Solanco School District 2016-17 Preliminary Final Budget May 2, 2016 Regularly scheduled Board meeting 7:30 PM - Central Office

May 2, 2016 Preliminary Final Budget Solanco School District General Fund 2016-17 -- Preliminary Budget 25-Apr-16 Revenue Summary: Local Tax Rates Est Assessment 1,900,000,000 2014-15 Actual 2015-16 Current 2016-17 Proposed Proposed Increase Proposed Incr % Current Real Estate (Mills) 11.8040 12.0991 12.4500 0.3509 2.90% Current Earned Income 1.15% 0.0000 0.00% Current Real Estate Transfer Tax 1/2 of 1% Note: 2.9% increase keeps Solanco SD within the District's Act 1 Cap index for 2016-17 Property Tax revenues estimated from projected Net Taxable Assessment of : $ 1,900,000,000 Proposed Increase Per $100,000 Assessed Value: $ 35.09 = Increase (annually) for each $100,000 in assessed value Average Home Owner Tax increase (Based on $152,620 Assessment) = $ 53.55

May 2, 2016 Revenues: Preliminary Final Budget Revenue sources and % share: Revenues Sources $'s: 2012-13 Actual 2013-14 Actual 2014-15 Actual 2015-16 Budget 2016-17 Proposed Local 28,287,077 28,630,345 29,814,012 30,367,487 31,978,050 State 16,407,104 17,136,128 17,781,054 18,337,539 19,182,107 Federal 2,432,398 2,625,710 2,202,989 2,187,381 2,113,000 Other 3,839 3,571 67,791 405,000 Total Revenue: 47,130,418 48,395,754 49,865,846 51,297,407 53,678,157 Total Expenditures: 47,096,048 47,989,897 49,499,661 52,952,670 55,751,935 Varaince: Revenues over Expenditures 34,370 405,857 366,185 (1,655,263) (2,073,778)   Revenues Sources %: 60.0% 59.2% 59.8% 59.6% 34.8% 35.4% 35.7% 5.2% 5.4% 4.4% 4.3% 3.9% 0.0% 0.1% 0.8% 100.0%

Revenue Source Shares

Expenditure Functions Instruction and Support

Expenditure Functions Student Activities and Finance Uses

Expenditures by Object

Benefit Object Composite (26.1%)

Total State Revenue - Last Five Years STATE REVENUES Actual Budget 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Total State Solanco Funding 16,129,851 16,407,104 17,136,128 17,781,054 18,337,539 19,182,107 Less State pension (1/2 of total) 917,147 1,234,252 1,800,938 2,227,500 2,878,953 3,413,991 State Net to Solanco 15,212,703 15,172,852 15,335,190 15,553,554 15,458,586 15,768,117 3,052,257 Total Inc 2,496,843 PSERS Incr 5 year total net increase 555,413 Total State dollar Growth to Solanco Net of Pension dollars 3.7% State net over 5 years or annual avg of 0.73% Avg annual times 35.7% of budget or .26% of total budget 0.26%

Selective State Changes from January preliminary State Budget Solanco Re-cap: Selected Four Major State Revenue Funding Streams [These Line items only]   2015-16 Budget Estimated 2015-16 2016-17 Budget "State" 2016-17 from 15-16 Jan 2016 BEF 9,841,000 10,184,000 May 2016 9,740,861 9,935,678 194,817 Variance - (100,139) (248,322) RTL 330,147 427,715 97,568 SEF 2,095,000 2,195,210 2,275,210 2,074,719 2,116,213 41,494 (120,491) (158,997) Total Net Impact (123,062) (309,751) $ 333,879 Total cash variance from preliminary budget (432,813) Pension (rev only) PSERS 2,878,953 2,872,000 3,354,763 *Increase in State Share ( state pays 50% of the total pension cost) 482,763 816,642 * Note: Board must pay 'its' share from Local funds (482,763) $ (148,884)

2016 -17 State Total as Budgeted Projected Increase in Total State funds to Solanco....is approximately $200K less than the mandated 16.2 % pension increase...with credit due...they are paying their share... The 2016-17 budget started in that negative position and all other funds must lift from there. Also...State will ‘defer’ social security payments in May and June --- until July and August --- and we will be instructed to ‘accrue’ those funds back to fiscal year 15 -16 (about $120K in cash).

