Five Year Financial Plan December 18, 2014 The School District of - - PowerPoint PPT Presentation

The School District of Philadelphia

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December 18, 2014

Five Year Financial Plan

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The School District of Philadelphia

The five-year financial plan is a valuable budgetary forecast tool which outlines the District’s strategic priorities. It is not the District’s budget.

• The five-year financial plan enhances the District’s ability to invest strategically,

provide transparency, and ensure that the District remains a responsible financial steward of public resources.

• Since the previous Five-Year Financial Plan in September 2012, District leadership

has made difficult decisions to achieve fiscal stability. The District has:

– Realized more than $140 million in labor concessions – Closed 24 schools – Reduced administrative spending to less than 3% of budget

• The District has also:

– Secured additional revenues totaling $337 million – Expanded opportunities for students to attend high-quality District schools, invested in new school models, and converted three low-performing schools into Renaissance Charter schools

• While many of these steps allowed the District to spend within expected revenues, a

balanced budget came at the expense of the District’s students.

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The School District of Philadelphia

Over the next five years, the District will build a system of great schools that will provide every student in Philadelphia with a high quality education. This requires an infusion of new, recurring resources in conjunction with effective implementation of the District’s Action Plan.

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FY16 FY17 FY18 FY19 City $ 102,964 $ 178,951 $ 241,160 $ 304,349 State $ 205,928 $ 357,901 $ 482,319 $ 608,698 Revenue Request $ 308,892 $ 536,852 $ 723,479 $ 913,048 Labor Savings $49,132 $51,365 $54,048 $57,240 Total Revenues / Savings $358,024 $588,217 $777,527 $970,288

Cumulative Revenue Request / Savings Above FY15 (in thousands)

• To continue and expand its transformation of schools, the District is requesting $309

million in new revenues and anticipates labor savings of $49 million in FY16.

The School District of Philadelphia

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These resources will enable the District and school leaders to better support students and improve the District’s academic outcomes.

Example Investments Outcomes Anchor Goals

• 1. 100% of students

gradate, ready for college and career

• 2. 100% of 8-year-olds

read on grade level

• 3. 100% of schools

will have great principals and teachers

• 4. SDP will have 100%
• f the funding we

need for great schools, and zero deficit

• More students on-track to

graduate

• More students reading at

grade level

• Improved school leadership
• More teachers able to

differentiate instruction

• More students engaged in

college- and career-ready curriculum

• Additional inclusion
• pportunities for ELL and

special education students

• More students are in school
• Decreased dropout rates
• Decreased suspension and

violence incidents

• Turning around low-

performing schools

• Expanding or replicating high-

performing schools

• Increased counseling and

conflict resolution support

• Increased Pre-K seats
• Credit recovery
• Improved facility conditions
• College-prep. programming

(AP, IB, Dual Enrollment)

• Strengthening and targeting PD
• Elimination of split classes
• Early literacy coaches
• Tutoring for students to pass

Keystone Exams New, Recurring Resources

The School District of Philadelphia

The District’s five-year financial plan for transformation includes:

• Investments in District schools of $308 million in FY16 and $485 million by FY19

– The District is committed to direct the majority of these resources to schools – With District guidance and support from Assistant Superintendents, principals and their staffs will have the necessary flexibility to allocate resources in the ways that best address the needs of their students

• Charter sector growth of approximately 13,500 students over five years and total

investments of $360 million by FY19

• Labor savings of $49 million in FY16 and over $200 million by FY19

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The School District of Philadelphia Apart from providing new, recurring revenues, the State and City can help alleviate some of the District’s financial challenges through policy and practice changes.

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Topic Challenges Recommendations / Requests State

State Funding Method The State does not take into consideration the varying level of services that students across the State require Create of a fair funding formula that includes more funding for students with additional needs Charter School Per Pupil Funding The charter school funding mechanism passes along funding to charter schools for services which they do not provide Reform the charter school funding mechanism to include only the cost of services for the types of students that charter schools serve Charter School Special

• Ed. Funding

The per pupil funding calculation for payment to charter schools does not allow for variations in rates for special ed. students Reform the per pupil calculation for special ed. students to reflect cost; reform the IDEA pass-through PSERS The State-established PSERS rate increases from 21.4% to 33.1% from FY15-FY19 , creating an unfunded PSERS mandate of approx. $29 million Reform the pension formula or provide additional revenues to relieve the District

• f uncontrollable cost growth

City

Identifying additional opportunities to support the District in its desire to realize its full City revenue potential Enhance practices that allow for increases in revenues dedicated to the District

The School District of Philadelphia While significant resources are needed to aid the District in transforming its schools, the District is committed to living within its means. Therefore, the plan proposed for adoption is based on the inadequate level of services in District schools today.

