2Presentation OutlineBudget Development Overview and Process– slides 3-6Prior Actions and Efficiencies Achieved – slides 7-12FY 2015 Proposed Budget Summary – slides 13-14Revenue and County Transfer Overview – slides 15-18Revenue Assumptions – slides 19-21Expenditures by Program and Category – slides 22-26Expenditure Increases – slides 27-31Expenditure Reductions – slides 32-48Central Support, Divisionwide, School Support, and ClassroomSummary – slides 49-50State Update and Intended Use of State Funding – slides 51-52Final Thoughts and Additional Information – slides 53-56
3FY 2015 Proposed Budget Overview $2.5 billion operating budget$59.4 million, or 2.4%, increase from the FY 2014 Approved BudgetSignificant Cost DriversEnrollment GrowthRetirement Rate IncreasesHealth Insurance Rate IncreasesStep Increase for Eligible EmployeesThe FY 2015 Proposed Budget for the School Operating Fund totals $2.5 billion and is an increase of $59.4 million, or 2.4 percent, over the FY 2014 Approved Budget.The significant cost drivers are student enrollment growth (an increase of 3,369 students and changes in student demographics), retirement rate increases, health insurance costs, and providing eligible employees with a step increase.In addition to the significant cost drivers, FCPS is also challenged by the need to correct a structural deficit.Structural DeficitDecrease in available one-time funding ($16.9 million loss from VRS reserve depletion and $17.2 million decrease in beginning balance)Insufficient recurring revenue to meet expendituresNOTE:FY 2014 Proposed Budget was a $62.7 million, or 2.6%, increase from the FY 2013 Approved Budget.
4Budget Document Purpose Balance of priorities and resourcesDocument indicating policy decisions and priorities through the allocation of funds to specific services and programsCommunication tool for the communitySpending guide for the upcoming school yearThe framework for FCPS’ budget development process stems from the instructional priorities and objectives set forth by the School Board and the community.The budget reflects a balance of priorities and resources and provides a policy document that describes the sources of projected revenue and the allocation of resources to specific services and programs.
5Budget Development Process Foreshadowed during prior years’ budget process that FY 2015 and beyond would include significant fiscal challenges; prior year budget decisions were made with this knowledgeStarted developing the FY 2015 budget last JulyEnhanced transparency by sharing list of potential reductions in the fallIdentified both short- and long-term options for FY 2015 and future yearsKnowing that FY 2015 and beyond would be fiscally challenging, we began our budgeting process earlier than ever and worked to provide transparency throughout.One example of this transparency is our evolving list (menu) of potential reductions that includes both immediate and long-term options.
6Stakeholder Engagement FCPS School Board (SB)Individual meetings with each School Board member and monthly work sessions on budgetFairfax County Board of Supervisors (BOS)Met with each BOS member in the fallJoint SB/BOS meeting in NovemberParents, Employees, and Community MembersMet with associations and advisory councils, engaged with stakeholders through listening tours, and implemented a new feedback initiative called User VoiceDeveloped A Citizen’s Guide to Understanding the BudgetThis year we worked diligently to provide more opportunities for stakeholder engagement, and providing these opportunities earlier in the budget development process.FCPS is working closely with the School Board and the Fairfax County Board of Supervisors to increase FCPS’ effectiveness and ensure open communication.In the fall, School Board members and I conducted listening tours throughout the County, and we’ve recently released the winter schedule. This gives us the chance to hear parents’ and community members’ concerns and questions about school issues and priorities.Visits to every FCPS magisterial district with Fairfax County Board members have provided vital feedback, and User Voice provides the community with the opportunity to continuously provide comments and suggestions on all facets of FCPS operations.In total, nearly 100 meetings were held where budget was all or part of the discussion.To begin communicating about the budget, the Citizens’ Guide to the Budget was developed.Prior to presenting the FY 2015 Proposed Budget, let’s review what we’ve done up to this point.
7Prior Actions to Address Budget Challenges Through a program review process, programs were reduced, eliminated, and redesignedClass size increased by 1.0; school support, central office, and transportation reductions; 1,450 fewer positionsPrograms eliminated or redesigned include: Focus, Planetariums, Student Accountability, and Summer SchoolCompensation actionsContract-length reductionsPay frozen in FY 2010 and FY 2011; no step increases in FY 2010, 2011, 2013, and 2014Short-term relief provided by the federal and state governments through ARRA and lower VRS ratesCreating a budget to meet the needs of our rapidly growing and changing student body over the past several years has been a challenge, and FCPS has had to make difficult choices in light of limited resources.FCPS has taken many proactive steps to address budget challenges. A program review process was used in prior fiscal years to target cost savings and avoidances and to determine resource reallocations. The process included exploring alternative service delivery models and identifying opportunities for reorganization, consolidation, reduction, and elimination.Reductions over these years included both central support and schools. No instructional or support programs, including departments, were spared. Within the instructional programs, class sizes increased and summer school offerings were redesigned. Programs that provided additional support to students.Since the majority of FCPS’ budget is for positions, FCPS examined each position category to look for efficiencies and adjusted employee contract lengths. At the school level, assistant principals, clerical, and custodial staff were reduced. At the central support level, departments were consolidated, reorganized, and reductions were implemented while minimizing the impact on the support they provide to schools.Short-term support from the federal and state governments, including the American Recovery and Reinvestment Act (ARRA) and lower retirement contribution rates, helped with the fiscal challenges.
