PROPOSED BUDGET

Transcription

1 PROPOSED BUDGET RICHARDSON INDEPENDENT SCHOOL DISTRICT Where all students learn, grow and succeed.

2 RICHARDSON INDEPENDENT SCHOOL DISTRICT Richardson, Texas ANNUAL BUDGET FOR FISCAL YEAR From July 1, 2013 to June 30, 2014 BOARD OF TRUSTEES Kim Quirk, President Kim Caston Karen Ellis Lanet Greenhaw Karen Holburn Adam Meierhofer Kris Oliver APPOINTED OFFICIALS Dr. Kay Waggoner, Superintendent Patti Kieker, Deputy Superintendent Tony Harkleroad, Deputy Superintendent, Finance and Support Services Bob DeVoll, Assistant Superintendent, Secondary Schools Joyce Wilson, Assistant Superintendent, Elementary Schools Mia Martin, General Counsel Candace Ahlfinger, Executive Director, Communications and Public Affairs

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4 Table of Contents Superintendent s Budget Message...1 Legal Notice of Budget Hearing...2 Legal Basis for Budget Adoption...3 Budget and Tax Rate Adoption Calendar...7 Budget Overview...8 Employee Compensation...13 Proposed Budget... Operating Fund...28 Child Nutrition Fund...32 Debt Service Fund...34 Financial Forecasts...37 Other Funds...41 Miscellaneous Statistics and Analysis...46 Who May I Contact...52

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8 NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE The Richardson Independent School District will hold a public meeting at 7:00pm, June 17, 2013 in the Auditorium at 400 S. Greenville Ave, Richardson TX The purpose of this meeting is to discuss the school district's budget that will determine the tax rate that will be adopted. Public participation in the discussion is invited. The tax rate that is ultimately adopted at this meeting or at a separate meeting at a later date may not exceed the proposed rate shown below unless the district publishes a revised notice containing the same information and comparisons set out below and holds another public meeting to discuss the revised notice. Maintenance Tax $ /$100 (proposed rate for maintenance and operations) School Debt Service Tax $ /$100 (proposed rate to pay bonded indebtedness) Approved by Local Voters Comparison of Proposed Budget with Last Year's Budget The applicable percentage increase or decrease (or difference) in the amount budgeted in the preceding fiscal year and the amount budgeted for the fiscal year that begins during the current tax year is indicated for each of the following expenditure categories. Maintenance and operations Debt Service % increase % decrease Total expenditures 8.21 % increase Total Appraised Value and Total Taxable Value (as calculated under Section 26.04, Tax Code) Total appraised value* of all property Preceding Tax Year Current Tax Year $19,820,617,110 $20,476,002,780 Total appraised value* of new property** $120,890,849 $100,369,258 Total taxable value*** of all property $16,788,564,857 $17,354,215,956 Total taxable value*** of new property** $120,890,849 $100,369,258 *Appraised value is the amount shown on the appraisal roll and defined by Section 1.04(8), Tax Code. ** "New property" is defined by Section (17), Tax Code. *** "Taxable value" is defined by Section 1.04(10), Tax Code. Bonded Indebtedness Total amount of outstanding and unpaid bonded indebtedness* $444,139,987 *Outstanding principal. Comparison of Proposed Rates with Last Year's Rates Maintenance & Interest & Local Revenue State Revenue Operations Sinking Fund* Total Per Student Per Student Last Year's Rate $ $ * $ $6,255 $1,998 Rate to Maintain Same Level of Maintenance & Operations Revenue & Pay Debt Service $ $ * $ $7,442 $2,666 Proposed Rate $ $ * $ $6,408 $2,666 *The Interest & Sinking Fund tax revenue is used to pay for bonded indebtedness on construction, equipment, or both. The bonds, and the tax rate necessary to pay those bonds, were approved by the voters of this district. Comparison of Proposed Levy with Last Year's Levy on Average Residence Average Market Value of Residences Last Year This Year $205,938 $207,635 Average Taxable Value of Residences $170,345 $171,872 Last Year's Rate Versus Proposed Rate per $100 Value $ $ Taxes Due on Average Residence $2, $2, Increase (Decrease) in Taxes $20.46 Under state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, may not be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value. Notice of Rollback Rate: The highest tax rate the district can adopt before requiring voter approval at an election is $ This election will be automatically held if the district adopts a rate in excess of the rollback rate of $ Fund Balances The following estimated balances will remain at the end of the current fiscal year and are not encumbered with or by a corresponding debt obligation, less estimated funds necessary for operating the district before receipt of the first state aid payment. Maintenance and Operations Fund Balance(s) $77,595,754 Interest & Sinking Fund Balance(s) $14,408,413 2

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10 Legal Basis for Adoption of the Official Budget The following is taken from 2. Budgeting, A Module of the Texas Education Agency Financial Accountability System Resource Guide published by the Texas Education Agency. Update 14.0 January Legal Requirements for Budgets Legal requirements for school district budgets are formulated by the state, TEA, and the local district. In addition to these requirements, individual school districts also may have their own legal requirements for budget preparation. Additional legal requirements also may be imposed by state and federal grants; however, this section deals only with state legal mandates, TEA legal requirements and local district requirements for basic budget development and submission Statement of Texas Law Sections through of the Texas Education Code establish the legal basis for budget development in school districts. The following six items summarize the legal requirements from the code: The superintendent is the budget officer for the district and prepares or causes the budget to be prepared. Note: TEA recommends that an interactive approach between the board of trustees and the superintendent be taken to establish the budget process and define related roles and responsibilities. The district budget must be prepared by a date set by the state board of education, currently August 31 (June 30 if the district uses a July 1 fiscal year start date). In order for the budget to be adopted by the board of trustees, inclusive of amendments, the district budget must be prepared by August 20 (June 19 if the district uses a July 1 fiscal year start date). The president of the board of trustees must call a public meeting of the board of trustees, giving ten days public notice in a newspaper, for the adoption of the district budget. Any taxpayer in the district may be present and participate in the meeting. Concurrently with the publication of notice of the budget above, a school district must post a summary of the proposed budget on the school district s Internet website or in the district s central administrative office if the school district has no Internet website. The budget summary must include a comparison to the previous year s actual spending and information relating to per-student and aggregate spending on instruction, instructional support, central administration, district operations, debt service, and any other category designated by the commissioner. (Section , TEC). 3

