1. Presentation to Board May 27, 2008 Presented by: J. A. Sabo, Associate Director – Leading Services & Treasurer of the Board 2008-09 OPERATING BUDGET York Catholic District School Board UPDATE Preparation of 2008-09 FINANCIAL ESTIMATES

2. As reported at the May 6, 2008 meeting (based on analysis of revenue projections completed and expenditure projections in progress), there is an obvious “disconnect” between projected expenditures and revenues resulting in a budget shortfall or “under-funding” York Catholic District School Board 2008-09 OPERATING BUDGET

3. York Catholic District School Board 2008-09 OPERATING BUDGET Development of a compliant 2008-09 Operating Budget remains a significant challenge in light of the previously identified expenditure pressures, calculated available funding and lack of available reserves. However, the target remains to strive to develop a positive “York Catholic Solution”.

4. CONCERNS AND PRESSURE POINTS Legislative requirement under section 231 of the Education Act for boards to submit a BALANCED budget Section 286: Directors of Education and other supervisory officers are responsible to the Minister of Education for the performance of their duties in accordance with the ACT and the regulations Other school boards are at various levels of financial “health” (surplus and deficit) 2008-09 OPERATING BUDGET York Catholic District School Board

5. “FACTS” that must be considered Through the use of Reserves it is projected that the Board will NOT incur a 2007-08 deficit/shortfall. To maintain the same level of programs and services in 2008-09 the Board must first fund the amount of the preceding year’s shortfall (prior to reserve transfer). The Board has in the past filed compliant budgets and financial statements. The Board has reached a limit in terms of YCDSB interpretations, and ability to report within certain envelope provisions (e.g. Admin & Governance) The Board is experiencing EXCELLENT student achievement results The Board is experiencing costs above Ministry benchmarks and resulting funding allocation. In the name of accountability the Ministry is increasing the examination of School Boards’ fiscal responsibility. The Ministry is not rewarding school boards for excellence in student achievement.

6. Objectives re: May 27, 2008 meeting 1.Follow-up to the information provided at the May 6, 2008 Board meeting 2.Review Expenditure modules for the 2008-09 Operating Budget not previously available for distribution: oGeneral School Budgets oAccommodation & Plant oTransportation oInformation Technology

7. Objectives (cont’d) 3.Identify budget modules not yet completed for review 4.Initiate preliminary discussion on the 2008-09 “budget balancing process and worksheet form” in preparation for approval of the Operating Budget 5.OTHER NEXT STEPS a)Review projected funding shortfall elimination strategies b) Establish July 2, 2008 for Budget Approval

8. BACKGROUND INFORMATION (Included in Agenda package) Report to Board - May 27, 2008 Information Transportation(ivory 4 pages) Plant/Accommodation(purple 18 pages) General School Budgets(pink 5 pages) Information Systems(blue 11 pages) Note: Supplementary power point presentations are included for each of the above.

9. TRANSPORTATION (excluding Salaries and Benefits) 2007-08 Revised Estimates $ 15,472,446 2008-09- Base $ 15,486,596 Increase /(Decrease).09% Growth 406,4182.62% Increase/Decrease TOTAL $ 15,893,0142.71%

10. ACCOMMODATION /PLANT (Including Salaries and Benefits) 2007-08 Revised Estimates $ 44,342,369 2008-09- Base $ 46,394,638 Increase /(Decrease) 4.63% Growth 1,012,2932.28% Increase/Decrease 4,795,23710.81% TOTAL $ 52,202,16817.72%

11. GENERAL SCHOOL BUDGETS 2007-08 Revised Estimates $ 9,528,896 2008-09- Base $ 9,190,840 Increase /(Decrease) (3.55)% Growth 72,4630.76% Increase/Decrease TOTAL $ 9,263,303(2.79)%

12. INFORMATION SYSTEMS (excluding Salaries and Benefits) 2007-08 Revised Estimates $ 3,664,305 2008-09- Base $3,283,326 Increase /(Decrease) (10.39)% Growth Increase/Decrease 1,807,69049.33% TOTAL $ 5,091,01638.94%

