1. 2016 - 2017 Budget February 11, 2016 AGENDA Five-Year Financial Forecast Current Litigation Budget Preparation Ethan Warren Graphic Design and Illustration Class

2. What The Budget Ain’t It is not a “magic” bullet.

3. The “Magic” Bullet is the Strategic Plan The District approach to coping with the combination of fast student growth in a restricted funding environment with increasing academic standards has been to ensure that the budget process is instructionally driven and guided by the Strategic Plan. During the budget development process, the Administration will review all revenues and expenditures and focus on aligning the allocation of resources, both personnel and financial, with the accomplishment of the goals and objectives. All cost increases will be referenced to the Strategic Plan Goals.

4. Strategic Plan VISION Northwest ISD The best and most sought-after school district where every student is future ready: Ready for college Ready for the global workplace Ready for personal success

5. Strategic Plan MISSION STATEMENT Northwest ISD, in partnership with parents and community, will engage all students in a premier education, preparing them to be successful, productive citizens

6. Board of Trustee Parameters A budget that focuses on the district’s vision and is guided by the strategic plan. A budget that focuses on the district’s vision and is guided by the strategic plan. A budget that is held to the highest standard of financial accountability and reflects a commitment to efficient management of growth. A budget that is held to the highest standard of financial accountability and reflects a commitment to efficient management of growth. A budget built on $1.04 tax rate and, if needed, utilizes fund balance to provide for any revenue shortfalls. A budget built on $1.04 tax rate and, if needed, utilizes fund balance to provide for any revenue shortfalls. A budget that prioritizes allocation of resources to the classroom. A budget that prioritizes allocation of resources to the classroom. A budget that maintains the current campus staffing formulas. A budget that maintains the current campus staffing formulas. A budget that considers the possibility of improvements in employee benefits and/or compensation. A budget that considers the possibility of improvements in employee benefits and/or compensation.

7. Student Enrollment ADDITIONAL STUDENT GROWTH OVER PREVIOUS YEAR School YearCountGrowthGrowth 2015 - 2016 (Budget)20,700 553 2.74% 2015 - 2016 (Mid-Year)20,962 815 4.05% 2016 - 201721,998 1,298 6.27% 2017 - 201823,073 1,075 4.89% 2018 - 201924,115 1,042 4.52% 2019 - 202025,268 1,153 4.78% 2020 - 202126,507 1,239 4.90%

8. Assessed Value - Taxable Property

9. 2015-16 General Fund Forecast NORTHWEST INDEPENDENT SCHOOL DISTRICT FIVE-YEAR FINANCIAL FORECAST COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND EQUITY Adopted Revised Financial Forecast Description 15 - 16 16 - 17 17 - 18 18 - 19 19 - 20 20 - 21 Net Taxable Property Value ($1,000,000,000) $ 12.806 $ 11.706 $ 12.583 $ 13.527 $ 14.452 $ 15.632 $ 16.805 Enrollment 20,700 20,962 21,998 23,070 24,115 25,268 26,507 Additional State Aid for Tax Reduction (ASATR) $ 6,210.289 $ - Loss of State Revenues due to Expiration of ASATR7,811,133 9,270,265 9,018,267 11,223,941 REVENUES: 168,443,000 171,380,032 178,306,762 177,602,814 184,890,532 192,955,691 202,501,649 EXPENDITURES: 175,925,500 177,540,052 184,564,780 192,950,291 201,411,645 214,269,682 222,036,573 Excess (Deficiency) of Revenues Over (Under) Expenditures (7,482,500) (6,160,020) (6,258,018) (15,347,477) (16,521,113) (21,313,991) (19,534,924)

10. Tax Rate Analysis Base M&O Tax Rate$1.0000Base M&O Tax Rate Board Discretion No Recapture 0.0400“Golden Pennies” Election Required No Recapture 0.0200“Silver Pennies” Election Required Recapture 0.1100“Copper Pennies” Maximum M&O Tax Rate$1.1700 Current Total Tax Rate: M&O Tax Rate$1.0400 I&S Tax Rate 0.4125Fifty Cent Limit Current Tax Rate $1.4525

11. Current Litigation Texas Public School Finance System August 28, 2014 The District Court found the current Finance System unconstitutional Texas Supreme Court ruling in March?