11 The summary of the budget should be presented in the following function areas: (A) Instruction functions 11, 12, 13, 95 (B) Instructional Support functions 21, 23, 31, 32, 33, 36 (C) Central Administration function 41 (D) District Operations functions 51, 52, 53, 34, 35 (E) Debt Service function 71 (F) Other functions 61, 81, 91, 92, 93, 97, 99 (G) The per student will be based on student enrollment. No funds may be expended in any manner other than as provided for in the adopted budget. The board does have the authority to amend the budget or adopt a supplementary emergency budget to cover unforeseen expenditures. The budget must be prepared in accordance with GAAP (generally accepted accounting principles) and state guidelines. The budget must be legally adopted before the adoption of the tax rate unless the district elects to adopt a tax rate before receiving the certified appraisal roll for the district as provided by Section 26.05(g), Tax Code (see the following point if the district elects to adopt the tax rate first). Additionally, a school district must publish a revised notice and hold another public meeting before the district may adopt a tax rate that exceeds the following: (1) The rate proposed in the notice prepared using the estimate; or (2) The district s rollback rate determined under Section 26.08, Tax Code, using the certified appraisal roll. If a school district elects to adopt a tax rate before adopting a budget, the district must publish notice and hold a meeting for the purpose of discussing the proposed tax rate as provided by TEC Following adoption of the tax rate, the district must publish notice and hold another public meeting before the district may adopt a budget. The comptroller shall prescribe the language and format to be used in the notices. The school district may use the certified estimate of taxable value in preparing a notice. HB 3, 81st Regular Session, added TEC which requires that on final approval of the budget by the school board, the school district shall post on the district s Internet website a copy of the adopted budget. The website must prominently display the electronic link to the adopted budget until the third anniversary of the date the budget was adopted. 4

12 2.6.2 TEA Legal Requirements TEA has developed additional requirements for school district budget preparation as follows: The budget must be adopted by the board of trustees, inclusive of amendments, no later than August 31 (June 30 if the district uses a July 1 fiscal year start date). In order to prepare the public notice to be published 10 days prior to the meeting, the district budget must be prepared by a date set by the state board of education, currently August 20 (June 19 if the district uses a July 1 fiscal year start date). Minutes from district board meetings will be used by TEA to record adoption of and amendments to the budget. Budgets for the General Fund, the Food Service Fund (whether accounted for in the General Fund, a Special Revenue Fund or Enterprise Fund) and the Debt Service Fund must be included in the official district budget (legal or fiscal year basis). These budgets must be prepared and approved at least at the fund and function levels to comply with the state s legal level of control mandates. Funds to be budgeted and reported through PEIMS, both required and optional, are shown in Exhibit 2 in section Note: Districts may prepare and approve budgets for other funds and/or with even greater detail at their discretion. Such local decisions may affect the need for budget amendments and financial reporting requirements. The officially adopted district budget, as amended, must be filed with TEA through PEIMS (Public Education Information Management System) by the date prescribed in the annual system guidelines. Revenues, other sources, other uses, and fund balances must be reported by fund, object (at the fourth level), fiscal year, and amount. Expenditures must be reported by fund, function, object (at the second level), organization, fiscal year, program intent and amount. These requirements are discussed in further detail in the Data Collection and Reporting module. A school district must amend the official budget before exceeding a functional expenditure category, i.e., instruction, administration, etc., in the total district budget. The annual financial and compliance report should reflect the amended budget amounts on the schedule comparing budgeted and actual amounts. The requirement for filing the amended budget with TEA is satisfied when the school district files its Annual Financial and Compliance Report Local District Requirements In addition to state legal requirements, individual school districts may establish their own requirements for annual budget preparation. Local fiscal policies may dictate budgetary requirements which go beyond those required by the Texas Education Code and TEA. These policies may include: 5

13 Fund balance levels Debt service fund balance accumulation Investment requirements Property tax exemption parameters Financial performance comparison measures Staffing levels Exhibit 2. Legal Requirements for Funds to be Budgeted Fund Budgeted on an Annual Basis Budgeted on a Multi-year Basis Submitted to PEIMS General Required Optional Yes Special Revenue Optional Required No Food Service * Required Optional Yes Capital Projects Optional Required No Debt Service ** Required Optional Yes Enterprise Optional Optional No Internal Service Optional Optional No Fiduciary Optional Optional No * The Food Service Fund must be budgeted and submitted to PEIMS regardless of the type of fund used to account for school nutrition programs. A school district may account for these operations in a Special Revenue Fund, an Enterprise Fund, or within the General Fund. All expenditures in the Special Revenue Fund and/or Capital Projects Fund must be budgeted on a fiscal year basis (legal basis) if the district does not have a policy directing administration to adopt a budget in these areas on a project basis (except food service fund which is always budgeted on a fiscal year basis). ** Debt Service Fund budgets are required if there are any expenditures in Function 71, Debt Service. 6