13. EXPENDITURE SUPPORT MATERIAL PRESENTED MODULEDATECOLOURPages Salary & BenefitsMAY 6, 2008Pink37 Special EducationMAY 6, 2008Yellow10 TransportationMAY 27, 2008Ivory4 Accommodation/PlantMAY 27, 2008Purple18 General School Budgets (GSB)MAY 27, 2008Pink5 Information SystemsMAY 27,2008Blue11 Instructional Services (includes ESL and Alt Ed.) Continuing Education Other Central Support Not finalized

14. MODULEDATECOLOURPages Revenue Estimates May 6, 2008Pink/Green37 SUPPORT MATERIAL PRESENTED REVENUE RESERVE FUNDS MODULEDATECOLOURPages Transfers from Reserves May 6, 2008Buff5

15. STEP #1 - CALCULATE REVENUE ENTITLEMENTS (based on Ministry Technical Papers using Board specific/relevant data) STEP #2 - CALCULATE EXPENDITURE REQUIREMENTS (based on Ministry regulations/requirements and Board priorities/commitments) STEP #3 - ENSURE that Revenues meet or exceed Expenditures (since Step #1 is capped, adjustments must occur in Step #2) Note: Step #2 Must Comply to Ministry Regulations & Envelopes REVIEW OF BUDGET DEVELOPMENT STEPS

16. OPERATING REVENUE May 27, 2008 Adjustments FINAL PROJECTIONS Grants for Student Needs $ 432,507,725 Other Grants 1,000,000 Other Revenue 5,586,400 Continuing Education 7,061,521 TOTAL$ 446,155,646 Budget Balancing Worksheet 2008-09 Operating Revenues See Revenue Module dated May 6, 2008 for details

17. For Illustration purposes 1.Estimated Revenues for 2008-09$ 446,155,646 = Balance Available for Spending. $ 446,155,646 Alternate Approach to Budget Balancing Note: The above projected amount will change, only if new and valid information and assumptions arise.

18. 2008-09 BUDGET PROJECTION SUMMARY Total 2008-09 Preliminary Operating May 27,2008 Adjustments FINAL Projections REVENUE$ 446,155,646 EXPENDITURE DIFFERENCE

19. “Protected” Reserves “Available” Reserves TOTAL Reserves Board Established Reserves August 31, 2007 $ 1,533,748$ 5,091,420$ 6,625,168 Amount required to balance 2007-08 as per Revised Estimates (2,696,287) BALANCE REMAINING for 2008-09 prior to year end variances $ 1,533,748$ 2,394,953$ 3,928,881 RESERVES Estimated Board Established Reserve Balance Projected 2007-08 year-end variances(1,905,201) PROJECTED BALANCE prior to drawdown for 2008-09 $ 1,533,748$ 489,752$ 2,023,680 Maximum available for 2008-09 assuming above (489,752) BALANCE$ 1,533,7480

20. OPERATING EXPENDITURES May 27, 2008Adjustments FINAL Projections Salary & Wages$ 342,060,550 Employee Benefits53,152,363 Professional Dev Supplies/Services Capital Fees & Services Other Total Exp Budget Balancing Worksheet 2008-09 Operating Expenditures

21. PRELIMINARY INCREASES OVER REVISED ESTIMATES REVENUE 07-08 Revised Est.IncreasePreliminary 08-09 Grants$ 420,863,847$ 11,643,878$432,507,725 Other Grants2,428,259(1,428,259)1,000,000 Other Revenue6,022,760(436,360)5,586,400 Con. Ed.7,436,725(375,204)7,061,521 Transfer from Reserve2,696,287(2,206,355)489,932 Total Revenue$ 439,447,878$ 7,197,700$ 446,645,578 EXPENDITURES Salary & Wages$ 333,941,010$ 8,119,540$ 342,060,550 Benefits48,766,2604,386,10353,152,363 Professional Dev1,748,296tbd Supplies/Services28,103,404tbd Capital3,649,884tbd Fees & Services21,952,539tbd Other1,286,4485tbd Total Exp$ 439,447,878$ 12,505,643 Balance-TARGET = ZERO

22. “Protected” Reserves “Available” Reserves TOTAL Reserves Board Established Reserves August 31, 2007 $ 1,533,748$ 5,091,420$ 6,625,168 *Amount required to balance 2007-08 ( estimated) 4,601,488 BALANCE REMAINING for 2008-09$ 1,533,748$ 489,932$ 2023,680 2008-09 Transfer from Reserves (489,932) BALANCE$ 1,533,7480 If Required(1,533,748) BALANCE000 RESERVES Estimated Board Established Reserve Balance