12. Current Litigation Texas Public School Finance System The Finance System effectively imposes a Statewide property tax in violation of the Texas Constitution because school districts lack “meaningful discretion” in the levy, assessment and disbursement of property taxes; The Finance System effectively imposes a Statewide property tax in violation of the Texas Constitution because school districts lack “meaningful discretion” in the levy, assessment and disbursement of property taxes; The Finance System is structured, operated and funded in such a manner that prevents it from providing “a constitutionally adequate education for all Texas schoolchildren”; The Finance System is structured, operated and funded in such a manner that prevents it from providing “a constitutionally adequate education for all Texas schoolchildren”; The Finance System “is constitutionally inadequate because it cannot accomplish, and has not accomplished, a general diffusion of knowledge for all students due to insufficient funding”; and The Finance System “is constitutionally inadequate because it cannot accomplish, and has not accomplished, a general diffusion of knowledge for all students due to insufficient funding”; and The Finance System “is financially inefficient because all Texas students do not have substantially equal access to the educational funds necessary to accomplish a general diffusion of knowledge.” The Finance System “is financially inefficient because all Texas students do not have substantially equal access to the educational funds necessary to accomplish a general diffusion of knowledge.”

13. Texas State Supreme Court - 2015 Don R. WillettPhil Johnson Paul W. Green Nathan L. Hecht Eva Guzman Debra H. Lehrmann Jeffrey S. Boyd John DevineJeffrey V. Brown

14. Current Litigation Texas Public School Finance System As expected the State appealed the District Court's ruling directly to the Texas Supreme Court. Ruling expected after March 1 Primary Election Ruling expected after March 1 Primary Election What if remanded back to District Court? What if remanded back to District Court? If favorable ruling, when will the Legislature respond? If favorable ruling, when will the Legislature respond?

15. Texas School Finance Reform 05/23/84 Edgewood I 05/23/84 Edgewood I 10/02/89 Edgewood I 10/02/89 Edgewood I 01/22/91 Edgewood II 01/22/91 Edgewood II 01/30/92 Edgewood III 01/30/92 Edgewood III 01/30/95 Edgewood IV 01/30/95 Edgewood IV 04/09/01 West Orange Cove 04/09/01 West Orange Cove 11/22/05 West Orange Cove 11/22/05 West Orange Cove 12/09/11 Calhoun County ISD 12/09/11 Calhoun County ISD 08/28/14 District Court ruling 08/28/14 District Court ruling ??/??/?? Texas Supreme Court ??/??/?? Texas Supreme Court

16. Bond Rating The District's bonds are rated Aaa by Moody's Investor Services and AAA by Fitch Ratings, by virtue of the Permanent School Fund of the State of Texas. The underlying credit ratings of the district are Aa2 by Moody's Investor Services and AA by Fitch Ratings. In 2015, the Board of Trustees approved three Unlimited Tax Refunding Bonds, Series 2015 ($15,395,575.00), Series 2015A ($22,766,381.17), and Series 2015B ($13,904,656.39) which have reduced the District’s overall debt service requirements and saved the District’s taxpayers a combined $52,066,612.56. Currently the Board of Trustees approved a parameter order authorizing the issuance of bonds for a Tax Exempt Advance Refunding of Series 2008, 2009, and 2010 Bonds that will further lower the interest cost to the District and its taxpayers by an estimated $10,046,582.

17. Texas School FIRST Rating The Northwest Independent School District received a rating of “P” for “Passed” under Texas’ School FIRST financial accountability rating system. The “Passed” rating is the state’s highest, demonstrating the quality of Northwest ISD’s financial management and reporting system. The Northwest Independent School District received a rating of “P” for “Passed” under Texas’ School FIRST financial accountability rating system. The “Passed” rating is the state’s highest, demonstrating the quality of Northwest ISD’s financial management and reporting system. This rating shows that Northwest ISD is making the most of our taxpayers’ dollars. This rating shows that the District’s schools are accountable not only for student learning, but also for achieving these results cost-effectively and efficiently. This rating shows that Northwest ISD is making the most of our taxpayers’ dollars. This rating shows that the District’s schools are accountable not only for student learning, but also for achieving these results cost-effectively and efficiently.

