1. Fall 2017 Conference
Myrtle Beach SC

2. Outline SC Budget and Revenues
“Convergence 2017” - Transportation and Pension Reform
Economic and Budget Outlook
Future Funding Possibilities
Capital Improvement Funds (Current and Future)

3. South Carolina’s Budget and Revenues
Appropriations & Revenues

4. FY 2017-18 Appropriation Sources
General Fund (Gross) $8,533,988,000
Less Tax Relief Trust Fund ($583,649,169)
Less Homestead Exemption Shortfall ($25,735,247)
General Fund (Net Available) $7,924,603,584
Federal Funds $8,623,469,730
Other Funds $10,855,586,746
Total $27,429,395,307*
**SC Total Personal Income in 2016 is $192.6 Billion. So, the State Budget represents about 14% of economic activity in SC.

5. FY 2017-18 Net General Fund Revenue Available
Sales Tax $3,041,207,000
Individual Income Tax $4,295,400,000
Corporation Income Tax $ 329,486,000
Other Sources $ 868,270,000
TOTAL (Gross) $8,534,363,000
Less Tax Relief Trust Fund ($583,649,169)
Less Homestead Exemption Shortfall ($25,735,247)
Total (Net Available) $7,924,603,584

6. FY 2017-18 General Fund, EIA and Capital Reserve Appropriations
“New Money”
Recurring $417 Million
One-time $ 95 Million
CRF $ 139 Million
Total: $651 Million
Statewide Appropriations:
Pension Stabilization $118 Million
Employee Pay/Health/Dental/Pension $ 58 Million
Hurricane Matthew and Pinnacle Mountain $ 69 Million
Reserve Funds $ 22 Million
Local Govt. Fund $ 10 Million
Subtotal: $277Million
State Agency Appropriations:
K12 Education $ 80 Million
Health & Environment $ 149 Million
Higher Education $ 26 Million
Econ. Develop, Tourism & Natural Resources $ 83 Million
All Other $ 36 Million
Subtotal: $ 374 Million

7. Why “Convergence. ”. Retirement Funding Reform &
Why “Convergence?” Retirement Funding Reform & Transportation Funding Reform
Both bills were the culmination of years of work in the legislative arena.

8. H3516, Transportation Funding

9. Road Funding…and Tax Cuts

10. H3726, Pension Reform and Funding

11. SCRS & PORS FUNDING IMPACT
Act 13 of 2017
SCRS & PORS FUNDING IMPACT
Expected new cash flow into SCRS and PORS from employers as a result of contribution increases required by Act 13 is $73.6 million for FY , and an additional $36.8 million for each of the next 5 years.
EMPLOYER IMPACT
July 1
Employer Rate Increase
General Fund
Local Government
Federal /Other Funds
Total All Funding Sources
Cumulative Total
2017
2.00%
$73.6
$67.4
$95.4
$236.4
$236.2
2018
1.00%
$36.8
$33.7
$47.7
$118.2
$354.6
2019
$472.8
2020
$591.0
2021
$709.2
2022
$827.4
Total Additional Funds to System over 6 years
$3,191.4
($ in millions)

12. FY 2017-18 GENERAL APPROPRIATIONS ACT
PENSION FUNDING
IN THE
FY GENERAL APPROPRIATIONS ACT
The General Assembly allocated $154.8 million funding to cover a portion (if not all) of the 2% employer contribution rate increases in FY for every employer that participates in SCRS or PORS as follows:
The full 2% for:
General-funded state and school district employees
EIA-funded employees (teachers & other school employees funded through the EIA)
1% for:
Federal-funded employees (including state agencies & colleges)
Other-funded state and school district employees (also includes colleges)
Local entities (counties, municipalities, associations, hospitals, special purpose districts)

13. Economic and Budget Outlook
Let’s take a look at the state’s income growth and employment growth..

18. Show Me the Money An Unofficial Guesstimate of FY18-19 Available Revenues
Recurring
General Fund (Unofficial): $320 Million*
DOT “Transfer Back”: $50 Million
Road Bill Tax Cuts (Year 1): ($36 Million)
Net “New Money”: $334 Million
Non-Recuring
FY17 Surplus: $0
CRF: $145 Million
Net “Non-Recurring”: $145 Million
*SFC staff estimate. Official Prelim. BEA estimate due mid-November 2017.