Five functions: 80% of Spending; Share 1100 Function

Share 1200 Function

Share 2600, 2700, 2300’s

Athletics & Extra-curricular

Long-term share trend: Salary -- 40.8%

Long-term share trend: Benefits -- 26.1% to Total Exp

Long-term share trend: Benefits -- 64% to Payroll

Long-term share trend: Salary & Benefits to Total Exp

Solanco SD Pension Total Employer (Gross & Net) Payments Pension Detail Solanco SD Pension Total Employer (Gross & Net) Payments Fiscal Year Gross Pension (for Total Budget) Gross Annual $ Inc. / Dec* Annual % Inc. / Dec PSERS' ECR (as a% of PYRL) *NET Annual $ Inc. / Dec = Board Local share Cumulative Since 2010 2006-07 1,230,298   6.46% 2009-10 1,013,409 38,150 3.9% 4.78% 19,075 2010-11 1,232,757 219,348 21.6% 5.64% 109,674 128,749 2011-12 1,878,790 646,033 52.4% 8.65% 323,017 451,766 2012-13 2,615,717 736,927 39.2% 12.36% 368,464 820,229 2013-14 3,587,705 971,988 37.2% 16.93% 485,994 1,306,223 2014-15 4,528,511 940,806 26.2% 21.40% 470,403 1,776,626 2015-16 Budget 5,593,966 1,065,455 23.5% 25.84% 532,727 2,309,353 2016-17 Proposed 6,827,982 1,234,016 16.2% 30.03% 617,008 2,926,361 Note: In 2016-17 based on an estimated June 2016 assessed value, and millage at 12.4500 as proposed; a 1% Property tax increase yields Approx. $220,688. * The District must pay the entire (100%) of the pension amount due and then receives (from the state as state revenue line item) approximately 1/2 of the payment as state revenue.

Increases were cumulative. & will ‘stay’ with us for two decades Increases were cumulative...& will ‘stay’ with us for two decades....unless the GA can find other funding solutions

Perhaps after 7 years----? Pension Projections Looking Ahead FY *% of Payroll Yr over Yr Increase as equated to a % of PYRL Rate of increase 2016-17 30.03 3.85 16.2% 2017-18 30.62 0.59 2.0% 2018-19 31.56 0.94 3.1% 2019-20 32.23 0.67 2.1% 2020-21 32.02 -0.21 -0.7% * All rates subject to change by PSERS board, GA mandate, subsequent legislation and combinations thereof.

Property Tax Assessment Base

January Tax Assessment Estimate---vs Actual YTD Assessment Growth: School District Fiscal Year (FY) For FY Budget Month / Year Assessment Prior yr Increase Increase % FY Period of Growth 2011-12 6/1/2011 1,808,469,000 25,282,000 1.41% 2010-11 2012-13 5/31/2012 1,813,591,000 5,122,000 0.28% 2013-14 6/1/2013 1,839,381,300 25,790,300 2014-15 6/3/2014 1,860,655,600 21,274,300 1.15% 2015-16 6/4/2015 1,879,493,000 18,837,400 1.01% 2016-17 ytd 4/1/2016 1,894,725,200 15,232,200 0.81%   Budget #'s used in January (and current) 1,900,000,000 Total 2016-17 1,870,000,000 GF 2016-17 Proposed mills 12.4500 2016-17 5,274,800 Apr, May? $ 65,671 Close

Solanco Vs the County

Earned income Tax --- Positive trend

2016-17 Other items/considerations Total Enrollment remains stable to slight decline; charter enrollment remains stable to slight decline Staffing expectations anticipate retirement impact, non-replacements, re-assigned resources, internal position changes, needed new hires. Several significant health care strategies remain in the forefront to slow medical trend impact Plan changes, HDHCP (2K/4K), Aetna Jan 1, Rx Jul 1 General fund budget teams with food service, health trust, and Capital Reserve to deliver all services and leverage capital requirements

Variance as a % of Budget Two to Three Year Budget strategy to allow for growth into the future with ability to adjust and react to environmental changes inclusive of opportunities...potential for 15-16 Pension draw down to be delayed to 16-17.... Budget to Budget vs Estimated Actual to Multi-year Budget Planning Bottom Line: Leveraging Current position and resources for current year planning; Building budget Capacity to exploit one time opportunities and drive resources to students; Multi-year Positioning moving forward Solanco School District Proposed 2016-17 Budget Budget to Budget Comparison May 2, 2016 Preliminary Budget 2015-16 Budget 2016-17 Increase $ Increase % Revenues $ 51,297,407 $ 53,678,157 $ 2,380,749 4.64% Expenditures $ 52,952,670 $ 55,751,935 $ 2,799,265 5.29% Variance $ (1,655,263) $ (2,073,778) $ (418,515)  Exceptions? Pension Draw Down $ 300,000 $ -   Net Variance $ (1,355,263) $ (1,773,778) Variance as a % of Budget -2.56% -3.18% $ (1,473,778) -2.64% To underspend the budget by 2% is the equivalent of $1.1 million dollars; with the resources available, deliberate and effective 'investment' in sustainable programs for students and staff requires planning and the ability/agility to take advantage of opportunities when presented. This flexibility ensures there is no "rush" to spend without diligent thought, nor need to increase the tax rate just to "close gaps".

Next Steps Approve Preliminary Final 2016-17 Budget for advertising Targeted Final Budget adoption is June 6, 2016 (need 30 days) May and June board meetings; approvals for various equipment purchases and project implementations Await final 15-16 State budget numbers...wait for state 16-17?