Midland Public Schools 9/1/2019 Midland Public Schools 2019-20 Budget June 10, 2019

Timeline Board Budget Workshop – April 15 9/1/2019 Timeline Board Budget Workshop – April 15 Proposed 2019-20 Budget to Board and Public Hearing – June 10 Board Action (Adoption of 2019-20 Budget and Approval of Final 2018- 19 Budget) – June 24 Michigan Public Act 621 of 1978, the “Uniform Budgeting Act,” requires all local governments to adopt balanced budgets, (can include funds from fund balance) in a format specified by the state, before July 1 of each year. It also requires that “the local unit shall amend the general appropriations act as soon as it becomes apparent that a deviation from the original general appropriations act is necessary and the amount of the deviation can be determined.” The final revision of the 2018-2019 budget will take place at the end of this month. A public school budget is not advisory in nature but rather an accounting of the source and uses of public funds. If either changes, the budget must be amended.

Millage Rates 18 mills on non-homestead property 9/1/2019 Millage Rates 18 mills on non-homestead property 1.8090 mills on homestead and qualified agricultural property (hold-harmless) 2.95 mills on all properties for the 2015 School Building and Site Bonds Hold-harmless millage (raises $415.31 per pupil, so pupil count and taxable value (including PPT) play a big part in determining rate—State calculation with district input, is adjusted each year to reflect over or under collections from previous year) City taxes are split .9045 and .9045 (up .1276 mills) Bond 1.475 and 1.475 (same as first year up from last due to series II being added, TV growth about 1.39% Series I—1.390, Series II-1.560) 50% on 18 and 6 mills non-homestead and commercial

Major revenue assumptions 9/1/2019 Major revenue assumptions State Aid Foundation: (UNKNOWN) $100 per pupil foundation increase ($8631). Categorical: (UNKNOWN) Maintains 147a(1) MPSERS Cost Offset and 147a(2) MPSERS rate of return reduction but estimated allocation down $210,000. Maintains 147c MPSERS rate cap. Every budget starts with determining revenue and then determining expenditures. The State School Aid Budget is not settled. They might struggle completing by October fiscal year. Only 2 proposals (governor and senate) 1.5 X ($120) 2X ($135). House version released 6/6/19 $90 2X After May revenue sharing conference—State Aid Fund down from January no extra funding 2X ($70) 147a part 1 assists with a district’s current year MPSERS liabilities; part 2 is to hold districts harmless from reduction of rate of return from 8% to 7.5% over 2 years. 147c pays for costs of unfunded accrued liabilities above the statutory cap

Major revenue assumptions 9/1/2019 Major revenue assumptions State Aid Categorical Assumptions: Retirement rates up approx. 1.4% Maintain 31a at-risk funding at current level. No MISTEM,104d, 147e, 22n, or Safety grants. Retirement rates due to UAAL cap being up 0.18% and average of employees with mix of retirement plans up from 26.8% to 28% and increase of 1.2%. On all the grants that we didn’t include there was disagreement between plans of if it should be in or agreement they should be out.

Per Pupil Foundation Allowance Revenue Sources 9/1/2019 Per Pupil Foundation Allowance Revenue Sources   2008-09 2017-18 2018-19 2019-20 (Estimate) Foundation Allowance $8,904 $8,411 $8,531 $8,631 Local Millage (Hold- Harmless) 415.31 Local Millage (Non-Homestead) 1,962.06 2,359.79 2,430.54 2,553.61 % of funding Local 26.7% 33.0% 33.4% 34.4% State Aid Payment $6,233.63 $5,635.90 $5,685.15 $5,662.08 Section 20(j) Payment 293.31 % of funding State 73.3% 67.0% 66.6% 65.6% Note $470 reduction in state aid payment and loss of 20(j) Also note that in 2008-09, it was possible to add hold-harmless, local, state, and 20(j) to match the foundation. With the elimination of 20(j), this no longer works. Exempt industrial and commercial personal property tax---lowers taxable value, State share larger, doesn’t affect debt, reimbursed by the State on Hold-harmless.

