THREE-YEAR COMPARISON ALL FUNDS FY TENTATIVE BUDGET

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1 THREE-YEAR COMPARISON ALL FUNDS FY TENTATIVE BUDGET INCREASE FY FY FY (DECREASE) ACTUAL PROJECTED TENTATIVE OVER RESULTS RESULTS BUDGET FY General Fund $ 2,638,024,332 $ 2,721,704,665 $ 2,764,229,131 $ 42,524,466 Debt Service Funds 377,022, ,025, ,136,614 (41,889,311) Capital Outlay Funds 1,313,499, ,951, ,357,149 (202,593,996) Special Revenue Funds 646,967, ,326, ,252,172 (270,074,408) Proprietary Fund 165,821, ,813, ,904,164 18,090,880 Fiduciary Fund 27,962,064 26,840,605 25,947,057 (893,548) Sub-Totals $ 5,169,297,266 $ 5,038,662,204 $ 4,583,826,287 $ (454,835,917) Less: Proprietary Fund* (165,821,554) (332,813,284) (350,904,164) (18,090,880) Less: Interfund Transfers (534,579,863) (367,865,080) (330,618,146) 37,246,934 TOTALS $ 4,468,895,849 $ 4,337,983,840 $ 3,902,303,977 $ (435,679,863) *The Proprietary Fund is used to record health care self-insurance revenues and expenditures. The Proprietary Fund is not included in the totals to avoid duplication of expenditures. 3-1

2 SUMMARY OF REVENUES & APPROPRIATIONS - ALL FUNDS FY TENTATIVE BUDGET DEBT CAPITAL SPECIAL TOTAL GENERAL SERVICE OUTLAY REVENUE PROPRIETARY FIDUCIARY ALL FUND FUNDS FUNDS FUNDS FUND FUND FUNDS REVENUES Federal $ 17,460,454 $ - $ - $ 385,319,663 $ - $ - $ 402,780,117 State 1,110,291,393 13,794,280 15,196,718 2,063, ,141,345,391 Local: Property Taxes 1,183,759,836 46,023, ,998, ,555,782,204 Other 105,844,231 1,632,978 6,722,000 36,323, ,000,000 3,234, ,756,900 Total Revenues $ 2,417,355,914 $ 61,450,644 $ 347,917,700 $ 423,705,997 $ 358,000,000 $ 3,234,357 $ 3,611,664, TRANSFERS FROM OTHER FUNDS $ 138,100,000 $ 192,518,146 $ - $ - $ - $ - $ 330,618,146 NON-REVENUE SOURCES , ,000 NET ASSETS (7,095,836) (7,095,836) FUND BALANCE FROM PRIOR YEAR 208,773,217 96,167, ,049,449 8,546,175-22,712, ,249,365 TOTAL REVENUES AND OTHER SOURCES $ 2,764,229,131 $ 350,136,614 $ 660,357,149 $ 432,252,172 $ 350,904,164 $ 25,947,057 $ 4,583,826,287 Less: Transfers (330,618,146) Less: Proprietary Fund (350,904,164) TOTAL ALL FUNDS $ 3,902,303,977 APPROPRIATIONS Instructional $ 1,802,299,191 $ - $ - $ 177,121,854 $ - $ - $ 1,979,421,045 Instructional Support 170,261, ,625, ,887,465 Other 702,058, ,954, ,739, ,909, ,512,588 4,128,000 1,794,302,447 Total Appropriations $ 2,674,619,651 $ 266,954,146 $ 310,739,003 $ 421,657,569 $ 351,512,588 $ 4,128,000 $ 4,029,610,957 TRANSFERS TO OTHER FUNDS $ - $ - $ 330,618,146 $ - $ - $ - $ 330,618,146 FUND BALANCE - End of Year Unassigned Fund Balance $ 89,609,480 $ - $ - $ 10,594,603 $ - $ - $ 100,204,083 Assigned Fund Balance ,819,057 21,819,057 Non-Spendable Fund Balance - Restricted Fund Balance 83,182,468 19,000, ,182,468 Committed Fund Balance - Ending Net Assets (608,424) (608,424) Total Fund Balance $ 89,609,480 $ 83,182,468 $ 19,000,000 $ 10,594,603 $ (608,424) $ 21,819,057 $ 223,597,184 TOTAL APPROPRIATIONS, TRANSFERS AND FUND BALANCE $ 2,764,229,131 $ 350,136,614 $ 660,357,149 $ 432,252,172 $ 350,904,164 $ 25,947,057 $ 4,583,826,287 Less: Transfers (330,618,146) Less: Proprietary Fund (350,904,164) TOTAL ALL FUNDS $ 3,902,303,977

