Centennial School District Christopher Berdnik Business & Finance Phone: (215) , Extension COMMITTEE/BOARD AGENDA ITEM

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1 Centennial School District Christopher Berdnik Business & Finance Phone: (215) , Extension COMMITTEE/BOARD AGENDA ITEM TO: Board of School Directors DATE: June 7, 2016 RE: General Fund budget adoption I support the following request: Office/Department Item Attached Description: Business & Finance Cost Funds Allocated in Department Budget Account N/A Budget Transfer Required Yes No Cabinet Discussion Yes No Solicitor Review for Background Information Approve the Final General Fund budget in the amount of $111,795,742 as presented, and hereby authorizes expenditures as set for therein during the school year, and levying a tax of mills per $1,000 of assessed real estate valuation as per the Budget Resolution, authorizes the Homestead/Farmstead Exclusion Act Resolution and authorizes the Real Estate Installment Plan Resolution. N/A Yes No N/A Contract/Agreement Anticipated Approval Date June 14, 2016 Other information: Please contact me with any questions or comments regarding this information. Public Education in Centennial Schools Inspiring Students Building Intellect Forging Partnerships A Diverse Learning Community Where Students Succeed Through Academics, Athletics, and The Arts An Equal Opportunity Employer

2 CENTENNIAL SCHOOL DISTRICT FINAL BUDGET JUNE 14, 2016 BUDGET The Final Budget is in the amount of $111,795,742 representing a real estate rate of mills or approximately a 4.47% tax increase. ASSESSMENT TAX RATE REAL ESTATE TAX (GROSS) $545,923, Mills $72,436,885 Assessed value actually decreased from $546,465,620 in The major reasons for the increase in expenditures for the budget are: 1) Pension Cost Increases 2) Salary and Benefit Increases 3) Return to an orderly refresh program for district equipment (e.g., school busses) REALTY TRANSFER TAX The Realty Transfer Tax will be adopted for the fiscal year with estimated realty transfer tax income of $1,000,000. FACTS: Millage Mills Millage Increase Mills Total Millage Mills Millage % Increase 4.47% Budget Expense % Increase 4.68% Median Assessed Value $26,400 Average Real Estate Tax Increase (approx.) $ State Property Tax Reduction $164.17

3 CENTENNIAL SCHOOL DISTRICT BUDGET RESOLUTION SCHOOL YEAR RESOLVED, that the Budget of Centennial School District, Bucks County, Pennsylvania, as was proposed at a meeting of the Board of School Directors of said District, held the 14th day of June, 2016, is hereby finally adopted as the Annual Budget of Centennial School District, Bucks County, Pennsylvania for the fiscal year beginning on July 1, BE IT FURTHER RESOLVED, that the Board of School Directors of Centennial School District, Bucks County, Pennsylvania, hereby authorizes the appropriations and expenditure of the funds as itemized in said Budget during the fiscal year beginning on July 1, 2016 with the levying of a tax of mills per $1,000 of assessed real estate valuation. The necessary revenue for the same shall be provided by the following taxes enacted pursuant of the provisions of the Act of the General Assembly No. 511 as approved December 31, 1965, provided for by resolution imposing such taxes for the fiscal year beginning July 1, 2016, adopted concurrently herewith; as: 1) The Mercantile Tax for Fiscal Year of (a) one mill on wholesale sales, and b) 1 ½ mills on retail sales, and a license fee of $5.00. This tax is shared with Warminster Township, the Borough of Ivyland and Upper Southampton Township. 2) A Realty Transfer Tax for Fiscal Year of one percent (1%). This tax is shared with Warminster Township, the Borough of Ivyland and Upper Southampton Township. 3) The Local Services Tax for Fiscal Year at the rate of $5.00 per person employed within the boundaries of the Centennial School District. This tax represents a portion of the Local Services enacted by Warminster Township, Ivyland Borough, and Upper Southampton Township ($52.00). 4) The Business Privilege Tax for Fiscal Year of 1 ½ mills on gross receipts and a license fee of $5.00. This tax is shared with Warminster Township. 5) The Earned Income Tax ad Net Profits Tax for Fiscal year at the rate of 1%. This tax is shared with Warminster Township, Ivyland Borough and Upper Southampton Township. FINALLY, BE IT RESOLVED that the Administration is authorized and directed to advertise the adopted budget in accordance with the provisions of the School Code and to file a copy of the Budget with the PA Department of Education. RESOLVED, ADOPTED, and ENACTED this day of June. CENTENNIAL SCHOOL DISTRICT ATTEST: BOARD SECRETARY BY: BOARD PRESIDENT

4 CENTENNIAL SCHOOL DISTRICT FINAL BUDGET HOMESTEAD FARMSTEAD EXCLUSION ACT RESOLUTION RESOLVED, by the Board of School Directors of Centennial School District, that homestead and farmstead exclusion real estate tax assessment reductions are authorized for the school year beginning July 1, 2016, under the provisions of the Homestead Property Exclusion Program Act (part of Act 50 of 1998) and the Taxpayer Relief Act (Act 1 of 2006), as follows: 1) Aggregate amount available for homestead and farmstead real estate tax reduction. The following amounts are available for homestead and farmstead real estate tax reduction for the school year beginning July 1, 2016: a) Gambling Tax funds. The Pennsylvania Department of Education (PDE) has notified the School District that PDE will pay to the School District during the school year pursuant to Act 1, 53 P.S (b), as a property tax reduction allocation funded by gambling tax funds, the amount of $1,982,992. b) Philadelphia tax credit reimbursement funds. PDE has notified the School District that PDE will pay to the School District during the school year pursuant to Act 1, 53 P.S (3), as reimbursement for Philadelphia tax credits claimed against the School District earned income tax by School District resident taxpayers, the amount of $0.00. c) Other Sources. No funds will be available during the school year for real estate reduction from other sources. d) Aggregate amount available. Adding these amounts, the aggregate amount available during the school year for real estate tax reduction is $1,982,992. 2) Homestead/Farmstead numbers. Pursuant to Act 50, 54 Pa. C.S. 8584(i), and Act 1, 53 P.S (g)(3), the County has provided the School District with a certified report listing approved homesteads and farmsteads as follows: a) Homestead property number. The number of approved homesteads within the School District is 12,077. b) Farmstead property number. The number of approved farmsteads within the School District is 2. c) Homestead/farmstead combined number. Adding these numbers, the aggregate number of approved homesteads and farmsteads is 12,079. 3) Real estate tax reduction calculation. The School Board has decided that the homestead exclusion amount and the farmstead exclusion amount shall be equal. Dividing the aggregate amount available during the school year for real estate tax reduction (Section 1.0.), $1,982,992, by the aggregate number of approved homesteads and approved farmsteads (Section II.C.), 12,079, the maximum real estate tax reduction amount applicable to each approved homestead and to each approved farmstead is $ RESOLVED, ADOPTED, and ENACTED, this 14 th, day of June, ATTEST: BOARD SECRETARY BY: BOARD PRESIDENT

5 CENTENNIAL SCHOOL DISTRICT FINAL BUDGET REAL ESTATE TAX INSTALLMENT PAYMENT PLAN RESOLUTION (INSTALLMENT PAYMENT AVAILABLE FOR ALL TAXPAYERS) RESOLVED, by the Board of School Directors of Centennial School District, that a plan is adopted providing an option for installment payment of real estate taxes for all taxpayers pursuant to the Taxpayer Relief Act, 53 P.S , as follows: Real Estate Tax Installment Payment Plan (Installment payment available for all taxpayers) For the real estate tax levied by the School District, other than interim real estate tax, taxpayers may elect an installment payment option under the following rules: 1) Installment payment dates. A taxpayer electing the installment payment option may pay the real estate tax in three (3) equal installment payments of one-third (1/3) of the face tax amount. The installments are due on or before August 31, October 12, and November 15, of the year in which the tax is levied. 2) Taxpayer election of installment payment option. Payment of the first installment in full by August 31 will constitute taxpayer election to pay tax in installments. Installment payment is permitted only if the taxpayer elects by paying the first installment payment in full by August 31. If the taxpayer fails to meet this requirement, the full amount of the real estate tax is due on or before October 31 (face) or December 31st (penalty). 3) Taxpayers who elect installment payments are not eligible for 2% discount. 4) Penalty on delinquent installments. If a taxpayer makes the first installment payment by August 31 and fails to pay in full any subsequent 2nd or 3rd installment by the installment due date, the installment not paid by the due date is delinquent, and a penalty will be added to the tax in the amount of ten percent (10%) of the amount of the installment not paid by the installment due date, without regard to any partial payment of the installment. 5) Option available for all property. Any taxpayer may elect installment payment. 6) Ineligibility. A taxpayer who is delinquent by more than ten (10) days on all installment payments is ineligible for the installment payment option in the following school year. 7) Effective date. This plan will become effective July 1, 2016, and will continue in effect thereafter for real estate taxes levied for the school year beginning July 1, 2016, and for real estate taxes levied for future years, until amended or repealed. RESOLVED, ADOPTED, and ENACTED, this 14 th, day of June, ATTEST: BOARD SECRETARY BY: BOARD PRESIDENT

6 LEA Name : Centennial SD Class : 2 AUN Number : County : Bucks FINAL GENERAL FUND BUDGET Fiscal Year General Fund Budget Approval Date of Adoption of the General Fund Budget: President of the Board - Original Signature Required Date Secretary of the Board - Original Signature Required Date Chief School Administrator - Original Signature Required Date Christopher Berdnik (215) Extn :11010 Contact Person Telephone Extension berdch@centennialsd.org Address Printed 6/7/ :20:56 AM Page 1

7 CERTIFICATION OF USE OF PDE-2028 FOR PUBLIC INSPECTION OF PROPOSED BUDGET 24 PS 6-687(a)(1) (03/2006) School District Name : County : AUN Number : Centennial SD Bucks Section 687(a)(1) of the School Code requires the president of the board of school directors of each school district to certify to the Department of Education that the proposed budget was prepared, presented and will be made available for public inspection using the uniform form prepared and furnished by the Department of Education. I hereby certify that the above information is accurate and complete. SIGNATURE OF SCHOOL BOARD PRESIDENT DATE DUE DATE: IMMEDIATELY FOLLOWING ADOPTION OF PROPOSED FINAL GENERAL FUND BUDGET Printed 6/7/ :20:57 AM Page 2

