Budget Montrose Area Public Budget Presentation June 3, 2002 Lewis Plauny

Budget Montrose Area Presentation Agenda Current “Draft Budget” key numbers Current “Draft Budget” key numbers Explain Budgetary Reserve & Fund Balance Explain Budgetary Reserve & Fund Balance Major Revenue & Expenditure Increases Major Revenue & Expenditure Increases Our Continuing Budget Improvement Plan Our Continuing Budget Improvement Plan Insights on Grants & Budget Problems Insights on Grants & Budget Problems Standard & Poors Review Standard & Poors Review Answer questions & ask for decisions Answer questions & ask for decisions

Budget Montrose Area Budget Draft Status Budget $18,000, Budget $18,000, Budget approx. $19,500, Budget approx. $19,500,000 Increase of$ 1,500,000or8.3% Increase of$ 1,500,000or8.3%

Budget Montrose Area Review of “Budget Draft” content 155 Page Board Document Itemizes all anticipated expenses and revenues 155 Page Board Document Itemizes all anticipated expenses and revenues Current Expenses are $ 18,221,995 Current Expenses are $ 18,221,995 Current Revenues are $ 18,171,324 Current Revenues are $ 18,171,324 Difference is $ -50,671 Difference is $ -50,671 Difference in millage equivalent is.28 mill Difference in millage equivalent is.28 mill –1.0 mill = 2.6 % tax increase –.5 mill = 1.3 % tax increase

Budget Montrose Area How We Calculate “Millage Equivalent” In the District collected $ 6,901, in current real estate taxes. In the District collected $ 6,901, in current real estate taxes. This was 90.4% of the levied taxes. This was 90.4% of the levied taxes. Amount collected divided by 37.5 mills levied equals 184, dollars collected for each mill levied. Amount collected divided by 37.5 mills levied equals 184, dollars collected for each mill levied.

Budget Montrose Area Why We Should “Think” “Millage Equivalent” Proactive - To be “fiscally responsible” local Boards should fund “Current Revenues”=“Current Expenditures” and “Think of all newly created budget costs in terms of millage increases” Proactive - To be “fiscally responsible” local Boards should fund “Current Revenues”=“Current Expenditures” and “Think of all newly created budget costs in terms of millage increases” Reactive - The State & Federal govts are always one to three years behind (if) they fund school needs Reactive - The State & Federal govts are always one to three years behind (if) they fund school needs

Budget Montrose Area Millage Impacts Average Real Estate Parcel is assessed at 27,340 (after Clean & Green) Average Real Estate Parcel is assessed at 27,340 (after Clean & Green) One mill is $ increase on the average parcel. One mill is $ increase on the average parcel.

Budget Montrose Area Budgetary Reserve for A Budgetary Reserve is a “non-itemized placeholder amount” that is used to anticipate unforeseeable expenses during the budget year that “must” be recorded in the General Fund. A Budgetary Reserve is a “non-itemized placeholder amount” that is used to anticipate unforeseeable expenses during the budget year that “must” be recorded in the General Fund. –Example: a “special needs” student enrolls during the year and the district must pay his/her tuition Budgetary Reserve is approx. $ 198,000 Budgetary Reserve is approx. $ 198,000 $ 198,000 is approx. 1% of a $ 19,500,000 $ 198,000 is approx. 1% of a $ 19,500,000

Budget Montrose Area Beginning Fund Balance for ’s budget total is $ 18,000, ’s budget total is $ 18,000,000 The District budgets to a 7 ½ % fund balance The District budgets to a 7 ½ % fund balance 7 ½ % of $ 18,000,000 is $ 1,350,000 7 ½ % of $ 18,000,000 is $ 1,350,000 Tentative Budget is approx. $ 19,500,000 Tentative Budget is approx. $ 19,500,000 7 ½ % of $ 19,500,00 is $ 1,462,500 7 ½ % of $ 19,500,00 is $ 1,462,500

Budget Montrose Area Budget Expenditure Increases Blue Cross (211 only) Increase $ 1,128, $ 1,071,400 57,271 Blue Cross (211 only) Increase $ 1,128, $ 1,071,400 57,271 Salary (100s) Increases $ 9,554, $ 8,787, ,421 Salary (100s) Increases $ 9,554, $ 8,787, ,421

Budget Montrose Area Budget Subsidy Increases ESBE Increase $ 128,755 (1%) = 0.69 mills ESBE Increase $ 128,755 (1%) = 0.69 mills Special Education Increase $ 46,959 (6.6%) = 0.25 mills Special Education Increase $ 46,959 (6.6%) = 0.25 mills Retirement Rate Decrease ????? Decrease in name only $ 231,928 = mills Retirement Rate Decrease ????? Decrease in name only $ 231,928 = mills

Budget Montrose Area Three Year Budget Improvement Plan Improving budgeting practices do not increase funding or decrease costs Improving budgeting practices do not increase funding or decrease costs Improves the methods and procedures with which we create the budget Improves the methods and procedures with which we create the budget Improves identifying costs and purchasing accountability Improves identifying costs and purchasing accountability

Budget Montrose Area A Balanced Educational Plan Increasing one side causes the other two sides to increase Increasing one side causes the other two sides to increase Decreasing one side causes the other two sides to decrease Decreasing one side causes the other two sides to decrease Continuous Improvement Plan Expenditure Plan Budget Plan

Budget Montrose Area Electronic Equipment Depreciation Philosophy A recommended “Sustainability Guideline” A recommended “Sustainability Guideline” –If you can not afford to “replace” it, you can not afford to “maintain” it –If you can not afford to “maintain” it, you can not afford to “buy” it –If you can not afford to “train staff to use it properly”, you can not afford to “buy” it

