Spring-Ford Area School District 2012/2013 Proposed Preliminary Budget Presented December 5, 2011 12/7/2018

2012/13 Proposed Preliminary Budget The purpose of the Proposed Preliminary Budget Presentation tonight is to present the budget and allow for a minimum of 20 days for public inspection. The Proposed Preliminary Budget is required to be approved by January 25, 2012. Due to the Presidential primary election in April, an earlier presentation is required (1 month). The district is following the Act 1 timelines, and the purpose of tonight’s meeting is to determine if the district will need to have a voter referendum on the ballot. The district is making a commitment to stay within the state index and allowable exceptions. 12/7/2018

2012/13 Proposed Preliminary Budget 2011/12 2012/13 Difference Revenue $123,111,623 $127,304,053 $4,192,430 Expense $130,262,214 $7,150,591 Total Difference $ 0 $ 2,958,161 Budget not Balanced Allowable State Index of 1.7% $ 1,860,000 Allowable PDE Exceptions of 1.93% (PDE Approval is Required) $ 2,055,324 Allowable tax increase of 3.63% $ 3,915,324 12/7/2018

2012/13 Proposed Preliminary Budget 2011/12 2012/13 Difference Revenue $123,111,623 $127,304,053 $4,192,430 Expense $130,262,214 $7,150,591 Total Difference $ 0 ($ 2,958,161) Budget not Balanced PDE requirement – Balance Budget Additional Fund Balance from Fund Balance Reserve $2,958,161 New Revenue Total Balance Budget 12/7/2018

2012/13 Revenue   Budget 2011/12 2012/13 Budget to Budget Increase 2012/13 Percentage of Total Functions Revenues 6000 Local $96,936,883 $100,653,528 $3,716,645 77.27% 7000 State $20,398,348 $22,065,133 $1,666,785 16.94% 8000 Federal $1,309,342 $1,118,342 -$191,000 0.86% 9000 Other $0 0.00% Fund Balance Appropriations $4,467,050 $6,425,211 $1,958,161 4.93% TOTAL $123,111,623 $130,262,214 $7,150,591 100.00% 12/7/2018

History of Act 1 Index School Districts capped at Base Index and with allowable exceptions. Base Index is based on (ECI) Employer Cost Index + (SAWW) Statewide Average Weekly Wage   Allowable Tax Increase Year Base Index Value of Exceptions Actual Tax Increase 2012/13 1.70% 1.93% 3.63% TBD 2011/12 1.40% 3.4346% 4.8246% 3.23% 2010/11 2.90% 6.72% 9.62% 2.00% 2009/10 4.10% 2.02% 6.12% 3.95% 2008/09 4.40% 3.31% 7.71% 4.32% 2007/08 3.40% 2.18% 5.58% 4.27% 12/7/2018

2012/13 Allowable Exceptions PA Department of Education 2012/13 2011/12 Special Education Expenditures $ 821,388 $ 778,400 Retirement Contributions 8.65% to 12.36% (42.89 Percent increase) $ 1,233,936 $ 837,108 3. Debt Health Care – Related Benefits No Longer Available $ 1,252,933 Total Exceptions $ 2,055,324 $ 2,868,441 Millage Conversion State Tax Index Total Allowable without Voter Referendum 1.93% 1.70% 3.63% 3.4346% 1.40% 4.8346% Actual Tax Increase TBD 3.23% 12/7/2018

2012/13 Revenue Changes Local - Exelon Last Year of 5 Year Agreement ($ 104,172) Local - EIT $ 200,000 Local - Real Estate Transfer Taxes ($ 100,000) Local – Delinquencies on Taxes $ 250,000 Local - Increase in Real Estate Taxes (7.07%) $ 3,510,000 Local Total Changes $3,716,645 12/7/2018

Increase in State Funds 2012/13 Revenue Changes State - Basic Instructional Subsidy – No increase $ 0 State - Special Education – 3 year without Increase State - Social Security – ½ back from State $706,690 State – Transportation Reduction due to MVAR ($ 165,000) State – Retirement - ½ back from State $ 1,018,938 State – Other Miscellaneous $ 314,033 Increase in State Funds $1,666,785 12/7/2018

2012/13 Revenue Changes Federal – Stimulus IDEA Funds – Completed ($ 141,000) Federal – Medical Access Funds ($ 50,000) Designated Fund Balance - $4,467,050 to $6,425,211 ($2,958,161 Required to Balance Budget) $ 1,958,161 Total Revenue Increase $7,150,591 12/7/2018

