FINANCIAL STATUS OF THE TRI-VALLEY SCHOOL DISTRICT S GENERAL FUND

Transcription

1 FINANCIAL STATUS OF THE TRI-VALLEY SCHOOL DISTRICT S GENERAL FUND

2 BACKGROUND OF SCHOOL FUNDING- 4 MAIN FUNDS IN A SCHOOL 'Main' School Funds: 4). Special Education 3). Pension 2). Capital Outlay 1). General Fund

3 SPECIAL EDUCATION Revenues: Local Property Taxes and federal allocations 1.40/ $1,000 Expenditures: Special Education staff salaries, benefits, supplies, travel, contracted or related services (speech, O.T., P.T.), and outof-district placements.

4 PENSION FUND Revenue: Local Property Taxes.30 / $1,000 Expenditures: Mandatory district match (6% total salaries) of South Dakota Retirement System (SDRS) for all employees.

5 CAPITAL OUTLAY FUND Revenue: Local Property Taxes $3.00/$1, Expenditures: Equipment, vehicles, buses, computers, printers, buildings, land, major remodeling/renovation and construction, textbooks, instructional software.

6 GENERAL FUND MILL LEVIES Ag: 2.327/$1,000 Owner-Occupied: 4.038/$1,000 Other: 8.647/$1,000 General operating expenses: salaries and benefits, health insurance, workers compensation. Other operational expenses: fuel, utilities, building maintenance and repairs, classroom supplies, workbooks, busing/transportation, property insurance, custodial, and extra-curricular activities.

7 GENERAL FUND REVENUE Per student allocation or PSA = $4, (one time) = $4,521 per student Our budgeted projected enrollment was 825 students. 825 x 4,521 = $3,729,825 (local need) or what it takes to run the school Local Need (3,729,825) Local Effort (1,637,486) = State Aid Local Effort- Get twice a year, November and May State Aid- Monthly Some schools get a small school adjustment or if they are in a sparse area. (We do not) By law, the per-student allocation is adjusted annually by the same rate as inflation, as measured by the Consumer Price Index, or 3 percent, whichever is less.

8 GENERAL FUND BUDGET Our general fund expenditure budget for this year is $4,738,110. Local Need (PSA x amount of students) = $3,705,075 Other revenue - Bank Franchise Tax, interest bearing accounts, gross receipts, fines etc. Federal Sources (title) Residual Equity Income- projected 320, ,000

9 CAPITAL OUTLAY TRANSPORTATION FLEXIBILITY Printer Friendly Definition and use of capital outlay fund--levy required. The capital outlay fund of the school district is a fund prov ided by law to meet expenditures which result in the acquisition or lease of or additions to real property, plant, or equipment. Such an expenditure shall be for land, existing f acilities, improvement of grounds, construction of facilities, additions to facilities, remodeling of facilities, or for the purchase or lease of equipment. It may also be used for installment or lease-purchase payments for the purchase of real property, plant, or equipment, which have a contracted terminal date not exceeding twenty years from the dat e of the installment contract or lease-purchase and for the payment of the principal of and interest on capital outlay certificates issued pursuant to Any purchase of one thousand dollars or less may be paid out of the general fund. The total accumulated unpaid principal bala nces of such installment contracts and leasepurchase and the outstanding principal amounts of such capital outlay certificates may not exceed three percent of the taxabl e valuation. The school district shall provide a sufficient levy each year under the provisions of to meet the annual installment contract, lease-purchase, and capital outlay certificate payments, including interest. A school district which contracts its student transportation may expend from the capital outlay fund an amount not to exceed fifteen percent of the contract amount. In addition, a school district which reimburses for mileage instead of providing transportation pursuant to , may use the capital outlay fund to pay for fifteen percent of its mileage reimbursement costs. The capital outlay fund may be used to purchase textbooks and instructional software. The capital outlay fund may be used to purchase warranties on capital assets if the warranties do not include supplies. During the period of time beginning on July 1, 2009, and ending on June 30, 2014, any school district may make payments from its capital outlay fund for the purchase of property insurance and casualty insurance, for payments for energy costs and the cost of utilities, and for motor fuel or for any portion of a contract providing transportation to students or for any mileage reimbursements. However, the total amount that a school district expends from its capital outlay fund for these expenses may not exceed forty-five percent of the total tax revenues deposited in that fund during the current school fiscal year, and for any school district with a current tax levy fo r the capital outlay fund that is greater than its tax levy for the capital outlay fund in school fiscal year 2008, the total amount expended from the capital outlay fund for these expe nses may not exceed forty-five percent of the total tax revenues that would have been deposited in that fund during the current school fiscal year if the tax levy for the capital ou tlay fund had not been increased since 2008.