8 Final General Fund Budget (PDE-2028) Estimated Revenues and Other Financing Sources: Budget Summary LEA : Centennial SD Printed 6/7/ :20:58 AM Page - 1 of 1 ITEM AMOUNTS Estimated Beginning Unreserved Fund Balance Available for Appropriation and Reserves Scheduled For Liquidation During The Fiscal Year 0810 Nonspendable Fund Balance 0820 Restricted Fund Balance 0830 Committed Fund Balance 2,500, Assigned Fund Balance 0850 Unassigned Fund Balance 8,375,601 Total Estimated Beginning Unreserved Fund Balance Available for Appropriation and Reserves Scheduled For Liquidation During The Fiscal Year 10,875,601 Estimated Revenues And Other Financing Sources 6000 Revenue from Local Sources 80,932, Revenue from State Sources 29,298, Revenue from Federal Sources 1,040, Other Financing Sources 25,000 Total Estimated Revenues And Other Financing Sources 111,295,742 Total Estimated Fund Balance, Revenues, and Other Financing Sources Available for Appropriation 122,171,343 Page 3

9 Final General Fund Budget (PDE-2028) Estimated Revenues and Other Financing Sources: Detail LEA : Centennial SD Printed 6/7/ :20:58 AM Page - 1 of 2 Amount REVENUE FROM LOCAL SOURCES 6111 Current Real Estate Taxes 68,272, Interim Real Estate Taxes 171, Public Utility Realty Taxes 83, Payments in Lieu of Current Taxes - State / Local 1,484, Current Act 511 Taxes - Flat Rate Assessments 96, Current Act 511 Taxes - Proportional Assessments 7,950, Delinquencies on Taxes Levied / Assessed by the LEA 1,408, Earnings on Investments 69, Revenues from LEA Activities 61, Revenues from Intermediary Sources / Pass-Through 1,090,000 Funds 6910 Rentals 235, Refunds and Other Miscellaneous Revenue 10,365 REVENUE FROM LOCAL SOURCES 80,932,498 REVENUE FROM STATE SOURCES 7110 Basic Education Funding 12,352, Tuition for Orphans Subsidy 50, Special Education funds for School-Aged Pupils 2,915, Transportation (Pupil and Nonpublic/CS) 714, Rental and Sinking Fund Payments / Building 1,049,289 Reimbursement Subsidy 7330 Health Services (Medical, Dental, Nurse, Act 25) 135, State Property Tax Reduction Allocation 1,982, Other State Revenue Not Listed Elsewhere in the ,000 Series 7810 State Share of Social Security and Medicare Taxes 2,036, State Share of Retirement Contributions 7,986,175 REVENUE FROM STATE SOURCES 29,298,003 REVENUE FROM FEDERAL SOURCES 8514 NCLB, Title I - Improving the Academic Achievement of the Disadvantaged 8515 NCLB, Title II - Preparing, Training and Recruiting High Quality Teachers and Principals 8516 NCLB, Title III - Language Instruction for Limited English Proficient and Immigrant Students 8810 School-Based Access Medicaid Reimbursement Program (SBAP) Reimbursements (Access) 8820 Medical Assistance Reimbursement for Administrative Claiming (Quarterly) Program 616, ,326 97,328 89,450 30,000 REVENUE FROM FEDERAL SOURCES 1,040,241 Page 4

10 Final General Fund Budget (PDE-2028) Estimated Revenues and Other Financing Sources: Detail LEA : Centennial SD Printed 6/7/ :20:58 AM Page - 2 of 2 Amount OTHER FINANCING SOURCES 9400 Sale of or Compensation for Loss of Fixed Assets 25,000 OTHER FINANCING SOURCES 25,000 TOTAL ESTIMATED REVENUES AND OTHER SOURCES 111,295,742 Page 5

11 Final General Fund Budget (PDE-2028) Real Estate Tax Rate (RETR) Report for AUN: Centennial SD Printed 6/7/ :20:59 AM Multi-County Rebalancing Based on Methodology of Section of School Code Page - 1 of 3 Act 1 Index (current): 2.4% Calculation Method: Rate Approx. Tax Revenue from RE Taxes: $68,272,655 Amount of Tax Relief for Homestead Exclusions $1,982,992 Total Approx. Tax Revenue: $70,255,647 Approx. Tax Levy for Tax Rate Calculation: $72,436,885 Bucks Total Data a. Assessed Value $546,465,620 $546,465,620 b. Real Estate Mills I Data c STEB Market Value $4,655,411,532 $4,655,411,532 d. Assessed Value $545,923,000 $545,923,000 e. Assessed Value of New Constr/ Renov $0 $ Calculations f Tax Levy $69,269,982 $69,269,982 (a * b) Calculations II. g. Percent of Total Market Value % % h. Rebalanced Tax Levy $69,269,982 $69,269,982 (f Total * g) i. Base Mills Subject to Index (h / a * 1000) if no reassessment (h / (d-e) * 1000) if reassessment Calculation of Tax Rates and Levies Generated j. Weighted Avg. Collection Percentage % % k. Tax Levy Needed $72,436,885 $72,436,885 III. (Approx. Tax Levy * g) l Real Estate Tax Rate (k / d * 1000) m. Tax Levy Generated by Mills $72,436,885 $72,436,885 (l / 1000 * d) n. Tax Levy minus Tax Relief for Homestead Exclusions $70,453,893 (m - Amount of Tax Relief for Homestead Exclusions) o. Net Tax Revenue Generated By Mills $68,272,655 (n * Est. Pct. Collection) Page 6

12 Final General Fund Budget (PDE-2028) Real Estate Tax Rate (RETR) Report for AUN: Centennial SD Printed 6/7/ :20:59 AM Multi-County Rebalancing Based on Methodology of Section of School Code Page - 2 of 3 Act 1 Index (current): 2.4% Calculation Method: Rate Approx. Tax Revenue from RE Taxes: $68,272,655 Amount of Tax Relief for Homestead Exclusions $1,982,992 Total Approx. Tax Revenue: $70,255,647 Approx. Tax Levy for Tax Rate Calculation: $72,436,885 Bucks Total Index Maximums p. Maximum Mills Based On Index (i * (1 + Index)) q. Mills In Excess of Index (if (l > p), (l - p)) r. Maximum Tax Levy Based On Index $70,862,006 $70,862,006 IV. (p / 1000 * d) s. Millage Rate within Index? No (If l > p Then No) t. Tax Levy In Excess of Index $1,574,879 $1,574,879 (if (m > r), (m - r)) u.tax Revenue In Excess of Index $1,526,121 $1,526,121 (t * Est. Pct. Collection) Information Related to Property Tax Relief V. Assessed Value Exclusion per Homestead $1,237 Number of Homestead/Farmstead Properties Median Assessed Value of Homestead Properties $26,400 Page 7

13 Final General Fund Budget (PDE-2028) Real Estate Tax Rate (RETR) Report for AUN: Centennial SD Printed 6/7/ :20:59 AM Multi-County Rebalancing Based on Methodology of Section of School Code Page - 3 of 3 Act 1 Index (current): 2.4% Calculation Method: Rate Approx. Tax Revenue from RE Taxes: $68,272,655 Amount of Tax Relief for Homestead Exclusions $1,982,992 Total Approx. Tax Revenue: $70,255,647 Approx. Tax Levy for Tax Rate Calculation: $72,436,885 Bucks Total State Property Tax Reduction Allocation used for: Homestead Exclusions $1,982,992 Lowering RE Tax Rate $0 $1,982,992 Prior Year State Property Tax Reduction Allocation used for: Homestead Exclusions $0 $0 Amount of Tax Relief from State/Local Sources $1,982,992 Page 8

14 Final General Fund Budget (PDE-2028) Local Education Agency Tax Data LEA : Centennial SD REAL ESTATE, PER CAPITA (SEC. 679), EIT/PIT (ACT 1), LOCAL ENABLING (ACT 511) Printed 6/7/ :21:00 AM Page - 1 of 1 CODE 6111 Current Real Estate Taxes County Name Taxable Assessed Value Real Estate Mills Tax Levy Generated by Mills Amount of Tax Relief for Homestead Exclusions Tax Levy Minus Homestead Exclusions Percent Collected Bucks 545,923, ,436, % Net Tax Revenue Generated By Mills Totals: 545,923,000 72,436,885-1,982,992 = 70,453,893 X % = 68,272,655 Rate Estimated Revenue 6120 Current Per Capita Taxes, Section 679 $ Current Act 511 Taxes Flat Rate Assessments Rate Add'l Rate (if appl.) Tax Levy Estimated Revenue 6141 Current Act 511 Per Capita Taxes $0.00 $ Current Act 511 Occupation Taxes Flat Rate $0.00 $ Current Act 511 Local Services Taxes $5.00 $ ,000 96, Current Act 511 Trailer Taxes $0.00 $ Current Act 511 Business Privilege Taxes Flat Rate $0.00 $ Current Act 511 Mechanical Device Taxes Flat Rate $0.00 $ Current Act 511 Taxes, Other Flat Rate Assessments $0.00 $ Total Current Act 511 Taxes Flat Rate Assessments 96,000 96, Current Act 511 Taxes Proportional Assessments Rate Add'l Rate (if appl.) Tax Levy Estimated Revenue 6151 Current Act 511 Earned Income Taxes 0.500% 0.000% 5,050,000 5,050, Current Act 511 Occupation Taxes Current Act 511 Real Estate Transfer Taxes 0.500% 0.000% 1,000,000 1,000, Current Act 511 Amusement Taxes 0.000% 0.000% Current Act 511 Business Privilege Taxes ,150,000 1,150, Current Act 511 Mechanical Device Taxes Percentage 0.000% 0.000% Current Act 511 Mercantile Taxes , , Current Act 511 Taxes, Other Proportional Assessments Total Current Act 511 Taxes Proportional Assessments 7,950,000 7,950,000 Total Act 511, Current Taxes 8,046,000 Act 511 Tax Limit --> 4,655,411,532 X 12 55,864,938 Market Value Mills (511 Limit) Page 9

