1. DELTA COUNTY SCHOOL DISTRICT 50J SCHOOL BOARD DECEMBER 2011

2. Where The Funds Come From

3. Where The Funds GO 73.95% Total Budget $36.7 Million Numbers reflected are the percentage of the total budget

4. Source2010-2011 Actual 2011-2012 Budget Federal $ 1,602,153$ 1,541,120 State Equalization 20,256,47121,178,601 Fed. Portion Equalization 1,334,734-0- Property Taxes 10,166,6619,015,800 Specific Ownership Tax 1,399,0221,435,000 Other Local Revenue 983,4291,160,243 Use of Fund Balance -0-1,077,256 Other State Revenue 1,639,3001,312,073 Total Revenue $37,381,770$36,720,093 State PPR $6,478.18$6,152,07 Revenue Comparisons

5. Understanding PPR (Per Pupil Revenue)  Property Tax  Specific Ownership Tax  State Equalization  Full Day Kindergarten Factor (.08)  Factors Personnel At-Risk Cost of Living PPR is how schools are funded in Colorado through the School Finance Act adopted annually. It is made up of the following:

6. Property Tax Each December, we set the mill levy assigned to our District by the State. This becomes part of our PPR. The current Mill Levy is 22.656. Assessed valuations from the County Assessor are applied to the mill levy to determine the District’s portion of the property tax. Mill levies were frozen 3 years ago which is increasing the percentage of local funds into school districts and decreasing the State share. Current economic conditions causing assessed valuations to decrease will cause property taxes to decrease and State share to increase. Current property taxes account for $9.7 million.

7. Specific Ownership Tax We collect a portion of taxes assessed on: car sales, boat sales, atv, license plate renewals, etc… Sales are down due to the current economic situation which creates more pressure on State Equalization. Specific ownership accounts for $1.4 million.

8. State Equalization State Equalization funds the balance of PPR after Property Taxes and Specific Ownership taxes. District Board Resolution 2011-08 continues to restrict $300 per student for capital reserve. We call this the District PPOR (Per Pupil Operating Revenue) State Equalization accounts for $21.2 million.

9. Full Day Kindergarten  In 2007-2008 the State added a factor to increase payments for districts providing full day kindergarten with an additional.08 FTE. Previously, kindergarten was funded at.50 or ½ FTE. This addition increases to.58 FTE which is over $490 per kindergarten student included in our PPR.

10. Factors  Personnel costs are factored for the geographical area the District is in and either adds to or reduces from base PPR.  Cost of Living  At-risk factors include: Free and Reduced Lunch ELL Special Education All Factors adjust PPR up and down from the base funding. Our District is the 6th lowest funded district in the state.

11. Amendment 23 Amendment 23 was passed in 2000. It guaranteed an increase in base funding of inflation plus 1% in an attempt to increase funding to schools in Colorado through 2010- 2011. In 2011-2012 and beyond, Amendment 23 will provide for an increase of the inflation factor only*. (Denver-Boulder Index) The intention of the legislation was to close the gap in funding compared to other states. However, it has become the floor for increases to education funding rather than the ceiling. 1 1.Source: Donnell-Kay Foundation *This 1% reduction started in the 2011-2012 budget. Currently PPR is not being funded as designed and there is a “negative factor” to achieve budget reductions from the State. (Total negative factor reduction of Amend. 23 $4.9 Million)

12. FAQ: School Finance General Fund  Furlough Day = $122,600 per day  PPR = $6,152 per full time student  Transportation cost per mile = $3.29  District contribution for health care Single = $350, Family = $650  Average salary scale step Certified 2.38% Classified 1.89%  Cost of step increase (including benefits) ($491,000) Certified = $324,000 Classified = $ 70,000 Activities = $ 10,000 Admin. = $ 27,000 New Bottom Steps = $60,000  Beginning teacher salary/benefits Single health plan = $39,605 Family health plan = $43,205  Senior Teacher – “top end” Single health plan = $76,172 Family health plan = $79,772  Current Enrollment (October 1 count) Students 5,315 Funded FTE Count 4,909.50  PERA Increase ($195,000)  Education Increments ($65,000)

