1. Octorara Area School District
Tonight we will review the Proposed final budget and vote to pass a resolution that will allow us to make a copy of that budget available for public inspection.
Proposed Final Budget Presentation
April 18, 2016

2. 2016-17 Budget Summary Display Document
Total Revenues
$49,434,879
Total Expenditures
$52,405,602
Deficit
($2,970,723)
3% Act 1 Tax Increase
$964,727
Revised Deficit
($2,005,996)
Sources to balance budget
Use of General Fund Balance
Budget Reductions
Increased State Funding
As previously directed the document show revenues of $49.4 million and expenditures of $52.4 million with a additional 3% tax increase resulting in a deficit of ($2,005,996). Nothing is set in stone with the passage of the proposed final budget. The final millage rate, total revenues and total expenditures all can change right up to the passage of the final budget in June.

3. 2016-17 Anticipated Budget Summary
Total Revenues
$49,434,879
Total Expenditures
$52,405,602
Deficit
($2,970,723)
3% Act 1 Tax Increase
$964,727
Budget Contingency
$350,000
Known Debt Service Savings
$340,000
Increase in State Revenue *
$521,736
Proposed Budget Reductions
$420,000
($374,260)
Use of General Fund Balance
$374,260 $0
*Governor’s Proposed Budget as of April 2016
While the proposed final budget does show a deficit of $2million we do not anticipate that we will end the year with that actual deficit. Our proposed revenues are $49,4 million and our proposed expenditures are $52,4 million, resulting in a deficit of ($2,970,723). Our Act 1 tax increase produces approximately $965K in new revenue. Also within our deficit of ($2,970,723) we have a $350,000 contingency that we do not anticipate having to spend. We also have a known $340,000 savings in debt service. Our state revenue have been budgeted at levels, so any increase in State funding will also reduce our deficit, last estimate about $500K. Finally we started out the process with proposed $420,000 in budget reduction strategy, all resulting in an anticipated deficit of ($374,260) anticipated use of fund balance. The end result is that, while the budget document we are displaying shows a deficit of approximately $2million we anticipate a deficit of around $375K.

4. 2016-17 vs. 2015-16 Expense Summary 2016-17 Budget 2015-16 Budget
Variance
Salaries
$19,728,841
$19,066,458
$662,383
3.47% Inc Over 2 Years (Avg per year)
Benefits
$11,363,777
$10,557,957
$805,820
Retirement Rate % vs % $921K Increase
Outside Services
$5,018,796
$4,841,483
$177,313
Special Education
Repairs/Rentals/Maint. Srvs.
$881,207
$849,407
$31,800
Career Training Rentals $19,500
Electricity $13,400
Trans/Ins/Tuit/Charter
$6,541,792
$6,420,107
$121,685
Transportation increase 1.85%, $50K
CCIU Vo-Tech $63K
Supplies
$1,593,223
$1,570,500
22,723
Classroom supplies $22K/Career Tech Supplies $25K/Gas and Fuel ($27K)
Capital
$638,430
$645,640
($7,210)
Dues/Fees/Interest
$2,917,036
$3,023,313
($106,277)
Bond Interest ($200K)
Contingency $100K
Fund Trans/Principal
$3,722,500
$3,746,939
($24,439)
Other Fnds. Tran. ($230K) Bond Princ. $205K
Totals
$52,405,602
$50,721,804
$1,683,798
Total Expenditures are $52,405,602 for Total Salary increases are $662,383 which is a 3.47% increase(1.74% per year). If you recall the salaries were budgeted at the level. This budgeted amount in represents a two year increase.
Benefits in total have a $805K increase over Medical benefits are budgeted with a slight increase over benefits were budget for the entire year with a more costly plan however the plan design changes in January and should result in lower total costs. So even though we are aan increase for the total budget amount is staying at the budget amount. Prescription budget is decreasing by approximately 16% due to plan changes.
Total Retirement Expenditure is increasing by $921K. This is a net of $461K after we take into consideration the increase on the PSERS Subsidy revenue side.
Outside services increases of $177K are mostly CCIU Special Education Services but also includes an increase for the tax collection expenditure that corresponds to the increase in the EIT Revenue.
Repairs rentals maintenance services is increasing by approximately $32K. We are adding $19,500 for the rental of the County Career Training Center and we have an increase of 2.9% for electricity.
Transportation we have a built-in escalator of 1.85% each year which is approximately $50,000, additional transportation for the career training center at the county $63K and our CCIU three year average for vo-tech is up over last year.
Supplies and equipment combined is increasing by $15,513 or .7 of 1%
Dues and Fees is decreasing, $200K of debt service interest goes away however we are increasing the contingency by $100K.
Below that you can see that the principal increases by $205K however we are removing the $230K transfer to other funds we had in to set up the healthcare fund.
All of these increases = 1.68million or 3.32% increase.

