1. 2013-2014 Preliminary Budget March 18, 2013

2. Previous Year’s Budget Reductions Elimination of Teaching Positions Special Education/Two Elementary Elimination of Administrative Position Elimination of Technology Summer Workers Reduction of Summer Maintenance Workers Reduction of Capital Improvements Energy Curtailment Programs New Athletic/Band Fee Reduction in Variable Debt Elimination of Weekend Security Reduction of Contracted Services TOTAL REDUCTIONS $658,546

3. Budget Development Assumptions No Salary Increases All Employees No Change in Benefit Plans No Furlough/Outsourcing No Additional Programs Two New Teaching Positions Elementary Sp. Ed., High School Social Studies No Additional Allocations By Building By Department No Additional Debt No New Revenue Sources No Additional State & Federal Revenue Except PSERS Retirement Reimbursement

4. Expenditures

5. 2013-14 2012-13PROPOSED DESCRIPTION BUDGET $ INC(DEC) % INC(DEC) Salaries $ 30,415,980 $ 30,500,751 $ 84,771 0.28% Employee Benefits 13,558,938 15,438,865 $ 1,879,927 13.86% Purchased Prof. Svcs. 5,452,876 5,719,740 $ 266,864 4.89% Purchased Property Svcs. 1,927,772 1,905,088 $ (22,684)-1.18% Other Contracted Svcs. 10,054,668 10,393,738 $ 339,070 3.37% Supplies 2,083,664 2,168,410 $ 84,746 4.07% Equipment 447,175 438,190 $ (8,985)-2.01% Other Objects 3,183,456 3,031,792 $ (151,664) -4.76% Other Financing Uses 5,050,000 5,255,500 205,5004.07% TOTAL ALL OBJECTS $ 72,174,529 $ 74,852,074 $ 2,677,545 3.71%

6. PSERS History/Projections Employer Contribution Rates

7. Expenditure Growth - Other Special Education Medical/Prescription Insurance Technology Services Charter School Tuition Student Transportation Services Legal Fees Psychological Services

8. Revenues

9. Revenues – Local DESCRIPTION 2012-13 BUDGET 2013-14 BUDGET $ INC(DEC)% INC(DEC) CURRENT REAL ESTATE $ 50,489,372 $ 52,155,883 $ 1,666,5113.3% INTERIM REAL ESTATE $ 300,000 $ 250,000 $ (50,000)-16.7% PUBLIC UTILITY TAX $ 70,000 $ -0.0% EARNED INCOME $ 3,400,000 $ -0.0% TRANSFER TAX $ 700,000 $ -0.0% DELINQUENT TAX $ 1,250,000 $ -0.0% EARNINGS ON INVESTMENTS $ 101,328 $ 50,000 $ (51,328)-50.7% IDEA $ 478,614 $ 565,257 $ 86,64318.1% RENTALS/FEES $ 150,018 $ 150,000 $ (18)0.0% MISCELLANEOUS $ 50,000 $ 50,041 $ 41 0.0% FUND BALANCE APPROPRIATION $ 1,094,440 $ 1,243,112 $ 148,67213.6% $ 58,083,772 $ 59,884,293 $ 1,800,5213.1%

10. Budget Crisis…why? RevenuesExpenditures

11. Chester County Assessment Changes

12. CUMULATIVE IMPACT OF ASSESSMENT APPEALS SINCE 2010 KENNETT CONSOLIDATED SCHOOL DISTRICT Annual Tax Assessment Hearing Results 2010 - 2013 Municipality Original Assessment Revised Assessment Assessment Reduction KENNETT SQUARE BOROUGH $ 12,110,550 $ 7,655,465 $ 4,455,085 NEW GARDEN 221,065,824 169,415,179 51,650,645 EAST MARLBOROUGH 39,293,650 28,783,471 10,510,179 KENNETT 255,433,690 196,779,614 58,654,076 Total $ 527,903,714 $ 402,633,729 $ 125,269,985 Millage Rate27.746 Lost Revenue $ 3,475,741 Net Real Estate Tax Lost - $2,350,717

13. Interim Taxes, Transfer Taxes, and Interest Revenue $2,935,000 Revenue Lost

14. SUMMARY

15. Real Estate Tax Rate History

16. Budget Shortfall $2,909,655 Tax Increase Expenditure Reduction Fund Balance

17. Real Estate Tax Millage Analysis* Budget % Increase/ 2012-132013-14Increase(Decrease) Fund Balance Appropriations $026.7303 28.3901 1.666.21% $1,058,826 26.7303 27.8415 1.114.16% $1,094,44026.7303 27.8230 1.094.09% $1,243,11226.7303 27.7460 1.023.80% $2,000,00026.7303 27.3538 0.622.33% $2,326,344 26.7303 27.1847 0.451.70% $2,500,00026.7303 27.0947 0.361.36% Proposed Tax Increase Max Increase with Exceptions Increase at Act 1 Index * Net Value of a Mill - $1,929,883

