NHCS 2017-18 Budget Work Session April 18, 2017

State Budget Update

State Budget Updates K-3 Class Size Restrictions Without legislative action, several changes in allotment formulas will be necessary in order to use K-3 positions as intended for class size reduction. This will result in less enhancement positions and more classroom teachers. 13 schools do not have space for 30 of the additional 48 K-3 classrooms to be added  

K-3 Teacher Formula Summary Grade Current Local Formula State Formula Position Changes Cost Kindergarten 1:20 1:18 + 10 $ 670,000 1st Grade 1:16 + 13 $ 871,000 2nd and 3rd Grade 1:19 1:17 + 25 $ 1,675,000 + 48 $3,216,000 This slide shows the $3.2 million dollar impact of the k3 issue. Historically the State has allotted teachers by grade level teacher: pupil ratio and then limited LEA class size averages to 3 above the formula and set individual class size maximums at 6 above the formula. During the years of budget cuts, class size restrictions were eliminated for grades 4-12 to give LEA’s maximum flexibility. Over the last few years as the state reduced k-3 class size, the class size averages and maximums remained unchanged with an LEA average for all k-3 grades of 21 and an individual max of 24. NHCS continued to reduce our formulas as k-3 positions were added, but some LEA’s used the allowable flexibility to use the positions in higher grades. Current NHCS formulas in the second column are 2 above the state formula, and the differential was used to support 48 of our 72 elementary art, music and physical education enhancement positions. Additionally, we used state instructional support and at-risk funding to add Literacy Coaches to all elementary schools. In order to allot k-3 teachers by the state formula we will need to add 48 K-3 Teachers.

Proposed Formula Changes to Offset K-3 Restrictions Position Current Formula Revised Position Reduction Elementary Literacy Coaches 1 per elementary school (24) Eliminate -24 AIG Teachers 1 per elementary school Eliminate 10 positions and share at smaller schools -10 Elementary Enhancement (Art, Music and PE) 3 per school Eliminate 11 positions and share at smaller schools -11 Assistant Principals 1 per elementary school and 2 per middle school Eliminate 3 and share at smaller schools -3 Subtotal -48

State Budget Updates State Raises: The local portion of estimated state raises for local employees exceeds $2.4 million. Amounts included in this proposal are estimated based on available information and are subject to change with legislative action on the budget. Estimates based on the schedule published in last year’s State Budget.

State Raises – School Administrators Senate proposal (S.B.234) includes new compensation structure for Principals and Assistant Principals to be funded from Lottery Revenue. Principals: Increases current average allotted principal salaries by 7% Lump sum allotment without a salary schedule with compensation to be determined at the discretion of the Superintendent. Last year the Board approved a local schedule which resulted in average supplement of about 25%, so we could apply that increase toward the cost of our local schedule, including the 1.7% step increase. Assistant Principals: The proposed AP schedule is 13% higher than Base Teacher Schedule. With Master’s Teacher Pay already 10% higher, and National Boards another 12%, for many AP’s this would not result in an increase. Estimated AP raises at same average increase as teachers.

State Raises – Other State Employees Estimated 2% State Raise for Other Employees Governor’s proposal is higher of 2% or $800. This would result in a higher, yet inconsistent percentage increase for salaries under $40,000. Based local budget estimates on 2% without flat rate. Local proposal uses state raise to help fund local step increases on various local pay schedules.

Local Operating Budget Priorities

Prioritization Process All Requests were prioritized as follows: Imperative (Must Do) Non-discretionary items based on state or federal mandates, Board Commitments, or unavoidable cost increases Essential (Should Do) Requests considered to be essential to instructional program or support Important (Could Do) Requests to be supported if funding is available

Local Budget Priorities – Must Do (Imperative) Salaries and Benefits: Local estimate totals $3,051,900 $2.4 million based on state raises subject to change depending on legislative action Employer Retirement Contribution and Health Insurance increases based on rates included in Governor’s Budget

Local Pay Schedule Proposals Non-Certified Salary Schedule Adjustment: Step Increase and Salary Schedule Adjustment (Year 2 of 5). Reduces number of flat steps from 5 to 4, with a 2% increase for steps 1-5, and 3% for steps 4-30. Final schedule recommendation will be dependent on actual state raise. Bus Drivers 2% State Raise would be applied to the whole schedule, with local funds used to fund banded step. CO Administrators The state raise would be applied to the whole schedule with the 1.7% step increase funded locally. Contracted Senior staff at Average Teacher Increase Board of Education Proposed 3% Increase

New Child Nutrition Schedule Child Nutrition Helpers Propose new banded schedule with similar format as Bus Drivers, with 2% step increases at each banded level. Only group of permanent part-time employees not currently paid on a scale tied to state ranges. The bus step increases are much higher at 8% and 9% because that schedule was designed to recruit more drivers by allowing employees to move more quickly to the top of the state scale. Estimated Cost of $70,000 includes 2% State Raise

