Trimble County Public Schools 2017-18 Tentative Budget Trimble County Public Schools Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget Each local board of education is required to approve a Tentative Budget on or before May 30 each year. The purpose of this law is to assure that the local board of education has an opportunity to review all proposed revenues and expenses before the upcoming school year begins. This is the 2nd formal step in developing the 2017-18 annual working budget. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget REVENUE STUDENTS   Some basic revenue considerations and how they are addressed in this Tentative Budget are: STUDENTS How many students are expected to enroll and what rate of attendance will occur? Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget STUDENTS Projected enrollment for 2017-18 staffing levels was 1,169 as discussed during the board’s approval of the allocations to school councils in February. This budget is based on 1,130.900 final FTE-ADA for 2016-17. No growth in ADA is projected during the first two (2) school months in 2017-18 compared to the same period in 2016-17. Thus, Trimble County’s 2017-18 SEEK is expected to be calculated using the prior year FTE-ADA. If final ADA for 2016-17 is less than 1,130.900, SEEK revenue for 2017- 18 will be lower than projected. If 2016-17 final ADA is higher than 1,130.900, SEEK revenue in 2017-18 will be higher.   Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget ASSESSED VALUE OF TAXABLE PROPERTY As noted during the January Draft Budget review the estimated assessed value for 2017-18 is $626,703,182. The 2016-17 certified total assessment was $604,719,716. The 2017-18 projected assessed value is about 3.64% higher than the 2016-17 certified total assessment. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget ASSESSED VALUE OF TAXABLE PROPERTY The 2017-18 estimated assessment includes a 4.28% increase in real estate (including approximately 1.94% in new growth). Tangible property is projected to decrease by 0.64%. Public Service Company (PSC) real estate assessment is projected to increase by 3.97%. PSC tangible property is projected to increase by 1.59%. Motor vehicles at wholesale book value are projected to increase by 2.70%. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget TAX LEVY The 2017-18 Tentative Budget is based on a projected combined property tax rate of 66.9 cents per $100 of assessed value for real estate and 66.9 cents per $100 of assessed value for tangible property. The projected rates are the same as the rates levied the prior year but could be higher if growth in existing assessment is less than 4%.   Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget TAX LEVY Under certain conditions Kentucky law allows a local school district to levy a rate that will generate 4% increase in local tax revenue. There is a good chance the 4% increase rate is likely to be higher than the previous year due to the overall projected assessment for 2017-18 being less than 4% higher than the 2016-17 certified assessment. The projected motor vehicle rate per $100 assessed value is 55.4 cents and the 3% utility tax levy was also projected for continuation. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Summary of Projected Revenues - 2017-18 Tentative Budget Table A Summary of Projected Revenues - 2017-18 Tentative Budget Fund Actual 2015-16 Budget 2016-17 Tentative 2017-18 $ Change % General Fund (*) $11,766,932 $10,471,057 $9,888,706 ($582,351) -5.6% Special Revenue Fund (#) $1,880,722 $1,093,014 $1,189,519 $96,505 8.8% Capital Outlay Fund $122,623 $116,684 $113,237 ($3,447) -3.0% Building Fund $465,652 $456,432 $442,935 ($13,497) Food Service Fund $975,375 $770,411 $802,161 $31,750 4.1% Total $15,211,304 $12,907,598 $12,436,558 ($471,040) -3.6% *All columns exclude state payments on-behalf of the school district. #“Projected” Special Revenue Fund will be adjusted as Grants are verified by KDE Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget Due to uncertainty about Special Revenue funding, the district is not required to account for Special Revenue funds in the Draft Budget presented to the Board in January. The Tentative Budget includes $1,189,519 as an estimate of these federal, state and local funds. The Special Revenue fund will be adjusted (up or down) as grants are verified by the Kentucky Department of Education (KDE). Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget Table B on the next slide presents an overview of recommended changes in projected revenue in all funds (except Special Revenue) since the January review of projected receipts and expenses. Projected revenue in the Draft Budget was $11,214,589. The Tentative Budget projection is up by $32,450 across all funds.   