15 Final General Fund Budget (PDE-2028) Comparison of Tax Rate Changes to Index LEA : Centennial SD Printed 6/7/ :21:01 AM Page - 1 of 1 Tax Functio n Description Tax Rate Charged in: Additional Tax Rate Percent Less than Charged in: Change in or equal to Index Rate Index (Rebalanced) (Rebalanced) Percent Change in Rate Less than or equal to Index 6111 Current Real Estate Taxes Bucks % No 2.4% 6120 Current Per Capita Taxes, Section % Current Act 511 Taxes Flat Rate Assessments 6141 Current Act 511 Per Capita Taxes 2.4% 6142 Current Act 511 Occupation Taxes - Flat Rate 2.4% 6143 Current Act 511 Local Services Taxes $5.00 $ % Yes 2.4% 6144 Current Act 511 Trailer Taxes 2.4% 6145 Current Act 511 Business Privilege Taxes - Flat Rate 6146 Current Act 511 Mechanical Device Taxes - Flat Rate 6149 Current Act 511 Taxes, Other Flat Rate Assessments Current Act 511 Taxes Proportional Assessments 2.4% 2.4% 2.4% 6151 Current Act 511 Earned Income Taxes 0.500% 0.500% 0.00% Yes 2.4% 6152 Current Act 511 Occupation Taxes 2.4% 6153 Current Act 511 Real Estate Transfer Taxes 0.500% 0.500% 0.00% Yes 2.4% 6154 Current Act 511 Amusement Taxes 2.4% 6155 Current Act 511 Business Privilege Taxes % Yes 2.4% 6156 Current Act 511 Mechanical Device Taxes - Percentage 2.4% 6157 Current Act 511 Mercantile Taxes % Yes 2.4% 6159 Current Act 511 Taxes, Other Proportional Assessments 2.4% Page 10

16 Final General Fund Budget (PDE-2028) Estimated Expenditures and Other Financing Uses: Budget Summary LEA : Centennial SD Printed 6/7/ :21:01 AM Page - 1 of 1 Description Amount 1000 Instruction 1100 Regular Programs - Elementary / Secondary 46,745, Special Programs - Elementary / Secondary 16,858, Vocational Education 2,070, Other Instructional Programs - Elementary / Secondary 47,139 Total Instruction 65,722, Support Services 2100 Support Services - Students 5,278, Support Services - Instructional Staff 3,218, Support Services - Administration 6,017, Support Services - Pupil Health 1,125, Support Services - Business 1,152, Operation and Maintenance of Plant Services 8,464, Student Transportation Services 4,981, Support Services - Central 2,184, Other Support Services 42,500 Total Support Services 32,466, Operation of Non-Instructional Services 3200 Student Activities 1,569, Community Services 97,597 Total Operation of Non-Instructional Services 1,667, Facilities Acquisition, Construction and Improvement Services 4000 Facilities Acquisition, Construction and Improvement Services 430,000 Total Facilities Acquisition, Construction and Improvement Services 430, Other Expenditures and Financing Uses 5100 Debt Service / Other Expenditures and Financing Uses 9,388, Interfund Transfers - Out 700, Budgetary Reserve 1,420,791 Total Other Expenditures and Financing Uses 11,508,859 Total Estimated Expenditures and Other Financing Uses 111,795,742 Page 11

17 Final General Fund Budget (PDE-2028) Estimated Expenditures and Other Financing Uses: Detail LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 1 of 4 Description Amount 1000 Instruction 1100 Regular Programs - Elementary / Secondary 100 Personnel Services - Salaries 29,100, Personnel Services - Employee Benefits 15,724, Purchased Professional and Technical Services 663, Purchased Property Services 7, Other Purchased Services 799, Supplies 384, Property 63, Other Objects 890 Total Regular Programs - Elementary / Secondary 46,745, Special Programs - Elementary / Secondary 100 Personnel Services - Salaries 7,687, Personnel Services - Employee Benefits 3,986, Purchased Professional and Technical Services 3,369, Other Purchased Services 1,681, Supplies 133,490 Total Special Programs - Elementary / Secondary 16,858, Vocational Education 500 Other Purchased Services 2,070,924 Total Vocational Education 2,070, Other Instructional Programs - Elementary / Secondary 100 Personnel Services - Salaries 31, Personnel Services - Employee Benefits 12, Other Purchased Services 3,777 Total Other Instructional Programs - Elementary / Secondary 47,139 Total Instruction 65,722, Support Services 2100 Support Services - Students 100 Personnel Services - Salaries 3,242, Personnel Services - Employee Benefits 1,813, Purchased Professional and Technical Services 152, Purchased Property Services Other Purchased Services 13, Supplies 51, Other Objects 4,500 Total Support Services - Students 5,278, Support Services - Instructional Staff 100 Personnel Services - Salaries 1,550, Personnel Services - Employee Benefits 780, Purchased Professional and Technical Services 52, Purchased Property Services 2, Other Purchased Services 2,500 Page 12

18 Final General Fund Budget (PDE-2028) Estimated Expenditures and Other Financing Uses: Detail LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 2 of 4 Description 600 Supplies 795, Property 35,000 Total Support Services - Instructional Staff 3,218, Support Services - Administration 100 Personnel Services - Salaries 3,388, Personnel Services - Employee Benefits 1,870, Purchased Professional and Technical Services 513, Other Purchased Services 155, Supplies 32, Property 7, Other Objects 48,500 Total Support Services - Administration 6,017, Support Services - Pupil Health 100 Personnel Services - Salaries 694, Personnel Services - Employee Benefits 390, Purchased Professional and Technical Services 28, Other Purchased Services Supplies 11, Property 500 Total Support Services - Pupil Health 1,125, Support Services - Business 100 Personnel Services - Salaries 438, Personnel Services - Employee Benefits 313, Purchased Professional and Technical Services 125, Purchased Property Services 207, Other Purchased Services 48, Supplies 5, Other Objects 13,200 Total Support Services - Business 1,152, Operation and Maintenance of Plant Services 100 Personnel Services - Salaries 3,516, Personnel Services - Employee Benefits 2,100, Purchased Professional and Technical Services 139, Purchased Property Services 1,522, Other Purchased Services 410, Supplies 681, Property 73, Other Objects 20,000 Total Operation and Maintenance of Plant Services 8,464, Student Transportation Services 100 Personnel Services - Salaries 2,145, Personnel Services - Employee Benefits 947, Purchased Professional and Technical Services 13, Purchased Property Services 34, Other Purchased Services 705,847 Page 13 Amount

19 Final General Fund Budget (PDE-2028) Estimated Expenditures and Other Financing Uses: Detail LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 3 of 4 Description 600 Supplies 585, Property 548, Other Objects 500 Total Student Transportation Services 4,981, Support Services - Central 100 Personnel Services - Salaries 616, Personnel Services - Employee Benefits 351, Purchased Professional and Technical Services 82, Purchased Property Services 300, Other Purchased Services 18, Supplies 215, Property 600, Other Objects 500 Total Support Services - Central 2,184, Other Support Services 500 Other Purchased Services 42,500 Total Other Support Services 42,500 Total Support Services 32,466, Operation of Non-Instructional Services 3200 Student Activities 100 Personnel Services - Salaries 818, Personnel Services - Employee Benefits 304, Purchased Professional and Technical Services 75, Purchased Property Services 38, Other Purchased Services 148, Supplies 164, Property 6, Other Objects 14,350 Total Student Activities 1,569, Community Services 100 Personnel Services - Salaries 48, Personnel Services - Employee Benefits 35, Purchased Professional and Technical Services 14,250 Total Community Services 97,597 Total Operation of Non-Instructional Services 1,667, Facilities Acquisition, Construction and Improvement Services 4000 Facilities Acquisition, Construction and Improvement Services 700 Property 430,000 Total Facilities Acquisition, Construction and Improvement Services 430,000 Total Facilities Acquisition, Construction and Improvement Services 430, Other Expenditures and Financing Uses 5100 Debt Service / Other Expenditures and Financing Uses 800 Other Objects 5,984,166 Page 14 Amount

20 Final General Fund Budget (PDE-2028) Estimated Expenditures and Other Financing Uses: Detail LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 4 of 4 Description 900 Other Uses of Funds 3,403,902 Total Debt Service / Other Expenditures and Financing Uses 9,388, Interfund Transfers - Out 900 Other Uses of Funds 700,000 Total Interfund Transfers - Out 700, Budgetary Reserve 800 Other Objects 1,420,791 Total Budgetary Reserve 1,420,791 Total Other Expenditures and Financing Uses 11,508,859 TOTAL EXPENDITURES 111,795,742 Amount Page 15

21 Final General Fund Budget (PDE-2028) Schedule Of Cash And Investments (CAIN) LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 1 of 2 Cash and Short-Term Investments 06/30/2016 Estimate 06/30/2017 Projection General Fund 10,000,000 9,500,000 Public Purpose (Expendable) Trust Fund Other Comptroller-Approved Special Revenue Funds Athletic / School-Sponsored Extra Curricular Activities Fund Capital Reserve Fund - 690, 1850 Capital Reserve Fund ,936, ,149 Other Capital Projects Fund Debt Service Fund Food Service / Cafeteria Operations Fund 25,000 25,000 Child Care Operations Fund Other Enterprise Funds Internal Service Fund Private Purpose Trust Fund Investment Trust Fund Pension Trust Fund Activity Fund Other Agency Fund 500, ,000 Permanent Fund Total Cash and Short-Term Investments 14,461,215 10,767,149 Long-Term Investments 06/30/2016 Estimate 06/30/2017 Projection General Fund Public Purpose (Expendable) Trust Fund Other Comptroller-Approved Special Revenue Funds Athletic / School-Sponsored Extra Curricular Activities Fund Capital Reserve Fund - 690, 1850 Capital Reserve Fund Other Capital Projects Fund Debt Service Fund Food Service / Cafeteria Operations Fund Child Care Operations Fund Other Enterprise Funds Internal Service Fund Private Purpose Trust Fund Investment Trust Fund Pension Trust Fund Activity Fund Other Agency Fund Page 16

22 Final General Fund Budget (PDE-2028) Schedule Of Cash And Investments (CAIN) LEA : Centennial SD Printed 6/7/ :21:02 AM Page - 2 of 2 Long-Term Investments 06/30/2016 Estimate 06/30/2017 Projection Permanent Fund Total Long-Term Investments TOTAL CASH AND INVESTMENTS 14,461,215 10,767,149 Page 17

23 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 1 of 6 Long-Term Indebtedness 06/30/2016 Estimate 06/30/2017 Projection General Fund 0510 Bonds Payable 127,210, ,325, Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 1,880,087 1,784, Accumulated Compensated Absences 1,066,585 1,013, Authority Lease Obligations 2,409,642 2,276, Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total General Fund $132,566,314 $128,399,221 Public Purpose (Expendable) Trust Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Public Purpose (Expendable) Trust Fund Other Comptroller-Approved Special Revenue Funds 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Other Comptroller-Approved Special Revenue Funds Athletic / School-Sponsored Extra Curricular Activities Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Athletic / School-Sponsored Extra Curricular Activities Fund Capital Reserve Fund - 690, Bonds Payable 0520 Extended-Term Financing Agreements Payable Page 18