Local Budget Priorities – Must Do (Imperative) Other Imperative Needs -$994,000 SEA Tech Operating Costs 4 Teachers, 1 Support Associate and 1 Counselor State funding will cover program coordinator and 1 CTE teacher Board Scholarship Fund Year 3 of 4 year Implementation Operating Cost Increases Includes Workers Compensation, Utilities, Technology Support, and Leases

Local Budget Priorities – Must Do (Imperative) One-Time Imperative Requests - $429,000 State Bonuses for Locally Paid Employees Contracted Enrollment Forecasting Services and Software Sea Tech Principal (Year 1 only) State & Federal Special Education - $302,000 2 Psychologists, 1 Speech Therapist and 1 Occupational Therapist needed to meet state caseload requirements To be funded with available Medicaid Reimbursements

Local Budget Priorities – Should Do (Essential) Essential Recurring Requests - $365,771 JC Roe Positions Assistant Principal and additional HS Transition Teacher Local funding for Head Start Nurse Grant funding insufficient to absorb raises and continue nursing services Custodial Months of Employment Phase I of 3-year plan to convert full-time 10 month and part-time 12 month custodial positions back to full-time 12 month positions - 189,100 Recommendations to be funded with Fund Balance Appropriation: One-Time Essential Funding Needs - $313,600 Recurring Essential Needs - $306,400

Local Budget Priorities – Could Do (Important) Important Recurring Requests – $362,600 These items would not be funded in recommended budget unless final state approved salary increases are less than anticipated 5 Position Requests Head Start Program Counselor McKinney Vento Local Liaison (Social Worker) Technical Software Specialist Plumbing Technician II HVAC Technician II Other Requests: Arts Supplies Board Meeting Software Digital Services for Human Resources Extra Duty for Instructional Services Wellness Liaison Stipends

Allotment Formula Changes to Offset Budget Increases Certified Positions: Eliminate 12 Secondary In-School Suspension Teachers: Replace with Non-Certified TA’s Increase Secondary Class Size: Current formula 2 lower than state Increase grades 9-10 by 1 and grades 10-11 by 2 Reduction of 17 positions Non-Certified Positions: Eliminate non-certified HS Graduation Coaches (4) Eliminate Technology Assistants over 2 years, starting with smallest schools, and replace with system wide Area Technical Coordinators

Proposed County Operating Request

Local Budget Priorities Cost Summary Total Imperative (Must Do) $4,050,900 Essential (Should Do) 648,500 Important (Could Do) 581,100 Requested Operating Increase $5,280,500

Recommended Increase in Continuation Budget Total Imperative (Must Do) $4,046,500 Essential (Should Do) 365,771 Requested Operating Increase $4,412,271 County Increase to $2,750 per pupil $3,188,271 Net Savings from Formula changes 1,224,000 Estimated Revenue

Recommended Increase in Fund Balance Appropriation Total Imperative (Must Do) $429,000 Essential (Should Do) 620,000 Important (Could Do) 315,000 Requested Operating Increase $1,364,000

Proposed County Request Restoration of $2,700 per pupil funding has been goal for several years Revised goal of $2,750 to cover estimated raises and other high priority requests Increase of $50 per pupil ($1.4 Million with Charters) would cover Imperative and Essential Costs.

Separate Pre-K Expansion Request Special County Request for Pre-K Expansion Add 3 additional Pre-K Classes at Mosley Continuation Request - $372,600 3 Teachers 3 Teacher Assistants 1 Family Specialist Supplies and Contracted Services One-Time Capital Funding - $100,000 Start-Up Furniture and Equipment Playground and Facility Upgrades Adds $14 per pupil to County Funding Request

Capital Outlay Recommendations

Capital Project Priority Process Priority I: Imperative (Must Do) Projects that cannot be reasonably postponed in order to avoid harmful or otherwise undesirable consequences. Priority II: Essential (Should Do) Projects that address clearly demonstrated needs or objectives. Priority III: Important (Could Do) Projects that benefit the district, but may be delayed without detrimental effects to required services.

