Economic crisis update how reduced state school funding is effecting north santiam school district
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Economic Crisis Update How Reduced State School Funding Is Effecting North Santiam School District. Dr. Jack Adams Update to Staff 11.20.09. 2007-09 Biennium State School Funding. 2007-09 Biennium—State funding allocation for K-12 education was set at $6.0 Billion in March of 2007

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Economic Crisis Update How Reduced State School Funding Is Effecting North Santiam School District

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Economic crisis update how reduced state school funding is effecting north santiam school district

Economic Crisis UpdateHow Reduced State School FundingIs Effecting North Santiam School District

Dr. Jack Adams

Update to Staff

11.20.09


2007 09 biennium state school funding

2007-09 BienniumState School Funding

2007-09 Biennium—State funding allocation for K-12 education was set at $6.0 Billion in March of 2007

Final allocation for 2007-09 was $5.7 Billion

Loss to NSSD General Fund= $974,685*

*Stimulus dollars were received, but had to be used for Special Education/Title programs and were not part of the general fund budget


History october 2008

History –October 2008

The U.S. recession was deepening

Tightening credit restrained spending by households, businesses, and state and local governments

The housing market started to slide

State revenue was down, effecting State School Funding for K-12 education


Economic crisis update how reduced state school funding is effecting north santiam school district

Unemployment was rising

2008-09 General Fund Budget was $20,642,076

Salary & Benefits equaled 73% of the budget or $15,026,304

State School Funding cuts in October equaled $258,000 with an expected additional $300,000 by the end of the year

History—October 2008


History october 20081

History—October 2008

Projected ending fund balance with State School Funding cuts was $444,000

The Superintendent initiated the following:

Communication with board members, administrators, and staff

Immediate hiring freeze

Retiree positions were not to be refilled unless absolutely necessary

New diploma requirements were under review

4-6 day cut in contract days proposed


History november 2008

History—November 2008

Contingency plan was put together with the following guidelines:

Communicate with staff regularly

Retain current employee positions

Retain current programs

Use the least disruptive solution for kids

Maintain economic responsibility to keep people working


History december 2008

History—December 2008

$40,000 cut from School Improvement Fund grant (SIF)

Estimate of state funding cuts is now at

$604,800

New discussion—District’s Rainy Day Fund may have to be used to have enough money to carry over into the 2009-10

Additional options now being discussed as part of the contingency plan


History december 20081

History-December 2008

Unions agree to a 4-6 day cut to contract for 2008-2009 to avoid layoffs

Savings equaled $65, 242 per day for a total of approximately $260,968 for 4 days


Additional money saving strategies

Additional Money Saving Strategies

Buildings budgets frozen at 65% and technology budget frozen at 85%

No overtime

Freeze on maintenance projects unless supported through grant money

Substitutes for classified only as approved by principals or managers

Professional Development—must be approved by the Superintendent


February state budget forecast down another 855 million

February State Budget Forecast Down Another $855 Million

Total Reductions for NSSD= $1,550,000

State cuts SSF per student by 6% or $381 per ADM= $1,050,000

SIF reduction= $40,000

Economic effects on other District revenue sources:

Property tax decrease= $88,000

Less interest earnings= $60,000

Drop in timber revenue= $66,000

Drop in enrollment due to move outs/job losses (41 students)= $246,000


History february 2009

History—February 2009

Superintendent makes presentation to staff on options to reduce staff or freeze roll over costs (salary and benefits) for 2009-10

Salary and benefit freeze to save approximately 20 employee positions with 8 positions unfilled due to retirements

The Superintendent, Administrators, Supervisors, Directors, and Confidential staff also agreed to cut 5 days from their contracts to save non-union represented positions


March forecast

March Forecast

State shortfall now forecasted to be

$3-$4 Billion for 2009-11 Biennium

Additional Cost Saving Strategies:

Salary/benefits freeze approved for 2009-10 (added approximately $665,000 back into budget and keeps staff employed, programs intact)

