Gateway School District General Fund Budget Final Summary Budget Information for the Fiscal Year As of June 30, 2014

Summary of Final Total Revenues for  Projected Final Total Revenues for the fiscal year of $68,403,000.  (***Projected Final Total Revenues DON’T include any real estate tax increase ($0) for the fiscal year.***)  Increase of $631,000 or.93% over the fiscal year budgeted Total Revenues.

Summary of Final Total Expenditures for  Projected Final Total Expenditures for the fiscal year of $70,180,000.  Increase of $2,408,000 or 3.55% over the fiscal year budgeted Total Expenditures.

Net Final Budgetary Shortfall or Deficit for  Increase in Revenues of $631,000 +  Increase in Expenditures of $2,408,000 =  Net Projected Final Total Budget Shortfall or Deficit for the fiscal year of ($1,777,000).

Direct District Impact of Final State Budget for  NO Increase $0 in Basic Education Subsidy in the State budget.  Increase of $35,827 in Special Education Subsidy – (NOT Included in the fiscal year Budget due to the District approving the Budget before the approval of the State budget).

Direct District Impact of Final State Budget for  New State grant called the Ready to Learn Block Grant (RLBG) was created for the fiscal year.  Collapses the Accountability Block Grant ($130,950) into the RLBG and adds a Student-Focused Funding Supplement ($165,165) to create the RLBG.  For the District: $130,950 + $165,165 = $296,115 for the RLBG.  The Student-Focused Funding Supplement is new money and requires new expenditures; therefore, it DOES NOT provide any relief to the District’s current revenue shortfall for the fiscal year.

State Retirement Changes – No Changes for  No changes to the Pennsylvania School Employees Retirement System (PSERS) were adopted & enacted by the State.  (***ALL Changes to PSERS must first be approved by the State Legislature.***)  Thus, no changes formally enacted and effective as of 7/1/14 for the fiscal year.

State Retirement Changes – No Changes for  NO reduction in the fiscal year employer contribution rate by a reduction in the pension collars of (2.25%) to reduce the overall rate from 21.40% to 19.15%. (Thus, 21.40% utilized in the fiscal year Budget.)  Current net effect (Expenditures Less State 50% Reimbursement Subsidy) in the fiscal year Budget is an increase in pension expenditures of $778,259 to PSERS.

Final Revenue and Expenditure Issues for  Reduction in Current Real Estate Tax revenues (Loss of $914,001).  Actual Increases of 5.75% for PPO & 5.75% for HMO in employer medical insurance expenditures.  Increase of 4.47% (from 16.93% to 21.40%) in required employer retirement benefit expenditures to PSERS.

Composition of Major Revenue Categories for  Local – 74% of the Final Budget.  State – 25% of the Final Budget.  Federal - 1% of the Final Budget.  FLAT or very Little Revenue Growth Projected in the fiscal year Budget.

Major Types of Local Revenue Categories for  Current Real Estate Tax (Largest).  Current Earned Income Tax.  Delinquent Real Estate Tax.  Mercantile Tax.  Deed Transfer Tax.  Local Services Tax.  Delinquent Earned Income Tax.

Major Types of State Revenue Categories for  Basic Education Subsidy (Largest).  Retirement Reimbursement Subsidy – 50%.  Special Education Subsidy.  Property Tax Reduction Allocation.  SS & FICA Reimbursement Subsidy – 50%.  Transportation Reimbursement Subsidy.  Debt Service Reimbursement Subsidy.  Accountability Block Grant.

Major Types of Federal Revenue Categories for  IDEA Funds (Largest) - Passed Through the AIU#3.  Title I Funds - Passed Through PDE.  Title II Funds - Passed Through PDE.  ACCESS Funds - Passed Through PDE.  Title III Funds - Passed Through PDE.