Budget Montrose Area Grant Insights Funding allocations are determined primarily by the availability of funds at higher levels of government Funding allocations are determined primarily by the availability of funds at higher levels of government Funding for all grants will change and the funding changes will not always be positive Funding for all grants will change and the funding changes will not always be positive Higher government levels do not have “downward” accountability Higher government levels do not have “downward” accountability

Budget Montrose Area Entitlement Type Grants Expect continuing State & Federal support Expect continuing State & Federal support –Example: Title 1 for poor & needy families Grant amounts controlled by State & Federal funding allocations Grant amounts controlled by State & Federal funding allocations –Funding will increase or decrease –“Allowable uses” will change May be “carefully” used for continuing salaries and benefits May be “carefully” used for continuing salaries and benefits

Budget Montrose Area Entitlement Type Grants Applied for annually 1. Social Security Reimbursement 2. Retirement Reimbursement 3. Building Debt Service Reimbursement 4. Special Education 5. Cafeteria Reimbursement 6. Title 1 – Poor and needy families and Reading First 7. Title II – (Part A) Improving Teacher Quality and (Part D) Enhancing Education Through Technology 8. Title V – Innovative Programs

Budget Montrose Area Competitive Type Grants “Sunset” type legislation Politically motivated (can occur midyear) Politically motivated (can occur midyear) Used to “start” but not “continue” support of Federal and State education initiatives Used to “start” but not “continue” support of Federal and State education initiatives Be thankful for them but, Be thankful for them but, –Only spend after you have received funds –Use grant funds for non-recurring expenses –Consider carefully future program maintenance costs

Budget Montrose Area Standard & Poors Review Local-Source Revenue Per Student (Definition) – Includes revenue for instruction, support services, and other operating purposes obtained from local sources including real estate property and other district-levied taxes, investment earnings, and tuition. Revenue is divided by total enrollment to determine per- student basis. Local-Source Revenue Per Student (Definition) – Includes revenue for instruction, support services, and other operating purposes obtained from local sources including real estate property and other district-levied taxes, investment earnings, and tuition. Revenue is divided by total enrollment to determine per- student basis.

Budget Montrose Area Standard & Poors Review MASD Key Factors “Well below-average operations and maintenance expenditures per student” “Well below-average operations and maintenance expenditures per student” “Exceptionally above-average transportation expenditures per student” “Exceptionally above-average transportation expenditures per student” “Well below-average local-source revenue per student” “Well below-average local-source revenue per student”

Budget Montrose Area Standard & Poors Quotes “On a per-student basis, the district’s operations and maintenance expenditures of $460 are exceptionally below the state average of $658, and lower than the peer group average. Statewide, only 6.0% of Pennsylvania’s school districts report lower per-student operations and maintenance expenditures. Spending on operations and maintenance represents 6.8% of the district’s operating expenditures, compared with the state average of 9.0%. During the period examined, the district’s per-student operations and maintenance expenditures have decreased by 7.2%. This is counter to the state trend, which has increased, and counter to the peer trend, which has remained relatively unchanged over the same time period.” “On a per-student basis, the district’s operations and maintenance expenditures of $460 are exceptionally below the state average of $658, and lower than the peer group average. Statewide, only 6.0% of Pennsylvania’s school districts report lower per-student operations and maintenance expenditures. Spending on operations and maintenance represents 6.8% of the district’s operating expenditures, compared with the state average of 9.0%. During the period examined, the district’s per-student operations and maintenance expenditures have decreased by 7.2%. This is counter to the state trend, which has increased, and counter to the peer trend, which has remained relatively unchanged over the same time period.”

Budget Montrose Area Standard & Poors Quotes “Transportation expenditures of $814 per student are exceptionally above the state average of $414, and higher than the peer group average. Statewide, only 1.2% of Pennsylvania’s school districts spend more per student than the district. Spending on transportation represents 12.1% of the district’s operating expenditures, compared with the state average of 5.7%. During the period examined, the district’s per-student transportation expenditures have increased by 17.4%. This is greater than the state and peer increases over the same time period.” “Transportation expenditures of $814 per student are exceptionally above the state average of $414, and higher than the peer group average. Statewide, only 1.2% of Pennsylvania’s school districts spend more per student than the district. Spending on transportation represents 12.1% of the district’s operating expenditures, compared with the state average of 5.7%. During the period examined, the district’s per-student transportation expenditures have increased by 17.4%. This is greater than the state and peer increases over the same time period.”

Budget Montrose Area “Postponing” Capital Expenditures Postponing “real” and “needed” costs is not “budget cutting”. Postponing “real” and “needed” costs is not “budget cutting”. The “need” does not “go away”. The “need” does not “go away”. Not budgeting a “need” results in “hidden deficit budgeting”. Not budgeting a “need” results in “hidden deficit budgeting”. The negative impact is even worse in future budgets. The negative impact is even worse in future budgets.

Budget Montrose Area “Inherent Structural Budget Deficiencies” “built-in” budget problems Employee Contracts, Benefits & Services Cost Increases Employee Contracts, Benefits & Services Cost Increases Proportionally Reduced State & Federal Funding Proportionally Reduced State & Federal Funding –Decrease in State subsidies from 52% to 3x% “Hidden” problems “Hidden” problems –“Work loads shifted” from Federal and State staff to Local education staff –Unfunded State & Federal Mandates“ shift tax burden” from Federal & State tax levies to Local tax levies“

Budget Montrose Area What we need to do Decide on any final budget changes Decide on any final budget changes Decide on a total final budget amount Decide on a total final budget amount Decide the millage rate for next year Decide the millage rate for next year Approve both items at Friday’s meeting Approve both items at Friday’s meeting