13. School District Funds  General Fund: General Operating Fund ($36.7 Million)  Food Service Fund: Lunch/Breakfast Program ($2.0 Million)  Federal Grants Fund: Title I to IV ($1.6 Million)  Capital Reserve Fund: Large Maint/Building projects ($1.8 Million)  Bond Redemption Fund: Payment of 2003 Bonds (2.0 Million)  Delta-Montrose Technical College: Funding from State Higher Education, Tuition, Federal Student Aide ($3.2 Million)  Insurance Reserve Fund: Part of $300 Capital Reserve to pay for Property Insurance and Worker’s Comp: ($229K)  Colorado Preschool Fund: BELA preschool Program ($645K)  Transportation Fund: ($1.5 Million)

14. DCSD50J Budget Process School Budget Law  School Districts must provide a proposed budget to the Board 30 days prior to the start of the new fiscal year. (We do this in the May Meeting.)  School Board must adopt a budget and appropriate the funds before July 1 st. (We do this in the June Meeting.)  Budget must be presented in a format that allows comparisons of revenues and expenditures that any “layperson” can understand.  School Boards must authorize the use of fund balance by resolution in which revenues are less than expenditures.  Budgets can be adjusted up to January 31 st each fiscal year taking into account enrollment and other revenue and expenditures not known at the time of the original budget approved in June. (We do this in the November Meeting)

15. Budget Process  We use a modified zero based budget procedure that goes through every line in the budget.  We use position control to account for personnel.  Each account is analyzed and compared to the prior 2 years and the current projected year.  Revenues are budgeted based on enrollment projections. This accounts for 86% of District revenues.

16. Budget Process  January-February: Update spreadsheets with current year projection and historical detail. Updated employee information.  January-February: Load current known changes into the budget. (i.e. PERA increases)  January-February: Process the information coming from the State and project what increases or decreases in funding might occur.  January-February: Meet with principals individually and directors to begin planning to meet the budget expectations.  February: Start budget projections for COLA, Steps, Furlough, and other issues as appropriate.  February: Start the Board approved process for prioritizing cuts/increases. (The past 2 years this has been accomplished through the Budget Task Force.)

17. Budget Process  March: Apply all information to the budget worksheets and evaluate the need for cuts.  March: State report comes out mid- month and make adjustments accordingly as this is usually the report the JBC uses to set the State’s budget.  April: Prepare a preliminary look to the Board and get the Board’s direction. Board work session at April’s meeting.

18. Budget Process  May: Proposed budget to the Board. Budget work session before the May meeting and budget hearing during the meeting and present the proposed budget with recommendations to the Board and public.  May: Take input from the Board and public to make adjustments.

19. Budget Process  June: Finalize budget to be presented to Board. Include State mandated budget reporting requirements.  June: Budget hearing during the meeting for budget presentation showing changes from May and final line item budgets.  June: Board reconvenes the regular meeting and approves the budget and appropriation resolutions for each fund.  October: Actual student enrollment numbers and additional information is factored into the budget.  November: Final budget and appropriation resolutions are approved during the November Board meeting.

20. 2012-2013 Budget Timeline  January 2012: Budget template updated with current information and prior year’s history. Gather data on potential budget reduction ideas. Meet with Principals regarding personnel and budget reduction ideas.  February 2012: Directors start planning proposed budget reductions based on State projections. Activate the Board desired process for budget discussions. (BTF in the past)

21. 2012-2013 Budget Timeline  March: Apply budget reduction ideas to budget template to analyze progress towards budget reduction goals. Adjust budget reduction goals after the State forecast and JBC initial budget scenarios.  April Prepare preliminary budget for a work session for School Board meeting. Take input from the School Board to create the May proposed budget.

22. 2012-2013 Budget Timeline  May: Prepare 2012-2013 proposed budget Present proposed budget to School board in a work session. Present proposed budget during budget hearing during the board meeting. Take input from School Board and adjust the budget accordingly.  June: School Board adopts 2012-2013 budget and appropriates the funds after budget hearing.  November: Adjust budget based on enrollment and other known factors. School Board adopts revised 2012-2103 budget and appropriations.