14 Budget and Tax Rate Adoption Calendar September, 2012 through June, Ongoing budget status meetings with the Superintendent and Superintendent s Council. September, 2012 through June, Board of Trustee legislative, alternative funding, bond and budget status monthly reports. October 1 - Board of Trustee Financial Integrity Rating System of Texas hearing and discussion. November, 2012 through May, Board of Trustee Budget Committee meetings to review budget proposals/projections and provide input to staff. November 5 - Board of Trustee acceptance of Comprehensive Annual Financial Report. Discussion of budget and school finance litigation December 3 Board of Trustee budget and compensation discussion. January 14 - Board of Trustee budget and demographic update discussion. February 4 - Board of Trustee budget and recruitment/retention discussion. February 15 - Budget Review Team (BRT) meeting to discuss budget and compensation. February 18 - Board of Trustee BRT feedback, budget, and compensation discussion. March 4 - Board of Trustee budget discussion. March 25 - Board of Trustee budget discussion. April 1 - Board of Trustee budget and recruitment/compensation discussion. April 15 - Board of Trustee budget and compensation discussion. April 30 - Dallas Central Appraisal District certifies and delivers estimated appraisal roll. May 6 and 7 - Discussions with Moody s and Standard & Poor s rating agencies (reported to the Board of Trustees). May 6 - Board of Trustee budget discussion. May 20 - Board of Trustee budget discussion. June 17 - Board of Trustee meeting and public hearing on proposed budget and tax rate. Board of Trustee budget adoption, tax rate adoption, and approval of final end of year budget amendments. Please note that acceptance of the Certified Tax Roll will occur in August,

15 Richardson Independent School District Budget Overview We believe that a continuous improvement model similar to what is in place for instructional delivery also applies to financial management. The concept of plan, do, study, act in regards to the RISD budget is vital in our efforts to meet the financial challenges we face. The district has developed the following as part of our financial continuous improvement efforts: A comprehensive multi-year financial plan, Annual analysis of peer district comparative financial data, Engaged stakeholder groups in the budget process, Interaction with Superintendent and the Board of Trustees (see adoption calendar for details) regarding budget throughout the year. Every divisional manager is responsible for evaluating all programs within their area of responsibility annually using the above information. The comparative data and feedback from stakeholders are particularly helpful as delivery methods are evaluated for all programs and services. RISD s financial objectives are threefold: 1. Maintain quality instruction and support programs, 2. Achieve a balanced budget where expenditures are within limits of revenue retained under current school finance legislation, and 3. Maintain appropriate fund balance reserves. It is important that readers understand where district revenue comes from and how funds are spent, particularly in the Operating Fund, since it is subject to revenue limitations under current school finance legislation. 63.3% of the Operating Fund revenue is derived from local sources, including property taxes, after school program, interest income, game receipts, fees, and gifts. Remaining revenue sources include: State sources (including hold harmless) 35.7%, and Federal sources 1%. 80.8% of the Operating Fund expenditures involve instructional delivery with another 4.8% for instructional support. Remaining expenditures include 11.3% for physical plant operations, technology, and security; and 3.1% for general administration (includes appraisal district fees). 8

16 Financial Challenges Dr. Waggoner mentioned challenges in her letter that are discussed below in detail. Legislative Impact on School Finance School finance was a major issue during the 2013 legislative session. Senate Bill (SB) 1 makes significant changes to the amount of funding most districts receive; however, it does not totally restore the funding reductions in public education from the last session. Background House Bill (HB) 1 from 2006 made significant changes to the Texas Education Code that focused on school property tax rate reduction. HB 1 also created revenue limitations using retained revenue levels to establish a target revenue level for each district. The 2009 legislative session made some school finance adjustments through HB 3646 that basically retained the structure from HB 1 as to revenue limitations and target revenue, but provided limited added funding to districts. The following is a summary of the main points of HB Districts are guaranteed or held harmless to an amount of revenue at least equal to the state and local target revenue per weighted pupil established under HB 1 plus at least $120 per weighted pupil in new funds. The equalized wealth level for taxes up to what is referred to as the compressed rate (which for our district is $1.00) increased to approximately $476,500 for , $481,900 for , and $487,300 in and This means that the district will not make a recapture payment since our current wealth level per weighted student falls below this level. However, the target revenue levels only increased by $120 so while recapture fell, state revenue fell by an equal amount and we had no net gain in available revenue from this change. The Austin yield per penny is retained for the first six cents above the compressed rate and remains unrecaptured. The equalized wealth level for tax rates above this remains at $319,500 per weighted pupil. HB 3646 required that districts use additional state revenue funds to provide the greater of an $800 per year pay raise to eligible teacher type employees or an amount equal to $60 per weighted pupil in pay raises above any step increases required by the district s salary schedule. HB 3646 made several changes regarding rollback election triggers and requirements as well as a number of modifications in state revenue calculations that were neutral to us as they did not increase net revenue under the target revenue 9

17 limitations. The only provision for increased funding for our district was the $120 minimum increase per weighted pupil, which equaled about $4.9 million. Texas elected to fund the cost of HB 3646 and balance their budget using federal stimulus dollars, which were only available for two years. The margins tax created in order to reduce the school property tax has generated lower than projected revenue. These decisions contributed to the massive State budget deficit in This deficit coupled with the Legislative leadership s desire to not raise taxes or access the rainy day fund, meant that the 2011 Legislative session included consideration of a number of possible funding reductions to public education ranging from about $4 billion to over $9 billion for the biennium. A variety of methods to implement these funding reductions were also discussed that had estimated impacts to our district of between $19 and $54 million of reduced revenue per year. Our Board and Administration started developing budget reduction strategies for several different scenarios of funding loss using input from our staff and community. We prioritized reductions to consider and refined the scenarios as the legislative session progressed. The 2011 Legislative session ended with an appropriations bill that cut funding for public education by approximately $5.4 billion over the biennium. However the session ended with no resolution as to how this funding reduction would be distributed to districts. The Governor immediately called a special session to attempt to address school funding among other items. However, we were required to adopt our budget prior to any resolution on school funding from the special session. Using what we felt was the most likely scenario, our budget for assumed a loss of $20 million in state funding. The special legislative session focused on two primary methods of implementing reductions to education funding. One involved across the board reductions for all districts and another focused reductions more heavily on districts with higher target revenue levels. The end result was the passage of SB1 which provided somewhat of a compromise. For RISD, the primary effects of SB1 were a 7.61% reduction in the regular program allotment in Tier I for and a 2% reduction in Reductions to the regular program allotment have the effect of reducing the district s weighted average daily attendance (WADA). Our Additional State Aid for Tax Relief (ASATR) is also reduced by 7.65% starting in , which means our hold harmless funds are reduced starting in This equates to a loss of $14.2 million and $21.7 million in funding for and , respectively. The bill stipulates that ASATR will be eliminated by 2017, but does not specify how this will occur. 10

