Harrisburg School District Revised 2019-2020 Budget Review & - - PowerPoint PPT Presentation

Harrisburg School District Revised 2019-2020 Budget Review & Discussion

Tuesday, November 12, 2019 Lincoln Administration Building

AGENDA

 Opening Remarks and Executive Summary  Review of Revenues by Category  Review of Expenditures by Category  Financial Strategy for Moving Forward  Future Challenges  Status of System Controls & Audits  2020-2021 Budget Development Process

Executive Summary

 Original Budget Revenue: $155.7 million  Actual Budget Revenue: $149.5 million

• Original budget over estimated revenue by $6.2 million

 Original Budget Expenditures: $158.8 million  Actual Budget Expenditures: $152.1 million

• Original budget planned to spend $6.2 million more

 Original Transfer from Fund Balance: $3.1 million  Actual Transfer from Fund Balance: $2.6 million

Executive Summary

Fund Balance as of 6/30/2019  16.2 million total  $5 million ( 3.4% of budget is unassigned)

Revenues by Major Function

37% 54% 9%

19-20 Revenue Budget

Original Budget (Submitted to PDE on 6/30/19) Revised Budget As of 11/12/19 Local Sources $ 57,486,426 $ 56,052,770 State Sources 84,446,600 79,392,355 Federal Sources 13,767,765 13,774,180 Other Sources/Balance 250,000 Total $ 155,700,791 $ 149,469,305 Note: The figures above include the implemented tax increase for the 2019-2020 school year.

State Revenue Variances

18-19 Actual 19-20 Original Budget Submitted to PDE 19-20 Revised as of 11/12/19 Difference Basic Ed $52,433,391 $54,210,847 $53,791,395 ($419,452) Special Ed 5,996,091 5,991,522 6,331,999 340,477 Transportation 1,399,643 953,593 1,375,000 421,408 Non Pub Tran 334,950 815,768 365,000 (450,768) Social Security 1,855,754 2,279,621 1,808,500 (471,121) Retirement 10,925,327 12,761,762 8,106,475 ($4,655,287) Budget submitted to PDE on 6/30/19 overestimated state revenue by $5,180,396.

Federal Revenue Variances

19-20 Original Budget Submitted to PDE 19-20 Revised Budget as of 11/12/19 Difference ELECT $235,000 $126,000 ($ 109,000) SIG $4,028,720 $1,953,660 ($2,075,060) The District lost $1,100,000 in SIG funds for John Harris High School for 18-19 and $1,826,324 for 19-20 due to the mismanagement of these funding sources within the prior Administration.

Expenditures by Major Function

19-20 Expenditure Budget

19-20 Original Budget Submitted to PDE 19-20 Revised Budget as of 11/12/19 100 - Employee Salaries $ 50,143,341 $ 47,823,265 200 - Employee Benefits 37,386,038 32,828,265 300 - Contracted Svcs 6,633,074 6,892,990 400 – Purchased Svcs 3,999,408 4,897,220 500 – Other Purch Svcs 31,757,243 32,818,640 600 – Supplies/Food 2,844,108 3,419,760 700 – Equipment 1,126,473 570,720 800 – Dues & Fees 3,024,190 2,987,010 900 – Other Uses 21,882,858 19,882,885 Total $ 158,796,733 $ 152,120,755

Expenditure Highlight #1

Charter School Tuition

• The continued increase in Charter School Expenditures is a significant

focus on the Amended Recovery Plan (See ED21).

• The Administrative Team has placed a focused effort on oversight of

Charter Schools under the prevue of the District. 18-19 Actual 19-20 Original 19-20 Revised Brick & Mortar $ 6,714,821 Not Available $ 7,050,560 Cyber Charter 8,184,197 Not Available 8,634,440 Total $ 14,899,018 $ 13,778,680 $ 15,685,000

Expenditure Highlight #2

Worker’s Compensation

19-20 Actual 20-21 Budget Proposed Cost $ 914,847 TBD Add: Safety Credit 30,467 TBD Revised Cost $ 945,314 $ 1,256,000 The District did not qualify for the Safety Credit, as the District did not have an active Workplace Safety Committee during the 2018-2019 school year. The new Administration can confirm a fully operating Workplace Safety Committee will be in place as of January 2020.

Expenditure Highlight #3

Facilities Management – Aramark Agreement

Fiscal Year Contract Amount 2016-2017 $ 959,445 2017-2018 969,039 2018-2019 978,730 2019-2020 Estimated $ 969,060 The Administration has had ongoing collaborative discussions with Aramark leadership regarding the effectiveness of this arrangement.

Expenditure Highlight #4

Harrisburg Area Community College – Adult Tuition Program

Adult Tuition Capital Outlay 2015-2016 $ 427,800 $ 51,668 2016-2017 341,800 76,671 2017-2018 341,800 74,819 2018-2019 174,694 * 48,763 Total $1,286,094 * $ 251,921

* Reflects Invoice for July – January 2019, the District has not received the final invoice for 18-19 yet.

