BUDGET PRESENTATION School Finance 101 Post McCleary – Now What BUDGET PRESENTATION School Finance 101 Post McCleary – Now What? Current Projections/Next Steps Dr. Kristine McDuffy Superintendent

“Pre-Test/Post-Test”

SCHOOL FINANCE “101”

School District Funds Associated Student Body - ASB Transportation Vehicle - TVF Capital Projects - CPF Debt Service – DSF General Fund – GF

ASB Fund Cultural Athletic Recreational Social

Transportation Vehicle Fund Used to purchase school buses Revenue comes from State Depreciation TVF levy

Used to build new buildings Major renovations Capital Projects Fund Used to build new buildings Major renovations Capital technology and technology services Revenue comes from Bond proceeds Capital/Technology levy State Match Capital surplus lease or sale

Revenue comes from bond levy Debt Service Fund Used to repay bonds Revenue comes from bond levy

General Fund

Main Driver of our Revenue

Enrollment – Budget & Actual Districts current AAA FTE 19,125 Budgeting for 19,075

Where our money comes from - Pre-MCcleary Local Support: Local Revenue $1.3 m Food service, $384K tuition fees, elearning, CTE, Pre-school, building fees) lower than prior yrs because of FDK State General – Basic ed apportionment $132M, State Special Ed $23M, LAP $3.8M, Bilingual $2.8M, Transportation $9.8M. Federal General – federal forest, Title 1, 2, IDEA-B, Fed Food Service Other Head start, Transfers

WHERE OUR MONEY COMES FROM - POST MCCLEARY

Where our money goes $159.3M Teaching:, teachers, extra curr, payments to other school districts. $37.5M Teaching support: librarians, counselors, nurses, student management, professional Dev., Instructional technology. $15.3M School Admin: Principals 80.9% of budgeted Expenditures into focused to student achievement. $34.0M Support Activities: Food, FS Operations, Tranpo operations, maintenance, Insurance, Grounds, Custodial, Information sys., $14.0M Central Admin: Board of Dir., Super office, Business office, HR, Public relations, Supervision of Instruction, Supervision of Transpo, Supervision of Maint.

Percent to salaries & benefits

Prototypical Schools Model – A Few Examples State Actual (20,556 Students) Librarians 25.178 30.600 Guidance Counselors 39.737 42.260 Nurses 3.151 10.100 Teaching Assistants 34.707 98.300 Custodians 79.162 89.481 Principals 56.480 56.419

fund balance Indicator of a districts financial health Part of the districts annual audit Major determining factor to establish the districts bond rating Board policy 6022: “To provide an adequate but not excessive reserve, the Board of Directors has established a target committed to minimum fund balance of 4% of total expenditures in the General Fund for the ending fiscal period.”

Snohomish County School Districts - Current Fund Balance % of Expenditures Lakewood 17.58% Darrington 14.14% Arlington 12.77% Mukilteo 10.80% Monroe 10.50% Marysville 10.49% Everett 9.34% Sultan 8.74% Lake Stevens 6.76% Stanwood 6.75% Snohomish 6.68% Edmonds 4.02% Granite Falls 1.42%

POST MCCLEARY - NOW WHAT?

EHB 2242 – McCleary “Solution” (Passed in 2017 legislation) Major changes in K-12 financing, significantly impacting both State and local funding Once-in-a-generation changes in: Salary Allocations Local Levies and Local Effort Assistance Collective Bargaining and Supplemental Contracts Accountability and Transparency Health Benefits

E2SSB 6362 – McCleary “Solution” 2 (Passed in 2018 legislation) Funding schedule for salaries Regionalization in effect Local funding limitations Accountability Increased Special Education Cost Multiplier Delayed K-3 class size compliance (goes into effect 2019-20)

Supreme Court Order – June 2018 The Court: Purged contempt order Lifted sanctions Relinquished jurisdiction in the case Conclusion: McCleary “is finished”

McCleary a few of the major impacts Salaries Regionalization Levy

Salary adjustments Certificated Instructional Staff IPD 2018-19 2019-20 Certificated Instructional Staff IPD Classified Staff 3.1 IPD Administration 3.1 IPD

State Funded Salaries by Regionalization Certificated instructional staff 0% = $65,216 6% = $69,129 12% = $73,042 18% = $76,955 24% = $80,868 Edmonds = 18% Everett = 24% Mukilteo = 24% Northshore = 18% Shoreline = 24% Lake Washington = 18% Edmonds

Staff Mix by District Lake Washington = 1.44408 Northshore = 1.53762 Mukilteo = 1.55340 Shoreline = 1.55452 Marysville = 1.56412 Edmonds = 1.57662 Everett = 1.59092

General fund levy revenue by fiscal year 9.4% drop over prior year 2024 only comes back to $56.9M 12.4% drop over prior year

What Now? While McCleary is “done,” much work remains Implementation of HB 2242 and SB 6362— with new funding formulas, salary allocations, levy systems, and accountability measures—is far from complete Court ruled that EHB 2242 may not ultimately amply fund basic education, stating: “the Court is willing to allow the State’s program to operate and let experience be the judge of whether it proves adequate”

Current Projections Next Steps

BUDGET 2018-19 Revised 2019-20 Projected 2019-20 Target Local Revenue $62,704,842 $55,642,427 State Revenue $242,840,704 $244,817,155 Federal Revenue $14,648,774 $14,588,774 Other Sources $4,929,846 TOTAL REVENUE $325,124,166 $319,978,202 Salaries $204,060,670 $211,566,670 Benefits $75,787,806 $79,515,078 All Other Costs $47,239,490 $44,070,348 $26,570,348 TOTAL EXPENDITURES $327,087,966 $335,152,096 $317,379,056 Deficit ($1,963,800) ($15,173,894) $2,599,146 Beginning Fund Balance $11,265,838 $9,302,038 Projected Ending Fund Balance ($5,871,894) $11,901,184 Fund Balance as a % of Expenditures 2.84% -1.75% 3.75% Data as of December 20, 2018. Revenue is declining by $5.2M while Expenditures are increasing by $8.1M In order to reach the 2019-20 Target there will need to be $17.5M in expenditure reductions

Core Values/Commitment Core Work – Student Learning Our Filters Core Values/Commitment Core Work – Student Learning Return on Investment/Cost Benefit

Next Steps Board Parameters Staff and Community Input Monitor Legislature Key Dates/Milestones

Budget Development key Dates 1/14/19 District-wide enrollment forecast complete – Cabinet review 1/22/19 Board Work Session 2/26/19 School by school enrollment projections complete 3/26/19 Certificated staffing sheets issued 4/09/19 Classified staffing sheets issued 4/16/19 Certificated staffing sheets due to HR 4/23/19 Classified staffing sheets due to HR First reading reduced staffing to School Board 5/14/19 Second reading reduced staffing to School Board 7/9/19 First Reading of budget – School Board 8/13/19 Second Reading and adoption of budget (Tentative) – School Board 8/27/19 School Board Special Session – Budget Adoption (If needed)

ESD 2019-20 Budget Development Latest News FAQs Questions Recommendations

We can do this!

Thank you! What an incredible Team!