Board of Trustees/Superintendent Planning Meeting

1. Board of Trustees/SuperintendentPlanning Meeting Financial Services FY 2015-2016 Budget Update Lancaster County School District January 23-24, 2015

2. Capital Funding Options: • General Obligation Bonds - Require a referendum and voter approval. • 8% General Obligation Bonds - District can issue up to 8% of the county assessment value currently estimated at $23,860,852. We will have outstanding 8% debt at year end of $8,560,000 and an estimated LEAP Payment due next year of $4,331,562 leaving available an estimated $10,969,290 that could be issued to meet our Capital Plan and other capital needs. Does not require a referendum or voter approval. • Special legislation for $.01 sales tax – This would require special local legislation to assess a $.01 sales tax for construction or bond payments for up to 30 years. Cannot have a school tax authorized by special legislation and the county 7 year capital projects tax at the same time. Would likely be successfully challenged in court as unconstitutional, based on the 2013 Supreme Court decision.

3. Capital Funding (Cont) • Equipment Acquisition Lease – used to spread cost out over several years and limit the amount of 8% funding encumbered each year to the annual payment amount only. Similar to the LEAP installment debt we have now but applies to equipment purchases. In our annual 8% bond issuance we would include necessary funding to make the annual payment on the Equipment Acquisition Lease.

4. Governor’s Budget Proposal FY 2015-2016

5. State Budget Timeline

6. Governor’s Budget - Highlights

7. Governor’s Budget - Highlights

8. Governor’s Budget - Highlights

9. Governor’s Budget - Highlights Based on Four Pillars: • Fair and Simple Funding – Continue simplifying funding by eliminating lottery fund streams for K-5 and 6-8 programs and distribute funding through the EFA. • Emphasizing Reading – Proposing an additional $10m in recurring support for reading to double the state’s reading coaches and to provide for professional development. • Access to Educational Technology – Budget contains a 2nd year of $29.3m for technology initiatives. • High-Quality Public School Choice – Budget supports full EFA funding for Charter Schools and also provides EIA funding of $11.8m.

10. Governor’s Budget - Highlights Teacher Quality and Recruitment: Focus on – • Homegrown Teacher Initiative • Enhanced Student Loan Repayment • Rural Educator Salary Supplement • Graduate Degrees for Career Educators • Teacher Mentors

11. Governor’s Budget - Highlights Details: • Consolidate funding streams (Lottery gone) and increase BSC from $2,120 to $2,200. • Double Reading Coaches and provide for professional development. • Fund Read to Success program with $.9m in recurring support. • Maintain $29m in Lottery funds for Technology. • Increase EIA professional development to $4m for recurring support to technology. • Additional $2m for career and technology equipment. • $11m in recurring support for growth in the Public Charter School District. • $2.8m to support development and expansion of the virtual education program.

12. Governor’s Budget - Highlights Details Cont: • Establish a Rural Teacher Recruiting initiative with $1.5m and sustain funding by closing the NBC incentive to new entrants as the NBC stipend phases-out. • Fully fund new career readiness assessments $4.2m and fund the new teacher evaluation system department $3m. • A one-time $10m allocation from the Capital Reserve Fund for the lease or purchase of school buses.

13. Governor’s Budget

14. Governor’s Budget-Tony’s Graph inserted for comparison

15. Budget ProjectionsFY 2015-2016

16. Budget Projections FY 14-15 mid-year budget revisions will be presented to the School Board for approval on February 17, 2015 at the regular board meeting. Any year-end deficit for this year will be covered from our undesignated general fund equity.

17. Budget Projections Undesignated General Fund Equity • Beginning total equity 7/01/14 $18,653,099 • Assigned for Encumbrances & pre-paid expenses -32,952 • Assigned for use in FY 14-15 budget -2,772,134 • Estimated unassigned balance 7/01/14 $15,848,013 • Available for FY 15-16 Budget -1,488,013 • Recommended minimum unassigned balance 7/01/14 $14,360,000 NOTE: Undesignated equity should ideally cover three months of average expenditures. Two months of expenditures is a good target to maintain. The recommended minimum balance above of $14,360,000 is 1.425 times one month’s average expenditures over the twelve months (estimated at $10,076,977).