18. Budget Manual Introductory Section Introductory Section Organizational Section Organizational Section Budget Preparation Section Budget Preparation Section Budget Amendments Section Budget Amendments Section Informational Section Informational Section

19. Budget Process Budget packets received from Financial Services office: Budget packets received from Financial Services office: Reallocate Campus/Program Allocations (eFinancePLUS) Reallocate Campus/Program Allocations (eFinancePLUS) Prepare Budget Decision Form (IF Required) Prepare Budget Decision Form (IF Required) Budget Requests beyond Campus/Program Allocation Budget Requests beyond Campus/Program Allocation Personnel Requests beyond Formula staffing (Administrative Services) Personnel Requests beyond Formula staffing (Administrative Services) Capital Expenditures (Facilities, Planning and Construction) Capital Expenditures (Facilities, Planning and Construction) Notify Financial Services (CFO) when budget entered Notify Financial Services (CFO) when budget entered

20. Budget Philosophy The development of the campus budget is the result of site based instructional priorities. The ‘campus community’ shares a collegial vision that considers the priorities of the school. The ‘campus community’ shares a collegial vision that considers the priorities of the school. All stakeholders are knowledgeable of the budget development process. All stakeholders are knowledgeable of the budget development process.

21. Campus Budget Process Review budget allocation with SBDM team Review budget allocation with SBDM team Initiate campus budget committee Initiate campus budget committee Anticipate and consider all revenue sources Anticipate and consider all revenue sources Campus Allocations Campus Allocations Campus Activity Accounts Campus Activity Accounts Grants/Donations/Gifts Grants/Donations/Gifts PTA Instructional Enhancement PTA Instructional Enhancement

22. Campus Budget Process Determine a per pupil, percentage, or set amount to be allocated to instruction, administration, clinic, counselor, library, staff development, departments and grade levels. Determine a per pupil, percentage, or set amount to be allocated to instruction, administration, clinic, counselor, library, staff development, departments and grade levels. Prioritize requests through site based decision making in light of campus goals. Prioritize requests through site based decision making in light of campus goals.

23. Considerations in Budget Development Tie to Campus Improvement Plan Tie to Campus Improvement Plan Tie to student instruction Tie to student instruction Tie to student safety Tie to student safety Consider impact on greatest number of students Consider impact on greatest number of students Consider any other ways to fund Consider any other ways to fund

24. Budget Decision Packages Budget Worksheet Budget Worksheet Budget Decision Form Budget Decision Form Support Schedules (as required) Support Schedules (as required)

25. Campus Funding Allocations Pupil Allocations Pupil Allocations Elementary$ 91.50 Elementary$ 91.50 Middle$ 96.00 Middle$ 96.00 High School$114.00 High School$114.00 Staff Allocations$ 50.00 Staff Allocations$ 50.00 Building AllocationsCopiers Building AllocationsCopiers

26. Pupil Allocations Weighted Allocation Three Weighting Factors / Proportional % of Students Three Weighting Factors / Proportional % of Students STAAR (Level II) - Not Passing All Subjects STAAR (Level II) - Not Passing All Subjects Economically Disadvantaged Economically Disadvantaged English Language Learners (ELL) English Language Learners (ELL)

27. Pupil Allocations Weighted Allocation STAAR + Economic Disadvantaged + ELL = Total Proportional % STAAR + Economic Disadvantaged + ELL = Total Proportional % Total Proportional % * Weighting Factor * Projected Enrollment = Total # of Weighted Students Total Proportional % * Weighting Factor * Projected Enrollment = Total # of Weighted Students Total # of Weighted Students + Projected Enrollment = Total # of Weighted Students + Projected Enrollment = Weighted Projected Enrollment Weighted Projected Enrollment Weighted Projected Enrollment x Per Pupil Allocation = Weighted Projected Enrollment x Per Pupil Allocation = Pupil Allocation

28. Pupil Allocations Weighted Allocation 80 % of pupil allocation received on July 1st of each year (based on projected weighted enrollment). 80 % of pupil allocation received on July 1st of each year (based on projected weighted enrollment). Remaining 20% pupil allocation received in October (based on 1st six weeks actual enrollment). Remaining 20% pupil allocation received in October (based on 1st six weeks actual enrollment).

