1. leading through change S T A T E O F T H E D I S T R I C T 2 0 1 2

2. Legislative Update MPSERS Reform Personal Property Tax Repeal Teacher and Administrator Evaluation School Aid Budget Highlights of State of the State Impact for Kalamazoo RESA Knowns and Unknowns Kalamazoo RESA Employee Compensation and Benefit changes for 2012-2013 school year Kalamazoo RESA Program Highlights and new initiatives

3. Senate bill as passed by the Senate and House bill as introduced by the House Senate: Future compensation would no longer include tax sheltered annuities or longevity pay New employees reportable income capped at $100,000 Employee hired before July 1, 2010 would be required to make one of the following elections: Higher contributions to keep 1.5 multiplier Keep current contribution level and move to a 1.25 multiplier for future years Freeze pension benefits and move to a defined contribution plan for future years Hybrid employees would not be affected by these pension changes New employees would become part of the new defined contribution 401(k) system New employees healthcare benefit would be eliminated and replaced with 401(k) account Existing and future retirees pay at least 20% of health care premiums House bill differences: New employees would join the Hybrid pension system Changes in employer contribution calculation methodology Still analyzing this bill – more information to come at a later time

4. The State of Michigan has balanced their budget Major tax restructuring has increased revenue to the General Fund and significantly reduced revenue to the School Aid Fund $1.8 Billion reduction in business tax liability Unemployment rate improving at 8.3% (April 2012) Modest gains in employment Modest gains in sales tax and income tax revenue levels Statewide estimate for wage growth for FY 2013 is.5% - 1.5%

5. Three varying versions: Executive, House, Senate Major Factors: Foundation allowance ($0 to $208/pp increase) Kindergarten funding change (full day for full funding) Best Practices language (varies in each version) Consolidation of Services incentive grants ISD State Aid ($-5% to +5%) MPSERS contribution rate 27.37% (from 24.43%) Continues transfers to community colleges and universities Continues most categoricals at current year funding Kalamazoo RESA’s strategy is to balance the budget through various approaches

6. Approved by the Board of Education on May 17 Average of 1% increase in salary schedules Steps granted for all eligible employees Change in vacation day accrual rules Enhancement to exemplary attendance policy Cost to the budget approximately $520,000

7. Increases: MIP/Basic > From 24.46% to 27.37% +2.91% Pension Plus > From 23.23% to 26.14% +2.91% This is a 11-12% increase in costs when applied to wages What Does This Mean? General Fund=$175,000 Special Ed. Fund=$480,000 Total= $655,000

8. Changed Health Insurance Plans January 1, 2012 Estimated 14% increase in employee health/dental/vision/life/long-term disability insurance January-June 2013 Still overall savings to the budget! Comparison to Cap unknown until Nov or Dec 2012 What Does This Mean? General Fund=$135,000 Special Ed. Fund=$480,000 Total Savings=$615,000

9. Wellness Committee Operation with the belief that an active, well- balanced lifestyle will directly benefit our students, co-workers, and families Together, establish and maintain a healthy environment in our schools that is both motivating and supportive New director in place, new initiatives underway Humanex Venture Implement a hiring process which enables us to hire one more like our best, every time we have an opening Inclusion & Diversity Committee Embrace a culture where inclusion and diversity thrive Aspire to create an environment that provides every individual with the opportunity to participate fully, including their many and unique ways of thinking, living, working, and learning

10. Increased Compensation Costs Wages – Steps plus 1%= $ 520,000 Retirement= $ 655,000 Health Insurance= $(615,000) Total Increased Costs= $ 560,000 Decreased Revenues Education Jobs Act=$280,000 Taxable Value Decrease=$400,000 Grants ending=$394,500 Total Revenue Decrease=$1,074,500 Increased Revenues Medicaid Billing=$400,000 New Grants=$106,000 Total Revenue Increase=$506,000

11. State aid act? Personal property tax repeal? Foundation allowance? MPSERs reform?

12. Rebalancing budgets Eliminating positions through attrition wherever possible Pursuing more grant funding Taking on new initiatives Spending down fund balance