Budget Consideration/Pressures

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Emerald White
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1 Budget Consideration/Pressures Board of Education Work Session Meeting March 16, 2017 I. Millage(s) II. Labor Contracts III. Budget Framework 1

2 Non-Homestead Millage Date of Election 2016 Millage Rate Permanently Reduced by "Headlee" Maximum Allowable Millage Levy Term Operating Non-Home 11/ Renewal of Non-Home?????? Renewal of Non-Home?????? Expiration Date of Millage Authorized s 12/31/18 X X X X X s 12/31/23 X X X X X s 12/31/28 X X X X X X X X X X

3 Non-Homestead Millage upcoming election dates Tax Year 4th Tuesday 1st Tuesday 2nd Tuesday 3rd Tuesday 2017 Feb May Aug Nov N/A Tax Year 4th Tuesday 1st Tuesday 2nd Tuesday 3rd Tuesday 2018 Feb May Aug Nov Gubernatorial Election Year Tax Year 4th Tuesday 1st Tuesday 2nd Tuesday 3rd Tuesday 2019 Feb May Aug Nov Tax Year 4th Tuesday 1st Tuesday 2nd Tuesday 3rd Tuesday 2020 Feb May Aug Nov Presidential Election Year = possible have to pay full cost of election = nominal cost for election = possible elections to have the vote for Non-Home Millage, and still be able to levy 100% on December 1,

4 Labor Contract Durations Group Length Term Date LSDAA 1 yr LTA 1 yr SEIU Food Service 1 yr Mechanics 1 yr LEA 2 yr LESP 2 yr AFSCME - Custodians 2 yr

5 General Information Macro View January 2017 Revenue Conference Information: State-wide pupil membership decrease by approx. 4,300 students School Aid Fund (S.A.F.) for FY & structural surplus Slow growth economy, low inflation = State Revenue slow to grow Auto sales at high point Michigan economy heavily reliant on auto sector State General fund will have $1 billion shortfall, if nothing changes for FY Shift $451m refunds into S.A.F. at some point May Revenue Conference scheduled for 5/11/17 5

6 Legislative Information Micro View Governor: proposed School Aid budget $50-$100 F.A. increase (Secs. 22a and 22b) Short approximately $162 pp, needed to cover decline in enrollment $50 categorical for High School FTE only (Sec. 22n) - NEW Shared-time for Nonpublic & Homeschool pupils reduced by 50% (Sec. 22m) Declining Enrollment funding for those with greater than 5% decline in 2 s (Sec. 29) - New Senate: N/A to date House: N/A to date 6

7 Enrollment loss equated in per student funding -170 fte X $7,511 = $1,300,000 $1,300,000 / 4,969 est. = $262 per fte Increase needed in F.A. $100 $262 Total Needed Gov - proposed Senate -? House -? 7

8 October to October Enrollment Summary from Official State Report Total Enrollment Summary Yr. Avg. Current Year October 5, , , , , Previous Year October 6, , , , , Total Actual Change in FTE Actual loss due to Graduation Exit and Kindergarten Enrollment Graduates - June Kdg. enrollment Oct

9 Pupil Membership Blend Changes FY to FY Fiscal Year Fall Count Prior February Count % 25% % 10% % 10% Following February Count % 10% % 10% % 10% % 10% ??? * Extracted from House Fiscal Agency Table 9

10 Changes in Blended Count Valuations Blend Percentage Count Date Actual Count Blended Amount Budgeted Count 5,103 Count Variance Dollar $7,511 Governor 50% Oct 16 5,103 * 2, % Feb 16 5,257 2, , , $578,347 House 85% Oct 16 5,103 * 4, % Oct 15 5, , , $202,797 Senate 75% Oct 16 5,103 * 3, % Feb 16 5,257 1, , , $285,418 = Estimated for October

11 Stanfred Consultants Enrollment Projection 5,400 5, ,065 4, ,836 4, , ,574 4,400 4,598 4, Most Likely Low = Blended projection 4,234 3,

12 Actual Foundation Allowance FTE Funding from blended formula Total Blended Enrollment for Funding Actual Year October Count 5, , , , , Actual Blended fte for Funding From August status reports 5, , , , , * * = Not final for FY 17 12

13 Stresses related to Enrollment - Micro View Declining enrollment (based on birth rates alone) will continue for another decade until incoming Kindergarteners equal Graduating Seniors Continue to explore/implement ideas to attract new students to the district via marketing programs Competition from Choice will add stress to enrollment numbers 13

14 Revenue - Pressures Revenue: Per Pupil Foundation Allowance increase/decrease still unknown High School fte categorical (segregation of funding) Non-Public & Homeschool (50% reduction) max funding $3,805 vs $7,611 Possible declining enrollment additional proportional funding Grant sources Title I being split into 2 areas Title I & Title IV with limitations Change in methodology from local to county Free & Reduced pupils Changing national political scene funding changes possible in

15 Expenditures - Pressures Expenditures: Retirement costs Unfunded liability will continue pressure on School Aid Fund or actual employer rate Benefit costs Hard caps raising by 3.3%, early April with actual premium increases to determine impact Wage cost 4 expiring Increasing minimum wage rate as well as competitive wages (competition for workers) Curriculum/Text Book updates and changes from regulatory bodies Technology replacement and Virtual instruction equipment challenges 15

16 Budget Framework - Pressures Expenditures: Utility costs Variable in purchasing in consortium along with lower actual usage Bus Fuel Predicted slow rise in crude oil, raising cost at pump to approx. $3.00 gal Bus Replacement Third of only budgeting 4 vs 8, which is needed to maintain a 9 replacement schedule Facility infrastructure (i.e., security, roofs, parking lots/driveways, HVAC systems, lighting, restrooms) Cash Flow Borrowing Unknown to come from Legislative Consensus budget process??? 16

17 Fund Balance/Expenditures Comparison FY Year Lapeer % Lapeer $ Board Goal Statewide Average * 2018??? 10 % 2017 projected 5.0% -5.5% $2,500, % % $2,945, % % $2,479, % 9.83 % % $2,632, % 9.45 % 17

18 Budget Framework Pressures Next steps March / April Hopefully get glimpse of Senate & House S.A. bills April Begin compiling preliminary budget for Present preliminary forecast to Board Present detailed available forecast information to Budget Managers for solicitation of input May Revise preliminary forecasted budget for new information from Legislators and May Revenue Conference projections Prepare Recommended Budget to adopt for

19 Next steps June Hold required Public hearing on Proposed Budget Board adoption of Recommended Budget 19

20 Budget Consideration / Pressures Questions / Comments 20

Budget Development #1 Process and Information

Budget Development #1 Process and Information Board of Education Work Session Meeting February 22, 2018 I. Budget Development Process II. Budget Variables III.General Information 2/22/2018 1 Budget Development