10 TRANSPORTATION This means around $400,000 out of capital outlay that would otherwise have had to come out of the general fund. The capital outlay fund in now unable to sustain this additional cost. 12 leaks in our roof Security of the school (door locks) Heating Intercoms SB 194 extends date to June 30 th, 2018 from June 30 th, 2014 (last year we transported an average of 713 students per day)

11 JUNE 2012 RESERVES (BEGINNING OF THIS SCHOOL YEAR) General Fund: 1,867, Capital Outlay: 576, Special Education: -61,580 Pension $240,957.66

12 CAPITAL OUTLAY RESERVES June ,398, June , Projected June ,000 balance for next year Difference 898,692.39

13 GENERAL FUND RESERVES General June ,654, June ,867, Projected June 2013 (Approximately) 1,500, Difference $1,154,959.00

14 WHY DO WE NEED TO HAVE MONEY IN GENERAL FUND RESERVES? Our reserves act as both the savings and checking accounts for the school district. We get our local taxes twice a year, November and May. We need to have enough cash flow to carry us through in between these times. We also can (and at times have to) borrow from the general fund: 500,000 in Capital Outlay (projection) 600,000 bond debt before we get our tax payment (this year, -188,770.31) Must be borrowed until we receive our taxes Special Education Extraordinary Cost Must be borrowed

15 SPECIAL EDUCATION 24:05:33.01:05. Extraordinary costs. Extraordinary costs include the cost of providing a free appropriate public education to students with disabilities that is not covered by a district's revenues from the maximum tax levy as defined in SDCL $64,268 for the first half of Fy2013. (Denied and appealed) As of 2/21/13-96, Year total is guesstimate of 227, Money will need to be taken from the general fund Legal Obligation to provide a free and appropriate education Students with severe disabilities, students with new category of disabling conditions once re-evaluation takes place, students being diagnosed with a disability, students moving into the district with a disability

16 THE SPECIAL EDUCATION FACTOR 24:05:33.01:05. Extraordinary costs. Extraordinary costs include the cost of providing a free appropriate public education to students with disabilities that is not covered by a district's revenues from the maximum tax levy as defined in SDCL $64,268 for the first half of Fy2013. (Denied and appealed) As of 2/21/13-96, Year total is guesstimate of 227, Average instructional cost for students with a disability: State Average: $5, Tri-Valley Average: $5,055.39

17 HOW MUCH MONEY DO WE NEED IN RESERVES? How much: 25% fund balance is the general rule 25% fund balance is 1,184, We get local taxes Nov-May but state aid monthly 1.18 million- state aid payments of approximately 170,000 per month = roughly 1.01 million (and then factoring in other revenue we receive) 800,000 (needed for cash flow)

18 REVIEW We are deficit spending a projected $340, ,000 (transportation out of capital outlay) and planning/hoping for a 227,586 reimbursement in sped. General Fund : 740,000 deficit + 227,586 if extraordinary costs don t come through = - 967, ,000 or - 967,586 GF RESERVES: 1.18 million (25%) 1.0 million (actual # we would like to be at) 800,000 minimum (needed for cash flow)

19 DEFICIT SPENDING???? HOW DID WE GET HERE? Main Reasons why we are deficit spending in the general fund: Less Money per student (state reduction in the Per Student Allocation) Less Students than before (PSA per student allocation) Bank Franchise Tax Interest Bearing Accounts This in addition to rising and/or fixed costs. (No account for inflation, Fuel etc.) Special Education

