Centennial School District 2019-20 Final Budget: A Longitudinal - PowerPoint PPT Presentation

Centennial School District 2019-20 Final Budget: A Longitudinal Analysis June 11, 2019 Christopher M. Berdnik, PCSBA Chief Financial Officer

Agenda • The purpose of this analysis is to walk backwards 12 years through recent Centennial School District budgets to identify key cost drivers impacting different periods of our recent history: • 2007-08 through 2011-12; • 2011-12 through 2015-16; • 2015-16 through 2019-20. • 2007-08 through 2017-18 data reflects actual, audited expenditures, while 2018-19 is the original budget, and 2019-20 is the draft final. • Key cost drivers were clustered into eight (8) meaningful cost centers for ease of comparison over time (the chart of accounts itself changes incrementally every fiscal year). 6/11/2019 2

2007-08 through 2011-12: Consolidation 2011-12 2011-12 % 2011-12 Cost Driver Cluster Actual vs. 2007-08 vs. 2007-08 Wages and Contracted Substitute Teachers 50,588,730 3,742,885 7.99% PSERS and Social Security 8,059,066 1,293,504 19.12% Health and Welfare Benefits 6,936,389 1,406,743 25.44% BCIU/Prof. Svcs/Tech. Svcs/BCIU Transportation 4,302,032 (415,201) -8.80% Books/Supplies/Software/Equipment 2,907,873 (307,696) -9.57% Out of District Tuition 4,197,168 (809,220) -16.16% Utilities/Fuel/Property Svcs/Everything Else 4,133,777 (510,359) -10.99% Debt Service/Fund Transfers/Land/Building 12,022,530 8,903,856 285.50% Contingency/Federal Programs Pending Award Total 93,147,565 13,304,512 16.66% 6/11/2019 3

2007-08 through 2011-12: Consolidation • Debt service and other fund transfers grows by $8.9 million, reflecting borrowing for the construction and/or renovation of the new William Tennent High School and three consolidated elementary schools. • PSERS and Social Security costs increase by 19.12%, as the Commonwealth’s retirement system struggles in the aftermath of two deep recessions and capped rate-setting strategies below actuarial necessity. • Actual salaries declined between 2010-11 and 2011-12. • Medical coverage is fully-insured until the move to the Delaware Valley Health Trust approved in June 2011, and effective in September 2011. • A residential institution closes in Southampton, which briefly lowers our tuition expense (the accounting requires the host district Centennial to pay, but the district of residence or the state to reimburse us, which flows as revenue). 6/11/2019 4

2011-12 through 2015-16: the Rise of PSERS 2015-16 2015-16 % 2015-16 Cost Driver Cluster Actual vs. 2011-12 vs. 2011-12 Wages and Contracted Substitute Teachers 53,869,485 3,280,755 6.49% PSERS and Social Security 17,618,091 9,559,025 118.61% Health and Welfare Benefits 7,704,172 767,783 11.07% BCIU/Prof. Svcs/Tech. Svcs/BCIU Transportation 5,527,791 1,225,759 28.49% Books/Supplies/Software/Equipment 3,250,220 342,347 11.77% Out of District Tuition 3,901,763 (295,405) -7.04% Utilities/Fuel/Property Svcs/Everything Else 4,154,148 20,371 0.49% Debt Service/Fund Transfers/Land/Building 12,175,089 152,559 1.27% Contingency/Federal Programs Pending Award Total 108,200,759 15,053,194 16.16% 6/11/2019 5

2011-12 through 2015-16: the Rise of PSERS • Wages grow an average of 1.62%, reflecting the concessionary contract reached with the Centennial Education Association in June 2012. • PSERS and social security costs increase a staggering $9.6 million, or 118.61%. • Participation in the Delaware Valley Health Insurance Trust moderates growth in health and welfare benefits to an average of 2.97%, well below commercial markets. • Closed school facilities are sold for residential development and growth in the local tax base. • The district purchases 48 Swan Way for renovation as the new administrative center. Bids for construction are opened in February 2016. • Select bond maturities are advance refunded in June 2016. 6/11/2019 6