8Position Growth School-Based & Nonschool-Based Position Growth FY 2009 to FY 2014 Prior actions to address shortfalls have impacted positions.Since FY 2009, nonschool-based positions have decreased by a net of 6.0 percent, or positions, while school-based positions increased by a net of 7.9 percent, or 1,625.3 FTE positions.The decrease in nonschool-based positions is due to budget reductions combined with the fact that nonschool-based positions do not increase with rising enrollment.School-based positions were also reduced, but due to rising student enrollment, have primarily seen a net increase over the last five years.Both the previous budget reductions taken and FCPS’ policies emphasize FCPS’ commitment to dedicating resources to the classroom.
9Comparing ManagementAnother measure of accountability is to examine the comparison of leadership (Leadership Team) and management positions (nonschool-based directors and coordinators) to the total positions across the school division.As shown in the chart, FCPS has the lowest percent of leadership and management positions to total positions as compared to neighboring school districts.1/ FY 2014 WABE Guide
10Comparing Costs Per Pupil FCPS’ cost per pupil is a strong indicator of operational efficiency.In 2014, FCPS maintained its ranking in the middle of other school districts in the metropolitan area with a cost per pupil of $13,472.The FY 2014 cost per pupil (CPP) for Montgomery County is $1,854 higher than Fairfax’s CPP.If Fairfax had the same CPP as Montgomery County, our budget would have been more than $342 million higher in ($15,326 - $13,472 = $1,854; $1,854 x 184,625 = $342.3 million).The FY 2015 WABE cost-per-pupil calculation for area jurisdictions will not be available until the 2015 WABE Guide is completed (in the fall of 2014).1/ FY 2014 WABE Guide
11FCPS’ Cost Per Pupil Over Time The projected cost per pupil for FCPS for FY 2015 is $13,535, an increase of $63, or 0.5 percent, from the FY 2014 cost per pupil.Over the eight year period between FY 2008 and FY 2015, FCPS’ cost per pupil increased just $128, or 1.0 percent.
12Financial And Operational Audits FCPS receives many regular financial and operational audits to ensure accountability:Independent external audits and reviewsState and federal auditsA-133 single audits of federal grant programsFCPS Internal AuditsFCPS Office of Program EvaluationState School Efficiency ReviewFCPS’ financial statements are audited each year by KPMG, an independent external auditor, and have been consistently given an unqualified opinion. After the independent, external audit is completed, FCPS releases the Comprehensive Annual Financial Report (CAFR).External Reviews are routinely conducted. In FY 2013, FCPS contracted with Prismatic Services to conduct an independent program review of the Food and Nutrition Services program. The results of the review were presented to the School Board on November 11, 2013.FCPS has also recently completed a telecommunications audit, and an external review of Facilities Management was completed by Facilities Engineering Associates (FEA).FCPS’ federal grant program is audited annually by KPMG, and FCPS also receives periodic audits from the state and the federal government.Internal Audit creates and executes an annual audit plan, which includes auditing Local School Activity funds annually.FCPS Office of Program Evaluation conducts periodic reviews of instructional programs.In FY 2014, FCPS participated in the Virginia Department of Education’s Efficiency Review Program. The results of the review were presented to the School Board on September 23, 2013.
13FY 2015 Proposed Budget Approach To balance the budget, utilized a shared approach of reducing expenditures and requesting additional revenue:Included expenditure reductions and savings totaling $96.5 million including the elimination of positionsAdded $4.2 million in new and increased feesRequested increased funding of $98.1 million from the County to cover the expenditure increases for items beyond FCPS’ control and the structural deficitTo balance the FY 2015 budget, a shared approach of identifying expenditure reductions and requesting additional revenue was taken.First, we made expenditure reductions of $96.5 million and eliminated positions The reductions are focused on protecting the classroom and student programs as much as possible and taking the greatest percentage reductions from central support.Then, we implemented fees for Advanced Placement and International Baccalaureate tests (excluding students eligible for free and reduced-price meals) and increased community use fees by 5 percent.Lastly, we are requesting additional funding of $98.1 million, or 5.7 percent, from the County to cover increases beyond FCPS’ control, such as enrollment growth and retirement rate increases and the structural deficit.
14FY 2015 Proposed Budget Summary Expenditure reductions and new or increased fees have a budget impact of over $100 million.We are also requesting a transfer increase of $98.1 million based on items out of FCPS’ control (such as, retirement rate increases, enrollment growth, and the structural deficit).This chart is repeated at the beginning of each section:Revenue – Slide 19Expenditure Increases – Slide 27Expenditure Reductions – Slide 32
15Proposed Revenue Sources* ($ in millions) While FCPS receives revenue from multiple sources, we are heavily reliant on funding from the county.As the pie chart illustrates, nearly 72 percent of our projected revenue is provided by the County Board of Supervisors.The other major source of funding is from the State, which provides both state aid and sales tax, that total nearly 22 percent of FCPS’ revenue.As you can see, FCPS must rely on the Board of Supervisors and the State for nearly 94 percent of the school system’s funding.Additional smaller sources of revenue include federal revenue, which is less than 2 percent of FCPS’ total revenue, and other revenue including the budgeted beginning balance.