20 PER STUDENT ALLOCATION # OF STUDENTS X PSA = LOCAL NEED SD PSA Our Enrollment 2006 $ $4,642/$4, $4, $4, ** $4, $4, (our enrollment) x 4,491 PSA = $3,754,476 If funded at 2009 levels: 836 x 4,805 = $4,016,980 = + $262,504 If our enrollment was 2006 level with current funding= 879 x 4,491 = +$242,514

21 GENERAL FUND REVENUE REVIEW Our general fund budget for this year is $4,738,110. Local Need (PSA x amount of students) = $3,705,075 Other revenue - Bank Franchise Tax, interest bearing accounts, etc. = Reserves, known as residual income

22 BANK FRANCHISE TAX Banks and other financial institutions are taxed yearly based on their net income. The bank franchise tax is collected through the state and doled out by county governments. Year Actual Revenue , , , , , , (received 2/21/13; -36, less than budget) a difference of -425,583.08

23 2/28/13- BUREAU OF FINANCE AND MANAGEMENT Here s what the Bureau of Finance and Management is predicting, as of this morning, fresh as today s donuts, for the remainder of fiscal 2013, which ends June 30, and for fiscal 2014, which starts July 1, 2013, for the major categories of state tax revenue: Bank franchise tax After topping $30 million in the five previous years, FY10 saw a slump to just over $20 million, followed by a giant drop in FY11 to $4.7 million. The FY12 total was $29.7 million. For FY13 the forecast is a drop back to $22.9 million, while FY14 is pegged at $23.2 million. This isn t a good trend.

24 ONE MORE Interest (Interest Bearing Accounts) FY 2008 $79, FY 2013 $1,917 (as of 2/13)

25 REVENUE In 2008, we received $821, more than we will take in this year, due to Per Student Allocation, Bank Franchise Tax, and interest on investments. REVENUE HAS DECREASED WHILE COSTS HAVE BEEN FIXED OR HAVE INCREASED DUE TO INFLATION

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27 THE PERCEPTION THAT TRI-VALLEY IS EXTREMELY FINANCIALLY SOUND When you factor for inflation, the comparison that we are working with next year in comparison to is $1,317,086.47

28 WHAT ABOUT FUTURE FUNDING? On 12/4/12, our governor proposed an increase for the school year of 3% or a PSA of $4,625 per student. 4,625 4,521 (what we got this year) = $104 per student or 2.3% (104 x 830 students would = an additional $86,320) One time money we got last year $ 56,434 (April 12) + $25,000 for one time PSA this school year. This money has been relied upon and spent in our budget. $56, ,000 = $81,434 Governor s 3%= additional 29,116 or additional dollars for our school district. 29,116 is 3%-4% of what we are currently deficit spending. 1% one time of = $37,350

29 WHAT HAS BEEN DONE? Instruction Supplies Instruction/Travel Technology Travel/Supplies Board/Administration/Business Supplies $3,300 Travel/Bussing EBB Yearbook Educational Institutions $26,150 $1,800 $9,000 $18,000 $5,000 $27,500 Strive High, Carroll Institute, ESA II Administration Salary/Benefits $28,790 Instructional Salary Benefits $57,000 EBB After School Program $6,240 Overtime $2,500 Co-Curricular Reduction $15,000 (one year) Department Heads Junior High Golf Program Middle School Secretary $22,896 Field Trips? Music Teacher $62,378 (2 retired, replaced 1) Junior High After School Tutoring $336 Total $285,890

30 WHAT ELSE COULD BE CUT? EXPENDITURE RANKINGS School District Enrollment ADM 152 school districts in South Dakota FY12 Total Educational Expenditures* 114 out of 152 schools spend more per student than we do. (37 spend less than us) Means we already spend less per student than 75% of schools in South Dakota Cost Per ADM Tri-Valley $5,912,707 $7, Ranking