18 Current - The Texas House and Senate considered various public school funding options during the session and the end result was passage of SB1 (please note that as of the date this document was prepared the bill had yet to be signed into law by the Governor). Key public school funding increases in SB1 include $3.4 billion added to formula funding distributed by the following: increase the Regular Program Allotment Factor to 1 increase the basic allotment from $4,765 to $4,950 in and $5,040 in reduce target revenue hold harmless by $282 million in and $417 million in includes $838.7 million in funding for instructional materials already required under statute increase Student Success Initiative funding by $24 million This equates to additional net State funding for RISD of approximately $8 million. None of the last several legislative sessions have produced a solution to the issue of adequate school funding. State sponsored adequacy studies and school finance proposals have largely been based on what the State could afford to fund or was willing to fund versus what it actually costs to educate to the current State and Federal mandates. RISD is a plaintiff district in litigation against the State regarding the adequacy of the school finance system. While District Judge Dietz has issued a preliminary ruling in our favor, he has indicated that he will allow further evidence to be submitted regarding changes in public school funding from the 2013 legislative session before issuing a final ruling. Once his ruling has been issued the case will likely be appealed and it is unclear at this point what, if any, additional funding may be provided as a result of the litigation. We are in a much stronger financial position than most districts due to the conservative approach of our Board of Trustees and administration. While we have made reductions, we have been able to so far avoid the large layoffs and major program reductions that many other districts in the State have already had to make. We are now in a position to move forward with budget plans to address two primary priorities: 1) providing additional teachers to address enrollment growth and reduce class size and 2) increasing compensation to remain competitive with area districts. The district will continue to work with our legislators to try to improve public education and appropriate funding. 11

19 Enrollment One of our most significant challenges involves projecting enrollment and specifically, the number of students in weighted average daily attendance (WADA). WADA is the figure used by the State for school funding. Templeton Demographics was engaged to provide enrollment projections based on a number of lead indicators, changes in housing stock, tax increment financing zone (TIF) agreements already in place and those under consideration, and projected property redevelopment. Updated projections were provided to the Board in January, 2013, for a ten year period and have been incorporated into our budget projections. Our actual enrollment to date for has been higher than projected due to higher numbers of students per unit in multi-family housing and turnover in single family housing resulting in higher numbers of kindergarten and first grade students in a number of attendance areas within the district. Based on the demographic report, our current enrollment projection for is 39,018 or 976 students higher than revised projections for The demographic data indicates increasing enrollment figures for the period through The district has conducted campus capacity reviews in areas with the highest enrollment growth and identified a number of campuses to increase instructional space in order to serve more students at their neighborhood school. Construction of additional space will be completed this summer for Forest lane Academy and Skyview Elementary. Additional space will be completed at Forest Meadow Junior High, Mohawk Elementary and Richland Elementary for start of school in August, Additional construction may be considered for 2014 depending on actual enrollment at the start of school in August, Recapture The revised school finance system still involves recapturing property wealth over State prescribed levels. The system also still uses a complex system of weights for certain student populations such as bilingual/limited English proficient students, low socio-economic students, gifted students, students with learning disabilities, etc.; funding allotments/adjustments; cost of education index; etc. to establish the amount of tax and state revenue retained. The wealth level has increased the last few sessions and is stratified at various levels within the total available operating tax rate, subject to certain hold harmless provisions. These levels include the compressed tax rate, the enrichment pennies (those subject to and not subject to a tax ratification election), and the remaining pennies of tax authority subject to tax ratification election. Since our wealth level per WADA is projected to fall below the equalized wealth level for , we will not be required to make a recapture payment. This does not result in increased retained 12

20 revenue since earlier decreases in recapture were simply offset by reductions in state revenue. Recapture is calculated using a district s prior year state assigned taxable value, current year taxes collected, and current year WADA. The reductions in the tax rate in and caused a loss of tax revenue for districts across the state. The legislation passed in HB 1 provided hold harmless levels of funding using the amount of revenue generated in per weighted student as a minimum. We received hold harmless funding in added State aid, but this just brought us equal to the level of revenue received in and did not provide an increase in funds. Hold harmless amounts have been reduced each year since 2012 as part of the funding changes in the last two legislative sessions. We will move into formula funding as part of the 2013 session SB1 due to an increase in the basic allotment. This hold harmless level eliminates the financial impact of fluctuations in our tax base for the next few years since small to moderate increases will still not exceed our hold harmless revenue level and the guaranteed revenue in the hold harmless negates decreases in total property value. Formula funding will have a similar effect for us. Recapture payments have been as follows: = $28.6M (with $295,000 equalized wealth level) = $32.2M (net after the $5.2 million OPHSE rebate) = $42.9M (with $300,000 equalized wealth level) = $49.7M (net after $6.8 million OPHSE rebate) = $55.9M (with $305,000 equalized wealth level) = $47.9M (with $305,000 equalized wealth level) = $41.7M (with $305,000 equalized wealth level) = $35.5M (with $319,500 equalized wealth level) = $17.4M (with $319,500 equalized wealth level) = $20.3M (with $374,200 equalized wealth level) = $ 0 (with $476,500 equalized wealth level) = $ 0 (with $476,500 equalized wealth level) = $ 0 (with $476,500 equalized wealth level) = $ 0 (with $476,500 equalized wealth level) Since , RISD has sent $420 million to the state in recapture payments. Competitive Pay for All District Employees We monitor other district s salary schedules regularly and make necessary modifications to our salary schedules to remain competitive. Based on the State budget deficit and funding reductions for public education over the 2011 biennium, an early recommendation in our budget review process last year involved freezing salaries in an effort to preserve as many jobs as possible. 13