16County Funding and Support for FCPS FCPS is requesting a majority of its funding, 71.9%, from local funds as a transfer from Fairfax CountyFrom FY 2009 to FY 2014 approvedThe average annual increase in the transfer over the previous year was 1.1%The County Transfer has increased in total by 5.6% while enrollment has increased 8.9%The County also provides additional support for programs such as Head Start, school health, school resource officers, school crossing guards, afterschool programming, field maintenance, and recreational programsFCPS is requesting to receive the majority of its funding, 71.9 percent, from local funds in the form of a transfer from the Fairfax County government. The amount of funding transferred to FCPS by the County illustrates the commitment that our County has made to education.In addition to the School Operating Fund transfer, the County also provides funding for capital improvement and directly funds services for FCPS students in the county budget.However, the increases in funding haven’t kept pace with enrollment growth and other cost drivers.
17County Transfer Increase History FY 2015 increase of $98.1 million, or 5.7%, requested This chart illustrates the percentage change in the County Transfer over a 10-year period, plus our request for FY 2015.For FY 2015, FCPS is requesting a $1.8 billion county transfer. This is an increase of $98.1 million, or 5.7 percent, over FY 2014.The primary source of revenue for Fairfax County is real and personal property tax dollars, and the largest portion of the County’s General Fund, 52.7 percent of the County’s FY 2014 Adopted Budget, is dedicated to FCPS.Now, let us take a closer look at why we need this additional funding from the County.
18County Transfer Increase Request To cover the cost of uncontrollable increases and the structural deficit:Enrollment GrowthRequires $25.8 million in school-based resourcesRetirement Rate IncreasesVRS rate increases of $37.5 millionFCERS rate increase of $1.4 millionStructural DeficitBudgeted Beginning Balance – decrease of $17.2 millionVRS Reserve depleted – decrease of $16.9 millionFCPS faces substantial increases in expenditures that are beyond its control.Enrollment growth requires $25.8 million in school-based resources, and changes in the composition of the enrollment have significantly added to the cost of growth.In addition, the State’s decision to temporarily defer VRS contributions allowed the full impact of a fiscal crisis to be temporarily averted, but VRS rate increases for FY 2015 amount to $37.5 million. The FCERS rate increase will cost $1.4 million, and the rate is set by the Board of Supervisors.A structural deficit is created when non-recurring funding is used for recurring costs. During the economic downturn, FCPS received one-time stimulus funding provided by the federal government and savings from the temporary deferral of VRS contributions from the state. For a number of years, FCPS also has relied on a budgeted beginning balance. A budgeted beginning balance is the result of available funds identified during quarterly budget reviews that are set aside for future budget years. Our budgeted beginning balance is $17.2 million lower in FY 2015 than it was in FY 2014 and the VRS reserve established in anticipation of VRS increases has been depleted. While one-time funding helps in the short-term, it has resulted in a structural deficit that must be addressed with recurring revenue.Because of timing, developing a budget requires some assumptions to be made about revenue andexpenditures.
19FY 2015 Proposed Budget Summary—Revenue The next two slides will present the revenue assumptions for FY 2015 as compared to the FY 2014 Approved Budget as highlighted on this summary chart.
20FY 2015 Revenue Assumptions Change from FY 2014 Approved Budget $ in millionsBeginning Balance ($17.2)$48.5 million set aside for FY 2015FY 2014 beginning balance was $65.7 millionVRS Reserve ($16.9)Used remaining $16.9 million in FY 2014County Transfer Increase Request $98.15.7% increase to cover uncontrollable costsand the structural deficitHere are the revenue assumptions in the FY 2015 Proposed Budget.Funding for the budgeted beginning balance is the result of one-time expenditure savings realized from prior fiscal years. A beginning balance of $48.5 million is budgeted for FY 2015 and is a decrease of $17.2 million, or 26.2 percent.As mentioned previously, the VRS reserve was depleted in FY 2014 resulting in a decrease of $16.9 million in FY 2015.We are requesting a 5.7 percent increase in the County Transfer. If we do not received the proposed revenue, we will have to make further expenditure reductions than the ones we will be detailing later in the presentation.
21FY 2015 Revenue Assumptions (cont FY 2015 Revenue Assumptions (cont.) Change from FY 2014 Approved Budget$ in millionsState Aid ($11.3)2.9% decrease due to LCI and one-time fundingSales Tax $1.81.0% increase based on current trendsFederal Aid ($0.5)1.2% decrease based on current grant awardsOther Revenue $5.4$4.0 million from charging for AP/IB test fees$0.2 million community use fee increase of 5%$1.2 million increase in other revenueThe Governor’s proposed budget was released on December 16th and the potential impact is not included in the revenue assumptions. Since the Governor’s proposal is just the first step in the state budget, his proposal and the potential impact will be covered later in the presentation.As part of the biennium budget, the State has recalculated the Local Composite Index (LCI) and will adjust the funding formula which will affect the amount of projected state aid. FCPS’ LCI increased from to An increase in the LCI results in a decrease in state aid, and this is combined with the projected loss of one-time funding provided by the State in FY 2014.Sales tax revenue for FY 2015 is projected at $171.7 million, an increase of $1.8 million, or 1.0 percent, over FY This is based on current year trends and a projected increase in the school-age population in Fairfax County which is used by the state to determine the allocation.In FY 2015, federal aid is projected to be $42.0 million, a decrease of $0.5 million, or 1.2 percent, when compared to the FY 2014 approved, primarily due to a projected decrease in funding provided for the Impact Aid program.Tuition, fees, and other revenue is projected to be $23.6 million, an increase of $5.4 million, or 29.9 percent. This increase is primarily attributed to a new fee for Advanced Placement and International Baccalaureate tests totaling $4.0 million and increases in community use fees totaling $0.2 million.Now let’s look at where FCPS’ funding goes.