The 2016 General Assembly set the 2017-18 SEEK base at $3,981 per ADA; the same as 2016-17. The SEEK base used in the January Draft Budget projection was the same. Projected Special Revenue funding is excluded from Table B in order to compare revenues from the Draft and Tentative Budgets. Reporting of this fund is not required in the Draft Budget. More definitive funding information should be available by the time the Board considers the Working Budget in September. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Comparison - Projected Revenues - 2017-18 Draft & Tentative Budget Table B Comparison - Projected Revenues - 2017-18 Draft & Tentative Budget Fund Draft 2017-18 Tentative $ Change % General Fund (*) $9,888,706 $0 0.0% Special Revenue Fund Capital Outlay Fund $113,237 Building Fund $442,935 Food Service Fund $769,711 $802,161 $32,450 4.2% Total $11,214,589 $11,247,039 0.3% *All columns exclude state payments on-behalf of the school district. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Comparison - Projected Revenue - 2017-18 Draft & Tentative Budget Table C presents a more detailed overview of recommended changes in projected revenue in the General Fund since the January review of projected receipts and expenses. Projected General Fund revenue in the Draft Budget was $9,888,706. The Tentative Budget projection is unchanged. Table C Comparison - Projected Revenue - 2017-18 Draft & Tentative Budget General Fund Revenue Source Draft 2017-18 Tentative $ Change % Beginning Unrestricted Balance $1,268,050 $0 0.0% Local GF Revenue $4,299,137 State GF Revenue (*) $4,264,019 Federal GF Revenue $55,000 Other Receipts $2,500 Total General Fund $9,888,706 *All columns exclude state payments on-behalf of the school district. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget BEGINNING BALANCE How many dollars will be in the projected unassigned beginning balance? The Tentative Budget’s estimated unassigned beginning balance of $1,268,050 (see Table C on the previous slide) is based on a careful review of expected revenues and planned expenses for the remainder of 2016-17. The unassigned beginning balance in the Tentative Budget is unchanged from the January Draft Budget estimate. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget EXPENSES DEBT SERVICE Table D on the next slide shows the district’s required debt service payments and projected capital (restricted) revenues. Total scheduled 2017-18 debt service is $552,663. This obligation is budgeted for payment from the Capital Outlay and Building funds. Projected 2017-18 recurring revenue from the Capital Outlay and Building funds is $556,172. The district has sufficient projected capital (restricted) funds to pay the scheduled debt service ($552,663) from these funds with an uncommitted remaining balance of $3,509. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Projected Bonded Debt Payment - 2017-18 2017-18 Tentative Budget Table D Projected Bonded Debt Payment - 2017-18   Total Debt Service Building Fund Capital Outlay Principal $433,876 $0 Interest $118,787 $9,059 $109,728 Total (Restricted Funds) $552,663 $442,935 Projected Recurring Revenue $556,172 $113,237 Uncommitted $3,509 Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget OTHER OBLIGATIONS Does the proposed budget provide for all known obligations for the fiscal budget year, such as salary improvements for additional experience or fringe benefits costs such as accumulated sick leave at retirement? The cost of advancing all personnel in all funds for an additional year of experience was included in the Draft Budget.   The Tentative Budget includes all certified and classified positions allocated to school councils approved in February. The Tentative Budget includes an amount in the general fund budget for accrued sick leave with a similar amount in a restricted reserve. Thus, 100% of the potential obligation for this benefit is budgeted. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget ALLOCATIONS TO SCHOOL COUNCILS Has the board allocated sufficient funds to school councils to meet the staffing and other requirements of 702 KAR 3:245? The allocation approved by the board in February exceeds the minimum requirements for Sections 4 and 5 of the state regulation on allocations to councils. The Section 6 allocation meets the $100 minimum set by the 2016 General Assembly in the state's biennial budget. The salary schedule improvements enacted by the board are automatically incorporated into the allocation to school councils. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget ALLOCATIONS TO SCHOOL COUNCILS (continued) The Tentative Budget includes funding through Section 7 of the SBDM state regulation. The next adjustment to council allocations will be in September (if more or fewer students enroll). At the end of the second school month the Section 6 and 7 allocations will be adjusted (up or down) based on the first two (2) months actual FTE-ADA per the district's Growth Factor Report.  The Tentative Budget includes line item changes based on budgets received from school councils. Each school’s allocation is budgeted based on its submitted budget. As funds are actually expended, the expense is posted to the appropriate object code. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget SALARY SCHEDULE IMPROVEMENTS No salary schedule improvements for 2017-18 are included in the Tentative Budget. This budget reflects 0% salary schedule improvements for certified and classified staff. It is important to note that approximately 82% of the General Fund is dedicated to personnel expense.   A summary of personnel and benefits as a portion of the General Fund, excluding accumulated sick leave, for the last three (3) years is in Table E on the next slide. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Summary of Projected Personnel Expense - 2017-18 Tentative Budget Table E Summary of Projected Personnel Expense - 2017-18 Tentative Budget   Actual 2015-16 Budget 2016-17 Tentative 2017-18 $ Change % Salaries GF Personnel $6,775,305 $6,657,081 $6,389,733 ($267,348) -4.0% Percent General Fund 67.91% 72.27% 72.97% Benefits excl. accum. sk. Lv. (*) $717,515 $817,838 $787,038 ($30,800) -3.8% 7.19% 8.88% 8.99% Total Salaries & Benefits $7,492,820 $7,474,919 $7,176,771 ($298,148) 75.10% 81.15% 81.95% *All columns exclude state payments on-behalf of the school district. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget SUMMARY OF PROJECTED EXPENSES Table F (see next slide) provides an overview of all proposed general fund expenses and changes made since the January review of projected expenses. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Summary of Projected GF Expense - 2017-18 Tentative Budget Table F Summary of Projected GF Expense - 2017-18 Tentative Budget Object Description Actual Budget Tentative $ %   2014-15 2015-16 2017-18 Change 0100 SALARIES PERSONNEL SERVICES $6,775,305 $6,657,081 $6,389,733 ($267,348) -4.0% Percent of General Fund Expense 67.9% 72.3% 73.0% 0200 EMPLOYEE BENEFITS (*) $717,515 $817,838 $787,038 ($30,800) -3.8% 7.2% 8.9% 9.0% 0300 PURCHASED PROF & TECH SERVICES $464,127 $379,570 $378,495 ($1,075) -0.3% 4.7% 4.1% 4.3% 0400 PURCHASED PROPERTY SERVICES $337,801 $199,300 $182,568 ($16,732) -8.4% 3.4% 2.2% 2.1% 0500 OTHER PURCHASED SERVICES $270,258 $252,274 $240,011 ($12,263) -4.9% 2.7% 0600 SUPPLIES $633,445 $661,369 $635,701 ($25,668) -3.9% 6.3% 7.3% 0700 PROPERTY $103,342 $201,600 $107,000 ($94,600) -46.9% 1.0% 1.2% 0800 DEBT SERVICE AND MISCELLANEOUS $54,234 $12,849 $18,024 $5,175 40.3% 0.5% 0.1% 0.2% 0900 OTHER ITEMS $620,697 $29,405 $18,645 ($10,760) -36.6% 6.2% 0.3% General Fund Estimated Expense $9,976,724 $9,211,286 $8,757,215 ($454,071) 0840 CONTINGENCY** $0 $1,259,771 $1,131,491 ($128,280) -10.2% 0.0% 13.7% 12.9% General Fund Total (Est Expense + Contingency) $10,471,057 $9,888,706 ($582,351) -5.6% *All columns exclude state revenue/ payments on-behalf of the school district. **The Contingency is not an estimated expense. It is the budget's reserve. The "Percent of General Fund Expense" represents the Contingency's percentage of the budget's estimated expense. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget EXPENSES Proposed expenses are detailed in the 2017-18 Tentative Budget attached to the information in the material received by the Board for this meeting. The totals for each fund are equal to the projected revenue plus the fund balance for each fund. Table G (see next slide) provides an overview of all proposed General Fund expenses and changes made since the January review of projected expenses. Projected certified and classified salary improvements are included in Table G. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Comparison - Projected GF Expense - 2017-18 Draft & Tentative Budget Table G Comparison - Projected GF Expense - 2017-18 Draft & Tentative Budget General Fund . Object Description Draft Tentative $ %   2017-18 Change 0100 SALARIES PERSONNEL SERVICES $6,730,029 $6,389,733 ($340,296) -5.1% Percent of General Fund Expense 72.77% 72.97% 0200 EMPLOYEE BENEFITS (*) $826,796 $787,038 ($39,758) -4.8% 8.94% 8.99% 0300 PURCHASED PROF & TECH SERVICES $371,220 $378,495 $7,275 2.0% 4.01% 4.32% 0400 PURCHASED PROPERTY SERVICES $202,318 $182,568 ($19,750) -9.8% 2.19% 2.08% 0500 OTHER PURCHASED SERVICES $252,274 $240,011 ($12,263) -4.9% 2.73% 2.74% 0600 SUPPLIES $650,601 $635,701 ($14,900) -2.3% 7.03% 7.26% 0700 PROPERTY $202,250 $107,000 ($95,250) -47.1% 1.22% 0800 DEBT SERVICE AND MISCELLANEOUS $13,149 $18,024 $4,875 37.1% 0.14% 0.21% 0900 OTHER ITEMS $0 $18,645 100.0% 0.00% General Fund Estimated Expense $9,248,637 $8,757,215 ($491,422) -5.3% 0840 CONTINGENCY** $639,969 $1,131,491 $491,522 76.8% 6.92% 12.92% General Fund Total (Est Expense + Contingency) $9,888,706 0.0% *All columns exclude state revenue/ payments on-behalf of the school district. **The Contingency is not an estimated expense. It is the budget's reserve. The "Percent of General Fund Expense" represents the Contingency's percentage of the budget's estimated expense. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget BUDGET RESERVE Does the proposed budget include a sufficient reserve? A fundamental basis of budgeting is not to spend more than you receive. There are some years when the carry forward balance is above 5% that a local school board may decide to spend more than they receive, excluding the carry forward balance. KDE defines “total budget” as the budgeted expenditures in the General and Food Service funds excluding the Contingency. The budgeted reserve (Contingency) in the Tentative Budget has been determined accordingly.   The board must include a minimum reserve (Contingency) of at least 2% of the total budget ($249,736). This budget includes an unrestricted General Fund reserve (Contingency) of $1,131,491 (8.0% of the total budget). Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget BUDGET RESERVE It is important to remember that an adequate unrestricted reserve (Contingency) provides a “buffer” to minimize the disruption of instructional programs deemed critical by the Board during times of negative shifts in revenue. Since the potential for a reduction in state SEEK funding exists, any reduction in 2017-18 state SEEK would negatively impact the unrestricted General Fund reserve (Contingency). The district had a reserve (Contingency) of $1,259,771 at the beginning of 2016-17. The Tentative Budget includes an estimated General Fund carry forward balance of $1,268,050. The actual carry forward will not be confirmed until the Annual Financial Report is filed in late July. It is possible, however, that final 2016-17 expenses could be higher than revenue. This development would have a negative impact on the 2017-18 projected unassigned beginning balance. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget BUDGET RESERVE The “Expense as Percent of Revenue” in this budget is 101.6%. What does this mean? It means estimated expense exceeds projected recurring revenue by $136,559. It is not a structurally balanced budget. This budget contains a sufficient reserve for 2017-18. Table H presents the district’s most recent five (5) year “Expense as Percent of Revenue” historical trend. Ohio Valley Educational Cooperative Financial Services 5/19/2017

Expense as Percent of Revenue – 2017-18 Tentative Budget Table H Expense as Percent of Revenue – 2017-18 Tentative Budget    Tentative 2013-14 2014-15 2015-16 2016-17 2017-18 Projected GF Revenues less Beginning Balance (*) $8,555,160 $8,586,967 $8,625,422 $8,619,532 $8,620,656 Projected GF Expenses less Contingency (*) $9,185,918 $9,599,800 $9,285,374 $9,095,884 $8,757,215 +/- Difference ($630,758) ($1,012,833) ($659,952) ($476,352) ($136,559) Expense as Percent of Revenue 107.4% 111.8% 107.7% 105.5% 101.6% *All columns exclude state payments on-behalf of the school district. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget Table I presents a comparison of the “Expense as Percent of Revenue” at the Draft and Tentative stages of developing the FY2017-18 Working Budget. Projected recurring General Fund revenue did not increase, but estimated General Fund expenses decreased by $491,422. Table I Comparison - Expense as Percent of Revenue – 2017-18 Draft & Tentative Budget   Draft 2017-18 Tentative $ Change Projected GF Revenues less Beginning Balance (*) $8,620,656 $0 Projected GF Expenses less Contingency (*) $9,248,637 $8,757,215 ($491,422) +/- Difference ($627,981) ($136,559) $491,422 Expense as Percent of Revenue 107.3% 101.6% *All columns exclude state revenue/ payments on-behalf of the school district. Ohio Valley Educational Cooperative Financial Services 5/19/2017

2017-18 Tentative Budget RECOMMENDATION Approve the 2017-18 Tentative Budget as described in this enclosure. Ohio Valley Educational Cooperative Financial Services 5/19/2017