31 THE BIG QUESTION: WHERE DO WE GO FROM HERE? 11/5/12- IM 15 COLTON, SD - Tuesday, South Dakota voters will decide if they want to permanently raise the state's sales tax. A yes vote to Initiated Measure 15 would add a penny to every dollar you spend. The money would go to K through 12 public education and Medicaid. Tri Valley School district, just northwest of Sioux Falls, is one of many districts hoping for the passage of Initiated Measure 15. The superintendent there says his district will face some tough decisions if it doesn't pass. But opponents to the ballot issue say the penny tax increase creates winners and losers -- and the losers are South Dakotans. School districts could receive an estimated $700 per student if Initiated Measure 15 is approved by South Dakota voters. And at Tri Valley School District that totals more than half a million dollars. "Initiated Measure 15 wouldn't enhance any programs; it would just sustain the programs we currently have," Superintendent Mike Lodnel said. The district faces a $271,000 deficit and they've cut the preschool and after -school programs. If Initiated Measure 15 doesn't pass, Lodnel says it forces the district down to two options. "We will have to opt out of local property taxes or make significant and drastic cuts and reductions to programs and people so it is very important for our school district," Lodnel said. Keloland.com

32 THE BIG QUESTION FOR OUR SCHOOL BOARD Two Solutions: Opt out of the district tax limitation Cut programs and staff

33 WHY DISCUSS NOW IF WE HAVE ONE YEAR? $0 TRANSPORTATION School Year. Beginning Fund Balance General Fund deficit spending Capital Outlay transportation expenditure Ending Fund Balance , , , , , , ,000 SDCL if a teacher's contract is not renewed due to a reduction in staff, only written notice is required, which shall be provided by the school board to the teacher by April fifteenth. An opt out should not be done until January 1 st or after BUT must be done on or before July 15 of the year prior to the year the taxes are payable.

34 WHY DISCUSS NOW IF WE HAVE ONE YEAR? $200,000 TRANSPORTATION (BEST CASE SCENARIO). School Year Beginning Fund Balance General Fund deficit spending Capital Outlay transportation expenditure Ending Fund Balance , , , , , , , , ,000 SDCL if a teacher's contract is not renewed due to a reduction in staff, only written notice is required, which shall be provided by the school board to the teacher by April fifteenth. An opt out should not be done until January 1 st or after BUT must be done on or before July 15 of the year prior to the year the taxes are payable.

35 WHAT IF WE DON T OPT-OUT OR AN OPT-OUT IS UNSUCCESSFUL? 80-85% of a school s general fund expenditures are staff costs. Bottom line, we will have no choice other than to reduce both programs and staff. How Drastic? 740, ,586 (sped) Guesstimate of 30,000 employees (make more- then less, make less-then more) Health insurance and FICA approximately 40,000 district general fund cost approximately 18.5 employees (best) 24 employees (worst)

36 OPT-OUT INFORMATION Opting out to impose an excess levy Requires a 2/3 vote of the governing body on or before July 15 th. Decision to opt-out must be published within 10 days of the decision. That decision may be referred upon a petition signed by at least 5% of the registered voters in the taxing district and filed with the governing body within twenty days of the publication. (Election must be held on or before October 1 st ) Must specify in the resolution the year or number of years the excess tax levy will be applied. There are also certain requirements concerning the publication of the opt-out resolution. An opt out should not be done until January 1 st or after BUT must be done on or before July 15 of the year prior to the year the taxes are payable.

37 REDUCTIONS VS. OPT-OUT Discussion Points In an opt-out, you can request up to that amount but do not have to take the whole amount. Example: 740,000 but only request 540,000

38 HOW MUCH ADDITIONAL WOULD I PAY?? Agriculture Owner-Occupied Other 540,000 $73.20 Or $6.10 per month 600,000 $81.40 $ $10.59 per month $ $ $22.68 per month $6.78 per month 650,000 $88.10 $11.76 per month $ $25.19 per month $ $7.34 per month 750,000 $ $12.74 per month $ $27.29 per month $ $8.47 per month per month $31.49 per month 800,000 $ $ $ ,000 $ $200 $ Per 100,000 assessed evaluation

