M, $2.7M & $4.5M, respectively no net impact. * A one time amount is also an in & out to fund the incentive offered in 2010 est dat $700,000 in FYE 2015 (Note: Governor issued an Executive Order reducing most of this amount) Millions $95 $ * Beginning 2012, the State Budget provided relief funding to offset rising retirement costs. FYE 2012 & 2013 totaled approximately $1M, which was reduced to $700k for FYE 2014 & FYE $85 $ $75 Revenue Expenditures changes 12

13 Fund Balance by Fiscal Year & % $28 35% Millions $26 $24 $22 $20 $18 $16 $15.7 $18.9 $20.7 $21.0 $23.4 $25.4 $24.9 $22.4 $21.6 $22.2 $24.0 $24.8 $24.2 $22.0 $ % 25% 20% 15% 10% $14 $12 5% $10 0% Fund Balance FB as % of exp: General Fund Forecast Preview changes 13

14 Board of Education Policy 3110 Annual Operating Budget and Fund Balance Forecast Preview General Fund Midyear Budget Forecast Preview Forecast Preview Forecast Preview Forecast Preview Fund balance, beginning of year $ 22,046,392 $ 18,664,330 $ 16,710,477 $15,415,243 $14,389,966 Annual surplus (deficit) ( 3,382,062) ( 1,953,853) ( 1,295,234) ( 1,025,277) ( 1,187,317) Fund balance, end of year $ 18,664,330 $ 16,710,477 $ 15,415,243 $14,389,966 $13,202,649 Fund balance, as a percent of expenditures 21.6% 19.5% 18.1% 16.9% 15.5% Budget balancing actions + additional targeted savings in future years: $2,013,888 $2,426,481 $1,992,611 $2,355,042 $4,130,266 changes 14

15 General Fund Forecast Key Variables, including State Budget Decisions in Process Revenue Enrollment based on preliminary projection of the change each year Foundation Allowance part of State s budget process, presume no increase and maintaining the $50 best practices & $70 of the up to $100 performance incentive Expenditures Salary/wages in accordance with contracts; freeze at expiration Retirement rate portion of the rate is capped in accordance with recent reform law; balance has been increasing and expected to level out. Small increases each year. Health care cost projections will be continue to be updated based on claims trends. Munetrix Financial Indicators Enrollment changes Current year One year ago Two years ago General Fund revenue over(under) expenditures Current year One year ago Two years ago General Fund Fund balance as a percent of total expenditures General Fund Fund balance as a percent of operating expenditures Fund balance or fund deficit Foundation allowance change Bloomfield Hills Schools Zero indicates the lowest risk changes 15

16 Munetrix Summary Fiscal Years 2007 through 2014 Multi-year General Fund Data for the Bloomfield Hills Schools Located at changes 16