North Penn School District 2020-2021 Preliminary Budget January 6, - PowerPoint PPT Presentation

North Penn School District 2020-2021 Preliminary Budget January 6, 2020

In-N-Out Yes, Now Act 1 (Not Barometer Potpourri But What Burgers) $200 $200 $200 $200 $200 $200 $400 $400 $400 $400 $400 $400 $600 $600 $600 $600 $600 $600 $800 $800 $800 $800 $800 $800 $1000 $1000 $1000 $1000 $1000 $1000

A property tax relief bill passed by the PA legislature in 2006 which set a cap on the amount a school district can raise property taxes.

What is Act 1?

Budget Timeline First Draft of Preliminary Budget 1/6 Finance Committee Meeting Preliminary Budget Adoption 1/16 Referendum Exceptions Consideration Board Action Meeting Adoption of Proposed Final Budget 5/12 Board Action Meeting Adoption of Final Budget 6/18 Board Action Meeting

Act I Index 5% 4.4% 4.1% 3.9% 3.75% 3.4% 3.2% 3.0% 2.9% 2.8% 2.6% 2.4% 2.5% 2.4% 2.3% 2.5% 2.1% 1.9% 1.7% 1.7% 1.4% 1.25% 0% 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 - - - - - - - - - - - - - - - - - - 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4

A school district that adopts a preliminary budget with real estate taxes that exceed its Act 1 index may seek these.

What are exceptions?

Act 1Exceptions Special Education $1,784,958

Act 1Exceptions Retirement $0

Act 1Exceptions Special Education +0.97% 3.57%

Act 1Index vs. NP Tax Increase 5.00 4.00 3.00 2.00 1.00 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 Act 1 NP Tax

A financial plan based on income (in) and expenses (out).

What is a budget?

0%

$12.9 M Deficit Budget

6.96% To Balance

Budget Comparison Fiscal Year Surplus Revenues Expenses Budget (Deficit) 2020-2021 $269,635,219 $282,498,098 -$12,862,879 2019-2020 $267,208,014 $273,977,289 -$6,769,275 $ Change $2,427,205 $8,520,809 -$6,093,604 % Change 0.91% 3.11%

Expenditure Increase Drivers Salaries (includes placeholder for 22 new $3,946,895 positions) PSERS $1,702,802 Legal Settlements $1,000,000 Textbook Replacements $500,000 Technology Security Assessment $290,000 Charter School Tuition $475,964 Total increase in major items $7,915,661 Total expenditure increase $8,520,809 Act 1 index revenue @ 2.6% $4,786,870

Spending Breakdown $282,498,098 Debt 5% All Others 17% Salaries and Benefits 78%

Retirement Rate 40% 32% 24% 16% 8% 0% 00-01 02-03 04-05 06-07 08-09 10-11 12-13 14-15 16-17 18-19 20-21 22-23 24-25 26-27 Employer Rate

Retirement Expense $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Gross Retirement Expense

Retirement as a % of Budget 18% 14% 11% 7% 4% 0% 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Retirement % of Budget

Charter Tuition Rates $40,000 $35,869 $34,912 $32,000 $32,123 $31,226 $29,318 $24,000 $16,000 $14,416 $14,083 $13,039 $12,681 $12,216 $8,000 $0 15-16 16-17 17-18 18-19 19-20 Regular Special

Charter School Tuition $3,000,000 $2,734,003.00 $2,740,016.00 $2,400,000 $2,423,136.00 $2,264,052.00 $2,007,432.00 $1,968,590.00 $1,800,000 $1,772,642.00 $1,685,936.00 $1,497,793.00 $1,472,451.00 $1,399,879.00 $1,387,296.00 $1,200,000 $600,000 $313,683 $279,956 $0 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Expense Subsidy

Spending Allocation by Function 6% 1% 29% Instruction 63% Support Services Non-Instructional Support Other Expenditures and Financing