22Proposed Expenditures by Program Funding instruction is always FCPS’ highest priority.The importance FCPS places on instructional programs is illustrated by the fact that 85.9 percent of the budget is allocated to instructional programs.Instruction includes the elementary, middle, high, special education, adult, and instructional support programs. These programs are significantly impacted by student enrollment.
23Expenditure Driver—Student Enrollment 15,603 studentsFCPS’ projected enrollment for FY 2015 is 187,994. By FY 2020, FCPS is projected to have more than 200,000 students.Since FY 2010, FCPS student enrollment has grown by 15,603 students which is more than the total enrollment of Alexandria City Public Schools.FCPS’ cumulative cost of enrollment growth since FY 2010 is nearly $175 million, and in addition to an increase in the total number of students, FCPS student demographics are changing.
24Expenditure Driver—Demographic Trends The importance of changing demographics is that students with special needs require additional funding for increased services.For instance, in FY 2015, the additional net per-pupil cost for special education is $11,361. While the number of students receiving special education services has increased, the percentage of students receiving them has slightly decreased to 13.7 percent.In FY 2015, students receiving ESOL instruction are projected to make up 15.4 percent of FCPS total enrollment, and students eligible for Free or Reduced-Price Meals are projected to make up 28.0 percent.Growing enrollment and changing demographics result in an increased number of teacher positions and increased compensation costs.
25FY 2015 Expenditures By Category Percent of FY 2015 budgetCompensation 88.6%SalariesBenefitsLogistics 10.3%Transfers to Other Funds 1.2%For Preschool, Summer School, andConstructionDoes not add due to rounding.Compensation (salaries and employee benefits) represents 88.6 percent of the budget.Logistics is the next largest expenditure type at 10.3 percent and includes materials and supplies, utilities, and other operating expenses.Transfers are made to the Construction Fund, Grants and Self-Supporting Programs Fund, the Adult and Community Education (ACE) Fund, and Debt Service and are 1.2 percent of the budget.The cost of compensation is largely determined by employee salaries.
26FY 2014 Salary ComparisonsWhen compared to the nine other school divisions included in the FY 2014 WABE Guide:FCPS ranks 3rd in terms of starting teacher salaries with a beginning salary of $46,756. There is less than a $350 difference between FCPS and the 4th and 5th ranked school systems.FCPS ranks 7th in terms of a mid-career teacher salary with a salary of $59,590, based on a step 9, masters degreeFCPS’ maximum teacher salary is $100,898, which is third from the bottomAs career teachers advance in FCPS, they tend to earn less relative to their counterparts in neighboring jurisdictions.Source: FY WABE GuideAlexandria City, Arlington, FCPS, and Manassas City have completed the VRS shift.Falls Church City, Loudoun, Manassas Park City, and Prince William have only shifted 2 percent.
27FY 2015 Proposed Budget Summary—Expenditures Now that I’ve presented the budget drivers of enrollment and employee compensation, let’s look at the expenditure increases as compared to FY 2014.
28Expenditure Increases Change from FY 2014 Approved Budget $ in millions FTEEnrollment Growth $Increase of 3,369 studentsDemographic adjustmentsVRS Rate Increases $Retirement from 11.66% to 14.50%Retiree medical from 1.11% to 1.18%FCERS Retirement Rate Increase $Health Insurance Rate Increases $To meet the demands of increased enrollment and changes in student demographic shifts, additional positions are needed in schools as compared to the FY 2014 Approved Budget.The employer contribution rate for VRS increased from percent to percent. This rate is approximately 80 percent of the actuarially-determined rate. While the VRS rate was previously underfunded, this mandated rate will continue to increase as required by state legislation, reaching 100 percent of the actuarially-determined rate by July 1, 2018.The VRS Retiree Medical (RHCC) rate increased from 1.11 percent to 1.18 percent, a $0.9 million increase, and the employer contribution rate for FCERS is also projected to increase in FY 2015.FCPS will continue to offer a choice of three medical plans; however, two medical plans are changing with rate increases ranging from 6.4 percent to 14.8 percent.
29Expenditure Increases (cont.) Change from FY 2014 Approved Budget $ in millions FTEFull-Year Impact of FY 2014 MSA $Employees received a 2% MSA in Januaryof 2014 to offset the decrease in net payresulting from the completion of themandated VRS shiftFCPS received $6.3 million in state incentivefunding by providing this increase in FY 2014Step Increases $For eligible employeesAs part of the FY 2014 Approved Budget, a 2.0 percent market scale adjustment (MSA) was provided to employees effective January 1, 2014.This provision met the State’s requirements for FCPS to receive one-time incentive funding of $6.3 million and helped to offset the decrease in employees’ net pay that resulted from the completion of the state-mandated Virginia Retirement System employee contribution shift.Because the MSA was only funded for the second half of FY 2014, additional funding of $15.9 million is required to fully fund the MSA in FY 2015.The FY 2015 Proposed Budget also includes a step increase for eligible employees.Funding of $41.0 million will provide an average step increase of 2.5 percent for eligible employees.Since FY 2010, a step increase was only provided once (in FY 2012).