29. Pupil Allocations Additional Allocation Substitute Teacher Allocation (Campus Discretionary): Substitute Teacher Allocation (Campus Discretionary): (1 Day per Teacher FTE) – Instruction (1 Day per Teacher FTE) – Instruction (1 Day per Teacher FTE) – Staff Development (1 Day per Teacher FTE) – Staff Development Substitute Teachers for illness provided by Administrative Services. Substitute Teachers for illness provided by Administrative Services. Substitute Teachers for mandated activities provided by Central Office department requiring activity. Substitute Teachers for mandated activities provided by Central Office department requiring activity.

30. Budget Worksheet Campus and Program Budgets Campus and Program Budgets Campus base budget is the Campus Funding Allocations. Campus base budget is the Campus Funding Allocations. Program base budget is the Current Year budget. Program base budget is the Current Year budget. Please enter budget revisions online. Please enter budget revisions online. Executive Cabinet review in March. Executive Cabinet review in March. ----- Requested Budget Worksheet due February 28 th ----- BudgetJon GraswichX50025 BudgetJon GraswichX50025 Account Code SetupDeAnne HatfieldX50041 Account Code SetupDeAnne HatfieldX50041 Data EntryScott Van HoevenX50076 Data EntryScott Van HoevenX50076

31. Budget Worksheet Payroll Costs The Payroll Costs for both Salaries & Wages and Employee Benefits will be budgeted centrally. The Payroll Costs for both Salaries & Wages and Employee Benefits will be budgeted centrally. Staffing for 2016 - 2017 School Year (First Request) Staffing for 2016 - 2017 School Year (First Request) Questions concerning staffing, salaries, stipends, and employee benefits? Contact Administrative Services. Questions concerning staffing, salaries, stipends, and employee benefits? Contact Administrative Services.

32. Campus Funding Allocation Instruction(Function 11) Instruction(Function 11) Media Services(Function 12) Media Services(Function 12) School Leadership(Function 23) School Leadership(Function 23) Guidance/Counseling(Function 31) Guidance/Counseling(Function 31) Health Services(Function 33) Health Services(Function 33) Co-curricular(Function 36) Co-curricular(Function 36)

33. Campus Funding Allocation Contracted Maintenance & Repair(624900) Contracted Maintenance & Repair(624900) Normal contracted maintenance and repair of items Rentals – Operating Leases(626900) Rentals – Operating Leases(626900) This includes, but is not limited to rental or lease of copiers Reading Materials(632900) Reading Materials(632900) Magazine subscriptions and newspaper subscriptions that are placed in classrooms, offices or libraries. General Supplies (639900) General Supplies (639900) Items of relatively low unit cost necessary for the instruction process and/or for administration including single use software licenses.

34. Campus Funding Allocation Travel and Subsistence - Employee Only(641100) Travel and Subsistence - Employee Only(641100) The cost of transportation, meals, room, conference registrations, and other expenses associated with traveling on school business. Travel and Subsistence - Students (641200) Travel and Subsistence - Students (641200) The cost of transportation, meals, participation fees, room, and other expenses associated with students traveling for school events. Transportation Expenditures(649400) Transportation Expenditures(649400) Expenditures for student (pupil) transportation costs. Dues (649500) Dues (649500) Dues paid to clubs, committees, or other organizations..

35. Campus Funding Allocation Miscellaneous Operating Costs (649900) Miscellaneous Operating Costs (649900) Expenditures/expenses for all other operating costs not mentioned above. This account includes: Admission Fees Admission Fees Awards Awards Bid notices Bid notices Graduation expenses Graduation expenses Refreshments for school-related meetings Refreshments for school-related meetings Newspaper advertisements, etc. Newspaper advertisements, etc.

36. Budget Decision Form Any major program changes or new programs described on this form. Any major program changes or new programs described on this form. Administrative Services will review all personnel and stipend requests. Please direct staffing requests accordingly. Administrative Services will review all personnel and stipend requests. Please direct staffing requests accordingly. Facilities, Planning, and Construction will review all capital expenditures requests. Please direct building modification requests accordingly. Facilities, Planning, and Construction will review all capital expenditures requests. Please direct building modification requests accordingly.

37. A Final Message “We never fail when we try to do our duty, we always fail when we neglect to do it.” - Lord Baden-Powell - Lord Baden-Powell