Octorara Area School District 2018-2019 Budget Presentation March 19, 2018

Octorara Area School District Budget 2018-2019 December 11th Board meeting Reviewed the results of the 2016-17 fiscal year. (Increase in General Fund balance of $143K to $8.8M and moved $1.2M into the Capital Reserve Fund) Presented the first draft of the preliminary budget for 2018-2019 PDE Indicated that because of the Lancaster reassessment, Octorara would not be able to increase the mills for 2018-2019. (Lancaster’s levy could not increase more than the prior year’s levy +3.2% rebalancing put the levy over 3.2%) We started our budget process in October by preparing building allocations per student, which in total was less than last year due to a lower enrollment and asking department managers to prepare their budgets. Those budgets along with a salary and benefit budget were gathered and presented to the Board in December. Also in December we reviewed the results of the 2016-2017 audit. Because of some very favorable debt refinancing and favorable expenditure variances we were able to transfer $1.2Million to our newly created capital reserve fund. We also saw that the results of the 2016-2017 fiscal year was a $143K increase in the General Fund Balance, ending at $8.8Million. We were also notified by PDE that our tax levy for the 2018-2019 tax year was going to be limited due to the Lancaster re assessment. We appealed to PDE to review their act 1 tax limit process, specifically for a multi county school district after a re assessment for one county, to allow for the rebalancing process.

Octorara Area School District Budget 2018-2019 January 15th Board meeting Notified by PDE that the mills for 2018-2019 can be increased (After a reassessment the new tax levy could be rebalanced first then prior year’s index added 3.2% for Octorara) Passed resolution to stay at or below the index of 3% (2.8% because of Lancaster’s assessment limit after reassessment) In January we were notified that PDE agreed with our logic and has since changed their budgeting document and reporting process. We were again allowed to consider using most of our Act 1 tax index increase. Also in January our Board passed a resolution to not apply for act 1 exceptions for Retirement and Special Education increases. These exceptions would have allow the Board to set a mill rate higher than the act 1 rate of 3% for this year. This resolution was passed limiting any tax increase for 2018-2019 to a max of our Act 1 index. Also, because of the reassessment of Lancaster properties we are limited to a increase in the Lancaster levy of 3.2% after rebalancing.

Octorara Area School District Budget 2018-2019 February 19th & March 15th Reductions in the preliminary budget expenditures for PSERS estimate and contracted services Increases in revenue from adding state sources In February and March Finance and Board meeting we have been adjusting the budget to account for a lower PSERS rate and some reductions in expenditures. We also increased our revenue budget to account for likely increases in State revenues.

Octorara Area School District Budget 2018-2019 April 15 certification of the amount of homestead farmstead assessment reduction available. ($268 per property in 2017 – 2018) April 16 review and adopt a proposed final budget for 2018-2019 and make available for public inspection on form PDE-2028 April, May and June discuss budget adjustments and mills June 18 Adopt the 2018-2019 final budget set mills June 30 Deadline to adopt the 2018-2019 final budget In April we will be reporting on the homestead farmstead tax reduction after it is certified by the state. Last year the reduction equated to approximately $268 per property. Also, next month we will review the budget again in detail similar to what we did in December. You will be asked to adopt a proposed final budget that will allow me to complete the PDE budget document and make that available to the public. In April/May and June we will be discussing budget adjustments and setting a mills rate. We are scheduled to adopt the budget at our June 18 Board meeting. We are required by law to have a balanced budget by June 30.

Octorara Area School District Budget 2018-2019 Act 1 Increase: The year after a tax assessment, the tax increase is limited to the prior year’s tax levy plus the prior year’s Act 1 index (3.2% last year) Lancaster’s reassessment limits our tax increase to 2.8%, .2% lower than our Act 1 increase of 3% The Board passes a resolution for the mill rate not a percentage increase This year is very different than in past years. In prior years our mills increase is limited to the act 1 tax increase after rebalancing our mills. This year we are limited to both the 3% mills increase and a 3.2% increase on Lnacster’s tax Levy. The last time this we calculated the 3.2% limit is reached at a 2.8% overall increase. You will be advising me on a percentage increas however you will be passing a resolution for mills not a % increase.

2018-19 Final General Fund Budget Summary As of December 2017 Total Revenues $53,279,263 General Fund Budget Document Total Expenditures $55,220,744 Deficit ($1,941,481) Anticipated Budget Results Budget Contingency $350,000 Debt Service Savings $337,681 Anticipated Use of Fund Balance ($1,253,800) This is a summary of where we were in December showing a deficit of $1.9million with a full index increase.

2018-19 Final General Fund Budget Summary As of March 2018 Total Revenues $53,431,662 General Fund Budget Document Total Expenditures $55,087,542 Deficit ($1,655,880) Anticipated Budget Results Budget Contingency $350,000 Debt Service Savings $337,681 Anticipated Use of Fund Balance ($968,199) This is were we are after our budget adjustments and addition of state revneue increases.

Tax Revenue Here is a simplified schedule of % increases, how much additional revenue that produces and how much the budget document will show as a deficit and what our expected deficit would be when you backout the budgeted contingency and debt service savings. As you can see we will be limited to being able to use only 2.8% of our Act 1 index.

Increase for Median Homestead Property 2018-2019 Act 1 Index % Change 0.00% 0.60% 1.20% 1.80% 2.40% 2.80% Chester County -$61 -$31 $2 $27 $56 $72 Lancaster County $131 $160 $189 $218 $248 $267 This scheudle show the impact on the estimated Median Homestead Property. The actual calcualted median value will be reported by each county in May but should be close to the value we are uisng. As you can see a full tax increase will result in $72 for a Chester County property and a $267 increase for a Lancaster property. The wide discrepancy is due to the rebalancing that happens each year.

Multi-County Rebalancing Since 2010 12.44% increase This graph puts that rebalancing into prespective. As you can see here in 2013-14 Lancaster’s mills actually decreased when we had a tax increase and Chester County mills increased hgher in proportion to the actual act 1 increase. Then in 2015-16 Lancaster’s mills again decreased while Chester County mills stayed the same, there was no tax increase in that year. This year is a rebalaning that increases Lancasters mills by a higher % than Chester Cpounty. Also, as you can see on the graph those Lancaster adjustemnt were around $190.

Octorara Area School District Historical Millage Rates Year Chester County Lancaster County 2001-02 20.52 16.87 2002-03 21.27 18.85 2003-04 21.77 20.30 2004-05 22.54 20.42 2005-06 24.51 20.12 2006-07 28.37 23.11 2007-08 31.61 25.58 2008-09 27.37 2009-10 32.23 27.68 2010-11 35.12 28.13 2011-12 35.28 2012-13 36.66 27.49 2013-14 27.71 2014-15 26.43 2015-16 37.51 27.20 2016-17 38.63 28.73 2017-18 39.49 29.45 I am also providing you with a current history of millage changes.

Max Increase for Median Homestead Property 2018-2019 Projected Chester County Octorara Median Homestead Property Assessment * $124,000 2017-2018 Tax Mills 39.49 2017-2018 Tax Face Value $4,897 Max Act 1 Index 2018-2019 Tax Mills 40.07 2018-2019 Tax Face Value $4,969 Increase $72 2018-2019 Projected Lancaster County Octorara Median Homestead Property Assessment * $195,000 2017-2018 Tax Mills** 24.06 $4,692 25.43 $4,959 $267 *Actual median homestead assessments will be released in April **2017-2018 Lancaster mills will be calculated in June

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