18. Bottom Line Proposed Real Estate Tax Increase 3.8% Increase 27.7460 Mills Apply for Act 1 Exceptions Special Education & PSERS Appropriation of Fund Balance $1,243,112 Begin Process of Budget Deliberations Finance Committee Meetings First Monday of Every Month Long Term Planning Initiatives to Reduce Recurring Expenditures

19. Prepared Statements Please hold questions to the end of all presentations

20. PROPOSED STATE EDUCATION BUDGET

21. COMPARISON OF KCSD PROPOSED 2013-14 BUDGET TO GOVERNOR'S PROPOSED BUDGET KCSDGOVERNOR'S 2013-14 PROPOSEDVARIANCE ACCOUNT DESCRIPTION PROPOSED BUDGETINC(DEC) BASIC ED SUBSIDY $ 4,944,283 $ 5,110,050 $ 165,767 CHARTER SCHOOLS $ - SPECIAL ED SUBSIDY $ 1,641,323 $ 1,633,616 $ (7,707) EDUCATIONAL ASSISTANCE $ - TRANSPORTATION SUBSIDY $ 1,525,661 $ - RENTAL & SINKING FUND $ 462,000 $ - HEALTH SERVICES $ 86,000 $ - PROPERTY TAX REDUCTION ALLOCATION $ 1,390,637 $ - PA ACCOUNTABILITY GRANT $ 128,446 $ - SOCIAL SECURITY $ 1,160,811 $ - RETIREMENT $ 2,493,041 $ 2,161,651 $ (331,390) TOTAL REVENUE FROM STATE SOURCES $ 13,832,202 $ 13,658,872 $ (173,330) RETIREMENT EXPENSE REDUCTION $ 5,151,821 $ 4,467,143 $ 684,678 NET CHANGE TO KCSD PRELIMINARY BUDGET $ 511,348 Millage Reduction Equivalent 0.26 Reduced Millage Requirement under Governor's Proposal 2.8%

22. $1.0 Billion to School Districts over 4 years Kennett’s Grant $1,829,390 Year 1 – 2014-15 Grant Amount $365,878 4 Targeted Uses School Safety Ready by 3 Individualized Learning STEM Initiatives Contingent on the Privatization of State Liquor Stores Passport for Learning Block Grant

23. MIDDLE SCHOOL PROPERTY SUBDIVISION PLAN

24. Outsourcing Deliberations Tentative Time Line Custodial Staff Presentation February 4, 2013 Alternative Proposals March 18, 2013 Committee Discussion April 1, 2013 Board Action April 6, 2013 Instructional/Teaching Assistants Presentation March 18, 2013 Committee Discussion May 6, 2013 Board Action May 13, 2013

25. Comments and Questions Comments@kcsd.org

26. CUSTODIAL OUTSOURCING ALTERNATIVE PROPOSAL 1 REORGANIZATION

27. Elimination of 6 night custodial positions 2 employees by attrition 4 employees by layoffs Reduce all remaining night custodial positions from 40 hours/week to 37.5 hours/week Reorganization of remaining day and night custodial staff to maximize performance and building coverage Total estimated savings - $356,104 Custodial Outsourcing Alternative Proposal 1 Reorganization

28. CUSTODIAL OUTSOURCING ALTERNATIVE PROPOSAL 2 SALARY AND BENEFIT REDUCTION

29. Option 1 Reduction of custodial salaries by 6.5% Major changes to existing healthcare plans for all custodial and maintenance personnel (15% cost reduction) Elimination of 2 positions through attrition Option 2 Reduction of custodial and maintenance salaries by 5.0% Major changes to existing healthcare plans for all custodial and maintenance personnel (15% cost reduction) Elimination of 2 positions through attrition Total estimated savings - $330,000 Custodial Outsourcing Alternative Proposal 2 Salary and Benefit Reduction

30. INSTRUCTIONAL/TEACHING ASSISTANTS OUTSOURCING ANALYSIS

31. Instructional/Teaching Assistants Outsourcing Analysis All staffing was based on equivalent existing employees’ hours and work schedule. All qualifications of contracted employees would meet or exceed the qualifications as dictated by the District and the Pennsylvania Department of Education. Two agencies have submitted proposals based on our solicitation. Lead time for transition to outsourcing arrangement is 60 days after award of contract.

32. Instructional/Teaching Assistants Outsourcing Analysis

33. Patient Protection and Affordable Healthcare Act if applicable would reduce savings by an estimated $104,000

34. DISTRICT WIDE SALARY REDUCTION

35. All Employee Salary Reduction Total Salaries $28,773,685

36. All Employee Salary Reduction Employee Classification Average Per Pay Reduction @ $450,000 (1.56%) Average Per Pay Reduction @ $1,000,000 (3.48%) Average Per Pay Reduction @ $1,500,000 (5.21%) KEA$39$87$131 KCESPA$16$37$55 Administration$78$174$261 Maintenance/ Custodial $24$53$79 Confidential$46$103$154 Food Service$18$40$60