30Expenditure Increases (cont.) Change from FY 2014 Approved Budget$ in millions FTEContractual Increases $Human Resources $Information SystemTeacher Evaluation ($0.0) (4.0)Temporary Positionsfor FY 2013 & FY 2014Recurring Items from FY 2013 $Funding of $2.0 million is required to address unavoidable increases in current service and maintenance contracts and to meet increases in existing building leases due to terms and conditions of negotiated contracts and/or renewals.Contracts with various vendors provide enterprise software and systems maintenance and are maintained to secure services that are essential to students’ success, as well as to FCPS’ day-to-day operations.Due to the suspension of the contract to implement the Human Resource module in the joint County/FCPS enterprise resource planning system, FOCUS, funding was provided by the County for FY 2013 and FY 2014 to upgrade FCPS’ existing Lawson Human Resources Information System. Additional funding of $1.6 million will be required for this effort in FY 2015.The 4.0 positions for teacher evaluation that were approved at the FY 2012 Final Budget Review for two years only (FY 2013 and FY 2014), and funded with year end funding are eliminated in the FY 2015 budget.The FY 2015 Proposed Budget includes funding for items approved as part of the FY 2013 Final Budget Review identified as recurring items. Compensation and logistic expenditure adjustments totaling $4.5 million, including 19.5 positions, will fund bus replacement lease/purchases; preventive maintenance resources; division counsel additional staff; music program assessment costs; licensure requirements; position authorization to add advanced academic resource teachers; and a temporary program specialist position to assist in the development of FCPS Working Conditions standards.
31Expenditure Increases (cont.) Change from FY 2014 Approved Budget Required to Implement Reductions $ in millions FTEStaffing Reserve $To mitigate large class sizesCentral Custodial Oversight $As recommended in theState School Efficiency Review toenable a reduction in the totalnumber of custodial positionsDue to the class size increases included in the FY 2015 Proposed Budget, 20.0 positions are added specifically to address disparate, recurring larger class sizes at a limited number of schools, and this increase will be targeted specifically to these schools.Based on the 2013 State School Efficiency Review (SSER) final report, 10.0 positions will be added to provide central custodial oversight to improve efficiency and implement the SSER recommended custodial reduction.
32FY 2015 Proposed Budget Summary—Reductions Now that we’ve covered the expenditure increases, let’s look at the expenditure reductions included in the proposed budget.
33Approach to Expenditure Reductions Protect the classroom and student programming as much as possibleTake the greatest proportion of reductions from central supportReductions to nonschool-based positions and department operating budgetsDifferentiate levels of school supportRecommendations from the State School Efficiency Review for assistant principals, school clerical, and custodial staffing and oversightTo help balance the FY 2015 budget, reductions planned for FY 2015 total $96.5 million and eliminate positions. Reductions are being made to all categories: Central Support, Divisionwide Support, School Support, and the Classroom.The reductions are focused on protecting the classroom as much as possible and taking the greatest percentage reduction from Central Support.
34Expenditure Reduction Percentages This chart summarizes the total reductions by category, excluding compensation base savings.Let’s start with compensation base savings and then we’ll review the reductions by category.
35Expenditure Reductions Change from FY 2014 Approved Budget $ in millions FTECompensation Base Savings ($26.6) (0.0)The recurring reduction to thesalary base due to employeeturnoverThis is in addition to budgetedturnover and vacancy savings thattotal $42.5 million for FY 2015reflected in total compensation costsBase savings impacts all reduction categories.The $26.6 million base savings represents the recurring savings due to turnover in FY Position turnover represents the savings realized when experienced employees retire or leave the system and are replaced by workers with less experience who earn a lower salary.The FY 2015 budget maintains the budgeted lapse rate of 2.1 percent. In addition to turnover, the other component of lapse is vacancy savings which results when positions are vacant and are waiting to be filled.
36Category: Central Support Central support includes nonschool-based department positions and operating budgetsFY 2015 proposed budget prior to reductions totals$228.3 million including 1,665.9 FTEReductions total 6%, or $13.4 million, including positionsAs compared to the category’s total expenditures, the greatest proportion of reductions is from central supportSupport provided to schools and the community will be reducedCentral support reductions total $13.4 million, or 6 percent, from the nonschool-based department budgets for positions and operating expenses.The reductions were made to nonschool-based department budgets and employees and include the elimination of 82.0 positions.The central support budget includes the costs associated with support services for finance, human resources, information technology, purchasing, facilities, and administration.
37Category: Divisionwide Support Divisionwide support includes expenditures that benefit the entire system. Examples are utilities, property insurance, and transportationFY 2015 proposed budget prior to reductions totals$276.2 million and 0.0 positionsReductions total 1%, or $3.5 million, including 0.0 positionsReductions include utilities, a decrease in the equipment transfer based on projects in the Capital Improvement Plan, and short-term disabilityDivisionwide support reductions total $3.5 million, or 1 percent, of the divisionwide support budget.Divisionwide support includes items that affect all programs and departments, such as utilities, property insurance and transportation.In utilities, the electricity budget will decrease $1.6 million, or 4.7 percent, as compared to the FY 2014 Approved Budget. The decrease is due to the effects of energy cost-saving measures, such as retrofitting equipment for increased energy efficiency and employing energy conservation methods.The construction fund equipment transfer is funding for new construction, renewals, and additions that is provided through a transfer from the School Operating Fund. The FY 2015 transfer of $0.4 million reflects a decrease of $1.6 million, or 80.9 percent, from the FY 2014 approved based on the requirements of the Capital Improvement Plan.For short-term disability, a $0.3 million cost reduction is reflected in the FY 2015 Proposed Budget as a placeholder while specific options for reducing the Short-Term Disability program, including a comparison of benefits provided by surrounding school districts, are evaluated.The next reduction category, School Support , follows.
