Finances / Budget May 18, 2020 Overview COVID-19 required all NASD - PowerPoint PPT Presentation

NORRISTOWN AREA SCHOOL DISTRICT Impact of COVID-19 Closure on Finances / Budget May 18, 2020

Overview – COVID-19 required all NASD Schools & Buildings to close on March 13, 2020 – Education provided to students through Districts’ “Continuity of Education” Plan • Remote learning through digital and non-digital educational materials – Student meals provided through bi-weekly meal distribution events at 2 District sites

NASD COVID-19 Closure – Not only did our schools closed, but also many local businesses were required to close – Impact to NASD local revenues was immediate – 2019-20 local revenues projected to be down by over $ 2.6 million • Earned Income Tax Down - Filing Deadline Extended / Rising Unemployment • Transfer Tax Down - Property Sales Impacted • Interest Income Down - Market Conditions UC Claims - For Montgomery County – Several other non-local revenue sources also impacted by closure – Total projected revenue impact to 2019-20 school year – loss of $ 2.9 million

NASD COVID-19 Closure – Act 13, Pa’s Emergency School Code Bill, was approved in Harrisburg on March 27, 2020 – Required all NASD employees, and some contractors, to be paid in full – even though our schools were closed – District has been able to realize some incidental savings that through closure (utilities, substitutes, etc.), but these are not contributing to a significant savings or windfall. • And have been somewhat offset by spending for cleaning supplies, PPE, etc. • General Fund likely will need to provide funding to Food Service Program as all staff continue to get paid even though our traditional meal program is not operating – 2019-20 Projected Savings From Closure = $ 1.1 million

2019-20 (Current Year) Financial Overview Budgeted Projected Projected 2019-20 2019-20 2019-20 (ADJUSTED) PRE-COVID POST-COVID Fund Balance 7/1/19 $ 7,136,618 $ 7,136,618 $ 7,136,618 2019-20 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 2019-20 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 Fund Balance 6/30/20 $ 7,136,618 $ 9,582,648 $ 7,755,587 Revenue Variance = ($2.9.Million)

2019-20 (Current Year) Financial Overview Budgeted Projected Projected 2019-20 2019-20 2019-20 (ADJUSTED) PRE-COVID POST-COVID Fund Balance 7/1/19 $ 7,136,618 $ 7,136,618 $ 7,136,618 2019-20 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 2019-20 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 Fund Balance 6/30/20 $ 7,136,618 $ 9,582,648 $ 7,755,587 Expense Variance = $ 1.1 Million

2019-20 (Current Year) Financial Overview Budgeted Projected Projected 2019-20 2019-20 2019-20 (ADJUSTED) PRE-COVID POST-COVID Fund Balance 7/1/19 $ 7,136,618 $ 7,136,618 $ 7,136,618 2019-20 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 2019-20 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 Fund Balance 6/30/20 $ 7,136,618 $ 9,582,648 $ 7,755,587 NASD Fund Balance (Reserve Funds) Projected to Increase By $ 600k

NASD 2020-21 Proposed Final Budget – NASD is still required to adopt the ”2020 -21 Proposed Final Budget” by May 31, 2020 AND the “2020 - 21 Final Budget” by June 30, 2020 – Challenging Factors – Budget Development • Timing of County Reopening – Impact to 2020-21 Student Programming – CDC Guidance / PPE Spending – Impact to Local Economy & NASD Local Revenues • State Funding for 2020-21 – TBD – Charter School Reform ? • CARES (Federal Stimulus Funding) – Both allocation and guidelines – TBD

2020-21 Proposed Final Budget Financial Overview Budgeted Projected Projected 2020-21 2019-20 2019-20 2019-20 Proposed Final (ADJUSTED) PRE-COVID POST-COVID Budget Beginning Fund Balance $ 7,136,618 $ 7,136,618 $ 7,136,618 $ 7,755,587 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 $ 159,981,945 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 $ 163,589,295 Ending Fund Balance $ 7,136,618 $ 9,582,648 $ 7,755,587 $ 4,148,237

2020-21 Proposed Final Budget Financial Overview Budgeted Projected Projected 2020-21 2019-20 2019-20 2019-20 Proposed Final (ADJUSTED) PRE-COVID POST-COVID Budget Beginning Fund Balance $ 7,136,618 $ 7,136,618 $ 7,136,618 $ 7,755,587 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 $ 159,981,945 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 $ 163,589,295 Ending Fund Balance $ 7,136,618 $ 9,582,648 $ 7,755,587 $ 4,148,237 2020-21 Proposed Final Budget Includes 3.3% Tax Increase (NASD Index) Revenues Still Below 2019-20 levels Significant revenue lags projected for EIT, Transfer Tax, Delinquent RE Tax, and Interest Income

2020-21 Proposed Final Budget Financial Overview Budgeted Projected Projected 2020-21 2019-20 2019-20 2019-20 Proposed Final (ADJUSTED) PRE-COVID POST-COVID Budget Beginning Fund Balance $ 7,136,618 $ 7,136,618 $ 7,136,618 $ 7,755,587 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 $ 159,981,945 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 $ 163,589,295 Ending Fund Balance $ 7,136,618 $ 9,582,648 $ 7,755,587 $ 4,148,237 2020-21 Proposed Spending Only Increasing by 1.88% (Compared to 2019-20 Budget) Generating Adequate Revenue To Support Spending Plan Is Challenge

