Northeastern School District Preliminary Budget Presentation 2 - - PowerPoint PPT Presentation

Northeastern School District

Preliminary Budget Presentation 2016-2017 School Year

The Bobcat Way: 100% of our students will graduate and be fully prepared for post-secondary education.

2016-17 budget highlights

• Known:

– Local revenue is continuing to show growth. – 5 new positions requested. – County-wide survey shows a lot of classified hourly rates are below YC avg. – The projected employer cost to retirement is driving costs higher. – Refinancing of debt last year has temporarily offset retirement increases. – Lower forecasted health insurance costs. – Total fund balance has grown to 10% of preliminary expenditures – provides for better cash flow security, address capital reserve projects and/or offers time to phase in real estate millage.

• Unknown: (and may cause budget to change significantly)…

– State budget for 2015-16 not resolved – 1/3 of revenue – Act 93 and Professional staff contracts expire June 30th – >1/3 of expenditures. – Greater employee cost sharing for medical benefits district-wide unresolved. – Employer cost to retirement rate may be lower rate than budgeted. – Charter school funding assistance may return. – Restrictions on future tax increases may be expanded. – $250k Budgetary reserve added budget to mitigate some of the uncertainty.

Preliminary Budget Summary

DESCRIPTION 2016-17 BUDGET SUMMARY TOTAL REVENUE $ 63,789,898

• TOTAL EXPENDITURES

$ 64,216,298 Budget deficit (rounded) ($ 426,400) Use of Fund Balance $ 0 RE Tax increase $ 0 Total budget deficit ($ 426,400)


 What helped this budget?

REVENUE EXPENDITURES Continue budgeting growth in local revenue of $1.5M mostly from real estate taxes. Less LERTA adds $375k, incr in assessment +$468k and better tax collection % of 1% equals $515k. New LERTA property not included. 3 teacher retirements to date Assumes $500k of medical savings to make salary increases more manageable Over $500k more state funding for retirement due to higher retirement contribution. Did not budget for LTS and ETS (substitutes) as wages from FMLA, sabbatical and CRL should offset Budgeted SS/HS grant of $550k. Locked in utility and diesel fuel at lower rates for budget savings Retain ability to add use of fund balance and/or < tax increase to index to balance budget Last year advanced refinanced debt service saving $680k. Potential refinancing of 2010 issue, not included, could offer more savings.

Possible Budget Concerns…

REVENUE CONCERNS EXPENDITURE CONERNS What will be the outcome of the 2015-16 state budget impasse? Will any BEF and SEF increases be outweighed by tax increase restrictions? Employer contribution to RETIREMENT . Rate increased +14% or net $700k more cost. State doesn’t support cyber/charter school funding costs. Adds 5 new teaching positions. Also, contract negotiations unresolved for Act 93 and teachers. If salary increase without medical savings, then problem. If medical savings occurs, this impacts Classified staff who are on average being paid less than YC average. Where will the funding come from to boost these wages?

Savings and Taxes

SAVINGS TAXES 2014-15 audit results added $1.8M to fund balance. Recommend approving a tax resolution – limits tax increase to max 3.2% and

• pt out of filing preliminary budget

Consider using fund balance committed to PSERS to offset $700k in net retirement cost increase Limit any tax increases especially if reoccurring expenditures are offset by reoccurring revenue. Recommend transfer of $250k to Capital Reserve transfers for physical plant maintenance to $250k. Consider a large 1 time transfer from GF to address artificial turf and track.

Group Life Insurance $25,000 % Social Security $2,051,848 1 2 % Retirement $7,963,317 4 8 % Tuition Reimbursement $225,000 1 % Unemployment Compensation $15,000 % Worker's Compensation $175,000 1 % Health Insurance $6,273,992 3 8 %

2016 -17 Benefit Budget

Group Life Insurance Social Security Retirement Tuition Reimbursement

Unemployment Compensation Worker's Compensation Health Insurance

13.85% 8.86% 2.50% 6.96% 5.95%

• 2.65%

5.26% 3.48% 5.32% 1.86% 2.60%

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-2014 2014-15 B2015-16 B2016-17

Revenue Growth % - 10 year History

13.4% 14.3% 8.7% 6.8% 4.9%

• 2.5%

1.9% 4.0% 4.1% 6.4% 2.9%

• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 B2015-16 B2016-17

Expenditure Growth % - 10 year History

% exp growth

10.73% 12.37% 7.94% 5.23% 4.22% 3.62% 6.35% 8.50% 11.20% 10.05% 9.77% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2006-07 2007-08 2008-09 2009-10 2010-11 2011--12 2012-13 2013-14 2014-15 B2015-16 B2016-17

Fund Balance % of Expenditures Budget - 10 year History

Fund Balance as a % of Budget

TAXES: District Perspective

DISTRICT Perspective Real Estate Millage Increase 1 mil = $1.4M in new reoccurring revenue Index +2.4% Adjusted Index +3.2% No Exceptions to be filed Additional Real Estate Revenue possible through tax increase $870,000 to $1,160,000 $0

TAXES: Taxpayer Perspective

TAXPAYER Perspective Real Estate Millage Increase based on assessed property value $ 100k $ 150k $ 200k Tax increase: Adjusted Index to 2.4% Real Estate Tax bill at 26.72mils w/o H/ F excl +$ 63 $ 2,672 +$ 94 $ 4007 +$ 126 $ 5,344

Budget Steps Moving Forward… Need to see what the 2015-16 state budget resolves or compounds…new BEF formula – good, taxpayer protection – bad for district’s LT health Employee staff carefully increased – supports student achievement and efficiency. Labor negotiations needs health insurance savings to manage any increased salary cost Discuss Classified salary survey. Link higher salary with higher medical cost sharing. Continue to review LIU program(s). Evaluate whether any services are better served in-house. Continued debt refinancing benefits – next 4+ years lowered debt service than 2015-16 and maybe another debt service refinancing coming. Recognize that temporary lower debt service is masking reoccurring cost of retirement. Make annual transfers into Capital Reserve for physical plant and use current fund balance to address longer term needs of artificial turf Use part of committed fund balance to balance budget – planned to ease into millage Keep on the horizon the eventual need for a new high school and aging equipment in all buildings.

Northeastern School District Questions and Answers