Summary of Capital Requests by Priority Category Priority I IMPERATIVE (Must Do) Priority II ESSENTIAL (Should Do) Priority III Important (Could Do) Total Repairs & Renovations $ 6,780,730 $ 6,788,986 $ 6,443,465 $20,013,181 Technology 172,000 5,415,400 428,400 6,015,800 Furniture & Equipment 45,000 447,527 161,580 654,107 Vehicles 80,900 58,200 - 139,100 $ 7,078,630 $ 12,710,113 7,033,455 $26,822,188

Recommended Capital Projects By Priority Category Priority I IMPERATIVE (Must Do) Priority II ESSENTIAL (Should Do) Priority III Important (Could Do) Total Repairs & Renovations $ 3,653,000 $ - $ - Technology - 3,048,300 Furniture & Equipment 45,000 233,800 278,800 Vehicles 80,900 $ 3,778,900 $ 3,282,100 $ - $ 7,061,000

Funding Recommendation by Source Category State Lottery State Equipment Reserve County Capital Outlay Appropriation General Fund Other Revenue Total Repairs & Renovations $ 2,368,000 $ -  $ 1,135,000 $ -  $ 150,000 $3,653,000 Technology   400,000 2,284,100 124,200 240,000 3,048,300 Furniture & Equipment 278,800 Vehicles 80,900 $ 400,000 $ 3,500,000 $ 403,000 $ 390,000 $7,061,000 General Fund includes $137,000 transfer of project savings from Roe project and Fund Balance Appropriation of $266,000. Other Revenue includes $80,000 estimated from County Sales Tax Refund, $70,000 for NHCS Sales Tax Refund, and $240,000 from current year project savings.

Current Budget Summary

Current Operating Budget - $256.5 Million By Purpose By Source You are familiar with this slide in which we can see our operating budget (funds 1, 2, 3 and 8) by source and purpose.

Comparison of State and General Fund General Fund By Purpose State Fund By Purpose These charts compare state and local funds by source and purpose, and you can see that 88% of state funds go toward instruction, with only 12% for support cost, most of which are transportation and custodial costs. Local funds significant support the instructional program and substantially fund facility and other support costs. Charter School Transfers represent 3% of the General Fund Budget.

Current Operating Budget - Positions by Fund State General Federal Other Restricted Total Administrators 77 4 1 152 Teachers 1,467 236 47 35 1,755 Certified Instructional Support 166 99 20 284 Non-Certified Instructional Support 330 70 222 629 Other Support & Trades 468 229 5 742 2,508 711 297 107 3,623 This chart shows operating positions by fund so you can see that about half of the General Fund positions are impacted by the more significant increases in certified salaries. This is updated from the chart presented in March based on any mid-year changes.

Enrollment Growth This chart shows enrollment trends for the past 4 years (Best 1 of 2) with estimated growth for next year of 1.2% (289).

County Per Pupil Funding Analysis NHCS NHC Charters Virtual Charters Total 1st Month Enrollment 26,287 1,068 47 27,402 Per Pupil Funding $2,662 $790 Projected Growth for 2017-18 318 80 - 398 Projected growth % 1.2% 7.5% 0.0% 1.5% Projected Enrollment for 2017-18 26,605 1,148 27,800 County Per Pupil Funding Allotted per 1st Month Membership, which is slightly less than our best 1 of 2 for current year. We use first month to allocate county funds between NHCS and charter schools. And our county request also must include estimated growth for the charter. Total enrollment for NHCS to projected to be about 26,600, and the total with charter at 27,800.

Recommended County Request

County Revenue Summary NHCS NHC Charters Virtual Charters Total Current County Appropriation Allotted based on 1st Month Membership $ 69,975,479 $ 2,842,995 $ 37,130 $ 72,855,604 Projected Growth at current Per Pupil Rate 846,516 - $88 per pupil increase using Projected Enrollment 2,341,755 94,005 2,435,760 Requested Increase at $2,750 $ 3,188,271 $ 94,005 $ - $ 3,282,276 Projected Funding Increase % 4.6% 3.3% 0.0% 4.5% Total Request at $2,750 Per Pupil $ 73,163,750 $ 2,937,000 $ 76,137,880 Using the enrollment information we just reviewed, the first row shows the County appropriation of $2,662 per pupil spread between NHCS and the charters. The second is the estimated funding increase for growth the current rate, and the 3rd is the estimate funding increase if pp increased to $2.700. The overall increase would be 2.7% for us and 2.9% overall.

Requested Approval of Base County Budget Recommendation Total Operating Request - $76,137,880 $2,750 per pupil Total Increase of $3,319,406 NHCS - $3,188,271 Charters - $94,005 Total Capital Request - $3,500,000

Requested Approval County Budget Recommendation with Pre-K Expansion Total Operating Request - $76,137,880 Pre-K Expansion Request - $387,422 Total Capital Request with Pre-K - $3,600,000

Projected County funding for NHCS Bond Debt   Principal on Bonded Debt $16,319,117 Interest on Bonded Debt     6,239,367 Bond Service Charges           57,892 Installment Lease Agreement         480,909 Total NHCS Debt $23,097,285 Federal Subsidy QSECB (Revenue) ($142,001)

NEXT STEPS May 2nd Board Meeting June Budget Work Session Budget Hearing Vote on Recommended County Request June Budget Work Session Date to be determined subsequent to County and State Budget Approval July 11th Board Meeting Approval of Budget Resolution