Retirements encouraged with no rehire planned whenever possible


Board and superintendent goal

Board and Superintendent Goal

We are committed to doing what is best for kids; making any reductions in staffing in a way that is fair and equitable to ALL employees; and making an effort to keep as many people employed as possible

while maintaining

programs


Preparing the 2009 10 budget

Preparing the 2009-10 Budget

Information given to Board and staff on projection for 2009-10 SSF and the difference between a $5.4, $5.6, $5.8, and $6.0 Billion allocation for K-12 Education

$6.0 Billion is the best case scenario, NSSD took the conservative road and built budget on $5.6 Billion allocation


April may 2009 strategies for saving

April/May 2009 Strategies for Saving

Implemented freeze on Professional Development

Limit field trips

Release of NSSD Rainy Day Fund

Review of Co-Curricular Middle School and High School Athletics and Activities for 2009-10—Savings of $43,239

Prepared budget on $5.6 Billion allocation for K-12 education, and presented to Budget Committee at the end of May after State Forecast

30-34% of districts across the state budgeted at this conservative level


State legislature funds k 12 at 6 0 billion with revenue package and stipulations

State Legislature Funds K-12 at $6.0 Billion with Revenue Package and Stipulations

NSSD keeps budget based on $5.6 Billion allocation, due to nature of stipulations and history of tax implementations in Oregon


What is the revenue package

What is the revenue package?

Along with reducing the state budget, the 2009 Oregon Legislature passed two bills that would increase some corporate and personal income taxes.

These bills are expected to raise $733 million in revenue, which is included in the 2009-11 state budget to prevent further cuts to schools, healthcare and public safety.


What is the revenue package1

What is the revenue package?

Legislative actions taken to fill the projected 2009-11 state budget gap of $4.028 billion were:

Budget Cuts$1.994 billion

Federal Stimulus$978 million

Additional State Revenue$801 million

State Reserves$255 million

Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 5, September 2009


How would personal income taxes be affected

How would personal income taxes be affected?

For 97.5% of Oregonians – single people making less than $125,000, or couples making less than $250,000 – personal income taxes would not change

Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009


How would personal income taxes be affected1

How would personal income taxes be affected?

For individuals with annual incomes above $125,000 or couples with annual incomes above $250,000, it raises the state income tax rate by 1.8%-2.0% – but only on income abovethose amounts

Source: Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 7, September 2009


How would corporate income taxes be affected

How would corporate income taxes be affected?

Corporations would pay an additional 1.3% on profits over $250,000 in 2009 and 2010. That would be reduced to 1.0% in 2011 and 2012. Starting in 2013, the additional tax will be reduced to 1.0% on profits over $10,000,000

Sources: HB 3405 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009


How would corporate income taxes be affected1

How would corporate income taxes be affected?

Two-thirds of corporations doing business in Oregon now pay an annual minimum tax of $10. This bill would raise the corporate minimum tax to $150 for corporations with revenues of less than $500,000. Those with revenues of more than $500,000 would pay about one one-thousandth of their Oregon revenues in taxes

Sources: Oregon Corporate Excise and Income Tax”, 2008 Edition, Oregon Department of Revenue, pages 3-14 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 12, September 2009


How do oregon s business taxes compare

How do Oregon’s business taxes compare?

Oregon’s business taxes are currently at 3.7% of gross state product, which ranks 3rd lowest among the 50 states. If the revenue package would be affirmed by voters, Oregon’s corporate taxes would go up to 3.9% of gross state product, which would rank as 5th lowest

Sources: ”Total State and Local Business Taxes,” Council on State Taxation, Ernst & Young, 2009 and Legislative Revenue Office Research Report #6-09, “Referendum 301 & 302 Revenue Measures,” Page 18, September 2009


How do oregon s corporate taxes compare

How do Oregon’s corporate taxes compare?