Top Ten Revenues for  1. Current Real Estate Taxes - $42,328,491  2. Basic Education Subsidy - $6,996,248  3. Current Earned Income Taxes - $3,745,000  4. Retirement Reimburse. Subsidy - $3,424,152  5. Special Education Subsidy - $1,941,712  6. Delinquent Real Estate Taxes - $1,490,000  7. State Property Tax Reduction - $1,459,741  8. SS & FICA Reimburse. Subsidy - $1,230,292  9. Mercantile Taxes - $1,209,000  10. Transportation Reimb. Subsidy - $1,175,000

Top Ten Expenditures for  1. All Employee Wages & Salaries - $31,997,292  2. Retirement Expenditures - $6,848,304  3. Health Insurance Expenditures - $6,100,000  4. Transportation Expenditures - $4,243,000  5. Bond Debt Service Expenditures - $4,002,150  6. Charter & Cyber School Expenditures - $3,600,000  7. Special Education Expenditures (Other) - $2,740,000  8. SS & FICA Expenditures - $2,460,584  9. Technology Expenditures (All) - $1,356,000  10. Utility Expenditures - $1,024,000

Final Total Personnel & Employee Benefit Expenditures for  Projected Final Personnel Wage & Salary Expenditures = 45.5% of the fiscal year Budget.  Projected Final Employee Benefits Expenditures = 23.3% of the fiscal year Budget.  Projected Final Total Gross Employee Expenditures = 68.8% of the Total fiscal year Budget.

Projection of Ending Total Fund Balance at 6/30/14 for  Beginning Fund Balance as of 7/1/13 $11,669,241  Less: 1. C/Y Real Estate Tax Refunds ($ 713,377)  2. C/Y & P/Y Refunds – Westinghouse Property ($ 469,805)  3. Transportation Expenditures for Additional  Fuel, Additional Routes, & Homeless  Students ($ To Be Determined)  4. Other Expenditures ($ To Be Determined)  Add: 1. No Major Increases to List at this Time. $ 0   Net Projected Decrease for Fiscal Year ($1,183,182)  Projected Ending Fund Balance as of 6/30/14 $10,486,059

Composition of Projected Ending Fund Balance at 6/30/14 for  Unassigned Fund Balance $4,137,271  Nonspendable Fund Balance $ 681,274  Committed Fund Balance $5,667,514  Projected Total Fund Balance$10,486,059

Components of Fund Balance  Unassigned Fund Balance: Portion that is immediately available to be utilized for identified purposes such as balancing the Budget & making transfers to other funds.  Nonspendable Fund Balance: Portion that offsets the amount of Prepaid Expenditures on the District’s balance sheet & is not available for expenditure.  Committed Fund Balance: Portion that is not immediately available due to official designation by the Board for specific purposes through a formal Board resolution. Can be designated by the Board for different purposes or classified back to Unassigned Fund Balance through an additional formal Board resolution. Designations Currently Include: 1. Future employer health insurance increases; 2. Future employer pension cost increases; & 3. Future capital repair project expenditures for District school buildings.

Projection of Total Fund Balance at 6/30/15 for  Projected Fund Balance as of 7/1/14 $10,486,059  Less: Utilization to Balance the ($ 1,777,000)  fiscal year Budget  Projected Fund Balance as of 6/30/15 $ 8,709,059  The Projected Total Ending Fund Balance Represents 12.41% of the Final fiscal year Budget.  (NOTE: The Unassigned Fund Balance portion of the Total Ending Fund Balance is projected to be 3.36% of the fiscal year budgeted expenditures which is in compliance with 24 PS or less than 8% in a fiscal year when the real estate tax millage rate is increased by the District.)

What if Only Two Budget Line Items Didn’t Change for ?  Utilization of Fund Balance ($1,777,000)  Add: Net Increase in PSERS $ 778,259 Expenditures. Expenditures.  Add: Net Decrease in Current Year $ 914,001 Real Estate Tax Revenue. Real Estate Tax Revenue.  Adjusted Utilization of Fund Balance ($ 84,740) for the fiscal year if the for the fiscal year if the PSERS Rate & Current Year Real PSERS Rate & Current Year Real Estate Tax Revenues Didn’t Change. Estate Tax Revenues Didn’t Change.