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$2,615 $2,615 $2,615 $2,615 $2,615 $13 $52 $82 $115 $2,646 $2,692 $2,731 $2,767 $2,937 $3,204 $3,421 $3,644 $1,800 $2,000 $2,200 $2,400 $2,600 $2,800 $3,000 $3,200 $3,400 $3,600 $3,800 FY15 FY16 FY17 FY18 FY19 $ (in millions) FY15 Revenues Natural Revenue Growth

Revenues Needed for Transformation Revenues Needed for Inadequate Status Quo

$0

The School District of Philadelphia

This inadequate status-quo plan includes:

• Revenue growth of $115 million over five years, which is a compounded annual growth rate of

1.1%

• Expenditure growth of $282 million over five years, which is a compounded annual growth rate
• f 2.6%; the large majority of this cost growth is out of the District’s control
• Labor Savings of $49 million in FY16 and over $200 million over the five years
• Gap between revenue and expenditures of $30 million in FY16 and a cumulative gap of $374

million over the five years; this gap will need to be closed though additional revenues or expenditure reductions

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2,604 2,711 2,816 2,896 2,972 2,619 2,632 2,671 2,701 2,734 2,400 2,500 2,600 2,700 2,800 2,900 3,000 FY15 FY16 FY17 FY18 FY19 $ (in millions) Expenditures Revenues Annual Gap between Revenues + 15 M - $30 M - $76 M - $116 M - $152 M and Expenditures

The School District of Philadelphia

Revenue Assumptions

• After years of significant reductions, the District cannot continue to cut its way to
• solvency. The District faces a revenue, rather than expenditure, problem.
• Revenues are projected to increase by just 0.5% between FY15 and FY16 and by an

annual compounded rate of only 1.1% over five years.

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Local, 5 Local, 26 Local, 49 Local, 75

State - PSERS, 21 State - PSERS, 38 State - PSERS, 42 State - PSERS, 47 State - All Other, 2 State - All Other, 4 State - All Other, 6 State - All Other, 9

Other Financing Sources, (15) Other Financing Sources, (15) Other Financing Sources, (15) Other Financing Sources, (15) (40) (20) 20 40 60 80 100 120 140 FY16 FY17 FY18 FY19

$ (in millions)

Cumulative Revenue Growth Above FY15 Revenues

State, 41 State, 48 State, 56 State, 23 Total Revenue $13 M $52 M $87 M $115 M Growth:

The School District of Philadelphia

Expenditure Assumptions

• The plan assumes that service levels in

FY16 through FY19 will remain similar to FY15 levels, which are wholly inadequate and fail to provide students and educators with the supports needed to transform schools

• Approximately 86% of the District’s

expenditure growth between FY15 and FY19 can be attributed to three categories: – Charter Schools – Pension – Debt

• The rise in expenditure growth is partially
• ffset by assumed labor savings of $49

million in FY16 and over $200 million during the five years of the plan

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Charter Schools, $140 Pension, $75 Debt, $28 Other, $39 50 100 150 200 250 300 FY15 to FY19 $ (in million)

Major Expenditure Increases from FY15 to FY19

Total Expenditure Increase FY15-FY19: $282 Million

The School District of Philadelphia Meeting the conditions of a five-year financial plan that focuses on the transformation of schools will demonstrate the commitment of the City, State, and labor unions to the students of Philadelphia and provide much needed investment to a system that has been depleted in recent years.

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FY16 FY17 FY18 FY19 City 102,964 178,951 241,160 304,349 State 205,928 357,901 482,319 608,698 Revenue Request 308,892 536,852 723,479 913,048 Labor Savings $49,132 $51,365 $54,048 $57,240 Total Revenues / Savings $358,024 $588,217 $777,527 $970,288

Cumulative Revenue Request / Savings Above FY15 (in thousands)