Morgan Hill Unified School District 2017-18 Adopted Budget Multi-Year Projection Presented to: Morgan Hill Board of Education June 20, 2017
What does the Multi-Year Projection (MYP) have to do with Budget? AB 1200 requires the Board of Education to conduct a public hearing and adopt the District s annual budget June 6 th meeting & June 20 th meeting In addition to adopting the budget for the next fiscal year, the District must prepare financial projections for the current and subsequent two fiscal years After the State budget is adopted by legislature and signed by the Governor, the District will have 45 days to revise the adopted budget and financial projections 2
Multi-Year Projections Recognize that MYP are projections, not forecasts Projections will change any time when underlying factors change Therefore, plan to adjust as conditions change In analyzing financial data look for trends not precision 3
Multi-Year Projections Continued The cause of most agency s financial issues can be traced to a bad financial decision made during prosperous times that came back to bite the agency during lean financial times Caution is key! Resist projecting one-time dollars to justify paying for ongoing expenditures A future recession is predicted the timing is unknown Be cautious of: Programs that require contributions especially in a cost-of-living only budget scenario Increasing retirement obligations (STRS and PERS) 4
Key Assumptions 2017-18 2018-19 2019-20 Statutory COLA 1.56% 2.15% 2.35% CalSTRS Employer Rate 14.43% 16.28% 18.13% CalPERS Employer Rate 15.531% 18.10% 20.80% 5
Key Assumptions 2017-18 2018-19 2019-20 Revenues ADA: 8,101.73 8,101.73 8,101.73 LCFF Gap Closure: 43.97% 39.03% 41.51% Unduplicated Students: 43.32% 42.67% 42.67% Salaries Step/Column & Longevity increase estimated at 1.75% Step/Column & Longevity increase estimated at 1.75% Step/Column & Longevity increase estimated at 1.75% 3% Salary Enhancement Benefits $9,000/FTE annually $9,000/FTE annually $9,000/FTE annually 6
Revenue Changes Unrestricted General Fund Regional Occupational Program (ROP) grant from Santa Clara COE 2017-18 will be funded at 25% = $167,581 2018-19 will be funded at 0% = $0 State Lottery $144 per pupil for 2017-18 to 2019-20 One-Time Dollars $0 budgeted in Adopted Budget Governor proposes to hold all of the funds until May 2019 Carryover Will be reflected in budget after the closing of the 2016-17 school year Indirect Cost Rate = 8.41% 7
Revenue Unrestricted General Fund Revenue 2017-18 2018-19 2019-20 Major Changes LCFF Sources $70,244,935 $71,655,736 $73,276,526 Federal $0 $0 $0 Other State $1,558,828 $1,544,844 $1,544,844 Other Local $2,502,984 $2,373,215 $2,387,045 Reduce ROP revenue Transfers In $61,200 $61,200 $2,686,894 Transfer In from Special Reserves Contributions -$14,450,600 -$15,244,675 -$15,707,578 Increasing costs in SpEd & CTE TOTAL $59,917,347 $60,390,320 $64,187,731 8
Revenues for the Restricted General Fund The ConApp (Consolidated Application) is used by the California Department of Education to distribute categorical funds from various State and Federal programs to school districts May Spring release to apply for participation in programs Program entitlements are determined by formulas contained in the laws that created the programs January Winter release informing districts of their entitlement amounts per grant Title I, Title II, and Title III Grants are given for a particular purpose and for specific periods of time 9
Revenue Changes Restricted General Fund Lottery $45 per pupil for 2017-18 thru 2019-20 Reduction in Revenues: California Clean Energy Jobs Act Career Technical Education Incentive Grant (CTEIG) Water Pathways Grant Career Pathways Grant Tech Museum Grant MTSS Grant Cost-of-living only budget scenario for Special Education Carryover Will be reflected in budget after the closing of the 2016-17 school year Indirect Cost rate = maximum of 8.41% Some restricted grants do not allow for indirect cost charges or have a maximum limit to charge, which is usually lower than the approved rate 10