21 The budget included freezing salaries and the original plan for was to do the same. Freezing salaries meant that we had to lower our beginning teacher starting salary and reduce our hire in schedule to avoid a situation where a new teacher would have a salary greater than an existing teacher with the same or greater years of experience (assuming appropriate performance evaluations). The thought was that this strategy best supported the district s mission, values, focus, and goals given the difficult financial circumstances. Lower than projected loss of state funding in the first year of the biennium and higher than projected enrollment provided additional nonrecurring and recurring funds to the district in Based on feedback from our Budget Review Team and discussions with staff and the Board, part of the nonrecurring funds were used to provide a one-time payment to staff equal to 2% of their base pay and some of the additional recurring funds were used to maintain the integrity of our existing teacher salary schedule. We anticipate teacher turnover for to be in line with historic levels and we will hire a significant number of additional teachers to address enrollment growth. We expect thousands of applications for the projected 500 or so open teaching positions for the coming year. Beginning teachers represent a large percentage of available teacher candidates. The Human Resources Department aggressively seeks top teachers, including beginning teachers, by offering open contracts as early in the hiring process as possible. An open contract guarantees the teacher a position within RISD although the school assignment will be determined later. This practice allows the district to retain the most qualified candidates and balance the average experience for staff. We modified our teacher compensation schedule twelve years ago, moving away from a step schedule for RISD veteran teachers. These teachers receive compensation increases as approved by the Board of Trustees. We developed a hiring schedule for teachers joining the district. This compensation structure allows us to provide higher compensation to teachers who have been with the district versus those newly hired. Details of Increased Employee Compensation for the Fiscal Year: In addition to the usual costs for employee benefits, the proposed budget for includes funds to provide the following compensation/benefit increases to staff: Provide a 5% increase in base salary. This increase in effect converts the 2% onetime payment staff received in into a recurring salary increase and provides an additional 3% increase in base salary for a 5% total increase in base salary. The total cost of the 5% increase is $10,093,205 ($4,037,282 to convert the 2% one-time payment and $6,055,923 for the additional 3%). Estimated cost of the 5% increase for teachers and all other staff is as follows: 14

22 T-Type employee salary adjustments (footnote 1) $7,017,066 All Administrative and Support Staff adjustments (footnote 2) $3,076,139 Total $10,093,205 Footnotes: 1. T-Type employees are teachers, counselors, nurses, and librarians. The salary adjustment is the greater of a 5% salary adjustment in base salary or the increase in the Hire-in schedule. Employees must receive an evaluation rating of at least satisfactory to receive the salary increase. The above reflects the cost of raises to T-Type staff funded from the general operating fund. Raises to T-Type staff whose salary is funded from other sources will be paid from the same source used to fund their base pay. 2. This adjustment is the greater of a 5% salary adjustment from base pay or the assigned competency step adjustment based on years experience in their respective positions. The total includes the cost to adjust paygrades found to be low compared to our benchmark group of districts for various positions (custodial, food service, elementary assistant principals, etc.). Employees must receive an evaluation rating of at least meets expectations or satisfactory on their last evaluation to receive the salary increase. The above reflects the cost of raises to staff funded from the general operating fund. Raises to staff whose salary is funded from other sources will be paid from the same source used to fund their base pay. 3. The district will continue to provide a $2,000 critical need stipend to full time secondary math, secondary science, and Languages Other Than English (LOTE) teachers for This stipend will be subject to annual review of critical needs areas, annual review of available funding, and other factors as identified by the district and Board of Trustees. In addition, the Budget includes an increase in District medical premium contribution of an estimated $1,000,000 to help offset premium increases from TRS- Active Care effective September 1, Legislation passed during the 2013 session will also require the District to increase our TRS contribution by 1.5% of salaries subject to the State minimum salary schedule for an estimated cost of $2,250,000, which is included in the proposed budget. 15

23 Property Values The Dallas Central Appraisal District (DCAD) provides an estimated preliminary certification of property values by the end of April each year based on current appraisal information. Property owners have a period of time to protest preliminary values assigned by the DCAD. Revised certified property values are generated in July by the DCAD that reflect changes in preliminary values and property values under protest. DCAD provides monthly updates as to changes in property value, which will include items such as resolution of value protests, litigation settlements, late exemptions, etc. The district s multi-year financial plan projections involve expectations as to the final tax roll that we use to collect tax levy. RISD does not try to project preliminary or certified values due to the volatility. The district does look at the preliminary and certified values as they are published and compare them to prior year trends to help refine our projections of the final tax roll preliminary values received are 6.86% higher than current estimated final values. This represents an 11.8% increase in commercial values, an 11.2% increase in business personal property and a 2% increase in residential values. While this is encouraging, the value will fall due to protests by the time we reach the final assessed value for the year. The district has lost an average of 6.5% from the preliminary values to the final values over a 10 year period, with a high of a 10.3% loss and a low of a 4.6% loss. The district has experienced the following increases (decreases) in total final property values of (3.11)% in , (.02)% in , 2.74% in , 1.2% in , 4.98% in , 2.26% in , (4.35)% in , (3.67)% in , (.64)% in , and.94% in The periods of decline were primarily due to declines in commercial property values in our area and slower growth in residential values as compared to other years. Periods of growth reflect a firming of commercial rents and values combined with continued, but slower growth in residential values. We are projecting a 1.5% increase in , a 1% increase in , and then flat for 2015 through This taxable value estimate has no net impact on the operating budget and identified reductions/enhancements due to the limitations imposed by the school finance system. Currently, if tax revenues go up or down then State aid changes and we receive the same net amount per WADA. 16

