Assembly-Board Joint Worksession- KPBSD’s FY14 Budget Dr. Steve Atwater, Superintendent March 19, 2013

KPBSD’s FY14 Budget Purpose of today’s worksession is to provide the Assembly with an overview of the District’s finances and specifically review FY14 budget considerations. Finally, District wants to review previous three years of fund balance. District’s goal for FY14 is to maintain the whole. We want to keep existing programs and staffing levels.

Main Points to Consider for KPBSD’s FY14 Budget KPBSD’s FY14 Budget has been introduced to school board- public meetings in February Enrollment FY13 8,892 (October count) up slightly from FY13 projection (8,871) FY14 projected enrollment is 8,873, increase of 113 from today’s enrollment FY14 Budgeted Revenue Includes Governor’s one time funding increase ($1,741,904) Includes no increase from the borough ($43,000,000) Includes using $1,710,000 of health care fund balance Staffing for FY14 is in motion- tenured contracts issued in March. Most non-tenured contracts on hold until funding levels are clear. District would like the Assembly to commit a funding level to district sooner rather than later. Request to increase Borough’s contribution to $44,500,000 made in February

All Governmental Revenues and Expenditures FY14 Preliminary Budget Revenue: General Fund $ 146,825,204 Includes Gov’s increase Other Special Revenue 8,455,000 Pupil Transportation 6,750,000 Food Service Fund 3,750,000 Total Governmental Funds Revenue: $ 165,780,204

Kenai Peninsula Borough School District FY14 Preliminary General Fund Budget Revenue Local Effort $43,000,000 29.29% State Revenue 98,197,300 66.87% State Revenue - One Time 1,741,904 1.19% Federal Revenue 450,000 0.31% Other Revenue (Investment Earnings, E- Rate, Rent) 1,726,000 1.18% Allocation of Fund Balance - Self Insurance 1,710,000 1.16% Allocation of Fund Balance - General 0.00% Total Revenue Budget $ 146,825,204 100.00%

FY14 Budgeted General Fund Revenue

The FY14 Preliminary General Fund Budget reflects: Revenue $145,115,204 (includes proposed $1,741,904 one-time funds) Expenditures 149,391,564 (includes additional $541,489 in salaries/benefits) Difference (4,276,360) Use of Fund Balance - Self Insurance 1,710,000 Remaining Deficit ($2,566,360) Expenditure FY14 % Of FY13 FY12 Category   Budget Total Actual Salaries and Benefits $ 122,165,636 81.78% $ 119,051,676 80.27% $ 107,868,572 77.61% Utilities 6,667,160 4.46% 5,976,385 4.03% 6,207,041 4.47% In-Kind Services 9,193,414 6.15% 6.20% 9,492,737 6.83% Discretionary Accounts 11,365,354 7.61% 14,099,193 9.51% 15,427,640 11.10% $ 149,391,564 100.00% $ 148,320,668 $ 138,995,990

Information on FY14 Budget Provided FY14 Summary Info - KPBSD Board 1/14/13 FY14 Detailed Info - KPBSD Board 2/11/13 KPB Assembly & KPBSD Board 3/19/13 Board Approves Balanced Budget 4/1/13

FY14 General Fund Budget Assumptions Expenditures Existing staffing formulas used (Programmatic Staffing) One Step on existing salary schedule 10% increase to employer share of health care PRS & TRS On-Behalf payment increases No transfer of funds to Transportation Fund Retention of existing programs Revenues Enrollment projected conservatively Final change to District Cost Factor implemented in FY13 No increase to Base Student Allocation Including Governor’s one-time funding Flat revenue from Borough

FY14 General Fund Budget Assumptions (continued) Revenue & use of health fund balance $146,825,204 Expenditures & Transfers $149,391,564 Existing deficit ($2,566,360) Board authorized maximum use of $1 million from Fund Balance

FY14 General Fund Budget What is still unknown? Revenue State- will there be more $ beyond Governor’s one time money ? Borough- requested $1.5 million more, what will final amount be? Expenditures Negotiations -tentative agreement is reached Amount of salary and benefit impact estimated, but not fully known at this time At end of April, known numbers will determine what action needs to be taken

Four year history of Borough’s appropriation and in-kind totals

Trend of Sales Tax and Property Tax Funding for Schools FY09 FY10 FY11 FY12 FY13 projected FY14 requested From Sales Tax 28,585,036 25,950,998 27,798,976 28,385,150 30,064,593 31,064,593 From Property Tax 12,561,909 17,032,378 14,789,159 14,865,985 12,935,407 13,435,407 Total Local Funds 41,146,945 42,983,376 42,588,135 43,251,135 43,000,000 44,500,000

KPB’s Local Contribution to Schools, Where Does It Come From? FY06 FY07 FY08 FY09 FY10 FY11 FY12 estimated FY13 projected FY14 requested Funding From Sales Tax 16,755,426 18,321,611 23,801,181 28,585,036 25,950,998 27,798,976 29,188,925 30,064,593 31,064,593 Funding From Property Tax 18,218,256 19,620,065 13,899,936 12,561,909 17,032,378 14,789,159 14,062,210 12,935,407 13,435,407

Fund Balance Revenues received less expenditures and transfers equal fund balance usage or accumulation for a fiscal year.

Why is there a variance in the projected fund balance usage? Budget is our best estimate 18 months before next fiscal year ends Variances are expected Budget is in motion until closed out at end of fiscal year Example KPBSD’s FY13 General Fund Budget was revised at the July 9, 2013 Board meeting to equal $146,637,793. Estimated use of fund balance $2,762,120 A 1% variance in expected revenues would equal a difference of $1,466,378. A 2% variance in actual expenditures would result in the difference of $2,932,756. At year-end, the combined effect of the actual revenue and expenditure changes determines if a usage or accumulation occurred for the fiscal year.

FY10 b. $1,235,796 less in utilities usage than budgeted Predicted FB Usage = ($4,524,843) Actual FB decrease = ($161,302) Difference = $4,363,541 Reasons for Variance a. $931,986 Interest Revenue in excess of budget b. $1,235,796 less in utilities usage than budgeted c. $1,396,941 less in salary/wages than budgeted d. $495,880 less in salary related benefits $4,060,603 total in big ticket variances

FY11 Predicted FB Usage = ($4,923,931) Actual FB increase = $2,355,677 Difference = $7,279,608 Reasons for Variance a. $2,953,600 Intensive Needs funding increase b. $889,250 Health cost accounting change c. $1,468,811 Salary/Benefits Unfilled positions d. $364,466 Curriculum orders not received e. $1,167,804 Prof-Tech Contracted and Purchased Services

FY12 Predicted FB Usage = ($3,524,030) Actual FB decrease = ($2,994,764) Difference = $529,266 Reasons for Variance a. $741,534 in unexpected Transportation funding from the State of Alaska

Questions?