19. Lookout! More Budget Outlook…things to Watch
Impact of Federal Tax Reform on South Carolina Taxpayers…and the General Fund?
Phase-in of additional tax cuts from Roads Bill over multiple years.
Pension – Implementation of Phase 1 – increasing employer costs.
Pension – Phase 2? A new plan for new workers?
Abbeville Equity Lawsuit (and School Bus Funding)?
College Scholarships and Funding Impact of SDE grade scale change.
It’s a Disaster Natural Disaster Recovery requirements?
“Shaken, Not Stirred” is 2018 finally the “Year of Bond”? (Bond Bill, that is)

24. Original Base Student Cost
At District Level: 6,000 students in a District
One superintendent
One fiscal officer
One director of planning for every 3,000 students
One assistant superintendent
One program consultant for every 750 pupils
Five secretaries

25. Original Base Student Cost
At School Level (Minimum size of 375 students):
One teacher for every 26 pupils
One principal
One assistant principal (if have more than 500 pupils)
One secretary
One attendance clerk
One librarian
One library aide (if have more than 500 pupils)
One guidance counselor (if have more than 500 pupils)

26. Original Base Student Cost
Other Items:
$7 per pupil for instructional supplies, materials & library books
$10 per staff member for in-service education
Maintenance and Operational Costs
Office Support Costs

27. Fiscal Year 1981-82 Total Appropriations to School Districts
(Act 178 of 1981)
Distribution to Subdivisions: Aid to School Districts- Education Finance Act
$ 503,143,508
State Employer Contributions:
State Retirement - Public School Employees
$ 50,121,169
Group Life Insurance - Public School
$ 2,148,050
Social Security - Public School Employees
$ 48,585,472
Health Insurance - Public School Employees
$ 22,627,040
Total State Employer Contributions
$123,481,731

28. Fast forward to 2017…

29. EIA 1983-84 2017-18 % Teacher Salaries & Fringes $69,467,502 32%%
Teacher Salaries & Fringes
$69,467,502
32%
School Building Aid
$66,738,136
31%
Remediation Services to Students
$60,500,000
28%
Improve Student Learning (Advanced Placement Exams, Modernize Vocational equipment, 5K, etc.)
$19,189,449 9%
Other
$1,370,773 1%
Total:
$217,265,860 %
Teacher Salaries & Fringes
$224,345,370
28%
SC Public Charter School District
$100,556,551
13%
Remediation Services to Students
$79,551,723
10%
4K Public Schools
$49,838,283 6%
EAA
$41,855,943 5%
Transportation
$41,198,813
Office of First Steps
$29,336,227 4%
Instructional Materials
$20,922,839 3%
Other
$209,896,251
26%
Total:
$797,502,000

31. House Education Reform Committee
Do away with the forty year old formula.
Goal is to have a new formula by 2020.
Main goal is to roll up as many lines as we can this year.
We have had Superintendent Spearman present, CFO’s from several districts, Revenue and Fiscal Affairs, and Melanie Barton with the EOC.
Ultimately we want the districts to be given the money and let them spend it as they see fit, but hold them accountable.

33. Capital Improvement Funds

34. Abbeville Equity School Districts Capital Improvements Plan
Proviso 1A.82 in the Fiscal Year Appropriations Act
Funding ($55.8 Million) is provided to eligible school districts by the Department of Education for school facility upgrades
Eligible districts are Plaintiff districts and those with greater than 80% poverty
Eligible Projects Include:
Health and Safety Upgrades
Technology Upgrades inside school facilities
Upgrades associated with career and technology education programs
Deferred Maintenance needs described in the district’s capital improvement plan

35. Abbeville Equity School Districts Capital Improvements Plan
Funding comes from:
EIA Capital Improvements fund (N/R) $ Million
Revolving Student Loan Fund Transfer $16.0 Million
EIA Prior Year Cash Balance $35.0 Million
TOTAL $55.8 Million

