The Financial State of the District Dr. Brian G. Gottardy
General Fund Revenue History Year Total General Fund Revenue* Year-to- Year % Change Inflation- Adjusted Revenue** Year-to- Year % Change 2010-11 $482,639,181 $482,639,181 2011-12 $473,604,321 (1.9%) $458,289,956 (5.0%) 2012-13 $450,431,638 (4.9%) $428,601,005 (6.5%) 2013-14 $471,317,697 4.6% $441,595,501 3.0% 2014-15 $489,388,946 3.8% $447,222,822 1.3% 2015-16 $507,391,474 3.7% $465,688,162 4.1% 2016-17 $513,480,071 1.2% $465,205,990 (0.1%) 2017-18 $508,021,422 (1.1%) $451,957,516 (2.8%) 7-Year Change $25,382,241 5.3% ($30,681,665) (6.4%) *Not including TRS on-behalf or interfund transfers; 10-11 & 11-12 include ARRA funds used to supplant state aid **Inflation adjustment is based on Texas CPI (Houston/Dallas average), as provided by the Bureau of Labor Statistics; base year is 2010
General Fund Revenue History Per Student Year Revenue/ ADA Year-to- Year % Change Inflation-Adjusted Revenue/ ADA** Year-to- Year % Change 2010-11 $7,698 $7,698 2011-12 $7,442 (3.3%) $7,201 (6.5%) 2012-13 $7,045 (5.3%) $6,704 (6.9%) 2013-14 $7,329 4.0% $6,867 2.4% 2014-15 $7,665 4.6% $7,005 2.0% 2015-16 $7,999 3.9% $7,312 4.4% 2016-17 $8,129 2.0% $7,365 0.7% 2017-18 $8,223 1.2% $7,316 (0.7%) 7-Year Change $525 6.8% ($382) (5.0%) *Not including TRS on-behalf or interfund transfers; 10-11 & 11-12 include ARRA funds used to supplant state aid **Inflation adjustment is based on Texas CPI (Houston/Dallas average), as provided by the Bureau of Labor Statistics; base year is 2010
Student Enrollment Revenue Is Determined by Enrollment 69,000 NEISD Student Enrollment 68,000 67,000 66,000 67,329 67,713 68,026 67,660-1491 67,353 66,966 66,446 Projected 2017-2018 Actual 2017-2018 65,475 65,000 64,000-1283 64,192 63,000 Projected 2018-2019 62,000 61,000 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-2017 2017-2018 2018-2019 Source: Based on 1 st week of October enrollment analysis
1970 Enrollment 28,000 1980 Enrollment 34,000
1990 Enrollment 40,000 2000 Enrollment 51,000
2010 Enrollment 66,000 When NEISD was growing, growth was concentrated in areas of expanding housing. The District was able to open new schools, adjust boundaries and keep staffing levels efficient.
Elementary Schools with loss of 5% + Each orange dot is an elementary school that has lost 5% or more of enrollment since 2013-2014. Because our enrollment losses are felt District-wide, there is not an easy solution to offset the revenue reduction with changes to staffing levels.
Sample ISD has 1,693 students and 82 teachers in grades K-5. School A 595 Students 29 Teachers School B 40 22 Charter School X Effect of Enrollment Loss Sample ISD loses 103 students, but only 2 teachers to maintain the maximum ratio of 22:1 in grades K-4 and 25:1 in grade 5. 509 Students 25 Teachers School C 589 Students 28 Teachers 41 103 Students 6 Teachers Sample ISD loses $580,000 in revenue, but only $120,000 of expenditures. Where does Sample ISD cut the other $460,000?