Major revenue assumptions 9/1/2019 Major revenue assumptions The STEM gift/grant and WE/Diversity were fully received in 2018-19. County-wide enhancement millage down approx. 6%. MCESA special education transfers down Medicaid reimbursement down $400,000. Enrollment -30 students (Blended Count-- 7651). The other major part—predicting enrollment. Conservative. The foundation allowance and student enrollment are typically what we account for at adjustment times as we better understand at what those numbers actually work out to be. For example lets say we only receive $70 /student that would be ($229,530) but if we don’t loss any students that would be $258, 930---so it would be a wash, extra $20 per student would be additional $153,000, worse case $0 increase would be ($765,100). These two factors (student count, state foundation allowance) create many different scenarios.

MPS enrollment (blended count) 1999-2000 to 2019-2020 9/1/2019 MPS enrollment (blended count) 1999-2000 to 2019-2020

Enrollment Enrollment (FTE) 2008-09 2017-18 2018-19 2019-20 (estimate) 9/1/2019 Enrollment Enrollment (FTE) 2008-09 2017-18 2018-19 2019-20 (estimate) Elementary (K-5) 3,615 3,262 3,245 3,240 Secondary (6-12) 4,846 4,053 4,060 4,035 Special Education 464 372 376 Blended Count Enrollment 8,963 7,687 7,681 7,651 % change since 2008-09   -14.2% -14.3% -14.6%

2019-20 General Fund Revenue $81,212,554 9/1/2019 2019-20 General Fund Revenue $81,212,554

Major Expenditure Assumptions 9/1/2019 Major Expenditure Assumptions Continued use of the “Balance our Budget” process maintaining building and department expenditures close to the levels of the 2018-19 school year. Approximate 2-3% salary increase for employees. Step increases. Increase in medical and vision premiums of 5%. 6.5% in dental. The other side from revenues. Balance our Budget is our process for establishing the personnel side of expenditures. As a future graph will show approximately 15% of total expenditures. Most of the changes in expenditures are in the 85% of expenditures which are related to personnel costs.

Major Expenditure Assumptions 9/1/2019 Major Expenditure Assumptions Same level of employer HSA contributions, but switch to 2/3 in January, 1/3 in September. Federal Allocations for Title I, IIA and ID are at 85% of 2018-19. No carryover included at this time. Staffing patterns reflect the continuous process of evaluating vacancies for replacement, reduction or additional. Federal allocations at 85%, no carryover funds included at this time. Staffing levels affect a major portion of the expenditures. Any additional salary comes with an approximate 50% of the salary in retirement and FICA. Other benefits (medical dental, vision, life, LTD, AD &D) sub costs, etc are not included in that. So $70,000 salary would be $35,000 ret, FICA, plus the other benefits.

Proposed Expenditure Changes 9/1/2019 Proposed Expenditure Changes   2018-19 AMOUNT (ESTIMATE) MARCH 2019 2019-20 AMOUNT (ESTIMATE) JUNE 2019 CHANGE FROM PRIOR YEAR SALARIES $ 42,372,788 $ 42,581,890 $ 209,102 BENEFITS $ 27,541,848 $ 28,173,373 $ 631,525 PURCHASED SERVICES $ 2,603,743 $ 2,610,880 $ 7,137 CONTRACTED SERVICES $ 2,566,712 $ 2,511,833 $ (54, 879) SUPPLIES $ 4,332,098 $ 4,149,519 $ (182,579) CAPITAL OUTLAY $ 640,709 $ 213,318 $ (427,391) OTHER (LEASES & GIFTS) $ 620,303 $ 560,546 $ (59,757) OUTGOING TRANSFERS $ 2,243,387 $ 2,315,900 $ 72,513 FUND MODIFICATION $ 700,000 $ 0 $ (700,000) TOTAL GENERAL FUND EXPENDITURES $ 83,621,588 $ 83,117,259 $ (504,329) Chart compares are latest 2018-19 budget and the proposed 2019-20 budget. Expenditures are actually down just not as much as revenues. Most add in salary and benefits, less in capital outlay and fund modification (transfers to capital improvement fund) & grant expenditures

General Fund Expenditures (by account) $83,117,259 9/1/2019 General Fund Expenditures (by account) $83,117,259 Look at expenditures by account. Approximately 85% to personnel costs, 15% to other.

