1. Board of Trustees/Superintendent Planning Meeting Financial Services FY 2015-2016 Budget Update Lancaster County School District January 23-24, 2015 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 $23,860,852. We will have outstanding 8% debt at year end of $8,560,000 and an estimated LEAP Payment due next year of $4,331,562 leaving available an estimated $10,969,290 that could be issued to meet our Capital Plan and other capital needs. 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. 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 2015-2016 4

5. State Budget Timeline 5

6. Governor’s Budget - Highlights 6

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9. Based on Four Pillars: 1) Fair and Simple Funding – Continue simplifying funding by eliminating lottery fund streams for K-5 and 6-8 programs and distribute funding through the EFA. 2) Emphasizing Reading – Proposing an additional $10m in recurring support for reading to double the state’s reading coaches and to provide for professional development. 3) Access to Educational Technology – Budget contains a 2 nd year of $29.3m for technology initiatives. 4) High-Quality Public School Choice – Budget supports full EFA funding for Charter Schools and also provides EIA funding of $11.8m. 9

10. Governor’s Budget - Highlights Teacher Quality and Recruitment: Focus on – 1) Homegrown Teacher Initiative 2) Enhanced Student Loan Repayment 3) Rural Educator Salary Supplement 4) Graduate Degrees for Career Educators 5) Teacher Mentors 10

11. Governor’s Budget - Highlights Details: 1) Consolidate funding streams (Lottery gone) and increase BSC from $2,120 to $2,200. 2) Double Reading Coaches and provide for professional development. 3) Fund Read to Success program with $.9m in recurring support. 4) Maintain $29m in Lottery funds for Technology. 5) Increase EIA professional development to $4m for recurring support to technology. 6) Additional $2m for career and technology equipment. 7) $11m in recurring support for growth in the Public Charter School District. 8) $2.8m to support development and expansion of the virtual education program. 11

12. Governor’s Budget - Highlights Details Cont: 9) Establish a Rural Teacher Recruiting initiative with $1.5m and sustain funding by closing the NBC incentive to new entrants as the NBC stipend phases-out. 10) Fully fund new career readiness assessments $4.2m and fund the new teacher evaluation system department $3m. 11) A one-time $10m allocation from the Capital Reserve Fund for the lease or purchase of school buses. 12

13. 13 Governor’s Budget

14. Governor’s Budget- Tony’s Graph inserted for comparison 14

15. Budget Projections FY 2015-2016 15

16. Budget Projections FY 14-15 mid-year budget revisions will be presented to the School Board for approval on February 17, 2015 at the regular board meeting. Any year-end deficit for this year will be covered from our undesignated general fund equity. 16

17. Budget Projections Undesignated General Fund Equity Beginning total equity 7/01/14 $18,653,099 Assigned for Encumbrances & pre-paid expenses -32,952 Assigned for use in FY 14-15 budget -2,772,134 Estimated unassigned balance 7/01/14 $15,848,013 Available for FY 15-16 Budget -1,488,013 Recommended minimum unassigned balance 7/01/14 $14,360,000 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 $14,360,000 is 1.425 times one month’s average expenditures over the twelve months (estimated at $10,076,977). 17

18. Budget Projections FY 15-16 General Fund Estimated Changes in Revenues Local Taxes/State Tax Reimbursements: GO mill value (less residential) w/ no growth in mill value $139,044 x 1.00 x 149.50 mills (no millage increase) $20,787,078 Fee-In-Lieu/ Half-year Vehicle/ Delinquent/ Penalties (decreased) 5,102,454 Sales Tax Reimbursement for residential property (0.00% est growth) 8,377,879 Other State Tax Reimbursements (no change)5,279,184 Other Local Revenues950,600 Less Prior Year budget local revenues-40,496,477 Less Prior Year GF Equity budgeted-2,772,134 _______ Net Decrease in Local Revenues-$2,771,416 18

19. Budget Projections FY 15-16 State Revenue: EFA Revised for 45-Day Count (BSC of $2,120) $26,887,248 EFA Increase for FY 16 estimated growth (150 students) 318,000 Other State Revenues –EIA, Fringe, Misc15,296,048 Less Prior Year Budget -41,140,969 _______________________________________________________________ Net Increase in State Revenues $1,360,327 Total anticipated Decrease in All Revenues -$1,411,089 19

20. Budget Projections FY 15-16 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 15 Millage X (CPI + Population Growth) = State Allowable 149.50 X 3.34% (Estimated) = 5.00 mills County Millage Limit = 5.00 mills Maximum Millage Increase5.00 mills Value of a mill (excluding residential) is estimated at $139,044. Increase of 5.0 mills for a total of 154.50 mills would generate an estimated additional $695,220 in local tax revenue. 20

21. 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. 21

22. Budget Projections FY 15-16 Budget Assumptions: Increase in payroll for 1 step. No anticipated raise in salary schedules. Increase in Employer Retirement cost estimated by.30%. Increase in Employer Insurance cost by 5%. 22

23. General Fund Estimated Changes in Expenditures - Salaries & Fringe: Teachers step increase $1,146,567 Teachers estimated 0% raise 0 Classified step increase236,099 Classified estimated 0% raise0 Admin step increase 104,554 Admin estimated 0% raise 0 Hourly step Increase65,991 Hourly estimated 0% raise0 Supplement step increase19,778 Supplement estimated 0% raise0 23 Budget Projections FY 15-16

24. G/F Estimated Changes in Expenditures cont: Additional Salaries from Special Revenue $ 300,000 Increase in Discovery School Funding 7,510 Utilities estimated 2% increase 61,500 Cleaning contract estimated 2% increase 47,000 Increase in routine maintenance 20,000 Total Increase in Expenditures $2,008,999 24

25. Budget Reduction Process FY 15-16 Current Deficit-$3,420,088 Possible Considerations: Five mill tax increase 672,290 Use general fund equity 1,488,013 Growth in mill value by 1% 194,964 Base Student Cost increased to $2,200 530,859 (Net of Lottery Funds Cut $444,450) Net Deficit -$533,962 25

26. Budget Process FY 2015-2016 26

27. 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 15-16 Budget Calendar The Budget Presentation Schedule-Schools Proposed funding allocation standards Proposed school allocation Proposed staffing allocations Proposed staffing allocation standards School enrollment projections 27

28. The End I’ll be glad to answer any questions you may have. Thank You! 28