1. MISSOURIS FOUNDATION FORMULA & JCPS PRELIMINARY BUDGET SHIFTING MONEY AROUND THE STATE

2. Current Reality Current formula implemented in 2006-07 Designed to be phased in over 7 years – Fully funded 2012-13 Requires about $120m each year to be phased in Shortfall has existed in each of the last 3 years, and will next year Stimulus funds softened some of the blow ($153m in FY13) Every year the formula becomes more expensive o Increasing Costs + Flat Appropriations = More Withholdings DESE is currently applying a straight reduction to every district, because there is no legislative guidance to the contrary o Legislation Prohibits Adjusting SAT During Phase-In

3. Funding Formula Weighted Average Daily Attendance (WADA) X State Adequacy Target (SAT)-Set to increase in FY13 & FY14 X Dollar Value Modifier (DVM) - This is decreasing in FY13 Local Effort based on 2005 Assessed Valuation = Formula funding if +, but if – then hold harmless Also HH if payment per WADA < 2005 payment per WADA

4. Many Changes in FY13 Final Year of Phase In – $100 Million State Wide Increase in Cost – $1.1 Million New Funding JCPS Recalculation of DVM – $29 Million State Wide Decrease in Cost – $200,000 Lost Funding for JCPS JCPS DVM Going From 1.038 to 1.034. Recalculation of WADA Thresholds – No Official Calculation on State Impact but Will Decrease the Cost – $300,000 Lost Funding for JCPS

5. WADA Threshold Changes 2011-122012-13Difference Total ADA (Includes SS)8,0978,14750 F&R Lunch Threshold %32.0%38.8% F&R Lunch Threshold #2,5913,161 F&RL Students4,225 0 F&RL WADA408266-142 LEP Threshold %0.9%1.8% LEP Threshold #73147 LEP Students195 LEP WADA7329-44 Total WADA85788442-136 Even though we gained 50 students our WADA count goes down by 136. We will be paid on the prior year. JCPS misses out on $300,000 in funding for those 50 students, if the thresholds did not change

6. Many Changes in FY13-Huge SAT Increase Recalculate Every 2 Years – Original SAT Calculation = $6,117 – 1 st SAT Recalculation = $6,117 Actually went down but law wont allow reduction – 2 nd SAT Recalculation = $6,131 (0.23% Increase) – 3 rd SAT Recalculation = $6,716 (9.54% Increase) $6,423 in FY13 – Phase in ½ of the increase Removed 5% Throttle on growth in 2009 in anticipation of increased gaming money from the passage of Prop A.

7. Many Changes in FY13-Huge SAT Increase In FY13 the SAT goes from $6,131 to $6,423, which increases the cost of the formula by $292 million. In FY14 the SAT goes from $6,423 to $6,716, which increases the cost of the formula by $238 million. These Increases Make the Formula About $700 Million Underfunded.

8. Many Changes in FY13-But Not Funding While there are changes that increase the cost of the formula by nearly $400 Million in FY13 Initial FY13 Budget shows $5 Million Increase – 0.1% Increase – Record Appropriation With this many changes in the formula and no new money, there are massive shifts of money from district to district all over the state.

9. As If That Wasnt Bad Enough DESE is currently applying a straight reduction to every district, because there is no legislative guidance to the contrary – During the Phase-In, SAT Adjustments are Prohibited When the formula is fully phased-in in FY13 The state adequacy target may be adjusted to accommodate available appropriations – Only place in current legislation that addresses how to deal with a short fall. – Does May mean Shall?

10. Current Options–If No Legislation Passes Currently All Districts Receiving About 94% Funding. Option 1 – Continue to Prorate All Districts – Proration drops to 86.39% – JCPS GAINS $1.9 Million (+12.2%) Option 2 – Adjust SAT – SAT Drops from $6,423 to $5,749 – JCPS LOSES $1.3 Million (-8.5%) – Hold Harmless Districts Receive 100% Funding. Roughly a 6% Increase

11. We Saw This Coming Years Ago FY 13 MAY vs. SHALL

12. Proposed Legislative Fix SB 454 – Sen. Pearce – All Districts Share in the Underfunding – HH Districts Get 1/2 the Reduction as Formula Dist. Formula Proration – 84.8% HH Proration – 92.4% – JCPS Gains $1.6 Million (10.2%)