24 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 2 of 6 Long-Term Indebtedness 06/30/2016 Estimate 06/30/2017 Projection 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Capital Reserve Fund - 690, 1850 Capital Reserve Fund Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Capital Reserve Fund Other Capital Projects Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Other Capital Projects Fund Debt Service Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Debt Service Fund Food Service / Cafeteria Operations Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations Page 19

25 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 3 of 6 Long-Term Indebtedness 06/30/2016 Estimate 06/30/2017 Projection 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Food Service / Cafeteria Operations Fund Child Care Operations Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Child Care Operations Fund Other Enterprise Funds 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Other Enterprise Funds Internal Service Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Internal Service Fund Private Purpose Trust Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Private Purpose Trust Fund Page 20

26 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 4 of 6 Long-Term Indebtedness 06/30/2016 Estimate 06/30/2017 Projection Investment Trust Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Investment Trust Fund Pension Trust Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Pension Trust Fund Activity Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Activity Fund Other Agency Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Other Agency Fund Permanent Fund 0510 Bonds Payable 0520 Extended-Term Financing Agreements Payable Page 21

27 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 5 of 6 Long-Term Indebtedness 06/30/2016 Estimate 06/30/2017 Projection 0530 Lease-Purchase Obligations 0540 Accumulated Compensated Absences 0550 Authority Lease Obligations 0560 Other Post-Employment Benefits (OPEB) 0599 Other Long-Term Liabilities Total Permanent Fund Total Long-Term Indebtedness $132,566,314 $128,399,221 Page 22

28 Final General Fund Budget (PDE-2028) Schedule Of Indebtedness (DEBT) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 6 of 6 Short-Term Payables 06/30/2016 Estimate 06/30/2017 Projection General Fund 2,000,000 2,000,000 Public Purpose (Expendable) Trust Fund Other Comptroller-Approved Special Revenue Funds Athletic / School-Sponsored Extra Curricular Activities Fund Capital Reserve Fund - 690, 1850 Capital Reserve Fund Other Capital Projects Fund Debt Service Fund Food Service / Cafeteria Operations Fund Child Care Operations Fund Other Enterprise Funds Internal Service Fund Private Purpose Trust Fund Investment Trust Fund Pension Trust Fund Activity Fund Other Agency Fund Permanent Fund Total Short-Term Payables $2,000,000 $2,000,000 TOTAL INDEBTEDNESS $134,566,314 $130,399,221 Page 23

29 Final General Fund Budget (PDE-2028) Fund Balance Summary (FBS) LEA : Centennial SD Printed 6/7/ :21:03 AM Page - 1 of 1 Account Description Amounts 0810 Nonspendable Fund Balance 0820 Restricted Fund Balance 0830 Committed Fund Balance 2,500, Assigned Fund Balance 0850 Unassigned Fund Balance 7,875,601 Total Ending Fund Balance - Committed, Assigned, and Unassigned $10,375, Budgetary Reserve 1,420,791 Total Estimated Ending Committed, Assigned, and Unassigned Fund Balance and Budgetary Reserve $11,796,392 Page 24

30 Centennial School District 6/7/2016 Multiyear Financial Planning Tool Christopher M. Berdnik 2016 The reader of this document agrees by definition that projections are designed to assist decision makers in selecting wisely. Projections change as inputs are adjusted, often quite frequently. Disclosure changes behavior. If you do not agree, please do not read further. Directions: You may only make selections in certain higlighted cells by pulling down the menu. 2015/ / / / / /21 Est. Final Working File Projected Projected Projected Projected Beginning All In Fund Balance 10,041,303 10,993,903 10,993,903 9,198,362 6,720,758 2,254, Local Revenue 77,757,399 80,932,499 83,587,927 84,006,158 84,400,546 84,770,489 Select an Act 1 RET Scenario % 0.00% 0.00% 0.00% 0.00% 7000 State Subsidies 27,177,751 29,298,002 27,932,785 28,714,417 29,398,159 29,272, Federal Programs 1,224,668 1,040,241 1,040,241 1,040,241 1,040,241 1,040, Other Financing Sources ,000 25,000 25,000 25,000 25,000 Total Revenues 106,160, ,295, ,585, ,785, ,863, ,107, Wages and Salaries 52,994,027 53,280,000 53,834,519 54,269,436 54,620,633 54,100,997 Select a CAA (all in) wage increase 0.00% 0.00% 0.00% 0.00% Select a CEA (all in) wage increase assumption hidden due to ongoing teacher 0.00% negotiations. 2.77% 2.30% 2.08% 0.00% Select a Support Staff (all in) wage increase 0.00% 0.00% 0.00% 200 Employee Benefits 25,726,277 28,632,548 30,364,299 31,607,170 32,681,337 32,534,860 Select a benefit adjustment assumption hidden due to ongoing teacher negotiations. 300 Purchased Profession & Tech Svcs 6,027,220 5,228,707 6,283,227 6,346,066 6,409,527 6,473, Purchased Services/Maintenance 2,108,403 2,113,656 2,134,795 2,156,142 2,177,701 2,199, Other Purchased Services 5,216,125 6,099,004 6,232,879 6,295,206 6,358,160 6,421, Supplies/Food 2,372,412 3,063,566 2,972,931 3,002,671 3,032,685 3,063, Equipment and Property 1,065,614 1,766,962 1,431,736 1,446,054 1,460,513 1,475, Dues/Fees/Interest on Debt 6,190,886 7,507,397 7,383,206 7,246,772 7,823,970 7,855, Debt Principal Pymts & Fund Transfs 4,906,913 4,103,902 4,243,902 4,393,902 5,265,202 5,613,027 Select a Middle School(s) project size 20,000,000 5,000,000 Total Expenditures 106,607, ,795, ,881, ,763, ,829, ,737,220 Annual Surplus/(Deficit) (447,345) (500,000) (2,295,542) (2,977,604) (4,965,782) (4,629,357) One time $ sale of Newtown Road 1,399,945 Add Back Contingency for Emergencies 500, , , , ,000 Adjusted Annual Surplus/(Deficit) 952,600 (1,795,542) (2,477,604) (4,465,782) (4,129,357) Ending All In Fund Balance 10,993,903 10,993,903 9,198,362 6,720,758 2,254,976 (1,874,381)

31 Centennial School District 6/7/2016 Multiyear Financial Planning Tool Christopher M. Berdnik / / / / / /21 Major Assumptions (unless adjusted above) Adj Budget Working File Projected Projected Projected Projected Select a projected RET base growth % Per budget Per budget 0.50% 0.50% 0.50% 0.50% Interim RET (9 yr avg $ used 17/18 forward) Per budget Per budget 326, , , ,504 The above assumptions already bake in development of closed/sold school property. Do not count on this twice. PURTA (9 yr avg growth 1.51%) Per budget Per budget 1.51% 1.51% 1.51% 1.51% OPT (9 yr avg growth 0.62%) Per budget Per budget 0.62% 0.62% 0.62% 0.62% EIT (3 yr avg growth 0.67% Act 32) Per budget Per budget 0.67% 0.67% 0.67% 0.67% RE Transfer (9 yr avg $ used 17/18 forward) Per budget Per budget 1,041,918 1,041,918 1,041,918 1,041,918 The above assumption already bakes in development of closed/sold school property. Do not count on this twice. BPT (9 yr trend function 17/18 forward) Per budget Per budget 1,241,032 1,248,173 1,239,925 1,223,050 Mercantile (9 yr trend function 17/18 forward) Per budget Per budget 800, , , ,926 Delinquent RET (9 yr avg $ used 17/18 forward) Per budget Per budget 1,114,664 1,114,664 1,114,664 1,114,664 Delinquent EIT (3 yr avg $ used 17/18 forward) Per budget Per budget 75,736 75,736 75,736 75,736 Delinq Bus Taxes (3 yr avg $ used 17/18 forward) Per budget Per budget 233, , , ,384 PILOT Per budget Per budget Flat Flat Flat Flat All other Local Revenues growth Per budget Per budget 1% 1% 1% 1% Select a state subsidy growth (BEF/RTL/SEF) Per budget Per budget 1% 1% 1% 1% FICA/PSERS Reimbursement % Per budget 50.00% 50.00% 50.00% 50.00% 50.00% Federal funds/idea Per budget Per budget Flat Flat Flat Flat Staffing level Per budget Per budget Flat Flat Flat Flat Natural retirements Per budget Per budget Brand new programs are funding by Per budget Per budget Zero sum cuts Zero sum cuts Zero sum cuts Zero sum cuts CAA Wages Per budget Per plan Status quo Status quo Status quo Status quo CEA Wages Per budget Status quo Status quo Status quo Status quo Status quo Support Staff Wages Per budget Per plan Status quo Status quo Status quo Status quo FICA % Payroll Per budget 7.65% 7.65% 7.65% 7.65% 7.65% PSERS % Payroll Per budget 30.03% 32.04% 33.27% 34.20% 33.51% Medical/Prescription Increase Per budget Per renewal 5% 5% 5% 5% Dental/Life/Vision/Disability Increase Per budget Per renewal 2% 2% 2% 2% Tuition/Unemployment/Workers Comp Per budget Per renewal 1% 1% 1% 1% Objects 300, 400, 500 Per budget Per budget 1% 1% 1% 1% Adjustment for one time BCIU credit 16/17 Per budget Per budget 1,225,243 1,225,243 1,225,243 1,225,243 Objects 600, 700, 800 to 820 Per budget Per budget 1% 1% 1% 1% Contingency/Transfers/Other Per budget Per budget Flat Flat Flat Flat Cash savings from refunding bonds 6,000,000 Specific Transfer to the capital reserve fund 1,700, , , ,000 Debt Service Per budget Per schedule Per schedule Per schedule Per schedule Per schedule The reader of this document agrees by definition that projections are designed to assist decision makers in selecting wisely. Projections change as inputs are adjusted, often quite frequently. Disclosure changes behavior. If you do not agree, please do not read further.