General Fund Expenditures (by function) $83,117,259 9/1/2019 General Fund Expenditures (by function) $83,117,259 Look at expenditures by function. Classroom 77%, Administration 7%, Business/HR 3.5%, Other 12.4%

General Fund Snapshot 2018-19 March (Estimate) 2019-20 June (Original) 9/1/2019   2018-19 March (Estimate) 2019-20 June (Original) Change Budgeted Revenues $84,003,323 $81,212,554 ($2,790,769) Budgeted Expenditures $83,621,588 $83,117,259 ($504,329) Excess Revenue/(Appropriation) $381,735 ($1,904,705) Expected Budget Variance 1%-1.5%/Historical 2% to 3% $836,216 $1,246,759 Anticipated Surplus (Shortfall) $1,217,951 ($657,947) Anticipated Unassigned Fund Balance on June 30 $16,289,990 $15,552,043 % of expenditures 19.5% 18.7% Variance: Can be caused by either an increase or decrease in revenue or expenses Showing a conservative estimate of variance of 1.5%, I have done 1% in the past IF YOU GET THE HISTORICAL VARIANCE WOULD PROJECT THIS BUDGET TO BALANCE. Unassigned-different than Fund Balance different than Unrestricted Fund Balance (Fund Balance – Inventory/Pre-paid – Restricted gifts – Assigned – Workers Comp)

Previous Budget Adoptions 9/1/2019 Previous Budget Adoptions Year Beginning Revenue Beginning Expenditures Revenue - Expenditures Final Audited Change 2007-2008 $ 87,321,459.00 $ 89,431,384.00 $ (2,109,925.00) $ (3,589,526.00) 2008-2009 $ 86,895,770.00 $ 88,929,663.00 $ (2,033,893.00) $ (14,220.00) 2009-2010 $ 87,435,014.00 $ 88,207,931.00 $ (772,917.00) $ (484,743.00) 2010-2011 $ 81,285,254.00 $ 84,775,068.00 $ (3,489,814.00) $ 2,338,543.00 2011-2012 $ 75,939,269.00 $ 82,934,960.00 $ (6,995,691.00) $ (1,328,972.00) 2012-2013 $ 75,650,490.00 $ 82,696,904.00 $ (7,046,414.00) $ (2,087,129.00) 2013-2014 $ 76,211,439.00 $ 82,258,480.00 $ (6,047,041.00) $ (2,288,401.00) 2014-2015 $ 77,083,586.00 $ 81,982,779.00 $ (4,899,193.00) $ (493,861.00) 2015-2016 $ 78,409,105.00 $ 80,044,648.00 $ (1,635,543.00) $ 1,365,800.00 2016-2017 $ 78,736,798.00 $ 77,675,967.00 $ 1,060,831.00 $ 4,120,611.00 2017-2018 $ 79,128,914.00 $ 78,222,048.00 $ 906,866.00 $ 4,620,293.00 2018-2019 $ 81,716,910.00 $ 80,644,747.00 $ 1,072,163.00   2019-2020 $ 81,212,554.00 $ 83,117,259.00 $ (1,904,705.00) It has been awhile but you have used fund balance in the past to begin your year with a balanced budget. The value of a healthy fund balance. This chart shows how the beginning numbers have compared to the final audited change. Revenue (last 10 years) 101.96% audited revenue as % of original High 103.49% Low 99% Expenditures (last 10 years) 97.39% audited expenditures as % of original High 98.78% Low 96.10% Using Averages on this Budget $1,856,421 Using Low Revenue, High Expenditures ($1,702,800) Using High Revenue, Low Expenditures $4,171,186 Would take a 2.3% variance to cover. Variance is a combination of variance in both the revenue and expenditures.

9/1/2019 General Fund History

9/1/2019 Fund Balance History

9/1/2019 Questions? This presentation and a copy of the budget will be available on our website at www.midlandps.org