3 BUDGET OVERVIEW M-DCPS FY Tentative Budget stands at just over $3.9 billion, a remarkable $1.6 billion drop since Over that time, property values have plummeted, the global economy has crashed and the employment market dried up. In the face of such a drastic decline in revenue, the District has used four guiding principles to serve as a roadmap in navigating a way through the inevitable contraction. These guiding principles have been: 1. Improve student achievement 2. Protect the classroom 3. Protect an effective workforce 4. Maintain the fiscal viability of the District In that light, the FY budget is highlighted by the following: Protects teaching positions no layoff of full-time teachers for economic reasons. Stabilizes the credit rating outlook. No tax increase or increase in total millage. Includes funds to expand innovative programs and school choice. These highlights were accomplished despite a $210 million revenue decline and several large cost increases/changes including: Charter Schools: Increase in projected charter school enrollment leads to significantly increased payments; though cost increase for the District reflects net of reduced costs (e.g., classroom teachers). Health Insurance: Increase in the fiscal year cost of Health Insurance due to cost increase for calendar year 2011 that results in a cost increase for the back load. The performance of the District s very young self insurance program is promising, but we will continue to monitor results in the early part of the fiscal year. Categorical Flexibility: In FY , the District was able to use some of the funds allocated under the American Recovery and Reinvestment Act of 2009 (ARRA), to transfer Reading Coaches allocated in the State Comprehensive Reading Program to ARRA grants and balance the general fund with the funds available as a result of the flexibility language in Florida State Statute (6)(b). The ARRA funds are no longer available in FY and as a result, the Reading Coaches must be paid from General Fund dollars resulting in a $10,918,221 costs increase. Florida Retirement System Cost Shift: In FY , the Florida legislature adopted and Governor Scott signed SB 2100, which required that most state employees contribute an average of 3% of their salaries toward their retirement. This results in a savings in retirement costs for Miami-Dade County Public Schools in excess of $93.2 million in the General Fund. To deal with the loss of revenue and the cost increases, significant reductions were required to achieve a balanced budget. These reductions include: Reorganize the Capital Construction departments and re-direct limited resources to support the maintenance of existing schools and infrastructure for an annualized savings of $22 million. Combine school funding for assistant principals, counselors, CAP advisor, clerical, media specialist and custodial positions into one funding allocation and reduce by 3%. 3-3

4 Consolidate five (5) Alternative Education centers and service students from these centers at other existing programs saving $6 million. Reduce the transportation budget due to cost savings through routing efficiencies saving $1.5 million. All non-school locations were tasked with streamlining and cutting all non-essential functions. This action reduced central administration by $7 million in addition to the nearly $50 million reduced over the last two and one half years. Eliminate the Personnel/Program Protection Plan established in FY in anticipation of the loss of ARRA Funds which prevents further cuts in the amount of $29.45 million. Despite these difficult cuts, the quality of education we provide our students will never be compromised. Miami-Dade County Public Schools is the first district in the State of Florida to offer teachers a Pay for Performance Plan which will be funded through the Race to the Top Grant. For FY , the District is offering a full slate of Millennium Access Programs (MAPs) that aim at increasing student achievement in all corners of our community. Additionally, the District is expanding the new schools models offered to our students as part of expanding Choice Programs for all students. These programs and initiatives include: Links to Learning which provides students with custom learning paths in district-licensed software applications for remediation and enrichment purposes. Virtual School Programs which include Miami-Dade Virtual School and Miami-Dade Online Academy which offer full and part time virtual instruction for student in grades K- 12. Educators in Residency will expand in FY and help train the District s next generation of leaders by providing opportunities for select staff to participate in Cabinetlevel decision making and experience multiple areas within the organization. Cultural Literacy Initiatives which offer students the opportunity to extend their learning beyond the classroom, and explore areas of interest and showcase their talents and abilities. Centennial Ocean Academy of Science and Technology (C.O.A.S.T.) a middle school magnet academy offered only at Centennial Middle School. Criminal Justice and Forensic Science Academy offered at Cutler Ridge Middle School. Robotics Cambridge Academy offered at Howard D. McMillan Middle School. Jose Marti Mathematics & Science Technology 6-12 Academy. Arts are Special: a year-round cultural arts enrichment experience for students with disabilities Fit2Learn/Fit4Life: a partnership with community-based organizations and agencies that combats and prevents childhood obesity 3-4