32 Centennial School District 6/7/ Budget in Brief v2 Amount % 100 Wages and Salaries $53,280, % 73.27% 200 Employee Benefits 28,632, % 300 Purchased Profession & Tech Svcs 5,228, % 400 Purchased Services/Maintenance 2,113, % 500 Other Purchased Services 6,099, % 600 Supplies/Food 3,063, % 700 Equipment and Property 1,766, % 800 Dues/Fees/Interest on Debt 7,507, % 900 Debt Principal Pymts & Fund Transfs 4,103, % $111,795,742 Amount % Key Investments 1000 Instruction $65,720, % Curriculum Renewal: $1.3 million 2000 Support Services 32,468, % Technology hardware/software: $815, Operation of Non Instructional Svcs 1,667, % Band uniforms: $28, /5000 Debt Svc/Contingency 11,938, % Capital projects: $1.13 million $111,795, PSERS (mandatory) $15,972,350 $4,996,201 % Budget 14.29% increase 2,550,290 Increase from to $9,831,713 Real estate millage millage increase average increase $ homestead reduction $ average real estate bill CSD $3, Difference of average real estate bill Council Rock $4, $1, or 29.22% countywide rank (school districts) 2nd lowest real estate taxes Key Dates Discount Wednesday, August 31, 2016 Face Monday, October 31, st Installment Wednesday, August 31, nd Installment Wednesday, October 12, rd Installment Tuesday, November 15, 2016

33 Date: 06/07/16 Centennial School District Page: 1 Time: 10:17:13 Budget Summary Report BPR007 Revenue ALL 10 Fund Local Revenue 6100 Taxes Levied/Assessed - LEA 6400 Delinquent Tax Levied 6500 Earnings On Investments 6700 District Activities 6800 Intermediary Sources 6900 Rentals/Donations/Tuition Patrons 6000 Function (R) Sub Total 12/13 ACTUAL REVENUES 13/14 ACTUAL REVENUES 14/15 ACTUAL REVENUES 15/16 APPROVED REVENUES 15/16 YTD 5/31 16/17 PROP FIN REV 68,918,393 71,736,979 72,394,716 74,391,562 73,206,210 78,057,721 1,857,526 1,598,322 1,105,579 1,815, ,835 1,408,604 39,584 58,231 57,842 58,500 66,660 69,808 59,683 91,991 59,309 84,600 59,978 61,000 1,135,379 1,028,691 1,049,700 1,100,000 1,054,886 1,090, , , , , , ,365 72,298,861 74,754,384 74,818,396 77,687,687 75,600,728 80,932, State Subsidies 7100 Basic Education Funding 7200 Specific Education Programs 7300 Non-Ed Programs 7500 Extra Grants 7800 Comm. of PA - SS&PSERS 7000 Function (R) Sub Total 8000 Federal Programs 8100 Unrestricted Grants-in-aid Direct 8500 Fed Gov - IDEA&NCLB 8800 MA&ACCESS Reim Function (R) Sub Total 9000 Other Financing Sources 9300 Interfund Transfers 9400 Sale/Com (Loss) - Fixed Assets 9900 Other Financing Sources 9000 Sub Total 10 Sub Total Report Totals 11,803,420 11,771,459 11,710,998 12,091,400 8,146,461 12,402,635 2,914,064 2,894,540 3,025,873 2,929,325 2,195,615 2,915,920 3,345,683 3,224,096 5,910,055 3,603,509 2,860,523 3,884, , , , , ,473 75,000 4,874,790 6,124,778 7,478,907 8,643,557 4,658,370 10,022,963 23,188,938 24,278,824 28,563,205 27,367,791 18,246,442 29,301,003 5, ,221,028 1,184, , , , , , , , , , ,450 1,356,575 1,518,009 1,122,241 1,219,064 1,056,873 1,040,241 35, ,330, ,220 25,000 1,399,945 25, , ,365, , ,000 1,400,659 25,000 98,209, ,551, ,968, ,799,542 96,304, ,298,742 98,209, ,551, ,968, ,799,542 96,304, ,298,742

34 Date: 06/07/16 Centennial School District Page: 1 Time: 10:34:23 Budget Summary Report BPR007 Expenditure projections by single object 16/17 PROP FINAL code 12/13 ACTUAL EXPENDITURES 13/14 ACTUAL EXPENDITURES 14/15 ACTUAL EXPENDITURES 15/16 APPROVED EXPENDITURES 15/16 5/31 EXP ALL 10 Fund Wages and Salaries 200 Employee Benefits 300 Purchased Profession & Tech Svcs 400 Purchased Services/Maintenance 500 Other Purchased Services 600 Supplies/Food 700 Equipment and Property 800 Dues/Fees/Interest on Debt 900 Debt Principal Pymts & Fund Transfs 10 Sub Total 51,141,946 51,558,700 52,785,913 53,638,358 52,994,027 53,280,000 17,511,431 20,040,202 22,730,948 25,910,857 25,726,277 28,632,548 4,347,533 5,836,608 6,527,258 5,969,913 6,027,220 5,228,707 1,919,763 1,878,523 1,848,752 2,041,328 2,108,403 2,113,656 4,869,938 5,217,970 5,656,943 5,573,144 5,216,125 6,099,004 2,543,916 2,917,234 3,260,760 3,036,093 2,372,412 3,063,566 1,589,778 1,000,914 3,209,198 1,279,754 1,065,614 1,766,962 6,395,815 7,211,656 6,243,101 6,239,450 6,190,886 7,507,397 7,842,793 4,330,258 4,853,017 3,110,644 4,906,913 4,103,902 98,162,913 99,992, ,115, ,799, ,607, ,795,742 Report Totals 98,162,913 99,992, ,115, ,799, ,607, ,795,742

35 News Release Contact: Jay Himes (717) Jim Buckheit (717) HARRISBURG, PA June 6, 2016 As Pennsylvania s school districts work to balance and finalize their budgets on the heels of the nine-month state budget impasse, unchecked mandated cost increases and unpaid state school construction reimbursements are forcing school districts across the commonwealth to cut instructional and extracurricular programs, reduce classroom and other staff and increase local property taxes. These findings are revealed in the latest school budget survey conducted by the Pennsylvania Association of School Business Officials (PASBO) and the Pennsylvania Association of School Administrators (PASA), and represent the most current, comprehensive financial picture for Pennsylvania s public schools. The report, titled Continued Cuts: Losing Confidence, Losing Learning, documents the ongoing impact of the budget impasse and cumulative effect of six years of mandated expenses outpacing state funding, resulting in shifting the tax burden to local property taxpayers combined with cuts to staff and educational programming. Survey findings show that the state budget impasse forced 48 school districts (14%) to borrow a whopping $746 million to keep their schools open while more than 140 districts reduced, delayed or renegotiated payments to vendors. More than one-third of districts indicate they will need to borrow funds to meet fiscal obligations if the state budget is not approved by June 30. The survey finds: Eighty-five percent of districts plan to increase property taxes, with 30 percent planning to raise taxes above the Act 1 index. Fifty percent of all districts plan to reduce or eliminate academic and extracurricular programs, while 56 percent of high poverty districts plan to cut or reduce programs. Forty-six percent of districts plan to reduce staff. Seventy-three percent of districts plan to increase elementary class sizes, and 64 percent plan to increase high school class sizes. Eighty-three percent of responding districts indicate they will need to use fund balance to balance their budgets in fiscal

36 Mandated pension, health care, special education and charter school costs continue to escalate at rates that continue to exceed the total additional resources provided through increased state funding and local tax increases. The report features stories from six school districts: Coudersport Area, Corry Area, Southeast Delco, Elizabeth Forward, Reading and Hanover Area, representing urban, suburban and rural districts, illustrating how these combined factors have impacted school district financial conditions and student learning opportunities. Jim Buckheit, PASA executive director, responded to the survey stating Following six years of continued cuts of educational programs and staff, and the lingering impact of the nine-month state budget stalemate, a considerable number of school districts have reached their tipping point, where without immediate state action to address these challenges, they will be able to offer only bare-bones educational programming to their students. Jay Himes, PASBO executive director, said the survey shows that mandated expenses are consuming any new state funding. We continue to march backwards resulting in more cuts, higher property taxes and reduced educational opportunities. Our only option to balance schools budgets is increasing property taxes, cutting staff and spending down reserves. The situation in Hanover Area School District, one of the districts profiled in the report, remains challenging even after the resolution of the budget impasse. According to Tom Cipriano, Jr., Business Administrator, we ve done all the tricks, but we re spending so much time on negotiations and contingency plans to close schools, instead of doing the things that we re supposed to be here to do. Similarly, Elizabeth Forward School District, another district profiled in the report, is feeling the strain due to unpredictable state funding levels and delayed state budgets. These challenges have a disproportionate impact on less affluent districts and the children they serve, yet we re all being judged by the same accountability standards, said Rich Fantauzzi, Director of Finance and Operations. The survey of the 500 school districts was conducted from April 4, 2016 through April 29, Responses were provided by 355 school districts (71 percent). Participating school districts represent all 67 counties. Together these districts educate approximately 1,211,000 students, or 76 percent of the Commonwealth s traditional PK-12 public school enrollment. Participating districts range from the largest districts in the state (Philadelphia with 134,538 students) to 28 districts with fewer than 750 students, and every type of district in between. A copy of the report is available on the PASA website at and the PASBO website at

37 About PASBO: The Pennsylvania Association of School Business Officials is a statewide organization with more than 3,000 members, two-thirds of whom are K-12 non-instructional administrators serving in the areas of finance, accounting, facilities, transportation, food service, technology, communications, human resources, purchasing and safety. PASBO s focus is on educating its members through professional development opportunities as well as keeping them informed on the latest legislative issues affecting school business through workshops, the annual conference, specialty conferences and publications. Business Associate members provide products and services that can improve the operation of schools and support classroom learning. About PASA: The Pennsylvania Association of School Administrators represents school superintendents and other school leaders from across the Commonwealth. PASA s mission is to promote high quality public education for all learners through its support and development of professional leadership