24 Multi-Year Budget Plan Methodology & Assumptions The budget development process involves many variables. Estimating these variables poses significant challenges when trying to adopt a balanced budget and maintain a targeted level of fund balance, particularly in a legislative year. Some of the major variables involve: - the number of students who will have enrolled at each campus - the weighting and attendance of students enrolled - the number and type of teachers and courses needed - the tax roll after the effect of changes throughout the year - the percentage of tax revenue collections - changes in federal and state funding - interest rates earned and paid Basic estimates: Enrollment: 39,018 Daily attendance rate of 96% Local tax base: $16,483,867,928 Current year tax collections rate will be 98%. Amounts are allocated to each school on a weighted per pupil basis for miscellaneous expenses, and are differentiated by elementary, junior high, and high school. All expenditures in functions which are out-of-line with comparative peer district amounts will be examined for possible efficiencies. Note: Some differences will be the result of deliberate decisions or program differences between RISD and the peer districts. Competitive salary schedules will be maintained. We began piloting performance pay in Allocations for teachers and school expenditures are based on prior year Texas Public Education Information Management System (PEIMS) data. The Operating Fund budget will be adjusted after July 1 if the actual enrollments deviate from projection data used. State law requires the RISD to officially adopt budgets for three funds: Operating Fund, Child Nutrition Fund and Debt Service Fund. The Operating 17

25 Fund provides for the day-to-day operation of schools and offices. The Child Nutrition Fund provides for salaries and food to operate the school cafeterias. The Debt Service Fund provides for the repayment of principal and interest on bonded debt. Significant Budget Adjustments The conservative approach that the Board and Administration used to address the reductions in funding from the 2011 Legislative session allow us to now be able to use funds from enrollment growth and increases in State funding from the 2013 Legislative session to address two priorities mentioned earlier: 1) providing additional teachers to address enrollment growth and reduce class size and 2) increasing compensation to remain competitive with area districts. Major increases in the proposed budget include: $10,093,205 for raises discussed earlier $7,075,000 for additional teachers, nurses, special education staff, and assistant principals $1,000,000 increase in the District medical plan contribution $2,250,000 increase in the District contribution to TRS Various programs that were either eliminated/reduced or unable to be initiated as a result of 2011 State funding cuts, such as Mentor Teacher stipends, Career and Technology Education stipends, annual stakeholder surveys, secondary summer school, Saturday school, Career and College Readiness program, recruiting, and convocation. While our approach to compensation and budgeting is more conservative than many of our peer districts, we believe it creates the most stability for our staff and represents the most sustainable approach for our community. Alternatives involving immediately increasing the tax burden on our community under the current economic conditions or exhausting our reserves are not recommended at this time. This conservative approach put us in a much stronger financial position than many districts. This is reflected in our high credit rating; balanced sustainable budgeting approach; low tax levy compared to area districts and strong reserves. The remainder of this document contains details as to the following: Proposed budgets by fund and function. Financial Forecasts. Detail of Other Funds. Miscellaneous Statistics and Analysis. District contact information. 18

26 PROPOSED BUDGET The Proposed Budget is presented for the Operating Fund, the Child Nutrition Fund and the Debt Service Fund. 19

27 RICHARDSON INDEPENDENT SCHOOL DISTRICT PROPOSED BUDGET FISCAL YEAR Child Debt Total by Operating Nutrition Service Enrolled Fund Fund Fund Total Student* Estimated Revenues Local Revenue 173,298,927 4,553,709 47,639, ,492,139 5,779 State Revenue 97,680,880 81,431-97,762,311 2,506 Federal Revenue 2,808,315 11,337,960-14,146, Total Revenues 273,788,122 15,973,100 47,639, ,400,725 8,648 Appropriations 11 - Instruction 176,287, ,287,412 4, Library & Media Services 5,031, ,031, Curriculum/Instructional Staff Development 3,136, ,136, Instructional Administration 4,733, ,733, School Leadership 19,794, ,794, Guidance and Counseling 10,248, ,248, Attendance and Social Work 783, , Health Services 3,806, ,806, Student Transportation 4,459, ,459, Child Nutrition - 15,468,831-15,468, Co-Curricular / Extra Curricular Activities 5,751, ,751, General Administration 7,348, ,348, Plant Maintenance & Operations 25,286, ,269-25,780, Security and Monitoring Services 1,483, ,483, Data Processing Services 4,216, ,216, Community Services 213,007 10, , Debt Administration 26,967-46,642,779 46,669,746 1, Juvenile Justice Alternative Education Program 50, , Tax Increment Fund ,900 60, Other Intergovernmental Charges 874, , Total Appropriations 273,531,795 15,973,100 46,703, ,208,574 8,617 *Based on enrollment projection of 39,018 students 20

28 RICHARDSON INDEPENDENT SCHOOL DISTRICT PROPOSED BUDGET - EXPENDITURES BY OBJECT FISCAL YEAR Child Debt Operating Nutrition Service Fund Fund Fund Total Estimated Revenues Local Revenue 173,298,927 4,553,709 47,639, ,492,139 State Revenue 97,680,880 81,431-97,762,311 Federal Revenue 2,808,315 11,337,960-14,146,275 Total Revenues 273,788,122 15,973,100 47,639, ,400,725 Appropriations Payroll 245,582,239 5,539, ,121,242 Contracted Services 18,020, ,916-18,855,424 Materials and Travel 9,902,081 9,499,181 60,900 19,462,162 Debt Service 26,967-46,642,779 46,669,746 Capital Outlay - 100, ,000 Total Appropriations 273,531,795 15,973,100 46,703, ,208,574 21