5 UNWEIGHTED FTE TRENDS 370, , , , , , , , , ,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 M DCPS TOTAL CHARTER ONLY UNWEIGHTED FTE TRENDS: An upward trend that began in school year FY for unweighted FTE is projected to continue. For school year FY , it is anticipated that FTE will increase by 1,002 students. This upward trend in overall enrollment which began last year is primarily attributed to the movement of students from private schools due to the current economic environment families are facing. As a result of the devastating earthquake in Haiti in 2010 it is estimated that Miami-Dade has received a substantial number of displaced children from the island. Although FTE appears to be moving gradually upward, the potential always exists in Miami-Dade for an unanticipated population increase as political and economic instability impacts South America and the Caribbean Basin. The chart also shows the upward trend in charter school enrollment. Even as the number of students attending public schools in Miami-Dade has dropped over the past decade, charter school enrollment has more than tripled. In FY an estimated 40,656 students are expected to attend charter schools in Miami-Dade. This increase has serious effects on the District s ability to support its overhead costs. It is important to understand that over the last decade the overall trend in enrollment has been on the decline and is expected to remain relatively flat in the years to come. This raises concerns on the impact on the maintenance of the district s initiatives, the health of the operating budget as well as our construction program. Furthermore, as opportunities in charter schools and non-public educational alternatives continue to grow, the district will need to remain competitive by offering students and parents more choices. 3-5

6 PROPERTY TAX MILLAGE HISTORY 12.0 Total Millage No Increase in Property Tax Computed Pursuant to Law is Recommended. Florida Statutes require that an increase in property tax yield (FY vs. FY ) be formally advertised. This will NOT be necessary for this upcoming year s tentative budget recommendation since the anticipated proceeds will be less than last year. The overall millage rate decreases due to a decrease in Debt Service. A shift of.15 mills from Operating to Discretionary Capital is being recommended. However, It should be noted that the proposed state-required millage rate identified below could either increase or decrease from the following estimate based upon whether statewide tax rolls certified by the Department of Revenue in mid-july are higher or lower than those projected in the Appropriations Act passed by the Florida Legislature. The total proposed millage levy consists of the following: STATE ESTABLISHED AND REQUIRED: FY Actual Levy FY Recommended Levy* Required Local Effort (RLE) LOCALLY LEVIED: Discretionary Operating Additional Discretionary Operating (.25) Discretionary Capital Sub-Total Locally Levied Sub-Total Non Voted-Millage** Debt Service (Voted) Total Millage Levy *Subject to adjustment by the Commissioner of Education, pursuant to Florida Law. 3-6

7 When using the average assessed value, the school property tax for FY in Miami- Dade County would decrease by approximately $(34.29), which consists of a $(13.48) decrease due to lower assessed values and a $(20.81) decrease due to a decrease in millage rate. The school property tax for FY for a typical homeowner in Miami-Dade County would increase only $.83 which consists of a $22.23 increase due to a higher assessed value and a $(21.40) decrease due to a decrease in the millage rate. This calculation assumes the homeowner resides in the same home, townhome or condominium as the prior year and has not improved the property (e.g. additional garage or room). In this example, the homeowner is limited to an increase in the assessed value based on the increase in the Consumer Price Index (CPI) or 3% whichever is lower. The CPI increase was 1.5%; therefore, the typical homeowner is limited to a 1.5% increase in assessed value for Average Assessment During FY Average Assessment During FY ** Typical Assessment During FY *** Assessed Value * $ 179,626 $ 177,992 $ 182,320 Less: Homestead Exemption (25,000 ) (25,000 ) (25,000 ) Taxable Value $ 154,626 $ 152,992 $ 157,320 Total Levy Amount of School Taxes $ 1, $1, $1, * Includes single family homes, townhomes and condominiums. ** Estimated by Property Appraiser s Office *** Maximum of 1.5% increase to homeowner of same property without improvements. PROTECT THE CLASSROOM & MAINTAIN FISCAL VIABILITY: During the last decade, the District has engaged in an aggressive capital construction and facilities program to insure that there are adequate classrooms to meet Class Size mandates. This effort was accomplished at the expense of existing facilities needs, and by incurring substantial local debt from the leveraging of the Local Optional Millage Levy (LOML). The District more than doubled its debt by issuing over $1.8 billion in COPs since 2006 to augment the less than 6% of the total state allocation for capital class size reduction funding despite accounting for over 13% of students. The added pressures of a significant real estate market decline, a legislative millage reduction, and the shift of additional operating costs to capital (i.e. property insurance), have resulted in increased capital budget constraints and an increased percentage of the District s available capital funding to be pledged for the repayment of debt. The Five Year Capital Plan in Appendix B reflects limited funding for future projects and an inability in future years to fully absorb eligible expenditures in the general fund permitted by statute. Highlights include the following: 3-7

