Financial Summary: Funding The Capital Plan Education Summit - - PowerPoint PPT Presentation

Financial Summary: Funding The Capital Plan Education Summit 2014-2015

John Wilson Chief School Financial Officer

Financial Summary

• Before we can talk about revenue needed for

the Capital Plan, we need to evaluate the revenue we currently have available.

Current Ad Valorem

• Baldwin County currently receives 12 mills of ad

valorem property tax for education.

• How does that compare to other systems?
• Mountain Brook : 52.9 mills
• Vestavia Hills : 52.05 mills
• Hoover: 46 mills
• Homewood City: 37.5 mills
• Jefferson County: 30 mills
• Shelby County: 30 mills
• Saraland City: 29 mills (After 7.5 mill increase in Jan 2015)
• Mobile County (inside the City of Mobile and Prichard)= 29.5

mills; (outside the city limits = 21.5 mills)

• Baldwin County: 12 mills

State Equity Funding Provision

This is Reduced From Funding Sent To Baldwin County and Placed into a State Funding Pool Distributed To Other Systems

Is Property Tax Revenue Increasing with a Growing Population?

Close to a $12 million (22% decline) in Ad Valorem Revenue since 2008

Temporary 1% Sales Tax

Teacher Certified Staff Teachers 151 Counselors 18 Asst Principals 13 Psychometrist & Speech Path 10 Other Certified Employees 15 School Support Personnel Teacher Aides (Special Ed, Instructional) 27 Clerical (Bookkeepers, Registrar, Secretary, etc.) 88 Technical (IT Technicians, Nurses, Social Workers, etc.) 43 Maintenance (Custodians, Mechanics, HVAC Repair, etc.) 73 Bus Drivers 72 Other Administrative Positions 8 Total Number of Staff Budgeted with Penny Tax 518 Total Cost of Salaries and Benefits 27,688,922 $ Budgeted Staff for FY 2015 with Penny Tax

• Can We Use The Temporary 1% Sales Tax To Pay

For a Capital Projects Bond?

– We Can Not Pledge a 5 Year Tax to Pay for a 30 year Construction Bond.

• When Does the Temporary Sales Tax Expire?

– May 31, 2018

• Will We Still Need It?

– This Revenue Was Put In Place To Help Restore the Cuts in State Funding. – If State Funding Is Restored To Prerecession Levels Then We Will Have Comparable Funding To Allow It To Expire.

• How Much Funding Was Cut At The State level?

Temporary 1% Sales Tax

$1,128 in cuts per student!!

Only cut $623 in cuts per student

Alabama cut almost 2 times more per student that Mississippi

This Translates to Almost $34.5 Million Less in Baldwin County Today Compared to 2008

1% Sales Tax (Critical Funding Piece)

State Funding

1% Sales Tax, Helped to Fill In The State Funding Gap

* FY 2016 Expenditures Calculated from Rolling Reserve Act Formula Statewide Funding is Not Expected to Really Increase for Next Year Either *

Baldwin County is a highly educated place with 88.4 percent of its adults having graduated from high school.

87 50 3 6 5 7

10 20 30 40 50 60 70 80 90 100

Property Tax Rate Property Tax Equivalent High School Graduates College Graduates Per Capita Income Unemployment Rate

Rankings of Baldwin County and Baldwin County Public School System

(BCPSS tax rankings worse if adjusted for equity funding)

Can you imagine what we could accomplish as a School System/County if our funding was ranked in the Top 10 or even the Top 20 in the State

Ranked Top 10 in the State

Last Round of Capital Projects

• The Last Round Capital Projects completed between 2002-2010.
• Over $250 Million Spent to Keep Up with Over 30% Growth in

Last 14 Years.

Estimated Cost of Proposed 10 Year Capital Projects

• Cost to cover immediate needs (1-3 years) is

approximately $140 million.

• Cost to cover short term needs (4-6 years)

approximately $60-70 million.

• Cost to cover long term needs (7-10 years)

approximately $150-$160 million.

