1. Community Budget Forum FY 2015 Budget Development Dr. Patrick K. Murphy, Superintendent Deirdra McLaughlin, Assistant Superintendent, Finance & Management Services Leslie Peterson, Budget Director February 3, 2014

2. School Board’s Budget Guidance  Present a budget that is consistent with APS’ Mission, Vision, Core Values and Strategic Plan  Present a balanced budget  Set aside funding from FY 2013 closeout for one- time expenses in FY 2015  Close the budget gap, at least in part, by cost savings and the use of reserves to offset one-time costs. Options for cost savings should include consideration of efficiencies, service reductions, and personnel cost savings. All cost savings proposals should include an impact assessment that provides an analysis of the effect of the proposed reduction on achievement of the APS Strategic Plan goals 1

3. School Board’s Budget Guidance (cont’d)  Reflect the School Board’s priority to provide consistent instructional time at the elementary school level  Consider other enhancements that are consistent with the Strategic Plan, including compensation  Ensure that the budget provides for long-term financial sustainability, using the updated three- year forecasts of revenues and expenditures  Ensure that APS complies with all federal, state and local laws  Ensure that fiscal, human, and physical resources are used effectively, efficiently and responsibly 2

4. APS Revenue Outlook Arlington County funds more than 80% of APS’ budget APS’ revenue reflects the county’s revenue outlook 3

5. County Funding for APS  Fall projection was a 3% increase  January projection is a 5.8% increase  APS will receive an additional $19.6 million  APS share of local tax revenue is 45.6% ◦ County Board’s budget guidance does not provide additional revenue for enrollment increase 4

6. FY 2015 Revenue Pressures  Federal Funding ◦ Steady decrease over past 4 years  Almost $4.4 million or 26% since FY 2011  State Aid ◦ New biennial budget ◦ VRS contribution rate increase ◦ Additional state mandates 5

7. Where We Are Today ◦ Overall revenue growth = 3.2% ◦ Projected expenditure growth = 3.4% ◦ Projected Shortfall = $1 million The shortfall does not include compensation or any new or expanded programs or services. 7

8. APS – Enrollment Growth Class Size by Grade (2013-14) 8

9. APS – Enrollment Growth Projections 9

10. APS – Impact of Enrollment Growth  Growing Enrollment ◦ 26% increase since FY 2008 ◦ 3.6% increase projected for FY15  837 additional students  Capacity Issues ◦ Elementary at 105.6% and climbing ◦ Overall projected at 102.8% for FY15 ◦ As new building space comes on board, additional operational costs are incurred 10

11. APS – Expenditures Required for Additional Students  Cost of Enrollment ◦ School staffing ◦ Instructional materials and technology ◦ Relocatables ◦ Average annual cost past 4 years = $9.5 million ◦ Projected cost for FY15 = $9.8 million 11

12. APS – Expenditure Pressures  Compensation ◦ VRS contribution rate will increase by nearly 25% or $7.5 million ◦ An additional $3.4 million for increased health care costs  $9.8 million to fund enrollment growth Before funding a salary increase or additional instructional time, APS must first cover these additional costs of $20.7 million. 6

13. APS – Expenditure Pressures  Increased instructional time  Eliminate early release Wednesdays  Approximately $500,000 per school  Remain competitive and able to attract and retain high quality staff  Step increase = $8 million  1% COLA = $3.5 million  Focus on early literacy  Begin implementation of a 1:1 initiative 12

14. Options for Expenditure Changes  Compensation ◦ Examine options to reduce the cost of benefits (dependent audit) ◦ Contract length reductions/furloughs ◦ Decrease/eliminate TSA match ◦ Reduce extra days ◦ Reduce creditable compensation for VRS  Program adjustments and/or changes in service delivery models ◦ Redesign library services delivery model ◦ Reduce field trips ◦ Explore options to provide adult education services  Reduce staffing ◦ Custodians – increase square footage from 21,000 to 22,000 ◦ Clerical – at both schools and central departments ◦ Assistants – adhere to planning factors 13

15. Options for Expenditure Changes, continued  Consider selected increases in class size  Increase fees  Set aside funding from FY 2013 closeout to carry forward to FY 2015 to fund one-time costs  Request additional funding 14

16. 15 Reaching Out to the Community  Joint county/schools budget forum  Community budget forums  Online Budget Tool  Online Budget Survey  School Board Advisory Groups  Principals and Employee Advisory Groups

17. APS – Next Steps  February 5 (snow date for January 22) ◦ Community Budget Forum (Education Center)  February 27 ◦ Budget Release Date  March 20 ◦ Public Hearing on Superintendent’s Proposed budget  April 24 ◦ Public Hearing on School Board’s Proposed budget 16

18. Community Budget Forum FY 2015 Budget Development Dr. Patrick K. Murphy, Superintendent Deirdra McLaughlin, Assistant Superintendent, Finance & Management Services Leslie Peterson, Budget Director February 3, 2014