13. Proposed Legislative Fix HB 1043 – Rep Thompson - Original – All Districts Share in the Underfunding – HH Districts Get 1/3 the Reduction as Formula Dist. Formula Proration – 84.1% HH Proration – 94.7% – JCPS Gains $1.25 Million (8.2%)

14. Concerns with Current Proposals Both HB1043 and SB 454 Treat JCPS Very Well If total school funding is flat and we get more money, it is coming at the expense of another district. – SB Shifts About $35 Million in FY13 – HB Shifts About $27 Million in FY13

15. Concerns with Current Proposals SAT goes up again in FY14 which increases the cost of the formula another $238 Million Not expecting school funding to grow that much Shifting money around the state again If total school funding is flat and we get more money, it is coming at the expense of another district. – SB Shifts About $25 Million in FY14 – HB Shifts About $19 Million in FY14

16. Concerns With Current Proposals Baring any other guidance except the statement that DESE may adjust the State Adequacy Target next year, most believe that is the position DESE will take. – Remember this is the only option where JCPS loses money, but is the most likely to occur. Under this scenario HH districts go to 100% funding. Under either of the fix bills HH districts continue to participate in the underfunding and actually get much less money due to huge increase in SAT. Why would they allow this legislation to pass?

17. Benefits of Current Proposal Targets for future funding – Goals to get to full funding – Without targets it is too easy to shortchange education funding – Original bills have unrealistic funding targets Smoothing of DVM calculation – 3 year average – Will reduce wild swings in funding

18. HB 1043 Amended – Rep Thompson – All Districts Share in the Underfunding – HH Districts Get 1/3 the Reduction as Formula Dist. Formula Proration – 88.9% HH Proration – 96.3% – Reinstate 5% Throttle on SAT growth Reduces Massive Shift of $ – JCPS Gains $600,000(4.0%) – Chance of support from Formula and HH districts – Realistic Funding Targets Proposed Legislative Fix

19. Summary of How Districts Are Impacted

20. Straight Proration Reduce SAT SB454 HB1043 Amd Change In $$1,903,990-$1,321,662$1,592,390$621,634 Change In %12.2%-8.5%10.2%4.0% Summary of Possibilities for JCPS If No Legislation Passes

21. Description of Revenue Changes$ Amount LOCAL PROPERTY TAX-$9 Million New Construction$300,000 STATE AID-Reduce SAT to Accommodate Formula Underfunding *-$550,000 PROP C – Increased State Collections and Increased Students$150,000 Interest Income (90 day T-Bill has to go higher than 0.1% Someday)$100,000 County Stock Insurance-$300,000 TOTAL CHANGE IN REVENUE-$300,000 FY13 PRELIM BUDGET-Revenue Changes * Move $740,000 of State Aid back into Operating Funds after we move our Debt Service Levy back up to $.222. We are really losing $1.3 Million in State Aid.

22. FY13 PRELIM BUDGET-Expense Changes Description of Expenditure Changes$ Amount Salary-Operate Teacher Schedule & 1.8% to All Other Classes$872,400 Benefits Associated with Raises (Retirement, Medicare, OASDI)$143,886 Health Insurance-5% Increase in Board Contribution$300,000 Staff Retirements-$250,000 Increase Summer School Pay for $2,500 to $2,700$60,000 PSRS/PEERS Rate Increases (Remain at 14.5% & 6.86%)$0 Transportation-$100,000 Energy-Increase by 10% (Electricity, Natural Gas, Diesel Fuel)$202,400 TOTAL CHANGE IN EXPENDITURES$1,228,686

23. FY13 PRELIM BUDGET-Fund Balance Description of Fund Balance Change$ Amount FY2012 Change in Fund Balance-$300,786 + Change in Revenues FY13 vs. FY12-$300,000 - Change in Expenditures FY13 vs. FY12$1,228,686 - Change In Transfers Out of Operating Fund FY13 vs. FY12-$400,000 TOTAL CHANGE IN FUND BALANCE FY2013-$1,429,472

26. REVENUES CONTINUE TO BE VERY DIFFICULT TO BUDGET CHANGES MADE IN HEALTH INSURANCE, RETIREMENT, & TRANSPORTATION HAVE BEEN HUGE IN ALLOWING US TO MAINTAIN OUR CURRENT LEVELS OF EDUCATION FUTURE FISCAL STABILITY REMAINS POSSIBLE SUMMARY