1. Allen Independent School District Community Presentation March 7, 2011 1 To advance slide, either click on the screen or use the arrow tools on your keyboard to go forward and backward.

2. Introduction Thank you for your interest in our schools. This presentation is intended to provide basic information about the current state financial crisis and its impact on the Allen Independent School District. If you have more questions following the presentation, you may email the school district at publicinfo@allenisd.org or call 972- 727-0510.publicinfo@allenisd.org

3. The State of State Finances The current budget crisis began with a financial report prepared by the Texas Comptroller for legislators at the start of the 82 nd Legislature. The report showed a potential budget deficit of $15 - $27 billion. Budget report to 82 nd Legislature shows deficit of $15 - $27 billion

4. The State of State Finances A major cause of the current deficit is a shortage in revenue to fund the states public schools. Local property taxes that funded Texas schools were lowered by approximately one third in 2007. The state revenue that was expected to replace the tax funds did not materialize. Property taxes were significantly lowered in 2007 but revenue to replace them never materialized

5. The State of State Finances Legislative leaders have publicly committed to not raising taxes and not using the states rainy day fund. As a result, most of the deficit will be addressed by cuts to balance the budget. Since public education represents 44% of that budget, major cuts to school funding are expected. Legislature is committed to not raising taxes which means a majority of deficit will be addressed by budget cuts

6. Allen ISD Financial Situation With no changes to the state funding formula for 2011-2012, Allen ISD would face a deficit of approximately $2.8 million. Allen ISD could balance the budget and erase this $2.8 million deficit with reductions that were planned. Allen ISD has faced a deficit budget each year since 2007 when the Texas Legislature lowered taxes statewide.

7. Allen ISD Financial Situation Proposed legislation (HB1 and SB1) would reduce state funding to Allen ISD by an additional $18 - $23 million. The exact amount will not be known until the legislature completes its work in May 2011. The projected loss of $18 - $23 million for Allen ISD is based upon the House appropriations bill projections filed in January. The number could be lower by the end of the legislative session.

8. Allen ISD Financial Situation Local school districts have a limited option to increase school taxes through a TRE (Tax Ratification Election). If Allen ISD voters approved such an increase, only $9.6 million could be raised by law. This means that only half of the proposed budget cuts could be addressed by a local TRE election. Allen ISD lowered the Maintenance & Operation tax rate from $1.50 to $1.04 in 2007. The current M&O tax rate is still $1.04.

9. Allen ISD Target Revenue School districts receive a set amount of money for each student in attendance. This is called target revenue. The formula that sets this target revenue is based on enrollment growth in 2006 and has not changed since that time. The following three charts show that Allen receives less funding per student than our neighboring schools each year. This is the primary reason why Allen ISD faces a deficit and budget reductions each year.

10. Target Revenue Comparison 2010 Funding Per Student (WADA) Lovejoy ISDProsper ISDMcKinney ISDFrisco ISDPlano ISDAllen ISD $7,630 per student $7,576 per student $5,832 per student $5,808 per student $5,799 per student $5,535 per student 10

11. Target Revenue Comparison 2010 Funding Variance Compared To Allen ISD Lovejoy ISDProsper ISDMcKinney ISDFrisco ISDPlano ISDAllen ISD $2,095 more per student $ 2,041 more per student $297 more per student $273 more per student $264 more per student 11 $0

12. Target Revenue Comparison Revenue Compared To Allen ISD If Enrollments Were Equal at 21,000 Lovejoy ISDProsper ISDMcKinney ISDFrisco ISDPlano ISDAllen ISD $43.9 million $42.9 million $6.2 million $5.7 million $5.5 million 12 $0

13. Allen ISD Budget Basics The Allen ISD Budget is made up of three different funds: Maintenance and Operation (M&O) Debt Service (I&S) Student Nutrition State law prevents revenue and expenses from these funds from being mixed. The following chart shows how the budget is divided.