38Category: School Support School support includes support for the classroom including principals, assistant principals, librarians, instructional coaches, social workers, school clerical, and custodiansFY 2015 proposed budget prior to reductions totals $572.6 million including 5,518.8 positionsReductions total 3%, or $17.1 million, including positionsThe strategy was to differentiate levels of school support and address recommendations included in the State School Efficiency ReviewOverall, school support reductions total $17.1 million, or 3 percent, of the school support budget and include the elimination of positions.School support reductions focused on assistant principals, school clerical support, custodial support, tuition reimbursement, professional development, and replacement equipment.Reductions in this category address several recommendations included in the State School Efficiency Review.The following four slides present the reductions to school support.
39Expenditure Reductions to School Support Change from FY 2014 Approved Budget $ in millions FTEAssistant Principals ($1.7) (15.5)Small school reductionClass size increaseNeeds-Based StaffingInstructional assistant reductionAdministrative Interns ($0.8) (10.0)Program will not be fundedThe total reduction to assistant principals totals $1.7 million including 15.5 positions due to four reductions.The State School Efficiency Review recommended that small elementary schools (and we included small middle schools) be allocated fewer assistant principal positions resulting in a reduction of $1.1 million and 9.5 positionsThe class size increases resulted in a reduction of $0.1 million including a 1.0 positionThe reduction to Needs-Based Staffing resulted in a reduction of $0.3 million including 3.0 positionsThe instructional assistant formula change resulted in a reduction of $0.2 million including 2.0 positionsThe administrative intern program will not be funded. The intern program was FCPS’ most successful succession tool for school-based administrators with 75 percent of all interns placed in administrative positions.
40Expenditure Reductions to School Support (cont Expenditure Reductions to School Support (cont.) Change from FY 2014 Approved Budget$ in millions FTESchool-Based Technology ($1.4) (14.0)Specialists (SBTS)Reduce to state-required minimumlevel by sharing SBTS at small schoolsContract Length Reductions ($0.0) (0.0)Current employees not impactedNewly-hired and promoted AP IIsreduced to a 219-day contractNewly-hired assessment coachesreduced to a 194-day contractSchool-based technology specialist (SBTS) positions will be reduced to the Standards of Quality (SOQ)-mandated level divisionwide, saving $1.4 million including the elimination of 14.0 positions.Contract length reductions will generate future savings.When high school assistant principals (AP) are promoted from an AP I to an AP II, their contract length was previously extended from 219-days to 260-days. Current AP IIs on 260-day contracts will remain on those contracts; however, beginning in FY 2015, newly promoted high school AP IIs will remain on 219-day contracts.Assessment coaches are currently on 208-day contracts. Beginning in FY 2015, newly hired assessment coaches will be placed on 194-day contracts. Since current assessment coaches will remain on a 208-day contract, savings will be generated through attrition in future years.
41Expenditure Reductions to School Support (cont Expenditure Reductions to School Support (cont.) Change from FY 2014 Approved Budget$ in millions FTEClerical Support ($3.7) (81.0)State School Efficiency ReviewClass size increaseNeeds-Based StaffingCustodial Staffing ($2.9) (60.0)The total reduction for clerical support is $3.7 million including 81.0 positions, due to three reductions impacting the number of clerical positions allocated to schools.The State School Efficiency Review recommended adjusting clerical staffing at the elementary level resulting in a reduction of $2.6 million and 56.5 positionsThe class size increases resulted in reductions of $0.5 million including positionsThe reduction to Needs-Based Staffing resulted in reductions of $0.6 million including positionsThe total reduction for custodial staffing is $2.9 million including 60.0 positions, due to three reductions that effect the number of custodial positions allocated to schools.The State School Efficiency Review recommended reducing the number of custodial positions allocated to schools resulting in a reduction of $2.4 million including 50.5 positionsThe increase in class size resulted in a reduction of $0.2 million including 5.0 positionsThe reduction to Needs-Based Staffing resulted in reductions of $0.2 million including 4.5 positions
42Expenditure Reductions to School Support (cont Expenditure Reductions to School Support (cont.) Change from FY 2014 Approved Budget$ in millions FTEProfessional Development ($2.4) TBDCurrently evaluating systemwidePlaceholder pending analysisTuition Reimbursement ($1.2) (0.0)Suspended for all employeesReplacement Equipment ($2.0) (0.0)Student Achievement Goals ($0.9) (0.0)Project funding reduced by 50%A reduction placeholder of $2.4 million has been established while FCPS completes a comprehensive review of professional development systemwide.The suspension of the tuition reimbursement employee benefit in FY 2015 results in a budget reduction of $1.2 million.Replacement Equipment funding is used to replace obsolete, unsuitable, and unserviceable computer and other equipment items, and this reflects approximately a 32 percent reduction which will significantly impact the age of computer and other equipment in schools.Funding for Student Achievement Goal projects will be reduced by approximately 50 percent.The next category of reductions is the classroom.