These services are for Adult students, not K-12 students.

Expenditure Highlight #5

Energy Management - Electricity

Source: Provident Energy Consulting, October 2019

Expenditure Highlight #5

Energy Management - Electricity

The District received preliminary responses on November 8, 2019 for the 2021-2022 school year. Final responses with recommendation from Broker expected on November 13, 2019. Fiscal Year Amount 2018-2019 $980,277 2019-2020 (Locked) 914,953 2020-2021 (Locked) 901,091 2021-2022 (Preliminary Results) 885,100

Expenditure Highlight #6

New Stormwater Management Fees - Pending

• Notice to the District on July 9, 2019 from Capital Region Water
• Part of Larger program to invest over $300 Million into Harrisburg’s sewer

and stormwater systems over the next 20 years.

• Commercial properties will be charged a proposed fee of $6.15/month per

each 1,023 square foot of impervious area associated with the properties. Monthly Estimated Cost to Harrisburg SD: $13,617.40 Annual Estimated Cost to Harrisburg SD: $163,408.80

19-20 Revised Revenue & Expenditure Summary

Category Total Revenue $ 149,469,305 Expenditures 152,120,755 Total ( $ 2,651,450) With realistic revenue and expenditure estimates, the District is projecting a $2,651,450 deficit for the 19-20 school year.

Financial Strategy – Address Charter School Costs

• Provide better accounting on enrollment invoices
• The proposed 19-20 revised budget includes a new 1.00 FTE

Accountant for Student Accounting for this initiative.

• Improve Cougar Academy Program Offerings
• Expand Cyber Educational Opportunities via the

Montgomery Virtual Program

• Increase oversight of brick and mortar charters to ensure

compliance

Financial Strategy – Refinance Debt

Debt Refinancing for Capital Improvements

• Take Advantage of Historically Low Interest Rates
• Reduce 2020-2021 Debt to ‘free up’ funds for Capital

Improvements (Taxable Issuance)

• Keep Annual Debt Service Payments below $20 Million

Ongoing Discussions regarding the District’s Credit Watch Status with S&P Rating Agency will be integral to the viability of this

• pportunity.

Financial Strategy – Improve Management of Healthcare

16-17 Actual 17-18 Actual 18-19 Budget 18-19 Actual $14,865,498 $15,131,760 $13,800,000 $14,405,564

• Request for Proposal for Benefits Consulting Services
• Request for Proposals was issued October 30, 2019
• Comprehensive Proposals due by December 15, 2019
• Review Medical, Dental, & Prescription Drug Contracts
• Prescription Drug Contract – Express Scripts (Ends 12/31/19)
• Medical Contract – Highmark (Ends 6/30/20)
• Dental Contract – United Concordia (Ends 6/30/20)
• District is Self Funded with NO Reserves
• Reserve Should be at least 2 Months of Premium or $2,400,930

Financial Strategy – Pursue New Revenue

• Harrisburg SD – Recovery Plan Item RV07
• Engage Professional Contracted Grant-Writing Services to Seek

Additional Funding from Competitive Grants and Non-Traditional Sources

• A 1.00 FTE position has been included in the revised 19-20 budget

for this purpose.

• Harrisburg SD – Recovery Plan Item – School Based ACCESS Prgm
• Optimize Utilization of the Federal Medical Assistance (ACCESS)

Program

• Staff Training has been provided in August & November 2019

regarding the SBAP Program and how various Professionals can support the District in accessing these Dollars.

Financial Strategy – Address Special Education Costs

Statewide Average Cost/Student: $23,132 Harrisburg SD Average Cost/Student: $29,880

Financial Strategy – Review & Develop Plan for Physical Assets

Closed Facility Status Steele Elementary School Pulled Off the Market, Pending Elementary Enrollment Study Results William Penn High School Currently on the Market Seeking Potential Buyers Woodward Elementary School A Potential Buyer has been identified and the District is evaluating the final details of the proposed sale. Funds from the sale of properties would ideally be made available to provide capital improvements to other existing, open facilities.

Challenge – Need to Develop and Implement a Capital Plan

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 2018 2019 2020 2021 2022

Harrisburg School Capital Plan from 2017

Total

Challenge – Need to Develop and Implement a Capital Plan

Action Steps for Capital Improvements

• Complete evaluation of Building Facilities – Goal by 6/30/20
• Update Capital Plan and Financial Projections
• Seek Funding Opportunities for Building Improvements.

Challenge – Develop Community Partnerships

Reasons for Developing Community Partnerships Create Long-Term, Permanent Change Ensure Open Communication Among Stakeholder Groups Eliminate Duplication of Effort within the Community Launch New Community-Wide Initiatives Pool Valuable Resources Obtain and/or Provide New Services The District Administration has placed a high priority on developing mutually beneficial partnerships within the Harrisburg Community.