Revenue Restricted General Fund Revenue 2017-18 2018-19 2019-20 Major Changes LCFF/Revenue Limit Source $3,673,399 $3,752,380 $3,833,060 SpEd Revenue from SELPA Federal $3,537,782 $3,537,782 $3,537,782 Other State $4,158,817 $3,362,250 $3,373,490 Reduction in CA Clean Energy Jobs Act & CTEIG Other Local $556,325 $475,600 $484,300 Reduce all onetime grants Contributions $14,450,600 $15,244,675 $15,707,578 Increasing costs in SpEd & CTE TOTAL $26,376,923 $26,372,687 $26,936,210 11
Unrestricted & Restricted Revenues Unrestricted Restricted $26,376,923 $26,372,688 $26,936,210 $59,917,347 $60,390,320 $64,187,731 2017-18: $86,294,270 2018-19: $86,763,008 2019-20: $91,123,941 12
Expenditure Changes Unrestricted & Restricted General Fund Step/Column and Longevity increases Minimum Wage increases $11.00/hour: 1/1/2018 $12.00/hour: 1/1/2019 $13.00/hour: 1/1/2020 CalSTRS 1.85% increase each subsequent year CalPERS 2.569% increase for 2018-19 2.70% increase for 2019-20 Reduce expenses for: One-Time dollars Local Grants: Water Pathways, Career Pathways, MTSS, Tech Museum 13
Expenditures Unrestricted General Fund Expenditures 2017-18 2018-19 2019-20 Certificated Salaries $32,833,726 $33,278,640 $33,767,981 Classified Salaries $10,168,026 $10,312,168 $10,472,078 Employee Benefits $13,357,072 $14,292,666 $15,288,706 Books & Supplies $2,240,146 $2,237,818 $2,237,818 Other Operating Expenditures $5,800,113 $5,800,113 $5,800,113 Capital Outlay $2 $2 $2 Other Outgo $67,500 $67,500 $67,500 Indirect Cost -$1,430,576 -$1,443,577 -$1,443,577 Other $1,203,075 $1,389,101 $1,435,126 TOTAL $64,239,084 $65,934,431 $67,625,747 14
Expenditures Restricted General Fund Expenditures 2017-18 2018-19 2019-20 Certificated Salaries $6,118,062 $6,303,395 $6,404,517 Classified Salaries $3,689,937 $3,762,446 $3,822,979 Employee Benefits $5,261,447 $5,527,699 $5,771,483 Books & Supplies $966,251 $942,286 $942,286 Other Operating Expenditures $4,044,700 $4,004,291 $4,004,291 Capital Outlay $411,343 $411,343 $411,343 Other Outgo $4,280,976 $4,280,976 $4,280,976 Indirect Cost $1,214,196 $1,227,196 $1,227,196 Other $490,203 $0 $0 TOTAL $26,477,115 $26,459,632 $26,865,071 15
Unrestricted & Restricted Expenditures Unrestricted Restricted $26,477,115 $26,459,632 $26,865,071 $64,239,084 $65,934,431 $67,625,747 2017-18: $90,716,199 2018-19: $92,394,063 2019-20: $94,490,817 16
Revenue Vs. Expenditures Revenue Expenditures $96,000,000 $94,490,817 $94,000,000 $92,000,000 $90,716,199 $92,394,063 GAP $91,123,941 $90,000,000 $88,000,000 $86,000,000 GAP $86,294,270 GAP $86,763,007 $84,000,000 $82,000,000 2017-18 2018-19 2019-20 17
SCCOE Second Interim Letter 18
General Fund Reserves The District is able to meet the State s 3% reserve requirement 3% represents about two weeks of payroll costs Reserves are one-time money When reserves are used, it takes reductions of double the size in the subsequent years to restore BP 3100 Business & Noninstructional Operations Board policy establishes a minimum reserve of two months of general fund operating expenditures (16.67%) If reserve falls below this amount (16.67%) the Board shall develop a plan to recover the fund balance 19
Reserves in the Multi-Year Projection 18.00% Available reserve % 3% Minimum 16.67% BOE Policy 16.00% 14.00% 16.67% 16.67% 16.67% 13.54% 12.00% 10.00% 8.00% 7.12% 6.00% 4.00% 2.00% 0.00% 3.16% 3% 3% 3% 2017-18 2018-19 2019-20 20
Next Steps Staff will update the Board as new information becomes available on the Enacted State Budget Close 2016-17 Fiscal Year (Unaudited Actuals) Presented the first Board meeting in September Schedule Board study session on budget and develop recovery plan in accordance with BP 3100 2017-18 1st Interim Budget Presented in November and December 2017 21
Questions? 22