36. Abbeville Equity School Districts Capital Improvements Plan
Eligible Districts are:
ALLENDALE
CLARENDON 01
HAMPTON 02
LEE
BAMBERG 02
WILLIAMSBURG
FLORENCE 04
ORANGEBURG 03
JASPER
MARION 10
BARNWELL 19
FAIRFIELD
DILLON 04
FLORENCE 03
MARLBORO
ORANGEBURG 05
CLARENDON 02
MCCORMICK
CALHOUN
COLLETON
LEXINGTON 04
DORCHESTER 04
BARNWELL 29
HAMPTON 01
ORANGEBURG 04
LAURENS 56
GREENWOOD 51
BARNWELL 45
DARLINGTON
SALUDA
CHESTER
LAURENS 55
CHESTERFIELD
SUMTER 01
UNION
RICHLAND 01
ANDERSON 03
CHEROKEE
LEXINGTON 03
DILLON 03
ABBEVILLE
FLORENCE 02
BAMBERG 01
FLORENCE 05
FLORENCE 01
BERKELEY
CLARENDON 03
LEXINGTON 02

37. SC Education School Facilities Act-H.3343
Requires the State Department of Education to conduct a statewide facility assessment
Requires school districts to maintain Facilities and Maintenance plans and to submit these plans annually to SDE.
SDE, through its Facilities Office, shall review the plans and annually submit to the State Board of Education for approval. The priority list of $200 million of facilities need ranked based on several priority factors which include:
1. Current condition of facilities
2. Population trends
3. Millage and fee levels
4. District financial health
5. Ability to pay bonded indebtedness
6. Ability to incur debt without the need of a referendum
After the State Board approves the priority list, the list is submitted to the General Assembly and the governor’s office.

38. The General Assembly may adopt a proviso or joint resolution annually to authorize an amount of debt to be issued during the next fiscal year.
The State Board would then submit an amount equal to the General Assembly’s authorized amount to JBRC and SFAA for the issuance of G.O. (General Obligation) debt through the treasurer’s office.
SDE would be responsible for verifying applications and district facility information and ensuring financial and program compliance.
Financial assistance to districts could be in the form of grants, loans, or a fund of non- recurring appropriations for maintenance and smaller facility needs of the districts.
The State Board together with the assistance from SDE would promulgate regulations as to the specifics of the program.

39. Abbeville Capital Improvement Fund (ACIF) SCDE Process
Proviso 1A.82 requires SCDE to:
Establish an application process
Establish policies and procedures
Prioritize projects with greatest need
Recommend listing of projects to the State Board of Education (SBE)
Submit an annual report to the Governor and General Assembly based on prior year ACIF activities
Proviso 1A.82 requires the SBE to make an affirmative vote to award funds

40. SCDE Considerations - ACIF
Timely distribution of funds
District summer renovation activities
Electronic application submissions only; multiple submission dates; minimize paper processes
Feedback and guidance from eligible districts
Focus Group of finance officials
Priority for life safety, handicap accessibility, energy efficiency, technology upgrades inside school facilities, and deferred maintenance
Top three district-defined priorities
Compliance and Reporting
Adherence to 2017 District Facilities Assessments
Terms and Conditions – no new construction, plan review approvals, accounting and audit requirements
Reporting – expenditures and activities

41. ACIF Requests for Funding
Available for Projects $55,828,859
Requested by Districts $133,780,920
SBE Approvals by Nov $45,230,262
Yet to Allocate $10,598,597

42. ACIF Funded Projects
The majority of projects relate to health and safety upgrades and deferred maintenance
Within priority areas:

43. Next Steps Leverage State Energy Office funds where feasible
Seek technical assistance from Office of School Facilities (OSF) when needed
Obtain Plan Review, Building and Fire Marshal Approvals if needed
Submit Quarterly Expenditure Reports to Finance
Track Activities for inclusion in Annual Report to General Assembly
Conclusion of Facility Assessments for some districts
Questions:
Delisa Clark, Director OSF,
Michael Thom, Director Finance,