1. Your District May Be Headed for an Iceberg Don’t Ignore the Warnings

2. The Story of the Titanic Image from griid.org

3. Susan Barkley, Assistant Director susan.barkley@education.ky.gov Kentucky Department of Education Division of District Support 502.564.3930 Presenter

5. 173 districts 54 are independents No charter schools Largest = 94,000 students Smallest = 109 students 2/3 have less than 3000 students Kentucky School Districts

6. Photo from accuweather.com

7.  Fund Balance  Revenues compared to expenditures  Enrollment and attendance  Staffing levels  Tax rates  Bonding capacity  Using “Band Aids”  Lack of information The Warning Signs

8. Our Icebergs DEFICIT BUDGET CRISIS INSOLVENCY NO BONDING CAPACITY Photo from cbc.ca

9.  Data already collected  Annual Financial Report and Balance Sheet data  Enrollment/attendance data  Staffing data COMPILE, COMBINE, COMPARE! Using Financial Data

10.  General Fund: Committed, Assigned, and Unassigned  Funds over which the Board has control  Amounts remaining after considering current obligations  Includes board-designated funds, outstanding purchase orders  Trend data is important Fund Balance

11. Gee, that doesn’t look so bad…

12. …until you look at 2011-12 compared to the three previous years! Without action, you’ll hit the iceberg in 2013-14

14. Revenues and Expenditures  Is the district spending more than is received during the year?  Include transfers  Watch other funds! (food service, day care, construction)  OVERSPENDING = REDUCTION IN FUND BALANCE

15. Fund balance is decreasing & becomes deficit Overspending results in a hit to fund balance

16.  Legislative funding is directly related to attendance  Attendance = Funding  What is the trend? Enrollment/Attendance

17. ADM is decreasing Staffing remained the same, despite a consolidation Consolidation

18.  Certified and Classified  Salaries and benefits are 85% of general fund expenditures (state average)  Legislative funding is directly related to attendance  Staffing level should be responsive to attendance level  Or other expenditures must be reduced Staffing Levels Salaries & Benefits Everything Else!

19. To stay out of trouble, action must be taken

20. Tax Rates/Assessments  Tax Rate  The rate for this year impacts EVERY future year

21. Compensating rate produces same level of revenue as PY This doesn’t seem like much for a single year, but…

23.  Total principal and interest payments on bonds and leases (including KISTA)  Compare debt to fund balance  High debt ratio indicates financial weakness Bonding Capacity

24.  Redirecting funds  Capital Funds Request  Beware of soft money  ARRA and other short-lived grants  Pork barrel appropriations  When $ runs out, cuts must be made if no other funding source “Band Aids”

25.  Look for ways to increase revenues  Tax rates  Additional grants  Look for ways to decrease expenditures  Efficiencies  Cut unnecessary spending  Are staffing levels appropriate for the enrollment? Changing Course

26. Immediate action is necessary BUT Results take time State recommendations On-site visit State takeover Changing Course

27. Your Good Questions