43Category: ClassroomClassroom includes teachers (classroom, art, music, physical education, special education, and electives); instructional assistants; and textbooks and suppliesFY 2015 proposed budget prior to reductions totals $1,507.6 million including 17,054.3 positionsReductions total 2%, or $36.0 million, including positionsThe strategy was to protect the classroom and student programming as much as possibleClassroom reductions total $36.0 million, or 2 percent, of the classroom budget and include the elimination of positions.The classroom support budget includes the costs associated with class sizes, special education, instructional assistants.The following three slides detail the reductions to the classroom.
44Expenditure Reductions to the Classroom Change from FY 2014 Approved Budget $ in millions FTEElementary Class Size* ($7.0) (91.3)Increase of 0.5 studentMiddle Class Size* ($2.3) (30.7)High Class Size* ($5.9) (77.6)Increase of 1.0 student*teacher positionsThe elementary class size formula will increase by 0.5 students per teacher, from to 26.75, resulting in a reduction of $7.0 million and 91.3 teacher positions.The middle school class size formula will increase by 0.5 students per teacher, from 26.9 to 27.4, resulting in a reduction of $2.3 million and 30.7 teacher positions.The high school class size formula will increase by 1.0 student per teacher, from 29.5 to 30.5, resulting in a reduction of $5.9 million and 77.6 teacher positions.All of the increases in class size impact general education, advanced academics, and English for Speakers of Other Languages (ESOL) classes, but do not impact special education class size.(Increases to class size also impact allocations for school support positions which were included in earlier slides.)
45Expenditure Reductions to the Classroom (cont Expenditure Reductions to the Classroom (cont.) Change from FY 2014 Approved Budget$ in millions FTENeeds-Based Staffing ($12.6) (164.8)Teacher positionsInstructional Assistants ($2.4) (69.0)Reduction in general educationClass size increaseNeeds-Based StaffingSummer School ($3.8) (0.0)50% reductionRecognizing the importance of providing world class educational opportunities to all students, FCPS provides supplemental staffing for students eligible for free and reduced-price meals (FRM) through the needs-based staffing program.In the FY 2015 Proposed Budget, a minimum threshold of 20 percent of a school’s enrollment must be eligible for FRM for the school to qualify for needs-based staffing, and the formula for Needs-Based Staffing has been adjusted at elementary, middle, and high school.In addition to a staffing formula change reducing the number of elementary general education instructional assistants, the reduction to needs-based staffing and the increase in class-size will also reduce the number of elementary instructional assistant positions.Funding for elementary and middle school summer intervention programs will be reduced by $3.8 million, or 50 percent. Reducing this budget will require FCPS to more selectively target resources to students needing opportunities for academic intervention and remediation.
46Expenditure Reductions to the Classroom (cont Expenditure Reductions to the Classroom (cont.) Change from FY 2014 Approved Budget$ in millions FTESpecial Education ($1.9) (35.3)Career and TransitionTeachers and assistants at MSAssistants at HSAdult ESOL ($0.2) (0.0)Reduction in transferIn terms of special education, a reduction totaling $1.9 million was made to Career and Transition staffing. Specifically, this reduction eliminates additional Work Awareness and Transition (WAT) and public health training assistant positions at middle and high schools and teachers at middle schools.In addition, School Operating Fund support for the adult English for Speakers of Other Languages (ESOL) program will be reduced to better align with the local maintenance of effort requirements. This reduction results in a savings of $0.2 million in the School Operating fund, without reducing adult ESOL Services.
47FCPS Support for Employees Potentially Impacted by Position Reductions Implement communication strategyFor teacher positions, enrollment growth and typical turnover are expected to mostly offset the decrease from position reductionsFor other position categories (assistant principal, instructional assistants, clerical, custodial, and departments), FCPS will work with employees to place as many employees as possible in positions open due to turnover or to place employees in other positions (e.g., assistant principals may return to a teaching position)Since FCPS’ budget is primarily employee compensation, 88.6 percent for FY 2015, the budget reductions significantly impact people.FCPS’ Department of Human Resources will work with employees to minimize the impact of the position reductions.For teacher scale positions, the reductions are offset by increases for enrollment growth and by the typical turnover that occurs annually. Both enrollment growth and turnover will help FCPS to place teachers in other teaching positions.For other position categories, HR will work to place impacted employees in other positions when it is possible based on vacancies; the employee’s previous position held; and each employee’s knowledge, skills, and abilities.
48Expenditure Reduction Summary In summary, reductions totaled $96.5 million (including compensation base savings) with the greatest proportion by category coming from central support.