Gateway School District General Fund Budget Final Real Estate Tax Millage Rate & Other Budget Information for the Fiscal Year As of June 30, 2014

What is Millage?  Millage is a tax rate applied to a real estate property’s assessed valuation for the purpose of revenue generation by a taxing body such as the District.  Each mill represents $1 of tax assessment per $1,000 of assessed property value.  A mill is derived from the root word mill, which means “thousand.”  Thus, one mill is one part per thousand or 0.1% which can also be expressed as.001 for calculation purposes.

Gateway School District Real Estate Tax Millage Rate for  At Mills in the fiscal year, GSD has the 18 th Lowest Millage Rate out of 42 school districts in Allegheny County.  McKeesport Area School District – Lowest in Allegheny County at Mills.  Wilkinsburg Area School District – Highest in Allegheny County at Mills.

Neighboring Allegheny County School District Real Estate Tax Millage Rates for  Gateway School District – Mills  Plum Borough School Dist. – Mills  Penn Hills School District – Mills  Woodland Hills School Dist. – Mills  East Allegheny School Dist. – Mills

Effects of Allegheny County Real Estate Reassessment in  Real estate assessment values for properties located in Monroeville and Pitcairn CONTINUE to decrease in value and owner appeals will CONTINUE to occur in the fiscal year.  Current year and prior year real estate tax refunds will CONTINUE to have a negative effect on current year real estate tax revenue as well as prior year real estate tax refund expenditures which will ultimately effect the District’s Fund Balance.

District Real Estate Assessment Issues for  The current total assessed value of the District’s real estate properties CONTINUE to decrease each month.  The number of taxpayer appeals CONTINUE to occur and the successful taxpayer appeals further decrease the total assessed real estate value of the District.  Thus, the District’s calculation of real estate tax revenue for the fiscal year has factored in an adjustment for the continuation of successful taxpayer appeals.  In addition, new taxpayer appeals will probably CONTINUE to be initiated during the fiscal year which CAN NOT be quantified by the District.

Continued Decline of District Total Real Estate Assessed Values  6/14/13 Total Value $2,499,750,315  7/19/13 Total Value $2,463,880,115  8/23/13 Total Value $2,461,222,715  9/27/13 Total Value $2,453,451,165  11/8/13 Total Value $2,453,099,915  11/12/13 Total Value $2,447,304,616  12/13/13 Total Value $2,445,921,916  1/15/14 Total Value $2,451,626,716 (Certified Value from Allegheny County)  1/24/14 Total Value $2,449,255,916  2/21/14 Total Value $2,442,479,716  3/28/14 Total Value $2,438,104,566  4/4/14 Total Value $2,438,038,066  4/28/14 Total Value $2,437,550,241  5/2/14 Total Value $2,432,476,041  5/9/14 Total Value $2,432,411,041  5/23/14 Total Value $2,432,411,041  5/30/14 Total Value $2,418,463,341  From 6/14/13 to 5/30/14, the Total Real Estate Assessed Value of the District continued to Decrease by ($81,286,974) or (3.25%).  District utilized a ($36,000,000) adjustment leaving a balance of ($45,286,974) unanticipated for the fiscal year.

Assessed Value Adjustment for Taxpayer Real Estate Appeals in  District has utilized an adjustment of $5,000,000 for current taxpayer real estate appeals which MAY require the District to issue a refund or return current year revenue collected by the District to the taxpayers during the fiscal year after a successful appeal.

Primary Reason for the Decline in District Total Real Estate Assessed Values for  Successful and Pending Taxpayer Real Estate Assessment Appeals!  Thus, the District’s real estate tax millage rate was set TOO LOW for the fiscal year and is TOO LOW for the fiscal year without any additional increases to equalize the real estate tax revenues back to the original calculated amounts for the fiscal year.

