Northeastern School District Preliminary Budget Presentation 2 016-2017 School Year The Bobcat Way: 100% of our students will graduate and be fully prepared for post-secondary education.
2016-17 budget highlights Known: • – Local revenue is continuing to show growth. – 5 new positions requested. – County-wide survey shows a lot of classified hourly rates are below YC avg. – The projected employer cost to retirement is driving costs higher. – Refinancing of debt last year has temporarily offset retirement increases. – Lower forecasted health insurance costs. – Total fund balance has grown to 10% of preliminary expenditures – provides for better cash flow security, address capital reserve projects and/or offers time to phase in real estate millage. • Unknown: (and may cause budget to change significantly)… – State budget for 2015-16 not resolved – 1/3 of revenue – Act 93 and Professional staff contracts expire June 30 th – >1/3 of expenditures. – Greater employee cost sharing for medical benefits district-wide unresolved. – Employer cost to retirement rate may be lower rate than budgeted. – Charter school funding assistance may return. – Restrictions on future tax increases may be expanded. – $250k Budgetary reserve added budget to mitigate some of the uncertainty.
Preliminary Budget Summary DESCRIPTION 2016-17 BUDGET SUMMARY TOTAL REVENUE $ 63,789,898 - TOTAL EXPENDITURES $ 64,216,298 Budget deficit (rounded) ($ 426,400) Use of Fund Balance $ 0 RE Tax increase $ 0 Total budget deficit ($ 426,400)
What helped this budget? REVENUE EXPENDITURES Continue budgeting growth in local 3 teacher retirements to date revenue of $1.5M mostly from real Assumes $500k of medical savings to estate taxes. Less LERTA adds $375k, make salary increases more manageable incr in assessment +$468k and better tax collection % of 1% equals $515k. New LERTA property not included. Over $500k more state funding for Did not budget for LTS and ETS retirement due to higher retirement (substitutes) as wages from FMLA, contribution. sabbatical and CRL should offset Budgeted SS/HS grant of $550k. Locked in utility and diesel fuel at lower rates for budget savings Retain ability to add use of fund Last year advanced refinanced debt balance and/or < tax increase to index service saving $680k. Potential to balance budget refinancing of 2010 issue, not included, could offer more savings.
Possible Budget Concerns… REVENUE CONCERNS EXPENDITURE CONERNS What will be the outcome of the Employer contribution to RETIREMENT . 2015-16 state budget impasse? Will any Rate increased +14% or net $700k more BEF and SEF increases be outweighed by cost. tax increase restrictions? State doesn’t support cyber/charter Adds 5 new teaching positions. Also, school funding costs. contract negotiations unresolved for Act 93 and teachers. If salary increase without medical savings, then problem. If medical savings occurs, this impacts Classified staff who are on average being paid less than YC average. Where will the funding come from to boost these wages?
Savings and Taxes SAVINGS TAXES 2014-15 audit results added $1.8M to Recommend approving a tax resolution fund balance. – limits tax increase to max 3.2% and opt out of filing preliminary budget Consider using fund balance committed Limit any tax increases especially if to PSERS to offset $700k in net reoccurring expenditures are offset by retirement cost increase reoccurring revenue. Recommend transfer of $250k to Capital Reserve transfers for physical plant maintenance to $250k. Consider a large 1 time transfer from GF to address artificial turf and track.
2016 -17 Benefit Budget Group Life Insurance $25,000 0 % Social Security $2,051,848 1 2 % Health Insurance $6,273,992 Group Life Insurance 3 8 % Social Security Retirement Tuition Reimbursement Retirement Unemployment Compensation $7,963,317 Worker's Compensation 4 8 % Health Insurance Worker's Compensation $175,000 1 % Unemployment Tuition Compensation Reimbursement $15,000 $225,000 0 % 1 %
Revenue Growth % - 10 year History 13.85% 8.86% 6.96% 5.95% 5.32% 5.26% 3.48% 2.60% 2.50% 1.86% 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-2014 2014-15 B2015-16 B2016-17 -2.65%
16.0% Expenditure Growth % - 10 year History 14.0% 12.0% 10.0% 8.0% 14.3% 13.4% 6.0% 8.7% 4.0% 6.8% 6.4% 4.9% 2.0% 4.1% 4.0% 2.9% 1.9% 0.0% 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 B2015-16 B2016-17 -2.5% -2.0% -4.0% % exp growth
14.00% Fund Balance % of Expenditures Budget - 10 year History 12.00% 10.00% 8.00% 12.37% 6.00% 11.20% 10.73% 10.05% 9.77% 8.50% 4.00% 7.94% 6.35% 5.23% 4.22% 2.00% 3.62% 0.00% 2006-07 2007-08 2008-09 2009-10 2010-11 2011--12 2012-13 2013-14 2014-15 B2015-16 B2016-17 Fund Balance as a % of Budget
TAXES: District Perspective DISTRICT Perspective Index No Exceptions Real Estate Millage Increase +2.4% to be filed 1 mil = $1.4M in new reoccurring Adjusted revenue Index +3.2% Additional Real Estate Revenue possible $870,000 to $0 through tax increase $1,160,000
TAXES: Taxpayer Perspective TAXPAYER Perspective $ 100k $ 150k $ 200k Real Estate Millage Increase based on assessed property value Tax increase: Adjusted Index to 2.4% +$ 63 +$ 94 +$ 126 Real Estate Tax bill at 26.72mils w/o H/ $ 2,672 $ 4007 $ 5,344 F excl
Budget Steps Moving Forward… Need to see what the 2015-16 state budget resolves or compounds…new BEF formula – good, taxpayer protection – bad for district’s LT health Employee staff carefully increased – supports student achievement and efficiency. Labor negotiations needs health insurance savings to manage any increased salary cost Discuss Classified salary survey. Link higher salary with higher medical cost sharing. Continue to review LIU program(s). Evaluate whether any services are better served in-house. Continued debt refinancing benefits – next 4+ years lowered debt service than 2015-16 and maybe another debt service refinancing coming. Recognize that temporary lower debt service is masking reoccurring cost of retirement. Make annual transfers into Capital Reserve for physical plant and use current fund balance to address longer term needs of artificial turf Use part of committed fund balance to balance budget – planned to ease into millage Keep on the horizon the eventual need for a new high school and aging equipment in all buildings.
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