39 WHERE WOULD THIS PUT US? MINNEHAHA SCHOOLS OTHER (BUSINESSES) Ag Owner Occupied Other Chester Tri-Valley Sioux Falls Canton Parker Garretson Brandon Valley Montrose Dell Rapids Baltic West Central Lennox TV 540, Tea Area Harrisburg

40 WHERE WOULD THIS PUT US? MINNEHAHA SCHOOLS OWNER OCCUPIED Ag Owner Occupied Other Sioux Falls Chester Tri-Valley Parker Canton TV 540, Garretson Brandon Valley Montrose Dell Rapids Baltic West Central Lennox Harrisburg Tea Area

41 WHERE WOULD THIS PUT US? MINNEHAHA SCHOOLS - AG Ag Owner Occupied Other Sioux Falls Chester Tri-Valley Parker Canton TV 540, Garretson Brandon Valley Montrose Dell Rapids Baltic West Central Lennox Harrisburg Tea Area

42 AG- IF WE WOULD OPT OUT FOR 750,000 AND REQUEST THE WHOLE AMOUNT: Taxes would be lower in Tri-Valley than the following area school: Beresford Brandon Valley Elk Point-Jefferson Vermillion Freeman Garretson Montrose Dell Rapids Dakota Valley Arlington Canistota Baltic West Central Menno Estelline Lennox Gayville-Volin Harrisburg Armour Tea

43 QUESTIONS 1). If we are deficit spending, why the facility upgrades? Remember the difference in capital outlay and the general fund. The upgrades were done using capital outlay funds. Our capital outlay fund was healthy, so much so, that we have been able to use capital outlay funds for transportation (general fund expenditure) up to this point. Now, we are unable to sustain our capital outlay fund with accounting for full transportation expenditures.

44 QUESTIONS 2). What will this money be used for? These dollars will be used to maintain our current school programs. These dollars are not to add any additional programs. These dollars will not bring back after school programs or preschool.

45 QUESTIONS 3). If we opt-out, does that mean no cuts will happen? That is the intention, to keep the current programs we have, but the end must justify the means.

46 QUESTIONS 4). Why haven t you formed a budget committee? 80-85% of general fund expenditures are personnel

47 QUESTIONS 5). What about cutting activities? 2012 Football Wrestling Boys Basketball Girls Basketball Volleyball Major Plays JH play One act play Quiz Bowl Instrumental Music FFA Vocal Music Track Cross Country Golf Destination Imagination Activities Director Transportation for all activities 4.8% % of budget gate receipts average 30,000-35,000 per year ($30, last year) Deficit spending almost 16% of budget All activities / Sports Each fall sport made the academic team award of 3.0 GPA or higher Every student that open-enrolls out is $4,670 (counting 1% one-time).

48 WHAT EFFECT WILL THE FEDERAL SEQUESTER HAVE? According to DOE conference call on 3/6/13: 15-16% cut of Title I funding 5% cut of Title II, Perkins, and CTE funding = -17, in Tri-Valley

49 OTHER NOTES No one from the school is too blame for our deficit spending situation, as a matter of fact it is quite the opposite. Unforeseen Circumstances: PSA Enrollment Bank Franchise Interest Bearing Accounts Have been able to live off reserves for past few years.

50 IN CONCLUSION/ REVIEW Our district will financially be able to get through this year and the next school year. If we Opt- Out; Opt out resolution must be by July 15 th of this year because it is the year prior to when taxes are payable Referred with a petition signed by 5% of registered voters If an opt out in unsuccessful we will be reducing our personnel and programs which is estimated to be employees Reserves are our savings and checking accounts, we must have enough to get us through 6 months at a time and cover our other fund shortages until tax revenue is received million is 25%; 1.0 million we are okay because of monthly state aid payments and other revenue, 800,000 and we are in significant trouble Opt out amount: You do not need to take the full request. Finally: We will opt out by July 15 th of this year, or we will be making significant reductions in the future.

51 QUESTIONS/COMMENTS/BOARD COMMENTS Public Questions and Comments Board Comments