Reduced Revenue vs. Reduced Expenditures Since 2013-2014 to 2016-2017 Charter attendance of students residing in NEISD grew by 900 to 5,000 State revenue declined $12.4 million Teaching positions reduced $6.2 million NEISD was upside down $6.2 million
Ongoing Effect of Enrollment Loss Since our peak of 68,205 students in 2013-2014, enrollment has dropped by 2,100 Enrollment next year is projected to drop another 1,200-1,300 Effect to State Aid: Year Enrollment Decline Revenue Decline 2017-2018 (1,400) ($8,029,000) 2018-2019 (1,300) ($7,230,000) 2019-2020 (1,100) ($3,292,000)
NEISD Student Transfers to Charters NEISD student transfers have increased by 59% over the past 5 years Charter 2016-2017 2017-2018 Difference IDEA 757 1,084 327 BASIS 494 820 326 Great Hearts 754 990 236 Brooks Academy 15 239 224 Source: District Transfer Report, 2017-2018
The Perfect Storm: Welcome to Recapture Property values are still rising modestly every year Enrollment is declining every year Chapter 41 recapture is based on property wealth per student X Y What happens to the quotient when the numerator gets bigger and the denominator gets smaller? By 2019-2020, NEISD will pay recapture $7.7 million in 2019-2020 $33.3 million in 2020-2021
Revenue Breakdown Current Forecast Property values are still rising modestly every year; however For every $1.00 in extra property tax revenue, TEA takes away 96 of State Aid the following year In millions REVENUE FORECAST THROUGH 2021 2017-2018 % of Total 2018-2019 % of Total 2019-2020 % of Total 2020-2021 % of Total Property Taxes $390.7 73% $411.4 80% $432.9 86% $455.6 89% State Aid 98.4 19% 62.6 12% 37.7 8% 47.7 9% Recapture - - - - (7.7) (2%) (33.3) (6%) All Other 42.5 8% 43.2 8% 43.4 8% 43.6 8% Total $531.6 100% $517.2 100% $506.3 100% $513.6 100% Change from Prior Year ($9.4) ($14.4) ($10.9) $7.3
Forecast through 2021 2016-2017 was a breakeven year If revenues decline but expenditures don t, the result is significant deficits 2018-2019 assumes $12M in cuts, but a $17M deficit still remains FUND BALANCE FORECAST THROUGH 2021 In millions 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 Revenue $541.0 $531.6 $517.2 $506.3 $513.6 Expenditures 541.1 544.3 533.8 533.1 533.7 Net Change (0.1) (12.7) (16.6) (26.8) (20.1) Beginning Fund Balance $123.1 $123.0 $110.3 $93.7 $66.9 Ending Fund Balance $123.0 $110.3 $93.7 $66.9 $46.8 Fund Balance in Operating Months 2.9 2.6 2.2 1.6 1.1
What Can We Do? 1. Reduce expenditures through significant cuts 2. Increase revenue through Tax Ratification Election (TRE)
Cuts, Cost Avoidance & Limiting Growth The 2012-2013 year was our leanest year as we dealt with the District s share of the State s $5 Billion funding cut Since then, campus staffing levels have returned to preausterity levels; since 2012-2013 Approximately 105 more teachers (roughly the same amount as in 2010-2011) Increases in campus administrators and paraprofessionals can be attributed primarily to opening three new schools & a MS magnet Approximately 38 fewer custodians, despite opening three schools and expanding others
Other Expenditure Pressures Health Insurance increase of $8.3 million The District has absorbed the vast majority of increased costs Plan changes seem to be working costs are trending flat this fiscal year Increases to the District share of TRS & TRS-Care of $7.5 million Mostly due to State mandates, but also because salaries have increased Property Insurance increase of $0.9 million More square footage, hailstorms, hurricanes Tax appraisal and collection fees increase of $0.4 million
Belt Tightening for 2017-2018 Salaries No pay raise 1% pay increase is close to $4M Utilities Electricity rate per kwh up 13% Electricity use per sq. ft. down 10% - cost avoidance of $1.3M annually Central office staff Freezes & hiring delays cost avoidance of $0.5 million Consolidating Instruction & Campus Administration cost avoidance of $0.2 million Other Belt-tightening Cutting back on travel, furniture, food estimated $1.0M~$1.5M
Reductions Identified for 2018-2019 Teachers 97 positions reduced due to enrollment declines -- $6.2M 2017-2018 staffing levels were based on losing 500 students, not 1,400 20.5 FTEs reduced due to changes in staffing formulas -- $1.3M Other campus staff 13 positions reduced -- $0.5M Non-campus staff -- goal of $0.5M Non-staffing cuts -- $3.8M TOTAL = $12.3 million
Cutting Central Office Some taxpayers may ask if we can make cuts to our central administration before making cuts elsewhere If we cut the superintendent, 2 associate superintendents (half) and 9 executive directors (half), the savings would only amount to $1.9 million Not nearly the amount of cuts for what we need Fact: NEISD s Administrative Cost Ratio is historically the lowest of all districts in Bexar County and among the top 3% Statewide The Administrative Cost Ratio is TEA s official standard for measuring and comparing administrative costs For fiscal year 2015-2016, NEISD s administrative cost ratio ranked 28 th out of 1,018 ISDs
Tax Ratification Election What is it? Board approves a Maintenance and Operations (M&O) tax rate > $1.04 Ask voters to ratify the M&O rate M&O rate may increase from $1.04 up to a maximum of $1.17 Any increase above $1.06 increases recapture payments District staff is not yet making a recommendation to the Board for the 2018-2019 M&O tax rate
Tradition of Excellence
360 Education Aquatics Arts Debate Academic Success ROTC Drill Clubs UIL Every Child, Every Day
Possible Legislative Help in 2019 Revise the recapture threshold Consider a maximum percentage of districts or students (e.g. top 10%) Current estimates show 229 districts paying more than $2.5 billion in recapture for 2018-2019; 26% of students statewide will reside in recapture districts Since 2009-2010, recapture payments have grown 148% Index Basic Allotment to Texas Consumer Price Index (CPI) Address inflation impact automatically NEISD has $31 million less buying power than in 2010
Questions?