38 The PASA-PASBO Report on School District Budgets Continued Cuts: Losing Confidence, Losing Learning June 2016

39 Acknowledgments The Pennsylvania Association of School Administrators (PASA) and Pennsylvania Association of School Business Officials (PASBO) want to thank the William Penn Foundation for its generous support of this research project. The opinions expressed in this report are those of the authors and do not necessarily reflect the views of the William Penn Foundation. We also wish to acknowledge the contributions of Matthew Przywara (Lancaster School District); Jennifer L. Pesanka (Brentwood Borough School District); Susan Green (Southern York County School District); and Ryan Kirsch (Spring Cove School District) all of whom provided careful reviews of draft versions of the survey instrument. Thanks also to Tom Gluck and the Pennsylvania Association of Intermediate Units (PAIU) for their outreach efforts aimed at securing a strong, statewide sample. We wish to acknowledge our non-profit research partner, Research for Action, for contributions to survey design and administration, and for managing the quantitative analysis of the survey results. Jeff Ammerman, Director of Technical Assistance, and Hannah Barrick, Director of Advocacy for PASBO, also contributed to the survey design and final production of this report. And, as always, this report would not have been possible without the cooperation and support of superintendents, school business officials, and other school district administrators from every corner of Pennsylvania. In particular, we d like to thank the superintendents and school business officials from Coudersport Area School District, Corry Area School District, Elizabeth Forward School District, Hanover Area School District, Southeast Delco School District, and Reading School District for sharing their experiences. To our members: thank you for helping us reach the largest response rate in the history of this six-year initiative. JIM BUCKHEIT & JAY HIMES Harrisburg, June 2016

40 Continued Cuts: Losing Confidence, Losing Learning THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS Pennsylvania Association of School Administrators & Pennsylvania Association of School Business Officials June 2016 Copyright 2016 PASA & PASBO

41

42 Table of Contents I II III Introduction...5 Mandated Expenses...6 Mandated Expenses: Focus on Charter Schools...8 IV PlanCon V Shifting Burdens: Growing Reliance on Property Taxes VI Shifting Burdens: Uncertainty and Unpredictability VII Staff Reductions VIII IX Program Reductions Conclusion X Methodology... 23

43 Summary of Response Rate With a response rate of... these districts educate approximately 1,211,821 students, 71% 355 school districts participated in the survey, 76% of Pennsylvania s traditional K-12 public school enrollment. Participating districts range from Philadelphia, 134,538 students... to 31 districts with fewer than 750 students... and every type of district in between: 4% City 18% Town 37% Rural 41% Suburb The survey sample includes representation from all four corners of the state, including 67 of 67 counties. 4

44 I INTRODUCTION Losing Confidence, Losing Learning In , when PASA and PASBO first started documenting how lost and stagnant revenues have forced school districts to cut learning opportunities for Pennsylvania s school children, no one imagined that the cuts would continue six years later. No one imagined that in all this time state policy-makers would still have failed to take meaningful action to curb growing expenses or that the state share of school funding would still be declining. No one imagined that our school leaders would be losing confidence in state policy makers and students would still be losing learning opportunities. Yet this is the story of this edition of the annual PASA-PASBO Report on School District Budgets. As in previous years, this report provides current budget data and program details from school districts across every corner of the Commonwealth. Our survey received its highest response rate yet, with 355 of 500 school districts participating, and includes representation from all 67 counties. Districts were asked to detail plans based on preliminary budgets for the fiscal year New this year, we document how districts coped with the nine-month-long budget impasse, as well as uncertainty around PlanCon reimbursements for school construction. Also for the first time, we are able to include longitudinal comparisons to past surveys. The results are not good. Even as Pennsylvania s leading economic indicators project continued growth in the economy going forward, 1 our 2016 survey results show the worst outlook for public schools of any of our previous surveys. Districts project increases in mandated expenses for pensions (100 percent), health care (84 percent), special education (88 percent), and charter schools (77 percent), higher in every category than in previous reports. More districts are planning local tax hikes, borrowing funds, dipping into fund balances, and delaying payments to vendors. Most importantly, the number of districts projecting cuts to staff (46 percent), increases in class size (34 percent) and cuts to educational programs (50 percent) continue to rise. Based on our survey, we estimate that in the increased cost of mandated expenses will exceed $600 million, not including any cost of living salary adjustments. Thus, even under Governor Wolf s proposal to add $250 million in basic and special education revenues to next year s state budget, the vast majority of districts report they could not restore the cuts they have been forced to make since It s basic math. It s also deeply personal. Woven throughout the data are stories of how superintendents and business officials from six individual school districts have coped with continued cuts. This is not a cherry-picked rehashing of only the most well-known school funding challenges and inequities in Philadelphia, Chester- Upland, and York City districts or even the newer crises growing in Erie City and Scranton. The featured school districts Coudersport Area, Corry Area, Southeast Delco, Elizabeth Forward, Reading, and Hanover Area are reflective of public education across the Commonwealth. Their experiences demonstrate the depth of the state s structural school funding problems. Together with the survey data, their stories show that the time to restore confidence and restore learning opportunities is now. 1 Center for Workforce Information & Analysis (2015). Economic Review of Pennsylvania. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 5

45 II MANDATED EXPENSES Survey results indicate that mandated expenses continue to rise. A significant majority of districts project increases in every area surveyed: pension contributions, health care costs, special education services, and charter school payments. The percentage of districts projecting these increases is higher, in every category, than was the case in (see Figure 1). Figure 1. Percent of school districts anticipating increased mandated costs: FY (n=334) % 84% 88% 77% Percent of Districts PENSIONS HEALTH CARE SPECIAL EDUCATION CHARTERS Every district surveyed anticipated increased pension contributions in As Figure 2 illustrates, districts expected the size of that increase to be severe; on average they anticipated a jump of 24 percent in just one year. Figure 2. Average percent anticipated change in mandated expenses from to Percent Change % PENSIONS (n=321) 4% 5% HEALTH CARE (n=321) SPECIAL EDUCATION (n=318) 11% CHARTERS (n=304) 6

46 CASE STUDY: Coudersport Area Increases in mandated expenses are squeezing districts across Pennsylvania between a rock and a hard place. In rural Coudersport Area School District, the single largest cost driver is pension contributions, which have grown from five to 30 percent of total salaries in the last six years alone. The huge jump in PSERS is driving us over the edge, said Superintendent Alanna Huck, we re just not able to raise revenue to cover that kind of cost increase. Employee health benefits, charter, and special education costs have also risen year after year. There s a line in the sand and I don t want to cut more from our kids. Alanna Huck, Superintendent Like many other districts, Coudersport has responded by significantly reducing its workforce, leaving teaching, support, and administrative positions unfilled. Teachers now fill in as cafeteria aides and coordinate to staff the otherwise shuttered library. Superintendent Huck herself has taken on many of the duties of the district s former technology director. We ve all had to wear more and more hats as we ve been forced to eliminate these key positions, explained Huck. As educators in Coudersport look to the future, they worry things will only get worse in We ve made it work the last six years but we re at the end of the list of what we can do, said Huck. There s a line in the sand and I don t want to cut more from our kids. Unfortunately, she may have little choice. A shrinking population and tax base make raising sufficient local revenue a challenge. Huck urges educators and parents to engage with their legislators in Harrisburg, We need to be vocal about these structural problems like pensions and charter school costs. Without government action, increasing mandated expenses will continue to erode our ability to provide the high-quality education our children deserve. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 7

47 III MANDATED EXPENSES FOCUS ON CHARTER SCHOOLS As shown above in Figure 1, the percentage of districts expecting an increase in their mandated tuition payments to all charter schools (cyber and brick and mortar combined) is projected to be larger next year. Seventy-seven percent of districts anticipate increases in , compared to 71 percent of districts that experienced increases in mandated charter tuition expenses in Figure 3 below distinguishes between types of charters and demonstrates that increased mandated costs associated with cyber charters affect 75 percent of districts surveyed, while increased mandated costs associated with locally-based brick and mortar charters impact a smaller but still significant share of districts (46 percent). Figure 3. Percent of districts anticipating increased charter expenses for and Percent of Districts % 75% 38% 46% 0 CYBER CHARTERS BRICK AND MORTAR CHARTERS (For cyber charters n=346 for and n=346 for For brick and mortar charters n=346 for and n=334 for Note, the results are nearly identical (within +/- 1 percent) when the sample is restricted to the 282 districts that answered both the spring 2015 survey and the spring 2016.) Figure 4 below shows the expected change in the average amount of those expenses from to broken down by charter school type. Figure 4. Average percent expected change in charter expenses between and Percent Change % CYBER CHARTERS (n=303) 8% BRICK AND MORTAR CHARTERS (n=174) 8

48 CASE STUDY: Corry Area Corry Area School District in rural northwestern Pennsylvania covers 250 square miles and serves nearly 2,200 students from three separate counties. Over the course of 39 years in the district, Superintendent Bill Nichols has seen a steady increase in the number of those students coming from disadvantaged backgrounds. This year, over 70 percent of Corry Area students qualify for free and reduced lunch. Nichols is increasingly worried about meeting his students needs. Corry Area has eliminated 22 positions over the last three years, and class sizes have been steadily rising. Several of our elementary schools are operating with over 500 kids to a single principal, and could really use additional support, said Nichols. Business Manager Brenda Clabbatz says increases in mandated costs, including special education and cyber charter tuition, have driven budget cuts. For every student who attends a non-district cyber, Corry Area pays over twice as much as it costs to educate a student in their own cyber program, which is aligned to the district and state curriculum. There s no question we see significant differences in kids who attend our own cyber or blended learning programs versus kids who attend the for-profit cyber schools, said Nichols. What s more, many cyber charter students eventually return to district schools, but not before they have fallen behind grade level. It s as if we re paying for them twice, explained Nichols, once to attend a cyber and again to remediate when they rejoin our schools. It s as if we re paying for them twice, explained Nichols, once to attend a cyber and again to remediate when they rejoin our schools. Bill Nichols, Superintendent Looking forward, educators in Corry Area have grave concerns about their ability to plan for and beyond. Walking into budget planning not knowing where we re going to stand next year, it really makes me nervous for the future, said Nichols. He worries that uncertainty caused by another year of budget impasse would further derail the whole educational process, You start making decisions, instead of based on the kids and what you know is best, on caution and your lack of confidence in state government. The district has yet to determine if more cuts will be needed next year, but Nichols fears summer school may be on the chopping block. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 9