Analysis of Real Estate Tax Revenue at 6/30/14 for  Amount Originally Budgeted $43,242,492  Less: Amount Collected ($42,530,854)  Add: Refunds to Taxpayers $ 1,240,933  Balance to be Collected $ 1,952,571  Less: Future Delinquents ($ 1,623,757)  Amount Never to be Collected $ 328,814  Percentage Never to be Collected 0.76%

Correct Millage Rate for  Utilizing a $86,286,974 decrease in the District’s total assessed value in calculating the revenue for the fiscal year, the correctly adjusted millage rate would have been Mills.  District’s rank would have changed from the 17 th to the 19 th Lowest Millage Rate in Allegheny County.  Represents an increase of.3936 Mills over the mills previously set for the fiscal year.

2.5% Index - Equivalent in Mills  The District was permitted to increase the millage rate by up to a 2.5% (Index) for the fiscal year.  Current Millage: Mills  Multiplied by 2.5% Index: X.025  Max Increase in Millage of:.4722 Mills  Thus, the maximum amount the Real Estate Tax Millage Rate COULD have been for the Fiscal Year is Mills Mills = Mills.  ***NO INCREASE IN THE MILLAGE RATE WAS UTILIZED TO BALANCE THE DISTRICT’S BUDGET FOR THE FISCAL YEAR.***

Comparison of to Maximum Real Estate Tax Millage Rate FOR  Millage Rate: Mills  Maximum Millage Rate: Mills  Maximum Increase of (.4722 Mills) in the Millage Rate.  Maximum Increase of (2.5%) in the Millage Rate.  ***NO increase in the real estate tax millage rate was included in the Final Budget for the fiscal year. A full increase of 2.5% would have yielded a net amount of approximately $1,094,508.***

$ Amount of Real Estate Tax Maximum Millage Increase Per Resident Available for  Monroeville:  Based on median taxable value of $107,700.  At Maximum 2.5% Index = $50.86/YEAR.  At Maximum 2.5% Index = $4.24/MONTH.  Pitcairn:  Based on median taxable value of $35,000.  At Maximum 2.5% Index = $16.53/YEAR.  At Maximum 2.5% Index = $1.38/MONTH.

Assessment Value for  Allegheny County formally issued new certified real estate assessment values via a CD on 1/15/14 for properties located in Monroeville and Pitcairn to be utilized by the District for the preliminary real estate tax calculations required in the fiscal year Budget.  Allegheny County issued a CD to the District as of 4/28/14 with the eligible homestead properties to receive property tax relief for the fiscal year.  District compared the total 1/15/14 & 4/28/14 real estate assessment values and millage rate calculations to the value and millage rate calculations performed on the available summary assessment values per the Allegheny County website.

Homestead Exclusion for  The fiscal year amount was initially projected to be in the District’s fiscal year Budget.  State determined (on April 15, 2014) gaming revenues were available for distribution to the school districts during the fiscal year.  PDE certified and officially released the actual distribution amount to the District on May 1, 2014 in the amount of $1,459, for the fiscal year. An increase of only $ from the fiscal year.  The fiscal year will be the 7 th year in a row for the District to receive and to distribute a State gaming revenue distribution.  Impact of the distribution is revenue neutral in the District’s fiscal year Budget.

Homestead Exclusion for  $ per eligible homestead property in both Monroeville & Pitcairn for the fiscal year. Monroeville Pitcairn Monroeville Pitcairn.4722 Mill Increase $ $ Less: Exclusion ($174.63) ($174.63) Net Credit Effect ($123.77) ($158.10)

Budget Process for  A not to exceed Index (2.5%) resolution was previously adopted by the Board on January 22, 2014 for the fiscal year.  Thus, referendum exceptions were not requested and were not utilized by the District for the fiscal year to further increase the millage rate above the 2.5% Index rate.  The Proposed Final General Fund Budget was adopted by the Board on May 21, The Budget was displayed and continues to be displayed via the PDE-2028 on the District’s website at  Various detailed Excel spread sheets were also displayed and continue to be displayed on the District’s website at  Thus, the Pre-Act 1 budget timeline was followed by the District through final Budget adoption by the Board on June 25, 2014.