2020/2021 BUDGET REDUCTION PLANNING Board of Education April 29, - - PowerPoint PPT Presentation

2020/2021 BUDGET REDUCTION PLANNING

Board of Education – April 29, 2020 Kathleen Askelson, Chief Financial Officer Nicole Stewart, Director-Budget & Treasury

CURRENT NEWS FROM THE STATE

 Colorado Department of Education:

Plan for a 1 to 10 percent reduction

 Joint Budget Committee:

Wait for the May 12 updated economic forecast

 Plan to introduce Long Bill and

School Finance Act by May 18

 Target to complete school finance

by June 1

TIMELINE 2020/2021 BUDGET DEVELOPMENT

OCT/NOV

School Accountability Committees Meet to Define Priorities Governor’s Proposed Budget ELECTION

DEC

2020/2021 Factors are Set Based

• n 2019

October Count Kick Off SBB and BFO Processes Community Engagement/ SAC Reports December Forecast / Outlook

JAN/FEB

Schools Enter Budgets into Hyperion Budget Increase Requests Due Cabinet Recommendations Negotiations

MAR

DAC Final Community Engagement Results Report Direction/ Feedback─ March 5 BOE Meeting March Forecast Begin Building Budget Negotiations Budget Survey

APR

Continue Fine Tuning and Building Budget Final BOE Direction for Proposed Budget April 2/8/29 BOE Meetings

MAY/JUNE

Last Day for Legislators ? Proposed Budget Public Hearing May 7 BOE Meeting Final BOE Direction for Budget Adoption

• n June 4

CHALLENGES …

 Short timeline to implement

changes for July 1

 Large range in reduction projection  Long term outlook unknown,

expectation for multiyear impact

 Specific information for federal aid

starting, anticipated receipt at least 60 days out

REDUCTION PLANNING

DRIVING VALUES IN DEVELOPING REDUCTIONS

 Quality student experiences  Our people (employees)  Our community  Short and long term financial stability

FILLING THE BUDGET WHOLE

2020/2021 REDUCTION OPTIONS  Pay Reductions  Layoffs  Program Cuts  School Closures/Consolidations  Use of Reserves

2020/2021 REDUCTION OPTIONS Pay Reductions

• Furlough days – 1 day $3.6M
• % reduction of pay – 1% $6.3M
• Combination of both
• No layoffs of staff or

reduction of services

• Impacts to staff,

loss of income

2020/2021 REDUCTION OPTIONS Layoffs (Reduction in Staff)

• Central division
• School Student Based Budget (SBB)
• Difficult to implement quickly
• Will impact staff, student and

community support

2020/2021 REDUCTION OPTIONS Program Cuts

• Central division support cuts
• School program support cuts
• Short term central cuts,

already identified

• Longer term – difficult to implement

quickly with fidelity and community input

• Will impact staff, student and

community support

2020/2021 REDUCTION OPTIONS School Closures/Consolidations

• Not recommended for a short term

solution

• Demographics could change

in the next few months

• Difficult to implement quickly
• Will impact staff, student and

community

2020/2021 REDUCTION OPTIONS Use of Reserves

• $87.8M current year projection,

12.5% of expenditures

• Using $30M, reserves would be

8% of expenditures, lowest recommended balance

• Can be used for short term and long

term reduction planning

• Use of reserves could eliminate

immediate impact to students, staff and community.

• Important to monitor balance for

impact to financial stability

EXAMPLES OF REDUCTION RANGES

Amount One-time Use of Reserves $15.0 Furlough Days – 2 Days 7.2 Pay Reduction – 1% 6.3 Central Division Reductions 2.0 Total Reductions $30.5

Example A: 5 Percent Reduction – No layoffs, $15M from Reserves

Reduction Description

Amount One-time Use of Reserves $20.0 Furlough Day – 1 Day 3.6 Pay Reduction – .75% 4.7 Central Division Reductions 2.0 Total Reductions $30.3

Example B: 5 Percent Reduction – No layoffs, $20M from Reserves

Reduction Description

Amount One-time Use of Reserves $20.0 Furlough Days – 3 Days 10.8 School Closures – 6 Schools 4.8 Central Programs and Layoffs 10.0 School Programs and Layoffs 15.0 Total Reductions $60.6

Example C: 10 Percent Reduction – All Areas Impacted

Reduction Description

2020/2021 ADJUSTMENT EXAMPLES (combined)