Revenue Breakdown $269,635,219 Federal 1% All Others 10% State 21% Real Estate Taxes 68%

Local Revenue Allocation 1% 4% 1% 7% Real estate/interims Earned income tax (EIT) Transfer tax Delinquent tax Other 87%

Tax Base History $7,300,000,000 $7,200,000,000 $7,100,000,000 $7,000,000,000 $6,900,000,000 $6,800,000,000 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Assessed value - Annualized increase of 0.50%

Assessed Value Impact Revenue @ Fiscal Assessed Millage 97% Year Value Collection 2020-21 $7,284,989,925 26.0957 $184,403,704 2019-20 $7,269,192,917 26.0957 $184,003,837 $15,797,008 $399,867 Change 0.22% 0.22%

State Revenue Allocation 4% 9% 20% Basic Ed Special Ed 12% Transportation Property Tax Reduction Retirement 42% Social Security 4% 9% Other

Fund Balance Breakdown 6/30/19 Description Amount Nonspendable (inventory & prepaid items) $343,826 Assigned for self-funded insurance $2,700,000 Committed to PSERS $16,806,523 Unassigned (7.76%) $21,264,066 Total Fund Balances $41,114,415

The practice of comparing performance metrics to industry bests.

What is benchmarking?

Tax Rates 18 % Below County Average 32.00 25.60 19.20 12.80 6.40 North Penn County Average

Bond Rating Moody’s AA1 19 in PA

Per Pupil Expense $25,000 North Penn IU Avg. $22,619 $21,250 $20,040 $17,500 $13,750 $10,000 2018 The chart shows the total per pupil expenditures relative to other school districts in Montgomery County. North Penn is ranked 17 out of 21 districts.

Instructional Expense $10,000 North Penn IU Avg. $9,174 $8,731 $8,750 $7,500 $6,250 $5,000 2018 The chart shows the instructional (1100 function) per pupil expenditures relative to other school districts in Montgomery County. North Penn is ranked 12 out of 21 districts.

Special Ed. Expense $5,000 North Penn IU Avg. $4,000 $3,621 $3,579 $3,000 $2,000 $1,000 $0 2018 The chart shows the special programs (1200 function) per pupil expenditures relative to other school districts in Montgomery County. North Penn is ranked 9 out of 21 districts.

The Good… • Expiration of final lease ~ $97,000 • No retirements as of yet ~ $1,000,000 • Retirement rate ~ 0.64% increase

The Good… • Health care 1st look rates ~ $0 • Growth in EIT and transfer tax ~ $781,000

The Unknowns… • Basic education funding ~ 3.0% increase • Special education funding ~ 2.6% increase • Federal funding ~ 0.0% increase • Retirements • Staffing changes

Budget Scenario Current Budget Deficit -$12,862,879 Act 1Increase - 2.60% $4,786,870 Special Education Exception $1,784,958 Anticipated Retirements $1,000,000 Budgetary Reserve $1,500,000 Potential Positive Variances (0.50%) $2,760,667 Projected Ending Deficit -$1,030,384

Expenditure Variances 2.40% 1.92% 1.44% 0.96% 0.48% 0.00% 14-15 15-16 16-17 17-18 18-19

Revenue Variances 4.00% 3.20% 2.40% 1.60% 0.80% 0.00% 14-15 15-16 16-17 17-18 18-19

Tax Scenarios Average Tax Additional Remaining Homestead Increase Revenue Deficit Increase 0.00% $0.00 $12,862,879 $0 1.00% $1,853,392 $11,009,487 $39 1.50% $2,770,899 $10,091,980 $58 2.00% $3,698,302 $9,164,577 $77 2.60% $4,786,870 $8,076,009 $100 3.57% $6,570,989 $6,291,890 $138

Next Steps • Line item review of all revenues and expenses • 10-year capital plan prioritization • Staffing recommendations • 5-year projections • Refine and update data based on new information

Discussion