1. Board of Trustees/Superintendent Planning Meeting Financial Services FY 2014-2015 Budget Update Lancaster County School District February 7-8, 2014 1

2. Capital Funding Options: 1. General Obligation Bonds - Require a referendum and voter approval. 2. 8% General Obligation Bonds - District can issue up to 8% of the county assessment value currently estimated at $23,017,543. We will have outstanding 8% debt at year end of $11,105,000 and an estimated LEAP Payment due next year of $4,377,996 leaving available an estimated $7,534,547 that could be issued. Does not require a referendum or voter approval. 3. Special legislation for $.01 sales tax – This would require special local legislation to assess a $.01 sales tax for construction or bond payments for up to 30 years. Cannot have a school tax authorized by special legislation and the county 7 year capital projects tax at the same time. Would likely be successfully challenged in court as unconstitutional, based on the 2013 Supreme Court decision. 2

3. Capital Funding (Cont) 4. Request projects to be included in the County’s upcoming Local Capital Sales and Use Tax proposal which goes to the voters in November 2014 election. An appointed six member board reviews all the requests and determines which projects will be included on the ballot for the general election in November. An estimated $7 million in annual sales tax revenue could be collected for up to seven years (or until the debt is paid off) to pay for approved projects. 5. Equipment Acquisition Lease – used to spread cost out over several years and limit the amount of 8% funding encumbered each year to the annual payment amount only. Similar to the LEAP installment debt we have now but applies to equipment purchases. In our annual 8% bond issuance we would include necessary funding to make the annual payment on the Equipment Acquisition Lease. 3

4. Governor’s Budget Proposal FY 2014-2015 4

5. State Budget Timeline 5

6. Governor’s Recommendations 1) Proposes a transition from the existing K-12 funding formula to the Education Oversight Committee model. This model provides additional support for districts with higher poverty levels, adds new weighting factors for funding. 2) Recommended that the Base Student Cost be raised from $2,101 to $2,120. 3) Proposes the use of $30 million in recurring General Funds to provide every elementary school with access to a reading coach. Funding would be provided based on 100% or 50% based on the schools reading assessment. 4) Proposes to allow up to $5 million to be used to provide teachers with reading-related professional development. 6

7. Governor’s Recommendations 5) Proposes increased support for summer reading camps from $1.5 million this year to $6 million for FY 2015. 6) Proposes to dedicate 25% of the Capital Reserve Fund, nearly $29.3 million, to the improvement of K- 12 technology across the state to improve external connections to schools, internal connections within schools, and develop or expand one-to-one computing initiatives. 7) Proposes $4 million in non-recurring funds for teacher training and professional development focused specifically on the use of technology in the K-12 setting. 7

8. Governor’s Recommendations 8) Proposes increased funding for digital instructional materials, such as electronic textbooks and software packages, from the current year $4 million to $12 million for FY 2015. 9) Proposes more funding for charter schools. 8

9. Budget Projections FY 2014-2015 9

10. Budget Projections FY 13-14 mid-year budget revisions will be presented to the School Board for approval on February 18, 2014 at the regular board meeting. Any year-end deficit for this year will be covered from our undesignated general fund equity. 10

11. Budget Projections Undesignated General Fund Equity Beginning total equity 7/01/13 $17,746,892 Assigned for Encumbrances & pre-paid expenses -53,515 Assigned for use in FY 13-14 budget -2,423,778 Estimated unassigned balance 7/01/14 $15,269,599 Available for FY 14-15 Budget -1,379,599 Recommended minimum unassigned balance 7/01/14 $13,890,000 NOTE: Undesignated equity should ideally cover three months of average expenditures. Two months of expenditures is a good target to maintain. The recommended minimum balance above of $13,890,000 is 1.5 times one month’s average expenditures over the past year (estimated at $9,260,000). 11