23. Alternatives to review/debate INCREASE REVENUESRevenues are LIMITED to Grants for Student Needs based on actual enrolments UTILIZE RESERVESShould 2007-08 projections remain, Reserves will be substantially EXHAUSTED. REDUCE EXPENDITURESIdeal from budget balancing perspective, challenging from program/service delivery perspective DEFER EXPENDITURES to future fiscal periods Against Board budgeting principles and extends problem into future TRANSFER potential Operating expenditures to the Capital Fund Limited due to Ministry transfer restrictions. INCUR A DEFICITYCDSB Guiding Fiscal Policies- ”Position Board financially to “never” allow a deficit to knowingly reoccur” Ministry directives: Deficits are not permitted.

24. BUDGET BALANCING WORKSHEET ADJUSTMENTS (t.b.d.) Further Review of Expenditure Projections Re-Costing Deferral Reduction Capitalization “Targeted” Further Review of Revenue Projections Minor adjustments anticipated

25. Accumulated Deficit History 1988–2004 Projected 2004-2008 (INCLUDING USE OF RESERVES re 2003-2008) Amounts reflect Audited Financial Statement figures 1988 - 2007. ( 1992 is net of Undue Burden Grant) 2007-08 based on estimated financial position. The Accumulated deficit was eliminated in the year ending August 31, 1998. Commencing Sept 1, 1998 the fiscal year changed from Sept 1 to August 31

26. Amounts reflect Audited Financial Statement figures 1988 - 2007. ( 1992 is net of Undue Burden Grant) 2007-08 Based on Projected Year-end transfer of $4.6 M from Reserves The Accumulated deficit was eliminated in the year ending August 31, 1998. Commencing Sept 1, 1998 the fiscal year changed from Sept 1 to August 31 2003-2007 reflects amounts drawn from reserves each year. Accumulated Deficit History 1988–2004/Projected 2004-2008 (EXCLUDING USE OF RESERVES re 2003-2008) 2003-08 accumulated deficit (excluding reserve drawdown)

27. CHALLENGES Recording and filing of the 2008-09 Estimates Implementation of the 2008-09 Estimates Short/long-term sustainability

28. BUDGET ANALYSIS COMMITTEE 1.“Recommend strategies for developing a balanced and compliant budget for the current year 2.Examine strategies for sustaining a balanced and compliant budget on a multi-year basis” Note:As discussed at the May 15, 2008 Budget Analysis meeting, it is proposed that this Committee be used currently and into the Fall (if necessary) to facilitate budget compliance both short- and long-term.

29. SPECIAL BOARD MEETING Re: Budget Approval: As reviewed at the recent Executive Committee of the Board, a special Board meeting is proposed for Wednesday, July 2, 2008, for the approval of the 2008-09 Operating Budget.

30. NEXT STEPS: The next steps in the development of the 2008-09 Operating Budget are as follows: 1.Completion of outstanding expenditure modules (Of note Instructional Services and Other) 2.Review of all budget modules with the view of refining and validating assumptions incorporated and resulting calculated projections. 3.Completion of Budget Balancing Worksheet identifying options for adjustment and resulting impacts. 4.Presentation and discussion of initial Budget Balancing Worksheet at June 17, 2008 Board meeting. 5.Subject to discussions held and direction received at the June 17, 2008 meeting commence preparation of information in support of recommendations to file 2008-09 Financial Estimates with the Ministry of Education.

31.  Balanced Scorecard Outcomes “Re-allocating and Accessing Resources to Achieve our Student outcomes” “Leveraged use of our Resources”  Stability & Educational Excellence Maintaining positive educational results  Fiscal Targets 1.Balanced Budget 2.Compliance with Legislation/Regulations 3.Compliance with Funding Envelopes Ministry Focus YCDSB BUDGET OBJECTIVES Board Focus

32. BUDGET DISCIPLINE/CONSIDERATIONS ZERO SUM GAME CANNOT afford to materially UNDERSTATE Expenditures OR OVERSTATE Revenues

33. KEEPING THE BALANCE FISCAL STUDENT RESPONSIBILITY vs. OUTCOMES THE CHALLENGE

34. QUESTIONS ?