49Summary of the FY 2015 Proposed Budget Overall budget increase of $59.4 million, or 2.4%RevenueCounty transfer increase of $98.1 million, 5.7%, requestedAP/IB test fees charged to students and increases in community use feesExpendituresReductions totaling $96.5 million including positionsA total of positions were added in expenditure adjustments with the majority, positions, for enrollment growthOverall, a net loss of positions after accounting for increasing enrollment and expenditure reductionsIn summary, the FY 2015 Proposed Budget totals $2.5 billion. This is an increase of $59.4 million, or 2.4 percent, from the FY 2014 Approved Budget.To balance the FY 2015 Proposed Budget, a shared approach of making expenditure reductions and requesting additional revenue from Fairfax County was utilized:Expenditure reductions total $96.5 million and include the elimination of positionsNew and increased fees total $4.2 millionFinally, we are requesting increased funding of $98.1 million or a 5.7 percent from Fairfax County government to cover the expenditure increases for items beyond FCPS’ control and the impact of the structural deficitThe significant cost drivers include:• Enrollment Growth• Retirement Rate Increases• Health Insurance Cost Increases• Step Increase for Employees
50Without the Proposed Revenue Additional reductions will be necessary and program considerations include:Specialized instructional programsSupport to schoolsClass size increasesStudent activities and programmingContract-length reductionsEmployee salariesBenefit structuresThe proposed budget includes a requested increase in funding of $98.1 million from Fairfax County.If FCPS does not receive the requested revenue, additional reductions, beyond the $96.5 million in reductions already included in the proposed budget, will be needed.As shared with the School Board and the public during the budget work sessions held last October and November, this slide lists some of the items from the menu of reduction consideration items that will be considered.For example, specialized instructional programs will be considered for reduction, as well as additional reductions to school support, additional increases to class size, and cuts to student activities and athletics.In addition, employee compensation, including employee contract lengths and benefits, will potentially be reduced.
51Governor’s Budget Update The Governor released his proposed budget on December 16th, which includes $27 million more in state aid than FCPS projectedAfter the General Assembly debates the Governor’s proposal and the State budget is finalized in March, FCPS will recommend adjustments to state aid and sales tax revenueAfter FCPS had finalized projections for FY 2015, the Governor released his proposed budget.Based on the Governor’s Introduced Budget, the projected impact to FCPS is an increase of approximately $27 million in state aid as compared to our proposed budget. FCPS has projected a decrease in state revenue of $11 million, so the increase in state revenue above FY 2014 Approved is less than $16 million.While we are obviously very appreciative for the bottom line increase in state funding, the State continues to underfund education.Every two years school divisions hold their collective breath for the release of updated Local Composite Index data, which sets the split of state and local funding. Fairfax’s LCI increased slightly over the previous biennium (.6804, up from .6789), which itself resulted in an approximately $2 million decrease in state funding for FCPS.The increase in funding for basic aid is based on the biennial re-benchmarking which is updating two years worth of increased costs and student population growth. These are costs that have already been realized locally and this just brings the state’s share closer in line with these local costs.The Governor’s Introduced Budget also reduced potential funding to FCPS through policy changes. The elimination of the Support Cost of Competing Adjustment (COCA) funding is a loss of $3.4 million for FCPS, and the exclusion of non-personal inflation from re-benchmarking is approximately $4 million.The General Assembly will debate the Governor’s proposal and finalize the state budget in May. At that time, FCPS will recommend adjustments to both state aid and sales tax for FY 2015.
52Intended Use of State Funding If FCPS receives an increase in State funding, we intend to restore all or part of the following proposed fees and reductions:Advanced Placement/International Baccalaureate FeesClass Size IncreasesNeeds-Based StaffingSummer SchoolFCP S will use additional state funding to restore all or part of the proposed fees and reductions.
53Final ThoughtsThe resource needs of the school system will continue to growTo address potential future budget challenges, long-term considerations are being evaluatedLong-range financial planning in partnership with the County is essential to protect the quality of our schoolsThank you for the support and feedback that has been provided and for your continued involvementIn addition to the fiscal challenges that FCPS faces for FY 2015, we know that we will need to consider longer-term items if revenue growth cannot keep up with expenditures.Some of the items that are being evaluated for FY 2016 and future years include looking at master scheduling, course offerings, specialized programs, and student activities at schools.We look forward to moving forward into the future in partnership with the County and the community, recognizing our shared interests and priorities.
54Other Budget Documents Other budget documents prepared by FCPS include:Advertised and Approved Budgets representing different stages of the overall budget processApproved Detailed Budgets providing line item detail by FCPS’ financial structureApproved Program Budgets reflecting resource allocation by purposeWashington Area Boards of Education (WABE) Guide provides comparative data for local area school systemsFurther information, including the documents described above, is available online:FCPS produces several budget documents during the budget development cycle, starting with the Proposed Budget presented in January and ending with finalized revenue and expenditure details in the Approved Budget, which is adopted in May.Following the Approved Budget, the Program Budget is released and is a companion document to the Approved Budget. The Program Budget presents expenditure and revenue details by program.The Washington Area Boards of Education Guide provides comparative data for local school systems.These and other helpful budget documents are available online at the link provided.
55Important Dates Here are the dates for the FY 2015 budget process. A couple of important upcoming dates are:On January 27th, the School Board will hold a public hearing on the budgetFebruary 25th, the County Executive releases the County’s FY 2015 Advertised Budget Plan, which will include his recommendation for the transfer amount for FCPSMarch 4th, the Board of Supervisors will advertise the tax rate. The advertised rate represents the highest that the tax rate can be setApril 29th, the Board of Supervisors will formally adopt the budget including both the tax rate and the transfer to FCPS
56Participate In The Budget Process Watch School Board meetings on Red Apple 21School Board meetings are also streamed live via FCPS’ websiteTo speak at a School Board meeting:or callTo speak at a Board of Supervisors public hearing call orShare feedback with Dr. Garza through User VoiceThere are many ways for citizens to participate in the budget process.FCPS School Board meetings are televised on Red Apple 21 and are also streamed live via the FCPS website, and citizens are invited to speak at School Board and County Board of Supervisors’ public hearings.