By comparison, Washington’s corporate taxes are at 5.5% of gross state product, California and Nevada at 4.6%, and Idaho at 4.7%

Source: ” Total State and Local Business Taxes,” Council on State Taxation, Ernst & Young, 2009


What would this mean for oregon s schools

What would this mean for Oregon’s schools?

Of the $733 million raised by the revenue package, about 40% – some $285 million – would be targeted for schools. This amount would be included in the $6.0 billion allocated to schools for 2009-11

Source: ” 2009-10 Distribution of Formula Revenue to Districts,” Oregon Department of Education


What would the impact be to nssd if stipulations are not met in january 2010

What would the impact be to NSSD if stipulations are not met in January 2010?

2009-10

Immediate budget freeze

Cut in contract/school days


Funding levels how they look in our budget

Funding LevelsHow they look in our budget

6.0 Scenario

5.6 Scenario

Could be as low as 5.5


Staff communication plan

Staff Communication Plan

Continue with same format as last year, honest and transparent

Superintendent to meet with Board, Management Team and NSEA/OSEA Executive Council members

Meet with staff to keep them informed of latest information, discussing options and how each will effect staffing and programs in the District


Details to communicate

Details to Communicate

Used $600,000 Rainy Day Fund for 2009-10

Early Retirement must be figured in (averaging more than $300,000 per year for the past 7 years)

Reserves are needed to run the district

Ending fund balance for 2008-09 was $1,002,000 (with Rainy Day Fund, budget savings, and cuts in SSF)

Ending fund balance for 2009-10 is projected to be $106,450 (based on budgeted $5.6 Billion allocation from the State)

Significant PERS increases are expected in 2011-2012


Details to communicate1

Details to Communicate

Endorsements and degrees make a difference during layoffs

90% of districts cannot pass bonds, so they have had to spend general fund dollars on portables and boilers depleting their reserves

Federal dollars may decrease by 1-3% (stimulus, federal grants)

Unemployment costs for reduction in force $12,000 for each employee

Loss of State Funded School Improvement Fund Grant of $538,000

Employee roll over cost would be approximately $662,000*

*Based on actual savings from 2009-10


Cash reserves

Cash Reserves

District used all of its $600,000 Rainy Day Fund for 2009-10

Early retirement costs $300,000 for employees who no longer work in the District (obligation that must be figured in first)

Districts need a cash reserve to make payroll and pay for lights, heat, etc. approximately $650,000

110-140 out of 198 school districts in Oregon may end up with no cash reserve for 2010-11


Tools for reductions what does district look at

Tools for ReductionsWhat Does District Look At?

Reduction in Force

Reduction in Budget

  • Graphs of budget areas are updated regularly and include: (1) budgeted amount, (2) amount encumbered, (3) amount spent, and (4) amount remaining in each budget area

  • Work from a list of all employees with date of hire and endorsements


Communication plan

Communication Plan

Board and Management Team members to meet and communicate with local clubs or groups regarding the impact from the loss of SSF

Board members to submit commentary for local newspapers


Time line

Time Line

Legislature must adjust the K-12 budget allocation in a Special Session if tax fails, hopefully they will keep funding intact for 2009-10 and have districts take the whole hit in 2010-11

Must have facts regarding changes to allocation before communication with community begins

Need a contingency plan with unions

Action plan will be prepared in February


Looking forward to 2010 11 possible strategies for savings

Looking Forward to 2010-11Possible Strategies for Savings

Reduction in force based on contractual language or salary/benefit freeze

Cut in school days

Larger class sizes

Additional reductions to co-curricular athletics

Reduced elective/academic course availability

Review of transportation and food service costs

Review school programs/curriculum adoptions

Review increased PERS contributions


Update time line

Update Time Line

November 20, 2009 Staff Update

January Election

February Legislative Session

March 5, 2010 Staff Update


Questions or comments

Questions or Comments

PowerPoint Available On District Website Under District Budget>State School Funding Updates


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