2015-16 through 2019-20: Academics, Innovation, and Equity 2019-20 2019-20 % 2019-20 Cost Driver Cluster Proposed vs. 2015-16 vs. 2015-16 Wages and Contracted Substitute Teachers 58,087,101 4,217,616 7.83% PSERS and Social Security 24,005,032 6,386,941 36.25% Health and Welfare Benefits 7,256,696 (447,476) -5.81% BCIU/Prof. Svcs/Tech. Svcs/BCIU Transportation 8,145,952 2,618,161 47.36% Books/Supplies/Software/Equipment 4,651,308 1,401,088 43.11% Out of District Tuition 7,220,517 3,318,754 85.06% Utilities/Fuel/Property Svcs/Everything Else 4,168,174 14,026 0.34% Debt Service/Fund Transfers/Land/Building 11,020,754 (1,154,335) -9.48% Contingency/Federal Programs Pending Award 1,512,884 1,512,884 N/A Total 126,068,418 17,867,659 16.51% 6/11/2019 7

2015-16 through 2019-20: Academics, Innovation, and Equity • Warm, safe, and dry energy-savings projects are completed for Klinger and Log College middle schools. Additional bonds are refinanced in 2017 and 2018. • The technology ecosystem shifts for future readiness to 1:1 for secondary students, and 1:2 for elementary pupils. • Staffing grows in 2017-18 to implement full-day kindergarten and secondary block scheduling. Retirement costs increase by $6.4 million as the PSERS employer contribution rate continues to climb. • Tuition and professional services expenses grow a combined $5.9 million, reflecting increased charter school enrollment and a rise in autistic and emotional support special education costs in the district. • There are zero audit findings in the first year implementation of Skyward financials. 6/11/2019 8

2011-12 through 2019-20: Change is Constant 2019-20 % 2019-20 8-Year Cost Driver Cluster vs. 2011-12 vs. 2011-12 Avg. % Wages and Contracted Substitute Teachers 7,498,371 14.82% 1.85% PSERS and Social Security 15,945,966 197.86% 24.73% Health and Welfare Benefits 320,307 4.62% 0.58% BCIU/Prof. Svcs/Tech. Svcs/BCIU Transportation 3,843,920 89.35% 11.17% Books/Supplies/Software/Equipment 1,743,435 59.96% 7.49% Out of District Tuition 3,023,349 72.03% 9.00% Utilities/Fuel/Property Svcs/Everything Else 34,397 0.83% 0.10% Debt Service/Fund Transfers/Land/Building (1,001,776) -8.33% -1.04% Contingency/Federal Programs Pending Award 1,512,884 N/A N/A Total 32,920,853 35.34% 4.42% 6/11/2019 9

2011-12 through 2019-20: Change is a Constant • The district’s investment in books, supplies, software, and equipment (e.g., 1:1) increased by 60% or $1.7 million. • Out of district tuition (special education, MBIT, and charters) and professional services (e.g., BCIU) in total expanded by $6.8 million, which is 20.9% of the eight year bottom line growth. • PSERS employer contribution rate grew from 8.65% to 34.29% of payroll. Retirement system expenses represent 48.4% or $15.9 million of the aggregate change in budget across the eight (8) years. 6/11/2019 10

2011-12 through 2019-20: Cost Containment Strategies Paid Dividends • Even with implementation of full-day kindergarten and secondary block scheduling, wages grew a modest 1.85% on average. • Health and welfare benefits increased by only 0.58% a year since joining DVHT. • Utilities, fuel, property services, and everything else is the budget grew by only $34,397 in eight (8) years, or 0.10% per year. All six school buildings proudly wear the Energy Star certification. • Three bond refunding transactions later, debt service and other fund transfers are $1 million less than 2011, and yet every single facility in the district has had significant work completed. 6/11/2019 11

2019-20 through 2023-24: A Path Forward • Multiyear financial plans are in place to address curriculum renewal, technology refresh, building maintenance, bus replacement, and special education delivery. • In May 2019, the district and Centennial Education Association reach an early five-year agreement incorporating 2019-20, providing substantial savings in medical and pharmacy premium and providing labor peace through 2023-24. • A three-year commitment to the health trust brings the total one year change in medical insurance to nearly an 18% decrease, and pharmacy a 10% decline. • The 2019-20 budget process weathered an enormous storm, ultimately reducing the real estate tax increase to the 2.3% index. • The five-year capital plan will be primarily funded through a current refunding of select bonds, which, if the market holds, would yield approximately $5 million in present value savings. 6/11/2019 12

Summary • The table is set for significant academic progress at Centennial School District. • 2018-19 is winding down as the second of two consecutive difficult budget cycles. National and statewide trends around student need very much challenged the limits of our appropriation. • The next five years are financially manageable at or about Act 1 levels. The short-term outlook will be driven by the outcome of a number of district-filed tax appeals and the timing of PlanCon reimbursement for the Swan Way project. 6/11/2019 13