29 RICHARDSON INDEPENDENT SCHOOL DISTRICT PROPOSED BUDGET - ESTIMATED REVENUES FISCAL YEAR Child Debt Operating Nutrition Service Fund Fund Fund Local Sources: Property Taxes 5711 Property Taxes-Current Year $ 155,533,987 $ - $ 46,743, Property Taxes-Enrichment Tax-Local Collections 6,469, Property Taxes-Prior Years 1,750, , Penalty & Interest 1,200, , Property Taxes-Current Year TIF , Property Taxes-Prior Year TIF - - 5,084 Total Property Taxes 164,953,740-47,604,503 Fees & Tuitions 5739 Fees & Tuitions 4,689, Enterprising Activities 5751 Cafeteria Sales - 4,536, Game Receipts - All Sports 510, ,000 4,536,709 - Miscellaneous Revenue 5742 Investment Income 575,000 17,000 35, Athletic Concession Commission 80, Rentals on Facilities 1,846, Gifts 20, Theft and Vandalism 10, Other Misc Income 615, Total Miscellaneous Income 3,146,000 17,000 35,000 Subtotal Local Non-Taxes 8,345,187 4,553,709 35,000 Total Local Sources 173,298,927 4,553,709 47,639,503 State Sources: 5811/5812 State Aid Including Hold Harmless & Salary Transitional Entitlement 85,723, TRS On Behalf 11,957, Other State Funding - 81,431 - Total State Sources 97,680,880 81,431 - Federal Sources 5929 Miscellaneous Federal 600, School Health and Related Services 2,208, Breakfast Reimbursement - 2,654, Lunch Reimbursement - 8,683, Federal Food Allotment Total Federal Sources 2,808,315 11,337,960 - Total Estimated Revenues $ 273,788,122 $ 15,973,100 $ 47,639,503 22

30 Payroll Prof. & Materials & Other Oper. Debt Capital Costs Cont. Svcs. Supplies Expenses Service Outlay Total Function 12 - Library & Media Services 199 Operating Fund 4,735,114 25, ,829 15, ,031, Child Nutrition Debt Service Total for Function 12 4,735,114 25, ,829 15, ,031,211 Function 13 - Curriculum/Instructional Staff Development 199 Operating Fund 2,552, , , , ,136, Child Nutrition Debt Service Total for Function 13 2,552, , , , ,136,193 Function 21 - Instructional Administration 199 Operating Fund 4,186, , ,941 96, ,733, Child Nutrition Debt Service Total for Function 21 4,186, , ,941 96, ,733,668 Function 23 - School Leadership 199 Operating Fund 19,503, , ,356 33, ,794, Child Nutrition Debt Service Total for Function 23 19,503, , ,356 33, ,794,372 RICHARDSON INDEPENDENT SCHOOL DISTRICT EXPENDITURE BUDGET Function 11 - Instruction 199 Operating Fund $ 171,512,591 $ 885,130 $ 3,238,070 $ 651,621 $ - $ - 176,287, Child Nutrition Debt Service Total for Function ,512, ,130 3,238, , ,287,412 23

31 Payroll Prof. & Materials & Other Oper. Debt Capital Costs Cont. Svcs. Supplies Expenses Service Outlay Total Function 31 - Guidance and Counseling 199 Operating Fund 9,862,139 75, ,111 28, ,248, Child Nutrition Debt Service Total for Function 31 9,862,139 75, ,111 28, ,248,065 Function 32 - Attendance and Social Work 199 Operating Fund 775,734 1,000 5,391 1, , Child Nutrition Debt Service Total for Function ,734 1,000 5,391 1, ,897 Function 33 - Health Services 199 Operating Fund 3,582, ,600 51,741 3, ,806, Child Nutrition Debt Service Total for Function 33 3,582, ,600 51,741 3, ,806,615 Function 34 - Student Transportation 199 Operating Fund 497,552 3,858,112 72,815 30, ,459, Child Nutrition Debt Service Total for Function ,552 3,858,112 72,815 30, ,459,129 Function 35 - Child Nutrition 199 Operating Fund Child Nutrition 5,423, ,948 9,441,681 57, ,000 15,468, Debt Service Total for Function 35 5,423, ,948 9,441,681 57, ,000 15,468, RICHARDSON INDEPENDENT SCHOOL DISTRICT EXPENDITURE BUDGET

32 Payroll Prof. & Materials & Other Oper. Debt Capital Costs Cont. Svcs. Supplies Expenses Service Outlay Total Function 36 - Co-Curricular/Extra Curricular 199 Operating Fund 4,267, , , , ,751, Child Nutrition Debt Service Total for Function 36 4,267, , , , ,751,629 Function 41 - General Administration 199 Operating Fund 5,606, , , , ,348, Child Nutrition Debt Service Total for Function 41 5,606, , , , ,348,897 Function 51 - Plant Maintenance & Operations 199 Operating Fund 14,615,060 8,424,520 1,824, , ,286, Child Nutrition 105, , , Debt Service Total for Function 51 14,720,361 8,813,488 1,824, , ,780,718 Function 52 - Security/Monitoring Services 199 Operating Fund 470,568 1,004,565 7, ,483, Child Nutrition Debt Service Total for Function ,568 1,004,565 7, ,483,333 Function 53 - Data Processing Services 199 Operating Fund 3,255, ,007 55,733 32, ,216, Child Nutrition Debt Service Total for Function 53 3,255, ,007 55,733 32, ,216,434 RICHARDSON INDEPENDENT SCHOOL DISTRICT EXPENDITURE BUDGET 25

33 Payroll Prof. & Materials & Other Oper. Debt Capital Costs Cont. Svcs. Supplies Expenses Service Outlay Total Function 61 - Community Services 199 Operating Fund 159,507 53, , Child Nutrition 10, , Debt Service Total for Function ,507 53, ,007 Function 71 - Debt Administration 199 Operating Fund ,967-26, Child Nutrition Debt Service ,642,779-46,642,779 Total for Function ,669,746-46,669,746 Function 95 - Payments of JJAEP 199 Operating Fund - 50, , Child Nutrition Debt Service Total for Function 95-50, ,000 Function 97 - Tax Increment Fund 199 Operating Fund Child Nutrition Debt Service , ,900 Total for Function , ,900 Function 99 - Other Intergovernmental Charges 199 Operating Fund - 874, , Child Nutrition Debt Service Total for Function , ,517 Grand Total $ 251,121,242 $ 18,855,424 $ 16,355,714 $ 3,106,448 $ 46,669,746 $ 100,000 $ 336,208, Operating Fund 245,582,239 18,020,508 6,914,033 2,988,048 26, ,531, Child Nutrition 5,539, ,916 9,441,681 57, ,000 15,973, Debt Service ,900 46,642,779-46,703, RICHARDSON INDEPENDENT SCHOOL DISTRICT EXPENDITURE BUDGET