14. 2010-2011 Allen ISD Total Operating Budget MAINTENANCE & OPERATIONS Daily Expenses Salaries & Benefits Supplies & Materials Contracted Services Equipment Purchases DEBT SERVICE Debt payment on: Building Projects School Bus Purchases Major Technology Purchases STUDENT NUTRITION Salaries & Benefits Food & Supplies Major Equipment & Renovations 14

15. Allen ISD Budget Basics State law prevents revenue and expenses from these funds from being mixed. For example, bond money for projects such as the new auditorium and stadium cannot be used to offset operating expenses such as salaries. The following chart shows what type of expenditures come from the two major funds that our school district uses.

16. Allen ISD Budget Basics Day to Day Operational Costs Contracted Services Utilities Employee Salaries & Benefits Classroom Supplies New School Construction Major Renovations School Buses Stadium – Auditorium Career Tech Center Maintenance & Operations Debt Service Fund / Bond Construction 16

17. Allen ISD Budget Basics The day to day expenses of the school district are paid through the General Fund. State budget reductions would require Allen ISD to cut costs in the General Fund. The following chart shows how the Allen ISD General Fund is divided. Note that 63% of the General Fund is used for direct classroom instruction.

18. How General Fund Is Allocated 18

19. Allen ISD Efficiency Allen ISDs goal each year in the budget process is to become more efficient without negatively impacting student performance. Allen ISDs schools are among the top performing in the state. Allen ISD has also been rated as #17 out of the top 200 school districts in Texas for financial efficiency according to the Educational Resource Group. The following chart illustrates this comparison of performance and finances.

20. Rating District Efficiency $42.7 million $42.2 million $6.1 million $5.8 million 20 How Allen Compares In Efficiency & Performance To Top 200 Texas School Districts By Size Data provided by the Educational Resource Group (ERG)

21. What Has Allen ISD Done To Address The Budget Problem? $42.2 million $6.1 million $5.8 million $5.1 million 21

22. What Is Allen ISDs Strategy For Addressing the Current Challenge? $42.2 million $6.1 million $5.8 million $5.1 million 22

23. What Is Allen ISDs Strategy For Addressing the Current Challenge? $42.2 million $6.1 million $5.8 million $5.1 million 23

24. Potential Impact On Allen ISD As the state legislature seeks to erase a deficit of $15 - $27 billion, different proposals are being considered to reduce funding for public schools. The next slide shows how three options could impact the Allen ISD budget in 2011 - 2012.

25. Potential Impact On Allen ISD Across the board cuts for all Texas school districts - Loss of $18.4 million Cap current target revenue and adjust target revenue for districts- Loss of $19.5 million Proration of funds based on wealth of the school districts - Loss of $23.2 million

26. Potential Impact On Allen ISD All three budget cutting options would have an impact on Allen ISD. Three strategies the school district would use to offset the loss of funds would be: A tax ratification election (TRE) A reduction In Force (RIF) of programs and/or staff A reduction in services to students and families

27. Setting Priorities At this point, there is not enough information from the state legislature for the Allen ISD Board of Trustees and administration to make budget decisions. Once more specific information is available, the school district will reduce the budget as required using the following priorities as a guide.

28. Setting Priorities $42.7 million $42.2 million $6.1 million $5.8 million $5.1 million Non-Instructional SupportIncrease Fees/OtherMaintain instructional integrityClassroom 28

29. Get Involved Visit Allen ISDs Austin Alert website at www.allenisd/legislature - Updated legislative information - Links to key legislative leaders - Links to the Texas House and Texas Senate - A brief explanation of the Texas legislative process

30. Get Involved If you have additional questions about the current state budget crisis contact the Allen ISD Public Information Office Email: publicinfo@allenisd.orgpublicinfo@allenisd.org Phone: 972-727-0510 Web: http://www.allenisd.org/legislaturehttp://www.allenisd.org/legislature