8 A successful restructuring of COPs debt in FY provided much needed cash relief to the capital program, benefiting FY with an accumulated savings of $77.6 million, and FY with a future $60 million benefit. Due to debt capacity constraints, financing in the plan is limited to $0.39 million in State Board of Education (SBE) Bonds. The District will continue to closely monitor its diminished debt capacity. Although the three fourths statutory limitation on servicing the COP debt service with LOML is waived, the District is sensitive to the market-driven limitation of half of the levy (two times coverage) which is recommended for Florida COP issuers and is a rating agency standard. Indicative of declining revenue and diminished debt capacity, projected FY Beginning Fund balance of $ million has reached its lowest levels since the mid 1990s. Although significant cuts in capital funded positions and accounts were made in FY to balance the capital budget, additional cuts and surplused positions are anticipated as projects are completed and capital project balances continue to decline. To sustain the transfers to the General Fund in FY , the capital budget was built with the assumption that the District will avail itself of 0.20 of the 0.25 mills flexibility permitted by recent legislation which allows the transfer of the 0.25 millage reduction back to capital. Although this assumption is carried out for the full five years of the plan, the capital program is unable to absorb over $32.5 million of allowable maintenance costs because of diminished available capital revenue. For FY , PECO new construction and PECO maintenance was not funded by the state. For fiscal years through , state construction funding estimates are $120.9 million from Public Education Capital Outlay (PECO) and Capital Outlay & Debt Service (CO&DS). The District received less than 6% or $ million of the total state s $2.5 billion capital allocation for Class Size Reduction although it houses over 13% of the state s students. The state legislature has not appropriated any capital funding for class size reduction since FY It is also not anticipated that any further capital funding will be appropriated for this purpose. Given the bleak revenue climate, the debt burden, the pressure of meeting class size at the classroom level, and the inability of the District to sustain and fully capitalize on the potential transfers to the General Fund for all allowable expenditures, the District needs to engage the community and collaboratively develop a sustainable and recurring revenue source and financing options in order to fund the capital needs of the District. The citizen-based School Site Planning and Construction Committee will continue to meet to address the educational facilities planning and construction needs of the District s Five-Year Work Program. Critical to this process will be the need to continue to modernize existing schools and replace aging schools based on the District s Educational Plant survey and a comprehensive needs assessment of the District s existing school campuses. 3-8

9 LONG-TERM OUTLOOK AND POLICIES: Each year, the School Board s major legislative priority has been to obtain sufficient financial resources. Typically, the outlook regarding the state budget for public education is pessimistic. Hence, the current economic downturn and related sales and property tax revenue declines have made the budget picture far more serious. This continues to hold true as discussions surrounding several critical concerns for education in Florida heat up. The areas of most concern are: Full and continuing implementation of the constitutional class size amendment. Replacing FEFP funding that will end with the sunset of the ARRA legislation in early FY Continuing erosion of Miami-Dade and other counties property tax base with a negative effect on related revenues that support education. Continuing increase in the cost of the district s self insured medical program in spite of cost saving measures. Coping with an expected increase in the district s share of Florida Retirement System expense for FY Continuing loss of student FTE and related revenue to Charter Schools. Maintenance costs currently being transferred to capital funds, as capital funds become tight over the next few years. Adjustment to a drop in beginning fund balance for FY creating a build in deficit in funding for FY Unless the State and the District find ways to curtail the revenue losses, many important programs and services that do not qualify to meet class size will be at risk. We as a District must continue to find innovative and creative ways to reduce overhead as we continue to offer children the educational services they deserve. 3-9

MAJOR SOURCES OF REVENUE GENERAL FUND

MAJOR SOURCES OF REVENUE GENERAL FUND The District derives its operating income from a variety of federal, state and local sources. The major categories of these income sources for the general fund are