34 Richardson ISD Comparison of Budgets for Appropriations 300,000, ,000, ,000, ,000, ,000,000 50,000,000 0 Operating Child Nutrition Debt Service Adopted Budget Adopted Budget Adopted Budget Adopted Budget Adopted Budget Adopted Budget Adopted Budget Adopted Budget Adopted Budget Proposed Budget 27

35 OPERATING FUND The Operating Fund is the fund where most expenditures are recorded for the operation of the schools and central offices. Expenditures paid from this fund include teachers and administrators salaries and benefits, classroom supplies and equipment, educational computing, utilities, routine maintenance of buildings and transportation costs. The maintenance and operations budget is included in the Operating Fund. Also included in the Operating Fund are budgets for tuition based programs and co-curricular activities. 28

36 RICHARDSON INDEPENDENT SCHOOL DISTRICT PROPOSED BUDGET - OPERATING FUND FISCAL YEAR Estimated Revenues Adopted Increases Proposed Percent of Percentage Budget (Decreases) Budget Total Change Local Revenue 173,016,709 $ 282, ,298, % 0.2% State Revenue 71,854,425 25,826,455 97,680, % 35.9% Federal Revenue 2,608, ,000 2,808, % 7.7% Total Revenues 247,479,449 26,308, ,788, % 10.6% Appropriations 11 - Instruction 158,952,762 17,334, ,287, % 10.9% 12 - Library & Media Services 4,737, ,847 5,031, % 6.2% 13 - Curriculum/Instructional Staff Development 2,777, ,494 3,136, % 12.9% 21 - Instructional Administration 4,379, ,901 4,733, % 8.1% 23 - School Leadership 18,301,911 1,492,461 19,794, % 8.2% 31 - Guidance and Counseling 9,198,195 1,049,870 10,248, % 11.4% 32 - Attendance and Social Work 779,703 4, , % 0.5% 33 - Health Services 3,133, ,016 3,806, % 21.5% 34 - Student Transportation 3,327,983 1,131,146 4,459, % 34.0% 36 - Co-Curricular/Extra Curricular Activities 5,587, ,302 5,751, % 2.9% 41 - General Administration 6,934, ,454 7,348, % 6.0% 51 - Plant Maintenance & Operations 23,034,452 2,251,997 25,286, % 9.8% 52 - Security and Monitoring Services 1,435,411 47,922 1,483, % 3.3% 53 - Data Processing Services 3,979, ,944 4,216, % 6.0% 61 - Community Services 183,153 29, , % 16.3% 71 - Debt Administration 26, , % 0.0% 95 - Payments to JJAEP 50,000-50, % 0.0% 99 - Other Intergovernmental Charges 857,298 17, , % 2.0% Total Appropriations 247,677,521 25,854, ,531, % 10.4% 29

37 RICHARDSON INDEPENDENT SCHOOL DISTRICT OPERATING FUND BUDGET - ESTIMATED REVENUES FISCAL YEAR Adopted Increases Proposed Percent of Percentage Budget (Decreases) Budget Total Change Local Sources: Property Taxes 5711 Property Taxes-Current Year $ 152,837,404 $ 2,696,583 $ 155,533, % 1.8% 5711 Property Taxes-Enrichment Tax-Local Collections 9,104,788 (2,635,035) 6,469, % (28.9%) 5712 Property Taxes-Prior Years 1,750,000-1,750, % 0.0% 5719 Penalty & Interest 1,300,000 (100,000) 1,200, % (7.7%) Total Property Taxes 164,992,192 (38,452) 164,953, % (0.0%) Fees & Tuitions 5739 Fees & Tuition 4,168, ,670 4,689, % 12.5% Enterprising Activities 5752 Game Receipts-All Sports 510, , % 0.0% Miscellaneous Revenues 5742 Investment Income 775,000 (200,000) 575, % (25.8%) 5759 Athletic Concession Commission 80,000-80, % 0.0% 5743 Rentals on Facilities 1,846,000-1,846, % 0.0% 5744 Gifts 20,000-20, % 0.0% 5745 Theft and Vandalism 10,000-10, % 0.0% 5749 Other Misc Income 615, , % 0.0% Total Other Local Revenues 8,024, ,670 8,345, % 4.0% Total Local Sources 173,016, , ,298, % 0.2% State Sources: 5811/5812 State Aid Including Hold Harmless & Salary Transitional Entitlement 60,897,257 24,826,455 85,723, % 40.8% 5831 TRS On Behalf 10,957,168 1,000,000 11,957, % 9.1% Total State Sources 71,854,425 25,826,455 97,680, % 35.9% Federal Sources: 5929 Miscellaneous Federal 450, , , % 33.3% 5931 School Health and Related Services 2,158,315 50,000 2,208, % 2.3% Total Federal Sources 2,608, ,000 2,808, % 7.7% Total Operating Fund $ 247,479,449 $ 26,308,673 $ 273,788, % 10.6% 30

38 Richardson ISD Instruction 80.80% Comparison of Revenues and Expenditures Operating Fund Revenues by Source Operating Fund Expenditures by Function State Sources 35.70% Federal Sources 1.00% Plant Operations & Technology 11.30% General Administration 3.10% Instructional Support 4.80% Other Local Sources 3.10% Local Property Taxes 60.20% 31