Total Estimated Cost $350,000,000

To Address Student Enrollment Estimate

• f Close to 36,000 Students

The Solution

• An 8 Mill Increase Will Create a Long Term

Stable Funding Source Generating Bonding Capacity to Borrow Funds for Capital Projects.

• All the Proposed Capital Projects Can Be

Funded Addressing Our Capital Needs Now and In The Future.

NO!!! Everything over 10 mills stays in Baldwin County

Do We Have To Give More To The State?

100% Will Stay in Baldwin County Giving Us The Resources to Address Future Growth Needs Throughout The County

Will The 8 Mills Only Be Used For Capital Projects?

• Yes, Majority of the Revenue Will Be Pledged

for a Long Term Capital Bond Issuance.

• The Board Has Passed a Resolution to Use This

Revenue Solely and Exclusively for Capital Improvement, Capital Construction, and Maintenance.

Future “Pay As You Go” Plan

• We have not build a new school in Baldwin County

since 2009.

– In order to address those immediate needs we will need to issue an $140 million capital projects bond.

• Long Term Plans are to build up the Capital Projects

Fund

• As future capital projects come up, the board will do

as much “Pay as you go” projects as possible to avoid adding additional debt when new building are built.

What About Operational Cost Inside the Buildings?

Instructional Expenditures (Teacher salaries, instructional programs)

• This Is How We Are Currently Operating ( The Sales Tax Tug O’ War)
• If The Referendum is Successful:

Sales Tax

Instructional Expenditures

8 Mill Property Tax Sales Tax Revenue

Capital Maintenance Project (AC, Roof Repair, small school additions, etc)

Capital Projects & Maintenance

Ad Valorem Comparison Update

• Baldwin County would collect a total of 20 mills for

education.

• Still below other systems we compare ourselves to:
• Mountain Brook : 52.9 mills
• Vestavia Hills : 52.05 mills
• Hoover: 46 mills
• Homewood City: 37.5 mills
• Jefferson County: 30 mills
• Shelby County: 30 mills
• Saraland City: 29 mills (After 7.5 mill increase in Jan 2015)
• Mobile County(inside the City of Mobile and Prichard)= 29.5 mills;

(outside the city limits = 21.5 mills)

• Baldwin County: 20 mills

Move in the right direction from 50th to 32nd in State (136 School Systems) Move From 87th to 41st out of 136 School Systems

What about the Farmers and Large Land Owners? Current Use (8 mills)

• Rowcrop and/or Pasturelands

– Average Soil Group Classification

8 mills = $0.35 cents per acre per year

– 100 acres = $35 per year – 1,000 acres = $350 per year

• Timberland

– Average Soil Group Classification

8 mills = $0.43 cents per acre per year

– 100 acres = $43 per year – 1,000 acres = $430 per year

Home & Business 8 Mill Cost

• Homestead

= $80 increase per year

per $100,000 of appraised value

• Business or Rental Property =

= = $160 increase per year per $100,000 of appraised value

What Does This Mean For Me

Average Home Value in Baldwin County What Does an 8 mill Increase Cost? Cost per Year: $148 per year Cost per Month: $12 per month Cost per Day: $0.41 cents per day

Investment in our Community

Economic Impact of $350 million Capital Plan

• Dr. Semoon Chang, Gulf Coast Center for Impact Studies
• 769 Jobs Generated Each Year for 10 Years (Direct 355,

Indirect 414)

• Create Pre-Tax wages of $25,668,549 Each Year for 10 yrs
• Sales Tax Revenue of $2,656,197 for Baldwin Co Cities
• Sale Tax Revenue of $2,396,390 for Baldwin Co

Commission

• See the entire report at buildbaldwinnow.com

Strong Schools = Strong Communities

• We believe Strong Schools = Strong Communities.

Strong Communities which value and invest in their local schools have been proven to stimulate the local economy, increase property values, sustain and retain an educated workforce, and attract new businesses and industries.