(This slide should be on the screen 30 minutes prior to the start of the meeting while participants arrive and take their seats at their assigned tables.) Task force meeting May 31, 2017

School district funds Basically 3 Funds 1. Operating 2. Capital Projects 3. Debt Service (Stands Alone)

Sources of revenue (2015-16) St. Joseph State Average Local 50.72%* 56.25%* State 40.69% 34.31% Federal 8.59% 9.44% *Includes Proposition C revenues

Total Tax Levy Operating Levy + Debt Service Levy = Total Tax Levy

SJSD Total Tax Levy 2017 SJSD Operating Levy: $3.12 + SJSD Debt Service Levy: $0.45 = SJSD Total Tax Levy: $3.57

Reserve Fund Balance Definition Cash flow basis necessary to cover normal operating expenses during each fiscal year It is NOT a savings account

ReServe Fund Balance Recommendation 20% Operating Reserve Fund balance recommended by the Department of Elementary and Secondary Education (DESE) 9% Financially Stressed District Note: DESE and BOE Policy DBC

1. Operating Fund 2017-18 Beginning Reserve Balance $ 24.1M 19% Expenses $123.8M Revenues $120.2M Deficit ($3.6M) Ending Reserve Balance $ 20.5M 16%

Operating Fund 2017-18 80% of the Operating Fund is allocated for staff salaries and benefits (health insurance, retirement match, etc.) 80% of $123.8M Operating ≈ $99M 15% of $99M for Health Benefits ≈ $14.5M 15% of $99M for Retirement ≈ $14.5 M 70% of $99M for Staff Salaries ≈ $70M

St. Joseph School District Fund Balances: History/Projections DESE recommended fund balance The Missouri Department of Education recommends that all school districts maintain 20% of their funds in a reserve (fund balance) account for cash flow and emergency purposes. At the current rate of spending and revenue, we will go below that level during the 2018-2019 school year. If our balances continue to decline, the district will be placed on the state’s financial ‘watch’ list. That means the district must begin to take measures to correct the problem. Without increased revenue, that means major cuts. If that percentage continues to go down (or eventually does not start going back up) the State can take over the district.   As I said, according to the projections there will be no reserve funds left by 2020. You can see from this graph that unless the District receives additional revenue or makes some drastic reductions in programs and services over the next few years the District will basically be broke. Since this cannot happen the District and community must take action to correct this trend. And that’s what we are here to talk about DESE financial distress list Risk of state takeover

2. Capital Projects 2017-18 Beginning Balance $6.0M Expenses $4.5M Revenue $0.3M Balance $1.2M Note: Little to zero revenue for capital projects currently

3. Debt Service 2017-18 Definition Funds necessary to cover incurred bond debt and expenses from prior voter- approved bond issues Remember – this fund stands alone – separate checking account

Debt Service Current SJSD Debt Service Levy = $0.45

Ways to Fund Capital Projects

Ways to Fund Capital Projects 1. Operating dollars transfer to Capital Projects annually Up to 7% of WADA Amount Transfer Up to $5.32M 2. Designate part of Operating Levy for Capital Projects $0.10 Placement = $1M Per Year Generated

Ways to Fund Capital Projects 3. Utilization of lease purchase option by funding payments from either #1 or #2 Lease purchase of $10M project is approximately $1.25M annual payment or $0.125 designated tax placement to Capital Projects

Districts with lease certificates of participation

Ways to Fund Capital Projects 4. Bond Issue 2/3 majority in odd-year elections August and November elections 4/7 majority in even years 4/7 majority any April election

Bond capacity 15% of assessed valuation by statute $1Billion assessed valuation SJSD has $150M bonding capacity Currently: Using only $50M with current debt service of $0.54

SJSD Tax Rate History Operating Tax Levy = $3.12 Debt Service Tax Levy = $0.45 Total Tax Levy = $3.57

St. Joseph School District Local Property Tax Operating Revenue: History/Projections (Loss of $0.63 levy in 2015) This graph shows the actual dollar impact of the tax rate lowering by 63 cents. This resulted in approximately a $6 million dollar annual loss of revenue beginning in the 2016-17 school year. Thinking about this in simple terms — that revenue amounts to the salaries of 100 teachers who earn 60,000 per year.   Knowing this, the District has taken action to increase efficiencies and made some reductions in programs and services to save some money. However, for the most part, in order to keep a strong educational program for our boys and girls we are continuing to fund our schools in a way to not hurt students by spending our reserves.

PROPosition C One-cent sales tax approved by voters in 1982 One-half of funds used for district expenses, the other half used to reduce property taxes SJSD required by statute to roll back operating levy by $0.52 from $3.64 to $3.12 in proportionate amount of Prop C $$ received 95% of districts statewide have passed Prop C waivers to eliminate this rollback allowing for complete use of both Prop C $$ and operating tax $$

SJSD Total Tax Levy 2017 SJSD Operating Levy: $3.12 + SJSD Debt Service Levy: $0.45 = SJSD Total Tax Levy: $3.57

Sjsd by the numbers Based on enrollment/total budget, the current per-pupil expenditure per average daily attendance in the SJSD is about $9,645

PARENT/COMMUNITY Expectations What is important for quality education? What does that mean in terms of support? What steps should be taken for the future? The third, and most important, objective of the One Vision community engagement is to learn what parents and the community expects of the District over the next few years. This is why it is so vitally important that you are here to provide your input. We need to know what kind of district you want for the future. To do that we want you to work in groups to develop a list of what we are calling ‘Guiding Principles.’

Your Vision… Leading to One Vision Our work activity for you is to have you identify and list Guiding Principles (expectations) that are important to you…in essence to identify your vision for your school and District. The Guiding Principles you develop will be merged with principles developed by parents and community members attending meetings at schools throughout the District. The goal is to develop and prioritize the principles to create a unified…one…vision for the future of the District.