Proposed Final Budget Presentation (May 12, 2014) Selinsgrove Area School District

GENERAL FUND FINANCIAL STATEMENT (Current financial position) Actual Budget Projected Beginning Balance$ 6,142,492$ 6,810,646$ 8,082,703 Revenues$ 36,936,892$ 37,780,849$ 37,957,589 Expenditures$ 34,996,681$ 37,780,849$ 36,844,022 Surplus/(Deficit)$ 1,940,211$ 0$ 1,113,567 Transfer out to Capital Reserve $ (500,000) Transfer out for IS School Roof $ (850,000) Ending Balance$ 8,082,703$ 6,810,646$ 7,846,270 2

BUDGET SAVINGS (Current Yr.) Adopted budget balance $ 0 Personnel Salary Savings (2.5%) $ 450,000 Fringes/Benefit Savings $ 125,000 Medical insurance savings $ 95,000 Unemployment comp savings $ 63,000 All other department savings (net) $ 4,000 Revenues over budget (EIT) $ 176,000 Not using budgetary reserve $ 187,000 Total Savings (projected surplus) 3% $1.1 million 3

TOTAL FUND BALANCES AT Designations (“buckets”) Balance Restricted - Special Ed ACCESS $ 266,345 Nonspendable - Inventory of Supplies $ 33,631 Nonspendable – Prepaid Expenses $ 31,563 Committed – Retiree Healthcare $ 2,318,334 Committed - Future PSERS Expenses $ 2,648,258 Committed – Educational Resources $ 300,000 Unassigned Balance $ 2,248,139 (6.1% of budget) TOTAL GENERAL FUND RESERVES $ 7,846,270 (21.3% of budget) DEBT SERVICE FUND RESERVES $ 1,842,373 CAPITAL RESERVE FUND RESERVES $ 2,400,227 TOTAL ALL GOV’T FUNDS RESERVES $ 12,088,870 4

FUTURE CAPITAL RESERVE PROJECTS – Importance of maintaining a healthy Capital Reserve Fund ProjectAmountProject start date Intermediate school roof project $ 880,500 Summer 2014 Middle school addition (total cost of $650,000 balance from food service ) $ 275,424 Fall 2014 High school bleacher replacement $ 163,100 Summer 2015 Intermediate school A/C chiller $ 91,000 as needed Football field turf replacement (total cost of $313,000) $ 247,300 as needed 5 Other expenses: annual summer maintenance projects for carpeting, paving, vehicle replacement. Middle school HVAC system replacement (possible performance contract), stadium track surface replacement. Fund used to offset any unforeseen major equipment replacement.

BUDGET SUMMARY FLOW OF FUNDS – GENERAL FUND Beginning Fund Balance$ 7,846,270 Revenues (without tax increase) $38,544,948 Expenditures $39,174,810 Deficit ( $ 629,862) Transfer in from Educational Resources Reserve $ 125,000 Adj Deficit before tax increase ( $504,862) Proposed 1.66 mills (2.7%) Act 1 allowable tax increase $411,811 Operating Deficit to be covered from unassigned fund balance ( $93,051 ) Ending Fund Balance $ 7,628,219 6

REVENUE HIGHLIGHTS Moderately growing local economy 1.66 mill real estate tax increase (2.7%) and a 0.5% growth in the overall real estate base Earned Income Tax collection budgeted with a 2% increase from proj collections Basic education subsidy increase of 1.8% (state funding is uncertain at this point) Special education subsidy level funding Accountability Block Grant level funding Reduction in federal funding (Keystone Literacy Grant & Title I) Transfer in from educational resources reserve $125,000 7

REVENUE BY SOURCE 8 $23.6 M $13.7 M $1.6 M State averages: Local 54%, State 41%, Federal 3%, Other 2%

HISTORICAL REVENUES BY SOURCE 9 millions

EXPENDITURE HIGHLIGHTS Nine teacher retirements at end of 13/14 school year (not replacing one elementary position) Salary increases per personnel contracts – teachers 3.9% salary plus 2.3% steps, administrators 3.5%, classified 3.9% PSERS rate increase from 16.93% to 21.40% Medical insurance premium increase of 7% and move to tiered rates instead of composite rate Building and technology budgets level funded (4th year at reduced funding) 10

EXPENDITURE HIGHLIGHTS Transfer out to debt service fund reduced by $400,000 (debt service reserves to be used) Capital reserve transfer of $96,000 reflects Jackson- Penn rental income New K-5 reading textbook series ($125,000) Total budget of $39.17 million – overall increase of $1.4 million or 3.7% from 13/14 original budget and $2.3 million or 6.3% from 13/14 projected actual ending budget 11

MAJOR EXPENDITURE INCREASES EXPENSEINCREASE FROM Projected EMPLOYER SHR OF RETIREMENT EXP $ 1,003, % EMPLOYEE SALARY/WAGES$ 993, % MEDICAL INSURANCE$ 621, % 12

EXPENDITURE ANALYSIS 13 Personnel costs, student tuition, transportation, utilities, debt service Supplies, textbooks, equipment,repairs, travel

HISTORICAL USE OF FUNDS 14 Personnel costs make up 75% of total budget

FUTURE BUDGET CONCERNS Modest economic recovery producing inadequate local and state revenue growth Act 1 index will remain low Limited state subsidy increases Reductions in federal revenue PSERS rate increases to reach 30% Teacher contract increases over the next 2 years New Federal Healthcare Legislation (increase costs and administrative burden) 15

PROJECTED PSERS RATE 16 Fiscal Year

NET PSERS COST TO DISTRICT 10 Year Analysis 17

BUDGET RESTRUCTURING: ACTIONS TAKEN SINCE Reduced 27 professional staff (12.7%) Reduced 2.4 administrative staff (18.6%) Reduced 29 support staff positions (18.6%) Salary freeze in for all personnel Reduced pay increase for administrative staff in Eliminated indemnity health insurance plan Refinanced 4 bond issues Cut building and technology budgets by 30% 18

BUDGET RESTRUCTURING: ACTIONS TAKEN SINCE Leased Jackson-Penn for rental income Long term energy contracts for natural gas & electricity Strategic use of federal funds to offset costs Four day work weeks in the summer TOTAL FOUR YEAR CUMULATIVE BUDGET SAVINGS OF $14.3 MILLION 19

FUTURE BUDGET PROJECTIONS 20

GENERAL FUND PROJECTED ENDING FUND BALANCE 21

PROPOSED FINAL BUDGET SUMMARY “THE BOTTOM LINE” REVENUES $38,956,759 EXPENSES ($39,174,810) USE OF FUND BALANCE ($125,000 FROM EDUCATIONAL RESOURCES & 93,051 FROM UNASSIGNED) $ 218,051 MILLAGE INCREASE % INCREASE % TOTAL MILLS 1 mill = $247,000 in revenue INCREASE TO AVG HOMEOWNER Homestead/Farmstead credit $133 $45 ($3.75 per month) 22

PRESENTATION SUMMARY (POINTS TO REMEMBER) Financial reserves (fund balance) – very strong position in the short term State funding is uncertain Significant budget challenges remain for the future – PSERS, Healthcare, teacher contract increases NEW FISCAL REALITY Importance of long-term budgeting decisions and forecasting 23