2020-2021 School Year Enrollment and Financial Forecast SCHOOL BOARD WORK SESSION APRIL 29, 2020 Budget Information: www.spokaneschools.org/page/2190
Overview • Update on state budget outlook • 2019-2020 forecast • Potential impacts to forecast • 2020-2021 budget • Enrollment projection • Revised budget assumptions • Future budget considerations • History from previous periods of budget reductions • Consider Resolution 2020-05 declaring a financial emergency and directing the implementation of a modified educational program SPS Budget Planning 2020-2021
Updates on State Budget Outlook • Anticipate significant reduction to state sales tax revenue • Next scheduled revenue update in June • State agencies directed to implement budget reductions • Rumors of a June special session • State estimated loss due to COVID-19 response • $5- 8 billion • Loss exceeds rainy day fund of approximately $3 billion • Anticipate fiscal recovery will take several years • Anticipated impact to SPS 2020-2021 budget • Basic education is constitutionally protected putting non-basic ed at risk of significant reductions • Early indications are that federal funds will be to backfill state reductions SPS Budget Planning 2020-2021
Updated Four-year Bu Budget For orecast Budget Development Estimates April 2020 March 2020 Forecast Assumptions: 2019-2020 2019-2020 • Revenues: Updated Forecast • Decrease in revenue for childcare and meals Description • Decrease in grant expenditures creates revenue Forecast March Change carry forward Jan 2020 2020 • Decrease in other revenues • Property Taxes (In Millions) • Facility Rentals • Property tax delinquencies Revenue $ 457.4 $ 443.7 $ (13.7) • Expenditures: • Decrease in salaries for unfilled positions Expenditures 453.4 441.5 11.9 • Decrease in substitute, overtime and extra hours • Decrease in transportation Net Operations (Deficit) $ 4.0 $ 2.2 $ (1.8) • Decrease in utilities SPS Budget Planning 2020-2021
Updated Four-year Bu Budget For orecast Fund Balance Estimates February 2020 2019-2020 2019-2020 Description Forecast Forecast Jan 2020 March 2020 (In Millions) Beginning Fund Balance, September 1 $ 36.5 $ 36.5 Net Operations 4.0 2.2 Ending Fund Balance, August 31 40.5 38.7 Less: Restricted balances (14.3) (14.3) Unrestricted Fund Balance (CAU) $ 26.2 $ 24.4 CAU Fund Balance as a percentage of 5.73% 5.34% 2018-2019 actual expenditures SPS Budget Planning 2020-2021
Additional Considerations for the 2019-2020 Forecast • Spending patterns are not following any historical trends so fluctuations may occur • First full month of activity under closure with COVID-19 response impacts will be April • OSPI is relooking at the current year LEA allocations • Potential non-standard expenditures: • Software to support remote learning and device tracking • Implement social distancing at school buildings • Remote learning student supports • Enhancements to summer school programs • Other? SPS Budget Planning 2020-2021
Updated Four-year Bu Budget For orecast Enrollment Student FTE 2020-2021 Budget Development estimates include: Budget 2019-2020 29,500.00 • Enrollment forecast is stable • Enrollment based on move up of Projection 2019-2020 29,409.46 existing students • OSPI projection is higher than SPS projection by about 20 FTE Unfavorable variance (90.54) • No provision for a reduction in enrollment related to COVID-19 Initial 2020-2021 budget assumption 29,525.00 Increase over 2019-2020 projection 115.54 SPS Budget Planning 2020-2021
Revised 2020-2021 Budget Assumptions • Levy and LEA based on current assessed valuation and authorization • 2020 Levy = $35M • 2021 Levy = $38M • 2022-23-24 Levy assumes ballot and passage of $2.50 (~$65M plus per year) • State revenue reductions (non-basic education) to be determined • School staffing at 2019-2020 level • Current year elementary schedule and specialist model • Carryforward of 2019 – 2020 class size and staffing ratios • Suspended workload provisions • SEBB contingency • Non-salary expenditure (MSOC) freeze • Targeted reductions of $2 million • Preservation of fund balance SPS Budget Planning 2020-2021
Updated Four-year Bu Budget For orecast Budget Planning – Use of Fund Balance (CAU) Updated to remove 2020-2021 program restorations only (In Millions) 2020-2021 2021-2022 2022-2023 2023-2024 Current EP & O Authorized Levy (Feb 2018) $ 36.6 $ 18.0 $ - $ - Estimate of EP & O Replacement Levy (Feb 2021) - 34.7 68.7 73.9 LEA Estimate 13.3 11.3 9.4 7.6 Apportionment* 276.3 279.0 281.8 284.6 Other Revenue 138.7 141.6 144.4 147.3 Total Revenue 464.9 484.6 504.3 513.4 Maintenance Level Expenditures 474.8 487.3 498.6 508.2 Targeted Budget Reductions (2.0) (3.0) (3.0) (3.0) Program Restoration - 8.3 8.7 9.0 Opening of New Middle Schools - - 4.0 6.0 Total Expenditures 472.8 492.6 508.3 520.2 Net Operations $ (7.9) $ (8.0) $ (4.0) $ (6.8) Beginning CAU 24.4 16.5 8.5 4.5 Ending CAU 16.5 8.5 4.5 (2.3) Adjusted Fund Balance % (CAU) 3.61% 1.86% 0.98% (0.50)% *Assumes no reductions to state revenue, no additional federal revenue, 2022-2024 levy at $2.50 per $1,000 SPS Budget Planning 2020-2021
2020-2021 Budget Considerations • Revise state revenue estimates – non basic-ed funding may be reduced • LEA $13.3M • Carryover of state funds in excess of statutory carryover allowed • National board certification $3.5M • State special purpose grants • Implicit Price Deflator (IPD) – approx. $6M • State professional learning days – approx. $3M • Implement staffing budget based on spring staffing • Identify areas for potential reduction SPS Budget Planning 2020-2021
Financial Emergency Declaration History • Resolution 2010-10 • Resolution 2011-07 • Resolution 2019-12 • Proposed Resolution 2020-05 • Declaration of financial emergency • Reduction in force due to attrition (hiring freeze) • Targeted reduction of current staffing levels • Suspension of workload provisions • Reduction of current educational program and services SPS Budget Planning 2020-2021
Historical Budget Adjustments • Student enrollment decline 2002-2008 of 2,433 FTE Budget Fiscal Year Cumulative Budget Adjustment Amount Adjustment 2002-2003 $ (6.0) Central administration reduced $ (3.6) 2003-2004 (9.1) Reduce teachers to match lower enrollment (10.7) 2004-2005 (5.7) Reduce support positions to match lower (7.0) enrollment 2005-2006 (2.9) Other district wide reductions (7.7) 2006-2007 (6.8) Managed use of Fund Balance (12.3) 2007-2008 (10.8) Total reductions $ (41.3) Six year total $ (41.3) SPS Budget Planning 2020-2021
Budget Development – Next Steps • Revise state revenue estimates • Revise expenditure budget to reflect spring staffing • Identify potential areas of reduction • Continue budget preparation – refine and update estimates as needed • Formalize budget engagement and communication strategies - May SPS Budget Planning 2020-2021
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