18. Budget ProjectionsFY 15-16 General Fund Estimated Changes in Revenues Local Taxes/State Tax Reimbursements: • GO mill value (less residential) w/ no growth in mill value $139,044 x 1.00 x 149.50 mills (no millage increase) $20,787,078 • Fee-In-Lieu/ Half-year Vehicle/ Delinquent/ Penalties (decreased) 5,102,454 • Sales Tax Reimbursement for residential property (0.00% est growth) 8,377,879 • Other State Tax Reimbursements (no change) 5,279,184 • Other Local Revenues 950,600 • Less Prior Year budget local revenues -40,496,477 • Less Prior Year GF Equity budgeted -2,772,134 _______ Net Decrease in Local Revenues -$2,771,416

19. Budget ProjectionsFY 15-16 State Revenue: • EFA Revised for 45-Day Count (BSC of $2,120) $26,887,248 • EFA Increase for FY 16 estimated growth (150 students) 318,000 • Other State Revenues –EIA, Fringe, Misc 15,296,048 • Less Prior Year Budget -41,140,969 _______________________________________________________________ Net Increase in State Revenues $1,360,327 Total anticipated Decrease in All Revenues -$1,411,089

20. Budget ProjectionsFY 15-16 Possible Increase in Local Millage: Local millage could be increased by the CPI factor of ???% (estimated) plus a population growth factor estimate of ???% (estimated) as calculated below: FY 15 Millage X (CPI + Population Growth) = State Allowable 149.50 X 3.34% (Estimated) = 5.00 mills County Millage Limit = 5.00 mills Maximum Millage Increase 5.00 mills Value of a mill (excluding residential) is estimated at $139,044. Increase of 5.0 mills for a total of 154.50 mills would generate an estimated additional $695,220 in local tax revenue.

21. Millage Increase Limitations The millage rate limitations on the previous page may be suspended and further increased by a 2/3 vote of the membership of the local governing body for the following purposes: • Deficiency of the preceding year. • Catastrophic event such as natural disaster, severe weather, act of God or act of terrorism, fire, war, or riot. • Compliance with a court order or decree. • Taxpayer closure that decreases by 10% or more the amount of revenue payable to the taxing jurisdiction in the preceding year. • Compliance with a Regulation or Statute enacted that does not provide an appropriation for compliance.

22. Budget Projections FY 15-16 Budget Assumptions: • Increase in payroll for 1 step. • No anticipated raise in salary schedules. • Increase in Employer Retirement cost estimated by .30%. • Increase in Employer Insurance cost by 5%.

23. Budget ProjectionsFY 15-16 General Fund Estimated Changes in Expenditures - Salaries & Fringe: • Teachers step increase $1,146,567 • Teachers estimated 0% raise 0 • Classified step increase 236,099 • Classified estimated 0% raise 0 • Admin step increase 104,554 • Admin estimated 0% raise 0 • Hourly step Increase 65,991 • Hourly estimated 0% raise 0 • Supplement step increase 19,778 • Supplement estimated 0% raise 0

24. Budget Projections FY 15-16 G/F Estimated Changes in Expenditures cont: • Additional Salaries from Special Revenue $ 300,000 • Increase in Discovery School Funding 7,510 • Utilities estimated 2% increase 61,500 • Cleaning contract estimated 2% increase 47,000 • Increase in routine maintenance 20,000 Total Increase in Expenditures $2,008,999

25. Budget Reduction ProcessFY 15-16 Current Deficit -$3,420,088 Possible Considerations: • Five mill tax increase 672,290 • Use general fund equity 1,488,013 • Growth in mill value by 1% 194,964 • Base Student Cost increased to $2,200 530,859 (Net of Lottery Funds Cut $444,450) Net Deficit -$533,962

26. Budget Process FY 2015-2016

27. Budget Preparation Guide(Handout) This handout contains selected sections from the budget guide used by the principals to develop their budgets. It includes: • About the Process • FY 15-16 Budget Calendar • The Budget Presentation Schedule-Schools • Proposed funding allocation standards • Proposed school allocation • Proposed staffing allocations • Proposed staffing allocation standards • School enrollment projections

28. The End I’ll be glad to answer any questions you may have. Thank You!