49 IV PLANCON The Planning and Construction Workbook ( PlanCon ) is the process provided in Pennsylvania law for school districts to obtain state reimbursement for a portion of school construction or renovation costs. The PlanCon process requires approval by the Department of Education (PDE) at every step, from preliminary planning to project financing and refinancing. School districts that comply with the strict PlanCon requirements and reach approval for Part H are eligible to receive partial state reimbursement based upon their relative wealth. In the school year, the state appropriated $306 million for PlanCon reimbursements. Districts are still waiting to receive reimbursements for the school year. In addition, districts are facing a moratorium on any new approvals of PlanCon projects for the third time in six years, forcing many to defer necessary construction and renovation projects. Figure 5. Percent of districts that included PlanCon reimbursement in their budget Figure 6. Percent of districts with PlanCon Projects awaiting Part H approval 85% n=348 include PlanCon revenue in budget 20% n=344 awaiting PlanCon Part H approval Eighty-five percent of districts across the state relied on payments for already approved PlanCon projects to balance their budgets. Districts are hopeful they will receive reimbursements at some point, but these funds have not been distributed. One in five districts also have projects in the PlanCon pipeline that were approved up to Part G, but stalled waiting on PDE s final approval of Part H. Many districts started or even completed projects with no guarantee of reimbursement. As can be seen in Table 1, surveyed districts, which comprise 71 percent of all districts statewide, are owed more than $323.5 million for approved projects and those pending Part H approval. Table 1. PlanCon reimbursements owed statewide DISTRICTS OWED PLANCON FUNDS 305 TOTAL AMOUNT OF PLANCON OWED AMONG DISTRICTS WHO ANSWERED THE 2016 SURVEY $323,594,912 10

50 CASE STUDY: Southeast Delco Southeast Delco School District is a mid-sized district that serves approximately 4,500 students in Delaware County, in the southeastern corner of Pennsylvania. We are about as close as you can get, without being in Philadelphia, explains Dr. Stephen Butz, Superintendent since School funding inequities are stark in southeastern Pennsylvania. SE Delco and other struggling districts are neighbors to some of the wealthiest districts in the Commonwealth, and their spending differences often exceed $8,000 per student. On this uneven playing field, SE Delco strains to provide similar opportunities for their students. As Dr. Butz describes, We don t have any indoor swimming pools. We are lacking in the basics in terms of the number of teachers we have and the courses we can offer. Most of our technology is six to eight years old. We want to be held to the same standard as our neighbors, but the resources we have are so different. As a majority minority district with a high poverty rate, a growing immigrant population, and a local tax base that generates less revenue than their neighbors despite one of the highest tax rates in the state, SE Delco has already taken extraordinary measures to make ends meet. Since 2010, student enrollment has increased by nearly 500 students, but the district has cut 22 teachers. It has also cut benefits and implemented a salary freeze for all staff twice for teachers. There have been cuts to music, art, physical education, and other electives. In , securing a loan to get through the budget gridlock was not even an option for SE Delco s Business Manager, Vanessa Scott. We were weeks from not making payroll, and our bank said, We d love to help you, but we don t see any way you can guarantee that we will get repaid, explains Scott. We were weeks from not making payroll, and our bank said, We d love to help you, but we don t see any way you can guarantee that we will get repaid, Vanessa Scott, District Business Manager Failure to receive expected PlanCon reimbursements can make or break the budget of a district like SE Delco. In , the district expected nearly $1 million of already approved PlanCon reimbursements. Due to the budget impasse, Dr. Butz no longer expects to receive those funds before the end of the fiscal year, leaving the district with a very small fund balance. SE Delco also has an outstanding PlanCon application for a high school renovation project that was filed more than five years ago, but never received a decision from PDE regarding Part H. The renovation project was completed in August of We have had students in the building enjoying the renovations, but we haven t gotten any reimbursement for that project. said Dr. Butz. The district has delayed other needs, including repairs to a ventilation system that cools and heats a gymnasium and a bathroom renovation, which, if not fixed soon, could cause water damage and prove more costly to fix the in long run. When we have the funding we will have to take care of it. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 11

51 V SHIFTING BURDENS GROWING RELIANCE ON PROPERTY TAXES In response to increased mandated expenses and uncertainty about future state revenue, more districts are planning to raise property taxes this year (85 percent) than last year (71 percent) (see Figure 7). If enacted, this will be the seventh consecutive year in which over 60 percent of school districts have raised property taxes to meet educational needs. Figure 7. Percent of districts planning property tax increases in and Percent of Districts % 85% (n=354) (n=343) Figure 8 shows that, among districts planning tax increases for , 78 percent plan to tax at or above the Act 1 Index. Figure 8. Level of anticipated tax increases in and (n=243) (n=297) 23% 47% 30% 22% 48% 30% Below Act 1 At Act 1 Above Act 1 12

52 CASE STUDY: Elizabeth Forward Elizabeth Forward may not seem like a district struggling to make ends meet. One of 73 forward-thinking districts nationwide that make up the League of Innovative Schools, the district has developed curricula in both digital fabrication and computational thinking, and provides an ipad for every child. But obtaining the funding to do so wasn t easy in a district with a shrinking population and growing poverty, says Superintendent Bart Rocco. The problem in our Commonwealth is the inequity focused around providing education funding based on property values, explains Rocco. Why should a zip code of where a kid lives determine the quality of the education that he receives? Rocco and his team face the same challenges as many districts. Their mandated expenses, particularly pension contributions, are increasing rapidly, while their real estate values and ability to raise local revenues are decreasing. Under Rocco s leadership, the district has managed to bring in impressive outside grant funding through partnerships with philanthropy, industry, and local universities. But this year, the state budget impasse threatened to undermine their financial stability. The district got by with a $6.5 million dollar loan, which cost them over $27,000 in unbudgeted interest. They also delayed payments to vendors for things like transportation and classroom supplies. We use five year projections in our cost analysis for building our budget. How do you gauge what five years is going to look like without a timely state budget? I don t know about five minutes from now. Bart Rocco, Superintendent But there was one payment that couldn t be delayed. Like many other districts, Elizabeth Forward borrowed heavily in the 1990s, and is still paying over $3 million a year in debt service from that time. As Rocco explains, You can get as creative as you like, but you ve still got to pay your debt service! Now, with little reassurance that a budget will be passed by June 30th, uncertainty about their future ability to make debt service payments is mounting. We use five year projections in our cost analysis for building our budget. How do you gauge what five years is going to look like without a timely state budget? I don t know about five minutes from now. Even more troubling for Rocco, both state funding levels and delayed budgets have a disproportionate impact on less affluent districts and the children they serve. Clearly, we need a better way to fund our schools. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 13

53 VI SHIFTING BURDENS UNCERTAINTY AND UNPREDICTABILITY To keep schools open amidst the uncertainty and unpredictability of the state budget impasse, districts used multiple strategies, including borrowing, using fund balances, and delaying payments to vendors. The effects of the impasse continue to impact districts and, for some, their credit ratings continue to decline. Borrowing This year, 14 percent of districts borrowed additional funds mid-year to cope with the impasse. As Figure 9 shows, if the budget is not approved on time, 34 percent of districts will again increase borrowing. Figure 9. Additional borrowing due to budget impasse in (actual) and (predicted) Percent of Districts % : BORROWED ADDITIONAL FUNDS DUE TO IMPASSE (n=346) 34% : WOULD BORROW IF BUDGET NOT APPROVED BY JUNE 30 (n=336) Table 2. Total additional borrowing due to the impasse TOTAL BORROWING $746,632,504 AVERAGE PER DISTRICT $15,554,843 N 48 Seventy-one percent of districts responded to the PASA-PASBO survey. Between them, total new borrowing due to the impasse reached a whopping $746 million. 2 Fifteen percent of districts note that their credit rating declined from July 1, 2015 to April 1, Another 17 percent of districts predict that their credit ratings will get worse in Not surprisingly, districts that had to borrow due to the impasse reported greater declines in credit ratings over the year, as can be seen in Figure 10. Figure 10. Changes in credit ratings in for districts who borrowed additionally DISTRICTS THAT BORROWED (n=45) 31% 69% DISTRICTS THAT DID NOT BORROW (n=292) 12% 87% 1% Worse The Same Better 14 2 These numbers are comparable to the reports from the Auditor General. Russ, H. (2015, December 9). Pennsylvania schools borrow $900 million to survive state budget impasse. Reuters. Retrieved from

54 Fund Balance Figure 11 compares the percentage of districts that dipped into their fund balance in to those planning to rely on fund balance in Figure 11. Percent of districts relying on fund balance in (actual) and (planned) % 83% Percent of Districts RELIED ON FUND BALANCE FOR (n=338) WILL RELY ON FUND BALANCE FOR (n=334) Payment to Vendors As can be seen in Figure 12, survey results indicate that the budget impasse forced more than 140 school districts to reduce, delay, or renegotiate payments to vendors in Figure 12. Percent of districts that reduced, renegotiated, or delayed payments to vendors due to impasse Percent of Districts % DISTRICTS THAT REDUCED OR RENEGOTIATED PAYMENTS TO VENDORS (n=331) 41% DISTRICTS THAT DELAYED PAYMENTS TO VENDORS (n=332) Contracted services, supplies and equipment payments were most likely to have their payments reduced or renegotiated. Charter schools were the most likely to have their payments delayed. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 15

55 VII STAFF REDUCTIONS Almost half of districts surveyed (46 percent) plan to reduce staff in , up from 41 percent in (see Figure 13). Figure 13. Expected staff cuts in and (n=345) 41% reduced staff (n=330) 46% plan to reduce staff Class Size Figure 14. Percent of districts that plan to increase class size in (n=328) 34% n=328 plan to increase class size in Staff cuts often impact class size. As can be seen in Figure 14, over a third of surveyed districts plan to increase class size in Planned increases in class size will occur across grade levels, but are most common at elementary schools, as illustrated in Figure 15. Figure 15. Planned increases in class size by grade level among districts that plan to increase class size Percent of Districts % 56% 64% 0 ELEMENTARY SCHOOL (n=106) MIDDLE SCHOOL (n=100) HIGH SCHOOL (n=100) 16