2020-21 Proposed Final Budget Financial Overview Budgeted Projected Projected 2020-21 2019-20 2019-20 2019-20 Proposed Final (ADJUSTED) PRE-COVID POST-COVID Budget Beginning Fund Balance $ 7,136,618 $ 7,136,618 $ 7,136,618 $ 7,755,587 Revenues $ 160,592,050 $ 161,815,075 $ 158,889,875 $ 159,981,945 Expenses $ 160,592,050 $ 159,369,045 $ 158,270,906 $ 163,589,295 Ending Fund Balance $ 7,136,618 $ 9,582,648 $ 7,755,587 $ 4,148,237 Revenue Shortfall Will Require Use of Fund Balance And/Or Program Cuts 2020-21 Proposed Final Budget Includes Using $ 3.6 Million of Fund Balance As Revenue (Almost 50%) TOO MUCH! LOTS OF WORK TO BE DONE BEFORE FINAL ADOPTION IN JUNE

Property Tax Freeze Proposals (Impact to NASD)

NASD 2020-21 Proposed Final Budget – Property Tax Freeze for 2020-21 – HOT TOPIC IN HARRISBURG – House Bill 1776 & 2431 • Would limit authority of locally elected School Board • NASD would not be able to increase tax rate for 2020-21 • Short term & long term effects could be devastating for NASD Act I Index Expected Low For Next Few Yrs (Based on Pa Economy) 2020-21 2019-20 NO TAX INCREASE 2021-22 2022-23 2023-24 Revenues $ 158,889,875 $ 156,981,945 $ 159,500,000 $ 162,800,000 $ 166,500,000 Expenses $ 158,270,906 $ 163,589,295 $ 166,800,000 $ 169,700,000 $ 172,800,000 Surplus / Deficit $ 618,969 ( $ 6,607,350) ( $ 7,300,000) ( $ 6,900,000) ( $ 6,300,000) Begin Fund Balance $ 7,136,618 $ 7,755,587 $ 1,148,237 ( $ 6,151,763) ($ 13,051,763) Ending Fund Balance $ 7,755,587 $ 1,148,237 ( $ 6,151,763) ( $ 13,051,763) ($ 19,351,763) Fund Balance (% of Expenses) 4.90% 0.70% - - -

NASD 2020-21 Proposed Final Budget – Property Tax Freeze for 2020-21 – HOT TOPIC IN HARRISBURG – House Bill 1776 & 2431 • Would limit authority of locally elected School Board • NASD would not be able to increase tax rate for 2020-21 • Short term & long term effects could be devastating for NASD Act I Index Expected Low For Next Few Yrs (Based on Pa Economy) 2020-21 2019-20 NO TAX INCREASE 2021-22 2022-23 2023-24 Revenues $ 158,889,875 $ 156,981,945 $ 159,500,000 $ 162,800,000 $ 166,500,000 Expenses $ 158,270,906 $ 163,589,295 $ 166,800,000 $ 169,700,000 $ 172,800,000 Surplus / Deficit $ 618,969 ( $ 6,607,350) ( $ 7,300,000) ( $ 6,900,000) ( $ 6,300,000) Begin Fund Balance $ 7,136,618 $ 7,755,587 $ 1,148,237 ( $ 6,151,763) ($ 13,051,763) Ending Fund Balance $ 7,755,587 $ 1,148,237 ( $ 6,151,763) ( $ 13,051,763) ($ 19,351,763) Fund Balance Depleted During 2021-22; Recovery Will Be Challenging / Impacted By Length of Recession

Taxpayer Impact Tax Payment Flexibility

2020-21 Proposed Final Budget Taxpayer Relief / Tax Payment Flexibility (Options) Rebate Rebate North Penn SD Rebate Program • Modeled After PA Property Tax/Rent Rebate Program • Rebate Started at 25% of State Amount – Increased to 30% in 2019-20 • Max Rebate = $ 162.50 @ 25% & $195 @ 30% • Program Eligibility: • Age 65 or older • Widow / Widower Age 50 or older • Age 18 or older and permanently disabled • NASD exposure = $ 309k at 25% & $ 371k at 30%

2020-21 Proposed Final Budget Taxpayer Relief / Tax Payment Flexibility (Options) Rebate Volunteer Rebate Owen J Roberts Senior Service Work Program • Senior workers work up to 62.5 hours per year for maximum compensation @ $500 • Program Eligibility: • Age 60 or older • NASD exposure = Difficult to calculate; could be significant

2020-21 Proposed Final Budget Taxpayer Relief / Tax Payment Flexibility (Options) Rebate Volunteer Installments Rebate • NASD currently offers 4 installments • Aug 3, Sept 3, Oct 3, Nov 3 • Act 1 allows up to 6 monthly payments • Needs Board resolution • Will require tax collector to implement process changes

2020-21 Proposed Final Budget Taxpayer Relief / Tax Payment Flexibility (Options) Deadline Rebate Volunteer Installments Rebate Extensions • NASD cannot extend the discount period • House Bill 2460 • Would extend the property tax discount period by 30 days would also eliminate the penalty through December 31, 2020