Example A No Layoffs $15M Reserves Example B No Layoffs $20M Reserves Example C All Areas Impacted

One-time from Reserves $15.0 $20.0 $20.0 Furlough Days ($3.6M per day) 7.2 3.6 10.8 Pay Reduction (1%/.75%) 6.3 4.7

• Central Division Reductions

2.0 2.0 10.0 School Based Reduction

• 15.0

School Closures – 6 Schools 4.8 Total Reductions $30.5 $30.3 $60.6

2020/2021 REVENUE FORECASTS – 2 Year Loss (14% and 6% Reduction) 2 Year Loss, 14% and 6% Reduction

% Reduction Increase *Revenue (Reduction) Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐14.00% $ 794,908,139 $ (86,700,000) $ 708,208,139 FY 21/22 ‐6.00% $ 708,208,139 $ (32,000,000) $ 676,208,139 FY 22/23 0.00% $ 676,208,139 $ ‐ $ 676,208,139 FY 23/24 3.50% $ 676,208,139 $ 17,500,000 $ 693,708,139 FY 24/25 5.25% $ 693,708,139 $ 27,000,000 $ 720,708,139 Cumulative Reduction $ (74,200,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 3 Year Loss (14%, 11% and 4% Reduction) 3 Year Loss, 14%, 11% and 4% Reduction

% Reduction Increase *Revenue (Reduction) Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐14.00% $ 794,908,139 $ (86,700,000) $ 708,208,139 FY 21/22 ‐11.00% $ 708,208,139 $ (58,600,000) $ 649,608,139 FY 22/23 ‐4.00% $ 649,608,139 $ (19,000,000) $ 630,608,139 FY 23/24 3.50% $ 630,608,139 $ 16,000,000 $ 646,608,139 FY 24/25 5.25% $ 646,608,139 $ 24,700,000 $ 671,308,139 Cumulative Reduction $ (123,600,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 2 Year Loss (10% and 3% Reduction) 2 Year Loss, 10% and 3% Reduction

% Reduction Increase *Revenue (Reduction) Increase Total Revenue FY 19/20 $ 800,508,139 $ - $ 800,508,139 FY 20/22

• 10.00%

$ 794,908,139 $ (62,000,000) $ 732,908,139 FY 21/22

• 3.00%

$ 732,908,139 $ (16,700,000) $ 716,208,139 FY 22/23 0.00% $ 716,208,139 $ - $ 716,208,139 FY 23/24 3.50% $ 716,208,139 $ 19,000,000 $ 735,208,139 FY 24/25 5.25% $ 735,208,139 $ 29,000,000 $ 764,208,139 Cumulative Reduction $ (30,700,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 3 Year Range (5%, 3% and 1% Reduction) 3 Year Range, 5%, 3% and 1% Reduction

% Reduction Increase *Revenue (Reduction) Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐5.00% $ 794,908,139 $ (31,000,000) $ 763,908,139 FY 21/22 ‐3.00% $ 763,908,139 $ (17,700,000) $ 746,208,139 FY 22/23 ‐1.00% $ 746,208,139 $ (5,700,000) $ 740,508,139 FY 23/24 3.50% $ 740,508,139 $ 19,700,000 $ 760,208,139 FY 24/25 5.25% $ 760,208,139 $ 30,700,000 $ 790,908,139 Cumulative Reduction $ (4,000,000) *Assumes all revenue, but state of Colorado, stays flat

• 1. Board values to frame reductions?
• Pay reductions
• Layoffs
• Program cuts
• School closures/consolidations
• Use of reserves
• 2. Of the examples for the range of 5% to

10%, which are the preferred options? 2020/2021 DIRECTION NEEDED

NEXT STEPS

NEXT STEPS

• 1. Propose Budget on May 7;

further reduction conversation

• 2. School Finance Act drafted

by May 18

• 3. Option to add a Board meeting

after May 18 and before June 4

• 4. Budget adoption is scheduled for June 4

COMMUNITY ENGAGEMENT  Community Survey

• Launched week of March 9
• Community to choose top three and

highest priority for budget investments

• Closes April 27

Marginal value due to change in economy

COMMUNITY ENGAGEMENT (continued)  FACEBOOK Live event 4/23/2020  Public Comment for Budget – May 7  Student Town Hall with Superintendent 05/11/2020  Teacher Advisory Committee 05/13/2020  Revised Community Survey

• in May after updated forecasts

 Community Budget Advisory Committee

QUESTIONS