12. Budget Projections FY 14-15 General Fund Estimated Changes in Revenues Local Taxes/State Tax Reimbursements: GO mill value (less residential) w/ no growth in mill value $134,458 x 1.00 x 145.00 mills (no millage increase) $19,496,410 Fee-In-Lieu/ Half-year Vehicle/ Delinquent/ Penalties (decreased) $4,622,258 Sales Tax Reimbursement for residential property (3.73% est growth) $8,383,641 Other State Tax Reimbursements (no change)$5,272,144 Other Local Revenues$872,000 Less Prior Year budget local revenues-$38,694,988 Less Prior Year GF Equity budgeted-$2,423,778 _______ Net Decrease in Local Revenues-$2,472,313 12

13. Budget Projections FY 14-15 State Revenue: EFA Revised for 45-Day Count (BSC of $2,097.57) $24,252,085 EFA Increase for FY 15 estimated growth (175 students) 367,075 Other State Revenues –EIA, Fringe, Misc15,462,957 Less Prior Year Budget -38,626,576 _______________________________________________________________ Net Increase in State Revenues $1,455,541 Total anticipated Decrease in All Revenues -$1,016,772 13

14. Budget Projections FY 14-15 Possible Increase in Local Millage: Local millage could be increased by the CPI factor of ???% (estimated) plus a population growth factor estimate of ???% (estimated) as calculated below: FY 14 Millage X (CPI + Population Growth) = State Allowable 145.00 X 3.45% (Estimated) = 5.00 mills County Millage Limit = 5.00 mills Maximum Millage Increase4.00 mills Value of a mill (excluding residential) is estimated at $134,458. Increase of 5.0 mills for a total of 150.00 mills would generate an estimated additional $672,290 in local tax revenue. 14

15. Millage Increase Limitations The millage rate limitations on the previous page may be suspended and further increased by a 2/3 vote of the membership of the local governing body for the following purposes: Deficiency of the preceding year. Catastrophic event such as natural disaster, severe weather, act of God or act of terrorism, fire, war, or riot. Compliance with a court order or decree. Taxpayer closure that decreases by 10% or more the amount of revenue payable to the taxing jurisdiction in the preceding year. Compliance with a Regulation or Statute enacted that does not provide an appropriation for compliance. 15

16. Budget Projections FY 13-14 Budget Assumptions: Increase in payroll for 1 step. Anticipate up to a 2% raise in salary schedules. Increase in Employer Retirement cost estimated by.30%. Increase in Employer Insurance cost by 5%. Increase in operating cost for Harrisburg Elementary School. 16

17. General Fund Estimated Changes in Expenditures - Salaries & Fringe: Teachers step increase $960,725 Teachers estimated 2% raise $811,770 Classified step increase$94,102 Classified estimated 2% raise$144,064 Admin step increase $ 290,051 Admin estimated 2% raise $130,886 Hourly step Increase$55,455 Hourly estimated 2% raise$75,049 Supplement step increase$16,620 Supplement estimated 2% raise$22,493 17 Budget Projections FY 14-15

18. G/F Estimated Changes in Expenditures cont: Increase in Discovery School Funding$ 12,491 Utilities estimated 2% increase $ 54,524 Cleaning contract estimated 2% increase $ 49,019 Increase in routine maintenance$ 20,000 18

19. Budget Projections FY 14-15 Harrisburg Elementary Operating Cost Salaries & Fringe (16 new positions)$920,554 Utilities$145,663 School Allocation$ 17,735 Cleaning$109,453 Property Insurance/Fire Fees$ 31,378 Total Increase in Expenditure $3,962,032 19

20. Budget Reduction Process FY 14-15 Current Deficit-$4,978,804 Possible Considerations: Five mill tax increase $ 672,290 Use general fund equity $1,379,599 Growth in mill value by 1%$ 194,964 Base Student Cost increased to $2,120$ 259,186 Base Student Cost increased to $2,150$ 346,857 Net Deficit -$2,125,908 20

21. Budget Process FY 2014-2015 21

22. Budget Preparation Guide (Handout) This handout contains selected sections from the budget guide used by the principals to develop their budgets. It includes: About the Process FY 14-15 Budget Calendar The Budget Presentation Schedule-Schools Proposed funding allocation standards Proposed school allocation Proposed staffing allocations Proposed staffing allocation standards School enrollment projections 22

23. The End I’ll be glad to answer any questions you may have. Thank You! 23