5. 2016-17 vs. 2015-16 Revenue 2016-17 Budget 2015-16 Budget Variance
Local Revenue
$35,164,696
$33,784,692
$1,380,004
Act 1 index $964,727
.5% Assessment Growth $144,000
EIT $200,000
Rental $30,000
All other $41,277
State Revenue
$14,090,910
$13,530,110
$560,800
Retirement Subsidy $512,182
Social Security Subsidy $48,618
Federal Revenue
$1,144,000 $0
Revenue From Other Sources
$500,000
($500,000)
Prior year to set up benefits fund
Totals
$50,399,606
$48,958,802
$1,440,804
Fund Balance Appropriation
Needed to balance revenues and expenditures
$2,005,997
$1,763,000
$242,997
$52,405,603
$50,721,802
Total local revenue is $1,380,004 higher than the budget. The Act 1 index produces $960K. We average about ½ of a percent of assessment growth per year, which produces approximately $144K. This year our EIT actual revenue has been much higher than budgeted, so we are increasing the budget amount by $200,000. We also are increasing rental revenue by $30,000 to account for new rentals. All other local revenues are increasing by approximately $40K. In total local revenues are increasing by $1,380,004.
For now the only state revenue we are changing are the Retirement and Social Security Revenues. The retirement subsidy budget amount is increasing by $500K and social security is increasing by $48K. The Basic Education Subsidy, Special Education subsidy, and the Ready To Learn Block Grant are all budgeted at the level. (The latest omnibus school code bill being debated indicates that our increase in these subsidies would be approximately $500K. No mention of Charter School funding changes as earlier discussed)
No Change in budgeted Federal Funds at this time however ACCESS revenue is still being disputed and may decrease some time in the future.

6. Selected Local Revenue History
Here we can see that our EIT tax revenue, the yellow bar, has grown since it’s recent low of $1.4 Million in to just over $2 Million for (we are budgeting at this higher rate.)
Delinquent tax revenue, shown in red, has remained fairly consistent. (We will be using the same budget number in as we did in 15-16)
Transfer tax, in blue has varied over the years so our budget amount will stay the same as it is in
Investment income, the green line, has not grown much since the year. We do anticipate higher earnings in than we are experience now. This year, due to delayed State payments we were not able to invest larger amounts for a longer period of time thus our actual earnings will be below budget. We will budget the same amount in as we did in
Also Interim Real Estate revenue, the purple line, will be budgeted at the same level as in

7. Octorara Area School District
This chart shows the Octorara Area School District adjusted Act 1 index since As you can see the index is slightly high this year than last year.
(3% index raises approximately $960,000 in new revenue)
Base Index 2.4% Adjusted Index 3%

8. State Revenues
The only substantial growth we have seen over the past several years in the State funding was for the Retirement Subsidy Revenue, however that came with twice as much growth in the Retirement Expenditures side of the budget. This nets out to an increase in net expenditures.
The rest of this chart shows that state funding has remained relatively flat over the past several years. In the Proposed Final Budget our Basic Ed Funding, Special Ed and RTL grants are all flat funded since however we now know that we will actually see an increase in these revenues by possibly as much as $500K for As of now the actual distribution formula is the last part of the puzzle we need to know before we can be certain as to the final numbers and still needs to be part of an approved state budget before we can be certain of the amount.

9. Salary History
This chart shows the total salaries in comparison to the past 8 years of salaries, – 2010 still being the high point. The salaries, as you can see are also below the high in This is the budgeted amount in the proposed final budget. We do have budget reduction strategies that, if used could reduce the total salary and benefits by approximately $400,000. So our final budget may show lower total salaries.