Challenge – Negotiating Collective Bargaining Agreements

Harrisburg Education Association Agreement Expired June 30, 2018 AFSCME Agreement Expired June 30, 2019 Act 93/Administrative Staff Agreement Expired June 30, 2011 The District’s Amended Recovery Plan of 2016 included several items related to Workforce, including cost sharing and cost

• limitations. These items will create the basis for negotiations with

the various employee groups.

Challenge – Federal Funding & Cash Flow

• In the Spring of 2019, the District was placed on ‘reimbursement’ for

all of the Federal Funds due to prior failures to provide required documentation and reports.

• A Corrective Action Plan for the Major Federal Programs of the District

was developed by the new Administration and was submitted on September 30, 2019 to the PA Department of Education.

Challenge – Outstanding Legal Matters

Open Legal Matters with Major Financial Implications

• Legacy Matter regarding E-Rate Funding
• Matter open from the 2001-2002 School Year.
• The District is not in the financial position to pay a large settlement for this

matter.

• Transportation Fraud Matter from 2017
• The new Administration closed this matter in September 2019.
• An insurance settlement was provided to the District in the amount of

$215,262 in October 2019.

• Other – Numerous Personnel Matters

Challenge – Outstanding Tax Assessment Appeals

• 21 Parcels with Initial Assessment Appeal Filed
• Open Litigation exists regarding 1 Appeal that could have

a dramatic impact on the District’s budget.

Challenge – Fund Balance Management

6/30/16 6/30/17 6/30/18 6/30/19* Assigned 23,728,231 18,949,800 18,114,553 11,129,681 Unassigned 6,444,096 10,739,859 1,030,200 5,050,069 Total $ 30,172,327 $ 29,689,659 $ 19,144,753 $ 16,179,750 The 6/30/19 Figures are Preliminary, pending final audit report.

Accomplishments with Fiscal Implications

• Business Operations Procedures Manual – August 2019
• Cash Disbursement Procedures
• Invoice Approvals
• Positive Pay for Check Disbursement
• Training
• Training for Building Level Staff on Requisition Entry – August 2019
• Building Administration – August & September 2019
• Training for Booster Clubs & PTOs – October 2019
• School Based ACCESS Program Training – August & November 2019

Accomplishments with Fiscal Implications

• Position Control has been updated and is actively being utilized

for decision making.

• Budget Development Forms and Procedures for developing the

2020-2021 District Budget have been created.

• Purchasing – Approval Levels
• Including Building Level Staff, Administrators, and Business Manager

Business Procedures Manual

Accepting Donations to the District Guidelines for Grants/Partnerships Athletic & Event Gate Receipts Incident Rptg (Criminal Activity) Booster Clubs & PTO Organizations Purchasing & Procurement Budget Transfers Reimbursement for Travel Expenses Cash in School Buildings Student Field Trips Conflict of Interest Time & Effort Reporting Equipment Disposal & Transfer TimeClock Plus – Timekeeping Fraud, Waste, & Abuse of Funds Use of External Consultants Fundraising Guidelines Use of Facilities On-Line Fundraisers Vehicle Accident Report Additional Items Will be Added Throughout the Year.

Fraud Reporting

Fraud Reporting

• The new District Administration in collaboration with the Receiver have taken

numerous steps to reduce the possibility of Fraudulent Activities at the District.

• Looking for the entire District Community to assist in identifying areas of

potential fraud.

NEW Fraud Reporting Hotline: 717-703-4135 NEW Fraud Reporting Email: fraud@hbgsd.us

Status of Financial Audits

• Annual Local Audit
• New Firm Approved in July 2019 for the 2018-2019 Audit
• Field Work began October 28, 2019 and will be ongoing for approximately 4

weeks

• State ‘Real Time’ Performance Audit
• From the PA Department of the Auditor General
• Began September 2019
• Initial Focus areas were:
• Sunshine Act Compliance
• Cash Disbursements

2020-2021 Budget Development

Date Action November – December 2019 Budget Preparation by Admin December 16, 2019 Preliminary Budget Presentation January 10, 2020 Public Notice of Preliminary Budget January 21, 2020 Preliminary Budget Adoption May 18, 2020 Proposed Final Budget Adoption June 5, 2020 Public Notice of Proposed Final June 22, 2020 Final Adoption of Budget

2020-2021 Budget Development

• A detailed budget calendar is available on the District’s website at

http://www.hbgsd.k12.pa.us/community/budget__finance_and_f acilities_information/budgets_for_current_and_prior_years

• Budget documents will be added to the website as they are

prepared.

• A component of the 2020-2021 Budget Development will be

multi-year forecasting regarding District Operations.

• The MCIU Administrative Team in collaboration with the Receiver

has established a goal of a balanced budget for the 2020-2021 fiscal year.

THANK YOU!

Sandra Edling Acting CFO/Director of Business Services Harrisburg School District Phone: 610-755-9410 Email: sedling@mciu.org Christopher Celmer Chief Operating Officer – Acting Assistant Superintendent Harrisburg School District Phone: 717-703-4024 Email: ccelmer@hbgsd.us