2012/13 Expense Budget Budget 2012/2013 2011/2012 Budget to Budget   Budget 2012/2013 2011/2012 Budget to Budget Increase 2012/13 Percentage of Total Expenditures Salaries $58,445,745 $56,256,601 $2,189,144 44.87% Employee Benefits $27,151,839 $25,011,300 $2,140,539 20.84% Professional Services $4,633,944 $4,841,588 -$207,644 3.56% Property Services $5,977,323 $5,190,902 $786,421 4.59% Contracted Services $12,948,050 $12,310,158 $637,892 9.94% Supplies/Books $4,003,864 $3,481,517 $522,347 3.07% Property/Equipment $436,017 $427,492 $8,525 0.33% Other Objects $6,884,059 $6,837,509 $46,550 5.28% Other Financing $9,781,373 $8,754,556 $1,026,817 7.51% TOTAL $130,262,214 $123,111,623 $7,150,591 100.00% 12/7/2018

2012/13 Expenses Changes Salary All Personnel Salaries for 1,000+ Employees plus 4.6 FTE new employees at a cost of $355,423 $2,189,144 Benefits - Retirement $2,214,784; Soc. Sec. $227,968; Health Care $197,610; Prescription ($162,075); Tuition ($153,346) $2,140,539 Purchase Professional Services $ 153,405 Books – Curriculum Plan $ 550,000 Other Educational Schools Outside Spring-Ford- APS $389,046; Voc. Tech $114,910; Alternative Schools $100,000; Other Public Schools $101,100 $ 637,892 400 Objects – Jani King Outsourcing previously under 300 objects $ 786,421 Debt Financing – Elimination of assistances for Debt Fund $ 1,000,000 Total Expense Changes $7,150,591 12/7/2018

2012/13 Budget Highlights Fiscal Reality – The 2011/12 Budget reflected significant budget reductions due to revenue shortfalls. Adjustment in prior years to maintain fiscal reality of revenues losses due to the economy will continue with the 2012/13 budget. The 2011/12 major reductions were the result of state cuts of 2 million and federal support of 2 years of stimulus funding of 800,000 each year. The local economy is causing the total revenues received in the past to be short by 2.5 million a year. The 2011/12 budget reflected a 2.4 million decrease from the 2010/11 budget, even though expenses in the past increased on average 7 million dollars. Basic Education Subsidy – Estimated funding to be the same as 2011/12. Severe funding cuts (2.1 Million) in state revenue in 2011/12 had been cut back to the amount received in 2008/09. The Commonwealth ‘Costing Out Study’ showed Spring-Ford’s adequacy funding is underfunded by 10.5 million when considering factors such as special education students, ESL, poverty students, and geographic region.  12/7/2018

2012/13 Budget Highlights Special Education –Estimated funding to be the same as 2011/12. No funding increase since 2009/10 (same for the last 3 years). Overall program cost for 2012/13 is an estimated increase of 10.2%, or 2.2 million increase. These costs continue to outpace inflation rate due to high costs of PT, OPT, Speech and other related services as outlined by the student’s IEP.   Local Economy – The major revenue source of the district is based on assessment values and losses continue to be a threat to the fiscal climate of the school district, requiring a reevaluation of expenditures. The district is plague with past and on-going assessment appeals of over 50 commercial properties. Recently the district settled with SmithKline reflecting an annual loss of 1.6 million plus payments of 6.5 million in back taxes. In addition Real Estate Transfers, Interim Real Estate Taxes, and Interest on investments, continue to be sluggish. 12/7/2018

2012/13 Budget Highlights Benefits – Increase of 2.1 Million is related to PSERS retirement and slight reductions to Tuition and Prescription costs. After experiencing costs increase due to high health care claims of 28.1% in 2010/11 and 18.7% in 2011/12, the district finally received a more favorable rate of 6.14% in 2012/13. No Program Cuts are included in the 2012/13 Proposed Preliminary Budget. Recent Survey Responses – Indicated stakeholders of the district expect high standards for both Educational and after school Co-Curricular activities, however with no new tax increase. This creates a fiscal challenge especially if the state and federal government continues to underfund districts. The adage of ‘do more with less’ will continue to be evaluated based on the district’s Strategic Plans (currently under review) and funding availability. 12/7/2018

Spring-Ford’s PSERS Pension Dilemma Due to underfunded future retirement costs and increased to multiplier PSERS Rates 2011-2012 8.65% = $ 958,477 2012-2013 12.36% = $2,214,784 2013-2014 16.69% = $1,596,303 2014-2015 21.18% = $1,714,641 12/7/2018

Proposed Preliminary Budget Vote Moves the Budget Process Forward December/January 2012 June 2012 Proposed Preliminary Final Budget Additional time allows for the following: Updated State Revenue, Local Tax Considerations, Other Budgets (MCIU, WMCTC, APS, Alternative Ed, etc.), On-going District Budget Evaluation, etc. Important Dates December 5– Board to approve the advertising of the Proposed Preliminary Budget for public inspection January 17 – Adoption of Preliminary 2012/13 Budget January 25 – State deadline to adopt Proposed Preliminary Budget January 30 - State deadline to file exceptions with PDE 12/7/2018