10. Required Health Care Premium History
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
Total Claims
125,662
155,158
136,697
72,382
314,496
142,374
154,855
156,865
191,785
153,187
105,242
100,415
1,809,118
138,017
154,536
179,266
197,349
112,362
171,333
163,946
127,176
130,016
157,056
149,241
249,891
1,930,189
210,312
199,979
387,660
269,845
233,779
327,650
173,159
166,326
177,709
173,201
183,685
214,261
2,717,566
295,022
207,814
172,910
172,384
177,774
212,662
156,411
240,869
233,482
167,544
216,282
405,977
2,659,130
159,715
353,869
173,042
181,337
188,531
185,511
179,597
190,868
202,832
171,487
132,966
240,458
2,360,212
163,938
144,581
187,274
129,059
178,849
181,508
267,891
144,066
171,179
207,599
257,640
178,721
2,212,305
205,665
179,340
154,368
505,937
174,481
332,976
296,403
280,773
222,406
211,312
177,848
106,350
2,848,040
93,162
294,940
200,054
215,333
185,131
205,851
179,237
245,440
111,756
205,497
181,343
133,306
2,251,050
179,727
207,470
144,268
190,019
123,943
122,495
163,562
301,443
136,640
Healthcare claims were a positive variance to budget in Here you can see that total claims for , the second bottom row, were almost $600K lower than in the previous year is trending below that high year of also. The proposed final budget includes no increase in budgeted total Medical Benefits and a decrease in prescription budgeted amounts. (The most recent labor agreement includes cost savings in both of these budget items)
Does not include Stop Loss Premiums, Admin Fees & IBNR

11. Claims History
As you can see here the lower claims in was a combination of low claim in July of 2014, no spikes during the year like we saw in October of We did have a small spike in total costs in February of 2016, show that we do have risk of self insurance.

12. Selected General Fund Expenditures
% Growth
As for our major expenditure areas here you can see that in debt service, the yellow bar was slightly lower than it was in the past three years, due to the one time savings from refinancing actual will be much lower to due to two different one time savings and actual will be slightly lower than due to one time savings but the level will go back up in the year.
The red bar, healthcare expenditures fairly close in size to the actuals and budget, however as you have already seen our actual expenditures in those years are below budget.
The Blue bar, charter school tuitions, has been fairly consistent over the past 5 years was actually lower than in We are budgeting at this lower level for
The Green Bar represents PSERS Retirement. As you can see it has been growing significantly over the past few years. In we are looking at about a 16% increase.

13. PSERS Retirement Rate History & Projections
Fiscal Year
Rate
4.76 – Actual
4.78 – Actual
5.64 – Actual
8.65 –Actual
12.36 – Actual
16.93 – Actual
21.40 – Actual
25.84 – Actual
30.03 – Actual
32.04 – Projected
The largest line item increase in the budget is the increase in PSERS. As you can see here the employer contribution rate is increasing from 25.84% to 30.03%. This is a 16% increase in total PSERS Retirement expenditure dollars.

14. General Fund Budget Trends

15. Octorara Area School District
Items to Consider:
Tax Increase, 0% - 3% (3% in Proposed Final Budget)
Budget Reduction Strategies $0 – $637,800 ($0 Reduction in Proposed Final Budget)
State Funding Possible Increase of Approximately$500,000 (0% increase in Proposed Final Budget) What Do We Budget?
So for next month, and ultimately for the final budget voted on in June, we need to consider the following items.
First is the Act 1 Index. We passed a resolution last December to stay at or below the adjusted Act 1 Index. Octorara Area School District’s Act 1 index is 3.0%. This raises approximately $960,000 in new revenue. The final millage rate and any tax increase will need to be finalized.
Second, we have been debating several budget reduction strategies. The Administration first provided a list of budget reductions totaling $5,390,000, we are now considering a list of budget reductions totaling $637,800.
Also a final consideration is what to budget for State Funding (BEF, SEF and RTL) The proposed final budget has a 0% increase in the State funding however there is always the chance that a state budget will be passed before we finalize our budget and we can budget an increase.

16. Questions