23. Budget Reduction Process  2010-2011: School Board created the BTF (Budget Task Force)  Met from Nov – March with a presentation of their recommendations to the School Board in April.  Made up of 5 Community, 4 DAC, 4 Coord. Council, 2 Class. Council, 2 Directors, 3 Principals. Mike and Terry were “consultants” to the group. (20)

24. RecommendationAmountBudget Install 2 Furlough Days for All Staff300,000260,002 Eliminate District Funding for College Classes*150,00020,000 Increase Employee Contribution – Health Ins.360,000352,136 Reduce Bus Transportation Costs 10%114,000108,194 Intra School Consolidation850,000920,549 Qualifying Hours for Health Insurance20,00010,000 Reduction in Food for Meetings35,00030,000 Eliminate General Fund Support for Food Service 150,000 Reduce Speaker Fees for In-service Training9,0000 Reduce Copier/Paper Costs by 10%25,00021,915 Reduce Extra-Curricular Activities102,000 2010-2011 Budget BTF Recommendation Implemented $2,115,000 $1,974,796 Totals

25. BTF 2010-2011  Eliminated 17.5 Teacher FTEs All but 2 were done through attrition  Eliminated 12.5 Classified FTEs  Total State funding cuts $1,544,360  Budgeted enrollment decrease $350,000

26. 2011-2012 BTF  School Board creates BTF for 2011-2012 school year  Met from January – March with a presentation to the School Board in April  Made up of 5 Community, 5 DAC, 6 Coord. Council, 5 Class. Council, 2 Directors, 5 Principals. Composition was based on Board Districts. (2 Delta, 1 Ced. 1 Hotch., 1 Paonia/Craw) Mike and Terry were “consultants” to the group. (28)

27. RecommendationAmountBudget Transportation Fee$ 150,000$ 45,000 Intra-School (Certified) 240,000 283,297 Increase Activity Fees 8,1750 Intra-School (Classified) 110,000 119,310 Health Insurance (Taken from Health Ins. Reserves to prevent a large increase to employees) 79,000 One Additional Furlough Day (Board Approved reestablish one furlough day to employees) 130,000 (106,297) Crawford 6-7-8 (Board Approved 7-8 only) 209,738194,293 2011-2012 Budget BTF Recommendations Implemented $ 926,913 $ 614,603 Fund Balance was authorized to balance the 2011-2012 budget.

28. 2011-2012 BTF  Eliminated 6 Teaching and 8.5 Classified positions.  Board approved suspension of the Longevity Policy encouraging long-standing teachers to consider retiring which was successful in reducing salary costs.  Total State funding cuts $1,658,217  Budgeted use of fund balance $1,077,256

29. Recap of the past 2 years  Total staff reductions Certified Teachers 23.50 FTE Classified Staff 20.50 FTE  Total Reduction Factor (Amendment 23 amount not funded) $4.9 Million  Total State reductions in funding $3,202,577

30. Potential Process for 2012-2013  BTF in its current form: Effective? Needs Changed? Dropped? (Current Board’s Decision)  District administration will put together recommendations and priorities.  School Board’s input on the recommendations  Input will be received from DAC, Cord. Council, Class. Council, Administration, and the Community.  Administration will make final recommendations to the School Board.

31. 2012-2013 Budget What we know today  State budget projections for cuts to school districts near last year’s cuts. $1.6 Million.  Amount held over from last year’s State budget will be used to offset cuts to school districts in 2012-2013.  Unrestricted Fund Balance available to help offset cuts. $4.1 million less the amount 2011-2012 actually used. (Budgeted $1.0 million)  Friday, the judge ruled in favor of the Lobato case. This may have a positive impact on the 2012-2013 budget. However, there does not appear to be any additional funds for the State to comply with this ruling. It is also expected to be appealed to the State Supreme Court.

32. 2012-2013 Budget Items to be Considered  Activity Cuts  Benefit Changes  Class Size Increase  Consolidation  Four Day Week  Fund Balance  Furlough Days  Program Cuts  Salary Adjustments  Other (Alphabetic, no priorities have been assigned)

33. Fund Balance Analysis (Unrestricted) * Projections

34. Use of Fund Balance The use of fund balance has created a log jam in the budgeting process. When you use fund balance to shore up a budget shortfall, it carries forward to the next year. If no additional funds are available, the budget will consume that amount of the fund balance again. We are in a predicament that may occur if additional funding cuts come from the State. This may require additional fund balance to be used to balance the 2012-2013 budget. This significantly increases the log jam.

35. Projected Use of Fund Balance (Unrestricted)