56 CASE STUDY: Reading Perhaps nowhere in Pennsylvania are the impacts of the state s education funding crisis and continued inequities more apparent than in Reading School District. The district was forced to eliminate hundreds of positions in 2012, including significant numbers of instructional and social support staff, and they have yet to fully recover. It s been felt by classroom teachers and kids, laments Superintendent Khalid Mumin. Elementary schools are especially over-enrolled, with some Kindergarten class sizes reaching 30 students. Without more money in the formula it will take 30 years for Reading to catch up. That window is just too long for our kids. Khalid Mumin, Superintendent More staff and smaller class sizes are far from being a luxury in a district like Reading; they are a necessity. The exceptionally diverse student body is made up of over 17,000 students who hail from 28 countries and speak 27 different languages, but nine in 10 are considered economically disadvantaged. We have excellent students with amazing strength and problem solving ability but one in four are learning English as a second language, and they need additional supports, Mumin said. The resources and individualized learning required to get them to proficiency and graduation are significant. Rising mandated costs, heavy reliance on state funding, and accumulated debt have left Reading in a difficult spot. The district spends roughly 10 percent of their annual budget on debt service, and was forced to borrow an additional $20 million this year to weather the budget impasse. We spent two and a half teachers salaries on interest and fees because of the impasse, recalls CFO Wayne Gehris, and frankly we re not sure we ll even be able to acquire loans next year if we need them to carry us through another delayed budget. Mumin and his team are grateful for the recent adoption of the bipartisan Basic Education Funding Commission s formula, which will begin to correct for years of underinvestment in districts with large populations of economically disadvantaged students and English Language Learners. Mumin calls it a win for students across the Commonwealth. We are excited at the prospect of planning for a sustainable future. Unfortunately, he worries it will not be enough: Without more money in the formula it will take 30 years for Reading to catch up. That window is just too long for our kids. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 17

57 VIII PROGRAM REDUCTIONS Earlier reports documented that a large majority of districts statewide have reduced or eliminated academic and extra-curricular programs over the past six years. Figure 16 below indicates this trend is continuing and that the impacts are worse in high poverty districts. 3 Figure 16. Program cuts in (actual) and (planned) (all districts vs. high poverty districts) 100 Percent of Districts % 57% 56% 50% All Districts High Poverty Districts (For all districts n=331 for and n=315 for For high poverty districts n=79 for and n=75 for As Table 3 illustrates, program cuts are most common in professional development, instructional materials, and in construction and maintenance. The poorest school districts expect larger reductions in each category. Table 3. Anticipated cuts by type of program in (all districts vs. high poverty districts) ALL DISTRICTS HIGH POVERTY DISTRICTS Academic Programs 19% 26% Student Support Services 12% 19% Professional Development 27% 36% Purchase of Materials 37% 45% Extracurricular Activities 20% 27% Transportation Services 22% 32% Construction and Building Maintenance 29% 38% 3 High poverty school districts are defined as the quarter of school districts with the highest percentage of students who are considered economically disadvantaged in data provided by the Pennsylvania Department of Education. 18

58 CASE STUDY: Hanover Area Serving an increasingly diverse population of 2,000 students in the scenic Wyoming Valley of northeastern Pennsylvania, the Hanover Area School District is all too familiar with tightening its belt. In the last five years, the district has closed an elementary school, cut 17 teachers and four administrators, and eliminated classes in elementary school music, art, and physical education. Teachers are now asked to cover specials during their prep time. Keystone testing preparation- we aren t offering, because we don t have the bodies, explains Superintendent Andy Kuhl. We are done cutting fat and we are into the meat and bone. Despite years of cuts, the budget impasse this year caused an unprecedented crisis, bringing the district to the brink of closure in April. The school board has already raised taxes in all but one of the last six years and now has the highest millage rate in the county. The district s taxable assessed valuations have decreased, leading to a half million dollar loss in local tax revenues. This year, Kuhl and Tom Cipriano, Hanover Area s Director of Finance and Operations, took out an additional loan, negotiated extended terms with vendors, and utilized a health trust consortium that allowed them to defer health care costs, delayed paying PSERS quarterly, and asked for accelerated payments from tax collectors. We ve done all the tricks, said Cipriano, but we re spending so much time on negotiations and contingency plans to close schools, instead of doing the things that we re supposed to be here to do. Superintendent Kuhl is proud of the way his staff have dug their heels in and did what they had to do, but still recounts teachers meetings that were like a funeral and a general atmosphere of doom and gloom that seeped down into the grassroots, affecting morale from administration all the way down to support staff. Mr. Kuhl notes that the uncertainty could have impacted student concentration levels on state tests, Our kids were in the auditorium where we had to talk about locking the doors here. Our kids were in the auditorium where we had to talk about locking the doors here. Andy Kuhl, Superintendent The good news, according to Kuhl, is that where school boards are often pitted against tax payers and school districts pitted against teachers associations, the budget impasse has opened people s eyes. I think people on all sides saw this year that we are all in this together. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 19

59 IX CONCLUSION The Challenges Ahead After years of mandated expenses outpacing state revenues and resulting cuts to staff and programs, schools across Pennsylvania are struggling. In , districts also faced the unprecedented challenge of meeting the needs of students during the prolonged state budget impasse and the failure of the state to provide anticipated PlanCon reimbursements on time. Together, these pressures forced districts to make tough choices, such as spending down fund balances (74 percent), reducing or renegotiating payments to vendors (43 percent), and taking out unplanned mid-year loans (an estimated total near $1 billion). Perhaps more troubling, 97 percent of district administrators predict the same or worsening conditions next year. Districts describe the paralyzing uncertainty of blind budgeting with little reassurance that next year s revenues will be approved on time or prove adequate to off-set rising expenses. Given this context, it s no surprise that administrators are projecting continued cuts again next year: Half of districts plan to cut valuable programs. 46 percent plan to cut additional staff. 34 percent expect class sizes to increase. Even when asked to imagine a scenario in which a budget was enacted and an additional $200 million was distributed through the basic education funding formula, the outlook of responding districts was still grim. As shown in Figures 18, 19, and 20 below: 72 percent of districts report they would still need to enact planned property tax increases. 74 percent would still not be able to restore any staff positions. Only two percent could restore all positions lost since percent of districts report they would not be able to restore any eliminated or reduced programs. Not one district would be able to restore all programs lost since There is, of course, some good news. This year was the first in which new education dollars were distributed through the bipartisan Basic Education Funding Commission s formula. But while administrators agree this is an important step towards a more equitable system of school funding, many are quick to point out that a funding formula is only as good as its revenues. Even under generous projections, less than six percent of state funding would be distributed through the formula in Unless policymakers pursue a bold new commitment to public education, the rising expenses from pensions, health care, special education and charter costs will outpace state revenues and heavy reliance on local property taxes will continue to drive inequity. Administrators and educators on the front lines of the education funding crisis are clear: without immediate government action to address these challenges, cuts will continue. Every year that we fail to provide revenue that covers mandated expenses and invest adequately and equitably in public education, our school leaders and citizens lose confidence in state government and students everywhere lose learning opportunities. 20

60 District Responses to Proposed Budget with Additional $200 Million in Basic Education Funding Figure 18. Could you eliminate or reduce planned property tax increases? 72% n=295 still would not be able to reduce or eliminate planned property tax increases Figure 19. Could staff positions cut since 2010 be restored? (n=272) 2010 and hire additional staff 1% 1% Yes, restore all positions lost since Yes, restore all positions lost since 2010 No, more staff reductions would occur 12% 24% Yes, restore some positions lost since % No, restore no positions lost since 2010 Figure 20. Could programs eliminated and/or reduced since 2010 be restored? (n=256) No, more programs would be eliminated and/or reduced 7% 0% 23% Yes, we would restore all programs eliminated and/or reduced since 2010 Yes, we would restore some programs eliminated and/or reduced since % No, we would not restore any programs eliminated and/or reduced since 2010 THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 21

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62 X METHODOLOGY The Spring PASA-PASBO survey was released on April 4, 2016, to 1,073 administrators and chief financial officers in 500 school districts based on membership lists provided by both PASA and PASBO. Significant efforts were made to achieve a high, representative, and geographically-balanced response. When the survey was closed on April 29, 2016, the response rate reflected submissions from 355 school districts, or 71 percent of the statewide total. This includes representation from every corner of the state, including all 67 counties. Together, these districts educate approximately 1,211,821 students, or 76 percent of the Commonwealth s traditional K-12 public school enrollment. Participating districts range from the largest district in the state (Philadelphia with 134,538 students) to 31 districts with fewer than 750 students, and every type of district in between. Survey Description The survey was composed of 41 questions concerning school district finance, staffing, and programmatic conditions. Districts were asked to reflect on the fiscal year, as well as outline plans for the coming fiscal year, and to detail how those plans might change based on Governor Wolf s proposed education budget. Survey Testing Prior to dissemination of an online survey to Pennsylvania school district superintendents and business administrators, the instrument was piloted by staff at Research for Action and with current and former school district administrators to ensure clarity. Survey Administration The survey went live on April 4, Regular reminders were sent to those districts that had not completed the survey. The survey was closed on April 29, Sample The survey was sent to superintendents and business managers in 500 Pennsylvania school districts; the superintendent and business manager in each district filled out a single survey. In Table A1 below, we compare the districts that responded to the survey to the entire state. As seen below, the demographics of the responding districts are very similar to those of the entire state. THE PASA-PASBO REPORT ON SCHOOL DISTRICT BUDGETS 23

63 Table A1. Description of demographic data for respondent districts SPRING SURVEY RESPONDING DISTRICTS (n=355) ALL PENNSYLVANIA DISTRICTS (n=500) DIFFERENCE Total Enrollment 1,211,821 1,589, ,619 Average Percent White 83.8% 83.8% 0% Average Percent Special Education % 14.7% -0.2% Average Percent ELL % 1.2% 0.1% Average Percent Low Income Percent of Districts in Highest Poverty Quartile 41.0% 41.4% -0.4% 23.9% 24.9% -0.5% Average Total Revenue $56,773,496 $52,539,968 $4,233,528 Urbanicity (Percentage of Districts in Sample) City 4.2% 3.4% 0.8% Rural 36.9% 35.1% 1.8% Suburb 40.9% 41.5% -0.6% Town 18.0% 20.0% -2.0% Note: Numbers for enrollment, ethnicity, special education, English Language Learners, percent low income, poverty level and total revenue are most recent publicly available data from the PDE website. Bryn Athyn School District contracts-out educational services. Source: Figure A1. Response rate by region North Central % Northeast % Northwest % South Central % Southeast % Southwest % 24

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65 The Pennsylvania Association of School Administrators (PASA) is an organization that is instrumental in developing successful school leadership through advocacy, professional development, support, sustainment of high quality school administrators and a statewide collegial network. Our mission is to develop, support and serve Pennsylvania school leaders. The Pennsylvania Association of School Business Officials (PASBO) is a statewide association, 3,000 members strong. We are devoted to providing members with education, training, professional development and timely access to legislative and policy news. Our mission is to create great schools by developing outstanding school leaders and providing responsive school business solutions. For additional copies or electronic versions of this report, please contact PASA at (717) or pasa@pasa-net.org or PASBO at (717) or pasbo@pasbo.org.