2020/2021 BUDGET REDUCTION PLANNING Board of Education April 29, - PowerPoint PPT Presentation

2020/2021 BUDGET REDUCTION PLANNING Board of Education – April 29, 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: Wait for the May 12 updated economic forecast  Plan to introduce Long Bill and School Finance Act by May 18  Target to complete school finance by June 1

TIMELINE 2020/2021 BUDGET DEVELOPMENT OCT/NOV DEC JAN/FEB MAR APR MAY/JUNE School 2020/2021 Schools Enter DAC Final Continue Last Day Accountability Factors are Budgets into Community Fine Tuning for Legislators Committees Set Based Hyperion Engagement and Building ? Meet to Define on 2019 Results Report Budget Priorities October Count Budget Increase Proposed Budget Requests Due Direction/ Final BOE Public Hearing Governor’s Kick Off Feedback ─ Direction May 7 Proposed SBB and BFO Cabinet March 5 for Proposed BOE Meeting Budget Processes Recommendations BOE Meeting Budget April 2/8/29 Final BOE ELECTION Community Negotiations March Forecast BOE Meetings Direction for Engagement/ Budget Adoption SAC Reports Begin Building on June 4 Budget December Forecast / Negotiations Outlook Budget Survey

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 WHOLE

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 of 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

EXAMPLES OF REDUCTION RANGES

Example A : 5 Percent Reduction – No layoffs, $15M from Reserves Reduction Description Amount One-time Use of Reserves $15.0 Furlough Days – 2 Days 7.2 Pay Reduction – 1% 6.3 Central Division Reductions 2.0 Total Reductions $30.5

Example B : 5 Percent Reduction – No layoffs, $20M from Reserves Reduction Description Amount One-time Use of Reserves $20.0 Furlough Day – 1 Day 3.6 Pay Reduction – .75% 4.7 Central Division Reductions 2.0 Total Reductions $30.3

Example C : 10 Percent Reduction – All Areas Impacted Reduction Description Amount One-time Use of Reserves $20.0 Furlough Days – 3 Days 10.8 School Closures – 6 Schools 4.8 Central Programs and Layoffs 10.0 School Programs and Layoffs 15.0 Total Reductions $60.6

2020/2021 ADJUSTMENT EXAMPLES (combined) Example A Example B Example C No Layoffs No Layoffs All Areas $15M $20M Impacted Reserves Reserves One-time from Reserves $15.0 $20.0 $20.0 Furlough Days ($3.6M per day) 7.2 3.6 10.8 Pay Reduction (1%/.75%) 6.3 4.7 - Central Division Reductions 2.0 2.0 10.0 School Based Reduction - - 15.0 School Closures – 6 Schools 4.8 Total Reductions $30.5 $30.3 $60.6

2020/2021 REVENUE FORECASTS – 2 Year Loss (14% and 6% Reduction) 2 Year Loss, 14% and 6% Reduction % Reduction (Reduction) Increase *Revenue Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐14.00% $ 794,908,139 $ (86,700,000) $ 708,208,139 FY 21/22 ‐6.00% $ 708,208,139 $ (32,000,000) $ 676,208,139 FY 22/23 0.00% $ 676,208,139 $ ‐ $ 676,208,139 FY 23/24 3.50% $ 676,208,139 $ 17,500,000 $ 693,708,139 FY 24/25 5.25% $ 693,708,139 $ 27,000,000 $ 720,708,139 Cumulative Reduction $ (74,200,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 3 Year Loss (14%, 11% and 4% Reduction) 3 Year Loss, 14%, 11% and 4% Reduction % Reduction (Reduction) Increase *Revenue Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐14.00% $ 794,908,139 $ (86,700,000) $ 708,208,139 FY 21/22 ‐11.00% $ 708,208,139 $ (58,600,000) $ 649,608,139 FY 22/23 ‐4.00% $ 649,608,139 $ (19,000,000) $ 630,608,139 FY 23/24 3.50% $ 630,608,139 $ 16,000,000 $ 646,608,139 FY 24/25 5.25% $ 646,608,139 $ 24,700,000 $ 671,308,139 Cumulative Reduction $ (123,600,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 2 Year Loss (10% and 3% Reduction) 2 Year Loss, 10% and 3% Reduction % Reduction (Reduction) Increase *Revenue Increase Total Revenue FY 19/20 $ 800,508,139 $ - $ 800,508,139 FY 20/22 -10.00% $ 794,908,139 $ (62,000,000) $ 732,908,139 FY 21/22 -3.00% $ 732,908,139 $ (16,700,000) $ 716,208,139 FY 22/23 0.00% $ 716,208,139 $ - $ 716,208,139 FY 23/24 3.50% $ 716,208,139 $ 19,000,000 $ 735,208,139 FY 24/25 5.25% $ 735,208,139 $ 29,000,000 $ 764,208,139 Cumulative Reduction $ (30,700,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 REVENUE FORECASTS – 3 Year Range (5%, 3% and 1% Reduction) 3 Year Range, 5%, 3% and 1% Reduction % Reduction (Reduction) Increase *Revenue Increase Total Revenue FY 19/20 $ 800,508,139 $ ‐ $ 800,508,139 FY 20/22 ‐5.00% $ 794,908,139 $ (31,000,000) $ 763,908,139 FY 21/22 ‐3.00% $ 763,908,139 $ (17,700,000) $ 746,208,139 FY 22/23 ‐1.00% $ 746,208,139 $ (5,700,000) $ 740,508,139 FY 23/24 3.50% $ 740,508,139 $ 19,700,000 $ 760,208,139 FY 24/25 5.25% $ 760,208,139 $ 30,700,000 $ 790,908,139 Cumulative Reduction $ (4,000,000) *Assumes all revenue, but state of Colorado, stays flat

2020/2021 DIRECTION NEEDED 1. Board values to frame reductions?  Pay reductions  Layoffs  Program cuts  School closures/consolidations  Use of reserves 2. Of the examples for the range of 5% to 10%, which are the preferred options?

NEXT STEPS

NEXT STEPS 1. Propose Budget on May 7; further reduction conversation 2. School Finance Act drafted by May 18 3. Option to add a Board meeting after May 18 and before June 4 4. Budget adoption is scheduled for June 4

COMMUNITY ENGAGEMENT  Community Survey  Launched week of March 9  Community to choose top three and highest priority for budget investments  Closes April 27 Marginal value due to change in economy

COMMUNITY ENGAGEMENT (continued)  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