2020/2021 BUDGET REDUCTION PLANNING Board of Education May 13, - - PowerPoint PPT Presentation

2020/2021 BUDGET REDUCTION PLANNING

Board of Education – May 13, 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: May 12

updated economic forecast

 Plan to introduce Long Bill and

School Finance Act by May 26

 Legislators planning to complete

school finance by June

 Possible extension for budget

adoption from legislation

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 HOLE

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
• f 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

MODELS OF REDUCTIONS

2020/2021 PROPOSED BUDGET ASSUMPTIONS (NOT FINAL)

State funding decrease 12% $(74.3) 5A mill levy inflationary increase 0.6 Loss of specific ownership tax (1.5) Loss of interest (1.7) Loss of revenue from 350 student decrease (3.0) CARES Act funding (if we can use to backfill revenue loss) 6.0 Total 2020/2021 Change in Revenue $(73.9) Mandated PERA increase .5% $2.6 Retirement/Turnover Savings (5.0) Implemented Reductions (32.5) Total 2020/2021 Change in Expenditures (34.9) Net use of reserves $(39.0)

Amount Ongoing Savings Identified in 2019/2020 $3.0 Central Department Reductions #1 5.0 Eliminate Innovation Funding 1.0 SBB Reduction – (Plan B schools have worked on) 5.0 Eliminate School Improvement Funds 2.2 Reduce Capital Transfer 5.5 Implement 3 Furlough Days Across All Staff 10.8 Total Reductions $32.5

12% REDUCTION MODEL

Reduction Description (in recommended implementation order)

2020/2021 CENTRAL REDUCTIONS #1 Reductions planned so far, under different assumptions Excluded cuts that would directly impact schools (custodial, ERD literacy interventionists and ESL support) Forms a starting point for more reductions; from here we must go deeper.

• Sweep in reductions to custodial and

ERD + adding in all other proposed district reductions.

• Reduce the innovation fund to $0.

2020/2021 CENTRAL REDUCTIONS #2 Central Division Proposed Budgets (in amount order, with potential impacts):

 IT/Tech/Devices/Network (reduction or slowing of IT projects) $33.7M  Curriculum teams, Research, Assessment (no curricular supports, PD, tests, evaluations

• r tracking of strategic plan) $30.1M

 Telecom, Network & Utilities (would require school closures) $28.8M  Custodial (reduced cleaning) $27.9M  Student Success less MOE (mental health supports, GT, diversity and ELA) $23.7M  Transportation (eliminate routes) $19.8M  Field Services (less preventative maintenance) $18.7M  Athletics (less sports programs) $10.1M

Reductions could be made to base mandated amounts. Complete eliminations may not be possible for all divisions.

2020/2021 CENTRAL REDUCTIONS #2 (continued) Central Division Proposed Budgets (in amount order, with potential impacts):

 School safety (no district safety program) $8.2M  Financial Services (internal controls, less customer service for purchasing, budget support) $5.6M  Human Resources (reduced recruiting, slower onboarding and reduction of leaves and benefit support) $5.4M  Early Childhood 5A support (loss of licensed staff and programs) $3.2M  School Leadership (reduction in school support) $3.1M  Employee Relations (reduce performance management supports) $1.8M  Communications (reduce outreach) $1.1M  Superintendents office (support for BOE and Supt daily

• perations) $0.9M

 Board of Education (reduction of memberships and community engagement) $0.6M

Reductions could be made to base mandated amounts. Complete eliminations may not be possible for all divisions.

2020/2021 CENTRAL REDUCTIONS #3 Central district positions $7.5M of senior district leaders

• Proportionate cut should be made
• Already deferred raises w/5A
• Labor market

(these people can and will leave)

• Leadership/expertise vacuum

Insurance reserve fund needs an increased transfer due to increased premiums (see proposed budget pages 256 & 257)  Recommendation:

• Utilities trending lower than budget
• Shift utility budget underspend

to insurance reserve transfer 2020/2021 OTHER BUDGET ITEMS

2019/2020 estimated unassigned reserves:  $88.5M or 12% of expenditures 2020/2021 estimated unassigned reserves after $39M spend down:  $49.5M or 7% of expenditures 2020/2021 RESERVES

Early Retirement Incentives (ERI):  Always an option to consider, the district has done small incentive programs that were not influential or produce desired outcome  Formally evaluated by a third party with larger incentives in 2010 and recommendation was not to implement  The Government Finance Officers Association has a Best Practice Recommendation of not using ERI’s due to the difficulty of accurate projections and lack of positive results POPULAR IDEAS FOR REDUCTIONS

Outsourcing:  Always an option to consider, even when not making reductions  Caution must be taken; not all outsourcing results in savings  Careful evaluation is needed to identify

• pportunities

 Requests for proposals must be structured specifically  Must be viewed in a long-term view and watch for loss leading by vendors  Depending on the outsourcing, start up costs could be involved and/or reversal costs could be prohibitive POPULAR IDEAS FOR REDUCTIONS

 Is this the Board’s prioritization?

• Prioritized reductions to be

flexible with changing state revenue estimates

• Last reductions on list adjusted

down or removed 2020/2021 REDUCTION PRIORITIZATION

NEXT STEPS

NEXT STEPS

• 1. School Finance Act drafted by May 18
• 2. Option to add a Board meeting

after May 18 and before June 4

• 3. Budget adoption is scheduled for June 4
• 4. Option to add a Board meeting to move

budget adoption towards the end of June

COMMUNITY ENGAGEMENT  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